Hammerson plc · LSE:HMSO
Hammerson — Corporate Update (June 2010)
52 slides from Hammerson's corporate update, Jun 24, 2010
Slide 1: Analyst Visit to Les Terrasses du Port, Marseille
Analyst Visit to Les Terrasses du Port, Marseille 23/24 June 2010 1
Slide 2: Today's Programme
Today’s Programme | Presentations – Introduction and overview – Overview of the French retail property market – Hammerson France – Les Terrasses du Port | Euroméditerranée showroom and site tour | Lunch | Coach to the airport 2 2
Slide 3: Introduction and Overview
Introduction and Overview 3 3
Slide 4: Prime Investment Portfolio
Prime Investment Portfolio Total portfolio at 31/12/09 €2 billion O’Parinor Italie 2 Espace St Quentin Les Trois Fontaines Bercy 2 Place des Halles Grand Maine Villebon 2 Faubourg St Honoré 7 shopping centres; 1 retail park; 1 mixed use building 3 out of top 10 retail destinations Over 850 occupiers
Slide 5: Top Ten Properties
Top Ten Properties as at 31/12/09 Property name Ownership Valuation(1) Passing rent(1)(2) £m £m O’Parinor, Aulnay-sous-Bois 100% 404 21.6 Italie 2, Paris 13ème 100% 356 19.5 Brent Cross, London NW4 41% 257 17.2 Highcross, Leicester 60% 254 15.8 Bullring, Birmingham 33% 234 15.4 Cabot Circus, Bristol
Slide 6: The Team
The Team Plc Board Executive Directors David Atkins Simon Melliss Peter Cole Chief Executive Chief Financial Officer Chief Investment Officer Managing Directors Lawrence Hutchings Martin Jepson Jean-Philippe Mouton UK Retail UK Offices France French Senior Management Thomas Havas Igor Aglat Gérald F
Slide 7: Overview of the French Retail Property Market
Overview of the French Retail Property Market 7 I will start with a brief overview of the French property market and its environment. 7
Slide 8: French Retail Environment
French Retail Environment | Resilient consumer spending | Low private indebtedness | Limited shopping centre supply | Favourable legal environment 8 This is a short summary of the main characteristics of the French retail environment. Consumption in France has been historically resilient. French hav
Slide 9: Household Consumption
Household Consumption % change 4% 3% 2% 1% 0% -1% -2% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: INSEE – Household consumption for manufactured goods 9 French consumption has proved to be resilient even during the crisis. Only once in early
Slide 10: Household Debt
Household Debt Household debt as % of available income France: Consumer debt (€ million) 165% 157% 159% 149% - 13% 92% 91% 73% 75% 40.03 34.12 3.82 3.92 France Germany UK USA 2008 2009 June 2008 June 2009 Car Other Source: Banque de France 10 The French have some of the lowest personal indebtedness
Slide 11: Savings Rates
Savings Rates France UK 18% 16.9%15.8% 17.1% 18% 15.9% 15.9% 15.8% 15.8% 15.5%15.2% 16% 15.5% 15.1%15.6% 16% 14.6% 13.9% 15.3% 14% 14.7% 15.0% 15.1% 14.9% 14% 12.0% 12% 12% 10.7% 10.5% 9.4% 9.1% 10% 10% 9.4% 8% 8% 7.0% 6.2% 5.7% 7.7% 5.5% 6% 6% 4.3% 5.8% 4.5% 4.1% 3.6% 3.3% 4% 4% 1.8% 2.4% 2% 2% 0%
Slide 12: French Retail Stock
French Retail Stock million m2 35 30 25 20 29.2 15 10 18.9 17.5 5 2.8 Retail park 0 High street Retail warehouses Shopping centres Source: CWHB/High street: sites with at least 50 places; retail: at least 10 places, shopping centres: at least 10 places 12 One characteristic of the French retail mark
Slide 13: French Investment Market
French Investment Market € billion 30 20 French transaction volumes 10 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (f) % 7.0 6.0 5.0 Prime net initial yields 4.0 3.0 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 French shopping centres Paris CBD offices Source: CBRE, PMA 13 In regards to t
Slide 14: French Retail Property Investments
French Retail Property Investments € billion 7% 30 9% 14% 25 8% 16% 20 68% 10% 15 9% 5% 9% 8% 10% 10 23% Shopping centres City centres 5 Retail parks Others 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 Retail property investment – type €1.9 billion Other Retail Source: CBRE, DTZ, PMA 14 If we look
Slide 15: French Retail Market Characteristics
French Retail Market Characteristics Development o Two planning consents required: - Commercial (CDAC) - Building Pemit Retail lease o Typical duration 10 years (with 3-year break option) o Annual indexation (CAGR ILC 2004-2009 = 2.5%) o “Propriété commerciale”: – Tenants’ statutory right to renew –
Slide 16: Hammerson France
Hammerson France 16 16
Slide 17: Strengths
Strengths | Excellent track record | Experienced team | Directly managed assets | Low vacancy rate | Third largest operator in the shopping centre market | Historically concentrated in Île-de-France | International reputation with major retailers 17 Overall Hammerson is well positioned in the retail
Slide 18: Portfolio Performance
Portfolio Performance Historical Portfolio Value (LHS) and Net Rental Income (RHS) (€ m) 3,000 140 2,500 120 100 2,000 80 1,500 60 1,000 40 500 20 0 0 2005 2006 2007 2008 2009 Held throughout Acquisitions/disposals NRI 18 Over the last 5 years, the portfolio evolved as follows: • in 2005 we acquired
Slide 19: Retail Portfolio Performance
Retail Portfolio Performance Retail 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2000-2009 Income return 5% 6% 6% 6% 6% 6% 5% 4% 4% 5% Capital return 13% 7% 5% 4% 11% 20% 15% 17% -7% -11% Total return 18% 13% 11% 10% 17% 26% 20% 21% -3% -6% =12.4% 19 Overall, this enabled Hammerson France to re
Slide 20: Increased Retail Rents in France
Increased Retail Rents in France € million 100 Indexation Other Rents passing 31 Dec 2009 (1.0)m 4.5m New lettings and renewals 95 98.2m Rents passing Terminations 31 Dec 2007 and expiries 90 13.3m 91.5m (10.1)m 85 80 Note: Movement in passing rents compared on a like-for-like basis 20 This graph il
Slide 21: Future Plans
Future Plans | Exploit strong position in French retail market | Refurbish/extend existing assets | Progress development pipeline | Recycle capital from portfolio | Selective acquisitions 21 In light of what I just said, we should continue to exploit this strong position in France, especially vis a
Slide 22: Faubourg Redevelopment
Faubourg Redevelopment 5 MSU and 2 shops 60 m window facade onto Faubourg Redevelopment of 3,000 m² Additional rental income €3 m Development costs €35 m Start of works Underway Shell delivery Q3 / Q4 2010 Stores opening Q2 2011 22 Apart from focusing on lease renewals, we have been active in asset
Slide 23: Extensions
Extensions Place des Halles Space created 5,400 m² GLA Additional rental income €2 m Development costs €28 m Planning submission 2011 Angers Space created 5,900 m² GLA Additional rental income €2.5 m Development costs €38 m Planning submission 2011 23 We have identified several extension opportuniti
Slide 24: Extensions
Extensions Italie –Avenue d’Italie extension Bercy 2 – Ground floor restructuring Space created 5,600 m² GLA Space created 1,200m² GLA Additional rental income €2.5 m Additional rental income €0.6 m Development costs €34 m Development costs €7 m Planning submission 2011 Planning submission 2011 Ital
Slide 25: Future Pipeline Under Review
Future Pipeline Under Review Le jeu de Paume, Beauvais La Rotonde, Bethune •Shopping centre •Shopping centre •23 000 m² GLA •64 000 m² GLA Halle en Ville, Mantes Le Barlet, Douai •Shopping centre •Shopping centre •36 400 m² GLA •24 000 m² GLA 25 Last but not least, in December 2009, when we acquired
Slide 26: Les Terrasses du Port
Les Terrasses du Port 26 26
Slide 27: Les Terrasses du Port: The Team
Les Terrasses du Port: The Team Michael Farbos Igor Aglat Laurent Santiago Thomas Havas Project Leader Retail Leasing Project Management Marketing & Communication Maxime Depreux Lionel Le Gall Olivier Fournier-Laroque Charles-Henri Delouis Valérie Thomas Asset Manager Leasing Leasing Project Managem
Slide 28: The Region
The Region A very attractive region | Population of 4.5 million | 4 major cities: Nice, Toulon, Marseille and Avignon | Urbanised region (90 % of the population live in cities) | 3rd largest economic region in France | Premier world tourist destination with 34 million visitors per annum 28 Marseille
Slide 29: Marseille
Marseille A European capital | French 2nd city with population of 870,000 | Largest port in the Mediterranean | Extensive city regeneration | Exceptional location and weather | Intense tourist activity | European capital of culture in 2013 29 Marseille is France’s second largest city with a populati
Slide 30: Catchment area
Catchment area o 870,000 inhabitants in the primary zone o 1.5 million inhabitants (less than 35 min driving) o Average income equals the national rate o 2.1 million passengers through the Port – 870,000 to/from Corsica and Sardinia – 585,000 to/from North Africa – 620,000 to/from cruise-ships o 25,
Slide 31: Demographics
Demographics 10% 7% 1.0% 5% 11% 3% 2% 7% 0.8% 17% 0.6% 2% 36% 0.4% 0.2% A - Sophisticated singles B - Bourgeois prosperity C - Career and family D - Comfortable retirement E -Routine service workers F - Hard working blue collars G - Metropolitan strugglers H - Low income elders 0.0% I - Post industr
Slide 32: Euroméditerranée: An Operation in the interest of the nation
Euroméditerranée: An Operation in the interest of the nation in France’s second city | A public organisation | Founded by ¾ Supported by the European Union 3 dimensions: ¾ Urban planning ¾ Real estate development ¾ Economic development A 50 strong team 32 Marseille’s Euromediterranée project is the
Slide 33: Euroméditerranée: 480 hectares between the city centre and the port
Euroméditerranée: 480 hectares between the city centre and the port 33 Terrasses du Port project is located in Cité de la Méditerranée area, which is one of the seven areas planned in the global Euromediterranée project. Cité de la Méditerranée aims to transform the sea front (three kilometres long
Slide 34: Euroméditerranée by 2020
Euroméditerranée by 2020 Euroméditerranée 1st phase (underway) Extension + 20,000 jobs + 20,000 jobs + 10,000 residents + 30,000 residents + € 3.5 billion invested 34 + € 3.5 billion invested Euromediterrannée is currently the biggest urban regeneration program supported by the government. It has be
Slide 35: Location
Location Grand Littoral, Plan de Campagne Centre Bourse 35 On this slide you can see our project within the Euromediterrannée district The main projects of Euromediterrannée are located close to the Terrasses du Port scheme and spread along the future boulevard. The A55 highway will be moved undergr
Slide 36: Excellent Accessibility
Excellent Accessibility A50 36 Previously a flyover, motorway A55 is currently being placed in a tunnel, which will enable it to re- join the harbour side with the city. The Terrasses du Port car park will benefit from an easy link to the A55 and A51 highways, through the Boulevard and underground t
Slide 37: Centre Bourse
Centre Bourse This shopping centre (29,250 m² GLA and 55 units) is located in the heart of Marseille. It enjoys strong anchor tenants: Galeries Lafayette, Fnac, Habitat and Go Sport. An in-depth refurbishment over 6,000 m² has been planned for over a decade. The city centre is composed of 3 main sho
Slide 38: Les Terrasses du Port, Marseille
Les Terrasses du Port, Marseille • 54,000 m2 centre with 160 shops • 2,600 car park spaces • 44% of the retail units secured • One of the largest shopping centre developments in France • 70-year ground lease with the Port: No “Propriété commerciale” • Benefits from government-backed programme to reg
Slide 39: Les Terrasses du Port
Les Terrasses du Port 39 Connection with Boulevard du Littoral Port car park on the ground floor Architecture evoking the Docks in London building, largely using stone, metal, glass Roof covered with solar panels in a shape that is similar to the Docks roof 260 m long terrace with an open view onto
Slide 40: Achievements Since Purchase
Achievements Since Purchase | Built relationships with local stakeholders | Redesigned project and optimised retail layout | Renegiotiated building contracts at fixed costs | Expected savings achieved through technical re-engineering | Defined an optimisation strategy to achieve BREEAM Very Good | D
Slide 41: Leasing Strategy - Retail Mix
Leasing Strategy - Retail Mix | A comprehensive shopping experience with five main commercial activities: – Relevant catering offer for workers, residents and tourists – Good mix of middle to high range fashion and beauty brands – Balanced household/furnishing offer combining home electronics, furni
Slide 42: Lower Level – 70% let
Lower Level – 70% let Destination anchors (food supermarket, household equipment) 42 Basement 4 Medium-Sized Units: Monoprix, Darty, Nursery/Toys and Home Furnishing. These units will be directly linked to the ground floor main access and to the car park access. Storage areas as well as the delivery
Slide 43: Ground Level – 32% let
Ground Level – 32% let A street level opened to the boulevard with a convenience offer to meet the expectations of new residents and workers in the district (snacking, florist, bank, pharmacy) A market hall unique to Marseille with quality food offering 43 Ground Floor Main pedestrian access to the
Slide 44: First Floor – 52% let
First Floor – 52% let The main level, with a mid-range positioning. It comprises the fundamentals of the fashion offer with the anchors and regional exclusives 44 First Floor This level is focused on fashion, anchored by Decathlon, H&M, Sephora, Esprit, and 4 brands from the Inditex Group: Zara, Ber
Slide 45: Second Floor – 16% let
Second Floor – 16% let The upper level comprises a high range offer in all sectors (fashion, accessories, culture and leisure activities, and home furnishing). 45 Second Floor We will be focusing our efforts on high range brands on this level. Local luxury jewellers Pellegrin & Fils were among the f
Slide 46: Leasing Strategy - Second Floor
Leasing Strategy - Second Floor A terrace with a fantastic view over the Mediterranean sea and a unique catering zone 46 Catering The catering offer will represent 12 % of the total area of the project: - 8 restaurants on the 2nd floor, on the terrace with a sea view - 2 cafés on the 2nd floor, in t
Slide 47: Risk Management
Risk Management | Reputable contractors: Vinci, Otis, Spie | Established relationship with Vinci (Vendôme Saint Honoré, 53 quai d’Orsay, O’Parinor) | GMP contract including milestones with penalties | Hammerson’s commitments with the Port transferred to the contractors | Cross fertilisation between
Slide 48: Timetable and Cashflow
Timetable and Cashflow | Commence enabling works August 2010 | Main works start on site Q1 2011 | Handover of units to the tenants Q4 2013 | Opening Spring 2014 | €39 million 2009 | €40 million 2010 | €100 million 2011 | €100 million 2012 | €120 million 2013 | €35 million 2014 48 48
Slide 49: Key Figures
Key Figures | Total development cost €434 million1 | Construction costs €280 million | Net rents receivable €32 million2 | Development yield 7.4 % | Expected footfall 14.5 m visitors p.a. | Expected sales €360 m p.a. | Retail rents (excl. turnover) €540/m² Note: 1) Includes land and interest 2) Rent
Slide 50: Conclusion
Conclusion | Hammerson France well positioned | Excellent track record in France | Strong management team | French retailers remain confident | Strategy to develop the portfolio | Recycle capital and assess other pipeline assets | Les Terrasses du Port an exciting and unique opportunity 50 50
Slide 51: Questions
Questions 51 51
Slide 52: 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