Hammerson sale confirms upturn

THE CITY property market's return to health continued yesterday when Hammerson Group sold a 266,000sq ft office block occupied by Chase Manhattan to Scottish Amicable for pounds 87m, writes John Murray.

Analysts said Hammerson had obtained a good price for Woolgate House, London EC2, which is 25 years old.

It is understood that ScotAm paid about pounds 10m above the property's value in Hammerson's books. Chase pays rent of pounds 7.5m a year, giving a yield of about 8.5 per cent.

Hammerson, which raised pounds 199m from a rights issue earlier this year, said the sale reduced the company's exposure to the City property market. The building's yield represented about 5 per cent of the company's annual rental income.

The company was not actively marketing the building, but received an offer from ScotAm. A spokesman pointed out that Hammerson bought a City office block occupied by Lazards last year for about pounds 40m with a yield of 14 per cent.

Hammerson's new chief executive, Ron Spinney, is reviewing its portfolio, but a spokesman said no overall strategy had been decided yet. The company still intended to put forward proposals to clear up the anomaly of two classes of shares with different voting rights. Both ordinary and 'A' shares jumped 10p to 355p.

Trafalgar House sold an office development in Guildford to private clients of Citibank Private Bank for pounds 36.1m. The building, developed by a Trafalgar/Laurentian Life joint venture, yields 9.4 per cent initially.