Hammerson Plc · LSE:HMSO
Hammerson — FY2022 Earnings Presentation
51 slides from Hammerson's earnings presentation, Mar 9, 2023
Slide 1: 2022 Full-year results
2022 Full-year results 9th March 2023 Dundrum Town Centre, Dublin
Slide 2: Agenda
2022 full-year results Agenda Overview Full-year results Strategic execution Q&A 2
Slide 3: Another year of strategic, operational and financial progress
Overview Another year of strategic, operational and financial progress Executing on FY22 priorities What we said: What we did: • Stabilise and optimise cash flow and underwrite the value ✓ LfL GRI +8%, LfL NRI +29%; significant increase in adjusted earnings of our flagships through relentless operat
Slide 4: Full-year results
Full-year results Les Terrasses du Port, Marseille
Slide 5: Financial summary
2022 full-year financial results Financial summary £175m £105m £5.1bn NRI(1) Adjusted earnings Total portfolio value 5.3% Income return LFL GRI +£12m (8%) (2021: £66m(2)) -5.8% Capital return LFL NRI +£32m (29%) EPS: 2.1p (2021: 1.3p(2)) -0.7% Total return 53p £1.7bn 39%/47% NTA per share Net debt L
Slide 6: Adjusted earnings walk
2022 full-year financial results Adjusted earnings walk 2021 disposals (16.6) People 2022 disposals (3.7) £m costs 8.3 Flagships LfL 31.7 Other 3.6 140 Developments (11.2) & other NRI(1) 120 11.5 Foreign 0.2 1.1 (20.3) exchange 11.9 (3.3) 100 17.8 80 (15.4) 20.7 60 104.9 40 80.9 65.5 20 0 (2) 2021 I
Slide 7: Value Retail earnings walk
2022 full-year financial results Value Retail earnings walk(1) Operational: • Footfall and brands sales approaching 2019 • Spend per visit up 5% on 2019 levels £m • 332 leases signed 70 • 94% occupancy 60 • 100% collections (16.8) 50 Debt/refinancing: (14.1) • >£1bn refinancing completed in 2022 40
Slide 8: Gross administration costs & trajectory
2022 full-year financial results Gross administration costs & trajectory -17% YoY savings £72m delivered 2021-2022 £60m Targeting to deliver a further Drivers: 2022-2024 20% reduction in Gross Admin Drivers: by 2024(1) • Rapid progress on transformation of our • Savings from London and operating mod
Slide 9: Returns and yields by geography
2022 full-year financial results Returns and yields by geography UK flagships France flagships Ireland flagships 8 8 8 6 6 6 Yield (NEY) 4 4 4 2 2 2 0 0 0 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 100% ERV (100% at peak) 100% 100% 80% 80% 80% 60% 60% 6
Slide 10: NTA per share walk
2022 full-year financial results NTA per share walk pence 10
Slide 11: A stable balance sheet
2022 full-year financial results A stable balance sheet £1.7bn 39%/47% 68% Net debt LTV (headline/FPC) Gearing 4% lower vs Dec-21(1) Net debt/EBITDA 10.4x Dec-21: 39%/46%(1) Dec-21: 66%(1) (2021 13.4x)(1) vs 150% covenant £1bn 2025 IG rating Liquidity No material Group Moody’s and Fitch refinancings
Slide 12: No Group debt not covered by existing cash until 2025
2022 full-year financial results No Group debt not covered by existing cash until 2025(1) Liquidity position (£m) Group unsecured debt maturity Secured debt in joint ventures(3) £m (£m) Euro Bonds (int 1.8%) (£m) Secured Debt (Dundrum, int 1.9%) RCFs – undrawn 660 1,000 Sterling Bonds (int 5.3%) (2)
Slide 13: Modelling assumptions
2022 full-year financial results Modelling assumptions • Underlying 2022 GRI £211m (reported GRI of £215m less £4m from disposals and surrenders) GRI • Targeting mid-single digit growth (excluding disposals) from strong leasing and lower vacancy Disposals • Target of c.£300m of disposals in 2023(1)
Slide 14: Strategic execution
Strategic execution Carnival, Bullring
Slide 15: Two years of tangible results
Strategic execution Two years of tangible results Today, Hammerson is a better, more agile and resilient business ✓ A simplified and more focused portfolio following £628m of gross proceeds since start of 2021, stable balance sheet, with recycled capital for investment ✓ Rapid progress on the transf
Slide 16: An agile, asset-centric operating model focused on occupiers and customers
An agile platform An agile, asset-centric operating model focused on occupiers and customers Shift to simplified asset and customer centric model, yielding clear benefits Leaner organisation: 42% reduction in headcount vs 2019 Asset Management Investing in and promoting key talent at all levels Dest
Slide 17: Our strongest leasing performance since 2018
Reinvigorate our assets Our strongest leasing performance since 2018 ✓ 77% principal vs temporary(4) 317/£45m 34% ✓ Two thirds/one third: new leases to renewals(4) Leases/income(1) ahead of previous passing ✓ 40% of new leasing volume, c.44k sq.m. (£25.4m at our share) 2021: -2% to new concepts and/
Slide 18: Creating a sense of place
Reinvigorate our assets Creating a sense of place We engage on a portfolio basis We are bringing in new occupiers & concepts We are increasing focus on commercialisation & placemaking Local talent/influencers in our centres: • Over 123m impressions (vs 54m impressions in 2021) We have a refreshed •
Slide 19: Repurposing our spaces to introduce new occupiers and concepts
Reinvigorate our assets Repurposing our spaces to introduce new occupiers and concepts Completed Progressing opportunities Dundrum HOF picture Bullring Debenhams picture MSU B Reading picture Brown Thomas, Dundrum TOCA Social, Bullring The Oracle Cabot Circus Repurposing of former House of Work cont
Slide 20: Robust operational trends
Reinvigorate our assets Robust operational trends ✓ Footfall vs 2019 improved 11ppts from 96% / 98% 18% / 13% January to December(2) ✓ Strong continued recovery with footfall at UK & France / Ireland UK / France +39% vs 2021 for the Group(2) Occupancy OCR ✓ Trends continuing with footfall in January
Slide 21: Opportunity to unlock deep value
Accelerate development Opportunity to unlock deep value CAPITAL INTENSITY STAND-ALONE TO OUR CORE URBAN ESTATE Includes: Stand-alone schemes on self-contained land. Have the strength of Bishopsgate Goodsyard location and potential scale to create critical mass and returns of Eastgate, Leeds their ow
Slide 22: Enhancing the footprint and value of our estates
Accelerate development Enhancing the footprint and value of our estates Eastgate, Leeds Progressing the master planning for remaining c.10 acres Bishopsgate Goodsyard Signed s106 agreement, detailed design and next stage of enabling commenced Bristol Broadmead Engaged with City Council to explore po
Slide 23: Our portfolio is aligned to the structural growth of cities and the evolution of retail
Insights Our portfolio is aligned to the structural growth of cities and the evolution of retail Strong fundamentals Physical and digital converge in our spaces Occupiers and customers recognise the symbiotic nature of Cities are engines of economic growth digital and physical Affluent catchments ar
Slide 24: Hammerson owns and operates dominant assets in leading cities
Insights Hammerson owns and operates dominant assets in leading cities London, Dublin and Paris are ranked top three cities in Europe for economic potential(1) Bristol, Southampton, and Birmingham all have more than 50% of their population under 34 years old, with all our other cities over 40%(2) Lo
Slide 25: Flight to quality - best-in-class retailers value physical space
Insights Flight to quality - best-in-class retailers value the importance of physical space Our stores play an important role in supporting our Online customers; nearly half of our UK Online orders are collected instore and the majority of returns are through our stores (85%). Next Annual Report 202
Slide 26: We are a cities business: our next steps
Strategic execution We are a cities business Deliver sustainable and resilient Reinvent our assets Create agile platform capital structure Environmental, Social and Governance at the heart of everything we do Deliver a diversifying and stable OUR NEXT STEPS Be the leading owner and operator Be the c
Slide 27: Disciplined capital allocation – our approach
Sustainable and resilient capital structure Disciplined capital allocation – our approach Sources Uses Sustainable and Underpin cash De-lever Organic investment Consolidate stable cash flow dividend to meet in existing assets ownership in core minimum REIT/SIIC Retain IG credit and development asset
Slide 28: We will remain disciplined in our operational and financial management
Summary We will remain disciplined in our operational and financial management • £628m non-core disposals completed since start of 2021 1 Portfolio simplification and realignment • Targeting to c.£300m in 2023 • Multi-use and more diverse income streams • Best leasing performance 2018, £25m of rent
Slide 29: Conclusion and 2023 priorities
Conclusion and 2023 priorities 2022 2023 Near-term priorities Maintain strong operational grip on business: • Deliver another year of robust underlying earnings and cashflow • Target further 20% gross admin cost reduction by 2024 (vs 2022 base) • Conclusion of £500m disposal programme Another year o
Slide 30: Q&A
Q&A 30
Slide 31: Important Notice
Important Notice Certain statements included or incorporated by reference within this presentation may constitute “forward-looking statements” in respect of the company’s operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of ri
Slide 32: Additional disclosures
Additional disclosures Dundrum, Dublin
Slide 33: Contents
Additional disclosures – 2022 full-year results Contents Managed portfolio ESG Value Retail 33 Bullring & Grand Central, Birmingham
Slide 34: Our key achievements
Appendix Another year of strong operating and financial performance across the board Accelerate development Deliver sustainable and Reinvigorate the assets Create agile platform pipeline resilient capital structure Environmental, Social and Governance ✓ GRI growth LFL +8% ✓ Further segmented our ✓ S
Slide 35: Managed portfolio
Managed portfolio Terrasses du Port, Marseille
Slide 36: Metrics improving; pivoting towards broader mix
Additional disclosure: Managed portfolio Metrics improving; pivoting towards broader mix(1) FY22 flagship leasing activity (£m) 6 30 No of Value % % NER deals £m headline vs ERV vs previous passing 5 25 Principal 243 24.0 +34% +2% 4 20 Temp 74 1.4 FY22 317 25.4 3 15 2 10 1 5 0 0 January February Mar
Slide 37: Leasing cumulative activity – flagships
Additional disclosure: Managed portfolio Leasing cumulative activity – flagships (£m) 4 UK 16 4 France 16 3 12 3 12 2 8 2 8 1 4 1 4 0 0 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ireland 2 5 Leasing value FY22 FY21 4 (at Hammerson share) £m £m 3 UK 12.7 11.2 1 2 France 8.2 11.7 1 0 0 Ireland 4.5 1.8 Q1 Q2 Q3 Q4 To
Slide 38: Leasing analysis – flagships, principal leases only
Additional disclosure: Managed portfolio Leasing analysis – flagships, principal leases only(1) % vs previous # Deals Value £m % vs ERV passing 2022 2021 2022 2021 2022 2021 2022 2021 FY FY FY FY FY FY FY FY UK 116 133 12.0 10.0 29 (17) 3 (21) France 86 103 7.9 10.9 49 18 4 1 Ireland 41 26 4.1 1.6 2
Slide 39: Top occupier exposure
Additional disclosure: Managed portfolio Top 20 occupier exposure(1) Rental Rental % of passing % of passing Occupier exposure % of NIA Occupier exposure % of NIA rent rent (£m) (£m) Inditex 7.6 3.6 3.5 Superdry 2.3 1.1 0.7 H&M 6.5 3.1 3.0 Primark 2.1 1.0 0.9 JD Sports 3.3 1.6 0.9 Signet 2.0 1.0 0.2
Slide 40: Top ten occupiers by region
Additional disclosure: Managed portfolio Top ten occupiers by region(1) UK France Ireland Rental % of Rental % of Rental % of Occupier exposure passing % of NIA Occupier exposure passing % of NIA Occupier exposure passing % of NIA (£m) rent (£m) rent (£m) rent Inditex 4.0 1.9 1.8 H&M 2.5 1.2 0.7 Pri
Slide 41: Rent collection performance and provisions for arrears
Additional disclosure: Managed portfolio Rent collection performance and provisions for arrears Rent collection – flagships(1) UK France Ireland Group (%) (%) (%) (%) H122 95 95 99 96 FY22 95 94 98 95 Q123 89 91 89 90 Provisions for arrears – managed portfolio Provision as % of Provision as % of Net
Slide 42: LTV methodology
Additional disclosure: Managed portfolio LTV methodology 31 December 2022 31 December 2021 With Value Retail Fully proportionally With Value Retail Fully proportionally net asset value consolidated net asset value consolidated Net debt (£m) (£m) (£m) (£m) Managed portfolio 1,732 1,732 1,799 1,799 Va
Slide 43: Net debt analysis
Additional disclosure: Managed portfolio Net debt analysis(1) £m 1,900 Operating profit 129 Working capital 8 movements 1,800 Restricted monetary assets 28 Non-cash items 1 1,700 192 76 63 1,600 1,799 13 1,732 166 1,500 139 1,400 Net debt Disposals Cash generated Exchange and Dividends Interest (inc
Slide 44: Portfolio valuation summary
Additional disclosure: Managed portfolio Portfolio valuation summary(1) Value Capital Yield ERV & Total NEY NIY 31 return % impact other property range range December % impact % return % % % £m UK 871 (9.4) (4.9) (4.5) (2.1) 7.2-9.5 6.1-9.3 France(2) 1,241 (4.6) (1.0) (3.6) - 4.7-6.4 3.1-6.1 Ireland
Slide 45: ESG
ESG Dundrum Solar Installation, Dublin
Slide 46: Our 2030 ESG Strategy
Additional disclosure: ESG Our 2030 ESG Strategy Benchmarks 2022 portfolio performance Social Value 2022 8,641 people engaged in 2022 2022 2021 Change Target Key projects delivered: Bullring & Grand Central: Mental Health Awareness Rating: AA Scope 1 and 2 8,070 9,628 -12% -5% Week campaign in colla
Slide 47: Value Retail
Value Retail Bicester Village
Slide 48: 2022 operational update
Additional disclosure: Value Retail 2022 operational update 31 Dec 2022(1) 31 Dec 2021(1) Change (£m) Brand sales (£m) 2,681 1,951 +37% 1,400 Footfall (m) 35.2 26.9 +31% 1,200 Sales density (£/m2) 13.6 10.2 +34% 11 year IRR: 17% NRI (£m) 1,000 101.3 66.7 +52% Occupancy (%) 94 95 -1% 800 1,032 600 1,
Slide 49: Value Retail villages
Additional disclosure: Value Retail Value Retail villages Bicester Village, Oxford GLA: 28,000m2 Boutiques: 160 La Roca Village, Barcelona GLA: 25,900m2 Boutiques: 146 Las Rozas Village, Madrid GLA: 16,500m2 Boutiques: 99 La Vallée Village, Paris GLA: 21,600m2 Boutiques: 111 Maasmechelen Village, Br
Slide 50: Hammerson's interest in Value Retail
Additional disclosure: Value Retail Hammerson’s interest in Value Retail Maas-- Village Bicester La Roca Laz Rozas La Vallee mechelen Fidenza Wertheim Ingolstadt Kildare Opening 1995 1998 2000 2001 2002 2003 2003 2005 2006 Sponsor interest 13.7% 12.4% 12.4% 12.4% 12.4% 12.4% 12.4% 12.4% 12.4% Invest
Slide 51: Sales and sales growth 2012-2022
Additional disclosure: Value Retail Sales and sales growth 2012-2022 €m 3,500 +9% +34% +8% 3,000 +8% +8% 2,500 +11% +30% +11% 2,000 +12% -45% +13% 1,500 1,000 500 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 H1 Sales H2 Sales 51