Hammerson: REIT with Attractive Retail Assets at Discount to NAV

Amit Wadhwaney of Moerus Capital Management presented his in-depth investment thesis on Hammerson plc (UK: HMSO) at Best Ideas 2020.

Thesis summary:

Hammerson is a real estate investment trust that owns a portfolio of market-dominant shopping malls, regional retail parks, and premium outlets throughout the United Kingdom and Continental Europe.

The stock price has been affected by a number of factors, including secular ones (e.g., a shift from bricks and mortar to online shopping), and cyclical ones, overlaid by economic uncertainties relating to Brexit. Further exacerbating the decline were the company’s two rejections of buyout bids from a large European property company at levels almost twice recent stock price levels.

The attraction of Hammerson shares at recent levels is that they at a ~60% discount to NAV using EPRA (European Public Real Estate Association Net Asset Value) methodology, or a discount of almost one-third using Amit’s much more conservative methodology to assess the NAV of this geographically disparate collection of attractive and divisible assets.

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About the instructor:

Amit Wadhwaney is a Portfolio Manager and Co-Founding Partner at Moerus Capital Management LLC, and the founding manager of the Moerus Worldwide Value Fund. Mr. Wadhwaney has over 25 years of experience researching and analyzing investment opportunities in developed, emerging, and frontier markets worldwide, and has managed global investment portfolios since 1996. Prior to founding Moerus, Mr. Wadhwaney was a Portfolio Manager and Partner at Third Avenue Management LLC. Mr. Wadhwaney founded the international business at Third Avenue and was the founding manager of the Third Avenue Global Value Fund, LP, the Third Avenue Emerging Markets Fund, LP, and the Third Avenue International Value Fund, an open end mutual fund. Earlier in his career, Mr. Wadhwaney was first a securities analyst, and then Director of Research at M.J. Whitman LLC, a New York-based broker-dealer. Prior to joining M.J. Whitman, Mr. Wadhwaney was a paper and forest products analyst at Bunting Warburg, a Canadian brokerage firm. He began his career at Domtar, a Canadian forest products company. Mr. Wadhwaney holds an M.B.A. in Finance from The University of Chicago. He also holds a B.A. with honors and an M.A. in Economics from Concordia University; at Concordia, he was awarded the Sun Life Prize and the Concordia University Fellow in Economics, and he subsequently taught economics classes there. He also holds B.S. degrees in Chemical Engineering and Mathematics from the University of Minnesota.