Hammerson 2017 Half-year results… · Garden of Pure Imagination, Dundrum Batavia Stad, Amsterdam...
Transcript of Hammerson 2017 Half-year results… · Garden of Pure Imagination, Dundrum Batavia Stad, Amsterdam...
2017 Half-year results 26 July 2017
Agenda
01 H1 highlights David Atkins – CEO
02 Financial results Richard Shaw – Group Financial Controller
03 Portfolio review Mark Bourgeois – Managing Director UK and Ireland David Atkins – CEO
04 Conclusion David Atkins – CEO
2
2017 Half-year highlights
3
Consistent sector-leading income growth
EPS +5.6%
DPS +5.9%
Polarisation driving demand for space
Leasing volumes +44%
LfL NRI +3.4% (1)
Positive capital returns across all parts of portfolio
NAVPS +4.3%
Higher growth markets continue to outperform
Ireland ERV growth 2.5%
Premium outlets sales growth +11%
Advancing future developments
Brent Cross detailed planning submitted
Cergy main contractor selected
Pioneering sustainability commitment
‘Net Positive’ by 2030
(1) LfL NRI including Ireland and premium outlets. EPRA LFL NRI +0.7%
Garden of Pure Imagination, Dundrum
Batavia Stad, Amsterdam
H1 highlights
Brent Cross extension
Cabot Circus
Retail park image
Victoria, Leeds
Our strategy underpins the strong financial performance
4
Dundrum, Dublin Westquay, Southampton Mallorca Fashion Outlet
Focus on growing consumer markets
Create differentiated destinations
Promote financial efficiency and partnerships
H1 highlights
5 (1) Including disposal of Westwood and Westwood Gateway retail parks, Thanet, £80m (2) As at 30 June 2017 (excludes Norwegian Outlet, Oslo acquisition and disposals in Thanet in July)
Hammerson portfolio split (2)
Our well-positioned European portfolio
Positive valuations across all parts of the portfolio
Benefiting from structural trends in retail, despite variability of consumer environment
Solid investment market demand for prime assets underpins yields
Income growth contributed over 80% of capital returns
Outperformance from higher-growth markets
Irish economic data strong, driven by fundamentals
European premium outlets valuations driven by structural trends of tourism and market consolidation
Disposals on track
£97m (1) achieved to date and total £400m planned this year
UK shopping centres £3.5bn
France £2.2bn
Ireland £0.8bn
UK retail parks £1.3bn
Premium outlets £2.0bn
Development & UK other £0.6bn
H1 highlights
33%
21% 8%
13%
19%
6%
£10.5 billion portfolio
UK 57% Non-UK 43%
Achieving record leasing volumes as retailers increasingly focus on the best locations
6
Leasing volumes across investment portfolio (£m)
0
1
2
3
4
5
6
7
UK ShoppingCentres
UK Retail Parks France Ireland
2016 H1 2016 H2 2017 H1
H1 highlights
n/a
Coach, Victoria Leeds Bullring, Birmingham
Confidence in our income-focused growth track-record
7 (1) H1 2011 to H1 2017 (2) FY 2011 – H1 2017
NAVPS (pence)
400
450
500
550
600
650
700
750
800
2011 2012 2013 2014 2015 2016 H117
CAGR +7.1% (2)
EPS (pence) DPS (pence)
0
5
10
15
20
25
30
2011 2012 2013 2014 2015 2016 2017
H1 H2
CAGR +7.8% (1)
0
5
10
15
20
25
30
2011 2012 2013 2014 2015 2016 2016
H1 H2
CAGR +6.6% (1)
H1 highlights
15.1
10.7
771
02 Financial results
Richard Shaw – Group Financial Controller
- Review of 2017 performance - Analysis of valuation trends - Update on financing ratios - Capital recycling - Drivers of future earnings growth
Headline results
9 (1) Valuation for total portfolio including premium outlets
Income statement 30 June 2017 30 June 2016 Change
Net rental income (£m) 184.0 167.7 +9.7%
Adjusted profit (£m) 119.4 112.6 +6.0%
Adjusted EPS (p) 15.1 14.3 +5.6%
Interim dividend (p) 10.7 10.1 +5.9%
Balance sheet 30 June 2017 31 December 2016 Change
Portfolio value (£m) (1) 10,527 9,971 +5.6%
EPRA NAVPS (p) 771 739 +4.3%
LTV (%) 37 36 +1 p.p.
Financial results
LfL NRI growth lifted by Ireland and premium outlets
10 (1) Figures on a proportionally consolidated basis (2) Adversely impacted by surrender premiums. Adjusted H1 2017 LfL NRI growth +4.7% (3) Ireland will become EPRA LfL from 2018. Proforma LfL NRI including Ireland +1.6%
H1 2017 NRI by sector (1)
NRI (£m) LfL NRI growth (%)
UK shopping centres
76.7 +2.1
UK retail parks (2)
35.2 −3.0
France 47.5 +1.5
EPRA NRI
159.4 +0.7
Ireland (3)
16.0 +12.0
Premium outlets
42.9 +11.7
UK other and developments 8.6 n/a
Total NRI
226.9 +3.4
Financial results
Solid uplift in profit
11 (1) Net of interest received in H1 2016
112.6
119.4
7.0 1.0
2.7
3.7 0.5
3.5 (9.8)
(1.8)
100
105
110
115
120
125
130
135
H1 2016 H1 2017
H1 2017 adjusted profit movement (£m)
Acquisitions (Ireland) (1)
Developments Premium outlets
Net admin FX & other Financing
+6.0%
Financial results
LFL NRI Disposals
Income growth driving valuation
12 (1) At constant exchange rates (2) Figures on a proportionally consolidated basis (3) Principally assets held for redevelopment and non-core (4) Excluding Pavilions residual loan £111m
Financial results
H1 2017 capital return (1)
Drivers of underlying valuation change Value at 30 June 2017 (2)
(%) Yield shift (%) Income (%) Other (%) (£m)
UK shopping centres +0.9 +0.3 +0.6 - 3,484
UK retail parks +1.3 −0.1 +0.4 +0.9 1,340
UK other interests (3) +1.9 −0.9 +0.3 +2.5 169
France +0.0 +0.1 +0.1 −0.2 2,232
Ireland (4) +2.5 - +2.5 - 850
Developments +0.6 - +0.2 +0.4 420
Premium outlets +6.0 +0.6 +5.7 −0.2 2,032
Total +1.8 +0.2 +1.5 +0.1 10,527
Positive valuations driving NAVPS uplift
13
739
771 24
15
7 (14)
715
725
735
745
755
765
775
785
795
Dec 2016 June 2017
H1 2017 EPRA NAV movement (pence per share)
Portfolio revaluation incl. premium outlets
Adjusted profit
Dividends FX & other
+4.3%
Financial results
Financing ratios underpin our balance sheet strength
14
Financing policy 30 June 2017 31 Dec 2016
Net debt - £3,710m £3,413m
Gearing <85% 62% 59%
Loan to value <40% 37% 36%
Cash and undrawn facilities - £678m £592m
Weighted average cost of debt - 3.0% 3.1%
Interest cover >2.0x 3.4x 3.5x
Net debt/EBITDA <10x 10.1x 9.5x
Fixed rate debt >50% 76% 70%
GBP/EUR FX balance sheet hedging 70% - 90% 80% 79%
Financial results
15
0
200
400
600
800
1000
1200
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Revolving credit facilities
Private placement
Sterling bonds
Euro bonds
Secured debt
Debt maturity profile 30 June 2017 (£m)
Financial results
Continuing to take advantage of refinancing opportunities
Medium term opportunities to refinance upcoming maturities
• 2019: €500m 2.75% bonds
• 2020: £250m 6.875% bonds
Capital recycling and funding flexibility
16
Deleverage through disposals ahead of large developments (£m)
0
100
200
300
400
500
600
700
800
2011 - 2016 2017 disposals Average annual capex 2017-2021
Shopping centres Retail parks France Other, including offices
2011 – 2016 average disposals p.a.
Continue run-rate of annual disposals
Pipeline of extensions and phased capex for large developments
Financial results
£345m
£400m
£300m
Confidence in medium-term EPS growth
17 (1) CAGR 8.6%
Movement in adjusted EPS 2011-2016 (pence per share)
29.2
19.3
(0.6)
(0.3)
(0.2)
3.8
3.5
3.7
17 19 21 23 25 27 29 31
Drivers / outlook
At least 2% p.a. target. Enhanced quality of portfolio
Retail parks 8% YoC Near-term projects c.6% YoC
Strong market sales growth (c.10% p.a.)
Further deleveraging and refinancing in low interest rate environment
Disposals £400m, ahead of future developments
50% growth in 5 years
8.6% p.a. growth
Financial results
LfL NRI
2011
Developments
Premium outlets
Acquisitions and disposals
Net interest
Dublin loan interest, share issue & other
2016 50% growth (1)
Drivers/outlook
03 Portfolio review
Mark Bourgeois - MD UK & Ireland - First impressions - UK shopping centres - UK retail parks - Ireland
David Atkins - CEO - France - Premium outlets
Portfolio review:
UK shopping centres
Cabot Circus, Bristol
20
Portfolio quality
First thoughts upon joining Hammerson
Product experience framework
Iconic destinations
Best at retail
Convenient & easy
Interactive & engaging
Entertaining & exciting
Positive Places
Hammerson 75?
Portfolio review
Culture
Creating differentiated destinations
Wimbledon tennis at the Esplanade, Westquay
Issho, Victoria Leeds
LinkStreet, Birmingham
Garden of Pure Imagination, Dundrum Volkswagen, Bullring
Light show at the Esplanade, Westquay
Beach, Brent Cross
Beacons, Highcross
21 Style Seeker, Plus app
Role of the store continues to evolve
22 (1) Javelin survey of 50 retailers carried out for Hammerson
“What will the primary role of your store be in 5 years?”(1)
In-centre sales
1 2 3
2. Retail halo +5%
3. Collection kiosks +1-2%
1. Instore multichannel +10%
Productivity of the centre extends by a further 17%
“What are your investment priorities?” (1)
88%
improving customer experience through in-store technology
Selling merchandise
Provide service and experience
Showcase the brand
Portfolio review
75%
-3.1% Hammerson France sales
-3.9% Hammerson UK sales
Volkswagen, Bullring
Our differentiated destinations attract strong leasing demand in spite of challenging retail conditions
23 (1) Change in volume of new leasing (£m) H1 17 vs. H1 16
UK shopping centres H1 2017
In-store retail sales (%) −3.9
Leasing activity (%) (1) +47
Leasing vs. ERV (%) +5
ERV growth (%) +0.5
LfL NRI (%) +2.1
Average H1 2017 leasing package 9 months (H1 2016: 9 months)
*
* Portfolio firsts
*
*
*
Portfolio review
*
* * *
Coach, Victoria Leeds
Our dining destinations are performing well with robust leasing demand
15% of portfolio allocated to dining and leisure
Right concept in the right location will thrive
Brands with strong offer, innovative design,
strong financial models and good customer
service will win out
Bespoke leasing approach
Introducing new concepts:
24 (1) 12 month rolling LFL to 30 June 2017
Selected statistics: D&D takings on first weekend? VR footfall? Westquay – footfall across rest of centre? Leasing deals signed with X Y Z since opening westquay south? Oracle – footfall? Silverburn restaurant extension – Footfall up 5% from 17.3m to 18.1m; dwell time up 21 mins after one year
Script notes Growth is slowing, coming off a high base, but still positive for those brands which have kept their offer relevant, priced appropriately and positioned their stores well
Largest 3 restaurant operators (by sales), Hammerson portfolio LfL sales growth (1)
+2.7%
+1.2%
+7.5%
F&B expertise boosting asset performance
Portfolio review
*Oracle – riverside dining
Quakers Friars, Cabot Circus
Riverside, Oracle
Westquay South
Issho, Victoria Leeds
Victoria Leeds
Opportunity to further enhance the UK portfolio with next generation of retail
25
Croydon
(1) Hammerson share
200,000m2 Croydon Partnership retail
Cost to complete (1)
£650-700m
Brent Cross
175,000m2 Total retail space
Cost to complete (1)
£475-550m
Portfolio review
Planning May 2017: submitted detailed planning consent Autumn 2017: committee for approval
Contractors Autumn: appoint shopping centre works contractor. By end of year: appoint highways contractor; secure cost certainty
Regulatory approvals By end of 2017: CPO consent
Leasing Finalise agreements with department stores Good initial interest from international MSU retailers
Current strong demand for new space within existing scheme
Advancing transformational development of Brent Cross towards 2018 start on site
26 Portfolio review
Steps towards start on site
Portfolio review:
UK retail parks
Elliott’s Field, Rugby
Profitable retail park extensions adding new income
28
Total yield on cost
8%
Total investment
£98m
Good leasing demand for well-located schemes
Build on success of Phase 1
Strong leasing demand
Profit on cost 29%
Portfolio review
Elliott’s Field Phase 2, Rugby 78% pre-let
Orchard Centre, Didcot 45% pre-let
Fife Central, Kirkcaldy Completed 100% pre-let
Parc Tawe, Swansea 76% pre-let
Record-high occupancy across retail parks
29 (1) Change in volume of new leasing (£m) H1 17 vs. H1 16 (2) Net surrender premiums of £2.7m received in H1 2016 (3) Source: CACI data versus 2015 survey
Enhancing our well-positioned retail parks with retail know-how
Dunelm “holding our superstore footprint at 159 stores” DixonsCarphone “Major roll out of fully refurbished 3-in1 store concept in the UK & Ireland” Topps Tiles “Now trading 367 stores…ending the year with approximately 370 stores” B&Q “Store closure programme complete” Stabilise portfolio at 295 B&Q UK & Ireland. Opened 60 Srewfit, target 700. [SCS / TAPI]
Importance of nationwide store portfolios to homeware retailers
99% H1 17 Occupancy
+1.2% YTD Footfall
+9% Dwell time (3)
(2017: 51 mins)
+32% Click & Collect users (3)
(2017: average C+C spend £88.75)
x2 Net promoter score (3)
(2017: 31%)
Portfolio review
Fife Central, Kirkcaldy
UK retail parks H1 2017
Leasing activity (%) (1) +56
Leasing vs. ERV (%) +11
ERV growth (%) +0.3
LfL NRI (%) −3.0
LfL NRI (adj for surrender premiums) (%)(2) +4.7
Portfolio review:
Ireland
Dundrum, Dublin
Delivering strong ERV growth and enhancing the consumer experience
31 (1) Proforma based on underlying net rental income in H1 2016 which was accounted for as finance income (2) Dundrum ERV 100%
Uplift in Dundrum ERV since ownership (2)
Portfolio review
€65m
73.7
€90m+
€8m
Acquisition ERVJuly 2016
Uplift at June2017
Expectedgrowth H22017-2021
Forecast 2021ERV
+12%
Ireland H1 2017
Leasing vs. ERV (%) +13
ERV growth (%) +2.5
LfL NRI (%) (1) +12.0
Creative asset management at Dundrum
Garden of Pure Imagination Smiggle
POCO
Nespresso
Volvo
99.9% Occupancy
POCO
Positive activity across the rest of the Irish portfolio
32
Developments
Full control secured of Dublin Central Development site
Master planning commenced at Dundrum Phase 2
Portfolio integration
New Dublin Hammerson HQ
Fully integrated with UK leasing team
Pavilions, Swords
Completion of ownership arrangements later this year
Trading positively; leading centre in catchment
Ilac Centre
Ilac Centre, Dublin centre
Moore Mall refurbishment completed
10 units to 5 larger units (100% pre-let)
Cost €1.5m; >2x rent uplift
Portfolio review
Les Terrasses du Port, Marseille
Portfolio review:
France
A core asset strategy in France
34
Focus on attractive and resilient prime centres
Les Terrasses du Port Marseille
Les Trois Fontaines Cergy Pontoise, Paris
Italie Deux Paris
70%
Mention Italie 2 cinema in the script
Portfolio review
£1,560m
Les Terrasses du Port
Italie Deux
Les Trois Fontaines
Regional
Other £660m
Good leasing in France with improving economic backdrop
35 (1) Change in volume of new leasing (£m) H1 17 vs. H1 16
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2012 2013 2014 2015 2016 Q1 2017
France H1 2017
In-store retail sales (%) −3.1
Leasing activity (%) (1) +12
Leasing vs. ERV (%) +8
ERV growth (%) +0.5
LfL NRI (%) +1.5
ILC (retail leasing index) turning positive (%)
Add H&M, Zara, Decathlon
Dim
Portfolio review
* Portfolio firsts
*
*
Benetton H&M JD Sport Jacadi Dim Lancel Kusmi Tea Skechers
Jacadi Benetton 123 Dim Colombus Café Pain de Sucre Pomme de Pain Just over the top L’Erbolario
*
Les Trois Fontaines, Cergy: advancing opportunity to develop a compelling Paris scheme
36
Investment
Refurbishment of existing scheme completed 2016
Progressing 33,000m2 retail and dining extension as part of a wider city centre project
Opportunity
Favourable location in Paris region and leading centre in catchment
Strong partnership with main co-owner Auchan (hypermarket)
Progress to start on site
Co-ownership agreement, building permit and retail consent obtained
Main contractor selected
Good pre-letting
Adjoining retail acquisition opportunities
(1) Excludes acquisition of additional property interests
Total development cost (1)
€230m
Portfolio review
Size upon completion
85,000m2
La Roca Village, Barcelona
Change image
Portfolio review:
Premium outlets
20 Villages
60m Visitors p.a.
Value Retail - £[1.4]bn (1)
A platform of considerable scale, now 19% of our portfolio
11 - UK shopping centres
10 - France shopping centres
1 - Ireland shopping centres
18 - UK retail parks
19 - Premium outlets
38
VIA Outlets - £[0.5]bn (1)
(1) [ ]
Opened 2010, recently extended
16,000m2
56 units
Hugo Boss, Timberland, Under Armour
Average sales growth 15% (2012-16)
Remerchandising and asset management opportunities identified
Hammerson share £47m
VIA Outlets acquisition
Norwegian Outlet, Oslo
Updated key to come
14 Countries
19% in pie??
Value Retail: continued strong growth
39
Over 40 new brands introduced
Value Retail H1 2017
Sales growth YoY (%) +10
Sales density growth (%) +8
Footfall growth (%) +2
Total return (%) +10.9
Opening October 2017
33 new units
£100m
15% YOC
Tourism and marketing - Brand marketing
collaborations: Paul Smith, Laduree, Coach
- New loyalty programme “Privilege”; Gift card sales +[31]%
- Fastest growing tourism sources: [Indonesia (+[ ]%), Russia (+[ ]%), US (+[ ]%)]
Portfolio review
Bicester Village Fidenza Village Kildare Village
La Roca Village La Vallée Village Kildare Village
Extending Bicester Village, one of the world’s most recognised and productive retail schemes
VIA Outlets: now an established outlet operator
40 (1) Excludes Mallorca Fashion Outlet and the ex-IRUS portfolio
Asset management
Rebranding of 2016 acquired assets
64 leases signed
Partnerships with tourism operators; international sales +63%
Extensions and reconfigurations
Freeport Lisboa Fashion Outlet: Major reconfiguration (Q3 2017)
Mallorca Fashion Outlet: Flagship Nike and Polo Ralph Lauren stores (Q4 2017)
VIA Outlets H1 2017
Sales growth YoY (%) +18
Sales density growth (%) +15
Footfall growth (%) (1) +8
Total return (%) +0.3
Batavia Stad extension opened Q2 2017
Portfolio review
YTD sales density +11% YTD footfall +17%
5,500 m2 added
45 new units
41
Use new format slide
04 Conclusion
Our strategy continues to deliver success
42
Portfolio positioned to benefit from retail evolution
Top-3 market position in chosen sectors
Good demand for our space in a polarising landscape
Leasing volumes +44%
Capital recycling into higher-growth markets enhancing returns
Premium outlets now 19% of portfolio
Skilled and focused teams
Product Experience Framework creates differentiated destinations
Continuing to deliver consistent returns
Sector-leading income growth
EPS +6%; DPS +6%
Victoria, Leeds
Conclusion
43
Questions
Westquay, Southampton
Disclaimer
This presentation contains certain statements that are neither financial results nor
other historical information. These statements are forward-looking in nature and
are subject to risks and uncertainties. Actual future results may differ materially
from those expressed or implied by these statements.
Many of these risks and uncertainties relate to factors that are beyond
Hammerson’s ability to control or estimate precisely, such as future market
conditions, currency fluctuations, the behaviour of other market participants, the
actions of governmental regulators and other risk factors such as the Company’s
ability to continue to obtain financing to meet its liquidity needs, changes in the
political, social or regulatory framework in which the Company operates or in
economic or technological trends or conditions, including inflation and consumer
confidence, on a global, national or regional basis.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this document. Hammerson does
not undertake any obligation to publicly release any revision to these forward-
looking statements to reflect events or circumstances after the date of these
materials. Information contained in this presentation relating to the company or its
share price, or the yield on its shares, should not be relied upon as a guide to
future performance.
44
Appendices
2.2m sq m retail space
14 Countries
UK shopping centres - £3.5bn
France - £2.2bn
Ireland - £0.8bn
UK retail parks - £1.3bn
Premium outlets - £2.0bn
Development & UK other - £0.6bn
£10.5 billion leading pan-European retail platform (1)
46
33%
21% 8%
13%
19%
6%
60 European shopping destinations
Top 3 Market position in all chosen sectors
43% non-UK assets
410m visitors
4,800 Tenants
11 - UK shopping centres
10 - France shopping centres
2 - Ireland shopping centres
17 - UK retail parks
20 - Premium outlets
(1) As at 30 June 2017 (valuation excludes Norwegian Outlet, Oslo acquisition and disposals in Thanet in July)
Focus on growing consumer markets
47
Retail formats Matched to consumer behaviour in the multichannel world: experience (shopping centres), convenience (retail parks) and retail tourism (premium outlets)
Market position Select prime property to benefit from polarisation in occupier demand
Location Selected European countries or cities benefitting from urbanisation and retail tourism Growing catchments and markets where we can gain share
Our strategy is to focus on markets which take advantage of retail property trends
Appendices
Create differentiated destinations
48
Our Product Experience Framework in action
Best at retail LinkStreet, Birmingham
Convenient & Easy
Click & Collect services
Iconic destinations Victoria, Leeds
Entertaining & Exciting Westquay South, Southampton Interactive &
engaging Developing the Plus App
Positive Places Victoria Gate community interaction
Appendices
Promote financial efficiency and partnerships
49
Financial efficiency
Flexible capital structure supports capital recycling strategy
Diversified sources of debt
Actively reducing weighted average cost of debt
Declining cost:income ratio
Accessing global capital markets – JSE Listing
Partnerships broaden our market reach, increase scale and strengthen our business
5.2% 5.0% 4.8% 4.7%
3.8%
3.1% 3.0%
0%
1%
2%
3%
4%
5%
6%
2011 2012 2013 2014 2015 2016 H1 2017
£19bn total European property platform through partnerships
Chosen operator for global capital
Reducing the cost of debt (%)
Appendices
Consumer backdrop
50 (1) Source: VISA (total and face-to-face indices); CNCC; Ireland Central Statistics Office (2) Source: Oxford Economics; annual growth; local currency
UK: VISA Consumer Spending Index growth by category (%, YoY)
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17
BRC Clothing LFL Negative Negative Negative Positive Negative Positive
Visa spending data: Clothing & Footwear
(4.0)% (4.3)% (0.4)% 2.2% (5.3)% (0.5)%
BDO Fashion sales (ex online) (1.0)% (3.4)% (0.8)% 1.2% (3.6)% 1.4%
John Lewis Fashion sales c.4% Flat c.6% c.5% Flat c.3%
UK: Fashion category indicators
-2
-1
0
1
2
3
4
5
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
France Ireland United Kingdom
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17
UK (total) 0.4 1.3 1.0 0.3 (0.9) (0.3)
UK (in store) (3.2) (3.2) (1.3) 0.1 (5.3) (2.4)
France (5.3) 0.1 1.1 (3.0) 0.4 (7.5)
Ireland 1.4 (0.3) 0.8 (0.9) 0.8 n/a
National retail sales indices (%, YoY, by value) (1) Real private consumption growth forecasts (%) (2)
TBU
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17
Food, beverages & tobacco (0.2) (0.9) (0.4) 6.0 (0.6) 1.9
Clothing & footwear (4.0) (4.3) (0.4) 2.2 (5.3) (0.5)
Household goods (2.4) (3.5) 0.0 (3.3) (4.3) (3.4)
Health & education (2.2) 1.0 7.4 (9.6) 6.8 2.2
Transport & communication (4.1) (4.6) (1.7) (9.7) (7.4) (5.8)
Recreation & culture 3.3 2.9 7.2 2.8 1.9 (1.2)
Hotels, restaurants and bars 5.7 0.9 4.2 9.1 3.3 4.9
Misc. goods & services 0.5 1.9 6.8 0.7 7.1 5.7
TBU
Appendices
European shopping centres are in a better position than the US
Source: Verdict; John Lewis retail trends
Shopping centre space per capita (sq ft)
Split of space in shopping centres by retail category (% of total centre GLA)
51
eCommerce penetration by country (% of sales, 2016)
UK has higher online sales penetration, so retailers and consumers are already well-adapted to multichannel
US has at least 5x as much shopping centre space per capital as Europe
US has higher amount of department store space within malls and less F&B. Most often department store anchors are owner-occupied.
Differences between US and UK/European retail property markets
Appendices
2017 YTD operational statistics
52 (1) Retail sales on same-centre basis, includes all shopping centres (2) France data includes VAT (rent:sales and OCR excluding department stores) (3) France data includes VAT; Jeu de Paume, Beauvais, excluded
Appendices
Occupancy (%) UK shopping centres
UK retail parks
France Ireland Group
30 June 2017 97.2 99.0 96.6 99.9 97.3
31 December 2016 97.8 98.6 96.5 99.5 97.5
30 June 2016 97.4 98.7 96.3 n/a 97.2
UK shopping centres
France
Sales (1) −3.9% −3.1%
Footfall −1.7% −2.3%
Rent:sales (2) 12.9% 12.5%
OCR (2) 20.4% 15.4%
Sales densities(3) UK £/ft2
France £/ft2
H1 2017 320 – 595 370 – 620
2016 320 – 590 395 – 690
2015 310 – 620 220 – 620 Check number
H1 2017 portfolio leasing overview
53 (1) Including UK Other and Ireland properties, principally assets held for development and non-core
Leasing vs previous passing
(%)
Leasing vs ERV (%)
ERV growth (%)
Rent secured from new leases
(£m)
UK shopping centres 5 5 +0.5 6.6
UK retail parks −2 11 +0.3 3.9
France 9 8 +0.5 5.8
Ireland 3 13 +2.5 1.5
Group (1) 6 8 +0.6 18.1
Appendices
Tenants in administration
54
30 June 2017 % of passing rents
42 units in administration 0.8
8 units unoccupied 0.1
31 December 2016
44 units in administration 0.7
9 units unoccupied 0.1
30 June 2016
71 units in administration 1.4
5 units unoccupied 0.1
Appendices
UK shopping centre investment
55
Capitalised Recoverable from tenant
Direct/indirect return?
Selection of examples
1. Hammerson operating expenses n/a Car park expenditure; landlord marketing; interactive
hoardings, upkeep collection lockers/mobile phone charge points, research and marketing costs
2. Service charge (maintenance) n/a Painting, flooring upkeep, footfall counters, CCTV, wifi
upgrade, IT upgrades
3.a Investment projects (hygiene) Partial Direct / Indirect Wayfinding projects, WC upgrades, LED lighting, public
seating upgrades
3.B Investment projects (value-add) Direct Creating new lettable space: e.g. CAU Oracle, Costa
Westquay, car parks projects
2014 2015 2016Ref £m £m £m
Gross rental income 149.4 162.0 174.2Service charge income 27.0 28.7 34.0Total income 176.4 190.7 208.2Service charge expenses (excl. maintenance capex) (23.5) (25.3) (32.9)
1 Other property expenses (Hammerson NRI) (19.4) (20.6) (22.4)Net cash flow before maintenance capex 133.5 144.9 153.0
2 Maintenance capex - service charge (Service charge P&L) (5.6) (6.1) (4.6)3 Maintenance capex - land and buildings (Hammerson L&B) (9.7) (9.6) (12.6)
Net "cash flow" from Operations 118.2 129.2 135.8Maintenance capex:Total income, % 9% 8% 8%
Hammerson UK shopping centre cash flow statement 2016 £m
2015 £m
2014 £m
Gross rental income 174.2 162.0 149.4
Service charge income 34.0 28.7 27.0
Total income 208.2 190.7 176.4
Service charge expenses (excl. investment) −32.9 −25.3 −23.4
Other property expenses (Hammerson NRI) −22.4 −20.6 −19.4
Net cash flow before maintenance capex 153.0 144.9 133.5
Investment spend (service charge maintenance projects) −4.6 −6.1 −5.6
Investment projects (capex on maintenance or ‘value-add’ projects) −12.6 −9.6 −9.7
Net cash flow from Operations 135.8 129.2 118.2
Maintenance capex: total income, % 8% 8% 9%
1
2
3a + 3b
1
2
A
B
A/B
3a
3b
Appendices
UK retail parks market split and Hammerson ownership
56 (1) Source: PMA; Market and portfolio split by number of parks; Adjusted for disposals
Shopping parks Hybrid parks Key homeware goods parks
Standard homeware parks
Solus units
Higher rental growth segments
Shopping parks
Hybrid parks
Key homeware goods
Standard homeware
Solus
40% 84%
Hig
her
renta
l g
row
th
UK retail parks market (1) Hammerson portfolio
Appendices
Value Retail Villages VIA Outlets centres
Bicester Village, UK (1)
GLA: 22,700m2
Boutiques: 135
Batavia Stad Amsterdam Fashion Outlet (2)
GLA: 31,000m2 Units: 110
La Roca Village, Barcelona GLA: 23,400m2 Boutiques: 141
Fashion Arena Prague Outlet GLA: 24,100m2 Units: 98
Las Rozas Village, Madrid GLA: 16,500m2 Boutiques: 105
Freeport Lisboa Fashion Outlet GLA: 29,500m2 Units: 98
La Vallée Village, Paris GLA: 21,400m2 Boutiques: 111
Hede Fashion Outlet, Gothenburg GLA: 16,300m2 Units: 53
Maasmechelen Village, Brussels GLA: 19,500m2 Boutiques: 106
Landquart Fashion Outlet, Zurich GLA: 20,700m2 Units: 71
Fidenza Village, Milan GLA: 20,900m2 Boutiques: 122
Mallorca Fashion Outlet GLA: 33,100m2 Units: 52
Wertheim Village, Frankfurt GLA: 21,100m2 Boutiques: 121
Sevilla Fashion Outlet GLA: 16,300m2 Units: 67
Ingolstadt Village, Munich GLA: 20,500m2 Boutiques: 120
Wroclaw Fashion Outlet, Poland GLA: 13,700m2 Units: 85
Kildare Village, Dublin GLA: 16,800m2 Boutiques: 99
Zweibrücken Fashion Outlet, Germany GLA: 29,400m2 Units: 113
Vila de Conde Porto Fashion Outlet GLA: 27,800m2 Units: 125
Norwegian Outlet, Oslo GLA: 16,000m2 Units: 56
57
Premium outlets portfolio
(1) Not including extension opening October 2017 (2) Including extension opened May 2017
Appendices
Hammerson’s total investment in Value Retail: 41% (1)
Holding companies 25% equity
Bicester Village
33
46
La Roca Village
23
36
Las Rozas Village
19
32
La Vallée Village
11
23
Maasmechelen Village
13
26
Fidenza Village
20
33
Wertheim Village
31
44
Ingolstadt Village
0
12
Kildare Village
27
40
58 (1) Hammerson’s share of Value Retail’s net assets at 30 June 2017, excluding goodwill (2) Largely represent the economic interests in Spanish Villages, structured as loans rather than equity
Village ownership via LPs (%)
Total Village ownership (%)
Hammerson €2m shareholder loan
Hammerson is the second largest shareholder in holding company after management. Largest owner of VR as a whole. Other shareholders include APG, SPG, private investors (family and friends)
VR ownership (1) Hammerson share (£m)
Value Retail 100% £m
%
GAV 1,533.6 4,496.5 34
Participative loans (3) 126.4 0 100
GAV plus participative loans 1,660.0 4,496.5 37%
Other assets 119.7 437.3 27%
Total liabilities (762.5) (2,436.9) 31%
Investment in associate excl. goodwill 1,017.2 2,496.9 41%
Appendices
Tourism is a key driver of outlets sales growth
Top 10 source markets represent 68% of sales in EU destinations, and is forecast to grow by 8%
59 (1) Source: Premier Vision Annual Review 2016/2017 (data from Oxford Economics)
Growth non-EU arrivals to EU countries 2017 (%) (1)
Non-EU arrivals will see growth of c.5% in 2017. All European destination markets are predicted to see gains
Top tax free nationalities sales growth 2017 (%) (1)
Appendices
On site developments
Scheme (1) Lettable area m2
Expected completion
Value 30 Jun 2017 £m(2)
Estimated cost to complete(3)
£m
Estimated annual income(4)
£m
Let (5)
%
Parc Tawe, Swansea 21,400 Q4 2017 n/a 9 2 76
Elliott’s Field Shopping Park (Phase 2), Rugby
7,900 Q4 2017 24 14 3 78
Orchard Centre, Didcot 8,700 Q1 2018 21 23 3 45
Total 38,000 46 8
60 (1) Group ownership 100% for all on-site schemes (2) Values are not included for extension projects which are incorporated into the value of the existing property (3) Incremental capital cost including capitalised interest (4) Incremental income net of head rents and after expiry of rent-free periods (5) Let or in solicitors' hands by income at 25 July 2017
Appendices
NB aligned with final press
release
Scheme Area (m2)
Brent Cross extension 90,000 Extension and refurbishment of Brent Cross forming part of wider Brent Cross Cricklewood regeneration plans, totalling 175,000m2 of retail, catering and leisure. Reserved matters planning application submitted with decision expected in September 2017. CPO decision expected in September 2017.
Bristol investment properties (1) 74,000 New planning application in the name of Callowhill Court submitted December 2016 for 3.5ha site of joint venture-owned land relating to part of the real estate adjoining Cabot Circus. Masterplan includes up to 74,000m2 retail and leisure, 500 car parking spaces, and the potential for 150 residential units and a 150 room hotel.
Croydon Town Centre 200,000 Redevelopment of Whitgift Centre and refurbishment of Centrale shopping centre by the Croydon Partnership., a 50:50 joint venture between Hammerson and Westfield. New outline planning application submitted in October 2016 with decision expected in autumn 2017.
Silverburn (Phase 4), (1) Glasgow 50,000 Consent granted in 2015 for a masterplan for a future extension of existing centre. Masterplan includes 31,250m2 retail, 8,500m2 leisure and a hotel.
Union Square, Aberdeen (1) 27,800 Extension of existing shopping centre for up to 11,000m2 of retail, 12,000m2 of leisure and catering, plus up to 300 car parking spaces and a hotel. Planning application due for determination by summer 2017.
Victoria, Leeds (Phase 2) (1) 73,000
Phase 1 Victoria Gate completed October 2016. Operator being sought for up to 300 bed hotel adjacent to new multi-storey car park. Phase 2 masterplanning underway to deliver phased retail/leisure mixed-use scheme to complement Victoria Gate. Freehold control of Phase 2 site obtained.
WestQuay South, Southampton (Phase 2) 58,000 Council-owned land, with potential for c.260 residential units, a hotel and number of retail units to complement the recently completed cinema and catering scheme. A joint review of scheme underway with the local authority and third parties to progress the project.
Oldbury, Dudley (1) 10,900 Planning secured in May 2016 for new development of up to 11 retail and catering units. Leasing underway.
The Goodsyard, London E1 270,000 4.2ha site on edge of City of London. Planning application for major mixed-use development was deferred in April 2016 to allow further consultation. Work on-going to submit amended application in early 2018.
Italie Deux, Paris 13ème 6,500 Extension of the existing shopping centre offering a new façade and innovative concepts. Land disposal approved by the City of Paris. Building permit submitted. Retail consent obtained and free from challenge. Pre-letting on-going.
Les 3 Fontaines, Cergy Pontoise 33,000 Retail and catering extension as part of a wider city centre project. Co-ownership agreement, building permit and retail consent obtained. On-going pre-letting discussions and contractor selected.
SQY Ouest, Saint-Quentin-en-Yvelines (1) 32,000 Opportunity to reposition existing shopping centre, creating a leisure-led destination. Trading consent obtained but challenged. Pre-letting on-going, Phase 1 launched to handover first units in second half of 2017.
Dundrum Phase II, Dublin (1) 100,000 Six acre site located adjacent to Dundrum Town Centre. Opportunity to create a retail-led mixed used scheme; masterplanning process underway.
Dublin Central, Dublin (1) 130,000 Extension of duration of planning consent granted until May 2022 to create a retail-led city centre scheme. Irish government has appealed a High Court decision to designate part of the site as a National Monument. The Group is supporting the process and a hearing is expected in December 2017.
Swords Pavilions Phase III, Dublin (1) 272,000
Extension of planning consent granted to August 2021. Consent in place to create 124,000m2 retail-led scheme including residential units. Pending completion of loan to own process for Phases I and II, subject to regulatory clearance due later this year.
Total 1,427,200
Development pipeline opportunities
(1) Schemes are on Group owned land. No additional land acquisitions are required. Excludes occupational and long leaseholds.
61 Appendices
NB aligned with final press
release
H1 2017 valuation data
62
UK shopping centres
UK retail parks
France Ireland UK other interests
Total portfolio
True equivalent yield (%)
30 Jun 2017 5.1 6.0 4.5 4.3 7.3 5.0
31 Dec 2016 5.1 6.1 4.4 4.3 7.4 5.1
ERV (£m)
30 Jun 2017 187.3 78.5 110.6 35.6 13.4 425.4
31 Dec 2016 186.8 77.1 107.9 34.8 13.4 420.0
LfL change (%) +0.5 +0.3 +0.5 +2.5 +0.4 +0.6
Appendices
H1 2017 components of valuation change
63 Note: Development and other includes the movement in the UK Other interests portfolio where valuations increased by a total of £3m during H1 2017
Components of valuation change in H1 2017, total portfolio (£m)
11
-1
3 0 0
11
22 20
5 2
21
0
108
156
-1
12
-4
0 2
-4
10
30
16
1
21
2
115
188
-50
0
50
100
150
200
UK shoppingcentres
UK retail parks France Ireland Developments Premium outlets Total Portfolio
Yield Income Development and other Total
UK shopping centres
Appendices
Sensitivity to FX movements
64
Income statement As reported
Weaker GBP
Change Stronger GBP
Change
GBP/EUR 1.162 1.056 -10% 1.278 +10%
Net rental income (£m) 184.0 190.5 +3% 178.0 −3%
EPS (p) 15.1 15.6 +3% 14.6 −3%
Balance sheet
GBP/EUR 1.139 1.035 10% 1.253 +10%
NAVPS (p) 771 783 +1% 761 −1%
Net debt (£m) 3,710 4,024 +8% 3,424 −8%
LTV (%) 37.3 38.9 +160bps 35.8 −150bps
Appendices
30 Jun 2017
Net debt
Reported Fully proportionally consolidated
Group 3,710 3,710
VIA Outlets - 124
Value Retail - 436
Loan 3,710 4,270
Property values
Group 8,495 8,495
Ireland (loans) 111 111
VIA Outlets - 499
Value Retail - 1,534
Less minority interest (84) (84)
VIA Outlets net assets 325 -
Value Retail net assets 1,097 -
Value 9,944 10,555
LTV 37% 40%
LTV methodology
65 Appendices
14.6% 13.3% 12.8% 11.8% 11.9% 11.5%
11.9% 10.9%
10.0% 11.3% 10.7% 9.0%
0%
5%
10%
15%
20%
25%
30%
2012 2013 2014 2015 2016 H1 2017
Corporate expenses Operational costs
Cost:income ratio
66
Cost:income ratio (%)
26.5% 24.2%
22.8% 23.1%(1)
(1) Excluding car park costs (£9.3m in 2015) cost:income ratio would be 21.1% (2) Excluding car park costs (£9.5m in 2016) cost:income ratio would be 20.7% (3) Excluding car park costs (£5.1m in H1 2017) cost:income ratio would be 18.5%
Appendices
22.6%(2)
20.5%(3)
Our new Positive Places objective is for Hammerson to be Net Positive for carbon, water, resource use and socio-economic impacts by 2030
Carbon Net Positive for carbon means carbon emissions avoided exceed emissions 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.
Resource Use Net Positive for socio-economic impacts means making a measurable positive impact on socio-economic issues relevant to our local communities beyond a measured baseline.
“I am proud that Hammerson has become the first real estate company globally to identify such comprehensive targets and by extending our aims to tenant impacts we will be able to directly support our retail clients and deliver best in class retail assets that are fit for the future.” David Atkins, CEO, Hammerson plc
Steps to becoming Net Positive
2015
27,000 tonnes CO2e
539,082 m3 water
18,243 tonnes waste not recycled or reused
2016
24,000 tonnes CO2e
511,888 m3 water
17,293 tonnes waste not recycled or reused
40,000 FTE jobs supported across our assets
2017
Deliver carbon neutral development at Rugby
Install 3 further solar PV arrays
Reduce energy demand by further 7% v 2015 baseline
Achieve 85% recycling
2018 – 2020
Work with tenants to reduce tenant on site energy demand
Major developments to support long term carbon reduction
Identify local carbon saving projects
2021
CO2e reduced by at least 27000 tonnes
Embed net positive into new developments
Increase renewable capacity
68 Appendices
Hammerson Net Positive
Designed a carbon neutral, BREEAM Outstanding retail park with full co-operation from tenants. We are on track for delivery during 2017
Published a full Carbon Footprint for the Group
Approved install of a 198kWp PV array at Cabot Circus – scheduled to be completed during H2, taking total capacity to 500kWp
Achieved further reduction in carbon emissions
69
Published True Value of Retail – the social impact footprint of the Group
Key data:
40,000 fte jobs across our portfolios
£800m generated in wages
82% of jobs to local people
48% to under-25s
Our ambition to be net positive for carbon emissions, water and resource demand and socio-economic impacts by 2030 So far during 2017 we have:
Appendices