Proposed REIT Election

Hammerson PLC
04 May 2006


Proposed Election by Hammerson for REIT Status and Extracts from Chairman's AGM
Address


Speaking at the Annual General Meeting of Hammerson plc to be held today, John
Nelson, Chairman, will say:

 'As many of you will know, the UK Government has introduced into this year's
Finance Bill proposals for Real Estate Investment Trusts - more commonly known
as REITs. The Board of Hammerson has decided that, if the Bill is enacted
substantially in its current form, the company will elect for REIT status to
take effect at the beginning of 2007.

To enter the new regime, Hammerson will be required to pay a one-off entry
charge of 2% of the value of its UK property assets at 31 December 2006.
Thereafter the company will be exempt from corporation tax on UK rental income
and gains arising on UK property sales. It will be required to pay dividends to
shareholders at a level of at least 90% of the tax exempt income and
shareholders will then be liable to pay tax on those dividends, subject to their
individual tax circumstances. In future, shareholders will, in effect, be
investing in REITs on a similar basis to that of investing in properties
directly.

The principal benefits to Hammerson and to you, as shareholders, are:

•    First, on the basis of the company's current projections, the savings of 
     tax on income and capital gains will exceed the initial costs of
     entering the regime.

•    Second, entry into the regime will remove Hammerson's substantial deferred 
     tax liability on unrealised gains. This will both increase the group's net 
     asset value per share and allow the group to make decisions regarding 
     disposals based on property fundamentals rather than on tax considerations.

•    Third, surpluses from Hammerson's substantial development programme will, 
     in future, be tax exempt, provided developed properties are retained for 
     three years.

•    And fourth, shareholders will be investing in Hammerson on the basis that 
     their investment is taxed only once, rather than twice.

We believe that the introduction of REITs will provide additional opportunities
to grow the business over the next few years and enable Hammerson to continue to
play a leading role in the transformation of our towns and cities. I believe it
will also add impetus to the regeneration of the UK's infrastructure at the same
time providing an attractive medium for investors.

Hammerson's French business already enjoys a similar tax exempt status following
the group's entry into the SIIC regime in France at the beginning of 2004. This
has proved beneficial to shareholders and is unaffected by the UK proposals.'

Further details on REITs and their potential effects on Hammerson, including a
proforma balance sheet, are set out in the attached appendix.


Post Year End Events

Referring to events since 31 December 2005, the Chairman will say:

'The first four months of this year have been marked by continued strong
investment demand for property in the principal markets in which Hammerson
operates. There have been further improvements in the office letting markets in
both London and Paris. In 2006, we have let 14,230 m(2) at One London Wall and
Moorhouse in the City. Including space under offer, the buildings are now
respectively 98% and 71% let. Recent transactions reflect shortened rent free
periods and rents of up to £55 per ft(2). In Paris, we have let a further 
6,000 m(2) at 9 place Vendome and this is now 90% let.

Hammerson has continued to make excellent progress on its existing major
development programme and commenced the redevelopment of the former Stock
Exchange in the City.

Today, we have announced the exchange of contracts for the sale of the B5
factory outlet centre in Berlin to Henderson Global Investors for €21.8 million.
The property had a book value at 31 December 2005 of €21.3 million and generated
a net rental income in 2005 of €0.2 million.

I am pleased to report that our financial position remains strong.  Since the
year end we have raised £300 million in the international capital markets and
£330 million from the banking market. The new facilities will be used largely to
refinance existing borrowings and will have the effect of reducing the group's
cost of borrowing and extending the debt maturity profile.

Whilst we believe the recent rate of growth in capital values is unlikely to be
sustained, demand for prime property investments remains strong and I anticipate
that this will be reflected in further increases in the value of Hammerson's
properties when we announce our interim results in September. I have every
confidence that Hammerson will continue to prove an attractive investment for
the future.'


Conference Call

A telephone conference for investors and analysts will be hosted by John
Richards, Chief Executive, and Simon Melliss, Group Finance Director, at 10.00
a.m. today. Access to the conference can be obtained by dialling +44 (0) 1452
561 263. The conference can be replayed by dialling [phone] and
entering the conference pin number, 8827497#.


For further information:

John Nelson                                                  Tel:  [phone]
Chairman

John Richards                                                Tel:  [phone]
Chief Executive

Christopher Smith                                            Tel:  [phone]
Director of Corporate Affairs                             [e-mail]


Appendix:


Hammerson- Proposed REIT Conversion and Proforma Balance Sheet

REIT status is a special tax exempt regime for property companies. REIT systems
have been very successful in a number of countries including the USA, Australia
and France. In 2004, Hammerson elected for tax exempt status for its French
properties under the French REIT regime, Societes d'Investissements Immobiliers
Cotees ('SIIC').

The UK government has included provisions in this year's Finance Bill
introducing a REIT regime. Under the proposed UK system, companies that elect to
be REITs will have rental income and capital gains from UK properties exempted
from corporation tax and instead have obligations to distribute 90% of the
exempted rental income (calculated after certain deductions) as Property Income
Dividends ('PIDs'), which will be taxable as rental income for shareholders. An
entry charge of 2% of the value of the group's UK property assets will be
payable on joining the new regime.

Provided that the Finance Bill is enacted and regulations published as expected,
the Board of Hammerson anticipates that it will be beneficial to Hammerson and
its shareholders for the election for REIT status to be made. The company's
projections show that the anticipated future corporation tax savings will more
than justify the entry charge, even taking account of the extra tax to be borne
by shareholders. In addition, as a REIT, Hammerson will be less restricted by
tax in making property buy/sell decisions, and deferred tax relating to UK
capital gains can be released.

It is envisaged that Hammerson will elect for REIT status before the end of 2006
and become a REIT effective 1 January 2007.  The 31 December 2006 accounts will
provide for the entry charge payable and show the release of deferred tax
relating to capital gains and capital allowances on UK investment properties.

The entry charge will be payable in four quarterly instalments starting in July
2007 and will be broadly 2% of the total value of the group's UK portfolio at 31
December 2006. The value of the UK portfolio at 31 December 2005 was £4,127
million, implying an entry charge of around £83 million, but the 31 December
2006 portfolio value will depend on acquisitions, disposals and revaluations
during 2006. Deferred tax provisions relating to UK capital gains and capital
allowances would be almost entirely written back. At 31 December 2005, these
totalled £365 million.

By way of illustration, a proforma balance sheet is attached showing what the
effect of REIT conversion would have been on the 31 December 2005 balance sheet.
Adjusted net assets, before deferred tax, reduces by 29 pence from £12.37 to
£12.08 per share, reflecting the entry charge payable. Shareholders' equity
after deferred tax, increases by £282 million, or £0.99 per share, to £11.96 per
share.

Most of the company's dividends will be paid as PIDs from November 2007. PIDs
will generally be paid after deducting 22% withholding tax, although regulations
to be announced may remove the withholding tax for some classes of shareholders
and some non-UK resident shareholders may claim under tax treaties to reduce the
rate. PIDs received will be taxed on UK resident shareholders broadly as rental
income and the 22% withholding tax will ensure that UK-resident individuals
liable to income tax at the basic rate will have no additional tax to pay. Under
the current draft of the Finance Bill, a REIT will bear a tax penalty if a PID
is paid to a shareholder with an interest of more than 10% in the company.
Further details of the rules governing PIDs will be provided in advance of the
first payment.

During 2006, the Board will monitor the progress of the Finance Bill through
Parliament and make preparations for the election for REIT status. The Bill is
not final and the associated regulations and guidance have not yet been issued.
A further announcement will be made by Hammerson if substantial changes emerge.


Hammerson plc - Proforma Summarised Balance Sheet

                                                                                           31 December 2005
                                                         31 December              REITs            Proforma
                                                                2005        Adjustments                  £m
                                                                  £m                 £m
Balance sheet

Properties                                                    5,732                  -               5,732
Net debt                                                     (2,049)                 -              (2,049)
Other net assets                                               (158)                 -                (158)
Entry charge payable                                              -                (83)                (83)

Sub-total                                                     3,525                (83)              3,442

Net deferred tax provision (note 1)                            (406)               365                 (41)
Fair value of interest rate swaps                                  7                 -                    7

Equity shareholders' funds                                    3,126                282               3,408


                                                                  £                  £                   £
Net asset value per share (diluted)
NAV per share (note 2)                                        10.97               0.99               11.96
Adjusted NAV per share (note 3)                               12.37              (0.29)              12.08



Notes


1.  Net deferred tax provision

                                                                 £m                 £m                  £m
UK
     Net capital gains                                          329               (329)                  -
     Capital allowances                                          36                (36)                  -
     Other timing differences                                    (2)                 -                  (2)
     Dividends receivable from France                            62                  -                  62
     Revenue tax losses                                         (33)                 -                 (33)

                                                                 392              (365)                 27
France                                                           14                   -                 14

Net deferred tax provision                                      406               (365)                 41


2.  NAV per share

NAV per share is calculated by dividing equity shareholders' funds by the number
of shares in issue and allowing for the dilutive effect of unexercised share
options.


3.  Adjusted NAV per share

Adjusted NAV per share is calculated by dividing equity shareholders' funds,
after adjusting for deferred tax and the fair value of interest rate swaps and
allowing for the dilutive effect of unexercised share options, by the number of
shares in issue.

The above Proforma assumes that the Finance Bill published on 7 April 2006 is
enacted substantially in its current form with satisfactory regulations and
guidance. The amount of the entry charge on 1 January 2007 will depend on the
valuation of Hammerson's UK portfolio at that time.


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