Hammerson has said that continuing stress in the eurozone financial system could result in some attractive buying opportunities in 2012, in a third-quarter trading update released today.
The REIT reported broadly stable occupancy of 97.1% across its office and retail portfolio – down slightly from 97.2% in Q2, adding that occupier demand for London offices remains muted.
It signed 81 new leases during the period, generating £4.4m of rental income pa during the three-month period. In the UK, Hammerson signed 18 long-term leases in the retail portfolio with rents, overall, 5% above ERV as at December 2010. In France, it signed 39 long-term leases, also at rents 5% above December ERV.
During the quarter, footfall and sales in its UK shopping centre portfolio declined 1.9% and 3.8% respectively, in part reflecting the impact of the riots in August and strong prior-year comparisons at some retailers. In France, footfall and sales fell 4.9% and 6.5% respectively, heavily affected by the different timing of the national summer sales period.
Hammerson chief executive David Atkins said: “Over the period, the economic environment has weakened and consumer confidence has fallen in both the UK and France. Nevertheless, we continue to deliver on our strategic objectives of maximising income growth and creating value from our high-quality portfolio, while reducing costs and retaining financial flexibility.”
He added: “Despite the weakening economic conditions, our regionally dominant shopping centres and conveniently located retail parks continue to attract successful retailers. Occupancy levels across the portfolio are stable and we remain confident of our operating prospects and ability to capitalise on prevailing retail trends.
“While we remain confident in the long-term outlook for the London office market, occupier demand has been muted and remains susceptible to fluctuations in the global economy. In this environment we will maintain our prudent approach to securing prelets before commencing developments.
“Investment markets are demonstrating a similar polarisation to the occupier markets, where demand has concentrated on prime, well-let assets. The value of prime assets such as Hammerson’s is being supported by continued demand from international capital combined with limited supply.
“We will continue to seek to recycle capital through selective asset disposals. However, if there is continuing stress in the eurozone financial system we may see some attractive acquisition opportunities across our markets in 2012.
