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LONDON-Hammerson plc, an investor-developer of shopping centers, retail parks and office sites primarily in France and the United Kingdom, has provided shareholders with a 25.3% return for 2006, the company announced. Hammerson CEO John Richards predicts a similar or better return in 2007.
Although the return in 2005 was 34%, Richards sees no special significance in the difference between the two-year's returns. "It's no Armageddon," the CEO tells GlobeSt.com. "The return in 2005 came after we completed an extraordinary year in performance." Compared to average industry-wide returns in the 8% range, Richards says, "I don't think our shareholders this year are disappointed."
He points to a 2006 increase in net asset value of $29 per share versus $24 in 2005, up 21%. The company's adjusted profit before tax was $185 million, up 5.7% from $176 million in 2005. Profit before tax was $1.56 billion compared to $1.36 billion in the previous fiscal year. Basic earnings per share was $7.02 versus $3.89 a year earlier. Adjusted earnings per share was 64 cents compared to 61 cents previously.
The company's $13.13-billion portfolio comprises about 14 million sf of retail and 2.96 million sf of prime office space. Net rental income of $465.4 million played a big role in Hammerson's 2006 financials. The company posted $412 million in 2005 rents. "Our rental income is projected to show substantial growth in 2007 with continued growth thereafter," Richards notes. "We expect retailers generally to see positive sales growth in 2007 at the strongest trading locations, leading to further increases in rental levels."
Richards says he is confident Hammerson will continue to please shareholders in the near future, primarily because of the company's scheduled $9.8-billion development program over the next 10 years. Additionally, he notes the company now has "major tax-exempt businesses," both in the UK and France.
Richards adds Hammerson's strong returns in recent years has outperformed the Investment Property Databank Index in the UK in nine out of the last 10 years, "making us one of the best-performing large real estate investors" in Europe.
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