intu Trafford Centre, Manchester
Hammerson and Intu
Setting the new benchmark for European retail destinations
6 December 2017
Setting the new benchmark for European retail destinations
01 The improved business
02 A leading portfolio
03 Enhanced operating and development platform
04 Significant financial benefits
05 Conclusion and Q&A
2
Apply best practice operating skills to unlock the performance potential of the enlarged portfolio
Rigorous income-focused strategy
Creates a pan-European leading portfolio of high-quality retail and leisure property
4 (1) Pro-forma GAV as at 30 Jun 2017, adjusted for Hammerson acquisition of Cergy 3, Paris and disposal of Place des Halles, Strasbourg, and Intu disposal of 50% of Madrid Xanadú and 50% of intu Chapelfield, Norwich
A leading portfolio
Compelling financial benefits
Superior combined operating platform
Strong development expertise
Significant capital recycling opportunities
More differentiated destinations
Top-three pan-European retail focused REIT with total GAV of £21 billion (1)
Increased exposure to higher-growth destination shopping centres
Better aligned to meet the needs of retailers in a multichannel world
Combining Ireland and Spain, two of Europe’s fastest growing economies
Clear rationalisation programme – at least £2 billion of disposals over the short to medium term
Reinvest into higher return opportunities – premium outlets, Spain, Ireland and developments
Enhanced resources in events, customer service, online and brand
Better equipped to drive footfall and dwell time to deliver productive, attractive space for retailers
Deploy Hammerson’s expertise in delivering successful developments and extensions across the combined development pipeline
Earnings accretion expected
Approx. £25 million p.a. cost synergies; further from operational efficiencies and refinancing
Strengthens Hammerson's consistent earnings and dividend profile
Key transaction terms
(1) Based on Hammerson closing price of 534.5p (2) Includes irrevocable undertakings from Peel Group and associates and Intu Directors , and a letter of intent from Coronation
The offer
All-share offer by Hammerson for Intu of 0.475 new Hammerson shares per Intu share, equivalent to 254p per Intu share (1)
Pro-forma ownership Hammerson/Intu 55%/45%
Combined group to be listed on LSE and JSE
Leadership and governance
Board of the enlarged group will comprise:
• David Tyler as Chairman
• John Whittaker as Deputy Chairman
• David Atkins as CEO
• Timon Drakesmith as CFO
• John Strachan as Senior Independent Director
The Board of the enlarged group will comprise six directors nominated by Hammerson and four directors nominated by Intu
Expect to have experienced and diverse Board
Relationship agreement in place with Peel Group (15% shareholder in enlarged group)
Shareholder support
Conditional on Hammerson and Intu shareholder approval
In aggregate, Hammerson has received support from Intu shareholders holding 50.6% (2)
5
Includes irrevocable undertakings from Estonia, Cheeseden and Crescent
Recycle and reinvest into European growth markets
More high-quality retail and leisure destinations
18 centres over 1 million sq ft
Attractive portfolio balance
(1) Pro-forma GAV as at 30 Jun 2017, adjusted for Hammerson acquisition of Cergy 3, Paris and disposal of Place des Halles, Strasbourg, and Intu disposal of 50% of Madrid Xanadú and 50% of intu Chapelfield, Norwich
(2) Based on annualised NRI for 6 months ending 30 Jun 2017 (3) Darker blue indicating top-10 largest combined group ownerships in UK shopping centres by value
Pro-forma enlarged group, GAV (£bn) (1) Top-3 European retail platform
£21 billion GAV (1)
£820 million NRI (2)
Combining Ireland and Spain, two of Europe’s fastest growing
economies
Close to 20% higher growth categories of Premium outlets,
Spain, Ireland and developments (1)
£0.6bn £0.6bn
UK shopping centres (3)
UK retail parks
France
Ireland
Spain
Developments & UK other
£0.9bn £13.1bn
£1.3bn
£2.0bn
£2.0bn
7
Premium outlets
8
More relevant to retailers expanding across Europe
Glasgow
Dublin Leeds
Manchester
Bristol
Southampton
Madrid
Paris
Marseille
Asturias
Zaragoza
Aberdeen
Newcastle
Nottingham
London
Nice
London Brent Cross, Croydon
Paris Italie 2, Les Trois Fontaines
Madrid Xanadu, Las Rozas
Barcelona La Roca
Frankfurt Wertheim
Dublin Dundrum, Kildaire
Manchester Trafford, Arndale
Marseille Terrasses du Port
Birmingham Bullring / Grand Central, Merry Hill
Glasgow Braehead, Silverburn
Bristol Cribbs Causeway, Cabot Circus
0.0 1.0 2.0 3.0 4.0 5.0
UnitedKingdom
France
Ireland
Spain
2018 2017
Zweibrücken
Amsterdam
Lisbon
Porto
Mallorca
Zurich
Gothenburg
Prague
Wroclaw
Seville
Oxford
Barcelona
Brussels
Milan
Munich
Frankfurt
Birmingham
Cardiff
Intu largest shopping centres
Hammerson largest shopping centres
Premium outlets (VR and VIA Outlets)
14 European countries
43% of portfolio in top-20 European cities (1)
3 top-10 shopping centres create a platform in Spain
8
ADD READING AND OSLO (check which centres are not
included as ‘largest’)
Add footnotes, what constitutes ‘largest’?
Multichannel - experiential shopping centres - convenient retail parks - luxury premium outlets - online affiliate website
Oslo
(1) Oxford Economics Note: largest shopping centres defined as those over 500,000sq ft
Enhanced operating and development platform
Superior combined operating platform
More differentiated destinations
Strong development
expertise
Rigorous focus on best brand mix
F&B experts
Sophisticated commercialisation
Harmonised customer services and branding across centres
Enhanced events and promotions
Complementary digital strategies – affiliate website and bespoke apps
Expertise in property development and extensions
Enlarged development pipeline
Combination drives benefits for retailers, consumers and shareholders
10
11
Rigorous focus on best brand mix
Skinnydip, Brent Cross Smiggle, Dundrum
Rituals, Bullring Nespresso, Oracle
Rigorous focus on curating the right retail mix and brand adjacencies
Close retailer relationships
Leasing informed by dedicated consumer insights team
Future opportunities
Combined leasing expertise with enhanced regional structure
intu Braehead and intu Lakeside - curate category clusters and zones
intu Metrocentre - reconfigure large spaces and further improve brand adjacencies
Market-leading delivery
New portfolio leasing opportunities:
12
F&B experts
Mowgli, Grand Central
Comptoir Libanais, Oracle
Franco Manca, Oracle
Bill’s, Westquay
Diversity and innovation in F&B leasing
Experienced F&B leasing team. Recent track record at Westquay, Victoria Gate and Silverburn
Close relationships with established restaurant brands as well as start-ups
Future opportunities
intu Trafford Centre – trial curated street food
intu Merry Hill – review and enhance current F&B offer with extension
Market-leading delivery
New F&B leasing opportunities:
13
Sophisticated commercialisation
Beach bar pop-up, Oracle Amazing Chocolate Workshop, Brent Cross
Up Market, Bullring Mercedes pop-up, Oracle
Maximise income from pop-ups, digital screens, sponsored events and enhance customer experience
Invest in high quality design and fit-out to improve returns
Car park investment programme
Innovative approach to pop-ups
Future opportunities
Roll out more sponsorship-led events
Introduce more regionally-themed events
Widen relationship with partners, e.g. AppearHere
What/where is this
Market-leading delivery
14
Complementary digital strategies
Enhanced destinations for consumers
Driving footfall & dwell time, benefitting consumers, retailers and communities
Events
Customer service
Affiliate online platform B2C branding
Sponsorship & promotions
Harmonised branding and customer service across centres
Enhanced events and promotions
Bespoke apps
15
Deploy development expertise
(1) Timeframe 2017-2020
Les Terrasses du Port, Marseille 62,700 sq m 7% YoC
Victoria Gate, Leeds 37,500 sq m 6% YoC
Add a lot more development – see p8&9 half year results
release
Strong development track record Intu development pipeline
Additional pipeline, UK and Spain £1.2 billion (1)
intu Lakeside intu Merry Hill
intu Watford intu Costa del Sol
Disciplined capital recycling to enhance future growth
16
Rigorous portfolio assessment of enlarged group
Asset location Real estate characteristics
(e.g. size)
Occupier profile Financial performance
Multichannel relevance Consumer proposition
Identified non-strategic assets At least £2 billion of disposals in short to medium term
Enhance growth prospects through reinvestment
Ireland
Reinvestment opportunities across a wide range of higher return growth channels
17 (1) Value Retail sales density CAGR 2007-2016 (2) Retail property rental growth in 2016, according to Capital Economics as of Sep-17 (3) Hammerson’s published forecast ERV growth guidance (4) Total committed development cost for Brent Cross extension, Les 3 Fontaines, Cergy, and Croydon town centre redevelopment
Sales density growth 11% p.a. (1)
Premium outlets
Sales density growth 11% p.a. (1)
ERV growth 4-5% p.a. (3)
0.6
2.0
2012 30-Jun-17
Puerto Venecia 119,000 sq m
Dundrum Phase 2 100,000 sq m
Dublin Central 5 acres
Bicester Village extension 15% YoC
Spain Developments
Brent Cross London 90,000 sq m
Les 3 Fontaines, Cergy 33,000 sq m
Hammerson pipeline £1.5bn (4)
Madrid Xanadú 153,000 sq m
GA
V a
t H
am
mers
on s
ha
re
(£b
n)
2012 2017
Value Retail
€0.6bn 9 villages
€1.5bn 9 villages
VIA Outlets
0 outlets €0.5bn
10 outlets
confirm Market rental growth 5.4% (2)
Potential to optimise capital structure and funding
19 (1) Pro forma net debt and LTV as at 30 June 2017, adjusted for Hammerson acquisition of Cergy 3, Paris and disposal of Place des Halles, Strasbourg, and Intu disposal of 50% of Madrid Xanadú and 50% of intu Chapelfield, Norwich
Hammerson financing policies unchanged
Maintain solid investment grade credit rating
Proceeds from £2 billion disposals used partially to reduce leverage
Adapt Intu credit/bank facilities to Hammerson’s cheaper and more flexible unsecured financing structure
Proactive approach to refinancing
Ongoing financial strategy Debt ratios (1)
Hammerson Intu Combined
Net debt £3.6bn £4.6bn £8.2bn
LTV 37% 45% 41%
Optimising the enlarged group’s financing structure
20 Note: 2018 excludes convertible bonds repurchased since 30 June 2017; 2022 includes additional £250m intu Trafford Centre debt and only 50% of Madrid Xanadú debt; 2024 includes intu Merry Hill refinanced loan
Debt maturity profile at 30 June 2017 (£m)
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027-2031
2032-2036
Hammerson Intu Selected Intu near-term debt maturities
Selected Intu near-term debt maturities:
Facility Drawn Maturity
Convertible bonds £160m 2018
intu Milton Keynes bank loan £140m 2019
CMBS 2019 £20m 2019
Sprucefield bank loan £33m 2020
SGS bank loan £352m 2021
RCF £363m 2021
intu Trafford Centre loan £250m 2022
Convertible bonds £375m 2022
CMBS 2022 £50m 2022
Total £1,743m
21
Approximately £25 million run-rate cost synergies per annum; one-off integration cost of approximately £40 million
Opportunity for further cost savings from operational efficiencies and refinancing
Greater confidence in positive LfL NRI growth through enhanced operating platform
Earnings accretive in first full financial year
Anticipated dividend growth at least in line with Hammerson’s track-record
Strong income profile and superior growth prospects
Bullring, Birmingham Dundrum, Dublin
intu Lakeside, Essex intu Trafford Centre, Manchester
22
Indicative timetable
Announcement of transaction 6 December 2017
Hammerson/Intu full-year 2017 results announcement 26 February 2018 / 22 February 2018
Hammerson/Intu shareholder votes Q2 2018
Expected completion Q4 2018
Setting the new benchmark for European retail destinations
24
Exciting milestone in Hammerson’s history
Enhanced growth prospects
More high quality retail destinations
Superior retailer proposition
Better consumer experience
Strong earnings profile and dividend growth intu Trafford Centre, Manchester
Victoria, Leeds
TBC
Hammerson and Intu Setting the new benchmark for European retail destinations
intu Trafford Centre, Manchester
27
Hammerson track record of operating performance:
Superior operating platform supports LfL NRI growth
Greater confidence in positive LfL NRI growth
Reported UK shopping centre LfL NRI growth (%)
4.6
2.8 3.2 2.2 2.1 2.4
3.6
-2.7 -1.9
-3.2
1.8
3.6
-4
-2
0
2
4
6
2011 2012 2013 2014 2015 2016
Hammerson Intu
Reported UK shopping centre occupancy (%)
98 98 96 96
75
80
85
90
95
100
2015 2016
Hammerson Intu
Superior operating platform
Implement income focussed process
28
Platform of attractive retail and leisure destinations
intu Trafford Centre, Manchester 183,300 sq m 31m footfall
Bullring, Birmingham 126,900 sq m 35m footfall
intu Lakeside, Essex 133,300 sq m 25m footfall
Zaragoza, Spain 119,000 sq m 19m footfall
Arndale, Manchester 148,600 sq m 42m footfall
Located in leading European cities
Well-invested
Combination of in-town and out-of-town
[ ]m total footfall
High brand recognition
Resilient income profile
Brent Cross, London 85,200 sq m 12m footfall
Merry Hill 155,200 sq m 21m footfall
Dundrum, Dublin 123,800 sq m 18m footfall
intu Eldon Square, Newcastle 125,400 sq m 34m footfall
Les Terrasses du Port, Marseille 62,700 sq m 13m footfall
St David’s, Cardiff 129,200 sq m 40m footfall
intu Metrocentre, Gateshead 195,800 sq m 21m footfall
Bicester Village, Oxfordshire 28,500 sq m 6m footfall
The Mall, Cribbs Causeway 99,900 sq m 12m footfall
Victoria Centre, Nottingham [ ] sq m [ ]m footfall
Braehead, Glasgow 104,400 sq m 17m footfall
Madrid Xanadú 153,000 sq m 13m footfall
TBC – possibly move back to just Intu
29
Top-three European retail REIT
29.5
20.6
17.4
10.4 10.2
7.9 6.6
4.6
0
5
10
15
20
25
30
35
Unibail Rodamco Hammerson post-transaction
Klepierre Hammerson Intu Land Securities British Land Carmila
Notes: Peer retail/shopping centre GAV based on latest reported financials. For Unibail, Klepierre and Carmila, numbers exclude transfer taxes and converted into GBP at exchange rates as of the balance sheet date (1) Pro-forma GAV as of 30 Jun 2017, adjusted for Hammerson acquisition of Cergy 3, Paris and disposal of Place des Halles, Strasbourg (2) Pro-forma GAV as of 30 Jun 2017, adjusted for Intu disposal of 50% of Madrid Xanadú and 50% of intu Chapelfield Norwich
Publicly listed European REITs by retail GAV (£bn)
Notes: EUR/GBP exchange rate of 0.89 as of 27-Nov-17 (1) Retail gross asset value only Source: Company reports
(1) (2)
30
Highlights of Q3 2017 trading updates
(1) RNS released 9 November 2017. Group figures including UK, France and Ireland shopping centres, and retail parks (2) RNS released 2 November 2017
Hammerson (1) Intu (2)
Occupancy 96%
Q3 leasing £13million (in line with Q3 2016)
• 5% above previous passing
• In line with ERV
YTD rent reviews 10% above previous passing
Footfall +2% vs. Q3 2016; YTD flat vs. 2016
Intu brand net promoter score consistently high at 70
Disposal of 50% intu Chapelfield, Norwich for £148 million (5% NIY); in line with 31 December 2016 book value, small discount to 30 June 2017 book value
“Anticipate positive like-for-like net rental income in 2017”
Occupancy 97%
Q3 leasing £6.8million (+17% vs. Q3 2016)
• 4% above previous passing
• 11% above ERV
YTD rent reviews 7% above previous passing
UK in-store tenant sales flat; France in-store tenants sales +5.6%
Footfall outperformed benchmarks in both UK and France
Opening of Bicester Village extension and acquisition of Cergy 3, Paris
[5/12/17 Disposal of Place des Halles, Strasbourg, completion of £400m 2017 disposal programme]
31
THIS PRESENTATION AND ITS CONTENTS ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL.
This presentation has been prepared solely for information and for use in connection with the acquisition by Hammerson plc (“Hammerson") of Intu Properties plc ("Intu").
For the purposes of this notice, "presentation" means this document, any oral presentation and any question and answer session by Hammerson or Intu during the presentations.
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This presentation does not constitute or form part of, and should not be construed as, investment advice or part of any offer, invitation or recommendation to purchase, sell or subscribe for any securities or the
solicitation of any vote for approval in any jurisdiction and neither the issue of the information nor anything contained herein shall form the basis of or be relied upon in connection with, or act as an inducement to enter
into, any investment activity, or the making of any investment decision.
This presentation does not purport to contain all of the information that may be required to evaluate any investment in Hammerson or Intu or any of their securities. Any investment decision should be made solely on the
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“target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “hope”, “aims”, “continue”, “will”, “may”, “should”, “would”, “could”, or other words of similar meaning.
These statements are based on assumptions and assessments made by Intu, and/or Hammerson, in light of their experience and their perception of historical trends, current conditions, future developments and other
factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors
described in the context of such forward-looking statements in this document could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements.
Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and you are therefore
cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this presentation.
Quantified financial benefits statements contained in this presentation relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies and which may in some cases be
subject to consultation with employees or their representatives. The synergies and cost savings referred to may not be achieved, or may be achieved later or sooner than estimated, or those achieved could be
materially different from those estimated. For the purposes of Rule 28 of the City Code on Takeovers and Mergers, the quantified financial benefits statements contained in this presentation are the responsibility of
Hammerson and the Hammerson Directors. No statement in this presentation (including any statement of estimated synergies) is intended as a profit forecast or estimate for any period and no statement in this
presentation should be interpreted to mean that earnings or earnings per share or dividend per share for Hammerson, Intu or the combined group of Hammerson and Intu, as appropriate, for the current or future
financial years would necessarily match or exceed the historical published earnings or earnings per share or dividend per share for Hammerson, Intu or the combined group of Hammerson and Intu as appropriate.
To the extent available, the industry, market and competitive position data contained in this presentation have come from official or third party sources. Third party industry publications, studies and surveys generally
state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data.
While Hammerson and Intu believe that each of these publications, studies and surveys has been prepared by a reputable source, neither Hammerson nor Intu has independently verified the data contained therein. In
addition, certain of the industry, market and competitive position data contained in this presentation are sourced from the internal research and estimates of Hammerson and Intu based on the knowledge and
experience of Hammerson and Intu management. While each of Hammerson and Intu believes that such research and estimates are reasonable and reliable, they, and their underlying methodology and assumptions,
have not been verified by any independent source for accuracy or completeness and are subject to change without notice. Accordingly, undue reliance should not be placed on any of the industry, market or
competitive position data contained in this presentation. You should not base any behaviour in relation to financial instruments
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