* Sees drop in tenant demand in UK and France
* Occupancy rate falls to 92 percent
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LONDON, April 30 (Reuters) - Anglo-French property company Hammerson said on Thursday it saw further weakness in commercial real estate values in the first quarter, foiling prospects Britain's property correction may be nearing an end.
The retail property specialist, which owns around 6.5 billion pounds ($9.60 billion) of real estate assets, said tough economic conditions were also compressing rental levels and tenant demand for its properties in France as well as the UK.
Reflecting a squeeze in consumer spending, Hammerson said the total income from tenants in administration has risen to 9.3 million pounds by April 24 compared with 6.7 million pounds in February.
The sum represents around 2.6 percent of the group's total rental income. Its overall occupancy rate fell to 92 percent from 95 percent at Dec. 31.
Hammerson said it remained in talks to sell some assets but negotiations had proven protracted owing to a lack of finance.
Chairman John Nelson said the company's financial health had been "strengthened substantially" following its 584 million pound equity raising in February.
The company had net debt of 2.71 billion pounds at end-March and undrawn committed bank facilities of 552 million pounds, of which 200 million pounds expires at the end of 2009.
Hammerson was the first major UK property company to seek fresh funds from shareholders after a record slump in commercial property values in 2008 pushed some of its loan-to-value covenant terms close to breach. ($1=.6772 Pound) (Reporting by Sinead Cruise; Editing by Jon Loades-Carter) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)