Hammerson plc · LSE:HMSO
Hammerson — Investor Presentation (July 2017)
82 slides from Hammerson's investor presentation, Jul 3, 2017
Slide 1: Premium outlets Investor and analyst visit
Premium outlets Investor and analyst visit 3 July 2017 Batavia Stad, Amsterdam
Slide 2: Today's agenda
Today’s agenda 01 Introduction/welcome Timon Drakesmith – CFO and MD Premium Outlets, Hammerson 02 Outlets investment market overview Richard Ching – Partner, Retail & Outlet Malls, Cushman & Wakefield 03 Delivering the outlets experience to brands Octavia Overholser – Business Director, VIA Outlets
Slide 3: The only listed European REIT with strategic exposure to premium outlets
The only listed European REIT with strategic exposure to One of a kind European outlet platform accumulated over 19 years, hard to replicate premium outlets High-growth sector, aligned with consumer preferences and retailer channel orientation Valuable, long-standing partnerships sharing complementa
Slide 4: Through-the-cycle organic sales growth
Through-the- Value Retail: sales density growth (EUR/m2) (1) cycle organic €18,000 sales growth €16,000 €14,000 Sales density 11% CAGR €12,000 €10,000 €8,000 €6,000 €4,000 €2,000 €0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD (2) (1) (2) Sales density CAGR 2007 to 2016 across Value Re
Slide 5: A platform of considerable scale – leading market position
A platform of considerable scale – leading market position £1.9bn Gross asset value (1) Value Retail - £1.4bn (1) 19 Villages Europe’s leading operator of luxury outlet villages Hammerson 40% ownership 13 Countries Growth through extensions VIA Outlets - £0.5bn (1) 60m Visitors p.a. Partnership betw
Slide 6: Operating in two categories of the European outlet market
Operating in two categories of the European outlet market €30,000+ Value Retail International fashion and luxury brands €2,000–€10,000 Mainstream fashion brand outlets VIA Outlets Increasing sales densities €/sq m Low-end discount outlets <€2,000 6
Slide 7: Working collaboratively with capital and operational partners
Working Hammerson Value Retail collaboratively with capital and Retail and investment market experience Luxury brand relationships operational Organisational structure and governance Retail management expertise partners Operations, finance and IT Tourism marketing APG Meyer Bergman Long history inve
Slide 8: Significant contribution to Hammerson's performance
Significant contribution to Hammerson’s performance 5 year value creation (£m) (1) 1,400 3.4x capital return 1,200 1,000 800 600 400 200 0 Premium Capital Income Valuation uplift Premium outlets NAV invested distribution outlets NAV 2011 2016 26% 5 year IRR La Roca Village, Barcelona (1) NAV of Valu
Slide 9: The future: confidence in continued track record of delivery
The future: confidence in continued track record of delivery 10 years consistent sales density growth Bicester, opening October 2017 Structural tourism growth Value Retail Organic growth extensions 34 new boutiques New retailers realising outlets opportunity YoC 15% Value-add asset management Potent
Slide 10: Appendices
Appendices
Slide 11: Premium outlets portfolio
Premium outlets portfolio Value Retail Villages VIA Outlets centres Bicester Village, UK (1) Batavia Stad Amsterdam Fashion Outlet GLA: 22,700m2 GLA: 31,000m2 Boutiques: 135 Units: 110 La Roca Village, Barcelona Fashion Arena Prague Outlet GLA: 23,400m2 GLA: 24,100m2 Boutiques: 141 Units: 98 Las Roz
Slide 12: Bicester Village
Bicester Village 98% Occupancy Commenced trading 1995 Extended: 1997, 2000, 2002, 2008 46% Hammerson ownership October 2017: 34 new boutiques £100m development cost YoC 15% 6 million footfall Third most visited tourist landmark in UK Tax free sales (non-EU visitors) account for 31% of total Village
Slide 13: Tourism is a key driver of outlets sales growth
Tourism is a key driver of outlets sales growth Top 10 source markets represent 68% of sales in EU destinations, and Non-EU arrivals will see growth of c.5% in 2017. All European is forecast to grow by 8% destination markets are predicted to see gains Top tax free nationalities sales growth 2017 (%)
Slide 14: Hammerson 2016 Premium Outlets operational metrics
Hammerson 2016 Premium Outlets operational metrics Operational summary Value Retail (1) VIA Outlets (1) Year ended Year ended Year ended Year ended 31 Dec 2016 31 Dec 2015 31 Dec 2016 31 Dec 2015 Brand sales (€m) (2) 2,562 2,380 437 374 Brand sales growth (%) (3) 8 11 7 10 Footfall (millions) (2) 34
Slide 15: Hammerson's total investment in Value Retail: 40%
Hammerson’s total investment in Value Retail: 40% (1) Hammerson is the second largest shareholder in holding company after management. Largest owner of VR as a whole. Holding companies 25% Other shareholders include APG, SPG, private Hammerson €2m(2) shareholder loan equity investors (family and fri
Slide 16: Hammerson accounting treatment for premium outlets
Hammerson accounting treatment for premium outlets Due to the nature of control over these externally managed investments, Value Retail is accounted for as an associate and VIA Outlets is accounted for as a joint venture Value Retail: share of results of associates (2016 annual report & accounts) –
Slide 17: Hammerson accounting treatment for premium outlets
Hammerson accounting treatment for premium outlets VIA Outlets: investment in joint venture (2016 annual report & accounts) – Note 12 17
Slide 18: Summary tables: Value Retail and VIA
Summary tables: Value Retail and VIA – Tables 12 & 13 (a) (b) (e) (c) (e) (d) (c) (a) IFRS profit of Hammerson proportional share of VR and VIA, as per notes 12 and 13 of 2016 annual report & accounts. (b) Other adjustments include £16.6m revaluation gains of Hammerson’s investor stake in La Roca an
Slide 19: Overview of the outlet investment market
OVERVIEW OF THE OUTLET INVESTMENT MARKET July 2017 Prepared for Investors of
Slide 20: Everyone can drive a car...
Everyone can drive a car...
Slide 21: Yields Converging
Yields Converging 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% Hammerson | Cushman & Wakefield Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 WHY OUTLETS? Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Outlets Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12
Slide 22: The outlet market
THE OUTLET MARKET Small but still growing – Majority of Outlet floor space comprises secondary/tertiary centres Total Shopping Centre floor Total Outlet space in Europe floor space in Europe is is 3 million sqm 159.4 million sqm Hammerson | Cushman & Wakefield 3
Slide 23: Lease structure
LEASE STRUCTURE How are Outlets different? The objective is to POTENTIAL GROWTH keep topping up! TURNOVER RENT BASE RENT Annual reviews based on Inflation + Previous Rent Hammerson | Cushman & Wakefield 4
Slide 24: Small market but big returns
SMALL MARKET BUT BIG RETURNS December 2015 – December 2016 Shopping Centres Outlet Malls 1.8% 11.1% Sales Growth (All Retail) Sales Growth 5.82% 11% Capital Value Growth Capital Value Growth 1.1% 9.8% Rental Growth Rental Growth 6.5% Sales Density Growth Source: Cushman and Wakefield Outlet Valuatio
Slide 25: Huge demand, very little supply
H U G E D E M A N D V E R Y L I T T L E S U P P LY Capital Markets Statistics European Outlet Transactions 2008 - 2017 €1,800 M €1,600 M €1,400 M €1,200 M Cushman & Wakefield over 50% €1,000 M advised on €800 M €600 M €400 M of all outlet transactions in €200 M Europe in 2016 and value €M around 50
Slide 26: Main European outlet operators
M A I N E U R O P E A N O U T L E T O P E R AT O R S Consolidation 23 Still more than 100 outlets not managed by the “Core Group” 13 Number of European Centres (excl. Development) 10 9 7 6 5 5 5 4 2 Hammerson | Cushman & Wakefield 7
Slide 27: Core investors
CORE INVESTORS Core Group of Experience Hammerson | Cushman & Wakefield 8
Slide 28: Expansions but very difficult to get planning consent
E X PA N S I O N S B U T V E R Y D I F F I C U LT T O G E T P L A N N I N G CONSENT Developments – In the last 4 months extensions have added more than a whole new scheme across Europe Opening Soon Recently Opened Designer Outlet Roermond – Phase 4 Batavia Stad Fashion Outlet – Phase 4 & 5 Bicester
Slide 29: The platform is key
T H E “ P L AT F O R M ” I S K E Y Recent Transactions – Large Portfolios openly transacted would command a premium General McArthurGlen Ochtrup Fashion House Gdansk IRUS Fund Split Braintree Freeport Junction 32, Castleford Hermes Junction One, Antrim Peakside Designer Outlet Wolfsburg Fashion Hous
Slide 30: Very limited supply
V E R Y L I M I T E D S U P P LY Outlets currently on the Market Livingston Designer Outlet, Scotland Outlet Centre Bialystok Norwegian Outlet Designer Outlet Luxembourg Festival Park, Ebbw Vale, Wales Outlet Centre Lublin Hammerson | Cushman & Wakefield 11
Slide 31: Appendix: Recent transactions
APPENDIX Recent Transactions Q4 2016 Q4 2016 Q2 2017 Q2 2017 Zweibrucken, Villa Do Getafe, Las Rozas, UK – Junction 32, Poland – Fashion House; Conde, Sevilla and Vicolungo, Castel Guelfo Braintree Freeport, and Gdansk, Warsaw, and Wroclaw SSR and Poznan Clarks Village Sosnowiec PRICE: €587m* PRICE:
Slide 32: Not all cars are the same… Questions?
Not all cars are the same….. Questions?
Slide 33: Contact details
CONTACT DETAILS Richard Ching Partner Head of Outlet Mall Valuations EMEA Direct: +44 (0) 20 7152 5870 Mobile: +44 (0) 7793 808870 richard.ching@cushwake.com
Slide 34: VIA Outlets July 2017
VIIA OUTLETS JULY 2017
Slide 35: Who are we
WHO ARE WE Started 2014 With the goal to create a major outlet platform with strong rental growth potential Principal investors: Hammerson (47%), APG (47%) Value Retail: Leveraging the expertise and brand relationships of the worldÊs pre-eminent operator of luxury outlet centres Value-add asset mana
Slide 36: The VIA Outlets portfolio
THE VIA OUTLETS PORTFOLIO BATAVIA STAD FASHION ARENA FREEPORT LISBOA HEDE LANDQUART MALLORCA ZWEIBRUCKEN VILA DO CONDE SEVILLA WROCLAW 2014 2015 2016 2017
Slide 37: The VIA Outlets portfolio
THE VIA OUTLETS PORTFOLIO 10 ASSETS HEDE 8 COUNTRIES BATAVIA STAD TOTAL GLA WROCLAW 238,501 M2 FASHION ARENA ZWEIBRUCKEN LANDQUART TOTAL SALES €846 M VILA DO CONDE TOTAL FOOTFALL FREEPORT MALLORCA 25.6 M SEVILLA
Slide 38: VIA Outlets gross asset value and equity contribution
THE VIA OUTLETS PORTFOLIO Gross Asset Value €1.2 bn Equity Contribution Net Rental Income €717 m €65 m
Slide 39: Delivery of sales growth
DELIVERY OF SALES GROWTH 2013 - 2017 Sales uplift 140 TOTAL TURNOVER (MILLIONS EUR) 105 70 35 0 BATAVIA STAD HEDE FASHION ARENA LANDQUART FREEPORT LISB. MALLORCA
Slide 40: Asset management initiatives
ASSET MANAGEMENT INITIATIVES BRANDS MARKETING TOURISM RECONFIGURATIONS/EXTENSIONS FOOD & BEVERAGE RETAIL DEVELOPMENT/MANAGEMENT
Slide 41: Capex program design process
CAPEX PROGRAM DESIGN PROCESS Strategic Objectives INCREASE FOOTFALL INCREASE SPEND PER VISIT Target a different customer Increase dwell time Increase visit frequency Improve customersÊ experience Create new reason to be considered for Improve brandsÊ performance brands and customers Create a better
Slide 42: Capex program design process
CAPEX PROGRAM DESIGN PROCESS Strategic Objectives Problem analysis Poor arrival experience Inadequate dining experience Undifferentiated brands stores identities Parking constraints Poor mall signage Bland consumer environment Visual clutter Toilets need upgrade Tool Selection Final Decision
Slide 43: Capex program design process
CAPEX PROGRAM DESIGN PROCESS Strategic Objectives Problem analysis Tool Selection Lighting Landscaping Food and beverage Parking Storefronts Mall furniture New phase KidsÊ areas Mall paving Signage Shopfits VIP rooms Final Decision
Slide 44: Fashion Arena Prague Outlet - Before
FASHION ARENA PRAGUE OUTLET - BEFORE
Slide 45: Fashion Arena Prague Outlet - Now
FASHION ARENA PRAGUE OUTLET - NOW
Slide 46: Fashion Arena Prague Outlet - Before
FASHION ARENA PRAGUE OUTLET - BEFORE
Slide 47: Fashion Arena Prague Outlet - Now
FASHION ARENA PRAGUE OUTLET - NOW
Slide 48: Fashion Arena Prague Outlet - Before
FASHION ARENA PRAGUE OUTLET - BEFORE
Slide 49: Fashion Arena Prague Outlet - Now
FASHION ARENA PRAGUE OUTLET - NOW
Slide 50: Fashion Arena Prague Outlet - Before
FASHION ARENA PRAGUE OUTLET - BEFORE
Slide 51: Fashion Arena Prague Outlet - Now
FASHION ARENA PRAGUE OUTLET -- NOW
Slide 52: Fashion Arena Prague Outlet
FASHION ARENA PRAGUE OUTLET Extensive capital improvements SALES DENSITY T O TA L T U R N O V E R G R O W T H 11% +42% 14% 11% Significant improvements in brand TURNOVER mix +51% 8% Shift to tourism-led Marketing 20 1 4 1 5 6 7 2 0 2 0 1 20 1
Slide 53: Freeport Lisboa Fashion Outlet - Before improvement works
FREEPORT LISBOA FASHION OUTLET - BEFORE IMPROVEMENT WORKS
Slide 54: Freeport Lisboa Fashion Outlet - Before improvement works
FREEPORT LISBOA FASHION OUTLET - BEFORE IMPROVEMENT WORKS
Slide 55: Freeport Lisboa Fashion Outlet - Before improvement works
\ FREEPORT LISBOA FASHION OUTLET - BEFORE IMPROVEMENT WORKS
Slide 56: Freeport Lisboa Fashion Outlet scope of work
FREEPORT LISBOA FASHION OUTLET SCOPE OF WORK DURING CONSTRUCTION PRIOR TO INITAITIVE RECONFIGURE NORTH LOOP TO ENHANCE RETAIL PRESENTATION, REDESIGN PEDESTRIAN ENTRY EXPERIENCE AT EAST AND WEST END INTRODUCE NEW FOOD & BEVERAGE OFFERS AND ENVIRONMENTS RECONFIGURE, REFIT & REFINISH SELECTED STOREFRON
Slide 57: Freeport Lisboa Fashion Outlet video
FREEPORT LISBOA)$6+,21287/(7 VIDEO
Slide 58: Zweibrucken Fashion Outlet - Before
ZWEIBRUCKEN FASHION OUTLET - BEFORE
Slide 59: Zweibrucken Fashion Outlet - After
ZWEIBRUCKEN FASHION OUTLET - AFTER
Slide 60: Zweibrucken Fashion Outlet - Before
ZWEIBRUCKEN FASHION OUTLET - BEFORE
Slide 61: Zweibrucken Fashion Outlet - After
ZWEIBRUCKEN FASHION OUTLET - AFTER
Slide 62: Zweibrucken Fashion Outlet - Before
ZWEIBRUCKEN FASHION OUTLET - BEFORE
Slide 63: Zweibrucken Fashion Outlet - After
ZWEIBRUCKEN FASHION OUTLET - AFTER
Slide 64: Zweibrucken Fashion Outlet - Before
ZWEIBRUCKEN FASHION OUTLET - BEFORE
Slide 65: Zweibrucken Fashion Outlet - After
ZWEIBRUCKEN FASHION OUTLET - AFTER
Slide 66: Zweibrucken Fashion Outlet - Before
ZWEIBRUCKEN FASHION OUTLET - BEFORE
Slide 67: Zweibrucken Fashion Outlet - After
ZWEIBRUCKEN FASHION OUTLET - AFTER
Slide 68: Zweibrucken Fashion Outlet - Before
ZWEIBRUCKEN FASHION OUTLET - BEFORE
Slide 69: Zweibrucken Fashion Outlet - After
ZWEIBRUCKEN FASHION OUTLET -AFTER
Slide 70: Conclusion - successfully delivering the strategy
CONCLUSION - SUCCESFULLY DELIVERING THE STRATEGY +€1 billion fund, achieved within 3 years across 10 outlets Introducing new tenants (including Coach, Armani, Hackett, Under Armour and Michael Kors) Brand relationships playing out – now six outlets with a Polo Ralph Lauren store Marketing initiative
Slide 71: Thank you! VIA Outlets
THANK YOU! VIIA OUTLETS JULY 2017
Slide 72: Batavia Stad Amsterdam Fashion Outlet
BATAVIA STAD BATAVIA STAD AMSTERDAM FASHION OUTLET
Slide 73: Batavia Stad Fashion Outlet
Batavia Stad Fashion Outlet • 31,100 m2 • 150 units • 2.35 million p.a. • Opened July 2001 • Extended 2007 • Extended 2009 • VIA ownership 2014 • May 2017 Phase 4 opened Batavia Stad Fashion Outlet 2017 | STRICTLY PRIVATE AND CONFIDENTIAL
Slide 74: Well located
Well located • 45 mins Schiphol airport (55m passengers) • 60 mins Amsterdam and Utrecht by motorway • 40 mins direct train from Amsterdam • Shuttle bus every 20 mins from train station • Markermeer public jetties walking distance Batavia Stad Fashion Outlet 2017 | STRICTLY PRIVATE AND CONFIDENTIAL
Slide 75: Developments since 2014
Developments since 2014 Before After Batavia Stad Fashion Outlet 2017 | STRICTLY PRIVATE AND CONFIDENTIAL
Slide 76: Developments since 2014
Developments since 2014 Before After Batavia Stad Fashion Outlet 2017 | STRICTLY PRIVATE AND CONFIDENTIAL
Slide 77: Developments since 2014
Developments since 2014 New Polo Ralph Lauren flagship store Batavia Stad Fashion Outlet 2017 | STRICTLY PRIVATE AND CONFIDENTIAL
Slide 78: Remerchandising since 2014
Remerchandising since 2014 NEW RELOCATION REFIT EXIT 53 units 29 units 45 units 36 units Batavia Stad Fashion Outlet 2017 | STRICTLY PRIVATE AND CONFIDENTIAL
Slide 79: Batavia Stad Fashion Outlet KPIs
Batavia Stad Fashion Outlet KPIs Sales (€m) Yield (€/m2) Spend per visit (€) +12% +12% vs +13% +13% +16% +15% +12% +36% +6% vs LY LY vs LY vs LY vs LY vs LY vs LY vs LY vs LY 2014 2015 2016 2014 2015 2016 2014 2015 2016 Batavia Stad Fashion Outlet 2017 | STRICTLY PRIVATE AND CONFIDENTIAL
Slide 80: New extension
New extension • 5,500 m2 sales floor • 45 new units • Soft opening April 12th • Grand opening May 12th Batavia Stad Fashion Outlet 2017 | STRICTLY PRIVATE AND CONFIDENTIAL
Slide 81: Leasing of the extension
Leasing of the extension Current By EOY America Today Samsonite Fred de la Bretoniere Farinella marlies|dekkers Essenza Summum Woman Circle of Trust Watch Station Noppies WMF Columbia G-star Aaiko Profuomo Skechers O bag Extension YTD: adidas Lindt Occupancy current 65% Tommy Hilfiger By year end 71
Slide 82: Thank you!
Thank you ! BATAVIA STAD AMSTERDAM FASHION OUTLET