Hammerson Plc · LSE:HMSO
Hammerson — H1 2009 Earnings Presentation
51 slides from Hammerson's earnings presentation, Aug 3, 2009
Slide 1: 2009 Half-Year Results
2009 Half-Year Results 3 August 2009
Slide 2: John Nelson, Chairman
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Slide 3: Agenda
Agenda | Introduction – John Richards | Financial Results – Simon Melliss | France – Christophe Clamageran | UK – David Atkins | Summary and Conclusion – John Richards 3
Slide 4: Results
Results 30 June 2009 30 June 2008 Adjusted profit before tax £65.6m £60.5m Adjusted earnings per share 11.0p 13.8p(1) Interim dividend per share 6.95p 12.60p 30 June 2009 31 Dec 2008 Adjusted NAV per share £3.73 £5.16(2) Gearing 81% 118% Notes: 1) Restated for rights issue. 2) Pro forma following th
Slide 5: Half-Year Highlights
Half-Year Highlights | Financial position significantly strengthened | Robust income with growth potential | Overhead costs reduced | Encouraging letting progress in a tough market | Development pipeline progressing 5
Slide 6: Financial Results
Financial Results Simon Melliss, Finance Director 6
Slide 7: Net Rental Income
Net Rental Income £ million Six months to 30 June 2009 2008 Properties owned throughout 121.3 121.4 Acquisitions 0.9 0.7 Developments 12.4 0.7 Properties sold 21.8 30.8 Exchange translation and other - (7.8) Net rental income 156.4 145.8 7
Slide 8: Vacancy Rates
Vacancy Rates As previously EPRA basis reported % 30 June 2009 31 December 2008 UK Retail 6.4 6.9 5.3 UK Offices 20.4 6.2 6.4 French Retail 2.2 2.6 2.2 Total 7.4 5.3 4.6 8
Slide 9: Income Statement
Income Statement £ million Six months to 30 June 2009 2008 Loss before tax (818.5) (417.1) Adjustments: Revaluations 766.2 462.6 Loss on disposals 103.3 2.1 Other exceptional items 14.6 12.9 Adjusted profit before tax 65.6 60.5 Adjusted earnings per share 11.0p 13.8p(1) Interim dividend per share 6.
Slide 10: Balance Sheet
Balance Sheet £ million 30 June 2009 31 Dec 2008 Property assets 4,717 6,457 Net debt (2,061) (3,333) Other net liabilities (48) (195) Sub-total 2,608 2,929 Deferred tax (61) (108) Shareholders’ equity 2,547 2,821 Adjusted net asset value per share £3.73 £5.16(1) Gearing 81% 118% Note: 1) Pro forma
Slide 11: NAV Analysis
NAV Analysis Shareholders’ funds(1) Adjusted NAV(1) (£ million) (£ per share) 31 December 2008(2) 3,591 5.16 Revaluation (765) (1.09) Disposals (125) (0.18) Retained profit 61 0.09 Dividends (44) (0.06) Exchange and other movements (120) (0.19) 30 June 2009 2,598 3.73 Notes: 1) Excluding deferred ta
Slide 12: Capital Return
Capital Return Capital Return Contribution Total Group (14.1%) French Shopping Centres French Retail Parks UK Offices UK Shopping Centres UK Retail Parks % French Offices % -25 -20 -15 -10 -5 0 0 5 10 15 20 25 30 35 40 12
Slide 13: Investment Portfolio Yields
Investment Portfolio Yields UK France Shopping Centres 7.8% +0.8% 5.7% +0.6% Retail Parks 8.4% +0.9% 7.5% +1.1% Offices 7.7% +0.8% 6.0% +0.5% Total 7.9% +0.8% 5.8% +0.6% Note: True equivalent yields at 30 June 2009 and the change compared to 31 December 2008. 13
Slide 14: Financing
Financing | Net debt £2.1 billion | Gearing 81% | Cash and undrawn committed facilities of £906 million | 97% of gross debt unsecured | Only £60 million borrowings mature before end 2011 | Weighted average maturity of debt eight years 14
Slide 15: Debt Maturity Profile
Debt Maturity Profile £ million 600 500 400 £253 million repaid since 30 June 2009 300 200 100 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2028 Bank debt drawn Euro bonds Sterling bonds 15
Slide 16: Sound Financial Position
Sound Financial Position Total gross debt £2.3 billion 3% 31% 31% 69% 69% 97% Bank debt Bonds Secured Unsecured Euro Sterling 30 June 2009 31 December 2008 Gearing 81% 118% Interest cover 2.0 times 1.7 times Net debt/EBITDA 7.6 times 12.9 times 16
Slide 17: Summary
Summary | Sound balance sheet | Virtually all borrowings unsecured | No significant refinancing requirements before 2012 | Substantial unutilised committed facilities 17
Slide 18: France
France Christophe Clamageran, Managing Director France 18
Slide 19: France: Yields and Finance Costs
France: Yields and Finance Costs % 7.0 Spread between all-property initial yield % 7.0 Spread between all-property initial yield and ten-year government debt and five-year swaps 6.0 6.0 5.0 5.0 4.0 4.0 3.0 3.0 2.0 2.0 1.0 1.0 0.0 0.0 1998 2003 2008 1998 2003 2008 The shaded areas show the range of a
Slide 20: French Yield Outlook
French Yield Outlook Long-term equivalent yields % 8.0 Actual Market Forecasts | Low level of transactions in 2009 7.5 | Paris office yields increased 7.0 significantly 6.5 | Shopping centre yields increased, but more resilient 6.0 Range 5.5 5.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Slide 21: French Environment
French Environment Unemployment rate Consumer confidence index Household consumption 200 +10% 12% 11% 100 +5% 10% - 9% - -100 8% -5% -200 7% 6% -300 -10% 1982 1987 1992 1997 2002 2007 1989 1994 1999 2004 2009 1995 1997 1999 2001 2003 2005 2007 2009 Source : INSEE Source : INSEE Source : INSEE 21
Slide 22: French Retail Market
French Retail Market Market Hammerson France Concentrated ownership and high barriers to entry Third largest operator in the shopping centre market Importance of strong relationship with tenants Direct management of assets Significant geographical concentration Concentrated in Île-de-France or in to
Slide 23: Robustness of Cash Flow
Robustness of Cash Flow Favourable commercial environment Lease structure and key money reduces vacancy risk Indexation Restrictive planning environment Quality portfolio Large tenant base implying reduced default risk: about 800 tenants Over 80% of national brands Occupancy cost:sales ratio of 11%
Slide 24: Increased Retail Rents
Increased Retail Rents € million 100 Rents passing Indexation Other 30 June 2009 4.2m (0.3)m New lettings and renewals 97.4m Terminations Rents passing and expiries 31 Dec 2007 90 90.5m (7.1)m 10.1m 80 Note: Movement in passing rents compared on a like-for-like basis 24
Slide 25: Office Market Summary
Office Market Summary Take up and supply Rental values and vacancy rate Prime yield in Île-de-France in Île-de-France Paris CBD 3.5 7.0% 350 7.0% 3.0 330 6.0% 6.0% 2.5 2.0 310 m illion m ² € /m² 5.0% 5.0% 1.5 290 1.0 4.0% 4.0% 270 0.5 - 3.0% 250 3.0% 2003 2004 2005 2006 2007 2008 2009 2003 2005 2007
Slide 26: Hammerson France Well Positioned
Hammerson France Well Positioned Retail | Fundamentals remain favourable | Market with high entry barriers | Hammerson France is well positioned Offices | Very low exposure following disposals | Abrupt market correction 26
Slide 27: UK
UK David Atkins, Managing Director UK 27
Slide 28: UK: Yields and Finance Costs
UK: Yields and Finance Costs % % 7.0 7.0 Spread between all-property equivalent yields Spread between all-property equivalent yields 6.0 and five-year swaps 6.0 and ten-year gilts 5.0 5.0 4.0 4.0 3.0 3.0 2.0 2.0 1.0 1.0 0.0 0.0 -1.0 -1.0 1993 1998 2003 2008 1993 1998 2003 2008 The shaded areas show
Slide 29: Prime UK Yields To Reduce
Prime UK Yields To Reduce Long-term equivalent yields % Actual Market Forecasts | Improved sentiment, but 10.0 transaction volumes remain low 9.0 | Yields stabilising for prime 8.0 assets 7.0 Range | Rental values under pressure 6.0 | Timing and extent of recovery 5.0 uncertain 4.0 1993 1998 2003 20
Slide 30: UK Consumer Environment
UK Consumer Environment Unemployment (thousand) Consumer Confidence Retail Sales (%) 10 5 1200 4 0 1100 3 -10 2 1000 1 900 -20 0 800 -30 -1 700 -40 -2 2005 2007 2009 2005 2007 2009 2005 2007 2009 Consumer confidence Non-food retail sales growth (12 month rolling Claimant count unemployment annual av
Slide 31: Trading Performance
Trading Performance Footfall and sales Non-rental income Trading Over 160 million visitors Car parking income Stronger sectors: young per annum £3.4 million (+10%) fashion, fashion accessories, gifts and Footfall up 2.9% Commercialisation catering £1.9 million (+15%) Sales down 2.2% Weaker sectors:
Slide 32: Active Asset Management
Active Asset Management Retail management strategy Aggressive leasing programme Targeted marketing and promotions On-site trading initiatives Cost and service charge management Effective credit control 32
Slide 33: Modest Reduction in Income
Modest Reduction in Income £ million 130 Rents passing Terminations New lettings Rent reviews Other Rents passing 31 Dec 2007 and expiries and renewals 30 June 2009 1.9m 120 (1.1)m 124.0m (12.3)m 8.6m 121.1m 110 100 Note: Movements in passing rents compared on a like-for-like basis. 33
Slide 34: Developments
Developments Cabot Circus, Bristol o 92% let o 2% in solicitors’ hands o Major new tenants signed: Hollister, Gant, Disney Highcross, Leicester o 89% let o 7% in solicitors’ hands o Major new tenants signed: Bestseller, Aldo, Faith, Boots Union Square, Aberdeen o 67% let and under offer o Major new
Slide 35: Office Market Summary
Office Market Summary Take up and completions Rental values and vacancy rate Prime yield in City of London in City of London City vs. West End 7 20% 70 8% 6 60 7% 5 15% 50 4 6% m illion ft² 40 £ / ft² 3 10% 30 5% 2 5% 20 1 4% 10 0 0% 0 3% 2003 2004 2005 2006 2007 2008 2009 2003 2005 2007 06/2009 200
Slide 36: London Offices
London Offices | Bishops Square disposal - Joint Venture with Oman Investment Fund | 60 Threadneedle Street - 23% let and 44% in solicitors’ hands | 125 Old Broad Street - 75% let | St Alphage option agreement signed 36
Slide 37: UK Summary
UK Summary Retail | Regionally dominant shopping centres | Growth from retail park extensions | Focus on income growth | Low vacancy against national averages Offices | Rents remain under pressure | Good letting progress 37
Slide 38: Summary and Conclusion
Summary and Conclusion John Richards, Chief Executive 38
Slide 39: Portfolio Designed to Outperform
Portfolio Designed to Outperform Investment Comments • Prime, modern portfolio Established investment portfolio: £3.8 billion • Active management to drive income • Well positioned to benefit from market recovery • Aggressive letting programme Recent developments: £0.7 billion • Strong recovery poten
Slide 40: High Quality Investment Portfolio
High Quality Investment Portfolio 1% 2% 34% 36% 15% 12% UK Shopping Centres UK Retail Parks UK Offices France Retail France Offices Germany Principal sectors UK UK Shopping UK Retail French Group Offices Centres Parks Retail Passing rent £39m £108m £50m £97m £301m Reversionary/(over-rented) (14.5%)
Slide 41: Contracted Growth from Developments
Contracted Growth from Developments £ million 60 50 40 30 20 10 0 2008 2009 2010 2011 2012 2013 UK shopping centres UK retail parks France retail UK Offices Notes: 1) Hammerson’s share of income shown for joint ventures 41 2) The bar chart shows cash rent receivable and not income smoothing under IF
Slide 42: Development Pipeline
Development Pipeline | Substantial pipeline of future opportunities | Planning consent for WestQuay extension achieved | Option agreement signed with Corporation of London for St Alphage House redevelopment | Will exploit when appropriate 42
Slide 43: Conclusion
Conclusion | Sound financial position | Prime portfolio with robust income and growth potential | Intensive asset management in a tough market | Prime UK yields stabilising | Well positioned to benefit from anticipated market recovery 43
Slide 44: Questions
Questions 44
Slide 45: Change in Net Debt
Change in Net Debt £ million Net debt 3500 31 Dec 2008 3000 £584m Rights issue 2500 proceeds £572 m Net debt 30 June 2009 2000 Disposals and £116 m associated debt £3,333 m £2,061 m Other movements (118% gearing) (81% gearing) 1500 1000 500 0 45
Slide 46: Top Ten Properties
Top Ten Properties Property name Ownership Valuation Passing 30/06/09(1) rent(2) £m £m O’Parinor, Aulnay-sous-Bois 100% 392 20.3 Italie 2, Paris 13ème 100% 348 18.8 Brent Cross, London NW4 41% 245 16.9 Highcross, Leicester 60% 230 17.1 Bullring, Birmingham 33% 210 15.4 Espace St. Quentin, St Quentin
Slide 47: Adjusted Earnings
Adjusted Earnings £ million Six months to 30 June 2009 2008 Loss before tax (818.5) (417.1) Adjustments: Loss on sale of investment properties 77.9 2.1 Loss on sale of subsidiary 25.4 - Revaluation losses on property portfolio 766.2 462.6 Share of revaluation losses of property and derivatives in as
Slide 48: UK: Retail Lease Expiries
UK: Retail Lease Expiries £ million 15.0 10.0 5.0 0.0 2009 2010 2011 2012 2013 2014 ERV uplift 2.4 1.1 0.3 0.4 0.6 1.0 Passing Rent 7.0 4.5 5.5 5.4 8.6 9.3 | 25% of the UK total retail passing rent of £158.0 m expiring before end 2014 | £5.8 million reversion on leases expiring before end 2014 48
Slide 49: France: Retail Lease Expiries
France: Retail Lease Expiries £ million 15.0 10.0 5.0 0.0 2009 2010 2011 2012 2013 2014 ERV uplift 1.6 1.0 0.7 0.3 0.3 0.3 Passing Rent 11.4 10.6 10.9 11.6 7.8 7.2 | 34% of total France retail passing rent of £96.7m expiring between 2009-2011 | £3.3 million reversion on leases expiring before end of
Slide 50: Contracted Income
Contracted Income £ million Rents passing 2008 2009 2010 2011 2012 2013 Offices - UK 0.5 2.2 3.4 4.9 5.7 7.7 Shopping centres - UK 1.5 14.9 24.3 27.1 27.4 27.4 Retail parks - UK - 1.1 3.8 3.9 3.9 3.9 Shopping centres - France 3.9 7.5 8.1 9.1 9.4 9.4 Retail parks - France - 2.0 2.6 2.8 2.8 2.9 Total
Slide 51: Disclaimer
Disclaimer This presentation contains certain statements that are neither reported 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 in or imp