Hammerson agrees John Lewis deal for Leeds as H1 income and dividend grow

Hammerson on Monday reported 2.4% growth in like-for-like net rental income for the half-year to 30 June, at £141.6m, and said its EPRA net asset value per share had risen to £5.35 from £5.30 a year earlier. During the period the group sold 75% of its portfolio of offices in London for £518m – 8% above book value – as part of its transformation into a retail-only property group.

The group has agreed Heads of Terms with John Lewis to anchor the first phase of its Eastgate Quarters development. The initial 36,000 sq m scheme of retail property in Leeds will create two new retail streets, with construction expected to start in early 2014 subject to planning approval.

Group retail occupation was 97.5%, above Hammerson’s 97% target, and the group signed 163 leases in total during the half-year in respect of 45,500 sq m of property. While tenants’ sales remained under pressure as a result of the continued weaker consumer climate, Hammerson said rent collection had remained very strong and retailer administrations had continued to have only a minimal impact on its portfolio.

Chairman John Nelson said the benefits of Hammerson’s strategy to focus on prime retail were evident in the results and gave the group confidence that it would grow future rental income and dividends. Referring to the London offices disposal, he added: “By acting decisively we have achieved our goal of becoming a focused retail business earlier than anticipated, and we are confident that, at this point in the cycle, we can reinvest successfully to increase scale in our chosen markets.” The interim dividend rose to 7.7p from 7.3p a year ago.