Hammerson plc · LSE:HMSO
Hammerson — Debt Investor Presentation (December 2019)
42 slides from Hammerson's debt investor presentation, December 2019
Slide 1: Fixed Income Investor Update December 2019
Fixed Income Investor Update December 2019 Festival of Light, Dundrum
Slide 2: Agenda
Agenda 01 Introduction and strategy 02 UK, France and Ireland flagship destinations 03 Premium Outlets 04 City Quarters and Sustainability 05 Financial highlights 2
Slide 3: Hammerson plc Key Metrics
Hammerson plc Key Metrics 30 June 30 June Hammerson plc (“Hammerson”) was established in 2019 2019 1942 and is based in London, UK. The company, (Pro forma)(1) listed on the London Stock Exchange, is a constituent of the FTSE250 index and has a total portfolio value Net debt £3,055m £3,447m of £9.5b
Slide 4: £9.5 billion leading pan-European retail platform
£9.5 billion leading pan-European retail platform(1) 53 European destinations 8% 8% 29% 14 countries Top 3 27% 19% market position in all chosen sectors 10% 2.2m m2 retail space UK flagship destinations - £2.7bn 425m France flagship destinations - £1.8bn Ireland flagship destinations - £0.9bn visito
Slide 5: Continued focus on debt reduction, active portfolio management and multi-use development
Continued focus on debt reduction, active portfolio management and multi-use development Capital Optimised Operational efficiency portfolio excellence Reduce debt Exit Retail Parks and Manage the structural pursue portfolio-wide shift in retail disposals Establish City Quarters 5
Slide 6: Debt reduction remains a key priority
Debt reduction remains a key priority Reduce debt and portfolio-wide disposals • Contracts exchanged with AXA for 75% of Italie Deux and the forward sale of the Italik extension for €473m (£423m), representing 8.5% discount to Capital December 2018 book value, NIY 4.1% efficiency • Total disposals o
Slide 7: Manage the structural shift in retail
Manage the structural shift in retail – actively repurposing space, maintaining vibrancy Softer UK leasing metrics, stronger in France and Ireland UK flagships over last 18 months(1): • Passing rents -6.2% UK flagships H1 2019: Operational • Tenant restructuring a continuing theme; 45 units affected
Slide 8: UK flagship destinations
The Oracle, Reading UK flagship destinations
Slide 9: H1 2019 operational update
UK flagship destinations H1 2019 operational update UK flagship destinations H1 2019 H1 2018 Occupancy (%) 96.4 97.2 Leasing activity (£m) 4.4 6.8 Leasing vs. ERV (%)(1) -4 +5 Leasing vs. previous passing (%)(1) -8 +5 In-store retail sales (%)(2) -2.0 -2.5 Footfall (%)(3) +0.5 -1.6 Cabot Circus, Bri
Slide 10: Footfall performance supported by operational excellence
UK flagship destinations Footfall performance supported by operational excellence Hammerson UK flagships footfall vs. national index three month moving average(1) 2% 1% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun -1% 2018 2019 -2% -3% -4% -5% Hammerson National Index Supe
Slide 11: Managing the challenge from tenant restructuring
UK flagship destinations Managing the challenge from tenant restructuring Cumulative restructuring impact on rent - Q1 2018 – Q2 2019 (£m) Key stats since January 2018(1) 18.0 • 100 units affected by restructuring • £5.5m run rate of rent lost (1.6% of 16.0 passing rent)(2) 14.0 • 49% of Hammerson u
Slide 12: Shifting the mix, leasing to winners
UK flagship destinations Shifting the mix, leasing to winners Category Current Future New Rent/ Near-term mix(1) mix(1) leasing(1) sq ft rental levels Department stores 39% c.28% nil c.£10/sq ft High street fashion (traditional) 15% c.10% nil c.£30/sq ft F&B 9% c.12% 31% c.£40/sq ft High street fash
Slide 13: Proactively reconfiguring department store space
UK flagship destinations Proactively reconfiguring department store space House of Fraser Indicative plans for further repurposing Highcross, Leicester Replaced with upsized Zara and JD Sports flagships, Adventure Golf, restaurants and additional car parking Additional £1.5m of rental income £17m pr
Slide 14: France flagship destinations
France flagship destinations Les Terrasses du Port, Marseille
Slide 15: Portfolio remains weighted towards flagship assets
France flagship destinations Portfolio remains weighted towards flagship assets Focus on flagship destinations 89% Les Terrasses du Port Italie Deux Les 3 Fontaines Other Portfolio value: £2.0bn 7 France flagship destinations Largest three assets 89% of portfolio(1) 1 By value at 30 June 2019 includ
Slide 16: H1 2019 operational update
France flagship destinations H1 2019 operational update France flagship destinations H1 2019 H1 2018 Occupancy (%) 97.0 97.1 Leasing activity (£m) 2.8 3.6 Leasing vs. ERV (%) +4 +2 Leasing vs. previous passing (%) +5 +4 In-store retail sales (%)(1) +1.3 +2.9 Footfall (%)(2) +0.5 +2.3 Les Terrasses d
Slide 17: On-site extensions update
France flagship destinations On-site extensions update Les 3 Fontaines • Scheme revised to increase proportion of leisure and F&B • Food hall opening spring 2020, 100% pre-let • Opening of main phase Q2 2021 • Leisure phase opening mid 2023 • Good progress on pre-letting, now 39%(1) (Dec18: 23%) • C
Slide 18: Ireland flagship destinations
Summer Fest, Dundrum, Dublin Ireland flagship destinations
Slide 19: 200,000m2 of prime space plus sustainable development opportunities
Ireland flagship destinations 200,000m2 of prime space plus sustainable development opportunities Focus on flagship destinations Dundrum Pavilions Ilac Developments Portfolio value: £1.1bn Dundrum 68% of portfolio(1) 1 By value at 30 June 2019 including developments 19
Slide 20: Key retail centres map
Ireland flagship destinations Key retail centres map 20
Slide 21: H1 2019 operational update
Ireland flagship destinations H1 2019 operational update Ireland flagship destinations H1 2019 H1 2018 Occupancy (%) 99.5 98.9 Leasing activity (£m) 1.2 1.5 Leasing vs. ERV (%)(1) +4 +6 Leasing vs previous passing (%)(1) +12 +23 Footfall (%) +0.6 -3.0 Five Guys, Swords Pavilions 1 Principal leases o
Slide 22: Premium outlets
Freeport Lisboa, Lisbon Premium outlets
Slide 23: Premium outlets portfolio
Premium outlets portfolio Value Retail Villages VIA Outlets centres Bicester Village, Oxford Batavia Stad Amsterdam Fashion Outlet GLA: 28,000m2 GLA: 30,800m2 Boutiques: 163 Units: 124 La Roca Village, Barcelona Fashion Arena Prague Outlet GLA: 22,800m2 GLA: 24,600m2 Boutiques: 131 Units: 101 Las Ro
Slide 24: Tiered European outlet market
Premium outlets Tiered European outlet market Sales densities €/m2 €30,000+ International fashion and luxury brands €2,000–€10,000 Mainstream fashion brand outlets <€2,000 Low-end discount outlets 24
Slide 25: H1 2019 operational update
Premium outlets H1 2019 operational update Value Retail(1) VIA Outlets(1) H1 2019 H1 2018 H1 2019 H1 2018 GAV Hammerson share (£m) 1,931 1,762 659 620 Brand sales growth (%)(2) 11 6 10 6 Footfall growth (%)(2)(3) 7 2 8 0 Average sales density growth (%)(2) 8 3 7 5 Like-for-like net rental income gro
Slide 26: Significant contribution to Group performance
Premium outlets Significant contribution to Group performance Premium outlets value creation (£m)(1) 7.5 year IRR - 24% 1,800 1,600 1,400 1,200 1,000 1,220 800 (132) 1,641 600 (313) 653 400 200 214 0 Premium Capital Distributions Distributions Valuation Premium outlets NAV invested - operating - ref
Slide 27: Future opportunities and sustainability
Rooftop Beehives, Silverburn, Glasgow Future opportunities and sustainability 27 The Goodsyard, London
Slide 28: Target to be Net Positive for carbon, water, resource use and socio-economic impacts
Hammerson has set a target to be Net Positive for carbon, water, resource use and socio- Carbon Resource Use economic impacts by 2030 Net Positive for carbon means Net Positive for resource use means waste avoided, recycled carbon emissions or re-used exceeds materials used avoided exceed that are n
Slide 29: Ambitious approach to sustainability underpins everything we do
Sustainability Ambitious approach to sustainability underpins everything we do We create destinations that deliver positive impacts economically, socially and environmentally Our target is to be net positive for carbon, resource use, water and waste by 2030 Significant reductions in resource usage d
Slide 30: Beyond retail
City Quarters Beyond retail City Quarters potential Martineau Galleries, Birmingham 100,000m2 workspace 1,300 residential units 100 acres 200 hotel rooms Restaurants, cafés, shops and high quality public realm 6,600 residential units 1,600 hotel rooms 300,000m2 work space 9 parks and public spaces 3
Slide 31: The City Quarters opportunity
City Quarters The City Quarters opportunity Retail F&B Residential Workspace Leisure Education Culture Hotel Public spaces Next Start on Key schemes Area planning site submission Les 3 Fontaines, Cergy 8,400m2 n/a On site Citywall House, Southampton 2,800m2 2019 Q2 2020 Near term Dundrum Bui
Slide 32: Flexibility over future capital expenditure
Group Flexibility over future capital expenditure Capex 2018-2020 Committed 2018 2019 2020 Actual Forecast Forecast £m £m £m On-site developments 95 70 80 Other committed capex(1) 74 25 - 169 95 80 Discretionary Flagship destination investment 43 38 40 City Quarters 2 7 20 45 45 60 Total 214 140 140
Slide 33: Financial highlights
Financial highlights Bullring & Grand Central, Birmingham
Slide 34: Credit ratios
Credit ratios 30 June 2019 Internal 30 June 2019 31 Dec 2018 (Pro forma)(1) guidelines Net debt £3,055m £3,447m £3,408m Gearing 61% <85% 69% 63% LTV – headline 37% <40% 40% 38% LTV – fully proportionally consolidated 43% <45% 46% 43% Cash and undrawn facilities £1,129m £736m £729m Net debt/EBITDA 9.
Slide 35: Comfortably within debt covenants
Comfortably within debt covenants Gearing(1) & Interest Cover Tightest Description covenants 80 4 Gearing <150% 75 3.4x 70 3.5 Interest cover ≥ 1.25x 65 3 60 55 61% 2.5 50 45 2 40 35 1.5 30 1 25 20 0.5 15 10 0 2011 2012 2013 2014 2015 2016 2017 2018 H1 19 1 H1 2019 gearing is proforma for the Italie
Slide 36: Gearing sensitivity
Gearing sensitivity(1) Disposals (£m)(3) 0 100 200 300 400 500 600 700 800 900 1000 Reduction in Group 0% 61% 59% 57% 55% 53% 51% 49% 47% 45% 43% 41% 5% 67% 65% 63% 61% 59% 56% 54% 52% 50% 48% 45% values(2) 10% 75% 73% 70% 68% 65% 63% 60% 58% 55% 53% 50% 15% 85% 82% 79% 76% 73% 71% 68% 62% 62% 60% 5
Slide 37: Credit rating
Credit rating Senior unsecured long Rating Agency Effective from term rating Outlook Moody’s August 2019 Baa1 Negative Fitch June 2019 BBB+ Stable Latest rating publications Moody’s Updated Credit Opinion (16 August 2019) “Hammerson plc’s Baa1 long-term issuer rating reflects (1) the prime quality o
Slide 38: Hammerson's resilience to a UK downturn
Hammerson’s resilience to a UK downturn Greater geographic diversity June 2019 December 2007 UK property/total property assets 51% 71% Property value outside UK £4.7bn £2.1bn London Office exposure 0% 22% Lower committed development Development properties/total property assets 7% 14% Development cap
Slide 39: Average of £400m disposed per year over the last five years
Average of £400m disposed per year over the last five years Hammerson annual disposal proceeds (£m) 700 600 500 400 300 200 100 0 2014 2015 2016 2017 2018 2019 YTD UK flagships UK retail parks UK other UK office France Ireland 39
Slide 40: Key disposals achieved 2017 – 2019 YTD
Key disposals achieved 2017 – 2019 YTD Proceeds(1) Buyer £m 2017: average -3% below book value Westwood and Westwood Gateway Retail Parks, Thanet 80 BMO (private equity) Saint Sébastien, Nancy 140 AEW (private equity) Place des Halles, Strasbourg 167 Greenstone Oxford Limited 2018: average -7% below
Slide 41: Debt maturity profile
Debt maturity profile Debt maturity profile 30 June 2019 (£m)(1) 1,000 900 800 700 Revolving credit facilities 600 Private placement 500 Sterling bonds 400 Euro bonds Secured debt 300 200 100 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 1 Proportionally consolidated, excluding
Slide 42: Conclusion
Conclusion Concluding Thoughts We create vibrant, continually evolving spaces, in and around thriving cities, where people and brands Our purpose want to be. We seek to deliver value for all our stakeholders and to create a positive and sustainable impact for generations to come. Prime quality portf
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