Blow as key retail projects to stay in mothballs

The group mothballed new developments in the UK, including the Eastgate scheme in Leeds and Sheffield's Sevenstone development, as the recession hit.

Yesterday it said UK developments are unlikely to resume in 2010 as the tough retail climate and slow crawl out of recession delay the property market's recovery.

"It's unlikely that we will start this year," said chief investment officer Peter Cole.

"We are just coming out of recession and retail demand is still firming.

"Our view is that the market will continue to improve and by the end of this year we can plan forward with certainty."

Hammerson said it was ploughing 430m into two French projects in Paris and Marseille.

It said its Paris project was now fully let, while space at its Marseille venture was already 40 per cent leased four years ahead of completion.

Hammerson is lead developer on the 800m Eastgate Quarter in Leeds, with Marks & Spencer and John Lewis signed up as anchor tenants.

Construction was initially scheduled for completion in 2012.

It is also behind the 600m Sevenstone development in Sheffield, which has John Lewis as its anchor tenant.

It said discussions continue with the city council to complete the land acquisition stage of the project.

Mr Cole added the group typically looks to secure pre-lettings of 25 per cent, but is "not yet in detailed negotiations with individual retailers (for Eastgate and Sevenstone) because the market is not appropriate".

Hammerson posted a 13 per cent rise in adjusted net asset value per share to 421p in the six months to the end of December.

While the group's total portfolio fell nine per cent over the year to 5.1bn, it rebounded by six per cent in the final six months of the year.

That growth was driven by its British portfolio, which rose 11 per cent in value in the final six months of 2009, while France dropped three per cent.

The group reported losses before tax of 453.1m for 2009, far less than the 1.6bn plunge into the red during 2008 as property values began to recover last year.

Hammerson's net rental income fell 2.1 per cent last year, although it said it saw growth of 1.1 per cent in like-for-like income, with disposals stripped out.

The group reported annual rental income of 294m, but said occupiers were still cautious about taking on new space.

The group has 66 per cent of its property portfolio in the UK and the remainder in France.

Hammerson said its occupancy rate stood at 95.2 per cent by the end of the year. The number of retail units in administration stood at 45 at the end of 2009, with 23 of these still trading.

The group said this was substantially lower than six months earlier.

Hammerson and peers including Land Securities and British Land were forced to tap investors for cash a year ago as bank covenants came under pressure from tumbling property values.

But chief executive David Atkins said the group was in "excellent shape" after a 580m rights issue and 780m of asset sales.

Net debt at the year end was 2.1bn, down by 1.2bn from a year earlier.

Hammerson said this gives it 767m of undrawn facilities, giving "good financial flexibil-ity".

Group enjoys profit on riverside sale

Property group London & Stamford Properties has revealed it booked a 36 per cent profit on the recent sale of Whitehall Riverside in Leeds.

AIM-listed London & Stamford has revealed it sold the 129,514 sq ft office block to NFU Mutual for 51.3m after paying 37.6m last May. The sale price reflects a 6.1 per cent initial yield. The building, which generates 3m a year in income, is multi-let to seven tenants including law firm Cobbetts and accountants Grant Thornton.

"Just when you thought the listed sector had turned its back on disposals, London & Stamford has announced a significantly accretive disposal of one of its 2009 purchases," said Execution Noble analyst Michael Burt.