March 1, 2013 / 9:14 AM / 4 years ago

UPDATE 2-Designer bargain outlets help Hammerson beat rival Intu

By Tom Bill

LONDON, March 1 (Reuters) - Retail landlord Hammerson had a better 2012 than rival Intu Properties, due to wealthy tourists hunting for bargains at its designer outlet villages and because of its stronger development pipeline.

Net asset value at Hammerson was up 2.3 percent to 542 pence ($8.23) per share at the end of 2012 versus a 1 pence rise to 392p at Intu, Hammerson said on Friday.

Its Value Retail arm, in which it has a 22 percent stake and which includes the Bicester Village designer outlet centre in central England and La Vallée Village in Paris, rose in value by 18 percent.

"Everyone likes a bargain, especially in a recession," said Hammerson Chief Executive David Atkins on a conference call with journalists.

"There has been very strong growth in tourism from Russia, the Far East and Latin America. These are people who ordinarily shop at Bond Street but who jump on the train to Bicester to get world-famous brands at a discount of 50 or 60 percent."

Hammerson, whose malls include the Bullring in Birmingham, Brent Cross in London and Italie 2 in Paris, trades at a discount to net asset value of about 7 percent versus 12 percent at Intu.

On Wednesday Intu, whose malls include the Trafford Centre in Manchester and Lakeside in southern England, announced an unchanged dividend and its fourth equity raising in as many years to fund the acquisition of a mall in Milton Keynes for 250.1 million pounds.

The move sent its shares down by over two percent and the high price tag was questioned by analysts against the backdrop of a weak retail climate in Britain.

Hammerson shares were trading up 0.71 percent at 497.9 pence at 0829 GMT in London on Friday and Intu was down 0.12 percent at 332.3 pence.

Development projects where Hammerson is on site will provide 78,300 square meters of lettable space and generate about 29 million pounds of income per year, the company said.

"Intu appears to be building in order to keep the rent roll up while Hammerson's pipeline has some meaningful potential growth," said Investec analyst John Cahill on Friday.

Though larger malls have fared better than the High Street during the downturn as they attract more shoppers, landlords including Land Securities and British Land face stiff competition from internet shopping.

Ninety percent of retail sales growth in the UK, France and Germany between 2012 and 2016, or 91.5 billion euros ($119.6 billion) will be online, said the property arm of french insurer AXA AXAF.PA last month, which manages 43 billion euros ($57.41 billion) of assets.

On Friday Hammerson announced a loyalty scheme in an attempt to stem the flow. It will track shoppers through their mobile phones and offer discounts and free gifts according to the amount they visit Hammerson's malls and how much they spend.

Hammerson sold the bulk of its London offices properties in June to Canadian-American developer Brookfield to focus on retail. It paid 254.5 million pounds for a portfolio of British retail parks in October called the Junction Fund.

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