Hammerson Plc · LSE:HMSO
Hammerson — H1 2022 Earnings Presentation
47 slides from Hammerson's earnings presentation, Jul 28, 2022
Slide 1: 2022 half-year results
2022 half-year results 28 July 2022 Bullring & Grand Central – proud sponsor of Commonwealth Games in Birmingham
Slide 2: Agenda
2022 half-year results Agenda Overview Half-year results Executing our strategy Q&A 2
Slide 3: Focus on execution, delivering tangible results
Overview Focus on execution, delivering tangible results 2022 near term priorities What we said: What we said: LfL GRI +16%, LfL NRI +48% • Optimise cash flow and underwrite value of our Footfall and sales improving, close to 2019 levels existing operating assets by relentless operational improv
Slide 4: Disciplined financial and operational management
Overview Disciplined financial and operational management 1 Portfolio realignment • £627m disposals since start of 2021, strengthening the balance sheet • Focus on best in class city centre assets with resilient catchments 2 Leasing • Strong H1 and pipeline • Diverse tenant base, c.1,250 brands in t
Slide 5: Half-year results
Half-year results 5 Mojito Bar, The Oracle
Slide 6: H1 key takeaways
2022 half-year financial results H1 key takeaways £87m 92% £51m,+154% NRI(1) H122 rent collections Adjusted earnings -1% YoY (H121: 71% (H121: £20m) LFL NRI +£23m (48%) at time of reporting) £3.3bn £1.7bn 37%/45% Managed portfolio value Net debt LTV (headline/FPC(2)) -1.5% Capital Return, +1.0% Tota
Slide 7: Adjusted earnings walk
2022 half-year financial results Adjusted earnings walk £m People costs 4.8 70 Other 2.4 Flagships LfL 22.5 60 Developments 15.7 (14.8) (7.2) & other NRI(1) 50 Foreign 0.5 (1.6) (1.2) exchange 7.2 40 9.9 30 14.1 51.1 20 10 20.1 0 (2) H1 2021 NRI (excl. Net Gross Tax Value NRI Disposals Property inco
Slide 8: Value Retail earnings walk
2022 half-year financial results Value Retail earnings walk £m Operational stats: 35 • Footfall and brands sales approaching 2019 levels at half year 30 • Spend per visit up 7% on 2019 levels • 178 leases signed (8.0) • 94% occupancy 25 • 100% collections 20 (5.7) Debt/refinancing: 15 32.4 (2.6) • L
Slide 9: Breakdown of -0.8% flagship capital return by geography
2022 half-year financial results Breakdown of -0.8% flagship capital return by geography UK flagships France flagships Ireland flagships 5% H118 H218 H119 H219 H120 H220 H121 H221 H122 H118 H218 H119 H219 H120 H220 H121 H221 H122 H118 H218 H119 H219 H120 H220 H121 H221 H122 0% 0.0% -0.6% -1.8% -5% -
Slide 10: A strengthened balance sheet
2022 half-year financial results A strengthened balance sheet 2025 £1.7bn £1.2bn No material refinancing's Net debt Liquidity required until 2025 6% lower vs Dec-21 Dec-21: £1.5bn IG rating 37%/45% 62% Moody’s and Fitch LTV (headline/FPC) Gearing changed outlook from negative to stable Dec-21: 39%/4
Slide 11: Debt maturity profile
2022 half-year financial results Debt maturity profile(1) Group unsecured debt and facilities Secured debt in joint ventures(4) Liquidity position (£m) Euro Bonds (int 1.8%) Secured Debt (£m) (£m) (Dundrum, int 1.9%) 1,000 1,000 £m (2) Sterling Bonds (int 5.3%) RCFs – undrawn 658 Secured Debt (Highc
Slide 12: Half year of strong execution delivering tangible financial results
2022 half-year financial results Half year of strong execution delivering tangible financial results Adjusted earnings • £51m adjusted earnings, up 154%; • IFRS earnings in line with adjusted earnings Costs • 15-20% reduction in gross administration costs delivered 18 months early • Exploring more o
Slide 13: Executing our strategy
Executing our strategy 13 Dundrum, Dublin
Slide 14: Strong omnichannel retail outperforms pureplay
Operational environment Strong omnichannel retail outperforms pureplay E-commerce penetration slowing post Covid-19 peak(1) Physical retail essential to successful omnichannel • Stores also enable brand interaction, customer and community engagement and services over and above what is possible in pu
Slide 15: Strong operational trends in H1
Operational environment Strong operational trends in H1 LfL sales, footfall & OCR by geography(2) Q1 2022 vs. Q2 2022 vs. H1 2022 vs. June July to 25th OCR Occupancy 2019 2019 2019 2022 vs. 2019 2022 vs. 2019 UK sales -2.5% 6.5% 2.2% 3.8% N/A 15.8% 94% UK footfall -18.6% -11.0% -14.7% -10.4% -8.3% F
Slide 16: Positive leasing momentum continues
Reinvigorating our assets Positive leasing momentum continues(1) 143/£10.5m 31% +1% vs ERV Leases/income ahead of previous passing Principal lettings(2) Since H121: 335/£25m Since H121: +6% Since H121: -3% 51% 78% 7.6yrs/10yrs Leases to non-fashion Principal vs temporary(3) WAULB(4)/ WAULT 68% since
Slide 17: Some leasing highlights
Reinvigorate our assets Some leasing highlights UK France Ireland Proactive asset management O Parinor Portfolio engagement Big box repurposing extension Line units F&B and leisure Pop-ups Non-traditional uses Commercialisation & events 17
Slide 18: Executing ahead of guidance on costs
Agile platform Executing ahead of guidance on costs -20% 15-20% -25% Gross admin vs 2019 base by 2023, Net interest YoY H122 delivered 18 months early YoY H122 Cost actions taken in 2021 delivering results in 2022, but exploring further opportunities o Projects underway to improve agility, and creat
Slide 19: Balance sheet stability; optionality for capital allocation and liquidity
Deliver a sustainable and resilient capital structure Balance sheet stability; optionality for capital allocation and liquidity Sell Optimise Core • Non core • Opportunities to create more value • Best city centre locations in most attractive • Not the right time to sell catchments • Better off in t
Slide 20: Accelerate development
Accelerate development Opportunities in land bank with tangible progress on key pre-development projects Potential Potential capex Potential GDV Near-term schemes Area value uplift 2022- 2022-2023(1) – all phases(1) 2023(1) (2) OPTIONALITY Dublin Central 6 acres c.£13m c.£28m >£500m The Goodsyard, L
Slide 21: Progress on pre-developments, land promotion and repurposing
Accelerate development Progress on pre-developments, land promotion and repurposing existing space Flagship with adjacent land bank Dublin Central Land bank Eastgate Leeds Planning permission for Flagship Masterplanning for three major applications resi-led, mixed use granted scheme Martineau Galler
Slide 22: Conclusion and H2 priorities
Conclusion and H2 priorities H1 H2 Execution to continue to build a better business by: • c.£300m disposals by FY23 • Focusing on costs A strong half of strategic, • Creating a more agile organisation • Reducing vacancy and void costs operational and financial • Repurposing space progress • Deliveri
Slide 23: Additional disclosures
Additional disclosures 23 Dundrum, Dublin
Slide 24: Contents
Additional disclosures – 2022 half-year results Contents Managed portfolio ESG Value Retail 24 Bullring & Grand Central, Birmingham
Slide 25: Managed portfolio
Managed portfolio 25 Terrasses du Port, Marseille
Slide 26: Metrics improving; pivoting towards broader mix
Additional disclosure: Managed portfolio Metrics improving; pivoting towards broader mix(1) H122 flagship leasing activity (£m) 6 12 No of Value £m % NER vs % headline deals ERV vs previous passing 5 10 Principal 111 9.7 +1% +31% Temp 32 0.8 4 8 H122 143 10.5 3 6 2 4 1 2 0 0 January February March A
Slide 27: Leasing cumulative activity – flagships
Additional disclosure: Managed portfolio Leasing cumulative activity – flagships (£m) 6 6 6 6 UK France 5 5 5 5 4 4 4 4 3 3 3 3 2 2 2 2 1 1 1 1 0 0 0 0 Q1 Q2 Q1 Q2 6 6 Ireland Leasing value H122 H121 5 5 (at Hammerson share) £m £m 4 4 UK 5.6 5.5 3 3 France 2.9 4.1 2 2 Ireland 2.0 0.8 1 1 Total 10.5
Slide 28: Leasing analysis – flagships, principal leases only
Additional disclosure: Managed portfolio Leasing analysis – flagships, principal leases only(1) # Deals Value £m % vs ERV % vs previous passing 2021 2022 2021 2022 2021 2022 2021 2022 H1 H2 FY H1 H1 H2 FY H1 H1 H2 FY H1 H1 H2 FY H1 UK 60 73 133 50 4.8 5.2 10.0 5.1 (26) (16) (21) (2) (9) (24) (17) 24
Slide 29: Top occupier exposure
Additional disclosure: Managed portfolio Top 20 occupier exposure(1) Rental Rental % of passing % of passing Occupier exposure % of NIA Occupier exposure % of NIA rent rent (£m) (£m) Inditex 7.5 3.7 3.4 Watches of Switzerland 2.2 1.1 0.3 H&M 5.2 2.6 2.7 Apple 2.0 1.0 0.4 Next 3.5 1.7 4.8 TK Maxx 2.0
Slide 30: Top ten occupiers by region
Additional disclosure: Managed portfolio Top ten occupiers by region(1) UK France Ireland Rental % of Rental % of Rental % of Occupier exposure passing % of NIA Occupier exposure passing % of NIA Occupier exposure passing % of NIA (£m) rent (£m) rent (£m) rent Inditex 4.1 2.0 1.7 Printemps 2.6 1.3 2
Slide 31: Rent collection performance and provisions for arrears
Additional disclosure: Managed portfolio Rent collection performance and provisions for arrears Rent collection – flagships(1) UK France Ireland Group (%) (%) (%) (%) FY21 94 93 97 94 H122 91 91 97 92 Q322 90 76 83 84 Provisions for arrears – managed portfolio Provision as % of Provision as % of Net
Slide 32: EPRA NTAPS walk
Additional disclosure: Managed portfolio EPRA NTAPS walk pence 70 65 1 (1) (2) 60 55 64 62 50 45 40 (1) FY21 Adjusted earnings Net revaluation deficit, Scrip dividend H122 FX & other 1 On a proportionally consolidated basis including Value Retail 32
Slide 33: LTV methodology
Additional disclosure: Managed portfolio LTV methodology 31 December 2021 30 June 2022 With Value Retail Fully proportionally With Value Retail Fully proportionally net asset value consolidated net asset value consolidated Net debt (£m) (£m) (£m) (£m) Managed portfolio 1,819 1,819 1,704 1,704 Value
Slide 34: Net debt analysis
Additional disclosure: Managed portfolio Net debt analysis(1) £m 1,900 Operating profit 67 Working capital (9) movements 1,800 Restricted monetary assets 13 Non-cash items (6) 193 1,700 28 51 1 1,600 1,819 65 63 1,704 1,500 1,400 Net debt Disposals Cash generated Exchange and Dividends Interest (inc
Slide 35: Portfolio valuation summary
Additional disclosure: Managed portfolio Portfolio valuation summary(1) ` Value Capital Yield ERV & Total NEY NIY 30 June return % impact other property range range £m % impact % return % % % H1 H1 H1 H1 UK 937 (1.8) 0.4 (2.2) 2.0 6.9-9.0 5.4-8.4 France(2) 1,256 (0.0) - - 2.3 4.5-6.3 3.0-6.1 Ireland
Slide 36: Opportunities in land bank with tangible progress on four projects
Additional disclosure: Managed portfolio Opportunities in land bank with tangible progress on four projects Feasibility/ Detailed Enablement/ Planning Phased Key schemes Area Outlined planning Pre- Construction submitted delivery planning secured construction Near-term Dublin Central 6 acres Better
Slide 37: Modelling assumptions: positive outlook subject to uncertain economic backdrop
Additional disclosure: Managed portfolio Modelling assumptions: positive outlook subject to impact from uncertain economic backdrop • Assume H222 broadly equivalent to H122, after adjusting for Silverburn and Victoria Leeds contributions of NRI £4m. H2 disposals will dilute if completed pre year-end
Slide 38: Disciplined capital allocation – our philosophy
Additional disclosure: Managed portfolio Disciplined capital allocation – our philosophy 1 2 3 4 5 Reduce Sustainable Refinancing / Investment in Consolidate absolute cash dividend efficient land promotion ownership in indebtedness commensurate balance sheet and core assets with REIT and development
Slide 39: Indicative long term total return opportunity
Additional disclosure: Managed portfolio Indicative long term total return opportunity Bridge to growth FY 21 FY 23 ambition Mid-to-long term ambition • Stronger balance sheet • Realigned portfolio • High quality earnings • Repositioning complete • Further repositioning of portfolio • Sustainable di
Slide 40: ESG
ESG Dundrum Solar Installation, Dublin
Slide 41: Our 2030 Sustainability Strategy
Additional disclosure: ESG Our 2030 Sustainability Strategy SOCIO-ECONOMIC IMPACT 2022 portfolio performance(1) 3,244 people engaged in Hammerson supported socio-economic projects to date in 2022 HY HY % 2022 Key projects delivered: 2022 2021 Change Target Bullring & Grand Central: Mental Health Awa
Slide 42: Value Retail
Value Retail 42 Bicester Village
Slide 43: 2022 operational update
Additional disclosure: Value Retail 2022 operational update 30 June 2022(1) 30 June 2021(1) Change (£m) Brand sales (£m) 1,118 626 +79% 1,400 Footfall (m) 15.3 8.5 +80% 1,200 Sales density (£/m2) 6.0 4.2 +43% 10.5 year IRR:18% NRI (£m) 1,000 45.4 21.0 +116% Occupancy (%) 94 95 -1% 800 1,046 600 1,20
Slide 44: Value Retail villages
Additional disclosure: Value Retail Value Retail villages Bicester Village, Oxford GLA: 28,100m2 Boutiques: 157 La Roca Village, Barcelona GLA: 26,000m2 Boutiques: 147 Las Rozas Village, Madrid GLA: 16,500m2 Boutiques: 99 La Vallée Village, Paris GLA: 21,700m2 Boutiques: 103 Maasmechelen Village, Br
Slide 45: Hammerson's interest in Value Retail
Additional disclosure: Value Retail Hammerson’s interest in Value Retail Maas-- Village Bicester La Roca Laz Rozas La Vallee mechelen Fidenza Wertheim Ingolstadt Kildare Opening 1995 1998 2000 2001 2002 2003 2003 2005 2006 Sponsor interest 13.7% 12.4% 12.4% 12.4% 12.4% 12.4% 12.4% 12.4% 12.4% Invest
Slide 46: Sales and sales growth 2012-2022
Additional disclosure: Value Retail Sales and sales growth 2012-2022(1) €m 3,500 +9% +8% 3,000 +8% +8% 2,500 +11% +30% +11% 2,000 +12% -45% +13% 1,500 +81% 1,000 500 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 H1 Sales H2 Sales 46
Slide 47: Important Notice
Important Notice Certain statements included or incorporated by reference within this presentation may constitute “forward-looking statements” in respect of the company’s operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of ri