UBS has downgraded Hammerson PLC (LSE:HMSO) to 'sell' from 'neutral', warning that the UK retail landlord’s turnaround is stalling and its path to scalable growth remains unclear.
The Swiss bank also cut its 12-month price target by 20% to 245p, implying limited upside from current levels.
Despite a recent 11% drop in Hammerson’s share price, UBS believes there is still further to fall.
Analysts flagged three key concerns: persistent pressure on operating margins, limited opportunities for organic or acquisition-led growth, and the drag from low-yielding French assets, which will become more burdensome once cheap euro-denominated debt matures in 2027.
Hammerson’s cost base remains elevated, with an EPRA cost ratio stuck around 40%, more than double that of European retail peers like Klepierre and Unibail-Rodamco-Westfield.
UBS sees little chance of improvement without scale, but expects near-term rental growth to remain muted, especially in France, where indexation has dropped sharply.
Crowding data also suggests investor interest is fading, with Hammerson’s crowding score now among the sector’s lowest. With first-half results not due until July, UBS warned that another soft print could further damage sentiment.
Despite trading at a 32% discount to net tangible assets, UBS sees better value elsewhere in the UK REIT space.
The shares were little changed at 255p.