Hammerson Plc · LSE:HMSO
Hammerson — FY2011 Earnings Presentation
51 slides from Hammerson's earnings presentation, Feb 24, 2012
Slide 1: 2011 Full-Year Results
2011 Full-Year Results 24 February 2012
Slide 2: Agenda
Agenda Overview – David Atkins (CEO) Financials – Timon Drakesmith (CFO) Retail Operations – Lawrence Hutchings (MD UK Retail) – Jean-Philippe Mouton (MD France Retail) Capital Allocation – Peter Cole (CIO) Summary and Conclusion – David Atkins (CEO)
Slide 3: Overview
y - @ Hanmerson Overview
Slide 4: Headline Results
Headline Results Operating Results 31 Dec 2011 31 Dec 2010 Occupancy 97.9% 97.3% Like-for-like income growth 2.5% 3.5% Leasing vs ERV 2.2% - Financial Results EPS 19.3p 19.9p Dividend per share 16.6p 15.95p NAV per share 530p 495p
Slide 5: Our Vision
Our Vision Our vision is to be the best owner-manager and developer of retail property within Europe By capitalising on our strengths we aim to provide industry leading shareholder returns
Slide 6: Hammerson track record in retail
Hammerson track record in retail Portfolio Allocation Results Portfolio transitioned to new, large dominant Delivered average NRI growth of 3% per shopping centres annum over 5 years Outperformed IPD benchmark by 200 bps per Targeted the retail parks sector annum over 5 & 10 years Implemented custom
Slide 7: Top retail venues in winning locations
Top retail venues in winning locations Dominance Convenience Luxury 18 shopping centres; 18 retail parks 260 million annual visits £2bn of annual sales1 (UK), €2bn annual sales2 (France) Over 2,800 shop units Increased investment in Value Retail Group 11% 25% Retail France Offices 75% UK 89% £5.7 bi
Slide 8: Changing role of physical retail
Changing role of physical retail Consumers want convenience or experience Dominant shopping centres provide experience Retail parks provide convenience Fewer but bigger stores Fewer Bigger Best
Slide 9: Benefits of retail specialism
Benefits of retail specialism Strategic Position Benefits Superior returns through reduced costs and Increased scale and leverage operating platform growing income Deepen retailer relationships Enhance active management programmes Capitalise on acquisition/development Create destination venues in wi
Slide 10: Financial Results
Hanmerson Financial Results
Slide 11: Headline results
Headline results 31 Dec Change vs Income Statement 2011 31 Dec 2010 Net Rental Income (£m) 296.0 +4.0% +2.5%(1) Adjusted Profit Before Tax (£m) 141.6 -2.0% Adjusted EPS (pence per share) 19.3 -3.0% Dividend - Final 9.3 +5.7% - Interim 7.3 +2.1% Balance Sheet Portfolio Value (£m) 5,720 +3.6(2) NAV (p
Slide 12: Focus on like-for-like income
Focus on like-for-like income Like-for-like Net Rental Income – YoY changes % UK Shopping Centres +4.6 UK Retail Parks +4.5 French Retail +0.6 UK Offices -6.8 Overall +2.5
Slide 13: Adjusted EPS vs 2010
Adjusted EPS vs 2010 23 Management L for L NRI Fees Underlying 22 admin (0.5) Restructuring Net Developments 0.9 charge 21 Acquisitions (0.6) Interest 0.7 (0.5)) and Other 20 0.3 (0.9) 19.9 19 19.3 18 17 16 15 2010 2011 14 Adjusted EPS (p)
Slide 14: Portfolio valuation movement
Portfolio valuation movement Value at 31 FY H2 Dec 2011 2011 2011 £m % % UK Shopping Centres 2,430 1.8 0.0 Core Assets 2,339 2.8 0.8 Land Holdings 91 -19.3 -17.0 UK Retail Parks 1,180 2.2 1.5 France Retail 1,320 5.9 3.3 London Offices 549 5.7 1.5 Current Developments (1) 241 20.3 9.8 Total 5,720 3.6
Slide 15: NAV per share movement
NAV per share movement Adjusted Dividends Profit 550 Value Retail 19 (13) Revaluation Other items Development Portfolio (5) 530 Revaluation Investment 8 Portfolio 530 Revaluation 4 22 510 495 NAV Dec 2011 NAV Dec 2010 490 470 NAV per share (pence)
Slide 16: Healthy financing ratios
Healthy financing ratios 31 Dec 31 Dec 2011 2010 Net Debt £1,964m £1,794m Gearing 52% 52% Loan to value 34% 34% Cash/undrawn facilities /fx swaps £711m £1,035m Weighted average (cost of finance) 5.2% 5.0% Interest Cover 2.6x 2.6x Net debt/EBITDA 7.7x 7.2x Debt fixed/hedged 88%(1) 94% Note 1) Proform
Slide 17: Driving earnings and dividends higher
Driving earnings and dividends higher Net rental income enhancement Reduce overhead costs -Exploit £16m of retail rent reversions by 2014 - Restructuring charge of £3.5m in 2011 -Deliver new expansion schemes in shopping - Relocation of Hammerson France HQ in 2013 centres and retail parks - Rational
Slide 18: Retail Markets
Hanmerson Retail Markets
Slide 19: Robust letting activity
Robust letting activity Lettings vs. ERV UK Vacancy: 2.2% (2010: 2.7%) 6 months to 12 months June 2011 to Dec 2011 208 lettings: 98 short term lettings 33 renewals UK Retail (6)% 1% 143 rent reviews +£1.0m annualised income France 6% 2% France Vacancy : 1.8% (2010: 1.9%) Group 2% 1% 147 lettings: 10
Slide 20: Strong trading picture
Strong trading picture UK France Sales +2.1%2 (benchmark 0.1%)1 Sales -1.1% (benchmark -1.8%)1 Footfall +0.4%(benchmark -1.2%)1 Footfall -2.8%(benchmark-1.3%)1 Rent: Sales 13.2% (Dec 2010: 13.5%) Rent: Sales 9.7% (Dec 2010: 9.5%) Commercialisation and car park income £15.6m (2010: Commercialisation
Slide 21: Managing administrations
Managing administrations 31 December 2011 2,800 units in portfolio 49 in administration (0.7% passing rent) 38 units still trading (0.6% passing rent) 23 February 2012 63 units in administration (1.2% passing rent) 56% of new administrations already assigned 1 42 units still trading (1.0% passing re
Slide 22: Hammerson responding to changing market trends
Hammerson responding to changing market trends Consumer Trends Retailer Response Hammerson response Increased brand Consolidation Winning Retail Venues awareness Convenience Easy to access locations Retail Parks In-house skills Technology Multi- Channel Innovation Click & Collect Exciting brands Exp
Slide 23: Retailer consolidation – winning venues
Retailer consolidation – winning venues 1. International retailers choosing to open in our centres: 2. Successful retailers reshaping portfolio to concentrate on profitable units: 3. Challenged retailers keeping their units in best locations
Slide 24: Retailer concentration - convenience
Retailer concentration - convenience Successful retailers creating new retail park formats Establishment of catering market at retail parks Emergence of drive-through hypermarkets in France 24-hour, customer-driven retail economy
Slide 25: Multi-channel – Changing the way we manage
Multi-channel – Changing the way we manage Growth in UK multi-channel sales 2003 – new Bullring website 2008 – first Facebook site, The Oracle 60 2009 – first social media promotions UK Clothing & Footwear sales (£billion) 2010 – first Tweet, Bullring – new websites for all French centres – first we
Slide 26: Multi-channel – Changing the way we operate
Multi-channel – Changing the way we operate • Changing role of retail real estate: - Flagship, full-line store - Brand support - Convenience/multi-channel support • By 2020, 75% of non-food sales influenced by internet • 50% of new phone sales are smart phones • Greatest shift is towards multi-chann
Slide 27: Growth of catering and leisure
Growth of catering and leisure % of Hammerson Portfolio 2007 2011 Catering: - Floor Area 2.6% 3.7% - Rent 2.7% 5.1% Cinemas: - Floor Area 0.8% 2.9% - Rent 0.4% 1.4% Catering Leisure 11% of floor space at Les Terrasses du Port Planning approval for 9 screen cinema at 3 new restaurants proposed at Wes
Slide 28: Corporate responsibility supporting tenants
Corporate responsibility supporting tenants Rising energy costs increase pressure 11.5% reduction in Group carbon emissions in on retailers 2011, saving customers £1.2m Tougher legislation driving retailers Hammerson recycling 58% in UK, reducing bill towards “greener” stores for retailers by £0.5m
Slide 29: Capital Allocation
Hanmerson Capital Allocation ph pe ee Fe iam f ay ge te : =. = =
Slide 30: Capital allocation
Capital allocation Mix of retail portfolio to remain Continual recycling of capital into higher-return opportunities Selective acquisitions in retail sector Extensions and refurbishments offer compelling, low-risk returns Developments will amplify returns - target yield on cost ≥ 7.5% - target IRR ≥
Slide 31: Optimising value from London office portfolio
Optimising value from London office portfolio 60 Threadneedle Street; £171m Recent Disposals Harbour Exchange; £134m £465 m Bishops Square (25%); £160m Standing Accelerate business plans Investments Realise value over medium-term Redeploy capital into retail assets Developments/ Review returns for d
Slide 32: Capital recycling in 2011
Capital recycling in 2011 Acquisitions Disposals 60 Threadneedle Street, London O’Parinor (24%), Paris £374m £272m St Martins Portfolio Central Retail Park, Falkirk (75%) SQY Ouest, Paris 99 Bishopsgate (Freehold), London
Slide 33: Value Retail – successful outlet villages
Value Retail – successful outlet villages Founded in 1994, nine premium outlet villages Europe’s wealthiest cities and most popular tourist destinations Hammerson first invested in December 1998 (Bicester Village) Total value c. £214m (cost £70m) 12% ownership of sponsor vehicles, 40% economic stake
Slide 34: Progress at Les Terrasses du Port, Marseille
Progress at Les Terrasses du Port, Marseille Retail developments - Leasing performance (pre-opening) 100% 90% 80% 70% 60% 64% 50% 40% 30% 20% 10% 0% 48 months 45 months 42 months 39 months 36 months 33 months 30 months 27 months 24 months 21 months 18 months 15 months 12 months 9 months 6 months 3 m
Slide 35: Progressing extensions and refurbishments
Progressing extensions and refurbishments Cramlington, Planning received Monument Mall, Newcastle December 2011. Pre-let with Vue Planning consent granted December 2011 Cinema December 2011 SQY Ouest, Paris Centrale, Croydon Planning permission for reconfiguration Planning application submitted Febr
Slide 36: Conclusion
Hanmerson Conclusion
Slide 37: 2011 Highlights
2011 Highlights Focus 2011 Highlights Operations • New retail and catering formats opened in 2011 • 2.5% growth in like-for-like income Focus on income growth • 355 leases signed for 105,000m2, overall 2% > ERV Emphasis on customer • Occupancy increased to 97.9% Portfolio • £374m on acquisitions, £2
Slide 38: Conclusion
Conclusion Income growth, portfolio management and prudent financing Operational excellence and higher long–term returns Sustainable NRI growth and outperforming IPD Higher dividend growth Developments increase market presence and enhance returns Hammerson - a pure retail REIT that delivers industry
Slide 39: Questions
Hanmerson Questions
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: Appendices
& Hammerson Appendices Tai HRTEM PHALLALLLTT Holy
Slide 42: At a glance: Our principal properties
Directors’ report | Overview | Directors’ report | Overview | Ata glance Our principal properties Portfolio Union Square Silverburn Cabot Circus Bullring Hammerson owns a portfolio of prime property assets Aberdeen Glasgow Bristol Birmingham in the UK and France. The portfolio, which is valued f at
Slide 43: Retail reversion - 2012 to 2014
Retail reversion - 2012 to 2014 Outstanding rent reviews 2012 2013 2014 Total £m £m £m £m £m Expiries and breaks (UK and France) ERV 45.8 19.5 17.4 82.7 Passing rents 40.0 19.3 16.8 76.1 Uplift 5.8 0.2 0.6 6.6 Rent reviews (UK only) ERV 44.5 26.0 43.5 27.5 141.5 Passing rents 41.3 24.3 41.8 25.0 132
Slide 44: Drivers of 2011 Full-Year valuation trends
Drivers of 2011 Full-Year valuation trends -20 30 80 130 180 230 UK Shopping Centres UK Retail Parks Yield Income/ERV France Development/other London Offices Total Portfolio £ million
Slide 45: Drivers of H2 2011 valuation trends
Drivers of H2 2011 valuation trends -20 0 20 40 60 80 100 UK Shopping Centres UK Retail Parks Yield Income/ERV France Development/other London Offices Total Portfolio £ million
Slide 46: Components of valuation growth – Investment portfolio
Components of valuation growth – Investment portfolio H2 2011 Capital growth Yield ERV/Income Other Investment properties UK Shopping Centres 0.0% 1.0% -0.1% -0.9% UK Retail Parks 1.5% 0.4% 0.8% 0.3% UK Offices 1.5% 0.0% 0.4% 1.1% France Retail 3.3% 0.6% 2.2% 0.5% Group Investment 1.1% 0.7% 0.7% -0.
Slide 47: Reconciliation of adjusted profit before tax
Reconciliation of adjusted profit before tax Adjusted Adjusted EPS profit before Reconciliation of adjusted profit before tax tax £m p Adjusted profit before tax for year ended 31 December 2010 144.5 19.9 Acquisitions 21.2 3.0 Disposals (19.1) (2.7) Developments 5.0 0.7 Like-for-like net rental inco
Slide 48: Movement in net asset value
Movement in net asset value Movement in net asset value Equity shareholders’ funds* Adjusted NAV* £m £ per share 31 December 2010 3,498 4.95 Revaluation - investment portfolio 157 0.22 Revaluation - developments 30 0.04 Revaluation - investments in Value Retail 57 0.08 Adjusted profit for the year 1
Slide 49: Total Property Returns
Total Property Returns 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 IPD UK Universe 9.3 10.5 17.3 19.1 18.4 -3.6 -22.4 3.1 15.1 7.9 Hammerson Retail Portfolio 11.3 14.0 19.3 21.0 16.1 7.3 -13.9 -2.3 14.9 8.6 Outperformance 2.0 3.5 2.0 1.9 -2.3 10.9 8.5 -5.4 -0.2 0.7 Hammerson 5 Year Outperforma
Slide 50: London offices portfolio
London offices portfolio Area Ownership Partners Occupancy Unexpired (m2) % lease term to break (years) Standing investments 10 Gresham Street 23,600 30% CPPIB 99.9 7.8 10 Grosvenor Street, London W1 6,000 50% Grosvenor 100 6.4 99 Bishopsgate, London EC2 31,500 100% 99.9 5.1 125 Old Broad Street, Lo
Slide 51: Debt Maturity
Debt Maturity 900 800 700 600 500 400 300 200 100 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2028 Bank drawn debt Euro bonds Sterling Bonds Undrawn facilities