On Friday, Deutsche Bank adjusted its stance on Hammerson Plc (LON:HMSO:LN) (OTC: HMSNF), altering the rating from Buy to Hold and revising the price target to GBP0.32 from the previous GBP0.34. The change was prompted by the completion of the sale of the VR portfolio, which the bank had anticipated as a significant event for the stock.
The sale's impact on Hammerson's share price has been noted, with the transaction being described as transformative for the company's medium-term outlook.
Despite this, the initial discount on book value and weaker property valuations in Ireland have led to a dilution in net tangible assets (NTA) that exceeded expectations, resulting in a slight decrease in the price target.
Deutsche Bank highlighted that the dilution was in the mid-20 percent range, which was marginally higher than anticipated. This adjustment in valuation was the primary reason for the downgrade to a Hold rating.
The bank also noted that Hammerson's total return could potentially realign closer to that of its peers over the medium term, depending on the efficiency of capital deployment in the future.
The adjustments come after a review of the recent portfolio transaction and its effects on Hammerson's financial position. Deutsche Bank's assessment suggests that while the sale may benefit Hammerson in the medium term, the immediate financial implications necessitate a more cautious investment rating.
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