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Sunday shares tips: Hammerson, Tritax Big Box

Sun 28 June 2020 20:23 | A A A

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(Sharecast News) - The Sunday Times's Sam Chambers thinks readers should 'sell' shares of Hammerson.

Writing in his 'Inside the City' column, he explain that, like rival Intu, Hammerson misjudged the "corrosive effects" of online shopping for its bricks-and-mortar rivals.

So too, the company was loaded up with debt.

Hammerson's incoming boss chairman, Rob Noel, may be forced to go cap in hand to investors even as some analysts worry that, absent asset sales, the company may breach its debt covenants.

Complicating matters, Intu's lenders may now push for a 'fire sale' of its 17 shopping centres, which in turn may lead valuers to write down Hammerson's assets.

Furthermore, Hammerson's rent collection may continue to fall in the second quarter after the moratorium on tenant evictions was extended until September.

South Africa's Lighthouse Capital has taken a 15.1% stake in Hammerson, prompting talk that the company could be taken private and restructured "away from the glare of the public markets".

Even so, Chambers concluded that "The shares are trading at bombed-out levels for very good reasons. Just ask Intu's shareholders. Sell."

The Mail on Sunday told investors to give listed warehouse operators Tritax Big Box, Warehouse REIT and Urban Logistics a look, singling out the former for special attention.

Even if the Covid-19 pandemic was the chief driver behind the recent surge in online shopping to 33% of consumers' total spend, for many the shift towards shopping on the internet will stick, the tipster argued.

"The best among these firms offer a blend of generous income and steady capital growth, combined with a strong element of stability," Midas added.

In the case of Tritax, Midas points out its recent announcement of plans to develop a 2.3m square foot building, likely for, a sign of its success.

And to its share price gains one must add the annual income from dividends of over 4% in recent years.

Midas also highlights how the majority of its rents come from e-commerce, food retail and logistics.

Warehouse REIT is slightly different in that it specialises in so-called multi-let industrial sites, in which each space is sub-divided into multiple smaller ones.

Its client list includes big names, including Amazon, John Lewis and Laithwaites, as well as hundreds of smaller businesses.

A cash call is now under way to fund its extension plans and retail investors have until Friday to subscribe for new shares.

"If the market price rises above £1.10 in the next few days the offer looks attractive," Midas said.

"Bird and his team are also incentivised to succeed as they own around 8per cent of the shares. Bird himself has put all his Isa funds into the new fund-raise."

As for Urban Logistics, the company's sites were designed for single occupancy, such that all its tenants were big businesses, including

DHL, Sainsbury's and Boots.

The company, which prides itself on generous payments, collected 100% of its rent due in the quarter to June, Midas highlighted, terming it "an almost unparalleled achievement in the property industry".

Looking ahead, the group expects to increase its portfolio and is already eyeing up a pipeline of assets worth more around £230 million.

"Looking ahead, Tritax is probably the safest bet and cautious investors may want to place most of their bets with the big box specialist.

"But Warehouse and Urban Logistics are both well-run businesses with ambitious managers. They too have a place in the income-seeker's portfolio."

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.

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