Hammerson, reporting a 36 per cent rise in interim profits, has unveiled plans to enter the French retail parks sector as it seeks to exploit the tax breaks it has negotiated for its operations in the country.
The company, which has interests in major UK shopping complexes such as Bristol’s Broadmead and Aberdeen’s Union Square centres, said that it was “exploring opportunities” for investing in large-scale French retail projects.
The move comes amid a recovery in high street sales which has prompted an increased demand for space in Hammerson’s existing French retail properties, which are based near Paris and in Strasbourg.
However, while such demand has inspired strength in the investment market, Hammerson reported that it had been difficult to strike deals, with owners of shopping centres reluctant to sell their holdings.
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Hammerson’s quest to expand its French operations follows their placing under the Societes d’Investissements Immobiliers Cotees regime, which allows exemption from income and capital gains tax exemption. Hammerson has agreed a £71 million fee, payable in four annual instalments, and a listing on Euronext, the continental exchange, to ensure eligibility.
The company also welcomed Government plans to introduce a similar regime in Britain.
“Dependent on the detailed legislation, the introduction of UK tax transparent vehicles for property ownership should prove beneficial to Hammerson’s shareholders,” Ronald Spinney, the Hammerson chairman, said.
For the six months to June 30, the company announced profits of £64.6 million compared with £47.4 million a year before.
However, excluding exceptional charges relating to property sales, profits slid by 3.4 per cent to £42.2 million, reflecting voids at three newly-completed office projects.
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Rents continued to slide at City office holdings, “due to the amount of space available”. Rents at Paris offices “softened” with rents not expected to recover until late next year.
However, “good demand” helped office rents in the West End of London rise by between 5 per cent and 10 per cent from levels seen at the end of last year.
Hammerson shares stood 5p lower at 727p in afternoon trade.