Hammerson plc · LSE:HMSO
Hammerson — H1 2008 Earnings Presentation
41 slides from Hammerson's earnings presentation, Aug 7, 2008
Slide 1: Half-Year Results 2008
HALF-YEAR RESULTS 2008 John Richards – Chief Executive Thursday, 7 August 2008
Slide 2: Financial Performance
FINANCIAL PERFORMANCE Six months to 30 June 2008 Adjusted profit before tax £60.5 million +10.4% Adjusted earnings per share 20.3 pence +10.3% Interim dividend per share 12.6 pence +5.0% NAV per share (EPRA basis) £13.92 - 9.9% 2
Slide 3: Portfolio
PORTFOLIO As at 30 June 2008 Total portfolio: £7.1 billion UK Offices 21% UK Shopping Centres 31% France Offices 6% France Retail 26% UK Retail Parks 15% Germany Retail 1% Total portfolio: £6.7 billion 3
Slide 4: Portfolio Data
PORTFOLIO DATA As at 30 June 2008 Occupancy Unexpired lease term % years UK Shopping Centres 98.0 10.4 Retail Parks 97.1 14.2 Offices 99.6 14.2 France Retail 97.0 4.5 Offices 93.7 5.4 Group 97.7 10.1 4
Slide 5: Current Major Developments
CURRENT MAJOR DEVELOPMENTS Six schemes underway – total cost £960 million Costs to 30 June £700 million Value at 30 June £864 million Forecast income £72 million Estimated yield on cost 7.5% Five projects completing in H2 2008; one in H2 2009 5
Slide 6: Financial Review
FINANCIAL REVIEW Simon Melliss – Group Finance Director
Slide 7: Net Rental Income
NET RENTAL INCOME (£million) Six months to 30 June 2008 2007 Properties owned throughout 134.6 128.9 Acquisitions 8.4 2.2 Developments 1.9 1.0 Properties sold 0.9 11.6 Exchange translation and other - (5.4) Net rental income 145.8 138.3 7
Slide 8: Adjusted Earnings
ADJUSTED EARNINGS (£ million) Six months to 30 June 2008 2007 (Loss)/Profit before tax (417.1) 367.8 Adjustments: Loss on the sale of investment properties 2.1 0.5 Revaluation losses/(gains) on investment properties 407.4 (323.4) Revaluation losses on development properties 55.2 - Bond redemption co
Slide 9: Cash Flow
CASH FLOW (£ million) Six months to 30 June 2008 2007 Cash generated from operations 160 150 Net interest (134) (103) Tax (112) (1) Cash flows from operating activities (86) 46 Property and corporate acquisitions (123) (112) Capital expenditure (191) (153) Investments - (20) Disposals 73 - (241) (28
Slide 10: Balance Sheet
BALANCE SHEET (£ million) 30 June 2008 31 Dec 2007 Property assets 7,093 7,275 Net debt (3,006) (2,496) Other net liabilities (56) (324) 4,031 4,455 Deferred tax (111) (100) Equity shareholders’ funds 3,920 4,355 EPRA NAV per share £13.92 £15.45 Gearing 77% 57% 10
Slide 11: Capital Returns
CAPITAL RETURNS Six months to 30 June 2008 Shopping Centres Retail Parks Offices Total Value Capital Value Capital Value Capital Value Capital £m return £m return £m return £m return % % % % UK 2,185 (8.0) 1,097 (13.1) 1,470 (8.1) 4,752 (9.2) France 1,712 2.9 144 (4.0) 393 (7.8) 2,249 0.3 Germany 92
Slide 12: Investment Portfolio Yield Movements
INVESTMENT PORTFOLIO YIELD MOVEMENTS Yield Change Yield Change Equivalent Yield H1 2008 H2 2007 30 June 2008 UK Shopping Centres +50 b.p. +35 b.p. 5.6% Retail Parks +75 b.p. +55 b.p. 6.0% Offices +45 b.p. +75 b.p. 6.2% France Retail unchanged unchanged 4.5% Offices +40 b.p. unchanged 4.8% Group +35
Slide 13: NAV Analysis
NAV ANALYSIS EPRA EPRA NAV(1) shareholders’ funds(1) (£ million) (£ per share) 31 December 2007 4,474 15.45 Revaluation - equity changes (2) (0.01) - income changes (463) (1.60) Retained profit (excl. revaluations) 36 0.12 Dividend (44) (0.15) Exchange and other movements 37 0.11 30 June 2008 4,038
Slide 14: Financing
FINANCING Unsecured medium term bank facilities totalling £350 million arranged in H1 2008 £400 million non-recourse facility secured on Bishops Square signed April 2008 Redemption of the €500 million 6.25% bonds in June 2008 57% of gross borrowings at fixed rates at 30 June 2008 Weighted average ma
Slide 15: Debt Maturity Profile
DEBT MATURITY PROFILE At 30 June 2008 £ million 1200 1000 800 600 400 200 0 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Euro bonds Other debt Sterling bonds Bank debt drawn 15
Slide 16: Markets and Portfolio Review
MARKETS AND PORTFOLIO REVIEW John Richards
Slide 17: UK Retail Property Market
UK RETAIL PROPERTY MARKET Higher cost of living straining household budgets Consumer confidence declining Conditions for retailers remain challenging Retailers continue to seek space in dominant regional locations Rental resilience at the best shopping centres and retail parks 17
Slide 18: Hammerson Shopping Centre Income Growth vs Non Food Sales – UK
HAMMERSON SHOPPING CENTRE INCOME GROWTH vs NON FOOD SALES – UK % 250 200 CAGR: 6.3% 150 CAGR: 3.4% 100 50 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Hammerson UK Shopping Centres UK non-food retail sales values Source: Hammerson data and DataStream 18
Slide 19: French Retail Market
FRENCH RETAIL MARKET Fewer economic imbalances but not immune from global problems Consumer confidence suffering from higher prices Retail rents benefiting from 5.1% indexation rate 19
Slide 20: Hammerson Shopping Centre Income Growth vs Non Food Sales – France
HAMMERSON SHOPPING CENTRE INCOME GROWTH vs NON FOOD SALES - FRANCE % 250 200 CAGR: 7.3% 150 CAGR: 5.2% 100 50 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Hammerson France retail properties French non-food retail sales values Source: Hammerson data and DataStream 20
Slide 21: Office Markets
OFFICE MARKETS CITY OF LONDON Close link with international banking and finance Take-up down nearly 40% on H1 2007 Continued occupier demand for well located prime space Prime rents down over 10% in H1 to £60 ft2 Completions will peak in 2008 but few new starts PARIS CBD Office take-up less exposed
Slide 22: Investment Markets
INVESTMENT MARKETS Continuing problems in the international debt markets Debt finance available on more restrictive terms Equity investors generally on sidelines UK values have fallen by around 20% since June 2007 France less affected but values softening 22
Slide 23: Developments
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Slide 24: London Office Development
LONDON OFFICE DEVELOPMENT 125 Old Broad Street, London EC2 60 Threadneedle Street, London EC2 24
Slide 25: Shopping Centre Development Completions
SHOPPING CENTRE DEVELOPMENT COMPLETIONS Highcross, Leicester O’Parinor, near Paris Cabot Circus, Bristol 25
Slide 26: Union Square, Aberdeen
UNION SQUARE, ABERDEEN Mall/open retail scheme totalling 49,000m² Estimated total development cost £245 million Projected income £16 million Completion Oct 2009 32% let or under offer 26
Slide 27: Fife Central Retail Park, Kirkcaldy
FIFE CENTRAL RETAIL PARK, KIRKCALDY Phase 2 Extension – 11,000m2 opening autumn 2009 Restricted open A1 retail consent Anchored by J Sainsbury’s, Homebase, B&Q, Next and Boots Estimated costs £24 million Estimated income £1.8 million Extension over 80% let or in solicitors’ hands 27
Slide 28: Development Pipeline
DEVELOPMENT PIPELINE Current investment £261 million Current income £6 million Secure planning consents Control capital expenditure 28
Slide 29: Additional Contracted Income
ADDITIONAL CONTRACTED INCOME £ million 50 45 40 35 30 25 20 15 10 5 0 2008 2009 2010 2011 2012 UK shopping centres UK retail parks France retail Other offices Notes: 1) Hammerson’s share of income shown for joint ventures 2) The bar chart shows cash rent receivable and not income smoothing under IFR
Slide 30: Summary
SUMMARY Continued good operating performance in first six months of 2008 Robust income stream from high quality £5.9 billion investment portfolio Current development programme nearing completion Income growth from new leases Excellent development pipeline but cautious approach to new starts Strong b
Slide 31: Appendices
APPENDICES
Slide 32: Earnings per Share (EPS)
EARNINGS PER SHARE (EPS) Six months to 30 June 2008 Pence per share Adjusted EPS 20.3 Revaluation movement on investment and development properties (159.7) Loss on disposal of investment properties (0.7) Change in fair value derivatives 1.4 Deferred tax 0.8 Asset impairment (5.9) Minority interests
Slide 33: Net Asset Value (NAV)
NET ASSET VALUE (NAV) As at 30 June 2008 £ per share Basic NAV per share 13.48 Effect of exercise of options and ESOP shares 0.05 Diluted NAV 13.53 Fair value of derivatives 0.01 Deferred tax 0.38 EPRA NAV 13.92 EPRA triple net NAV 14.15 33
Slide 34: Capital Allocation and Recycling
CAPITAL ALLOCATION AND RECYCLING £million 800 600 400 (six months) 200 0 2004 2005 2006 2007 2008 -200 -400 -600 Existing portfolio Developments Acquisitions Disposals 34
Slide 35: Top Ten Properties
TOP TEN PROPERTIES Property Valuation Valuation Passing Let by 30/6/08 31/12/07 rent income (1) (1) (2) (1)(3) (4) £m £m £m % Bishops Square, London E1 560 597 34.6 100 Italie 2, Paris 13ème 396 389 17.2 99 Brent Cross, London NW4 357 394 18.0 99 Bullring, Birmingham 288 313 15.4 97 Les 3 Quartiers,
Slide 36: Hammerson UK Performance vs IPD
HAMMERSON UK PERFORMANCE vs IPD % 25 20 15 10 5 (six months) 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 -5 -10 Hammerson UK IPD Annual Universe 36
Slide 37: Current Major Developments
CURRENT MAJOR DEVELOPMENTS Ownership Lettable Forecast Cost to Value at Cost to Forecast Let at Estimated interest area completion 30/6/08 30/6/08 complete total cost 1 August annual % m² date £m £m £m £m 2008 income (1) (1) (1) % when fully (2) let £m (4) Retail Cabot Circus, Bristol 50 92,000 Sept
Slide 38: Additional Contracted Income
ADDITIONAL CONTRACTED INCOME Rents Passing 2008 2009 2010 2011 2012 £m £m £m £m £m Offices – UK 0.9 2.1 2.7 3.2 3.2 Shopping centres - UK 1.3 14.4 22.8 25.2 25.5 Retail parks - UK - 1.9 4.7 4.7 4.7 Shopping centres – France 4.0 6.3 7.2 7.9 8.2 Retail parks - France - 1.7 2.0 2.0 2.0 Total - cash flo
Slide 39: Future Development Pipeline
FUTURE DEVELOPMENT PIPELINE Major retail-led schemes Retail parks Brent Cross and Cricklewood, NW London Abbey Retail Park, Belfast Central Area, Milton Keynes Manor Walks, Cramlington Eastgate Quarters, Leeds Nice Lingostière, Nice Martineau Galleries, Birmingham Parc Tawe, Swansea Sevenstone, Shef
Slide 40: Disclaimer
DISCLAIMER This presentation contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking in nature and are subject to risks and uncertainties. Actual future results may differ materially from those expressed in or imp
Slide 41: Hammerson
—/ Harmmerson