Hammerson - selling at less than half price

​Hammerson (LSE:HMSO), the shopping centre owner, has been rejected by the stock market. In the last five years its shares have fallen over 90% as it wrote-off £3.4bn from its balance sheet when its shopping centres struggled, and as investors rejected anything that looked even remotely like the bust Intu.
Hammerson’s shares have tumbled all the way to 23p, giving a market capitalisation of 4.6bn shares x £0.23 = £1.06bn. Following the revaluation downgrades and £2bn of property disposals over the last four and half years total shareholders’ funds, also called net asset value, is £2.87bn. This has been calculated after deducting the net debt figure of £1.7bn.


I estimate net current asset value, NCAV, to be very similar to NAV at £2.8bn or 61p per share. That compares very well with the price Mr Market is currently willing to pay.
Whether the gap between 61p and 23p provides a sufficient margin of safety is largely determined by the likelihood of
(a) Hammerson being able to continue servicing its debts, and
(b) the value of its malls and designer outlets not halving again.
You might have guessed already that I think they will be just fine on both counts - probably. More detail will follow, but I’ll throw in some statistics now. Over 85% of the debt is fixed rate and the average interest rate is 2.7%, with 3.6 years to run. It is rated BBB+.
Already the balance sheet value of prime sites such as the Bullring Birmingham, Cabot Circus in Bristol and Brent Cross have been more than halved by professional valuers. I find it difficult to believe that the shopping centres are so doomed that buildings and land in such great locations are going to become worth a great deal less.
And the valuers seem to agree that there might be ....