Hammerson Plc · LSE:HMSO
Hammerson — FY2015 Earnings Presentation
73 slides from Hammerson's earnings presentation, Feb 15, 2016
Slide 1: 2015 Full-year Results
2015 Full-year Results 15 February 2016
Slide 2: Agenda
Agenda 01 2015 highlights and strategy David Atkins – CEO 02 Financial results Timon Drakesmith – CFO 03 Portfolio update David Atkins – CEO 04 Conclusion and Q+A David Atkins – CEO 2
Slide 3: 2015 highlights
2015 highlights Consistently strong performance EPS +12.6% NAVPS +11.3% TPR 12.4% New European market Dublin, Ireland Portfolio recycling £360m disposals Completed four developments 64,900m2 Total 25% profit on cost Capturing rental growth LfL NRI +3.1%(1) (1) LfL NRI including premium outlets 2015
Slide 4: Investment management driving performance
Investment management driving performance 1 2 Leading position in the European countries or cities with European market segment strong macro indicators and infrastructure investment Investment management strategy 4 Identified asset management 3 Venues matched to consumer opportunities trends, in par
Slide 5: Building our portfolio to secure future growth
Building our portfolio to secure future growth Acquisitions Market-leading Quality retail in Birmingham, Fast-growth premium platform in Ireland UK’s second city outlets Irish loan portfolio, Dublin Grand Central, Birmingham Festival Park, Majorca Kildare Village, Dublin £690m £175m £46m Positive en
Slide 6: On-going review of lower-return assets
On-going review of lower-return assets Disposals Completed Recycling capital Lower-return Standalone retail successful asset in UK retail smaller shopping park in France management parks centres Monument Mall, Newcastle Drakehouse, Sheffield Bercy 2, Paris Villebon 2, Paris £75m £62m £47m £116m 46%
Slide 7: Focus on strategic priorities continues to deliver strong results
Focus on strategic priorities continues to deliver strong results NAVPS (pence) EPS (pence) DPS (pence) 750 30 25 +11% +13% +9% 28 23 700 710 26 21 22.3 26.9 650 24 19 22 17 600 20 15 550 18 13 500 16 11 14 9 450 12 7 400 10 5 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 201
Slide 8: Financial results
02 Financial results Timon Drakesmith – CFO • Review of 2015 financial performance • Analysis of valuation trends • Details on recent changes in debt levels • Funding capacity for our development pipeline 8
Slide 9: Headline results
Headline results Income statement 31 Dec 2015 31 Dec 2014 Change Net rental income (£m) 318.6 305.6 +4.3% Adjusted profit (£m)(1) 210.9 174.3 +21.0% Adjusted EPS (p)(1) 26.9 23.9 +12.6% Total dividend (p) 22.3 20.4 +9.3% Balance sheet Portfolio value (£m)(2) 8,374 7,734 +7.1% EPRA NAVPS (p) 710 638
Slide 10: Positive LfL net rental income growth
Positive LfL net rental income growth 2015 LfL NRI growth by sector (%) 9 8 7 7.3 6 5 4 3 3.1 2 2.6 2.5 2.1 2.3 1 0 (1) (2) (1) UK shopping centres UK retail parks France Total exc. Premium Premium outlets Total outlets (1) (2) Includes LfL movement of UK other properties – principally assets held f
Slide 11: Strong profit growth
Strong profit growth Adjusted profit movement (£m) 220 +21.0% 12.3 5.9 0.2 (3.0) 210.9 200 9.7 5.5 6.0 180 174.3 160 140 120 100 2014 LfL NRI Acquisitions Developments Premium Admin Financing FX & other 2015 and disposals outlets Financial results 11
Slide 12: Valuation analysis
Valuation analysis 2015 capital Components of underlying valuation Value at 31 Dec 2015(2) return(1) change (%) Yield shift Income Other (£m) (%) (%) (%) UK shopping centres +6.8 +4.4 +2.3 - 3,065 UK retail parks +1.3 −0.2 +1.5 −0.1 1,656 France +7.1 +9.3 −0.9 −1.7 1,861 UK other interests(3) +1.7 +
Slide 13: NAVPS uplift
NAVPS uplift Adjusted NAV movement (pence per share) 760 +11.3% 740 720 27 (21) 700 (3) 710 22 680 660 47 640 638 620 600 580 Dec 2014 Portfolio Premium Adjusted Dividends FX & other Dec 2015 revaluation outlets profit revaluation Financial results 13
Slide 14: Healthy financing ratios
Healthy financing ratios Financing policy 31 Dec 2015 31 Dec 2014 Net debt - £2,968m £2,265m Gearing <85% 54% 46% Loan to value <40% 38% 34% Cash/undrawn facilities - £931m £648m Weighted average cost of finance - 3.8% 4.7% Interest cover >2.0x 3.6x 2.8x Net debt/EBITDA <10x 9.6x 8.0x Fixed rate deb
Slide 15: Management of leverage
Management of leverage Today Proformas Actual Post 50% Grand Conversion of £300m disposals 31 Dec 2015 (1) Central and Irish loans to by end 2016 announced property by disposals (1) summer 2016 (2) Net debt £2,968m £2,951m £3,164m £2,864m LTV 38% 38% 39% 37% (1) (2) Value denominator includes £690m
Slide 16: Controlled deployment of capex
Controlled deployment of capex Forecast development expenditure (£m) 300 250 Average annual capex 2013-2015 200 150 Committed capex at on-site developments (1) 100 Discretionary capex The Goodsyard (2) 50 Croydon town centre Brent Cross extension - 2016 2017 2018 2019 2020 (1) (2) On-site developmen
Slide 17: Debt maturities and refinancing plan
Debt maturities and refinancing plan Debt maturity profile (£m) (1) 800 Recent financings (£1.7bn) • £1.1bn credit facility (£691m drawn down at 31 December 2015) 700 • £350m 2025 bond issue (2.5% effective coupon) • £272m bond redemption originally due December 2016 600 Future funding plans • Refin
Slide 18: Portfolio update
03 Portfolio update David Atkins - CEO Shopping centres • UK • Ireland • France Retail parks Premium outlets Developments 18
Slide 19: Positioned in prime assets delivering growth across the group
Positioned in prime assets delivering growth across the group Our portfolio today Occupancy Other/developments(1) 97.7% 6% Leases signed 400 leases (£28m) Premium outlets UK Leasing vs previous passing shopping 14% centres +9.5% 34% Retail parks 18% French shopping centres 20% Irish shopping centres
Slide 20: Portfolio update: Shopping centres, UK
Portfolio update: Shopping centres, UK Brent Cross, London
Slide 21: Grand Central: highly-prized new addition
Grand Central: highly-prized new addition 50:50 JV with CPPIB; Hammerson £175m net investment Adjacent to Bullring Largest John Lewis store outside London Birmingham economic growth second only to London in UK (1) £750m New Street Station regeneration 12% rental reversion on retail 7-8% IRR Size 40,
Slide 22: Sales patterns reflect shopper confidence
Sales patterns YoY sales growth by category in Hammerson UK shopping centre portfolio(%) reflect shopper 7% confidence 6% 5% 4% 3% 2% 1% 0% -1% Fashion Department Gifts & cards Fashion Footwear Catering Leisure & Jewellery Technology Health & Sport & accessories stores travel beauty Outdoors Hammers
Slide 23: Multichannel drives greater efficiency of prime retail space
Multichannel drives greater efficiency of prime retail space Incremental sales driven by multichannel 1. Online returns and Click & Collect (1) +10% 2. Retail ‘halo’ effect (2) In store sales 1 2 3 +5-6% 3. Collect+ (3) +1-2% (1) (2) Adjusted for online returns to store and attributing click & colle
Slide 24: Competition for the best retail space
Competition for the best retail space Hammerson UK shopping centre principal leasing deals vs ERV 90% International Unit stores Tenant-mix brands/ and new Catering 70% deals upsizing concepts 50% 30% 10% -10% -30% -50% Hammerson UK shopping centres Number of leases at or above ERV 73% Leasing vs pre
Slide 25: Growth in non-rental income
Growth in non-rental income UK shopping centre commercialisation revenue Income from kiosks +29% in 2015 (£m) 16 +9% TESLA, Brent Cross Bad Brownie, Oracle 14 Other 12 Storage 10 Vending Car valeting 8 Kiosks 6 Advertising & The White Company, Oracle Cath Kidston, Brent Cross promotions 4 2012 2013
Slide 26: Portfolio update: Shopping centres, Ireland
Portfolio update: Shopping centres, Ireland Dundrum, Dublin 26
Slide 27: Strengthening our European retail platform with new Irish portfolio
Strengthening our European retail platform with new Irish portfolio Fastest growing European Dundrum Town Centre(1) economy Best quality retail in Dublin Leading market position Dundrum Town Centre 50% ownership (JV with Allianz) Development sites at Dundrum and central Dublin Strong reversion poten
Slide 28: On track with asset conversion
On track with asset conversion Hammerson acquisition costs £m Face value of Irish loan portfolio (50%) 960 Hammerson loan acquisition cost (50%) 690 Expected expenditure on fees, tax and Allianz re-balance 220 Forecast total investment 910 Update on transfer to property ownership Continuing positive
Slide 29: Exceptional economic backdrop in Ireland
Exceptional economic backdrop in Ireland Europe’s fastest growing economy Dublin rental growth (€/m2) Grafton St Henry St 2015 GDP growth +6.7% 9,000 2015 Retail sales value growth +3.6% 8,000 2015 new car sales growth +18% Unemployment 6-year low at 7.8% 7,000 Consumer confidence at 8-year high 6,0
Slide 30: Dundrum leasing deals above expectations
Dundrum leasing deals above expectations Strong trading reflecting consumer confidence Tenant sales (2015 YoY) (1) +6.0% Footfall (2015 YoY) +1.3% Rent reviews settled on average +10% vs previous passing Rental uplift +29% Consolidates luxury mall Upsize and full refit Top 15 store globally Bought o
Slide 31: Portfolio update: Shopping centres, France
Portfolio update: Shopping centres, France Le Jeu de Paume, Beauvais
Slide 32: 2012 - 2015: Repositioning of our French portfolio
2012 - 2015: Repositioning of our French portfolio Significant work to transform French platform Refurbishments Selective disposals Developments Acquisitions £30m Total £210m Total £420m Total £125m Attracting new brands 15% premium to BV(1) 35% PoC 8% valuation uplift (1) Premium for disposal vs 31
Slide 33: Lifting quality and performance
Lifting quality Number of units re-tenanted across portfolio and 200 performance 180 Target 20% retail 160 with 140 offer renewed re-tenanting 120 2015 target 100 78 units 80 60 40 51 units 20 0 2014 2015 2016 + Hammerson France portfolio Leasing vs previous passing +9.7% Leasing vs ERV +1.5% New br
Slide 34: Turnaround in performance
Turnaround in Hammerson France portfolio performance (% growth) performance Sales (1) NRI excl. Indexation NRI 3.0% 2.0% 1.0% 0.6% 0.0% -1.0% -1.0% -2.0% -2.7% -3.0% -3.0% -4.0% 2012 2013 2014 2015 (1) Hammerson France same-centre retail sales growth. Includes all shopping centres, excludes extensio
Slide 35: Portfolio update: Retail parks
Portfolio update: Retail parks Rugby image B&Q Eco learning store, Cyfarthfa retail park, Merthyr Elliott’s 35 Tydfil Field, Rugby Elliott’s Field, Rugby
Slide 36: Focused strategy in retail park market
Focused strategy in retail park market Shopping parks Hybrid parks Key homeware Standard Solus units goods parks homeware parks Market forecast rental growth(1) 2.7% 2.5% 2.0% 1.8% 1.5% Hammerson investment focus 40% by UK Retail Park Hammerson 79% by number of number of market(1) properties portfol
Slide 37: Taking advantage of strong occupational demand
Taking advantage of strong occupational demand Shopping parks Hybrid parks Key homeware goods parks Share of lettings: 64% Share of lettings: 10% Share of lettings: 20% Leasing vs ERV: +2% Leasing vs ERV: +11% Leasing vs ERV: +10% Hammerson retail parks portfolio Leasing vs previous passing +7.7% Le
Slide 38: Portfolio update: Premium outlets
Portfolio update: Premium outlets Insert new picture? La Vallée Village, Paris Kildare Village, Dublin Kildare Village, Dublin
Slide 39: New investments in premium outlets
New investments in premium outlets Value Retail: Kildare Village, Dublin VIA Outlets: Festival Park, Majorca Ownership increased from 14% to 38% Acquired Majorca’s only major outlet centre £14m investment, Hammerson share £32m investment, Hammerson share Extension completed: 33 new boutiques and two
Slide 40: Premium outlets continue to grow strongly
Premium outlets continue to grow strongly Value Retail VIA Outlets Landquart, Zurich Sales growth +11.0% +9.6% Sales density €15,000/m2 €3,300/m2 Sales density +8.4% +11.2% growth Key 2015 leasing deals at VIA Outlets: Portfolio update: Premium outlets 40
Slide 41: Trends in European luxury shopping
Total European tax refunded sales by nationality, 2015 Trends in European YoY change Proportion of total luxury shopping +32% China 43% +20% Other Asia(1) 19% +18% Gulf States(2) 12% Russia 5% - 41% +17% Other 21% Source: Global Blue (1) Other Asia: Hong Kong (4%), Malaysia (3%), Korea (3%), Thailan
Slide 42: Portfolio update: Developments
Portfolio update: Developments Leeds aerial VG Gate, Victoria Leeds Gate, Leeds 42 Victoria Gate, Leeds Victoria pic?
Slide 43: On site developments: Victoria Gate, Leeds
On site developments: Victoria Gate, Leeds Creating the premium and aspirational shopping offer for the north of England Pre-lets exchanged 68% Under offer and advanced negotiations 83% Size 35,400m2 Total project cost £165m; 6.4% YoC Completion Q3 2016 Portfolio update: Developments 43
Slide 44: On site developments: WestQuay Watermark, Southampton
On site developments: WestQuay Watermark, Southampton Consolidating WestQuay and Watermark as the city’s leading leisure and retail destination Pre-lets exchanged 80% Under offer and advanced negotiations 89% Size 17,000m2 Total project cost £85m; 6.0% YoC Completion Q1 2017 Portfolio update: Develo
Slide 45: Major developments: Croydon
Major developments: Croydon Transforming South London’s retail and leisure offer 2015 CPO Inquiry confirmed Acquisition 50% interest in Whitgift centre (total 75%) Revised design of enhanced three level scheme – capex refined Advance retailer discussions Bought further land interests 2016 Sign ancho
Slide 46: Major developments: Brent Cross
Major developments: Brent Cross Regenerating North London’s iconic retail destination 2015 Infrastructure planning consents approved Advanced tenant mix proposals May 2016 confirmed date for CPO inquiry Secured infrastructure funding to bring forward a new rail station New CGI image to come 2016 CPO
Slide 47: Major developments: The Goodsyard
Major developments: The Goodsyard Opportunity to create a new London village 2015 Replace!! GLA support for the scheme Revised planning application submitted June 2015 • 25,000m2 additional commercial space • Revised office and residential buildings design 2016 Planning determination scheduled March
Slide 48: Conclusion
04 Conclusion 48
Slide 49: Proven strategy delivering consistent performance
Proven strategy delivering consistent performance Resilient Disciplined Prime Embedded business model investment property growth management NAVPS (pence) EPS (pence) DPS (pence) 750 +11% 30 +13% 25 +9% 700 710 25 26.9 20 22.3 650 600 20 15 550 500 15 10 450 400 10 5 2011 2012 2013 2014 2015 2011 201
Slide 50: Questions
Questions 50
Slide 51: Disclaimer
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 thes
Slide 52: Appendices
Appendices 52
Slide 53: Hammerson invests in prime retail assets throughout Europe
Hammerson invests in prime retail assets throughout Europe Portfolio overview (1) Our assets Other/ developments Irish loan 6% portfolio 8% Gross Asset £9.1bn Value UK UK shopping £3.1bn centres Premium shopping outlets centres France £1.9bn 14% 34% UK Retail £1.7bn Parks UK Retail Parks Premium £1.
Slide 54: Household consumption
Household consumption Growth in household final consumption expenditure (%) 15 United Kingdom France Ireland 10 5 0 -5 -10 -15 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Marketline analysis (using data from Eurostat, OECD and ONS) 54
Slide 55: Tenant sales growth across the portfolio
Tenant sales growth across the portfolio Irish loan Other/developments Sales growth portfolio 6% 8% UK shopping centres +1.3% UK France shopping centres +0.6% Premium shopping outlets centres 14% 34% Retail parks(1) +4.2% Premium outlets(2) +11.0% UK retail parks 18% France Ireland shopping centres(
Slide 56: 2015 French sales overview
2015 French Tenant sales growth in Hammerson France portfolio 2015 (%) sales overview 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Appendices 56
Slide 57: Operational statistics
Operational statistics UK shopping France Sales densities(2) UK France centres £/ft2 £/ft2 Sales(1) +1.3% +0.6% 2015 310-620 220-621 Footfall +1.1% −0.6% 2014 290-590 200-610 Rent:sales(2) 12.1% 11.1% 2013 270-560 200-620 OCR(2) 19.2% 14.0% Occupancy (%) UK shopping UK retail France Devs & other Gro
Slide 58: Positive uplift in rents for the group in 2015
Positive uplift in rents for the group in 2015 Leasing vs Leasing vs ERV ERV growth Rent secured from previous passing new leases UK shopping centres +8.8% +3.5% +2.8% £11.7m UK retail parks +7.7% +4.2% +1.3% £8.3m France +9.7% +1.5% 0.0% £7.2m Group (1) +9.5% +2.0% +1.6% £27.9m (1) Including UK Oth
Slide 59: Cost:income ratio
Cost:income ratio Cost:income ratio (%) 30% 26.5% 25% 24.2% 22.8% 23.1%(1) 20% 11.9% 10.9% 10.0% 11.3% 15% 10% 14.6% 13.3% 12.8% 11.8% 5% 0% 2012 2013 2014 2015 Corporate expenses Operational costs (1) Excluding car park costs (£9.3m in 2015) cost:income ratio would be 21.1% Appendices 59
Slide 60: Recycling capital in 2015
Recycling capital in 2015 Disposals Date of disposal Value Above £m book value (1) Drakehouse retail park, Sheffield April 2015 62 4% Bercy 2, Paris June 2015 47 11% Grand Maine, Angers July 2015 45 16% Monument Mall, Newcastle December 2015 75 1% Kingston-upon-Thames land interest December 2015 12
Slide 61: On site and major developments
On site and major developments On site developments(1) Lettable area m2 Potential completion Current value Estimated cost to complete(2) Estimated annual Let(4) % £m £m income(3) £m Victoria Gate (Phase 1), Leeds 35,400 Q3 2016 116 68 11 62 WestQuay Watermark, Southampton 17,000 Q1 2017 38 56 5 80 T
Slide 62: Development pipeline opportunities
Development pipeline opportunities Scheme Lettable area Key Facts m2 • Consent granted in October 2015 for a masterplan for a future extension of existing centre Silverburn (Phase 4), Glasgow 50,000 • Masterplan includes retail, hotel and leisure uses • Extension of existing shopping centre for reta
Slide 63: Premium outlets overview
Premium outlets overview Value Retail Villages VIA Outlet centres Bicester Village, UK Kungsbacka, Gothenburg Kildare Village, Dublin Batavia Stad, Amsterdam Maasmechelen Village, Fashion Arena, Prague Brussels Wertheim Village, Frankfurt Festival Park, Majorca La Vallée Village, Paris Landquart, Zu
Slide 64: Increasing sales densities
Premium outlets Value Retail brand sales (€m) Segmentation of Outlet market CAGR 17% €30,000+ Value Retail International fashion and Increasing sales densities €/sq m luxury brands 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 €2,000–€10,000 Mainstream fashion VIA Outlets brand outlets Fashion A
Slide 65: Hammerson's investment in Value Retail
Hammerson’s investment in Value Retail Hammerson €58m(1) shareholder loan Holding companies 22% equity La Roca Las Rozas La Vallée Maasmechelen Fidenza Wertheim Ingolstadt Kildare Bicester Village Village Village Village Village Village Village Village Village (2) 33 23 19 11 13 20 31 0 27 45 35 31
Slide 66: Premium outlets share of results
Premium outlets share of results Income statement 2015 2014 Value Retail VIA Outlets Total Value Retail VIA Outlets Total £m £m £m £m £m £m Profit for the year 159.3 13.1 172.4 109.9 (1.1) 108.8 EPRA adjustments (142.2) (7.0) (149.2) (93.9) 2.0 (91.9) Adjusted earnings of 17.1 6.1 23.2 16.0 0.9 16.9
Slide 67: Our sustainability vision
2015 Highlights 2016 Plans Our • 4% reduction in Group CO2e • 6% Reduction in electricity sustainability emissions intensity consumption vision • Four industry sustainability • 5% reduction in landlord water To create retail awards intensity destinations that • Delivered net zero energy • 3% reducti
Slide 68: Our sustainability vision
Our sustainability vision To create retail destinations that deliver positive impacts economically, socially and environmentally Our 2010-2015 targets Our Our 2015 – 2020 ambitions performance Reduce like-for-like carbon emissions by -20% 20% reduction in carbon emissions v 2015 20% v. 2010 baseline
Slide 69: Lease expiries and breaks as at Dec 2015
Lease expiries and breaks as at 31 Dec 2015 Rents passing that expire/break ERV of leases that expire/break Weighted average in in unexpired lease term Proportionally consolidated 2016 2017 2018 2016 2017 2018 To break To expiry excluding premium outlets £m £m £m £m £m £m years years Notes 1 1 1 2 2
Slide 70: Rent reviews as at Dec 2015
Rent reviews as at 31 Dec 2015 Rents passing subject to review in ERV of leases to review in Proportionally consolidated Outstanding 2016 2017 2018 Outstanding 2016 2017 2018 excluding premium outlets £m £m £m £m £m £m £m £m Notes 1 1 1 2 2 2 United Kingdom Shopping Centres 26.8 9.5 12.5 19.2 30.8 1
Slide 71: Valuation data
Valuation data UK shopping UK retail parks France retail UK Other Total continuing centres interests portfolio True equivalent yield (%)(1) 31 Dec 2015 5.2 5.6 4.7 7.6 5.2 31 Dec 2014 5.4 5.6 5.3 7.2 5.5 Change (bps) (20) 0 (60) 40 (30) ERV (£m) 31 Dec 2015 166.2 90.9 101.0 13.6 371.7 31 Dec 2014 16
Slide 72: Components of valuation change
Components of valuation change Components of valuation change in 2015 – total portfolio (£m) 400 Yield Income Development & other Total 350 368 300 287 250 200 195 150 161 127 117 100 77 50 67 24 19 36 36 1 0 0 4 0 (3) (2) (15) (29) -50 UK shopping centres UK retail parks France Developments Total P
Slide 73: Tenants in administration
Tenants in administration 31 December 2015 % of passing rents 51 units in administration 1.1 4 units unoccupied 0.1 30 June 2015 52 units in administration 1.0 10 units unoccupied 0.3 31 December 2014 55 units in administration 1.0 13 units unoccupied 0.4 Appendices 73