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Buy Hammeson at 1081p Whatever my sins, I have not tipped a property share since their period of high fashion, when they were gripped by the investment advantages of the Real Estate Investment Trust reform. But now they are looking cheap. More importantly, rich overseas investors are looking beyond the the current trough and actually putting money into UK property. We have just had news of British Land seeing stake building by Singapore interests. I would also note that the tycoons Wray & Leslau who sold their entire portfolio two years ago to go into cash, last week started buying again. Although commercial property companies generally look uninteresting in terms of dividend yield and price to earnings they are now very attractive in terms of assets per share; the most popular way of establishing property share values in the stock market. Hammerson (HMSO) is shown on a yield of only 1% even if the Price Earnings Ratio is given as 3. But turn to the last balance sheet to end June 2007 and you will observe an adjusted net asset value of 1635p. Set that against the current share price of 1081 and you see that the net asset value is selling at a discount of around 34%. Put another way, for each pound you pay for the shares you get one pound sixty pence of assets. Now I accept that the NAV has almost certainly fallen but this is still a stock trading at - I estimate - a 25% discount to NAV. More interestingly, Hammerson has been building up its cash by selling assets. That puts it in a good position to buy other assets more cheaply in current market conditions where such assets have become cheaper. The fact that mutual property funds are being forced to sell property because of redemptions is actually good for cash surplus companies like Hammerson. Although there was only 76 million of cash in the June balance sheet that was increased by the sale of 500 million pounds of property (at an 8% profit). Cash of 576 million pounds would represent a value equivalent to 18% of the current market capitalisation of 3.125 billion pounds. A tidy sum for investment in bombed out commercial property markets. Property shares look bound to rise. Without in any sense playing the chartist - or technical analyst to give charting its self aggrandizing title - it does look as if the recent downtrend in the Hammerson share price is over and a new upward pointing one,is arguably being formed. BUY. Key Data:
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