Hammerson Plc · LSE:HMSO
Hammerson — FY2021 Earnings Presentation
57 slides from Hammerson's earnings presentation, Mar 4, 2022
Slide 1: 2021 full-year results
2021 full-year results 4 March 2022 Bullring & Grand Central
Slide 2: Agenda
2021 full-year results Agenda Overview Financial results Operational & strategic progress Q&A 2 Wimbledon, Westquay
Slide 3: What we said
Overview What we said 2021 immediate priorities Execute tactical disposals & manage upcoming refinancing Maximise rent collection & revive leasing pipeline Conclude strategic review 2021 agenda Reduce net debt Improve operational agility & flexibility Deliver new strategy Shareholder value creation
Slide 4: What we did
Overview What we did H1 Addressing the immediate challenges H2 Regaining lost ground and laying strong foundations Stabilised and de-risked the Clear strategic direction established, balance sheet underpinned by strong financial discipline Strategic & organisational review New structure: lea
Slide 5: Disciplined financial management
Overview Disciplined financial management 1 Portfolio re-alignment • Disciplined disposals programme • Realigned to market (term, base vs turnover, breaks etc) 2 Leasing • Focus on cash flow and valuation • Strengthened methodology, processes and governance • Weekly focus on cash collections 3 Focus
Slide 6: Full-year results
Full-year results 6 Winter Bar, TheOracle
Slide 7: 2021 full-year financial results: key takeaways
2021 full-year financial results FY key takeaways £190m 90% £81m NRI(1) FY21 rent collections Adjusted earnings +12% YoY FY20: 99% +122% YoY LFL NRI £141m (+22%) £3.5bn £1.8bn 39%/47% Managed portfolio value Net debt LTV (headline/FPC(2)) FY (21%) vs Dec-20 19% lower vs Dec-20 Dec-20: 40%/46% H2 (3%
Slide 8: FY headline results
2021 full-year financial results FY headline results 31 Dec 2021 31 Dec 2020 Change Income statement Adjusted net rental income (£m)(1) (2) 189.8 169.6 12% LFL NRI (£m)(1) 141.0 115.9 22% Premium outlets earnings (£m)(3) 15.9 6.9 130% Adjusted earnings (£m) 80.9 36.5 122% IFRS loss (£m)(4) (429.1) (
Slide 9: Adjusted earnings walk
2021 full-year financial results Adjusted earnings walk Bond 2.8 Variable interest employee (5.8) Underlying (excluding Senior notes 11.4 costs £m surrenders and 2021 disposals) RCF & other Insurance (2.2) VIA 2020 (14.0) interest 4.1 disposal Other gross Other payable 4.1 140 Interest admin costs d
Slide 10: EPRA NTAPS walk
2021 full-year financial results EPRA NTAPS walk Continued Covid-19 overhang Yields stabilising pence 82 69 64 (1) (1) 1 On a proportionally consolidated basis including Value Retail 10
Slide 11: Portfolio valuation summary
2021 full-year financial results Portfolio valuation summary(1) ` Value Capital return Yield impact % ERV & other Total NEY NIY 31 Dec % impact % property range range £m return % % % FY H2 FY H2 FY H2 FY UK(2) 1,135 (16.7) (3.9) (6.8) (0.1) (9.9) (3.8) (10.8) 6.8-9.4 5.9-8.9 France(3) 990 (6.6) (2.6
Slide 12: Breakdown of -11.6% flagship capital return by geography
2021 full-year financial results Breakdown of -11.6% flagship capital return by geography UK flagships France flagships Ireland flagships 5.% H118 H218 H119 H219 H120 H220 H121 H221 H118 H218 H119 H219 H120 H220 H121 H221 H118 1.9% H218 H119 H219 H120 H220 H121 H221 0.% (1.0%) (0.7%) (1.0%) (1.5%) (
Slide 13: Value Retail earnings walk
2021 full-year financial results Value Retail earnings walk £m • 288 leases • 99% collections • 96% occupancy Premium outlets FY20 £6.9m 13
Slide 14: Value Retail valuation
2021 full-year financial results Value Retail valuation Total GAV: £1.9bn at Hammerson share Bubble size represents 35 relative GAV(1) 3.7% - 6.5% 5.3% – 6.3% 8.5% – 10.0% Bicester 30 NIY Exit yield Discount rate range range range 25 Sales Density 2021, €k La Vallee 20 Transactional evidence: • One
Slide 15: Strengthening the balance sheet
2021 full-year financial results Strengthening the balance sheet £1.8bn 2025 IG rating Net debt No material refinancing's Moody’s updated outlook 19% lower vs Dec-20 required until 2025 from negative to stable Pro forma(1): £1.6bn 67% £1.5bn 39%/47% Gearing Liquidity LTV (headline/FPC) Dec-20: 70% D
Slide 16: Gross administration costs
2021 full-year financial results Gross administration costs On track to deliver 15-20% reduction(1) 2021 actions: 2022+ actions: • Reorganisation • Continue to review review completed organisation • Headcount 18% • Talent management lower YoY, • Further right-sizing annualised run post disposals rat
Slide 17: 2022/2023 modelling assumptions
2021 full-year financial results 2022/2023 modelling assumptions • Underlying GRI £193m (2021 GRI of £242m less £49m from disposals and surrenders) GRI • Targeting mid single-digit growth (excluding disposals) from lower vacancy, Cergy extension and improved collections Disposals • Anticipate a tota
Slide 18: Strategic & operational progress
Strategic & operational progress 18 Dublin Central - O'Connell Street CGI
Slide 19: Who we are – operating with purpose
Flagship with adjacent land bank Operational & strategic progress Land bank Who we are – operating with purpose Flagship • Unique city centre asset footprint – our source of competitive advantage • Play an essential role in our communities • >250 million visitors • >40 thousands jobs supported • >£1
Slide 20: Proactive strategy to unlock value
Operational & strategic progress Proactive strategy to unlock value Medium and long term Near term opportunities opportunity • Maximise cash flow and underwrite • Holistically developing and curating value of our existing assets by relentless prime urban estates operational improvement: repurpose •
Slide 21: Relevance of physical evidenced by footfall and sales recovery
Operational & strategic progress Relevance of physical evidenced by footfall and sales recovery Footfall by geography(1) Sales and affordability(2) 0.2 LFL Sales Q3 2021 Q4 2021 H2 OCR vs. 2019 vs. 2019 0 UK -2% -3% 13.4% -0.2 France -8% -7% 13.0% -0.4 -0.6 Prime urban estates in some of the fastest
Slide 22: Strength of demand for prime space illustrated by leasing volumes
Operational & strategic progress Strength of demand for prime space illustrated by leasing volumes and improving spreads in H2 FY21 group leasing activity, excluding premium outlets (£m) Key stats(1) 7 30 • 371 leases, (+70% vs FY20) 6 25 • £25m - of income secured (+150% vs FY20; 5 20 +27% vs FY19)
Slide 23: Leasing highlights
Reinvigorate our assets Leasing highlights UK France Ireland Proactive asset management Portfolio engagement Big box repurposing extension Line units F&B and Leisure Pop-ups Non-traditional uses 13e Art Commercialisation & events 23
Slide 24: Generate capital to reduce debt and invest
Deliver sustainable and resilient capital structure Generate capital to reduce debt and invest Our core: prime urban estates Silverburn exchanged Nicetoile Espace St Quentin 2 transactions French minority stakes Two buckets of liquidity in the portfolio Victoria Place Land at Port Talbot Elder Stree
Slide 25: Disciplined capital allocation – our philosophy
Deliver sustainable and resilient capital structure 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
Slide 26: New leadership team supplementing existing talent
Create an agile platform New leadership team supplementing existing talent Board and leadership team Improved corporate governance • Robert Noel, Chair of the Board • Management committee structures reduced • Rita-Rose Gagné, CEO from >30 to 3 • New delegation of authority, greater empowerment Resha
Slide 27: Shift from geographic to asset-centric and customer-focused model
Create an agile platform Shift from geographic to asset-centric and customer-focused model Hammerson UK Flatter organisation with those closest to assets and customers empowered Leaner organisation: 18% reduction in headcount in 2021 Hammerson France Investing in new skills, talent, and reshaped lea
Slide 28: Opportunities in land bank with tangible progress on four land promotion projects
Accelerate development Opportunities in land bank with tangible progress on four land promotion projects Feasibility/ Detailed Enablement/ Planning Phased Key schemes Area Outlined planning Pre- Construction submitted delivery planning secured construction Land promotion – near-term Dublin Central 6
Slide 29: Clear land promotion milestones to value creation
Accelerate development Clear land promotion milestones to value creation and options for liquidity Secure office pre-lets Potential /detailed planning & Capex value uplift Potential 2021 2022 2023 tenders 2022- 2022- GDV(1) 2023(1) 2023(1) Dublin Submit final planning grants Achieve final planning g
Slide 30: Significant achievements in 2021; renewed focus in 2022
Sustainability Significant achievements in 2021; renewed focus in 2022 Building sustainability into everything we do • Sustainability culture built into the heart of our decision-making • Comprehensive climate scenario analysis completed in 2021 as part of strategic review which informs our approach
Slide 31: Strategy in action - three Birmingham assets become a prime urban estate
Looking ahead Strategy in action - three Birmingham assets become a prime urban estate Ladywood House redevelopment and Phased delivery of Martineau Grand Central integration Galleries development repurposing – vacant JLP Birmingham New Street HS2 Curzon Street Ongoing: M&S; Toca Social Moor Longer
Slide 32: Indicative long term total return opportunity
Looking ahead 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 dividend stream • Valuation u
Slide 33: Closing remarks
Closing remarks 33 Westquay
Slide 34: Q & A
ee Z & =e | ~ CA PY : Nt a Les Terrasses du Port
Slide 35: Additional disclosures
Additional disclosures 35 Les Terrasses du Port
Slide 36: Contents
Additional disclosures – 2021 full-year results Contents Managed portfolio Sustainability Value Retail 36 Bullring & Grand Central
Slide 37: Managed portfolio
Managed portfolio 37 Westquay
Slide 38: Physical remains essential to commerce and leisure
Additional disclosure: Managed portfolio Physical remains essential to commerce and leisure Ecommerce Covid spike abating(1) Relative competitiveness and appeal of physical growing(2) 100% • Growing online costs:1.4% pureplay margin 90% • Falling store costs: 5.4% omnichannel margin 80% Rate of onli
Slide 39: Leasing cumulative activity – flagships
Additional disclosure: Managed portfolio Leasing cumulative activity – flagships (£m) 7 12 7 12 6 UK 6 France 10 10 5 5 8 8 4 4 6 6 3 3 4 4 2 2 1 2 2 1 0 0 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 7 12 6 Ireland 10 Leasing value FY 21 FY 20 FY 19 5 £m £m £m 8 4 6 UK 11.2 5.6 11.2 3 4 France 11.7 3.2 6.0 2 1 2 Ir
Slide 40: Leasing analysis – flagships, principal leases only
Additional disclosure: Managed portfolio Leasing analysis – flagships, principal leases only # Deals Value £m % vs ERV % vs previous passing H1 H2 FY H1 H2 FY H1 H2 FY H1 H2 FY UK 60 73 133 4.8 5.2 10.0 (26) (16) (21) (9) (24) (17) France 57 46 103 4.1 6.8 10.9 (6) 4 1 32 12 18 Ireland 10 16 26 0.7
Slide 41: Leasing highlights – key themes
Additional disclosure: Managed portfolio Leasing highlights – key themes Donnybrook Fair • Iconic food emporium with interactive masterclasses • Anchor tenant secured for new F&B quarter, Pembroke district F&B and leisure at Dundrum Pop-up F&B operators • Both new brands like Get Caked through to fr
Slide 42: Leasing highlights – key themes
Additional disclosure: Managed portfolio Leasing highlights – key themes Watches of Switzerland - Goldsmiths • We initially approached Goldsmiths, aware they wanted to Proactive asset upsize in Bullring, eventually broadening the discussion to management include a new concept store at the Oracle. No
Slide 43: Top 20 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 8.5 3.8 3.0 Watches of Switzerland 2.4 1.1 0.3 H&M 6.4 2.9 2.8 John Lewis Plc 2.3 1.1 7.2 Next 4.3 1.9 4.8 TK
Slide 44: 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 4.9 2.2 1.7 Printemps 2.5 1.1 2
Slide 45: 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 (%) (%) (%) (%) FY20 97 106 96 99 FY21 90 86 95 90 2022 YTD 87 78 82 83 Provisions Provision as % of Provision as % of Net trade Change since for arr
Slide 46: LTV methodology
Additional disclosure: Managed portfolio LTV methodology Pro forma 31 December 2021(1) 31 December 2021 With Value Retail Fully With Value Retail Fully proportionally net asset value proportionally net asset value consolidated (£m) (£m) consolidated (£m) Net debt (£m) Managed portfolio 1,629 1,629 1
Slide 47: Net debt analysis
Additional disclosure: Managed portfolio Net debt analysis(1) £m French 48 minorities 2,400 UK retail parks 377 & non-core 2,300 2,200 Reported In-asset 56 2,100 EBITDA 146 developments Landbank 2,000 425 Working capital movements (7) capex 5 Pension Other asset 36 1,900 contributions (21) initiativ
Slide 48: Debt maturity profile
Additional disclosure: Managed portfolio Debt maturity profile(1) Euro Bonds (int 1.8%) Liquidity position (£m) (£m) Secured Debt (Parinor, int 2.4%) 1,000 £m Sterling Bonds (int 5.3%) RCF – fully undrawn 1,030 Private Placements (int 3.0%) Cash 434 Secured Debt (Highcross, int 2.9%) 800 Total liqui
Slide 49: Opportunities in land bank with tangible progress on four land promotion projects
Additional disclosure: Managed portfolio Opportunities in land bank with tangible progress on four land promotion projects Retail F&B Leisure Residential Workspace Hotel Culture Public spaces Key schemes Area Land promotion – near-term Dublin Central 6 acres The Goodsyard, London 10
Slide 50: Sustainability
Sustainability 50 Dundrum Solar Installation
Slide 51: Our 2030 Sustainability Strategy
Additional disclosure: Sustainability Our 2030 Sustainability Strategy Our sustainability vision is to create destinations that deliver Net Positive impacts economically, socially and environmentally. We aim to be Net Positive in the four areas where we have the most material impacts: Carbon, Resour
Slide 52: Sustainability-linked bond
Additional disclosure: Sustainability Sustainability-linked bond Issued in June 2021 and confirmed as being beyond business as usual and Paris aligned, our sustainability-linked bond (“SLB”) links ambitious Scope 1,2 and 3 targets to financing without restricting our use of proceeds. This was the fi
Slide 53: Value Retail
Value Retail 53 Maasmechelen Village
Slide 54: 2021 operational update
Additional disclosure: Value Retail 2021 operational update 31 December 31 December Change (£m) 2021(1) 2020(1) Brand sales (£m) 1,951 1,504 +30% 1,200 Footfall (m) 26.9 21.8 +23% Sales density (£/m2) 10.2 8.6 +20% 1,000 9 year IRR:18% NRI (£m) 66.7 45.7 +46% 800 Occupancy (%) 96 97 -1% 600 962 1,11
Slide 55: Value Retail villages
Additional disclosure: Value Retail Value Retail villages Bicester Village, Oxford GLA: 27,900m2 Boutiques: 157 La Roca Village, Barcelona GLA: 25,900m2 Boutiques: 148 Las Rozas Village, Madrid GLA: 16,500m2 Boutiques: 100 La Vallée Village, Paris GLA: 21,600m2 Boutiques: 105 Maasmechelen Village, B
Slide 56: 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 57: Sales and sales growth 2012-2021
Additional disclosure: Value Retail Sales and sales growth 2012-2021(1) €m 3,500 +9% +8% 3,000 +8% +8% 2,500 +11% +30% +11% 2,000 +12% -45% +13% 1,500 1,000 500 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 H1 Sales H2 Sales 1 Figures have been restated at constant FX rates, at 100% 57