Key points:
- Hammerson shares fell 3.25% despite redeeming a €500m bond early.
- The adverse reaction is a reflection of the sour investor sentiment.
- The challenging economic conditions have driven HMSO shares lower.
The Hammerson plc (LON: HMSO) share price fell 3.25% despite the British property company announcing that it had exercised its right to redeem the €500,000,000 1.75% bonds due 2023 early. The company noted that it still had outstanding bonds worth €235,507,000, whose redemption was fully covered by its existing cash flows.
The property company expects to redeem the bonds by 16 December 2022 fully. It advised bondholders to contact the relevant corporate actions departments within the bond clearing systems for further information.
Also read: Five Best Shares For Beginners To Watch In 2022.
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Instead of investors cheering the move by the company to redeem the existing bonds early, Hammerson shares kept falling as investors sold their shares in the real estate development and investment company. Today’s price action indicates the sour investor sentiment towards the UK property sector in the face of significant headwinds.
Hammerson shares have fallen 42.19% this year, driven by rising interest rates, which have increased the borrowing costs for most property buyers in the UK and other countries. In addition, the challenging economic environment characterised by record-high inflation levels and the looming recession in the UK has made most buyers withdraw from the market.
Therefore, this explains today’s market reaction to the highly positive news that Hammerson has redeemed a €500 million bond early and has excess cash on its balance to repay all outstanding bonds worth over €235.5 million.
However, the situation is likely to worsen before it improves, given that the UK is currently headed for a recession, which usually entails mortgage defaults and business closures that could cause the company’s recurring income to reduce significantly.
Meanwhile, the sour investor sentiment will likely worsen in the coming months as UK economic conditions worsen. Still, as is always the case, the situation will improve once the recession is over and the British economy improves.
*This is not investment advice.
Hammerson share price.
The Hammerson share price edged 3.25% lower to trade at 19.35p, falling from Wednesday’s closing price of 20.00p.