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Hammerson

gbjbaanb
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Hammerson

#135128

Postby gbjbaanb » April 27th, 2018, 1:34 pm

Just noticed that Hammerson is trading around 550p, yet the NAV of the assets were listed at 1st march at 790p. That's a huge disparity. Surely this is a massive opportunity.

I also noticed that activist investor Elliot has taken a stake in them, apparently to push them to sell off assets and kick the management (which I think is the main reason the shares are at such a discount).

Anyone got any views on this?

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Re: Hammerson

#135487

Postby bobsmydog » April 29th, 2018, 11:10 am

News on takeovers by and of hammerson here
https://quoteddata.com/?s=hammerson

westmoreland
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Re: Hammerson

#216690

Postby westmoreland » April 22nd, 2019, 8:41 pm

reviving this thread - since the date of posting the shares are now down a further 40%, now at a 48% discount to the offer from Klépierre last year.

the 48% non UK assets appear much more stable, with decent prospects for rental growth. they will be exiting retail parks in the 'medium term', and will invest some capital in the remaining assets, with a target to reduce LTV to 35%. disposals will obviously negatively affect rental income and dividends. management have the air of adapting to change that has already happened, unlike a better managed REIT like newriver, who anticipated the current structural changes in retail, and have no material exposure to department stores, and a focus on value retail.

the current share price discounts a 30% reduction in the price of the assets. valuing the ireland and EU portfolio at a modest discount of 10% prices in a reduction of 47% in the UK assets!

if management truly believe in the value of their assets, in my view the best option is to start a managed liquidation of the company, though i suspect they'd rather keep their jobs. it offers roughly a 100% upside from this valuation. the premium EU and Irish assets are seeing good rental growth, and there will be plenty of buyers.

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Re: Hammerson

#217940

Postby westmoreland » April 28th, 2019, 2:52 pm

i've bought shares at £3.28, bearing in mind the above, and the below.

discounting UK assets by 25% (which IMO is conservative given recent disposals have been in the 7-10% below BV range, and non UK assets by 10%, gives a current P/B of 0.67. the problem is that even small shifts in valuation yields can result in massive reductions in valuations.

to illustrate, for UK retail parks, in my conservative valuation i reduced current rental income by 10%, and increased the yield from 6.5% to 7.8%. this resulted in a 25% reduction in value. the loss of retail park rental income will be partially offset by a £2m saving in staff, and i've assumed a saving of 2% interest (.

for the above P/B of 0.67 i added the share buyback as an investment of £90m, (the shares were bought for £132m).

current dividend yield of 8%, which i think will at most be reduced by 15% to 7.6% if retail parks are sold 25% below book.

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Re: Hammerson

#220038

Postby westmoreland » May 7th, 2019, 6:02 pm

wow - shares now down a further 10% (just as well i didnt buy it all in one go :lol: ). now 52% below the Klepierre offer. mr market hates UK listed shopping centres ATM.

i think the market is waiting to see what prices are achieved for UK retail parks. from my own research, there are some like kirkcaldy that i think will achieve very close to book, due to limited local competition. there are undoubtedly some weak ones, in particular swansea, which has a 20%+ vacancy rate (even worse considering hammerson spent a huge sum redeveloping it), and lots of local competition. but 10 out of 13 are fully let. the ones that were recently sold in bristol and fife had 9 and 4% vacancy rates, and still achieved close to book.

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Re: Hammerson

#220205

Postby brightncheerful » May 8th, 2019, 3:55 pm

My target buying price £3.00 was breached yesterday. I paid a bit less, Including costs in at £3.02 (rounded).

imv, part of the reason for the sp drop is that the properties are overvalued. Valuers are torn between substantial mark-down and loyalty to their clients. Having said that, it's only the equity market's view the assets are overvalued. Recent property auction results for single lot shop investments that still fetch around 5-6% for non-prime/no growth locations. So valuers can probably get away with it a bit longer.

Retailer trend is short term leases, typically 5 years or 10 years with tenant break at year 5. With a break clause, the secure term for rent cash-flow is 5 years. Earlier this year, Intu stated: "We have continued to see good letting activity with 53 long-term leases signed amounting to £6 million of annual rent at an average of 1% above previous passing rent." But Intu haven't sad they mean by "long-term leases"; for all I know, that might mean 10 years with break clause(s).

Another depressing reason for HMSO is Philip Green's empire slowly collapsing. Arcadia's brands use to be relied upon to take several units in each shopping centres and pay top rents. Without exception, the (high-profile) retailers that have gone bust in the last couple of years have done so for self-inflicted operational reasons, nothing to do with rent, rates, etc: that's just smokescreen. Many multiple retailers have too many shops so CVA shifts as does non-renewal on expiry.

When all's said and done, any retailer serious about keeping going surely knows that, despite the substantial total property cost commitment (rent, service charge, business rates, etc), the shops to get/keep are in the prime shopping centres. The combination of a physical shop and a complementary on-line outlet is lethal.

Mrs Bnc was adamant I must not buy this morning. I only hope she wasn't wrong.

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Re: Hammerson

#220229

Postby PrefInvestor » May 8th, 2019, 6:36 pm

Suspect that INTUs share price vs NAV is even more impressive !. But that would be a courageous buy ATM one feels. All these big retail REITS are firmly in the wilderness. Personally steering well clear.....

ATB

Pref

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Re: Hammerson

#220503

Postby westmoreland » May 9th, 2019, 5:46 pm

PrefInvestor wrote:Suspect that INTUs share price vs NAV is even more impressive !. But that would be a courageous buy ATM one feels. All these big retail REITS are firmly in the wilderness. Personally steering well clear.....

ATB

Pref


intu is more leveraged, and less geographically diversified. it has also cut its dividend IIRC.

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Re: Hammerson

#220555

Postby PrefInvestor » May 9th, 2019, 9:57 pm

westmoreland wrote:intu is more leveraged, and less geographically diversified. it has also cut its dividend IIRC.


Well yes INTU debt at least 50% LTV (possibly 60%) and yes the dividend has been cut.

Hammerson debt ~36% LTV (though some say it’s really worse than that) and is the dividend safe ?. Not according to this article
https://www.stockopedia.com/articles/wh ... nger-1348/

But don’t get me wrong here I’m not preferring INTU over HMSO, rather I am saying that as far as I am concerned they are both a disaster.

ATB

Pref

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Re: Hammerson

#220730

Postby westmoreland » May 10th, 2019, 5:49 pm

PrefInvestor wrote:
westmoreland wrote:intu is more leveraged, and less geographically diversified. it has also cut its dividend IIRC.


Well yes INTU debt at least 50% LTV (possibly 60%) and yes the dividend has been cut.

Hammerson debt ~36% LTV (though some say it’s really worse than that) and is the dividend safe ?. Not according to this article
https://www.stockopedia.com/articles/wh ... nger-1348/

But don’t get me wrong here I’m not preferring INTU over HMSO, rather I am saying that as far as I am concerned they are both a disaster.

ATB

Pref


hammerson's fully consolidated LTV is 46%. too high in this market, and they are taking steps to reduce this.

personally i think the dividend at the current level is a squeeze in the short term (2-3 years), as they will lose (net of cost savings on debt and staff) about 11-12% of their rent roll just on the sale of UK retail parks, not including other assets that are for sale. i think that once the portfolio and balance sheet is more stable and focused on growing markets and subsectors following the restructuring, increases in line with inflation at least will be sustainable over the long run.

regarding the article, to qualify for REIT status, they must by law distribute 90% of recurring property income. ultimately, the dividend is only as stable as the cash flows and rents, and i don't think the market is giving enough credit for the stellar rental growth in EU and Irish centres.

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Re: Hammerson

#240327

Postby PrefInvestor » July 29th, 2019, 11:39 pm

gbjbaanb wrote:Just noticed that Hammerson is trading around 550p, yet the NAV of the assets were listed at 1st march at 790p. That's a huge disparity. Surely this is a massive opportunity.


I’m afraid that since the time your quote was written commercial retail property has just been one big train wreck, as I am sure you know. HMSO HY results were out today 29/7/2019 and a HMSO declared a loss but held the dividend by the look of it, see link for details, shares were down 7.x% to 251p, :-

https://www.proactiveinvestors.co.uk/co ... 24635.html

INTU have done no better and their shares are down to 75.x p today, bucking the big rise in the FTSE today.

Just where is the bottom for retail I wonder ?.

ATB

Pref

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Re: Hammerson

#240329

Postby gbjbaanb » July 29th, 2019, 11:42 pm

I'm glad I never bought any! And my only foray into the world of retail property (LSR) looks to be returning me the princely sum of... 0.5%!

I suppose I should be glad for that, but I reckon the future for retail will get a lot worse before it gets better.

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Re: Hammerson

#240367

Postby PrefInvestor » July 30th, 2019, 7:41 am

gbjbaanb wrote:I'm glad I never bought any! And my only foray into the world of retail property (LSR) looks to be returning me the princely sum of... 0.5%!

I suppose I should be glad for that, but I reckon the future for retail will get a lot worse before it gets better.

Just as well you kept out I think the way things have gone/are going. I am having a small punt on NRR at the moment. Not going great but not a disaster. Massive yield potentially.

ATB

Pref

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Re: Hammerson

#241269

Postby brightncheerful » August 2nd, 2019, 12:18 pm

The challenge for Hammerson (Intu and other quoted prop cos with retail property) is how to value the assets when tenants are wanting short leases (or longer with 3, 4 or 5 year breaks).

Valuers are notoriously conservative: they much prefer the security of longer leases (albeit the certainty might be wishful thinking if the tenant goes bust). As the quality of tenant covenant affects yield, the question is whether there should be any difference between a letting for 3-5 years to an unknown and a letting for 3-5 years to a known.

It has long been considered by prop cos that the stock market doesn't understand property companies - and vice versa! - which is part of the reason for the share price fall. How can it make sense for NAV to be £6+ when there are few buyers for shopping centre investments? The short answer is that the market has dried up because most shopping centre investments are not worth buying unless at a very high yield to offset lack of growth prospects. Unlike HMSO's centres which would be in demand were they for sale. HMSO are not selling their best stuff; by implication the disposal programme is only stuff that is probably ex-growth, which s why the prices are below book value. Share sellers are assuming that would be true for all the assets even though that does not make sense.

Yesterday, I bought a few more.

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Re: Hammerson

#241400

Postby PrefInvestor » August 2nd, 2019, 11:57 pm

brightncheerful wrote:Yesterday, I bought a few more.


Well I suspect that the stock market can remain ignorant longer than you can remain solvent !. However well done as I see they were actually UP today, not that many shares you can say that for. Only 10 FTSE 100 shares were in the green.i still think it a courageous decision though....but best of luck with it. I shall be watching from a safe distance !.

ATB

Pref

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Re: Hammerson

#244572

Postby westmoreland » August 15th, 2019, 5:44 pm

shares closed at 204p today :shock:

elliott advisors must be sitting on a paper loss of about 50% if not more.

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Re: Hammerson

#244630

Postby scrumpyjack » August 15th, 2019, 9:39 pm

I hold no Hammerson shares and do not know much about the company, but some of the issues which may have led to the huge price fall are

1) The NAV is the net of 2 large figures - book value (about 8.6 billion) of the properties and 3.4 billion of debt. So if the real value of the properties is 30% less than book the geared effect on the NAV is much greater than a drop on 30%

2) The figures are based on debt at par, but with interest rates so low the market liability of some of those debts may be well above par. That will not be included in the calculation of NAV (though investment trusts for example now have to include that calculation)

3) In this sort of situation there is a danger of banking covenants being broken, in which case the company's bankers can pull the plug, or charge huge fees/penalties.

Just a few points on why the market may not be bonkers in pricing a property company apparently worth nearly 800p per share at only 200p

On the other hand they may be a screaming buy, but I won't be buying. I suspect those pushing the price down know more about the real underlying situation than I do.


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