Property group Hammerson has slipped back after unveiling a surprise fundraising of around £400m.
Hammerson plans to place up to 71.3m new shares with institutional investors, to help buy out its joint venture partner in Leicester's Highcross shopping centre, as well as to expand in Europe.
It is paying £280m to buy the Royal Mail pension plan's 40% stake in Highcross, £70m for an investment in VIA Outlets which has bought sites in several cities including Prague and Amsterdam, and £30m to Value Retail to fund extensions at Bicester Village and Kildare Village outlet centres.
The news has sent Hammerson's shares 11.5p or nearly 2% lower to 573p. Oriel Securities said:
Hammerson is taking advantage of the strength of its share price (up 16% year to date) which is trading on just a 7% discount to net asset value to undertake a 9.99% placing raising around £400m.
Although we remain cautious on the outlook for the retail occupational market, we appreciate the continued income and capital growth potential within Value Retail and understand the wish to own the remaining 40% of Highcross where there is the potential to increase occupancy and experience some rental growth. However, we believe the 7% discount to net asset value to offer only fair value at present and retain hold.
Peel Hunt's James Carswell said:
Considering the strength of the prime retail market, we were initially surprised not to have seen such investment at least in part funded by disposals... however the conference call outlined plans for further acquisitions in the new VIA outlet joint venture.
Hammerson have sold £150m of assets, a retail park in Sheffield (£70m) and are looking at selling a weaker centre in Paris also – management guide £100m of disposals for the rest of this year. Hammerson did not want to sell other assets as they believe the rest of the £6.4bn or so portfolio is all high performing,
