2019 full-year results 25 February 2020 · 2020-06-10 · 5 Loan excludes premium outlets net debt...
Transcript of 2019 full-year results 25 February 2020 · 2020-06-10 · 5 Loan excludes premium outlets net debt...
2019 full-year results
25 February 2020
Village Noël, Les Terrasses du Port, Marseille
Agenda
01 2019 full-year overview
02 2019 full-year financial results
03 Strategic and operational review
04 Conclusion
Additional disclosure
2
Westquay, Southampton
Freeport Lisboa, LisbonSummer fest, Dundrum, Dublin
Les Terrasses du Port, Marseille
Delivering strategic progress in a challenging environment
31 Reflects net proceeds of £428m from disposal announced on 21 February 2020 of seven retail park portfolio and Abbey Retail Park, Belfast
Debt reduction target surpassed, retail parks exited Gross proceeds of £975m since January 2019
12 Retail Parks and 75% of Italie Deux
Pro forma(1) net debt at £2.4bn (vs target 2019 <£3bn), Gearing 55%, LTV 35%, LTV 42% fully proportionally consolidated
Earnings reducing due to disposalsEPS 28.0p (-8.5%), DPS 25.9p (no change)
FY20 dividend to be rebased to 14.0p
Decline in flagship valuations; premium outlets growthGroup capital return -9.8%, flagships -14.8%, premium outlets +8.2%
NAVPS 601p (-18.6%)
Diverse portfolio dilutes UK income weaknessGroup LfL NRI +0.5%, UK flagships –6.7%, premium outlets +10.8%
Weak UK leasing metrics, stronger in France and Ireland
Proactive management vital in polarising market100% of new UK flagship leasing to target categories
Repurposing department stores in Dundrum and The Oracle
Footfall up in all regions, outperforming benchmarks
Full-year overview
4
Hammerson annual disposal proceeds (£m)
1 Key disposals: Italie Deux (75%), Dallow Road, Abbotsinch, St Oswald’s and Parc Tawe 2 Eight retail parks: Abbey, Central, Cleveland, Cyfarthfa, Elliott’s Field, Telford Forge, Ravenhead and The Orchard Centre
£1bn transacted in the last 12 monthsFull-year financial results
0
100
200
300
400
500
600
700
2015 2016 2017 2018 2019 2020 YTD
UK flagships UK retail parks UK other France Ireland
(1) (2)
See slide 69
51 UK Flagships, FY19 only
Delivering against strategy in polarising retail marketFull-year overview
July 2018Strategic Agenda Progress to date
• Delever to mid 30%s LTV
• £300m share buybacks
• Defer Brent Cross
• Net debt reduced by a third to £2.4bn
• Buybacks programme ended July 2019
• Brent Cross and Croydon on hold
• Exit Retail Parks
• £1.1bn of disposals targeted
• Focus on flagships and premium outlets
• Progress City Quarters
• Retail Parks exit achieved
• Total disposals of £1.4bn
• Portfolio - flagships now 57%, premium outlets 34%
• VIA Outlets 50/50 JV
• Planning for three City Quarters schemes
• Step change retailer line-up
• Reducing costs
• Significant repurposing underway
• 100% of new leasing to target categories(1)
• Strong leasing in France and Ireland
• £7m annualised cost savings
Operational Excellence
Optimised Portfolio
Capital Efficiency
6
Priorities remain: reduce debt; maintain vibrancy; City QuartersFull-year overview
Operational Excellence
Optimised Portfolio
Capital Efficiency
Key priorities
• Further cross-portfolio disposals to strengthen balance sheet
• Disciplined capital expenditure
• Cost control
• Diverse portfolio: Flagships; Premium Outlets; City Quarters
• VIA Outlets: organic growth and acquisitions
• Progress City Quarters
• Repurposing department stores
• Shift tenant line-up to target categories
• Enhance visitor experience and drive footfall
• Net Positive
Our Net Positive commitments
7
Full-year overview
Hammerson controlled impacts
Hammerson controlled & development
impacts
Hammerson, tenant
& development impacts
2016 – 2020Phase One
2021 – 2025Phase Two
2026 – 2030Phase Three
Hammerson set a target in 2015 to be Net Positive for carbon, water, resource-use and socio-economic impacts by 2030
See slides 76-78
Significant progress against ambitious targets
8
Full-year overview
1 EPRA LfL2 Service charge and car park savings from at directly managed assets at 100%3 Source: London Benchmark Group at 100%
FY19 achievements towards Net Positive
-12%carbon(1)
-12%electricity(1)
-7%water(1)
£900kenergy cost savings(2)
£1.4mcommunity investment spend(3)
Thassalia project, Les Terrasses du Port PV array, Silverburn
2019 full-yearfinancial results
Victoria Leeds, Leeds
FY headline results
10
Full-year financial results
31 December 2019 31 December 2018 Change
Income statement Net rental income (£m) 308.5 347.5 (11.2%)
Adjusted profit (£m) 214.0 240.3 (10.9%)
Adjusted EPS (p) 28.0 30.6 (8.5%)
Total dividend (p) 25.9 25.9 −
Balance sheet Portfolio value (£m)(1) 8,327 9,938 (9.8%)
EPRA NAVPS (p) 601 738 (18.6%)
Net debt (£m) 2,843 3,406 (16.5%)
Gearing 65% 63% +2pp
LTV – headline 38% 38% −
LTV – full proportionally consolidated
45% 43% +2pp
1 Figures on a proportionally consolidated basis including premium outlets and assets held for sale2 Portfolio value change reflects capital return
(2)
30.6
28.0
3.1
1.5
0.5 0.6
1.5
0.4
20.0
22.0
24.0
26.0
28.0
30.0
Dec 2018 Net disposals LfL NRI Net admin Premium outlets Interest FX, tax and other Dec 2019
11
2019 EPS walk (pence per share)
1 Other includes change in NRI due to developments (-0.3p) and impact of share buyback (+0.8p)
EPS walk – disposals remain key driver of EPS declineFull-year financial results
(1)
12
LfL NRI movements across the portfolio (%)
LfL NRI movementsFull-year financial results
1.0
10.6
-5.5
-2.6
4.2
-6.6
-0.1
11.1
1.0
-7.4
0.1
-6.8
0.5
10.8
-1.4
-5.0
2.1
-6.7
-8 -6 -4 -2 0 2 4 6 8 10 12
Group
Premium Outlets
UK Retail Parks
Ireland Flagships
France Flagships
UK Flagships
FY19
H1
H2
FY19
H1
H2
FY19
H1
H2
FY19
H1
H2
FY19
H1
H2
FY19
H1
H2
(1)
1 Value Retail 12.5%, VIA 6.2%
13
2019 FY LfL NRI analysis
1 Includes rent reviews, indexation and turnover
Flagships LfL NRI analysisFull-year financial results
-6.7%
-0.1%
-0.4%
0.2%
-1.9%
-1.6%
-2.9%
UK flagships
2.1%
-0.2%
0.0%
-0.2%
-1.3%
4.3%
-0.5%
France flagships
-5.0%
0.3%
0.0%
-1.4%
-0.5%
0.4%
-3.8%
Ireland flagships
Leasing(1)
Tenant restructuring
Surrender premiums
Void costs
Marketing
Car park, commercialisation and other
Total
See slide 54
Portfolio valuation summary
14
Full-year financial results
1 At constant exchange rates2 Figures on a proportionally consolidated basis3 Excludes impact of impairment recognised on reclassification to assets held for sale on 31 December 2019
Sector FY 2019 capital return(1)
H2 2019 capital return(1)
Value at 31 Dec 19(2)
Portfolio weighting(2)
% % £m %
Flagship destinations
UK -19.9 -11.9 2,351 28
France -10.2 -6.6 1,270 15
Ireland -7.5 -4.5 860 10
Premium outlets
Value Retail +9.5 +4.0 1,966 24
VIA +4.5 +2.1 693 8
Developments -10.7 -3.2 599 7
UK other -23.6 -13.1 135 2
UK retail parks(3) -19.5 -9.6 545 6
Total -9.8 -5.3 8,419 100
See slides64-67
15
2019 EPRA NAV movement (pence per share)
1 Includes loss on sales of properties of £92m (12p) and foreign exchange of £73m (10p)
NAVPS walkFull-year financial results
738
601
28
26 1219
26
134
500
550
600
650
700
750
800
850
Dec 2018 Adjusted profit Premium outletsreval
Retail parksimpairment
Fx & other (incl.loss on disposal)
Dividend Reval deficit(ex outlets)
Dec 2019
See slide 68
(1)
-11.3%
-7.7%
-6.7%
0.4%
-5.5%
-13.6%
-7.3%-8.1%
-2.2%
0.6%
7.8%
-2.6%
-5.9%
-1.6%-0.5%
-0.3%
-1.4%
-5.3%
-0.9%
-19.9%
-10.2%
-7.5%
8.2%
-13.4%
-19.5%
-9.8%
-22%
-17%
-12%
-7%
-2%
3%
8%
UK flagships France flagships Ireland flagships Premium outlets Developments and UKother
UK retail parks Group
Yield Income Development and other Total(4)
(2)
(3)
16
Components of capital return for FY19, total portfolio (%)(1)
Components of valuation changeFull-year financial results
1 On a proportionally consolidated basis2 Capital return of UK other -23.6%, Developments -10.7%3 Excludes impact of impairment recognised on reclassification to assets held for sale on 31 December 20194 Developments and other capital movements reflects the impact of changes in purchasers’ costs, development surpluses/(deficits) and capital expenditure
Group
17
Two year change in ERVs Dec 2017 – Dec 2019, by unit type(1) (%)
1 Unit types: Anchor >50,000 sq ft, MSU 10-50,000 sq ft, Smaller units <10,000 sq ft
• ERVs derived by external valuers to reflect leasing and market evidence
• Largest ERV declines from department store and fashion space
• UK anchor ERV: £6/sq ft
• UK MSU ERV: £24/sq ft
• French & Irish ERVs: stronger trading
ERVs reflective of underlying leasing markets since December 2017Full-year financial results
Ireland+4.3%
UK-9.8%
France -1.2%
-15%
-10%
-5%
0%
5%
10%
Anchor MSU Smallerunits
Anchor MSU Smallerunits
Anchor MSU Smallerunits
Valuation appointment tendered in 2019:
• New valuation panel includes JLL and CBRE alongside C&W
• Effective from Q2 2020
3,406
2,843
2,415
536
174
172
27 37
110
199
428
2,200
2,400
2,600
2,800
3,000
3,200
3,400
Net debt1 Jan 2019
Disposals, net ofselling costs
Net cash inflowfrom operations
Exchange andother flows
Value Retaildistribution
VIA Outlets acqnand capex
Capitalexpenditure
Dividends Net debt31 Dec 2019
Retail parkproceeds
Pro formanet debt
181 On a proportionally consolidated basis, excluding premium outlets2 Principally reflects proceeds from the sale of Italie Deux (75%), Abbotsinch RP, St Oswald’s RP, Parc Tawe and Dallow Road RP, excluding forward sale of Italik.3 Reflects net proceeds of £428m from disposal announced on 21 February 2020 of seven retail park portfolio and Abbey Retail Park, Belfast
Net debt analysis (£m)(1)
Net debt analysis Full-year financial results
(2) (3)
Credit ratios
19
Full-year financial results
1 Reflects net proceeds of £428m from disposal announced on 21 February 2020 of seven retail park portfolio and Abbey Retail Park, Belfast2 Covenant within the Group’s unsecured bank facilities, bonds and private placement senior notes3 Covenant within the Group’s unsecured private placement senior notes only4 Covenant within the Group’s unsecured bank facilities and private placement senior notes5 Loan excludes premium outlets net debt and value includes premium outlet net assets 6 Includes VIA Outlets and Value Retail net debt and property values
31 Dec 2019 (pro forma)(1)
31 Dec 2019 31 Dec 2018
Net debt £2,415m £2,843m £3,406m
Cash and undrawn facilities £1,638m £1,210m £729m
Group debtcovenants
Internal guidelines
31 Dec 2019 (pro forma)(1)
31 Dec 2019 31 Dec 2018
Gearing(2) <150%/175% <85% 55% 65% 63%
Unencumbered Asset Ratio(3) >1.50x >1.75x 2.08x 1.89x 2.13x
Interest cover(4) >1.25x >2.0x n/a 3.3x 3.4x
LTV – headline(5) no covenants <40% 35% 38% 38%
LTV – fully proportionally consolidated(6) no covenants <45% 42% 45% 43%
Net debt/EBITDA no covenants <10x 8.5x 8.9x 9.5x
See slides70-71
20
Debt maturity profile at 31 December 2019 (£m)(1)
1 Group proportionally consolidated debt, excluding premium outlets. Interest rates are on a weighted average basis, post hedging derivatives
Debt maturity profileFull-year financial results
0
100
200
300
400
500
600
700
800
900
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Revolving credit facilitiesfloating linked to IBOR
Sterling bonds 4.7% wav coupon
Private placement 2.5% wav coupon
Euro bonds 2.0% wav coupon
Secured debt 2.1% wav coupon
21
Planning for a challenging but transitional year Indicative 2020 EPS sensitivity to disposals, assuming completion at 30 June, proceeds held as cash:
FY20 modelling assumptionsFull-year financial results
FY20 NRI:
• UK negative, weaker first half
• Ireland positive
• France positive
• Premium outlets positive
Disposals:
• -2p from Italie Deux
• -5p Retail Parks
Capex: • £140m
Weighted average cost of borrowing: • 2.6% (no change)
Admin costs: • flat
Disposals (£m)
200 400 600 800 1000
Yie
ld
2% 0.3 0.5 0.8 1.0 1.3
4% 0.5 1.0 1.6 2.1 2.6
6% 0.8 1.6 2.3 3.1 3.9
8% 1.0 2.1 3.1 4.2 5.2
p (EPS)
See slides72-74
Dividend to be rebased in 2020
2019 final dividend of 14.8p (no change), full year dividend of 25.9p (no change) due to:
• Confidence in debt reduction
• REIT & SIIC tax obligations - therefore 100% PID
2020 dividend to be rebased to a sustainable level
• Board adopting prudent approach
• Meet tax obligations
Board therefore expects to recommend 2020 full year dividend of 14p
• A clear departure from recent earnings linkage
• Usual H1/H2 phasing anticipated
• Cash savings: pay down debt; invest in the business
From 2021, growth from this minimum will be dependent on:
• Further disposals
• Rental income
• Strength of balance sheet
• Capital requirements for investment in the business
• Macro-economic factors
• Health of the real estate sector
22
Full-year financial results
Strategic and operational review
Bullring and Grand Central, Birmingham
01 Diversity of portfolio
02 Flagships
03 Premium outlets
04 City Quarters
24
Pavilions, Swords
AgendaStrategic and operational review
30%
16%
11%
25%
9%
9%
25
Portfolio by value(1) FY19 operational statistics
Diverse portfolio of leading pan-European destinationsDiversity of portfolio
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
UK flagships Franceflagships
Irelandflagships
Value Retail VIA Outlets
LFL NRI Footfall Leasing vs ERV Leasing vs previous passing
Premium Outlets (34%)
Developments& UK other(2) (9%)
Flagships (57%)
France flagships
UK flagships
Ireland flagshipsVIA Outlets
Value Retail
1 On a pro forma basis, reflects net proceeds of £428m from disposal announced on 21 February 2020 of seven retail park portfolio and Abbey Retail Park, Belfast2 UK other includes Brent South retail park held for sale
See slides52-53
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
UK Peer UK Peer UK Peer UK Peer HMSO Euro Peer Euro Peer
Diverse tenant base(1)
26
Diversity of portfolio
1 As at 31 December 2019, excluding Retail Parks2 Peers include: British Land, Capital & Regional, intu, Klepierre, Land Securities and URW. Data reflects most recently reported figures as at 24 February 2020. 3 Breakdown data of top 10 tenants unavailable for Klepierre and URW
Hammerson and peers(2) : % of retail rent accounted for by top 10 tenants
Hammerson
See slides60-61
(3) (3)
Flagships
Skate Southampton, Westquay
-8
-6
-4
-2
0
2
4
6
8
10
12
14
UK flagships UK Retail Parks/Other France Ireland
£m
28
Restructuring impact on rent: Dec17 – Dec19(1) (£m)
1 As at 31 December 2019. Includes all units affected by restructuring since 31 December 20172 Run rate of passing rent lost reflects difference between pre-restructuring rent and rent at 31 December 2019 from units affected 3 Analysis based on Hammerson leases impacted by CVAs between 31 December 2017 and 31 December 2019, weighted by Hammerson’s share of passing rent pre-CVA
Key flagships restructuring stats (two years to December 19):
• 234 units affected by restructuring (149 units in UK flagships)
• 9% of 2,700 units across group
• 11% of 1,400 units in UK flagships
• £14.5m run rate of group rent lost (4.5% of passing rent)(2)
• 48% of Hammerson UK flagship units subject to CVA in “no rent change” category vs 37% of market(3)
• Impacted UK flagships units: 91% trading, 70% with original occupier
Tenant restructuring: managing the challenge since December 2017Flagships
149 units
44units
38units
3units
Post restructuring passing rent + Annualised rent lost
= Pre restructuring passing rent
See slides58-59
29
Group, UK, France and Ireland flagship destinations FY19 leasing vs previous passing rent(1)
Leasing: 70% of flagship leasing at or above previous passingFlagships
1 Reflects all leasing by income
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Flagships
UK
France
Ireland
Leases below previous passing Leases in line with previous passing Leases above previous passing
Group
See slide 57
30
UK flagship destinations leasing(1) vs previous passing rent by category - FY19 (£’000s)
1 All leasing, new and renewal, excluding storage and nine reconfigurations2 Lease term < 3 years
Leasing: high street fashion remains most challenged categoryFlagships
Type £’000s No. % vsprevious passing
High street fashion 3,652 34 -36%
Non-fashion consumer brands 4,238 56 +9%
F&B 1,053 23 +8%
Aspirational fashion 1,444 18 +8%
Leisure 120 3 +118%
Total 10,507 134 -13%
-350
-300
-250
-200
-150
-100
-50
50
100
150
200
% of flexible leases in portfolio(2)
Flagships:% flexible
leasing in 2019 by passing rent by ERV
UK 23% 2.1% 9.1%
France 11% 0.9% 2.9%
Ireland 28% 2.1% 6.9%
Total 20% 1.8% 7.1%
See slide 57
Mix 2019 leasing ERV Rent
Category Current mix
by income
Current mix
by area(1)
Future mix
by area
New leasing
by area
Renewalsby area
Average across
portfolio £/sq ft
Average across
portfolio £/sq ft
Average of 2019
leasing £/sq ft
Department stores 6% 38% c.28% nil nil 6 4 n/a
High street fashion (traditional)
16% 15% c.10% Nil 58% 31 29 21
F&B 15% 9% c.12% 27% 2% 43 40 59
High street fashion (contemporary)
14% 8% c.12% nil 9% 47 46 48
Non-fashion and consumer brands
36% 17% c.20% 53% 22% 54 53 62
Leisure/events 5% 7% c.10% 1% 3% 17 16 21
Fashion (aspirational) 8% 3% c.8% 19% 6% 63 57 57
Shifting the occupier mix - UK
31
Flagships
1 Excludes 3% vacant space
DundrumIreland’s leading luxury retail
store, Brown Thomas, is to open a flagship store
>12%forecast YOC
£14mproject cost(1)
House of FraserDundrum, Dublin
13,200m2
Proactive portfolio management: repurposing department stores
32
Flagships
1 At Hammerson’s 50% ownership share
House of FraserThe Oracle Reading
13,300m2>7%forecast YOC
£13mproject cost(1)
The Oracleinnovative leisure,
F&B and flagship retail
See slide 82
-8%
-6%
-4%
-2%
0%
2%
4%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2019
Hammerson UK National Index
Footfall compares favourably with national indices(1)
33
Flagships
France & Ireland – tracking broadly in line with more stable markets
UK– strong polarisation
Cabot Circus Christmas lights switch on
1 Hammerson flagships footfall vs national index three month moving average. Index source: Shoppertrak (index data restated since HY19 results)
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2019
Hammerson France National Index
-6%
-4%
-2%
0%
2%
4%
6%
8%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2019
Hammerson Ireland National Index
Customer experience and innovation are driving commercial benefits
34
Flagships
Year on year footfall changes. Source: ShopperTrakSocial Media Engagement is defined in ‘Impressions’; the number of times that any content associated with the event page was displayed to a user during the reporting period. This includes both organic and paid activity. Source: Sprout Social
Super Events
Festival of Light, Dundrum
+8.7% footfall
+169% social media engagement
The Maze & Urban Treehouse, Westquay
Village Noël, Les Terrasses du Port
+2.7% footfall
+156% social media engagement
+11.1% footfall
+13% social media engagement
Customer experience and innovation are driving commercial benefits
35
FlagshipsLa
st m
ile f
ulf
ilm
ent
Fric
tio
nle
ss p
ark
ing
Fam
ily ro
om
sFle
xib
le la
bo
ur
Cheaper for online fulfilment
and returns
Physical space is key to success of retail brands
36
Flagships
Higher conversion rates than
online
Drives web traffic and
engagement
Physical retail offers competitive acquisition and distribution cost
37
Flagships
Based on fashion sector. Sources:1 Hammerson footfall by unit trial (Sept-Dec 2019 data annualised) and annual occupancy costs by unit 2 Practicology3 Hammerson exit surveys4 Practicology / IRP
Acq
uis
itio
n
Cost per visitor50p – 170p
occupancy costs(1)9p – 95p
visitor costs(2)
In-store conversion rate c.25-50%(3) c.2-4%(4)
Acquisition cost per sale(5) £1.00+ £2.25+
Op
era
tio
na
l Merchant payment cost(2) 1.2% 1.7 - 2.5%
Logistics costs(6) 2-5% 5-15%
Returns rate(6) 5-10% 15-40%
Cost per return(6) 70p – £1 £2 - £3
5 Calculation based on lower end of cost per store visitor range and higher end of in-store conversion range to create a minimum implied acquisition cost per sale
6 Accenture
The path towards stabilisation of UK rents
38
Flagships
Upward pressures on rents
Online rent increasing
Physical retail proven to drive awareness and reduce costs
Polarisation of footfall and vibrancy
Retailers making progress on right-sizing of portfolios
Increasing consumer confidence, employment, wages
Downward pressures on rents
Uncertain macroeconomic backdrop
Cyclical increase in costs
Structural pressure from online
Leasing structure
Excess retail space
Tenant restructuring
Premium outlets
Hede Fashion Outlet, Gothenburg
401 With the exception of property valuations and like-for-like net rental income growth, figures reflect overall portfolio performance, not Hammerson’s ownership share2 Premium outlets IFRS NAV as at 31 December 2019 includes liabilities in respect of distributions received in advance of £24m which will be repayable upon disposal of stakes in Value Retail
Value Retail(1)
VIA Outlets(1)
Gross Asset Value (£m) 1,966 693
Net Asset Value (£m) 1,506 445
Brand sales growth (%) 9 8
Footfall growth (%) 5 6
Average sales density growth (%)
9 2
Like-for-like NRI growth (%) 13 6
Occupancy (%) 97 93
2019 operational updatePremium outlets
Premium outlets value creation (£m)
8 year IRR - 22%
214
683
(149)
(313)
1,276
1,711
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
NAV Jan-12 Capitalinvested
Distributions -operating
Distributions -refinancing
Valuationuplift
NAV Dec-19(2)
See slides 91-97
41
2019 tax free sales (TFS) as a proportion of total sales(1)
1 Portion of total TFS as at 31 December 2019. Source: Global Blue and Premier Vision2 Including non tax-free overseas sales
Diverse customer base underpins progressive sales growth Premium outlets
9%
2%1%
Other14%
Other 2.5%
0.6%0.5%
0.4%
Domestic and
European sales
74%(2)
Value Retail: TFS customers 26% of total sales VIA Outlets: TFS customers 4% of total sales
Domestic and
European sales
96%(2)
China
S. Korea
Russia
BrazilChina
Angola
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1998 2003 2008 2013 2018
Value Retail VIA Outlets
MERs
GFC
Diverse customer base underpins progressive sales growth
42
Premium outlets
1 The sales figures have been restated at constant FX rates2 The sales figures show absolute reported sales figures, which includes acquisitions and developments
Premium outlets sales (€m)(1)(2)
SARS
Swine flu
Bird flu
City Quarters
Dublin Central
6,600residential units
Beyond retail
44
City Quarters
The Goodsyard, London
Dundrum Phase 2, Dublin Callowhill Court, Bristol
Dublin Central
9parks and public spaces
1,600hotel rooms
300,000m2work space
>100 acres of City Quarters potential
See slide 99
Next planning submission H2 2021
2019 progress
45
City Quarters
Planning committee approval
7.5 acres 1,300 residential units
130,000m2 of workspace
400 hotel rooms
Martineau Galleries, Birmingham The Podium at Dundrum, Dublin Leeds Hotel, Victoria
Planning committee approval
On-site H2 2020
107 apartments
Gym, lounge and terrace and co-working space
Planning committee approval
In discussions with major international hotel operator
205 rooms
Planned start H2 2020
Conclusion
Festival of Light, Bullring & Grand Central, Birmingham
Addressing rental decline -maintaining vibrancy, driving
footfall:
Repurposing
Shifting tenant mix
Events
Conclusion
47
Near-term will remain challenging but confident in long-term value creation
Debt reduction remains key priority
Disposals will impact earnings and dividend
First City Quarters scheme on-site in H2 2020
Strong pipeline of opportunities
Net Positive
Balance sheet strength Evolve our spaces Beyond retail
Reducing debt, repurposing and recycling capital into more diverse prime portfolio
Flagships City QuartersPremium Outlets
Questions
Highcross, Leicester
Additional disclosure
Festival of light, Westquay, Southampton
Contents
01 Group
02 Net Positive
03 UK flagship destinations
04 France flagship destinations
05 Ireland flagship destinations
06 Premium outlets
07 City Quarters
50
Group01
Bullring & Grand Central, Birmingham
Distinctive market characteristics help explain variation in performance
52
Additional disclosure: Group
1 Source: GlobalData2 Source: Oxford economics. National sales growth 2014-2019. 3 Premium outlet figure represents Value Retail sales growth due to lack of publicly available data.
UK France Ireland Premium Outlets
Macro backdrop ▲ Low unemployment and increasing wages
▼ Low consumer confidence▼ Cyclical cost pressures
▲ Stable consumer outlook▼ Occasional political unrest
▲ Strong economic growth ▼ Near-term uncertainty over
Brexit and general election
▲ Diverse exposure to highly affluent European and Global customer base
▼ Near-term risk from Coronavirus
Leasing structures ▼ Legacy of longer-terms and upward only rent reviews
▲ Indexation and three-year break clauses
► Upward only rent reviews banned for new leases
▲ Highly flexible model ► Risk-sharing from turnover
component
Geography ► High population density▼ Pure play online more
disruptive▲ High footfall in urban
locations
► Lower population density▲ Lower online penetration▲ Footfall only high in primary
urban locations
► Low population density▲ Lower online penetration▲ Dublin only urban location
of scale
▲ Located near affluent conurbations
▲ Best locations able to attract high tourist traffic
Culture ► Enthusiastic adopters of omnichannel
▼ Less leisure time▲ Increasing focus on big day
out
▲ More leisure time ▲ Daily visit to supermarket
anchor common
▲ Lack of postcodes until 2015 means greater focus on click & collect
▲ Strong growth in Global demand for luxury goods
Online penetration(1) c.17% - growth slowing c.11% c.10% 12% - very limited appetite from luxury brands for online discounting
Retail sales growth (5yr CAGR)(2)(3)
3.3% 3.1% 5.0% 8.8%
2019 UK Ireland France Retail parks
Premium outlets
Occupancy (%) 97 100 97 97 95
Leasing activity (£m) 11 2 6 3 n/a
Leasing vs. ERV (%)(1) -8 -2 +5 +1 n/a
Leasing vs. previous passing (%)(1) -11 +9 +9 -10 n/a
In-store retail sales (%)(2) -2 n/a +3 n/a +9
Footfall (%)(3) +1 +2 +2 +1 +5
Group statistics
53
Additional disclosure: Group
1 Principal leases only2 Sales: UK benchmark -2.2% (Source: Visa) premium outlets YoY. Retail sales on same-centre basis.3 Footfall: UK benchmark -4.6%, Ireland: -0.2% (source: Shoppertrak), France: +0.3% (source: CNCC), Retail parks +0.1% (source: Springboard), premium outlets YoY
2018
Occupancy (%) 98 99 97 97 94
Leasing activity (£m) 14 3 7 2 n/a
Leasing vs. ERV (%)(1) +5 +8 +5 +11 n/a
Leasing vs. previous passing (%)(1) +1 +28 +5 +19 n/a
In-store retail sales (%)(2) -3 n/a +2 n/a +8
Footfall (%)(3) -2 -2 +3 -1 +4
54
H1 2019 LfL NRI analysis
1 Includes rent reviews and indexation
H1 flagships LfL NRI analysisAdditional disclosure: Group
-6.8%
-2.1%
-0.6%
-0.2%
-1.4%
-0.6%
-1.8%
UK flagships
0.1%
-0.2%
0.1%
-0.7%
2.2%
-1.3%
France flagships
-7.4%
-1.7%
-2.1%
-0.5%
1.0%
-4.1%
Ireland flagships
Leasing(1)
Tenant restructuring
Surrender premiums
Void costs
Marketing
Car park, commercialisation and other
Total
55
2019 leasing and cumulative vs 2018(1) (£m)
2019 Group leasing performance cumulativeAdditional disclosure: Group
Flagship leasingvolumes
Dec 19£m
Dec 18£m
UK 11.2 14.4
France 6.0 7.3
Ireland 2.1 2.6
Total 19.3 24.3
0
5
10
15
20
25
30
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Janu
ary
Febru
ary
Marc
h
April
May
June
July
Aug
ust
Sep
tem
ber
Oct
ober
Nove
mber
Dec
ember
Monthly leasing 2019 (LHS) Cumulative leasing activity 2018 (RHS) Cumulative leasing activity 2019 (RHS)
1 Includes retail parks and other
2019 portfolio leasing key metrics
56
Additional disclosure: Group
1 Principal leases only2 Total group leasing includes UK Other £0.7m
Leasing vs previous passing (%)(1)
Leasing vs ERV (%)(1)
Like-for-like ERV growth
(%)
New rent secured from leasing
(£m)(2)
UK flagships -11.1 -8.1 -8.6 11.2
France flagships 8.3 5.0 -1.9 6.0
Ireland flagships 9.5 -1.5 1.2 2.1
UK retail parks -10.3 0.9 -6.7 2.6
Group -4.1 -2.8 -5.9 22.6
57
UK, France and Ireland flagship destinations FY19 leasing vs previous passing rent and ERV
Leasing: UK remains most challengingAdditional disclosure: Group
1 Based on passing rent, as at 31 December 20192 Excludes storage and reconfigurations
UK France Ireland
Type £’000s% vs previous
passing% vs ERV £’000s
% vs previouspassing
% vs ERV £’000s% vs previous
passing% vs ERV
Principal 6,167 -11% -4% 3,659 8% 6% 834 9% 7%
Flexible 2,441 -38% -57% 516 -70% -75% 490 23% -7%
Flexible/vacant to principal
1,899 60% -18% 422 240% -3% 419 103% -16%
Total(2) 10,507 -13% -28% 4,597 -8% -19% 1,743 27% -3%
Leasing performance varies by type
• Broad range of leasing performance in all markets
• UK suffering from lack of rental tension and highest proportion of flexible leasing
• Stronger rental tension in France and Ireland underpins ability to convert flexible/vacant units back to principal leases on attractive terms
58
Units in CVA or administration by month since January 2018
1 Passing rent of Jan 2020 tenant restructuring £0.4m
Run rate of tenant restructuring in the UK & Ireland Additional disclosure: Group
0
5
10
15
20
25
(1)
Tenant restructuring: 31 December 2017 – 31 December 2019
59
Additional disclosure: Group
1 Group passing rent £300.8m
UKflagships
France flagships
Ireland flagship
UKretail parks
UKother
Group
Number of units impacted 149 38 3 27 17 234
Passing rent pre restructuring (£m) 21.6 2.7 1.9 6.3 2.4 34.9
Current passing rent lost – 31 December 2019 (£m) 7.5 1.4 1.7 2.5 1.4 14.5
% of Group passing rent – 31 December 2019(1) 2.5% 0.5% 0.5% 0.8% 0.5% 4.8%
Top 20 tenants exposure(1)
60
Additional disclosure: Group
1 Ranked by passing rent as at 31 December 2019, excludes retail parks
RetailerRental
Exposure (£m)
% of passing
rent% of NIA
H&M 8.7 3.4% 1.8%
Inditex 8.4 3.3% 1.7%
Next 4.7 1.8% 1.9%
River Island 4.1 1.6% 1.4%
Boots 3.9 1.5% 0.7%
John Lewis PLC 3.7 1.5% 1.0%
Debenhams 3.1 1.2% 6.3%
JD Sports 3.0 1.2% 0.5%
CK Hutchison Holdings
2.9 1.1% 4.0%
Superdry 2.9 1.1% 0.5%
New Look 2.5 1.0% 0.5%
RetailerRental
Exposure (£m)
% of passing
rent% of NIA
TK Maxx 2.4 0.9% 0.9%
Printemps 2.4 0.9% 1.2%
Signet 2.3 0.9% 0.2%
SportsDirect 2.3 0.9% 3.6%
Arcadia 2.1 0.8% 0.2%
Natl Amusements 1.9 0.7% 0.4%
Mulliez 1.8 0.7% 0.8%
Watches of Switzerland
1.7 0.7% 1.2%
Apple 1.7 0.7% 0.2%
TOTAL 66 26% 29%
Only one occupier accounts for >2% of group rent from any region(1)
RetailerRental
exposure (£m)
% of passing
rent
% of NIA
H&M 5.3 2.06% 1.40%
Inditex 4.8 1.87% 1.20%
Next 3.8 1.47% 1.62%
John Lewis PLC 3.7 1.46% 6.30%
Boots 3.1 1.23% 0.88%
Debenhams 3.1 1.22% 3.97%
River Island 2.4 0.92% 0.56%
Superdry 2.1 0.82% 0.38%
JD Sports 2.1 0.80% 0.40%
CK Hutchison Holdings
2.0 0.77% 0.40%
Total 32 13% 17%
61
Additional disclosure: Group
1 As at 31 December 2019, excluding retail parks
RetailerRental
exposure (£m)
% of passing
rent
% of NIA
Printemps 2.4 0.93% 1.41%
Mulliez 1.8 0.70% 0.37%
H&M 1.7 0.67% 0.32%
Groupe Etam 1.7 0.65% 0.21%
Groupe Inditex 1.6 0.64% 0.50%
Armand Thiery 1.4 0.55% 0.20%
Vivarte 1.4 0.55% 0.19%
UGC 1.2 0.47% 0.94%
Rallye 1.0 0.41% 0.42%
Punto Fa 0.8 0.32% 0.11%
Total 15 6% 5%
RetailerRental
exposure (£m)
% of passing
rent
% of NIA
SportsDirect 2.3 0.90% 0.70%
Inditex 2.0 0.77% 0.30%
River Island 1.7 0.66% 0.18%
H&M 1.7 0.65% 0.30%
Marks & Spencer 1.2 0.45% 0.63%
Primark 0.9 0.36% 0.27%
Next 0.9 0.36% 0.26%
TK Maxx 0.8 0.32% 0.40%
RSA 0.8 0.31% 0.33%
Boots 0.8 0.30% 0.14%
Total 13 5% 4%
UK France Ireland
OCRs do not reflect store value and are not comparable between sector, peer or country
62
Additional disclosure: Group
1 Source: Eurostat2 Source: Javelin Group3 Source: Global Data
Not comparable between peers
• Hammerson OCRs only represent flagships. OCRs for retail parks and premium outlets are significantly lower
• Our peers present their OCRs as a blended average of all assets• Hammerson UK blended flagships and retail parks OCR is 17.3%
Do not reflect value • A store’s value is not only till sales, but click & collect, returns and driving online sales• OCRs ignore margin and staff costs which can vary widely by retailer
Average hides wide variance
Not comparable between countries
• Same retailer in France and the UK will have very different costs beyond occupancy e.g.hourly staff costs 30% higher in France(1), distribution costs 50% higher in France(2)
• Also rate of channel shift is very different; UK c.17% and France c.11% distorting OCRs(3)
High street fashion avg: 27%Low10%
High52%
OCRs do not reflect store value and are not comparable between sector, peer or country
63
Additional disclosure: Group
1 Source: Javelin Group
2018 2019
UK flagships
France flagships
UK flagships
France flagships
Rent: sales 13.3% 10.7% 12.7% 10.4%
OCR 22.6% 13.7% 22.2% 13.4%
OCRs remain consistent across both markets
• OCRs in UK and France not comparable due to differing costs
structures for retailers in UK and France. Higher staff and
distribution costs in France impact rental affordability
• Also rate of channel shift is very different UK c.17% and France
c.11% distorting OCRs
% Fashion sales P&L(1) UK retail French retail
Business rates 6-7% 1-2%
Staff costs 8% 15%
Distribution costs 1.5% 2%
2019 valuation data (NIY)
64
Additional disclosure: Group
UKflagships
France flagships
Ireland flagships
UK retailparks
UK other Total portfolio
NIY (%)
31 Dec 2019 5.5 4.1 4.1 7.3 7.4 5.1
30 Jun 2019 5.2 3.8 4.0 6.8 6.0 4.8
31 Dec 2018 4.8 3.7 3.9 6.0 5.7 4.6
Change 6m (pp) 0.3 0.3 0.1 0.5 1.4 0.3
Change 12m (pp) 0.7 0.4 0.2 1.3 1.7 0.5
2019 valuation data (ERV)
65
Additional disclosure: Group
UKflagships
France flagships
Ireland flagships
UK retailparks
UK other Total portfolio
ERV (£m)
31 Dec 2019 154.5 65.1 42.2 42.5 12.0 316.3
30 Jun 2019 164.0 89.9 45.3 53.9 12.9 366.0
31 Dec 2018 169.3 89.3 45.3 59.7 13.3 376.9
LfL change 6 months (%)
-6.1 -3.0 1.6 -1.3 -8.6 -3.9
LfL change 12 months (%)
-8.6 -1.9 1.2 -6.7 -11.4 -5.9
2019 valuation data (TEY)
66
Additional disclosure: Group
UKflagships
France flagships
Ireland flagships
UK retailparks
UK other Total portfolio
True equivalent yield (%)
31 Dec 2019 6.2 4.7 4.7 7.6 9.4 5.8
30 Jun 2019 5.9 4.5 4.6 7.2 8.7 5.5
31 Dec 2018 5.5 4.3 4.5 6.8 8.0 5.3
Change 6m (pp) 0.3 0.2 0.1 0.4 0.7 0.3
Change 12m (pp) 0.7 0.4 0.2 0.8 1.4 0.5
67
Historical NIYs, Hammerson flagships vs 10year gilt/bund
Widening spreads underpin institutional interest in prime assetsAdditional disclosure: Group
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19
Hammerson UK Hammerson France Hammerson Ireland 10 year gilt 10 year bund
(£ million) Old metrics Old metrics New metrics(1)
NAV NNNAV NRV NTA NTV
IFRS NAV 4,377.0 4,377.0 4,377.0 4,377.0 4,377.0
Dilutive share schemes 1.6 1.6 1.6 1.6 1.6
Diluted NAV 4,378.6 4,378.6 4,378.6 4,378.6 4,378.6
Exclude: deferred tax 270.7 270.7 270.7 270.7 −
Exclude: fair value of interest rate swaps 19.9 19.9 19.9 19.9 −
Exclude: goodwill as a result of deferred tax (70.6) (70.6) (70.6) (70.6) −
Include: property transfer taxes − − 522.2 − −
Include: fair value of currency swaps as a result of changes in interest rates
− − 17.0 17.0 −
Include: goodwill per IFRS balance sheet − − − (27.6) (98.2)
Include: fair value of borrowings − (183.3) − − (183.3)
Total 4,598.6 4,415.3 5,137.8 4,588.0 4,097.1
Per share (p) 601 577 671 599 535
Reconciliation to new EPRA measures as at 31 December 2019
68
Additional disclosure: Group
1 Unaudited
Key disposals achieved 2018 – 2020
69
Additional disclosure: Group
1 Gross proceeds 2 Total annual gross proceeds (includes ancillary disposals): 2018 - £570m , 2019 - £542m, 2020 - £433m (YTD)3 Central, Cleveland, Cyfarthfa, Elliott’s Field, Telford Forge, Ravenhead, The Orchard Centre (Didcot)
NIY(%)
Proceeds(1)
£mBuyer
2018:Battery Retail Park, Selly Oak 6.0 58 NFU Mutual
Wrekin Retail Park, Telford 7.4 35 Ediston/Europa
Imperial Retail Park, Bristol/Fife Central Retail Park, Kirkcaldy 7.4 164 Capreon (private equity)
Highcross, Leicester (50%) 5.5 236 Asian investor, introduced by M&G Real Estate
2019:Dallow Road, Luton 7.6 24 Private equity
Italie Deux, Paris (75%) 4.1 363 AXA
Abbotsinch, Paisley 7.8 67 Ashby Capital
St Oswald's Retail Park, Gloucester 8.5 54 Local authority
Parc Tawe, Swansea 4.7 22 Private investor
2020:Abbey, Belfast 8.4 33 Slate Asset Management
Portfolio of seven retail parks(3) 8.9 400 Orion European Real Estate Fund V
Total 2018 – 2020 YTD(2) 1,456
Gearing sensitivity(1)
70
Additional disclosure: Group
1 Reflects net proceeds of £428m from disposal announced on 21 February 2020 of seven retail park portfolio and Abbey Retail Park, Belfast2 Gearing sensitivity on changes in pro-forma 31 December 2019 values and future disposal proceeds3 Calculations assume disposals are achieved at 31 December 2019 book values
Disposals (£m)(3)
0 100 200 300 400 500 600 700 800 900 1000
Red
uct
ion in G
roup
va
lues(
2)
0% 55% 53% 51% 48% 46% 44% 41% 39% 37% 35% 32%
5% 61% 58% 56% 53% 51% 48% 46% 43% 41% 38% 36%
10% 67% 64% 62% 59% 56% 53% 51% 48% 45% 42% 39%
15% 76% 72% 69% 66% 63% 60% 57% 54% 51% 47% 44%
20% 86% 83% 79% 76% 72% 68% 65% 61% 58% 54% 51%
25% 100% 96% 92% 88% 84% 80% 75% 71% 67% 63% 59%
LTV methodology
71
Additional disclosure: Group
31 December 2019(pro forma)(1)
31 December 2019 31 December 2018
Net debt Headline
(£m)Fully proportionally
consolidated (£m)Headline
(£m)Fully proportionally
consolidated (£m)Headline
(£m)Fully proportionally
consolidated (£m)
Group 2,415 2,415 2,843 2,843 3,406 3,406
VIA Outlets - 238 - 238 - 242
Value Retail - 658 - 658 - 658
Loan 2,415 3,311 2,843 3,739 3,406 4,306
Property values
Group 5,245 5,245 5,668 5,668 7,480 7,480
VIA Outlets - 693 - 693 - 636
Value Retail - 1,966 - 1,966 - 1,823
VIA Outlets net assets 379 - 379 - 326 -
Value Retail net assets 1,355 - 1,355 - 1,211 -
Value 6,979 7,904 7,402 8,327 9,017 9,939
LTV 35% 42% 38% 45% 38% 43%
1 Reflects net proceeds of £428m from disposal announced on 21 February 2020 of seven retail park portfolio and Abbey Retail Park, Belfast
72
Capex 2019-2021
1 Completion of Les 3 Fontaines and Italik extensions2 Other committed caoex reflects land assembly related costs at Croydon and The Goodsyard3 Excludes amortisation of tenant incentives. 2019: -£5m
Capex and guidance Additional disclosure: Group
Committed 2019
Actual
£m
2020
Forecast
£m
2021
Forecast
£m
On-site developments(1) 58 63 35
Other committed capex(2) 7 15 15
Discretionary
Flagship destination investment 31 42 60
City Quarters 6 20 20
Total 102 140 130(3)
Examples: Income accretive: Repurposing and reconfiguration, capital contributions, digital screens
Other (partly recoverable from tenants): Wayfinding projects, WC upgrades, LED relamping, seating upgrades, family rooms, smart metering
73
Maintenance capex – FY 2019Additional disclosure: Group
Capital expenditure
Gross rental income (£m) 158 82 42 282
Capital expenditure – no additional area (£m) 10 8 1 19
Yield on cost from capital expenditure – no additional area (%) 4% 3% 1% 3%
Capital expenditure – no additional area: gross rental income (%) 7% 9% 3% 7%
Service charge (maintenance)
Examples: Painting, flooring upkeep, M&E: CCTV, wifi , IT systems maintenance
UKflagships
France flagships
Ireland flagships
Total
Service charge income (£m) 34 22 13 69
Maintenance expenditure within service charge (£m) 8 4 1 13
Examples: Income accretive: Repurposing and reconfiguration, capital contributions, digital screens
Other (partly recoverable from tenants): Wayfinding projects, WC upgrades, LED relamping, seating upgrades, family rooms, smart metering
UKflagships
France flagships
Ireland flagships
Total
Service charge income (£m) 36 25 12 73
Maintenance expenditure within service charge (£m) 7 4 2 13
74
Maintenance capex – FY 2018Additional disclosure: Group
Capital expenditure
Gross rental income (£m) 178 84 44 306
Capital expenditure – no additional area (£m) 28 25 - 53
Yield on cost from capital expenditure – no additional area (%) 8% 4% n/a 6%
Capital expenditure – no additional area: gross rental income (%) 16% 30% n/a 17%
Service charge (maintenance)
Examples: Painting, flooring upkeep, M&E: CCTV, wifi , IT systems maintenance
Net Positive02
Declutter to refresh, Cabot Circus, Bristol
761 Net Positive Phase One (2016-2020) figures are calculated for the group on proportionate ownership basis2 Offsets will be required to reach Net Positive3 Landlord only4 Net of recycling
FY20 a pivotal year for Net PositiveAdditional disclosure: Group
Net Positive carbon emissions (tonnes CO2e) 2015 baseline
2019outcome
2020Forecast
Carbontonnes CO2e
30,500 12,241 8,600
WaterM3 (3) 336,000 196,000 152,000
Resource usetonnes(4)
8,539 3,414 2,820
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2015 2016 2017 2018 2019 2020
30,500
25,400
27,500
17,900
8,600
12,200
(2)
Beehives at The Oracle rooftop, Reading
(1)
Delivering against our Positive Places Strategy
77
Our progress against 2019 plans
2019 Target Progress
Reducing energy demand across the managed retail portfolio by a further 11%
12% reduction achieved
Installing additional renewable electricity capacity at three sites 2 completed 2019, 1 completed Jan 2020
Reviewing our energy procurement model to leverage additional renewable capacity and offer grid balancing
Market review completed and new strategy in progress
Working with retailers to support efficiency improvements through fit out
Worked with 200+ retailers to improve fit out standards
Embedding Positive Places within City Quarters concept Sustainability a key USP for our City Quarters concept
Working with our design teams to deliver best in class sustainability in our Dublin developments
The Podium at Dundrum on track to achieve BREEAM Excellent and NZEB requirements
Working with regional water companies to support water reduction initiatives
Relationship with Thames Water delivering significant water savings at Oracle
Working with re-use partners to reduce waste Partnership with Globechaindelivering re-use opportunities
Continuing our programme of portfolio-wide, locally focused community engagement initiatives
Supported 400+ local community organisations
Hammerson has set a target to be Net Positive for carbon, water, resource use and socio-economic impacts by 2030
Carbon
Net Positive forcarbon meanscarbon emissionsavoided exceedemissions generated.
Resource use
Net Positive for resource use means waste avoided, recycled or re-used exceeds materials used that are neither recycled, renewable nor sent to landfill.
Water
Net Positive for water means water replenished by external projects exceeds water consumed from mains supply.
Socio-economic
Net Positive for socio-economicimpacts means making a measurable positive impact on socio-economic issues relevant to our local communities beyond a measured baseline.
“Hammerson was the first real estate company globally to set such comprehensive, challenging Net Positive targets and we are making good progress. Creating Positive Places underpins our delivery of best in class retail assets that respond to the major challenge presented by climate change.”
David Atkins, CEO
78
UK flagship destinations03
Sensory Gardens, Westquay, Southampton
2019 UK flagship leasing performance
80
Additional disclosure: UK flagship destinations
1 Principal leases only2 Excludes flexible leases (FY2018: average lease term 11 years, average incentive 7 months)
2019 UK flagship destinations leasing (£m)
UK flagship leasing key facts
Leasing vs. Dec 19 ERV -8%(1)
Leasing vs. previous passing -11%(1)
Average lease term: 8 years(2)
Average incentive: 3 months(2)
0
2
4
6
8
10
12
14
16
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Janu
ary
Febru
ary
Marc
h
April
May
June
July
Aug
ust
Sep
tem
ber
Oct
ober
Nove
mber
Dec
ember
Monthly leasing 2019 (LHS) Cumulative leasing activity 2018 (RHS)
Cumulative leasing activity 2019 (RHS)
2019 leasing £m
Principal leasing 8.1
Reconfigurations 0.6
Flexible and other 2.5
Total 11.2
2019 Sales
Hammerson -1.8%
Index -2.2%(1)
2019 Footfall Hammerson +0.6%
Index -4.6%(2)
2019 price deflation(3)
Non-food -0.9%
Clothing -8.0%
Differentiation between categories and brands in our UK portfolio
81
Additional disclosure: UK flagship destinations
1 Source: Visa F2F Index2 Source: Shoppertrak3 BRC Nielsen shop price index
Hammerson UK flagship destinations category sales and range
3.0% 2.3% 1.9% 1.9% 1.8% 1.8%
-1.0% -3.5% -5.1% -5.5% -7.6%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Jewellery &PersonalLuxuries
F&B Sportswear Dept Store -Aspirational
Fashion -Aspirational
Leisure Health &Beauty
Fashion -Modern
Home,Consumer
Brands & Gifts
Dept Store -Mainstream
Fashion -Traditional
82
Hammerson exposure to department stores in UK
Exposure to department storesAdditional disclosure: UK flagship destinations
Number of stores
Floorspace
(‘000 m2)
Hammersonsales growth
Harvey Nichols 2 8
Selfridges 1 24
John Lewis 5 114
Marks & Spencer 4 28
Fenwick 1 16
Debenhams(1) 5 74
House of Fraser(1) 3 45
Total 21 309
-ve
+ve
Highcross, Leicester
1 Includes Debenhams and House of Fraser stores at Centrale which is classified in the UK other portfolio
France flagship destinations04
Village Noël, Les Terrasses du Port, Marseille
Les Terrasses du Port Italie Deux (25%) Les 3 Fontaines Other
88%
Portfolio remains weighted towards flagship assets
84
Additional disclosure: France flagship destinations
Portfolio value: £1.4bn
Largest three assets: 88% of portfolio(1)
Focus on flagship destinations
7 France flagship destinations
1 By value at 31 December 2019 including developments
2019 leasing performance
85
Additional disclosure: France flagship destinations
1 Principal leases only2 Excludes flexible leases (FY2018: average lease term 10 years, average incentive 3 months)
2019 leasing and cumulative vs. 2018 (£m) 2019 leasing
£m
Principal leasing 4.1
Reconfigurations 1.3
Flexible and other 0.6
Total 6.0
France flagship leasing key facts
Leasing vs. Dec 19 ERV +5%(1)
Leasing vs. previous passing +8%(1)
Average lease term: 10 years(2)
Average incentive: 0 months(2)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Janu
ary
Febru
ary
Marc
h
April
May
June
July
Aug
ust
Sep
tem
ber
Oct
ober
Nove
mber
Dec
ember
Monthly leasing 2019 (LHS) Cumulative leasing activity 2018 (RHS)
Cumulative leasing activity 2019 (RHS)
2019 Sales
Hammerson +2.6%
Index +0.9%(1)
2019 Footfall
Hammerson +1.9%
Index +0.3%(1)
Differentiation between categories and brands in France
86
Additional disclosure: France flagship destinations
1 Source: CNCC
Hammerson UK flagship destinations category sales and range
7.9% 6.4% 5.5% 4.7% 4.5% 3.9% 1.2% 1.2% 0.5%
-0.5% -0.4%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Sportswear Fashion -Aspirational
Fashion -Modern
Dept Store -Mainstream
Jewellery &PersonalLuxuries
Health &Beauty
Dept Store -Aspirational
Fashion -Traditional
Leisure Home,Consumer
Brands & Gifts
F&B
Ireland flagship destinations05
The Ilac Centre, Dublin
200,000m2 of prime space plus sustainable development opportunities
88
Additional disclosure: Ireland flagship destinations
1 By value at 31 December 2019 including developments
Portfolio value: £1.0bn
Dundrum 65% of portfolio(1)
Focus on flagship destinations
Dundrum Pavilions Ilac Developments
Key retail centres map
89
Additional disclosure: Ireland flagship destinations
Premium outlets06
Mallorca Fashion Outlet, Mallorca
91
International fashion and luxury brands
Mainstream fashion brand outlets
Low-end discount outlets<€2,000
€2,000–€10,000
€30,000+
Sales densities €/m2
Tiered European outlet marketAdditional disclosure: Premium outlets
Value Retail Villages VIA Outlets centres
Bicester Village, OxfordGLA: 28,300m2
Boutiques: 161
Batavia Stad Amsterdam Fashion Outlet GLA: 31,000m2
Units: 135
La Roca Village, BarcelonaGLA: 22,800m2
Boutiques: 131
Fashion Arena Prague Outlet GLA: 25,600m2
Units: 102
Las Rozas Village, MadridGLA: 16,600m2
Boutiques: 95
Freeport Lisboa Fashion Outlet GLA: 36,600m2
Units: 132
La Vallée Village, Paris GLA: 22,400m2
Boutiques: 104
Hede Fashion Outlet, GothenburgGLA: 18,500m2
Units: 59
Maasmechelen Village, BrusselsGLA: 20,000m2
Boutiques: 102
Landquart Fashion Outlet, ZürichGLA: 21,300m2
Units: 82
Fidenza Village, MilanGLA: 21,200m2
Boutiques: 121
Mallorca Fashion OutletGLA: 32,700m2
Units: 79
Wertheim Village, FrankfurtGLA: 21,200m2
Boutiques: 116
Wroclaw Fashion Outlet, PolandGLA: 13,700m2
Units: 87
Ingolstadt Village, MunichGLA: 21,100m2
Boutiques: 112
Sevilla Fashion OutletGLA: 16,000m2
Units: 61
Kildare Village, DublinGLA: 16,700m2
Boutiques: 97
Zweibrücken Fashion Outlet, GermanyGLA: 30,100m2
Units: 118
Vila do Conde Porto Fashion OutletGLA: 27,600m2
Units: 112
Oslo Fashion OutletGLA: 13,500m2
Units: 93
Premium outlets portfolio
92
Hammerson’s total investment in Value Retail
93
Additional disclosure: Premium outlets
1 Total Village ownership calculated as economic entitlement of directly held and indirectly held interests
Holding companies 25% equity
Bicester Village
37
50
La Roca Village
29
41
Las Rozas Village
25
38
La Vallée Village
14
26
Maasmechelen Village
14
27
Fidenza Village
22
34
Wertheim Village
33
45
Ingolstadt Village
2
15
Kildare Village
29
41
Village ownership via LPs (%)
Total Village ownership (%) (1)
94
10%
7%
13%
10%8%
13%
12%11%
12%
8% 8%8%
9%
0%
2%
4%
6%
8%
10%
12%
14%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2012 2013 2014 2015 2016 2017 2018 2019
VR Sales (LHS) VIA Sales (LHS) VIA Sales Growth (RHS) VR Sales Growth (RHS)
VR and VIA Sales and Sales Growth 2012 – 2019 (€m)(1)
1 Figures have been restated at constant FX ratesSales growth include assets owned for 24 monthsSales include assets acquired from the date of acquisition
Absolute sales growth delivered through active management, acquisitions and extensions
Additional disclosure: Premium outlets
135.7
31.2
(3.3)
(16.2)
50.7
(44.4)
95.1
(40.6)
- 20 40 60 80 100 120 140
EPRA Earnings
Tax
Interest & other
EBIT
Administration costs
NRI
Property outgoings
GRI
95
£m
GRI: 62% fixed, remainder turnover; includes brand inducement amortisation
Property outgoings: includes significant marketing costs, as well as other property outgoings, e.g. leasing and car park costs, net of service charge income
Administration costs: roughly one-third local; two-thirds group
Interest & other: secured debt structure; weighted average cost of debt of 2.7%; net of participative loan earnings from investments in LP stakes in the Spanish villages
Value Retail – 2019 earnings walk (£m)
(7)
(2)
15
Tax: corporation tax ranges from 19% in the UK to 32% in France
37.4% EBIT margin
23.0% EPRA Earnings margin
1 All figures at Hammerson share
Luxury outlets incur higher costs to generate outperformanceAdditional disclosure: Premium outlets
45.6
14.6
(2.5)
(8.2)
25.3
(6.5)
31.8
(13.8)
- 5 10 15 20 25 30 35 40 45 50
EPRA Earnings
Tax
Interest
EBIT
Administration costs
NRI
Property outgoings
GRI
96
£m
GRI: 74% fixed, remainder turnover; includes car park income and inducement amortisation
Property outgoings: includes local marketing costs and leasing costs, net of service charge
Administration costs: include Value Retail advisory fees, internal staff costs and group marketing costs
Interest: secured debt structure; weighted average cost of debt of 2.4%
VIA Outlets – 2019 earnings walk (£m)
32
(7)
15
Tax: corporation tax ranges from 16% in Germany to 25% in Spain and the Netherlands
55.5% EBIT margin
32.0% EPRA Earnings margin
1 All figures at Hammerson share
Lower cost model operated below luxury end of premium outlets market
Additional disclosure: Premium outlets
Multi-phase extensions – a source of significant growth
97
Additional disclosure: Premium outlets
1 Development to be delivered in phases
Value Retail: La Roca Village, Barcelona Value Retail: Kildare Village, Dublin
Completed/Onsite Pipeline
VIA: Hede Fashion Outlet, Gothenburg
2,400m2
15 units
€10mTDC
YOC
+10%
Q4 2019
5,500m2
c.27 units
€60-65mTDC
OpeningQ2 2021
2,600m2
21 units
€50mTDC
OpeningQ4 2020
VIA – future schemes Units Launch
Sevilla Fashion Outlet 15-20 2022
Mallorca Fashion Outlet 30-35(1) 2023
Zweibrücken Fashion Outlet 30-35(1) 2024
City Quarters07
Martineau Galleries, Birmingham
The City Quarters opportunity
99
Additional disclosure: City Quarters
Key schemes AreaNext
planning submission
Start on site
Retail F&B Residential Workspace Leisure Education Culture Hotel Public spaces
Nea
r te
rm
Les 3 Fontaines, Cergy 8,400m2 n/a On site
The Podium at Dundrum, Dublin 10,000m2 n/a H2 2020
Victoria Hotel, Leeds 8,400m2 n/a H2 2020
Str
ate
gic
Victoria Phase 2, Leeds 10 acres 2020
Martineau Galleries, Birmingham 7 acres 2021
Callowhill Court, Bristol 9 acres 2021
Dublin Central 6 acres 2021
Dundrum Phase 2, Dublin 6 acres 2021
Pavilions Phase 3, Swords 18 acres 2023
Ma
jor
Brent Cross 15 acres n/a
Croydon 22 acres n/a
The Goodsyard, London 10 acres In Planning
TOTAL 103 acres