A Hidden Gem in Plain Sight

While the market is busy speculating about the potential sale of Value Retail and its potential windfall for Hammerson, a strategic shift is happening quietly in the company's French portfolio. This under-the-radar strategy might hold the key to unlocking substantial long-term shareholder value.

Streamlining for Strength

Hammerson has strategically streamlined its French portfolio, focusing on two prized properties: Les Terrasses du Port (TDP) in Marseille and Centre Commercial Régional de Cergy-Pontoise (Cergy). This concentrated ownership, rather than being a liability, might be their secret to success.

France: The Resilient Retail Haven

The French retail market presents a stark contrast to the UK. With less retail space per capita and flexible leases, France enjoys a more stable and resilient retail environment. This inherent strength shields it from the dramatic valuation fluctuations that plague the UK market.

Prime Locations, Inflation-Proofed Income

Both TDP and Cergy are strategically positioned in thriving urban areas with significant and growing catchment areas. TDP stands out as a top-three asset in France, enjoying a prime location on the revitalized Marseille waterfront.

Furthermore, over 90% of Hammerson’s French leases are indexed to government inflation clauses, guaranteeing rental increases year after year. This built-in protection against inflation ensures income security, something lacking in the UK portfolio.

Proactive Growth Strategy

Hammerson isn't just passively benefiting from the stable French market. They are actively driving rental growth, achieving impressive leasing spreads - 49% above previous passing rents and 4% above ERV.

They are also exploring an "add-on" opportunity at Cergy, potentially further strengthening its position as a dominant regional destination.

The Compelling Numbers

The potential for valuation upside is significant, especially considering the French portfolio has already absorbed a 30% decline from its peak.

Charting the Course of Growth

The chart below illustrates the potential growth in rental income from Hammerson's French portfolio, driven by inflation-linked leases and proactive leasing strategies.

A Long-Term Value Creation Story

While a Value Retail sale might offer a short-term cash boost, the French portfolio could be the driving force for sustained, long-term value creation. Hammerson's strategic focus on owning and managing dominant properties in a stable and inflation-protected French market might be the winning formula for unlocking lasting shareholder value.

"Fun Fact: Did you know that Les Terrasses du Port is home to one of the largest green walls in Europe? This stunning wall is not just aesthetically pleasing but also contributes to biodiversity and improves air quality."