2013 Half-year results
Results2013 Full-year
Monday 17 February 2014
ResultsMonday 17 February 2014
2013 Full-year
1Section
Introduction and market overview David Atkins, CEO
Financial results Timon Drakesmith, CFO
Today’s presentation
2Section
2013 half year results 2
Financial results Timon Drakesmith, CFO
Performance drivers David Atkins, CEO
2013 Full-year results
2
3Section
4Section
Conclusion David Atkins, CEO
Vision
Our vision is to be the best owner-manager and developer of retail property within Europe
2013 half year results 3
By capitalising on our strengths we aim to provide industry-leading shareholder returns
LfL NRI+2.1%
NAV/share+5.7%
32013 Full-year results
Dividend+7.9%
EPS+10.5%
2013 highlights
Occupancy 97.7%
Leasing +2% vs ERV
7% tenant rotation rate
Les Terrasses du Port 93% let
Commenced on site at Leeds and
Beauvais
Planning consent at Croydon and
Best in class retail portfolio Advancing developments
2013 half year results 42013 Half-year results 42013 Full-year results
rate at Croydon and Brent Cross
WAIR reduced to 4.8%
Reduction in cost ratio of 240bps
Over £700m liquidity
Queensgate disposal
Leisure extensions on site
Acquisition of Value Retail stakes,
Bullring and Nancy
Active financial management Capital recycling to enhance growth
Market indicators
Structural attractiveness of indexation
Low personal debt levels
Business confidence steady throughout 2013
Household disposable income increased
French business confidence (Source: INSEE, France)
Securing retail demand in France despite cyclical weakness
85
90
95
100
105
Index
90
85
95
100
105
2013 half year results 5
Household disposable income increased throughout 2013 80
Jul 12 Jan 13 Jul 13 Jan 14
Total disposable income (Source: INSEE, France)
2013 Full-year results
80
€bn
310000
315000
320000
325000
330000
335000
340000
Jan 08 Jan 10 Jan 1231
32
33
34Portfolio initiatives
Leasing progress at Les Terrasses du Port, Marseille and Jeu de Paume, Beauvais
Repositioning existing assets through extensions and refurbishments
Selective acquisitions
Jan 14
Stronger Christmas trading in the UK
Robert DyasCarphone Warehouse
ArgosThorntons
GreggsRyman
SuperdrugMothercare
WH Smith
Topps TilesHalfords
DixonsMaplin
Dunelm
WaitroseM&S FoodSainsbury
TescoMorrison
Foodstores
OOT retailers
Non fashion retailers
2013 half year results 6
Source: PMA (from company statements)% p.a. like-for-like sales change, Christmas trading period 2013 vs 2012
2013 Full-year results
-10 -5 0 5 10 15 20 25
SelfridgesLiberty
John LewisHouse of FraserM&S Gen merch
Debenhams
Boux AvenueMoss Bross
Mountain WarehouseJaeger
Karen MillenNext
Ted BakerWhite Stuff
JD SportsBon Marche
Blue IncNew Look
LushThe Works
Fragrance ShopRobert Dyas
Carphone Warehouse retailers
Fashion retailers
Departmentstores
Moss BrosBoux Avenue
UK GDP growth (Source: ONS)
%
Positive outlook driven by improving fundamentals
0.8
1.0
Falling UK unemployment (Source: ONS)
8
8.5
%
2013 half year results 72013 Full-year results
-0.2
0.0
0.2
0.4
0.6
2012 -
Q1
2012 -
Q2
2012 -
Q3
2012 -
Q4
2013 -
Q1
2013 -
Q2
2013 -
Q3
2013 -
Q4
6
6.5
7
7.5
Jan-1
2
Apr-
12
Jul-
12
Oct
-12
Jan-1
3
Apr-
13
Jul-
13
Oct
-13
Deep investor demand and firming yields
%
Shopping centre investment in Europe (Source: DTZ research)
€bn
250
30020
Volume Number of dealsNumber of deals
Net initial yield (Source: PMA)
6.0
6.5Prime Shopping centres Retail WarehousingPrime shopping centres Retail warehousing
LHS RHS
2013 half year results 82013 Full-year results
0
50
100
150
200
0
5
10
15
1999
2001
2003
2005
2007
2009
2011
2013
4.0
4.5
5.0
5.5
2010
2011
2012
2013
2014
20
25
Shopping Centre / Unit Shop Retail Warehouse
Combined with limited supply
Retail completions expected to remain modest (Source: PMA)
Mil ft2 p.a. net
Shopping centres Retail warehouses
2013 half year results 9
0
5
10
15
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2013 Full-year results
Increased space requirements in selected locations
International retailers
Fashion multiples
Leisure and catering
Aspirational brands
Homeware and furnishings
Discounters
London
Regional shopping centres
Out of town retail parks
2013 half year results 10
Prime towns
Secondary towns
Tertiary
2013 Full-year results
Forecast UK retail ERV growth per annum (Source: PMA)
Leading to market ERV growth
%
2.0
2.5
2.9
1.9
2.0
2.5
3.0 Prime shopping centres Retail warehouses
2013 half year results 112013 Full-year results
-1.2
-0.9
-0.1-0.1
1.1
2.0
-0.2
0.8
-0.2-0.8
1.3
1.9 1.81.6
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2010 2011 2012 2013 2014 2015 2016 2017
Hammerson positioned to support multichannel retail
Click and collect sales not recordedHammerson 2013 tenants’ sales
UK France
-0.4% -2.7%
Reported sales do not capture the whole picture
2013 half year results 122013 Full-year results
Overall estimated benefit to reported sales of 1-2% increase
Online purchases returned to store reduce recorded sales
Adjusted sales capture underlying picture
Adjusted sales Reported store sales
Retailer 1
Retailer 2
-0.7%
+4.7%
+1.7%
+5.7%
12 months to 31 December 2013 vs ERV vs previous rents
UK retail +4% +1%
France +0% +6%
Group +2% +2%
Leasing ahead of both ERV and previous rents
2013 half year results 132013 Half-year results2013 Full-year results
UK shopping centres UK retail parks French retail
Five Guys at The Oracle, Reading
Homebase at Battery Retail Park, Selly Oak
Eram at Place des Halles, Strasbourg
Summary
Improving economic fundamentals
Growing consumer confidence
Increasing tenant demand
2013 half year results 142013 Full-year results
Increasing tenant demand
Limited supply pipeline
Hammerson positioned to outperform
Conditions for selected ERV growth
2Section
2013 Half-year results
Financialresults
Timon Drakesmith
Growth in NRI of 2.1%Marseille opening May 2014On track to meet our £320m NRI forecast for 2015
Drive top line growth
Finance agenda and progress
Focus area Progress in 2013
Control operating costsCost income ratio declined by 240 bps to 24.6%Operating costs reduced by 1.5% in 2013
2013 half year results 162013 Half-year results 16
Control operating costs Operating costs reduced by 1.5% in 2013Further actions announced today to reduce cost income ratio
Manage interest expenseWAIR falls by 20bps to 4.8%Increased % of fixed debt for protection as rates rise
Optimise capital structure
Over £500m of new debt financingLTV below 40% targetWell funded to support development schemes
2013 Full-year results
Income statement
2013 2012 % change
Net rental income(1) (£m) 290.2 282.9 +2.1%(2)
Adjusted profit before tax(3) (£m) 168.9 152.5 +10.8%
EPRA EPS (p) 23.1 20.9 +10.5%
Final dividend (p) 10.8 10.0 +8.0%
Headline results
2013 half year results 172013 Half-year results
Final dividend (p) 10.8 10.0 +8.0%
Balance sheet
31 Dec 2013 31 Dec 2012 % change
Portfolio value (£m) 5,931 5,653(4) +2.0%(5)
EPRA NAV (pence per share) 573 542 +5.7%
LTV (%) 38 36 -
17
(1) Continuing and discontinued operations(2) On a like-for-like basis for continuing operations (3) Continuing and discontinued operations (4) Includes £195m for discontinued operations(5) Underlying capital growth for total portfolio excluding Value Retail
2013 Full-year results
Solid uplifts in like-for-like NRI
YoY
change (
LfL
)
3.2%2.6%
2.1%(1)
0.2%
UK shopping centres UK retail parks France retail Total
2013 Half-year results 182013 Half-year results 18
Union Square
Brent Cross
Silverburn
GRI up 2.2% LfL
Cleveland
Thanet
2012 administrations
Cergy
O’Parinor
Indexation
In line with previous guidance
Key
dri
vers
2013 Full-year results
2013 total(2) £124.7m £82.1m £62.7m £282.8m(3)
(1) Includes other interests LfL of £7.2m which declined YoY by 4.0%(2) Total NRI for continuing portfolio (not LfL) (3) Continuing operations, including other interests total of £13.3m
22.5
24.0
Net investment
LfL NRI Value Retail Administration costs
Net financing Exchange and other
1.0
0.6
0.2
(0.5) 0.2
23.1
0.7
EPRA EPS vs 2012
+10.5%
2013 half year results
18.0
19.5
21.0
192013 Half-year results 19
EPRA EPS (pence)
20.9
1.0
2013
2013 Full-year results
2012
Earnings +20% since 2011
Cost management delivering results
26
27
28
29
84
86
88
Operating costs(1)
£m
EPRA Cost/incomeratio(1)(2) %
28.3%
27.0%86.1
EPRA cost/income
2013 half year results 20
79.8
20
21
22
23
24
25
74
76
78
80
82
2011 2012 Year 2013
78.6
24.6%
79.8
2013 Full-year results
EPRA cost/income target for 2016
21-22%
(1) Continuing operations
(2) Cost ratio is defined as: (net service charge expense + property outgoings + administration expenses – management fees receivable)/Gross rental income
2013
New resource management measures
Efficiency improvements
Target savings - £6m p.a. from 2016
Senior management reorganisation
London office relocation in 2015
Share incentive plans and pension benefits
Additional investments to grow business
Expected incremental costs - £5m p.a. from 2015
Expanded development programme
- Headcount increases
- Mobilisation of project teams
2013 half year results 21
Resources redeployed to growth areas
Expense reductions push cost income ratio down to 21-22%
2013 Full-year results
Share incentive plans and pension benefits
London/Paris integration
Implementation costs of £5m in 2014
- Mobilisation of project teams
Digital marketing and multichannel
FY 2013 %
H2 2013 %
H1 2013%
Value at 31 Dec 2013 (£m)
UK shopping centres +2.4 +1.7 +0.7 2,524
UK retail parks +1.7 +3.2 -1.5 1,471
France retail -0.3 +0.8 -1.1 1,240
Current developments +10.4 +6.8 +3.4 497
Portfolio valuation change
2013 half year results 222013 Half-year results
Current developments +10.4 +6.8 +3.4 497
Other UK interests(1) -6.5 -1.6 -5.0 199
Discontinued operations +3.7 -1.2 +5.0 -
Total +2.0 +2.2 -0.2 5,931
Value Retail(2) +12.6 +6.8 +5.4 788(3)
2013 Full-year results
(1) Principally assets held for redevelopment(2) Underlying overall portfolio valuation change for Hammerson interests(3) Hammerson’s share of portfolio valuation at 31 Dec 2013
2013 Full-year results
DividendsDevelopments revaluation
Adjusted profit
573
560
570
580
590
Value Retail revaluation
Profit on disposals
Investment portfolio
revaluation2323
EPRA NAV per share vs 2012
+5.7%
2
(18)
11
573573
2013 half year results 232013 Half-year results 23
EPRA NAV per share (pence)
542
4
520
530
540
550
560
2012
2013
2013 Full-year results
9
4
Financing policies
31 Dec 2013 31 Dec 2012
Net debt - £2,252m £2,036m
Gearing <85% 56% 53%
Loan to value <40% 38% 36%
Cash/undrawn facilities - £716m £696m
Healthy financing ratios
2013 half year results 242013 Half-year results 24
Cash/undrawn facilities - £716m £696m
Weighted average cost of finance - 4.8% 5.0%
Interest cover >2.0x 2.8x 2.8x
Net debt/EBITDA <10x 8.2x 7.9x
Fixed rate debt >50% 82%(1) 80%
2013 Full-year results
(1) Fixed rate debt percentage at 31 December 2013 was 70% but is shown on a pro forma basis for £275m US private placement issue arranged in November 2013
350
400
450
500
Bank drawn debt Secured debt Euro bonds Sterling bonds USPP£m
Maturity profile of debt
Credit markets attractive
Weighted average coupon of 2015/2016 bonds 5.0%
USPP will refinance 2014 bank debt
(1)
2013 half year results 2525
0
50
100
150
200
250
300
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
2013 Half-year results2013 Full-year results
(1) Undrawn committed US private placement due to fund February and June 14
Forecast development expenditure
On site developments
Les Terrasses du Port, Marseille
Victoria Gate, Leeds
Jeu de Paume, Beauvais
Other on site developments
200
250
300
£m
2013 half year results 26
Note: Croydon expenditure in 2013 and 2014 reflects property acquisitionsOther on site developments: Abbotsinch Retail Park, Paisley; Cyfarthfa Retail Park, Merthyr Tydfil; Silverburn, Glasgow; O’Parinor, ParisNew extensions/redevelopments: Elliott’s Field Retail Park, Rugby; Watermark WestQuay, Southampton; Brent Cross leisure extension
2013 Full-year results
New extensions/redevelopments
Whitgift, Croydon
Brent Cross extension
Future developments
0
50
100
150
2013 2014 2015 2016 2017 2018
Focus on Value Retail
Value Retail Villages 2013 YoY change
Brand sales €1.9bn +13%
EBITDA €111m +12%
Total portfolio value €3.1bn +12%
Future growth drivers
Forecast 72% growth in Chinese visits to Europe by 2018(2)
Village remerchandising with more premium brand stores
More flagship stores
Extensions at Barcelona and Dublin
Hammerson investment plans
Hammerson share of(1)
EPRA net income £19m +51%
2013 half year results 272013 Full-year results
EPRA net income £19m +51%
EPRA net assets £634m +29%
(1) Including benefit of new investments, interest receivable and loans(2) Source: European Travel Commission
3Section
2013 Half-year results
Performancedrivers
David Atkins
Performance drivers
Contribution from extensions and refurbishments
Growth from existing portfolio
Major developmentsValue Retail
2013 half year results 29292013 Half-year results2013 Full-year results
Selected examples
Capital deployment
Prime Shopping Centres
Convenient Retail Parks
Premium Designer Outlets
Extension and
refurbishmentSilverburn
Silverburn AbbotsinchRetail Park
La Roca Village
2013 Half-year results 30
Development
Acquisition
2013 Full-year results
Kildare Village
Les Terrasses du Port
Bullring Junction Fund
Cyfarthfa Retail Park
La ValléeVillage
Kildare Village
Acquisition of a further stake in Bullring
Acquired additional 33% stake in 2013 in 50/50 JV with CPPIB, taking ownership to 50%
9% total property return
Recent lease renewals +10% above previous rent
Continues to attract new brands
2013 Half-year results 31
Bullring opens, with 1.5 million visitors
in first week
New £100 million John Lewis store opens for
trade in city
2011
Spiceal Street opens, a 1,900m2 leisure and
catering development
2003 2013 2014
Bullring celebrates 10
years of trading
2013 Full-year results
Explore opportunity to increase leisure offering
and add a cinema
2015
Saint Sébastien, Nancy
105shops and
restaurants
£7mannual rents
99%let
24,000m2
centre
%%%%6%
initial yield
Development potential
2013 Half-year results 322013 Full-year results
Nearing completion at Les Terrasses du Port
Countdown to launch
Opening 3 May 2014
93% pre-let and 95% construction complete
£28 million annual rents
£460 million total development cost
2013 Half-year results 33
7.3% yield on cost
Anchor store Printemps and MSUs have commenced fitting out of units
2013 Full-year results
Transforming Marseille’s retail offer
190 units
53 43 222281
1
30
2013 Half-year results 342013 Full-year results
53fashion brands
43international
brands
22brands taking 1st
store in a French shopping centre
22catering units
81brands new to the portfolio
Brands recently signed include
30brands new to
Marseille
Construction commenced at Leeds and Beauvais
Victoria Gate, Leeds Jeu de Paume, Beauvais
2013 Half-year results 352013 Full-year results
Out-turn financials
Total development cost
£150m
Annual income £10m
Yield on cost 6.7%
34,300m2 luxury retail venue
John Lewis anchor store
28% pre-let
Completion Q3 2016
Out-turn financials
Total development cost
£70m
Annual income £5m
Yield on cost 7.1%
23,800m2 retail and leisure venue
80km north west of Paris
Large catchment and poor retail provision
42% pre-let
Completion Q3 2015
Advancing the development pipeline
Silverburn, Glasgow O’Parinor, ParisCyfarthfa Retail Park, Merthyr Tydfil
Abbotsinch Retail Park, Paisley
2013 Half-year results 362013 Full-year results
10,900m2 extension
14 screen cinema
84% pre-let
Total development cost £13m
Completion Q1 2015
Yield on cost 7%
7,200m2 extension
14 screen cinema
100% pre-let
Total development cost £4m
Completion Q4 2014
Yield on cost 5%
14,500m2 extension
4,300m2 Marks and Spencer anchor store
46% pre-let
Total development cost £23m
Completion Q1 2015
Yield on cost 10%
5,000m2 extension
5 retail units in adjacent existing retail park
87% pre-let
Total development cost £9m
Completion Q2 2014
Yield on cost 13%
Key milestones at Brent Cross and Croydon
Brent Cross Whitgift, Croydon
2013 Half-year results 3737
Agree masterplanBrent
Cross/Cricklewoodphasing
Submit planning
Complete S106
2013 Half-year results
2013
Establish JV
2014
Acquire RLAM stake
Secure planning resolution
Conclude land
assembly
Conclude anchor
negotiations
Complete design
2013
2014
2013 Full-year results
S73 approval Complete S106
Submit leisure
planning application
Secure CPO resolution
Attractive future pipeline: The Goodsyard
£6m per acre valuation
Spring 2014Planning submission
Total development area 260,000m2
1,400residential
units
60,000m2
office space19,000m2
Retail space(90 shops)
50/50joint venture with
Ballymore Properties
10 acresite in heart of
Shoreditch
2013 Half-year results 382013 Full-year results
90
120
£m
annual
rents
Additional income from developments
£15m
£56m £63m
2013 half year results 3939
Notes: Annualised passing rents assuming 100% occupancy in year of project completion, post any rent free periodsAssumes completion of all medium-term developments and extensions2014 Les Terrasses du Port, O’Parinor, Abbotsinch Retail Park; 2015 Silverburn, Jeu de Paume Beauvais, Elliott’s Field Rugby, Cyfarthfa Retail Park Merthyr Tydfil 2016 Watermark WestQuay, Victoria Gate2017-2019 Croydon, Brent Cross Leisure, Brent Cross extension
2014 2015 2016 2017-2019
30
60
£m
annual
rents
2013 Half-year results2013 Full-year results
£11m
£30m
2014 2015 2016 2017-2019
2013 Half-year results
Conclusion
Key messages
ERV growth returning to our markets
On track with previous income growth guidance
Major development activity amplifies returns
2013 half year results 41
Conclusion
ERV growth from existing portfolio
Contribution from extensions and refurbishments
Overhead cost control
2013 half year results 42422013 Half-year results2013 Full-year results
refurbishments
Major developments
Value Retail
Liability management
Strong returns
Confident outlook
2013 Half-year results
Questions
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 in 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 and regulatory framework in which the Company operates or in economic or technological trends or conditions, including inflation and consumer
Disclaimer
2013 half year results 4444
Company operates or in economic or technological trends or conditions, including inflation and consumer confidence, on a global, regional or national 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.
2013 Half-year results
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