3rd May 2007 10:36
Hammerson PLC03 May 2007 Extracts from AGM Statement Hammerson plc, the European REIT, held its Annual General Meeting at its headoffice at 10 Grosvenor Street, London, W1 today at 10.30 a.m. At the meeting,John Nelson, Chairman of Hammerson, made the following statement: "Hammerson enjoyed another very active year in 2006 and we are maintaining thatmomentum in 2007. We now have a portfolio of retail and office assets ofextremely high quality valued at more than £6 billion. This includes investmentsin six of the most successful shopping centres in the UK and five of thestrongest trading shopping centres around Paris. We have a current developmentprogramme of over £900 million and a very exciting future development pipelineamounting to some £5 billion. We have a strong balance sheet and undrawncommitted financing of over £1 billion. Led by John Richards, I believe we havethe best management team in the sector. "This has been reflected in our very strong performance in recent years. Indeed,over the last five years, Hammerson's average annual total shareholder returnhas been 32.3% which compares with 27% for the real estate index, making us thebest performing company in the real estate sector amongst our larger peers. "Development remains a core part of our strategy and has generated and willcontinue to generate very good returns for our shareholders. Six majordevelopments are currently underway at an estimated total development cost ofover £900 million. At the year end the development profit in respect of theseschemes reflected in the group's accounts totalled £167 million. On completionthey are projected to generate net rental income of £71 million or a 7.3%initial yield on our costs. This yield is substantially above current primeproperty yields and our current developments should therefore give rise tofurther substantial capital growth. "Our development pipeline provides Hammerson with the opportunity to invest afurther £5 billion over the next decade in a range of very attractive schemesand at the timing of our choice. This will enable the group to maintain itsmomentum, potentially doubling the size of the Company and providing thepotential for continued outperformance. "Yesterday we announced some further good news for our development pipeline. Inpartnership with the City of London Corporation, we have entered into anexclusivity agreement with JPMorgan, one of the world's leading internationalbanks, to redevelop St. Alphage House in the City to provide a new officebuilding of 90,000 m(2) (approximately 1 million ft(2)), which will become thebank's European headquarters. This again illustrates the skills of our team insecuring attractive new development opportunities. "Following approval by shareholders at the Extraordinary General Meeting inDecember 2006, Hammerson elected for REIT status and entered the new regime on 1January this year. Hammerson's business model is ideally suited to this newtax-exempt REIT environment in the UK and of course we already have asubstantial tax-exempt business in France. "Perhaps I could share with you now some brief observations on the propertymarkets in which we operate. Both in the City of London and central Paris,occupational demand for prime offices remains strong and this has beenaccompanied by continued demand from investors, leading to a further increase inoffice values in the first four months of the year. "As regards demand from retailers for space, this has continued to polarisetowards the larger shopping centres and retail parks of the type Hammerson ownsand develops. This is leading to some increase in rental values. Investmentdemand for major retail assets in the UK and France remains healthy with primeinvestment yields little changed this year. "Looking ahead, although there are uncertainties, including the possibility of arise in short-term interest rates, I believe that high quality prime assets ofthe type owned by Hammerson will continue to show out-performance and shoulddisplay resilience in the event of any softening of market conditions. "In conclusion, it will probably not have escaped your attention that Hammersonhas recently been rumoured as a possible takeover target. While it is not ourpolicy to comment on market rumour, as this is the AGM, I would like to takethis opportunity to reassure shareholders that the Board would only consider anoffer for the Company which it believed fully reflected Hammerson's outstandinginvestment portfolio, the value of its existing development programme and thevery substantial value of its pipeline which, as I said earlier, provides uswith the potential to double the size of the Company. "I believe Hammerson has the right strategy, the right resources and the rightmanagement to continue to generate the best returns in the sector over the nextfew years." Enquiries: John Richards, Chief Executive Tel: 020 7887 1000Christopher Smith, Director of Corporate Affairs Tel: 020 7887 1019 [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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