Final Results (part 1)

Hammerson PLC
01 March 2004


Hammerson plc - Results for the year ended 31 December 2003

                                                  2003        2002      Change

Net rental income                              £189.5m     £175.9m       +7.7%
Profit before taxation                          £67.1m      £90.9m      -26.2%
Exceptional (losses)/profits(1)               £(18.8)m      £5.3m
Adjusted profit before taxation(2)              £85.9m      £85.6m       +0.4%
Basic earnings per share                         18.3p       27.1p      -32.5%
Adjusted earnings per share(3)                   29.8p       29.2p       +2.1%
Total dividend for full year                    16.83p       15.8p       +6.5%
Adjusted net asset value per share(4)/(5)         803p        751p       +6.9%
Return on shareholders' equity(4)                 9.3%        4.3%
Gearing(5)                                         73%         81%

Recommended final dividend of 11.71 pence (2002: 10.99 pence) making a total for
the year of 16.83 pence, an increase of 6.5%.

Notes:

(1)  The exceptional loss of £18.8 million in 2003 related primarily to the
     disposal of a retail property in Germany.
(2)  Excluding exceptional profits and losses.
(3)  Excluding exceptional profits and losses and deferred tax (see note 5 of
     the notes to the accounts attached).
(4)  Excluding deferred tax.
(5)  Following the adoption of UITF Abstract 38, 'Accounting for ESOP trusts',
     shareholders' funds at 31 December 2002 have been restated as explained in
     note 22 to the accounts. The only effects of the adjustment on the 2002
     figures were to reduce adjusted net asset value per share by one pence and
     increase gearing by one percentage point.

Copies of the Chairman's statement, preliminary results statement, profit & loss
account, balance sheet, cash flow statement and notes are attached. The terms in
the commentary that follows are based on those defined in the glossary of terms
at the

end of the document.
Key Points on Results


   • Rental income showed a like-for-like increase of 6.9%.

   • Underlying increase of 2.9% in the valuation of group's portfolio.
     Retail portfolio showed an underlying increase in valuation of 7.1%, more
     than offsetting a 5.1% decline in the valuation of the office portfolio.

   • Active recycling of capital with capital investment of over £440 million
     and disposals of more than £550 million.

   • The disposals gave rise to an exceptional loss of £18.8 million, the
     majority of which relates to the sale of a retail property in Germany.
     Following the reduction in the size of the German business in 2003, the
     group is outsourcing the management of its three remaining properties in
     that country.

   • Increase in retail portfolio weighting from 65% to 68%.

   • The 110,000 m(2) regional shopping centre, Bullring, Birmingham, opened
     in September 2003 and is performing very successfully.

   • Good progress in retail parks business with planning consents secured
     for over 75,000 m(2) of additional space.

Proposed Listing on Euronext, Paris

   • Hammerson plc announces today its intention to list its shares on the
     Premier Marche of Euronext, Paris, the French Stock Exchange, prior to
     electing for tax exempt status for its French business.


Ronald Spinney, Chairman, said:

'Another year of progress for Hammerson saw further growth in the group's rental
income and net asset value. This was against a background of challenging
conditions in several of the group's markets. The policy of progressive
increases in dividends has been maintained with a proposed rise of 6.5% this
year.

Today we have announced plans to seek a listing on Euronext in Paris. This
should enable us to take advantage of tax exempt status for our French business,
which now represents almost 30% of the group's total portfolio.

Conditions in the group's principal retail markets appear favourable and I am
encouraged by the recent signs of an improvement in the central London office
market. The group has a high quality portfolio, which together with the
opportunities presented by the future development programme, give me great
confidence in Hammerson's continued success.'

For further information:

John Richards, Chief Executive                                Tel: [phone]
Simon Melliss, Group Finance Director                         Tel: [phone]
Christopher Smith, Director of Corporate Affairs              Tel: [phone]
                                                              Fax: [phone]
                                                          [e-mail]

CHAIRMAN'S STATEMENT

Overview

I am pleased to report on another year of good progress for Hammerson with
further growth in rental income and net asset value. This was against a
background of challenging conditions in several of the group's markets. In line
with the group's strategy of recycling capital, £556 million was raised through
disposals, compared with total capital investment of over £440 million. The
retail portfolio weighting increased by three percentage points to 68% at the
year end.

There was a sound performance from the group's retail properties in the UK and
France, which showed good underlying rental growth and valuation increases.
Particular highlights were the completion and opening of Bullring shopping
centre in Birmingham in September and the encouraging progress in the group's
retail parks business. Our entry into the retail parks market at the end of 2002
has proved to be very successful and the portfolio continues to offer excellent
growth prospects.

Conditions in the London and Paris office markets were challenging in 2003. As a
consequence, our three office schemes completed towards the end of the year, at
a total cost of £268 million, remain unlet. However, we recently announced the
first letting at One London Wall and I am encouraged by the increasing level of
interest from prospective occupiers.

Since the year end Hammerson has arranged a £300 million unsecured bond issue
with a term of 22 years. This further strengthens the group's financing
structure and balance sheet.

At the end of January 2004, a major block of Hammerson shares, amounting to
nearly 20% of the Company's equity and previously owned by Standard Life
Investments, was successfully placed with a wide range of existing and new
shareholders.

Financial

In 2003, Hammerson achieved an underlying increase in rental income overall of
6.9%. In the retail portfolio, the like-for-like increase was 8.8% following
successful rent reviews and lease renewals.

The increase in rental income was largely offset by an increase in financing
costs, reflecting the fact that interest is no longer being capitalised on the
recently completed office developments, together with the cost of holding assets
pending their redevelopment. Profit before tax and exceptional items rose by
£0.3 million to £85.9 million in 2003. There was an exceptional loss of £18.8
million on property disposals which realised more than £550 million. The loss
related primarily to the disposal of a retail property in Germany.

Adjusted earnings per share rose by 2.1% to 29.8 pence. The directors are
recommending a final dividend of 11.71 pence, compared with 10.99 pence in 2002.
This makes a total dividend for the year of 16.83 pence, an increase of 6.5%.

There was an underlying increase of 2.9% in the value of the group's properties
during 2003. An increase in the value of the group's retail portfolio of 7.1%
more than offset a decrease of 5.1% in the value of the offices.

Adjusted net asset value per share rose by 52 pence or 6.9% to 803 pence,
principally due to the increase in property values. The return on equity was
9.3% in 2003, compared with 4.3% in 2002.

Markets and Outlook

Retail Property

UK retail sales continued to grow overall in 2003, but with considerable
variation from month to month and at a somewhat lower rate than during the
previous year. Anticipated continued growth in consumer spending in 2004 should
support increases in rental levels at major regional shopping centres and retail
parks.

In France, retail sales growth showed a further improvement in 2003, although
monthly movements were quite volatile. As in the UK, demand for space from
retailers has focused on the larger, higher turnover shopping centres. The more
positive outlook for the French economy, accompanied by increasing consumer
confidence, should encourage rental growth.

In both the UK and France investor sentiment towards retail property remained
positive.

In Germany, the economy and consumer confidence weakened further in 2003,
leading to lower retail spending and rents. The outlook for the retail property
sector remains subdued.

Office Property

Conditions in the office occupational markets in London and Paris remained
challenging in 2003, with a further fall in rents. Nevertheless, investor demand
for prime office assets in both markets remained strong, due principally to the
low interest rate environment.

In London, whilst there was some pick up in office occupational demand from the
low level of the previous year, the large number of development completions led
to a higher overall vacancy rate putting further pressure on prime rents.
However, with virtually no developments started in 2003, the supply of new prime
London office space coming to the market during 2005 and 2006 is limited. This,
coupled with a recovery in the banking and financial services sectors, is
expected to lead to a reduction in vacancy levels and a gradual increase in
rents.

In Paris, headline office rents showed a modest decline during 2003. Looking
ahead, the anticipated improvement in the economy and business confidence should
lead to increased demand from occupiers and some recovery in rental levels.

Taxation

The Board has announced today that it has applied to list the Company's shares
on the Premier Marche of Euronext, Paris, the French Stock Exchange. This
follows legislation passed in France at the end of 2002, which permits real
estate companies listed in France to elect into a new tax exempt regime. It is
Hammerson's intention to make such an election. As a consequence, Hammerson's
French business, which now accounts for nearly 30% of the total portfolio,
would, in return for a one-off charge of approximately £70 million, payable in
four equal annual instalments, become largely exempt from tax on income and
capital gains. At the same time deferred tax of approximately £45 million would
be released and the group's contingent tax liability reduced by around £121
million. The full effect of this would be reflected in the group's 2004
accounts.

This is a very positive development, which should benefit Hammerson's operations
in France and the group overall.

I am also encouraged that the UK Government has recently begun a consultation
exercise, in which Hammerson is participating, in connection with the possible
introduction of tax transparent property vehicles in the UK.

The Board

In May, David Edmonds joined the Board as a non-executive director. He is a
board member of Ofcom, Chair-designate of the Board of NHS Direct and a
non-executive member of the Legal Services Commission.

I am delighted to confirm the appointment of two additional non-executive
directors. John Hirst, a Chartered Accountant, is Group Chief Executive of
Premier Farnell plc and joins the Board today. John Nelson, who is also a
Chartered Accountant and a former senior investment banker, is Deputy Chairman
of Kingfisher plc and a non-executive director of BT Group plc and will join the
Board with effect from 1 May 2004. I am sure that both will make major
contributions to Hammerson.

Conclusion

Another year of progress for Hammerson saw further growth in the group's rental
income and net asset value, with the good performance of our retail assets more
than offsetting the lower returns from offices. The policy of progressive
increases in dividends has been maintained with a proposed rise of 6.5% this
year.

Today we have announced plans to seek a listing on Euronext in Paris. This
should enable us to take advantage of tax exempt status for our French business,
which now represents almost 30% of the group's total portfolio.

Conditions in the group's principal retail markets appear favourable and I am
encouraged by the recent signs of an improvement in the central London office
market. The group has a high quality portfolio, which together with the
opportunities presented by the future development programme, give me great
confidence in Hammerson's continued success.
                                                                  Ronald Spinney
                                                                        Chairman
                                                                    1 March 2004


FINANCIAL REVIEW

The financial information contained in this review is extracted or calculated
from the attached profit and loss account, balance sheet, cashflow statement,
notes and glossary of terms.

Profit and Loss Account

• Net rental income was £189.5 million in 2003 compared with £175.9 million in 
  2002. Within net rental income, £3.3 million related to turnover rent and 
  there was £8.8 million of accrued rent receivable allocated to rent free
  periods.

• An analysis of net rental income is shown below:

                                                              2003        2002
                                                                £m          £m

  Properties owned throughout 2003 and 2002                  142.6       133.4

  Acquisitions                                                28.6        13.7
  Developments                                                 5.0         2.7
  Properties sold                                             13.3        30.3
  Exchange translation and other                                 -        (4.2)
                                                             189.5       175.9

• Administration expenses in 2003 rose by £0.5 million to £24.8 million,
  although 2002 included £2.6 million for rationalisation costs at Grantchester.  
  Increased staff costs and professional fees relating to tax restructuring in
  France were the principal reasons for the increase.

• The group's net financing costs were £78.7 million in 2003 compared with
  £66.0 million in 2002, reflecting higher levels of debt following the
  purchase in late 2002 of Grantchester and other acquisitions and the holding
  costs of completed developments. The average cost of borrowing was 6.0%
  compared with 6.1% in 2002. Interest cover was 1.8 times compared with 1.9
  times in 2002.


• Profit before tax was £67.1 million, after deducting losses on the sale
  of investment properties of £18.8 million. This loss arose principally on
  the sale of the Luisencenter, Darmstadt. Adjusted profit before tax,
  excluding exceptional items, was £85.9 million, an increase of 0.4% compared
  with 2002.

• The tax charge in 2003 was £14.8 million, of which £13.1 million was
  deferred tax. The current tax charge of £1.7 million represented an effective
  tax rate of 2.0% on profits before disposals. The low tax rate was principally
  due to tax losses available from previous years being offset against UK tax  
  payable for 2003, together with capital allowances and relief for capitalised
  interest.

• Adjusted earnings per share, after excluding losses on disposals and
  deferred tax, were 29.8 pence compared with 29.2 pence in 2002, an increase
  of 2.1%.

• A final dividend of 11.71 pence per share is proposed which, together
  with the interim dividend of 5.12 pence per share, makes a total of 16.83 
  pence per share for the year. This represents an increase of 6.5% over the 
  total dividend for 2002.

Cash Flow

• Cash flow from operating activities was £174 million, with the increase
  of £26 million compared to 2002 mainly attributable to increased rental
  income and the favourable timing of working capital receipts and payments.
  This increase was largely offset by the additional cost of financing
  acquisitions and development expenditure.

• The cash outflow from acquisitions and other capital expenditure was
  £441 million, which was more than offset by the proceeds of £556 million
  from the disposal of assets. After paying dividends of £44 million there was
  a cash inflow, before financing, in 2003 of £139 million.

Balance Sheet

• At 31 December 2003, Hammerson's investment property portfolio was
  valued at £3,956 million, compared with £3,908 million at the end of 2002.
  The increase arose from capital additions of £364 million, a revaluation
  surplus of £111 million and exchange translation gains of £109 million,
  partly offset by the disposal of properties with a book value of £536
  million.

• The development properties within the investment portfolio were valued
  at £328 million, £26 million above cost. Developments are shown at a
  valuation that is discounted for the estimated costs to complete, including
  interest, and a profit margin that a potential purchaser might apply. The
  group does not intend to dispose of any of its developments prior to their
  completion.

• Adjusted net asset value per share, after excluding deferred tax,
  increased by 52 pence or 6.9% to 803 pence at the year end. The portfolio
  revaluation accounted for 40 pence of this increase, with the balance 
  reflecting exchange translation movements and retained profits.

Borrowings

• At 31 December 2003, the group's borrowings were £1,772 million. Undrawn
  committed facilities at the same date were £182 million.

• The weighted average maturity of borrowings at 31 December 2003 was
  approximately eight years. During the year, secured borrowings of £184
  million were repaid and cancelled, so that at the year end 99% of debt was
  unsecured.

• With cash and deposits of £187 million, net debt amounted to £1,585
  million. Gearing at 31 December 2003 was 73% compared with 81% at the end of
  2002.

• The market value of borrowings at the year end was £1,940 million, some
  £168 million greater than the book value, equivalent, after tax relief, to
  42 pence per share. During 2003, the margin above government bonds of
  Hammerson's bonds fell significantly which had the effect of increasing the
  market value of debt by £42 million.

• In February 2004, Hammerson issued £300 million 6% unsecured bonds
  maturing in 2026. The proceeds of the issue have been swapped into floating
  rate debt, currently at a rate of 5.2%. As a result of this issue, the
  average maturity of the group's debt has increased to ten years.

Return on Shareholders' Equity

• At 9.3%, Hammerson's return on equity was above the group's estimated
  cost of equity of 8.0%. The principal reason for this was the uplift in value 
  of the property portfolio. Over the last three years the group has achieved 
  an average return on equity of 7.3%.

Taxation

• At the end of 2002, the French Government announced new regulations
  enabling real estate companies listed in Paris to elect for the Societes
  d'Investissements Immobiliers Cotees ('SIIC') tax status, under which
  property income and capital gains are exempt from French tax.

• Hammerson is applying for a listing of its shares on the Premier Marche
  of Euronext, Paris, the French Stock Exchange. Such a listing, provided it
  is obtained by 30 April 2004, will enable Hammerson and its French
  subsidiaries to elect for SIIC tax status. It is envisaged that elections
  will be made, with retrospective effect from 1 January 2004, covering all
  the group's properties in France with the exception of 9 place Vendome,
  Paris.

• Hammerson's elected French subsidiaries will be required to pay a
  one-off exit charge, payable in four equal annual instalments, calculated at
  16.5% of their latent capital gains at the time they enter the SIIC regime.
  There is an additional requirement that Hammerson plc continues to be a
  French-listed property investment business for ten years to avoid the charge
  being recalculated at full rates.

• The elected French subsidiaries will be required to pay dividends equal
  to 85% of their net accounting profit on income and 50% of their net
  accounting capital gains on disposals. However, the dividend payment
  obligations of the French subsidiaries will be reduced by interest and
  depreciation. These intercompany dividends will, when received, be taxed in
  the UK. Hammerson plc will be under an obligation to pay dividends at least
  equal to the intercompany dividends received but, in the foreseeable future,
  the amounts are expected to be small and therefore will not affect the
  Company's dividend policy.

• If elections are made, the following effects on the group's 2004
  accounts are anticipated:
     
  -  Provision for exit tax of approximately £70 million (€100 million),
     payable in four equal annual instalments with the first payment in December
     2004.

  -  The write back of previously provided deferred tax of approximately
     £45 million (€64 million).

  -  The exit tax of £70 million will be accounted for as a charge in the
     profit and loss account of £45 million and a charge in the statement of
     recognised gains and losses of £25 million. The release of £45 million of
     deferred tax will be credited in the profit and loss account.

  -  Pro forma shareholders' funds following these two adjustments:

                                                               
                                               £ million         Pence per share
Shareholders' funds at 31/12/03                   2,168               784
Exit tax payable                                    (70)              (25)
Deferred tax provision no longer required            45                16
Pro forma shareholders' funds at 31/12/03         2,143               775

• In addition to the deferred tax release, the group's contingent tax
  liability as at 31 December 2003 would be reduced by approximately £121
  million.

• Therefore, taking the £45 million deferred tax release and the £121
  million contingent tax reduction net of the £70 million exit charge,
  Hammerson's pro forma triple net NAV would increase by £96 million or 35
  pence per share.

Urgent Issues Task Force ('UITF') Abstract 38 - Accounting for ESOP Trusts

• UITF 38 was issued in December 2003 changing the accounting treatment
  for a company's own shares held for Employee Share Ownership Plans (ESOPs). 
  The UITF requires that such shares be included in the balance sheet as a 
  deduction from shareholders' funds rather than held as an asset. Comparative 
  figures have been restated and net assets have been reduced by £2.2 million at 
  31 December 2003 and 31 December 2002. There is no impact on the profit and 
  loss account.

PORTFOLIO REVIEW

• At 31 December 2003, Hammerson's portfolio had a book value of £3,956
  million.

• The retail component of the portfolio increased from 65% at the
  beginning of the year to 68% at 31 December 2003. Retail parks now account
  for 11% of the group's portfolio. The distribution between the UK and
  Continental Europe was unchanged at 66% and 34% respectively at year end.

• Total capital additions amounted to £364 million in 2003. Of this £202
  million was invested in the development programme, £101 million was
  attributable to acquisitions and £61 million was spent on the existing
  portfolio.

• Hammerson now has a retail portfolio of 16 major shopping centres and 11
  retail parks, providing over one million square metres of retail space. The
  group's office portfolio consists of 12 prime office buildings located in
  central London and central Paris with a total area of over 220,000 m(2).

• During 2003, the group renewed over 130 expiring leases and carried
  out over 50 rent reviews, which, together with rent reviews and renewals in
  2002, resulted in an underlying increase in rents of 6.9%.

• The value of the development programme at 31 December 2003 was £328
  million compared with £468 million at the end of the previous year. This
  reduction reflects the completion of the Bullring shopping centre in 
  Birmingham in September 2003, and the completion of office developments in 
  London and Paris.

Vacancy

• At the end of 2003 the vacancy within the group's portfolio stood at
  9.2% compared with 5.0% at the end of 2002. The increase resulted mainly from
  the completion, in the second half of 2003, of the three office developments 
  at One London Wall and 10 Grosvenor Street, London and Neo, 14 boulevard 
  Haussmann in Paris, each of which were unlet at 31 December 2003. Excluding 
  these properties the portfolio vacancy rate would have been 5.6%.

Portfolio Information
for the year ended 31 December 2003

                          Net   Properties     Underlying                                 Average
                       rental           at      valuation    Total     Reversionary/    unexpired
                       income    valuation         change   return     (Over-rented)   lease term
                           £m           £m              %        %                 %        Years
  Note                                                                            (1)
  United Kingdom
  Retail:  Shopping        63        1,367           10.6     16.6               8.5           14
           centres
           Retail          16          448            8.7     14.8              22.0           16
           parks
                           79        1,815           10.1     16.2              11.4           14
  Office                   46          784           (5.9)     0.5             (20.5)           8
  Total United
  Kingdom                 125        2,599            4.7     11.0               1.0           12
  
  Continental
  Europe
  Retail:  France          38          668            3.7      9.9              19.9            6
           Germany         12          222           (5.5)    (2.7)             13.2            5
                           50          890            1.3      6.5              18.2            6
  Office:  France          15          467           (3.7)     1.0               1.3            5
  
  Total
  Continental
  Europe                   65        1,357           (0.5)     4.6              12.3            6
  
  Group
  Retail                  129        2,705            7.1     12.7              13.9           11
  Office                   61        1,251           (5.1)     0.7             (11.9)           7
  Total Group             190        3,956            2.9      8.7               5.0           10
  
Note
     
(1)  The amount by which the estimated rental value exceeds or falls short of
     the rents passing, together with the estimated rental value of vacant space
     after any rent free period.
     
Valuation Movements

• During 2003, there were contrasting performances from the retail and
  office portfolios. The retail portfolio showed an underlying increase in
  value of 7.1%, whilst there was an underlying decrease in the value of the
  office portfolio of 5.1%. This resulted in an overall increase in the
  valuation of the portfolio of 2.9%.

• In the UK, the abolition of stamp duty in disadvantaged areas added £32
  million to the property valuations. The properties in France have been
  valued on the assumption that, following tax changes introduced by the
  French Government, future disposals are more likely to be effected through
  the sale of properties rather than the sale of the group's property owning
  subsidiary companies. The result is that additional transfer tax of
  approximately £30 million has been deducted from the value of the French
  properties.

• The good performance in the UK and French retail portfolios mainly
  reflected rental growth and asset management initiatives. In the UK,
  valuation yields for prime shopping centres improved slightly whilst in
  France they remained broadly stable. By contrast, in Germany, continued
  investor uncertainty in the face of subdued consumer markets resulted in a
  valuation decline of 5.5%.

• The decline in the value of the group's office portfolio principally
  reflected the difficult market in London caused by the continuing caution on
  the part of occupiers, increased vacancy levels and lower market rents. The
  office portfolio in Paris decreased in value by 3.7% as rental levels
  reduced.

Total Return

• The total return from the portfolio was 8.7% in 2003, compared with 5.3%
  in the previous year, with the increase mainly attributable to the positive
  valuation movement in the retail portfolio.

Income Quality

• At 31 December 2003, the passing rent from the group's portfolio
  amounted to £210 million and the average unexpired lease term was ten years.
  Within the retail portfolio, the average unexpired lease term for shopping
  centres was ten years and for retail parks 16 years. The average unexpired
  lease terms for the office portfolios in London and Paris were eight and
  five years respectively.

• The group's five largest retail tenants accounted for 10.9% of total
  passing rent and comprised: Hennes & Mauritz (3.0%); Dixons (2.5%); Next
  (2.0%); Arcadia (1.8%) and Boots (1.6%). Given the spread of tenants in the
  retail portfolio, the overall risk to Hammerson of individual tenant default
  is considered low.

• The group's three largest office tenants accounted for 13.1% of total
  passing rent and comprised: Deutsche Bank (7.0%); Network Rail (3.5%) and
  Lazard (2.6%). In addition, the group has pre-let its development at Bishops
  Square, London, to Allen & Overy, and Hammerson's share of the annual rent
  on completion of the development will amount to £27 million.

Rent Reviews

• In 2003, UK rent reviews with a passing rent of £2 million were agreed,
  giving rise to an increase in annual rents of £1 million, whilst reviews
  remaining to be settled from 2003 could increase rents by a further £3
  million.

• In the UK, leases subject to rent review in 2004 to 2006 have current
  rents passing of £80 million. Management estimates that, on review, rents
  receivable in respect of these leases would increase by £6 million to £86
  million by 2006 if reviewed at current rental values. This is not a forecast
  and takes no account of increases or decreases in rental values before the
  relevant review dates.

                                                2004     2005     2006   2004-06
                                                  £m       £m       £m        £m
  Rents passing from leases subject to review     20       29       31        80
  Projected rent after review at current ERV      23       31       32        86
  Potential rent increases                         3        2        1         6

Lease Expiries and Breaks

• During 2003, tenant leases with passing rents of £7 million expired.
  Most of the leases were renewed or the tenants replaced and, because the
  expiring leases were at rents below market levels, additional annual income
  of £3 million was secured.

• Over the three years 2004 to 2006, leases with current rents passing of
  £31 million are subject either to expiry or tenants' break clauses.
  Management estimates that, assuming renewals at current ERVs, additional
  annual rents from this element of the portfolio would total £1 million by
  2006 as shown in the table below. This is not a forecast and takes no
  account of void periods, tenant incentives, or possible changes in rental
  values before the relevant lease expiry dates.

                                                 2004    2005    2006    2004-06
                                                   £m      £m      £m         £m
  Rents passing from leases subject to expiries
  or breaks                                        10      14       7         31
  Current ERV                                      11      13       8         32
  Potential rent increases / (decreases)            1      (1)      1          1

Retail Portfolio

• The group's retail portfolio had a book value of £2,705 million at 31
  December 2003. The retail portfolio was 14% reversionary, with annual rents
  passing of £147 million, compared with a current estimated rental value of
  £174 million. The latter figure includes vacant space and rent reversions
  due after 2006. The shopping centre portfolio was 13% reversionary and the
  retail park portfolio 22% reversionary. The vacancy rate in the retail
  portfolio at the end of the year was 4.6%, compared with 3.1% at the end of
  2002. The principal reason for the increase was that a number of properties
  in the retail parks portfolio are vacant pending redevelopment.

Investment Activity

• Hammerson's retail portfolio mainly comprises prime regional shopping
  centres that dominate their catchment areas, retail parks and city centre
  properties that could form part of future retail-led developments.

• The value of retail property acquisitions amounted to £101 million
  during 2003, whilst proceeds from disposals were £252 million.

• During 2003, the group continued to expand its retail park portfolio. In
  February, Sittingbourne Industrial Park was acquired for £17 million. The
  ten hectare site is situated close to the town centre and currently
  comprises light industrial and warehouse units. Hammerson is working on
  proposals for a retail-led redevelopment.

• In November, the group acquired the largest retail park in Sheffield,
  Drakehouse Retail Park, at a cost of £60 million. The current leases have an
  average unexpired term of 19 years.

• In December, Hammerson and Standard Life Investments jointly acquired
  the freehold interest in Brent Cross Shopping Park, a development close to
  Brent Cross Shopping Centre, London NW4. Hammerson's interest in the retail
  park is 40.6% and its share of the initial cost for the site was £18
  million. Hammerson's total commitment to the development, including the
  initial consideration, is £30 million. On completion, the 8,600 m2 scheme
  will be the largest open A1 retail park in North London.

• In the UK, the B&Q retail warehouse in Romford was sold for £21 million
  in April and, in July, the group's leasehold interest in Merseyway Shopping
  Centre, Stockport was sold raising £128 million. Sprowston Retail Park,
  Norwich, was sold in September for £13 million.

• In Germany, the sale of Luisencenter, Darmstadt was completed in
  December for a consideration of £71 million, £66 million of which was
  received before the year end, with the balance expected to be received in
  2004. Contracts were also exchanged for the sale for £20 million of
  Hammerson's 22% interest in City Center shopping centre, Essen and the
  adjacent car park.

• Following the reduction of the size of its business in Germany,
  Hammerson has outsourced the property management of its three remaining
  retail properties and will be closing its Berlin office.

Developments

• The Bullring shopping centre was completed in September, at a total cost
  to Hammerson of £170 million, and opened more than 95% let. Hammerson's
  share of the estimated annual income is £13.3 million. Hammerson was the
  development manager for the scheme undertaken by The Birmingham Alliance.
  The 110,000 m(2) shopping centre, in the heart of Birmingham, has proved
  extremely successful to date with over 20 million visitors in the six months
  since opening.

• The major refurbishment of the 49,000 m(2) Liberty Centre, Romford was
  completed in April. Over 95% let at completion, these works have resulted in
  a significant improvement in the tenant mix and the overall rental value of
  the centre.

• In June, Hammerson was granted planning consent for the 23,600 m(2)
  Cyfarthfa Retail Park at Merthyr Tydfil. The total development costs are
  estimated to be £35 million and work started in February 2004. Lease
  agreements have been signed with tenants for 52% of the projected rental
  income. In October, Hammerson was granted planning consent for the St
  Oswald's Retail Park in Gloucester. Work on the first phase of the
  development is expected to start in the second half of 2004 at a total cost
  of £52 million. Since the year end, Hammerson has received planning consent
  for the development of a 7,500 m(2) retail park in Thanet, Kent. It is
  anticipated that construction will begin at the end of 2004, with total
  development costs expected to be £14 million.

• The Bristol Alliance, a partnership between Hammerson, Land Securities
  and Morley Fund Management, has made good progress on its development
  proposals for the Broadmead area of Bristol and the necessary planning
  consents are in place for the 75,000 m(2) retail development. A leasing
  campaign is underway and site assembly is progressing with a view to
  construction starting in 2005.

• The group is also working with local authorities and landowners in
  several other major towns and cities, including Aberdeen, Barnet,
  Birmingham, Kingston-upon-Thames, Leeds, Leicester, Peterborough and
  Sheffield, to advance potential retail-led development schemes or expansions
  to existing centres.

• In France, the group continued to advance plans for improvements and
  refurbishments to a number of its retail assets, including Les 3 Fontaines
  in Cergy Pontoise, Espace Saint Quentin in Saint Quentin-en-Yvelines and
  Parinor in Paris.


Office Portfolio

• The group's office portfolio had a book value of £1,251 million at 31
  December 2003, and annual rents passing of £64 million. The portfolio was
  11% over-rented, compared with 7% at the end of 2002, reflecting the decline
  in rental values in the London and Paris office markets.

• Three development schemes completed towards the end of the year, 10
  Grosvenor Street, London W1, One London Wall, London EC2, and Neo, 14
  boulevard Haussmann, Paris 9eme, remained unlet. As a result the office
  vacancy rate at the end of the year was 26.8%, compared with 11.3% at the
  end of 2002.

Investment and Development Activity

• Office capital additions in 2003 amounted to £173 million. The disposals
  of Globe House, London WC2, and 16 Old Bailey, London EC4, in March, raised
  £194 million, whilst the sale of 53 quai d'Orsay, Paris 7eme, in July,
  raised a further £76 million.

• Two office developments in central London were completed during 2003. A
  lease for 2,930 m(2) of space has been signed with the leading international
  law firm, Dewey Ballantine, at One London Wall and negotiations are underway
  with prospective occupiers at both that property and at 10 Grosvenor Street.
  The development at Moorhouse is progressing and is expected to be completed
  towards the end of 2004.

• In Paris, the letting of 2,900 m(2) of office accommodation at 148, rue
  de l'Universite to GIE SC Autoroutes leaves only 1,600 m(2) of the 10,300 m
  (2) building unlet.

• The construction of Bishops Square, London, is progressing well. The
  75,000 m(2) office building has been pre-let to Allen & Overy and is
  expected to be completed in June 2005. A marketing campaign will begin
  shortly for the 3,700 m(2) of retail space.

• September 2003 saw the completion of the development of Neo, 14
  boulevard Haussmann, a 26,700 m(2) office building. Hammerson is in
  discussions with a number of potential tenants, but the market in Paris
  remains competitive with occupiers cautious.

• At 9 place Vendome, Paris, work started in January 2004 on a scheme
  comprising 22,900 m(2) of offices and 5,300 m(2) of retail space in a 50:50
  joint venture with AXA. Hammerson's share of the total cost of the project
  is £96 million and completion is scheduled for Spring 2006.

• In February 2004, the group sold 21 Moorfields, London EC2, to raise
  sale proceeds of £48 million.


                      This information is provided by RNS
            The company news service from the London Stock Exchange