Hammerson plc · LSE:HMSO
Hammerson — FY2014 Earnings Presentation
57 slides from Hammerson's earnings presentation, Feb 16, 2015
Slide 1: 2014 Full-year Results
Cabot Circus Bristol 2014 Full-year Les 3 Fontaines Les Terrases du Port Cergy Marseille Results 16 February 2015
Slide 2: Agenda
Agenda Section Introduction and market overview 1 Section Financial review 2 Section 3 Portfolio update Section 4 Conclusion 2014 Full-year results 2
Slide 3: 2014 was a standout year with increasing momentum
2014 was a standout year with increasing momentum +13.6% total portfolio returns +2.1% group LfL NRI +23% leasing volumes by value Opening of Les Terrasses du Port over £1bn new capital raised £100m into new VIA Outlets partnership 2014 Full-year results 3
Slide 4: Our vision is to be the best owner-manager and developer of retail property within Europe
Our vision is to be the best owner-manager and developer of retail property within Europe Creating high quality Maximising Enhancing retail destinations income generation capital strength NAVPS DPS TSR(1) 638p 20.4p 88% 19.1p 573p 17.7p 33% 542p 25% 2012 2013 2014 2012 2013 2014 1 year 2 year 3 year
Slide 5: Market overview
Section 1 Market overview David Atkins, CEO Les Terrasses du Port, Marseille
Slide 6: Improving retail sales picture
Improving retail sales picture UK: clear step-up in last 12 months France: stabilised but not yet consistent UK retail sales France retail sales 7% 4% 6% 3% 5% 2% 4% 1% 3% 0% 2% -1% 1% -2% -0% -1% -3% -2% -4% -3% -5% Aug Dec 2011 Apr Aug Dec 2012 Apr Aug Aug Dec 2013 Apr Dec 2014 Dec 2011 Apr Dec 20
Slide 7: Improving trend in tenant sales
Improving trend in tenant sales UK: benefitting from uplift in consumer France: retenanting and renovations starting sentiment to deliver results 4% 4% 3% +2.6% 3% 2% 2% 1% 1% 0% 0% -1.0% -1% -1% -2% -2% -3% -3% -4% -4% H1 12 FY 12 H1 13 FY 13 H1 14 FY14 H1 12 FY 12 H1 13 FY 13 H1 14 FY14 Note: Grow
Slide 8: Strong leasing momentum
Strong leasing momentum up 23% Rent secured from new leases, excluding developments (£m) 2012 2013 2014 29.5 30 25 23.9 20 18.7 15 13.5 10.1 10 8.3 8.2 8.1 8.0 7.2 4.9 5 2.1 0 (1) UK shopping centres UK retail parks France Group (1) Includes UK other interests 2014 Full-year results 8
Slide 9: Outperformance in a recovering market
Outperformance in a recovering market UK retail market ERV growth per annum UK prime shopping centres UK retail warehouses 4% Hammerson ERV growth 3.1 3% Shopping centres +2.6% 2.4 Retail Parks 2.0 2% +0.5% 1.5 1.0 1% 0.7 0.3 (1.9) (0.5) (0.2) 0.1 (0.8) 0% -1% -2% 2011 A 2012 A 2013 A 2014 A 2015 F
Slide 10: Rental growth across the whole portfolio
Rental growth across the whole portfolio Leasing vs previous passing Leasing vs ERV ERV growth UK shopping +8.9% +10.1% +2.6% centres UK retail parks +1.7% +6.8% +0.5% France +3.7% +2.0% +0.2% Group(1) +5.4% +6.2% +1.4% (1) Includes Other UK Properties 2014 Full-year results 10
Slide 11: Record levels of investment
Record levels of investment New peak levels across UK and France Leading to yield compression UK shopping centres Number of transactions (LHS) 8% UK prime shopping centres 100 Transaction Values (RHS, £bn) 6 7.5% UK fashion retail parks 5 75 France prime shopping centres 4 50 3 7% 2 25 6.5% 1 0 0 6%
Slide 12: Financials
Section 2 Financials Timon Drakesmith, CFO 2014 Full-year results Batavia Stad Village
Slide 13: Headline results
Headline results Income statement 2014 2013(1) % change Net rental income (£m) 305.6 290.2 +2.1%(2) Adjusted profit before tax (£m) 178.9(3) 168.9 +5.9% Adjusted EPS (p) 23.9(3) 23.1 +3.5% Final dividend (p) 11.6 10.8 +7.4% Balance sheet 31 Dec 2014 31 Dec 2013 % change Portfolio value (£m) 7,734 6,
Slide 14: Growth in like-for-like income
Growth in like-for-like income YoY change (LfL) 2.2% 2.4% 2.0% 2.1%(1) UK shopping UK retail parks France Total centres 2014 total(2) £127.9m £83.0m £82.4m £305.6m(3) Key drivers Cabot Circus Improving Telford Italie Deux occupier Highcross Falkirk Place des Halles market Union Square Paisley backdr
Slide 15: Adjusted PBT movement
Adjusted PBT movement up 5.9% One-off Net Premium Underlying restructuring LfL NRI investments Developments outlets admin costs Financing Other items cost(1) £m 190 2.6 10.7 (0.9) 178.9 180 175.9 5.4 (4.7) (0.1) (3.0) 170 168.9 (3.0) 160 150 2013 2014 2014 Adjusted PBT (1) Net reorganisation charges
Slide 16: Cost management in action
Cost management in action What we planned Events in 2014/2015 Exit high cost premises New operations hub in Reading, November 2014 Transfer from Mayfair to King’s Cross, June 2015 Rebalance headcount Shift from back office to development, innovation, leasing Employee benefits realigned Pension and s
Slide 17: Portfolio valuation change
Portfolio valuation change Value at FY 2014 H2 2014 H1 2014 31 Dec 2014 (%) (%) (%) (£m) UK shopping centres +9.6 +2.7 +6.6 2,864 UK retail parks +9.0 +4.9 +3.9 1,644 France +2.4 +2.7 -0.3 1,798 UK other interests(1) +3.4 +2.2 +1.2 193 Investment portfolio +7.4 +3.2 +4.1 6,499 Current developments +
Slide 18: Drivers of valuation change
Drivers of valuation change Value at FY 2014 (%) Components of change 31 Dec 2014 (£m) Yield shift (%) Income (%) Other (%) UK shopping centres +9.6 +7.4 +2.3 -0.1 2,864 UK retail parks +9.0 +7.5 +0.1 +1.4 1,644 France +2.4 +3.8 +1.5 -2.9 1,798 UK other interests(1) +3.4 -0.1 +0.9 +2.6 193 Investmen
Slide 19: EPRA NAV per share movement
EPRA NAV per share movement up 11.3% Portfolio Premium outlets Exchange revaluation revaluation Adjusted profit Dividends Share issue & other Pence 680 24 16 650 61 (20) 638 (9) (7) 620 590 573 560 530 Dec 2013 Dec 2014 2014 Full-year results 19
Slide 20: Healthy financing ratios
Healthy financing ratios Financing policies 31 Dec 2014 31 Dec 2013 Net debt - £2,265m £2,252m Gearing <85% 46% 56% Loan to value <40% 34% 38% Cash/undrawn facilities - £648m £716m Weighted average cost of finance - 4.7% 4.8% Interest cover >2.0x 2.8x 2.8x Net debt/EBITDA <10x 8.0x 8.2x Fixed rate d
Slide 21: Refinancing activities
Refinancing activities Financing event Benefits Acquisitions: Highcross and VIA Outlets £400m share placing Reduced gearing to support development pipeline €500m 8 year bond issued at 2.0% coupon Long term financing at very attractive rates Saving £8m in 2015 Redemption of outstanding €480m 4.875% b
Slide 22: Portfolio update
Section Section 3 Portfolio update David Atkins, CEO 2014 Full-year results Les Terrasses du Port, Bullring, Marseille Birmingham
Slide 23: Product framework delivering results
Product framework delivering results entertaining interactive best@retail & exciting & engaging New retail concepts rental income from 10% e.g. First UK Zara catering redemption rate menswear store at +10% on retailer offers Bullring in 2014 with PLUS app convenient iconic positive & easy destinatio
Slide 24: Areas of focus for capital allocation
Areas of focus for capital allocation Acquisitions and disposals: optimising the portfolio Driving maximum returns from retail parks Strengthening our French platform Increasing exposure to premium outlets Adding scale and quality with developments 2014 Full-year results 24
Slide 25: Disciplined use of shareholder capital
Disciplined use of shareholder capital Portfolio recycling(1) 2014 property acquisitions Hammerson net investments (£m) Acquisitions Disposals 478 500 432 410 248 Highcross, Saint Sébastien, Nicetoile, Leicester Nancy Nice 0 2014 property disposals (153) (275) (256) (663) -800 Queensgate, 10 Grosven
Slide 26: Retail parks: well positioned to deliver returns
Retail parks: well positioned to deliver returns Retail parks represent £1.6bn of GAV Well positioned to drive growth Capitalise on current trends • Regional economic recovery 48% uplift in UK retail Premium leasing volume parks outlets • Retailer in-fill strategies 2014 vs 2013 • Additional caterin
Slide 27: Capitalising on retailer trends and UK regional recovery
Capitalising on retailer trends and UK regional recovery Elliott’s Field shopping park, Rugby Critical in-fill location between prime shopping centres • 17,000m2 prime retail space • 440,000 principal catchment • 62% pre-let • 38% estimated profit on cost 2014 Full-year results 27
Slide 28: Rolling out projects with double-digit growth
Rolling out projects with double-digit growth Abbotsinch retail park, Paisley Net valuation uplift since acquisition (£m) 80 +41% £70.6m £9.3m capex 60 £40.7m 40 20 0 2012 2014 • 5,000m2 new space • Headline ERVs +31% since acquisition 2014 Full-year results 28
Slide 29: France: a defining year
France: a defining year Growth through Enhancing quality through Selective acquisitions developments renovations and disposals Les Terrasses du Port Saint Sébastien 2014 Le Jeu de Paume Nicetoile 2015 2014 Full-year results 29
Slide 30: Accelerating retenanting
Accelerating retenanting Achieved Target 51 units in 2014 +1.5% 2014 footfall 170 units by 2018 renovated centres +22% average sales uplift +2% outperform sales 17% of retail offer renewed average 2013 2018 2014 Full-year results 30
Slide 31: Strong start at Les Terrasses du Port
Strong start at Les Terrasses du Port Trading ahead of Sensational customer Enhancing shareholder expectations experience returns Digitally enhanced: visitors since visitors since Profit 8m opening opening PLUS app £107m margin Digital Wall Award winning centre: PROCOS award “Best Unique catering of
Slide 32: Premium outlets: a key differentiator
Premium outlets: a key differentiator Value Retail VIA Outlets GAV: £885 million GAV: £143 million Invested since 1998 New in 2014 Hammerson exposure(1): 38% Hammerson exposure: 47% Leading operator of luxury Villages across Partnership between Hammerson, APG, Value Europe Retail and Meyer Bergman 9
Slide 33: VIA Outlets is expected to deliver strong returns
VIA Outlets is expected to deliver strong returns Kungsbacka NEW ASSET Gothenburg Batavia Stad Amsterdam Fashion Arena Prague Excalibur Landquart, Zurich Chvalovice • 21,000m2 scheme, with 90 retail units Alcochete • Key tenants Calvin Klein, Desigual, Hugo Boss Lisbon • Wealthy catchment south of Z
Slide 34: On-site developments: creating iconic destinations
On-site developments: creating iconic destinations Le Jeu de Paume, Beauvais Victoria Gate, Leeds • 23,800m2 retail and • 34,300m2 luxury retail leisure development venue • Completion Q4 2015 • Completion Q3 2016 • 86 shops and restaurants • 40% pre let • 62% pre-let • Flagship John Lewis store 2014
Slide 35: Forecast development expenditure
Forecast development expenditure Actual Forecast £m £196m £303m £203m £194m £258m £277m 350 Completed developments Les Terrasses du Port, Marseille 300 On site developments 250 Victoria Gate, Leeds WestQuay Watermark, Southampton 200 Le Jeu de Paume, Beauvais Other on site developments(1) 150 Future
Slide 36: The Goodsyard
The Goodsyard • 50/50 joint venture with Ballymore Properties Key achievements • 10 acre site in the heart of Shoreditch • Initial planning application submitted July 2014 • Support from GLA • Delivering a mixed use scheme including: Next steps • 19,000m2 of retail space • Continuing engagement with
Slide 37: Brent Cross
Brent Cross • 40/60 joint venture with Standard Life Key achievements • TDC Hammerson 40% share: £475-550 million • Amended consent achieved in 2014 • Infrastructure application submitted January • Extension to existing shopping centre 2015 • Additional 90,000m2 of retail and leisure space • Concept
Slide 38: Croydon
Croydon • 50/50 joint venture with Westfield Key achievements • Planning consent • TDC Hammerson 50% share: £625-£750 million • CPO inquiry February 2015 • Transforming Croydon’s retail offer: • New three-storey scheme design • 2.0m sq ft core retail offer, Centrale plus Next steps new Whitgift • La
Slide 39: Conclusion
Section Section 4 3 Conclusion 2014 Full-year results Bullring, Bullring, Birmingham Birmingham
Slide 40: Realising our vision
Realising our vision Leading multichannel retail property expert Improving consumer spending Driving rental growth Rigorous approach to capital allocation Award-winning developments Consistent and strong shareholder returns 2014 Full-year results 40
Slide 41: Questions
Section 3 Questions 2014 Full-year results Les LesTerrasses Terrasses du Port, Port,Marseille Marseille
Slide 42: Disclaimer
Disclaimer This presentation contains certain statements that are neither 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 or implied by thes
Slide 43: Appendices
Section 3 Appendices 2014 Full-year results WestQuay, Southampton Les Terrasses du Port, Marseille
Slide 44: Our assets
Our assets £7.7 billion property portfolio 22 shopping centres 22 retail parks Investment in 15 outlet centres 2.2 million m2 retail space 250 million annual visitors 2014 Full-year results 44
Slide 45: On-site and major developments
On-site and major developments Estimated Estimated cost to annual On-site developments Ownership(1) Lettable area Earliest start Potential Current value(2) complete(3) income(4) Let(5) % m2 completion £m £m £m % Silverburn extension, Glasgow 50 10,900 Commenced Q1 2015 n/a 3 1 97 Cyfarthfa retail pa
Slide 46: Development pipeline opportunities
Development pipeline opportunities Lettable area Scheme Key facts m2 •Retail extension of the existing shopping centre Italie Deux, Paris 13eme 5,100 •Progressing necessary consents to enable start on-site •Retail and leisure extension Les 3 Fontaines, Cergy Pontoise 22,000 •Working towards obtainin
Slide 47: Premium outlets are a key differentiator driving Hammerson's returns
Premium outlets are a key differentiator driving Hammerson’s returns Hammerson outlets portfolio: +30% Over £1 billion (13%) of GAV income and net assets CAGR since 2012 Premium Hammerson share of premium outlets results Outlets Underlying 2012 2013 2014 CAGR growth(3) UK retail £m £m £m % % parks E
Slide 48: Hammerson's investment in Value Retail
Hammerson’s investment in Value Retail Hammerson €58m Holding companies shareholder loan 22% equity Bicester La Roca Las Rozas La Vallée Maasmechelen Fidenza Wertheim Ingolstadt Kildare Village Village Village Village Village Village Village Village Village Village ownership via LPs (%) 33 23 19 11
Slide 49: Value Retail share of results
Value Retail share of results 12 months ended 12 months ended Income statement 31 Dec 2014 31 Dec 2013 £m £m Share of results of associate 109.9 101.5 Less: EPRA adjustments (93.9) (88.1) Adjusted earnings of associate 16.0 13.4 Interest receivable 5.8 5.6 Total impact of Value Retail on income stat
Slide 50: VIA Outlets progress at Batavia Stad
VIA Outlets progress at Batavia Stad • 20 tenants rotated including Hugo Boss and Next steps Esprit • Further unit reconfiguration and tenant rotation • Upsized Ralph Lauren store planned for 2015 • Brand sales +11% in 2014 • Improve catering offer • Value uplift 7% since acquisition • Enhanced tour
Slide 51: Maturity profile of debt
Maturity profile of debt Bank drawn debt Secured debt Euro bonds Sterling bonds USPP 500 375 250 125 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2014 Full-year results 51
Slide 52: Lease expiries and breaks as at 31 Dec 2014
Lease expiries and breaks as at 31 Dec 2014 Rents passing that ERV of leases that Weighted average expire/break in expire/break in unexpired lease term to break to expiry 2015 2016 2017 2015 2016 2017 years years £m £m £m £m £m £m Notes (1) (1) (1) (2) (2) (2) (1) (1) United Kingdom Retail Shopping
Slide 53: Rent reviews as at 31 Dec 2014
Rent reviews as at 31 Dec 2014 Projected rents at current ERV of leases Rents passing subject to review in subject to review in Outstanding 2015 2016 2017 Outstanding 2015 2016 2017 £m £m £m £m £m £m £m £m Notes (1) (1) (1) (1) (2) (2) (2) (2) United Kingdom Retail Shopping centres 37.9 9.4 9.2 13.2
Slide 54: Operational statistics
Operational statistics UK France UK France Sales densities(1) £/ft2 €/m2 Tenant sales +2.6% -1.0% 2014 290-590 2,900-8,900 Footfall -1.3% +1.5% 2013 270-560 3,000-9,100 Rent:sales 12.9% 11.4% OCR 20.8% 14.3% Occupancy (%) UK shopping UK retail UK other France Group centres parks interests 31 Decembe
Slide 55: Valuation data
Valuation data Total UK shopping UK retail UK other France continuing centres parks interests portfolio True equivalent yield (%) 31 December 2014 5.4 5.6 5.3 7.2 5.5 31 December 2013 5.8 6.1 5.5 7.4 5.9 Change (bps) -40 -50 -20 -20 -40 ERV (£m)(1) 31 December 2014 148.6 87.1 70.3 13.5 319.4 31 Dece
Slide 56: 2014 components of valuation change
2014 components of valuation change £m Yield Income Development and other Total 450 437 361 237 184 137 112 86 57 64 54 25 23 (4) (35) 2 (10) -50 UK shopping centres France UK retail parks Total portfolio Note: The total portfolio movement includes the movement in the UK other interests portfolio wh
Slide 57: Tenants in administration as at 31 Dec 2014
Tenants in administration as at 31 Dec 2014 31 Dec 2014 55 units in administration (1.0% passing rents) 13 units unoccupied (0.4% passing rents) 31 December 2013 49 units in administration (1.2% passing rents) 22 units unoccupied (0.5% passing rents) 2014 Full-year results 57