Moody's changes Hammerson outlook to positive

Moody's Investors Service said it affirmed Hammerson plc's long-term issuer and senior debt ratings at Baa2 and changed the outlook to positive from stable.

The agency said it changed the outlook because the company's business risk and financial profiles have improved substantially since its Baa2 rating was assigned. Hammerson sold its office portfolio in 2012 to focus on the retail property sector, which carries less volatility, particularly as Hammerson's retail developments are partially pre-let prior to starting construction, Moody's said. The move has also led to decreased operating costs, thereby improving profitability.

The company's financial metrics have also improved since the financial downturn, and Moody's expects that fixed charge coverage, the constraining ratio, will continue to gradually rise toward 2.5x and above over the next few years.

Hammerson's Baa2 ratings are underpinned by the high quality of the company's prime retail property assets and its investment in Value Retail, the agency said.

The ratings are constrained by the high proportion of the company's total revenues produced from joint ventures (estimated at 43.4% for 2013), Moody's added.

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