Hammerson Plc · LSE:HMSO
Hammerson — FY2010 Earnings Presentation
36 slides from Hammerson's earnings presentation, 2011
Slide 1: Welcome to our 2010 results
Good morning everyone, and welcome to our 2010 results. I hope that as you arrived you appreciated that we are holding this presentation at a Hammerson development - Bishops Square is a great example of Hammerson in action… When we secured the site in 2000 everybody thought that this area was city f
Slide 2: Presentation overview
Now to this morning’s presentation itself I’ll give a quick summary before Simon runs through the financials, and I will give an update on how we are responding to current markets and an overview of progress we are making with developments. Now turning to the results… 2
Slide 3: A good set of figures
This is a good set of figures… Profit is up 11% NAV is up 18% to £4.95 and there has been further continued growth in the dividend. So turning to the key drivers behind the numbers… 3
Slide 4: Strategy progress and key drivers
We have a clear strategy for the business and you can see that we have made excellent progress with its implementation. A focus on customers’ sales and cost control has lead to growth in our like-for- like income of 3.5%, and our targeted approach to securing tenants has increased occupancy to over
Slide 5: Portfolio management and SQY Ouest acquisition
In 2010 we realised over £550 million through the disposal of mature assets, and reinvested some £220 million. Portfolio management is a continuous exercise, and therefore you should expect to see further transaction activity from Hammerson. A couple of weeks ago we announced the acquisition of SQY
Slide 6: Market trends: investor demand, banks, retailers
1. There is strong investor demand for property, driven by the attractive pricing in comparison to other asset classes. However, investors are very much focused on the quality income streams that prime property provides. By contrast secondary properties are suffering structural high vacancy which ha
Slide 7: Financial Results
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Slide 8: Like-for-like rental income growth
For properties that we have owned throughout the last two years, like for like growth in rental income was 3.5%. Our French portfolio showed a small decline whilst we saw strong growth in our UK Shopping Centres. Although we benefited from the fact that both Bristol and Leicester are maturing, estab
Slide 9: Adjusted profit before tax increase
Adjusted Profit before tax increased by £14.5 million to £144.5 million. The main reasons for this increase were: £m Lower interest costs including fees 12 Lower overhead costs, net of management fees 4 Rent reviews, reduced vacancy and higher 7 carpark and commercial income Partly offset by Net eff
Slide 10: Net debt and net asset value per share
Net debt reduced by £330 million in 2010 to £1.8 billion at the end of the year. This reduction reflected the fact that we realised £190 million more from disposals than we spent on acquisition and development; our operating cash flow was strong and exchange translation–movements were favourable. Ne
Slide 11: NAV analysis and portfolio revaluation
…is analysed here. The portfolio revaluation generated an increase of 63 pence per share across the portfolio. 11
Slide 12: Yield improvement across sectors
Strengthening demand during 2010 from investors for prime property has been reflected in lower yields in every sector. As you can see our average yields improved by 80 basis points in the UK and 30 basis points in France 12
Slide 13: Capital and total returns
In the year the capital return was 9.3% and the total return 15.0%. In the UK, 90% of the uplift in value was attributable to lower yields but encouragingly we also benefited slightly from improved rental values. The capital return of 13.2% from UK shopping centres compared with 10.2 % for IPD and t
Slide 14: Debt maturities and capital expenditure
In the short term we have very little debt maturing, £38 million in 2012 and £175 in 2013. However, our three principal bank facilities, which are currently largely undrawn, mature in 2012 and 2013. We will start to refinance these in the first half of 2011. In 2011, capital expenditure on developme
Slide 15: Credit measures and financial position
Both our balance sheet and our cash flow credit measures are healthy. Interest cover in 2010 was 2.6 times and the ratio of net debt to EBITDA was 7.2 Around 80% of the value of French assets is hedged. Importantly we do not rely on the secured debt market, which continues to be difficult, but borro
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Slide 17: Portfolio quality and retail focus
Thanks Simon A moment ago I talked about our strong position, particularly because of the quality of our assets. As you can see here we are nearly 90% retail focused, with some of the very best shopping centres and parks in the UK and France. We also have some excellent offices in London, which we w
Slide 18: Letting space, vacancy and rents
As you know I have a strong personal focus on growing income from our portfolio and this starts with letting space. Over the course of the last year we have halved vacancy in our UK portfolio, and kept occupancy at very high levels in the French portfolio. These vacancy figures remain significantly
Slide 19: Customer focus and leasing
I mentioned to you before that we had reorganised our leasing teams in the UK to become more customer focused, and this approach is starting to bear fruit. We have strengthened relationships with some of our existing customers, many of whom are trading well and looking for new space. In addition, ou
Slide 20: Refreshing centres and improving appeal
Retail is a fast moving, dynamic sector, and in order to continue to attract quality tenants, and help them grow their sales, we are working hard to continually refresh centres and improve their appeal. In turn this will increase the financial returns of each property We’re actively improving the ca
Slide 21: French portfolio performance and refurbishment
The French portfolio has shown excellent performance over the last 5 years, outperforming the UK portfolio by 22%. In order that we can ensure that the existing assets are in a position to continue performing well, we’re undertaking a refurbishment programme at the majority of our French centres. Th
Slide 22: UK retail parks
Our 16 UK retail parks, worth roughly £1billion have, 98% occupancy, the majority (60% by space) have open A1 consent, and affordable rents, at an average of £18 per square foot. We continue to work with a number of successful sub sectors, for example, the home improvement businesses who are the bed
Slide 23: Retail park extension programme
We continue to invest to keep the parks fresh and attractive to tenants, thus maintaining vacancy and supporting rents. We are proposing an extension programme over the next few years which in total is worth some £50 million, and as you can see from the examples on the slide, they will show good pro
Slide 24: Footfall, sales and trading performance
Our hard work has led to increased footfall and sales in both countries. Our retail centres in the UK and France generate over 230 million visits each year, so increases of one or two per cent equate to over 2 million extra visitors, and clearly that’s good for our retailers. The job of our marketin
Slide 25: French like-for-like passing rents
In France, this slide shows how like-for-like passing rents have moved over two years. Rents have been sustained over a tough period for tenants, and looking forward we should benefit from indexation, especially if there are rises in inflation. Looking at the UK … 25
Slide 26: UK like-for-like passing rents
We’ve more than compensated for terminations and expiries, and increased rents at review, so that our like-for-like passing rents increased over the period. So that’s the existing portfolio, let me turn now to developments… 26
Slide 27: Development
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Slide 28: Development pipeline
Hammerson has a strong reputation as a developer, an activity which remains an important element of our portfolio management, with the ability to enhance returns. We have a substantial pipeline of opportunities, however we will only commence these if they meet our financial criteria, and they will b
Slide 29: French developments on site
As I said, we are on-site with two developments in France. Les Terrasses du Port, will be one the largest retail developments in France over the next few years and as you can see, construction of this significant development has now begun. Since purchasing the site we redesigned the project and opti
Slide 30: UK retail and London office schemes
We have a number of projects where we have made significant progress and could start on site in the next year or two. We’ve revised our major UK retail schemes at Sevenstone in Sheffield and Eastgate Quarters in Leeds. To improve the viability and suitability we have simplified the schemes, thus tak
Slide 31: Brent Cross Cricklewood and Bishopsgate Goodsyard
We have two major projects which we continue to progress. These are two of the largest schemes proposed for London, and have significant longer-term value. At Brent Cross Cricklewood, which in its entirety is a £4 billion project, we bought out Brookfield’s share of the Cricklewood element, giving u
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Slide 33: Summary and questions
The retail landscape is polarising, and Hammerson has the quality of assets and the dynamic management to capitalise on this trend, thus maintaining occupancy and growing income. We have recycled capital and invested in developments and acquisitions to enhance the growth prospects of the portfolio.
Slide 34: 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 35: PMWM
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Slide 36: Top Ten Properties
@e@e) Top Ten Properties Ownership (%) Va Italie 2, Paris 13eme 100 Brent Cross, London NW4 41 BS Bullring, Birmingham 33 BS Highcross, Leicester 60 EIS The Oracle, Reading 50 BS Cabot Circus, Bristol 50 WestQuay, Southampton 50 BS Union Square, Aberdeen 100 Fa _ Les Trois Fontaines, Cergy Pontoise