Hammerson Plc · LSE:HMSO
Hammerson — FY2008 Earnings Presentation
51 slides from Hammerson's earnings presentation, Feb 9, 2009
Slide 1: 2008 Annual Results & Rights Issue
2008 ANNUAL RESULTS & RIGHTS ISSUE John Nelson – Chairman John Richards – Chief Executive Simon Melliss – Finance Director Monday, 9 February 2009
Slide 2: Agenda
AGENDA Overview of 2008 Proposed rights issue Markets Financial and operating review Summary 2
Slide 3: 2008 Audited Results
2008 AUDITED RESULTS Change on 2007 Adjusted pre-tax profit £113.7 million -3.1% Adjusted earnings per share 38.1 pence -5.5% Proposed total dividend per share 27.9 pence +2.2% EPRA NAV per share £10.36 -32.9% Gearing 118% (77% at 30 June) 3
Slide 4: Business Update
BUSINESS UPDATE Like-for-like increase in net rental income of 3.7% Disposals raised £245 million Completion of four major developments Let by income at Contracted income year end % £million Highcross, Leicester 86 7.6 Cabot Circus, Bristol 91 14.3 O’Parinor, Aulnay-sous-Bois 94 9.6 125 Old Br
Slide 5: Portfolio
PORTFOLIO As at 31 December 2008 Total portfolio: £6.5 billion UK Shopping Centres 28% France Retail 33% France Offices 6% UK Retail Parks 14% Germany Retail 1% UK Offices 18% 5
Slide 6: Ten Year Record
TEN YEAR RECORD Net rental income Adjusted earnings/ (£ million) dividend (Pence per share) 350 45 40 300 35 Adjusted EPS (right axis) 250 CAGR: 6.1% 30 Net Rental Income (left axis) 25 200 CAGR: 8.9% 20 Dividend per share (right axis) 150 CAGR: 8.1% 15 100 10 1999 2000 2001 2002 2003 2004 2005 2006
Slide 7: Adjusted NAV and Gearing
ADJUSTED NAV AND GEARING NAV Gearing £ % 20 140 120 15 100 80 10 60 Gearing NAV (right axis) 5 40 (left axis) 20 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 NAV Gearing 7
Slide 8: Rights Issue
RIGHTS ISSUE
Slide 9: Fully Underwritten Rights Issue
FULLY UNDERWRITTEN RIGHTS ISSUE 7 for 5 rights issue 405.8 million new ordinary shares at £1.50 per share (39.2% discount to TERP) Estimated net proceeds of £584.2 million Total number of shares following issue 695.7 million Proceeds will be used to reduce net indebtedness Shareholder ap
Slide 10: Expected Timetable
EXPECTED TIMETABLE Annual results/Rights Issue announcement 9 February 2009 Extraordinary General Meeting 25 February 2009 Dealings in New Shares nil paid commence 26 February 2009 Latest date for acceptance/payment 20 March 2009 New Shares fully paid commence trading 23 March 2009 10
Slide 11: Reasons for the Rights Issue
REASONS FOR THE RIGHTS ISSUE Credit crunch has severely limited capital available for real estate investment Hammerson’s gearing 118% at 31 December 2008 Tightest gearing covenant limit 150% Asset sale negotiations protracted and outcomes uncertain Renegotiation of existing bank facilities
Slide 12: Pro Forma Balance Sheet
PRO FORMA BALANCE SHEET (£ million) 31 Dec 2008 Adjustment Pro forma Property assets 6,457 6,457 Net debt (3,333) 584 (2,749) Other net liabilities (195) (195) 2,929 584 3,513 Deferred tax (108) (108) Equity shareholders’ funds 2,821 584 3,405 EPRA NAV per share £10.36 £5.16 Gearing 118% 81% Interes
Slide 13: Benefits of the Rights Issue
BENEFITS OF THE RIGHTS ISSUE Strengthen the Company’s financial position Help the Company remain within the financial covenants in its existing borrowing facilities and bonds Allow the Company to continue to benefit from the low cost of its existing facilities Allow shareholders to benefit fro
Slide 14: Markets
MARKETS
Slide 15: Property Investment Markets
PROPERTY INVESTMENT MARKETS Limited availability of debt finance Very low transaction volumes in both the UK and France UK prime values have fallen by around 35% since market peak 18 months ago French retail property showing greater resilience than offices 15
Slide 16: Retail Occupational Markets
RETAIL OCCUPATIONAL MARKETS UK Unemployment concerns reducing consumers’ willingness to spend Retail environment challenging Retailers continuing to take space in dominant regional locations Rents at the best shopping centres and retail parks showing resilience FRANCE French economy and co
Slide 17: Office Occupational Markets
OFFICE OCCUPATIONAL MARKETS CITY OF LONDON 2008 take-up down 20% on previous year Vacancy rate around 7% Few major transactions Modest occupier demand for well located prime space Prime rents now around £54/ft2 – rent-free periods have increased Completions peaked in 2008 virtually no ne
Slide 18: Financial and Operating Review
FINANCIAL AND OPERATING REVIEW
Slide 19: Net Rental Income
NET RENTAL INCOME (£ million) 2008 2007 Properties owned throughout 2008 and 2007 263.4 254.0 +3.7% Acquisitions 17.5 6.9 Properties sold 7.7 23.6 Developments 11.2 2.8 Exchange translation and other - (11.6) Net rental income 299.8 275.7 +8.7% 19
Slide 20: Adjusted Profit Before Tax
ADJUSTED PROFIT BEFORE TAX 2008 2007 (£million) (£million) (Loss)/Profit before tax (1,611.5) 110.4 Losses on revaluation of properties 1,649.9 5.0 Bond redemption costs - 28.3 Loss/(Profit) on sale of properties 32.5 (39.8) Fair value of swaps 26.9 3.8 Asset impairment and provisions 15.9 9.6 Adjus
Slide 21: Pro Forma Dividend
PRO FORMA DIVIDEND (£ million) Adjusted earnings in 2008 110.3 Pro forma interest saved in full year 2008(1) 31.5 Pro forma adjusted earnings 141.8 Pro forma dividend per share(2) 15.0 pence (1) Calculated as net proceeds of £584 million at the Group’s average cost of borrowing in 2008 of 5.4%. (2)
Slide 22: Capital Returns
CAPITAL RETURNS Year to 31 December 2008 Shopping Centres Retail Parks Offices Total Value Return Value Return Value Return Value Return £m % £m % £m % £m % UK 1,838 (26.7) 891 (30.5) 1,156 (20.4) 3,885 (25.8) France 1,928 (6.2) 171 (19.3) 383 (26.4) 2,482 (11.0) Germany 90 (25.7) - - - - 90 (25.7)
Slide 23: Hammerson UK Performance vs IPD
HAMMERSON UK PERFORMANCE vs IPD % 25 20 15 Hammerson average 8.7% p.a. 10 5 IPD average 7.5% p.a. 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 -5 -10 -15 -20 -25 Hammerson UK IPD Annual Universe IPD: 2008 Total Returns on the IPD Quarterly Index Benchmark for all properties including transact
Slide 24: Portfolio Data
PORTFOLIO DATA As at 31 December 2008 Occupancy Unexpired lease term % years* UK Shopping Centres 94.6 10.8 Retail Parks 94.9 13.7 Offices 93.6 13.8 France Retail 97.8 4.3 Offices 94.7 4.3 Group 95.4 9.5 *To expiry only 24
Slide 25: Investment Portfolio: Leasing Activity
INVESTMENT PORTFOLIO: LEASING ACTIVITY £ million Renewals and reletting Rents on space subject to expiry/termination 13.0 Less: space not yet relet (3.9) 9.1 Uplift on new lettings 1.6 New rental income on relettings/renewals 10.7 New lettings Rents receivable following letting of vacant space 3.3 2
Slide 26: Operational Performance
OPERATIONAL PERFORMANCE In the UK 95.2% of rents were collected within 14 days of 25 Dec 2008 In France the collection within 14 days of the due date was 94.7% Currently 56 retail units are let to tenants in administration in the UK and 16 in France Passing rent for units in administration t
Slide 27: Development Completions in 2008
DEVELOPMENT COMPLETIONS IN 2008 Highcross, Leicester Cabot Circus, Bristol 125 Old Broad Street, London EC2 27 O’Parinor, near Paris
Slide 28: 60 Threadneedle Street, London EC2
60 THREADNEEDLE STREET, LONDON EC2 Offices – 19,400m2 Retail – 1,200m2 Completed January 2009 Total development costs £125 million Currently unlet Projected gross rental income £10 million per annum 28
Slide 29: Union Square, Aberdeen
UNION SQUARE, ABERDEEN Mall/open retail scheme totalling 49,000m² Estimated total development cost £260 million Projected annual income £15 million Completion end 2009 34% let or under offer 29
Slide 30: Contracted Income from Developments
CONTRACTED INCOME FROM DEVELOPMENTS £ million 60 50 40 30 20 10 0 2009 2010 2011 2012 UK shopping centres UK retail parks France retail UK offices Notes: 1) Estimate of gross rental income from leases already contracted at recently completed and current developments 2) Hammerson’s share of income sh
Slide 31: Cash Flow
CASH FLOW 2008 2007 £m £m Cash generated from operations 346 208 Net interest (200) (137) 146 71 Dividends (87) (73) Bond redemption costs - (28) Taxation (116) (72) (116) (100) Acquisitions (124) (174) Capital expenditure (390) (380) Disposals 245 537 (269) (17) Net cash flow before financing (326)
Slide 32: Balance Sheet Reconciliation
BALANCE SHEET RECONCILIATION Property Net Shareholders’ Adjusted Gearing assets debt equity NAV % £m £m £m £ Position at 31 December 2007 7,275 (2,496) 4,355 15.45 57 Revaluation (1,675) 0 (1,675) (5.77) 36 Capital expenditure (net) 140 (269) 0 0 6 Foreign exchange translation 681 (496) 136 0.47 10
Slide 33: Financing
FINANCING Total drawn debt £3.5 billion at 31 Dec 2008 New committed facilities totalling £850 million arranged in 2008 Cash, deposits and undrawn facilities of £487 million at 31 December 2008 Debt analysis: Bank debt 50% Secured 13% Floating 35% Euro 47% Sterling 53% Fixed 65% Bonds 50% Un
Slide 34: Debt and Facility Maturity Profile
DEBT AND FACILITY MATURITY PROFILE At 31 December 2008 £ million* 1200 1000 800 600 400 200 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2028 Bank debt drawn Other debt Undrawn facilities Euro bonds Sterling bonds *Including the Sterling equivalent of E
Slide 35: Financial Covenants
FINANCIAL COVENANTS Most restrictive covenants: Position at Pro forma 31 Dec 2008 Interest Cover Net rental income to be no less than 1.25 times net interest charges 1.67 times 2.02 Secured Borrowings Not to exceed 50% of consolidated tangible net worth 16% 13% Consolidated Net Borrowings Not to exc
Slide 36: Financial Summary
FINANCIAL SUMMARY Low current cost of debt finance Portfolio income proving resilient Good like-for-like income growth Capital commitments £195 million at year end Substantial income growth from recent and current developments 36
Slide 37: Summary
SUMMARY Enable Company to remain within financial covenants in existing debt facilities Allow Company to continue to benefit from low cost of existing facilities Strengthen balance sheet High quality modern investment portfolio Robust and increasing income stream underpinning dividend St
Slide 38: Questions
QUESTIONS 38
Slide 39: Appendices
APPENDICES
Slide 40: Earnings per Share
EARNINGS PER SHARE Year ended 31 December 2008 Pence per share Diluted EPS per income statement (542.8) Revaluation movement on properties 569.5 Loss on disposal of investment and development properties 11.2 Change in fair value of derivatives 9.3 Deferred tax (13.2) Minority interests in respect of
Slide 41: Net Asset Value (NAV)
NET ASSET VALUE (NAV) As at 31 December 2008 £ per share Basic NAV per share 9.70 Effect of exercise of options and ESOP shares 0.04 Diluted NAV 9.74 Fair value of derivatives 0.25 Deferred tax 0.37 EPRA NAV 10.36 41
Slide 42: NAV Analysis
NAV ANALYSIS Shareholders’ EPRA NAV* funds* (£ per share) (£ million) 31 December 2007 4,474 15.45 Revaluation – equity changes (1) - – income changes (1,650) (5.69) Retained profit (excluding revaluations) 66 0.23 Dividends (81) (0.30) Exchange and other movements 199 0.67 31 December 2008 3,007 10
Slide 43: UK Rent Reviews
UK RENT REVIEWS Outstanding 2009 2010 2011 Total £m £m £m £m £m Rents passing from 26.3 20.3 71.4 27.6 145.6 leases subject to review Projected rent after review 30.3 23.2 74.8 29.7 158.0 at current ERV Potential rent increases 4.0 2.9 3.4 2.1 12.4 43
Slide 44: Lease Expiries and Breaks
LEASE EXPIRIES AND BREAKS 2009 2010 2011 Total £m £m £m £m Rents passing from leases subject to 34.2 21.2 36.8 92.2 expiries or break Current ERV 38.0 23.3 36.9 98.2 Potential rent increases 3.8 2.1 0.1 6.0 44
Slide 45: Contracted Income
CONTRACTED INCOME Rents Passing 2008 2009 2010 2011 2012 £m £m £m £m £m Offices – UK 0.5 2.1 3.2 4.3 4.3 Shopping centres - UK 1.5 15.0 23.5 25.9 26.2 Retail parks - UK - 1.0 4.4 4.9 4.9 Shopping centres – France 4.5 8.5 9.2 10.5 10.7 Retail parks - France - 2.5 3.0 3.1 3.2 Total - cash flow 6.5 29.
Slide 46: Capital Allocation and Recycling
CAPITAL ALLOCATION AND RECYCLING £million 800 600 400 200 0 2004 2005 2006 2007 2008 -200 -400 -600 Existing portfolio Developments Acquisitions Disposals 46
Slide 47: Top Ten Properties
TOP TEN PROPERTIES Property Valuation Passing rent Let by income 31 Dec 08 £m % £m (2) (3) (1) Bishops Square, London E1 489 34.7 100 O’Parinor, Paris 486 22.0 96 Italie 2, Paris 13ème 432 22.2 99 Brent Cross, London NW4 282 17.5 99 Highcross, Leicester 279 15.5 86 Les 3 Quartiers, Paris 1er 266 19.
Slide 48: Glossary
GLOSSARY Adjusted figures (per share) Reported amounts adjusted to exclude certain items as set out in note 10 to the accounts. EPRA NAV is sometimes described as ‘adjusted NAV’. Anchor store A major store, usually a department, variety or DIY store or supermarket, occupying a large unit within a sh
Slide 49: Disclaimer
DISCLAIMER THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION AND FOR USE AT A PRESENTATION TO BE HELD IN CONNECTION WITH THE PROPOSED RIGHTS ISSUE BY THE COMPANY AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHER DISTRIBUTED TO ANY OTHER PERSON OR PUBLIS
Slide 50: Disclaimer
DISCLAIMER This document and any materials distributed in connection with this document may include forward-looking statements. These forward-looking statements are statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results
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