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2013 Full-year
2013 Full-year

Results
Results
Monday 17 February 2014
Monday 17 February 2014

2013 Half-year results
Today’s presentation

Section

1

Introduction and market overview

David Atkins, CEO

Financial results

Timon Drakesmith, CFO

Performance drivers

David Atkins, CEO

Conclusion

David Atkins, CEO

Section

2
Section

3
Section

4

2013 half year results
2013 Full-year results

2
Vision

Our vision is to be the best owner-manager and developer
of retail property within Europe
By capitalising on our strengths we aim to provide
industry-leading shareholder returns

EPS
+10.5%

2013 half year results
2013 Full-year results

Dividend
+7.9%

LfL NRI
+2.1%

NAV/share
+5.7%

3
3
2013 highlights
Best in class retail portfolio
Occupancy
97.7%
Leasing +2% vs ERV
7% tenant rotation
rate

Active financial management
WAIR reduced to
4.8%
Reduction in cost
ratio of 240bps
Over £700m liquidity

2013 Half-year results
2013 half year results
2013 Full-year results

Advancing developments
Les Terrasses du
Port 93% let
Commenced on
site at Leeds and
Beauvais
Planning consent
at Croydon and
Brent Cross

Capital recycling to enhance growth
Queensgate disposal
Leisure extensions
on site
Acquisition of Value
Retail stakes,
Bullring and Nancy

44
Securing retail demand in France despite cyclical weakness

Market indicators
Structural attractiveness of indexation

Index
105
105

French business confidence (Source: INSEE, France)

100

100

95

95

Low personal debt levels

90

90

Business confidence steady throughout 2013

85
85

Household disposable income increased
throughout 2013

Portfolio initiatives

80

80

Jul 12
€bn
34

Jan 13

Jul 13

Jan 14

Total disposable income (Source: INSEE, France)

340000

Leasing progress at Les Terrasses du Port,
Marseille and Jeu de Paume, Beauvais

335000

Repositioning existing assets through
extensions and refurbishments

325000

Selective acquisitions

315000

33

330000

32

320000

31

310000

Jan 08

2013 half year results
2013 Full-year results

Jan 10

Jan 14

Jan 12

5
Stronger Christmas trading in the UK
Morrison
Tesco
Sainsbury
M&S Food
Waitrose

Foodstores

Dunelm
Maplin
Dixons
Halfords
Topps Tiles

OOT retailers

WH Smith
Mothercare
Superdrug
Ryman
Greggs
Thorntons
Argos
Carphone Warehouse
Robert Dyas
Fragrance Shop
The Works
Lush

Non fashion
retailers

New Look
Blue Inc
Bon Marche
JD Sports
White Stuff
Ted Baker
Next
Karen Millen
Jaeger
Mountain Warehouse
Moss Bross
Moss Bros
Boux Avenue
Boux Avenue

Fashion
retailers

Debenhams
M&S Gen merch
House of Fraser
John Lewis
Liberty
Selfridges

Department
stores
-10

Source: PMA (from company statements)

2013 half year results
2013 Full-year results

-5

0

5

10

15

20

25

% p.a. like-for-like sales change, Christmas trading period 2013 vs 2012

6
Positive outlook driven by improving fundamentals

Falling UK unemployment (Source: ONS)

UK GDP growth (Source: ONS)
%

%

1.0

8.5

0.8

8

0.6

7.5
7

0.4

6.5

0.2

2013 half year results
2013 Full-year results

7

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

2013 - Q4

2013 - Q3

2013 - Q2

2013 - Q1

2012 - Q4

2012 - Q3

2012 - Q2

-0.2

2012 - Q1

0.0

Jan-12

6
Deep investor demand and firming yields

Shopping centre investment in Europe (Source: DTZ research)
€bn

Volume
LHS

20

Number
of deals

Number of deals
RHS

300
250

Net initial yield (Source: PMA)
%
6.5

Prime Shopping centres
Prime shopping centres

Retail warehousing
Retail Warehousing

6.0

15
200
10

5.5

150
5.0
100

2013 half year results
2013 Full-year results

2014

2013

4.0
2012

2013

2011

2009

2007

2005

2003

2001

0
1999

0

4.5

2011

50

2010

5

8
Combined with limited supply

Retail completions expected to remain modest (Source: PMA)
Mil ft2 p.a. net
25

Shopping centres
ShoppingCentre / Unit Shop

20

Retail Warehouse
Retail warehouses

15

10

5

2013 half year results
2013 Full-year results

9

2018

2016

2014

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

0
Increased space requirements in selected locations

International Fashion
retailers
multiples

Leisure and
catering

Aspirational
brands

Homeware and Discounters
furnishings

London
Regional shopping centres
Out of town retail parks
Prime towns
Secondary towns
Tertiary

2013 half year results
2013 Full-year results

10
Leading to market ERV growth

Forecast UK retail ERV growth per annum (Source: PMA)
%
3.0

Prime shopping centres

Retail warehouses
2.9

2.5

2.5

2.0

2.0

1.9

1.5

1.8

1.6

1.3

1.0

1.1
0.8

0.5
0.0

-0.1

-0.2

-0.5

-0.2

-0.8

-0.9
-1.0

-0.1

-1.2

-1.5

2010

2013 half year results
2013 Full-year results

2011

2012

2013

2014

2015

2016

2017

11
Hammerson positioned to support multichannel retail

Reported sales do not capture the
whole picture
Hammerson
2013 tenants’
sales

UK

France

-0.4%

-2.7%

Click and collect sales not recorded

Adjusted sales capture underlying picture
Adjusted sales

Reported store sales

Retailer 1

+1.7%

-0.7%

Retailer 2

+5.7%

+4.7%

Online purchases returned to store
reduce recorded sales

Overall estimated benefit to reported sales of 1-2% increase
2013 half year results
2013 Full-year results

12
Leasing ahead of both ERV and previous rents

12 months to 31 December 2013

vs ERV

vs previous rents

UK retail

+4%

+1%

France

+0%

+6%

Group

+2%

+2%

UK shopping centres

Five Guys at The Oracle,
Reading

2013 half year results
2013 Full-year results
2013 Half-year results

UK retail parks

Homebase at Battery Retail Park,
Selly Oak

French retail

Eram at Place des Halles,
Strasbourg

13
Summary

Improving economic fundamentals

Growing consumer confidence

Increasing tenant demand

Limited supply pipeline

Conditions for selected ERV growth

Hammerson positioned to outperform

2013 half year results
2013 Full-year results

14
Section

2

Financial
results
Timon Drakesmith
2013 Half-year results
Finance agenda and progress
Focus area
Drive top line growth

Control operating costs

Manage interest expense

Optimise capital
structure

2013 half year results
2013 Full-year results
Half-year results

Progress in 2013
Growth in NRI of 2.1%
Marseille opening May 2014
On track to meet our £320m NRI forecast for 2015

Cost income ratio declined by 240 bps to 24.6%
Operating costs reduced by 1.5% in 2013
Further actions announced today to reduce cost income ratio

WAIR falls by 20bps to 4.8%
Increased % of fixed debt for protection as rates rise

Over £500m of new debt financing
LTV below 40% target
Well funded to support development schemes

16
16
Headline results
Income statement
2013

% change

2012

Net rental income(1) (£m)

290.2

282.9

+2.1%(2)

Adjusted profit before tax(3) (£m)

168.9

152.5

+10.8%

EPRA EPS (p)

23.1

20.9

+10.5%

Final dividend (p)

10.8

10.0

+8.0%

Balance sheet
31 Dec 2013
Portfolio value (£m)
EPRA NAV (pence per share)
LTV (%)
(1)
(2)
(3)
(4)
(5)

5,931

% change

31 Dec 2012
5,653(4)

573

542

38

+2.0%(5)
+5.7%

36

-

Continuing and discontinued operations
On a like-for-like basis for continuing operations
Continuing and discontinued operations
Includes £195m for discontinued operations
Underlying capital growth for total portfolio excluding Value Retail

2013 Full-year results
2013 half year results
2013 Half-year results

17
17
YoY change (LfL)

Solid uplifts in like-for-like NRI

Key drivers

2013 total(2)

3.2%
2.6%

2.1%(1)

0.2%
UK retail parks

France retail

£82.1m

£62.7m

Union Square

Cleveland

Cergy

Brent Cross

Thanet

O’Parinor

Silverburn

2012
administrations

Indexation

UK shopping centres

£124.7m

GRI up 2.2% LfL

Total

£282.8m(3)

In line with
previous
guidance

(1) Includes other interests LfL of £7.2m which declined YoY by 4.0%
(2) Total NRI for continuing portfolio (not LfL)
(3) Continuing operations, including other interests total of £13.3m

2013 Half-year results
2013 Full-year results
2013 Half-year results

18
18
EPRA EPS vs 2012
+10.5%
Net
investment

LfL NRI

Value Retail

Administration Net financing
costs

Exchange and
other

24.0
0.2
0.6

22.5

(0.5)

0.2
23.1

0.7
1.0

21.0
20.9

2013

2012

19.5

18.0

EPRA EPS (pence)

Earnings +20% since 2011
2013 half year results
2013 Full-year results
2013 Half-year results

19
Cost management delivering results
EPRA Cost/income
ratio(1)(2) %

Operating costs(1)
£m
88

29

28.3%

28

86

86.1

27.0%
27

84
26
82

80

24.6%

25

EPRA cost/income
target for 2016
21-22%

24

79.8

79.8
78

23

78.6

76

22
21

74

20

2011

2012

Year 2013
2013

(1) Continuing operations
(2) Cost ratio is defined as: (net service charge expense + property outgoings + administration expenses – management fees receivable)/Gross rental income

2013 half year results
2013 Full-year results

20
New resource management measures

Additional investments to grow business

Efficiency improvements

Expected incremental costs - £5m p.a. from 2015

Target savings - £6m p.a. from 2016

Expanded development programme

Senior management reorganisation

-

Headcount increases

London office relocation in 2015

-

Mobilisation of project teams
Share incentive plans and pension benefits

Digital marketing and multichannel

London/Paris integration
Implementation costs of £5m in 2014

Resources redeployed to growth areas
Expense reductions push cost income ratio down to 21-22%

2013 half year results
2013 Full-year results

21
Portfolio valuation change

FY 2013
%

H2 2013
%

H1 2013
%

Value at 31 Dec 2013
(£m)

UK shopping centres

+2.4

+1.7

+0.7

2,524

UK retail parks

+1.7

+3.2

-1.5

1,471

France retail

-0.3

+0.8

-1.1

1,240

+10.4

+6.8

+3.4

497

Other UK interests(1)

-6.5

-1.6

-5.0

199

Discontinued operations

+3.7

-1.2

+5.0

-

Total

+2.0

+2.2

-0.2

5,931

Value Retail(2)

+12.6

+6.8

+5.4

788(3)

Current developments

(1) Principally assets held for redevelopment
(2) Underlying overall portfolio valuation change for Hammerson interests
(3) Hammerson’s share of portfolio valuation at 31 Dec 2013

Full-year results
2013 half year results
2013 Full-year results
2013 Half-year results

22
EPRA NAV per share vs 2012
+5.7%
Investment
portfolio
revaluation

590

Profit on
disposals

Value Retail
revaluation

Adjusted
profit

Dividends

23

Developments
revaluation

(18)

580
570

573
573

2
11

560

4

550

2013

530

542

2012

540

9

520

EPRA NAV per share (pence)

2013 Half-year results
2013 half year results
2013 Full-year results

23
Healthy financing ratios

Financing
policies

31 Dec 2013

31 Dec 2012

-

£2,252m

£2,036m

Gearing

<85%

56%

53%

Loan to value

<40%

38%

36%

Cash/undrawn facilities

-

£716m

£696m

Weighted average cost of finance

-

4.8%

5.0%

>2.0x

2.8x

2.8x

Net debt/EBITDA

<10x

8.2x

7.9x

Fixed rate debt

>50%

82%(1)

80%

Net debt

Interest cover

(1) Fixed rate debt percentage at 31 December 2013 was 70% but is shown on a pro forma basis for £275m US private placement issue arranged in November 2013

2013 half year results
2013 Full-year results
2013 Half-year results

24
24
Maturity profile of debt

Bank drawn debt

£m

Secured debt

Euro bonds

500

Sterling bonds

USPP(1)

Credit markets attractive

450

Weighted average coupon of 2015/2016 bonds 5.0%

400

USPP will refinance 2014 bank debt

350
300
250
200
150
100
50
0
2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

(1) Undrawn committed US private placement due to fund February and June 14

2013 half year results
2013 Full-year results
2013 Half-year results

25
25

2028
Forecast development expenditure
£m
On site developments

300

Les Terrasses du Port, Marseille
250

Victoria Gate, Leeds
Jeu de Paume, Beauvais

200
Other on site developments
150

Future developments

New extensions/redevelopments
100
Whitgift, Croydon
Brent Cross extension

50

0
2013

2014

2015

2016

2017

2018

Note: Croydon expenditure in 2013 and 2014 reflects property acquisitions
Other on site developments: Abbotsinch Retail Park, Paisley; Cyfarthfa Retail Park, Merthyr Tydfil; Silverburn, Glasgow; O’Parinor, Paris
New extensions/redevelopments: Elliott’s Field Retail Park, Rugby; Watermark WestQuay, Southampton; Brent Cross leisure extension

2013 half year results
2013 Full-year results

26
Focus on Value Retail
Value Retail Villages

Future growth drivers

2013

YoY change

Brand sales

€1.9bn

+13%

Forecast 72% growth in Chinese visits to Europe by 2018(2)

EBITDA

€111m

+12%

Village remerchandising with more premium brand stores

Total portfolio value

€3.1bn

+12%

More flagship stores
Extensions at Barcelona and Dublin

Hammerson share of(1)
EPRA net income

£19m

+51%

EPRA net assets

£634m

Hammerson investment plans

+29%

(1) Including benefit of new investments, interest receivable and loans
(2) Source: European Travel Commission

2013 half year results
2013 Full-year results

27
Section

3

Performance
drivers
David Atkins
2013 Half-year results
Performance drivers

Value Retail

Growth from existing
portfolio

Major developments

Contribution from
extensions and
refurbishments

Selected examples

2013 half year results
2013 Full-year results
2013 Half-year results

29
Capital deployment
Prime Shopping
Centres

Extension and
refurbishment

Premium
Designer Outlets

Convenient
Retail Parks

Silverburn
Silverburn

Abbotsinch
Retail Park

La Roca Village

Kildare Village

Development
Les Terrasses
du Port

Cyfarthfa
Retail Park

Kildare Village

Bullring

Junction Fund

La Vallée
Village

Acquisition

2013 Half-year results
2013 Full-year results

30
Acquisition of a further stake in Bullring

Acquired additional 33% stake in 2013 in 50/50 JV with CPPIB, taking
ownership to 50%
9% total property return
Recent lease renewals +10% above previous rent
Continues to attract new brands

2003

2011

2013

2014

2015

Bullring opens, with
1.5 million visitors
in first week

Spiceal Street opens, a
1,900m2 leisure and
catering development

Bullring
celebrates 10
years of trading

Explore opportunity to
increase leisure offering
and add a cinema

New £100 million John
Lewis store opens for
trade in city

2013 Half-year results
2013 Full-year results

31
Saint Sébastien, Nancy

%
105

£7m

99%

24,000m2

6%

shops and
restaurants

annual rents

let

centre

initial yield

2013 Half-year results
2013 Full-year results

Development
potential

32
Nearing completion at Les Terrasses du Port

Countdown to launch
Opening 3 May 2014
93% pre-let and 95% construction complete
£28 million annual rents
£460 million total development cost
7.3% yield on cost
Anchor store Printemps and MSUs have commenced
fitting out of units

2013 Half-year results
2013 Full-year results

33
Transforming Marseille’s retail offer

190 units

1

81

22

53

43

22

30

brands new to
the portfolio

catering units

fashion brands

international
brands

brands taking 1st
store in a French
shopping centre

brands new to
Marseille

Brands recently signed include

2013 Half-year results
2013 Full-year results

34
Construction commenced at Leeds and Beauvais
Victoria Gate, Leeds

34,300m2 luxury retail
venue
John Lewis anchor store

23,800m2 retail and leisure
venue

Out-turn financials
Total development
cost
Annual income

28% pre-let

Jeu de Paume, Beauvais

Yield on cost

£150m
£10m
6.7%

80km north west of Paris
Large catchment and poor
retail provision

Out-turn financials
Total development
cost
Annual income

£5m

Yield on cost

7.1%

Completion Q3 2016
42% pre-let
Completion Q3 2015

2013 Half-year results
2013 Full-year results

£70m

35
Advancing the development pipeline

Silverburn, Glasgow

O’Parinor, Paris

Cyfarthfa Retail Park,
Merthyr Tydfil

Abbotsinch Retail
Park, Paisley

10,900m2 extension

7,200m2 extension

14,500m2 extension

5,000m2 extension

14 screen cinema

14 screen cinema

4,300m2 Marks and Spencer
anchor store

5 retail units in adjacent
existing retail park

84% pre-let

100% pre-let
46% pre-let

87% pre-let

Total development cost £13m

Total development cost £4m
Total development cost £23m

Total development cost £9m

Completion Q1 2015

Completion Q2 2014

Yield on cost 10%

Yield on cost 13%

Completion Q1 2015

Completion Q4 2014

Yield on cost 7%

Yield on cost 5%

2013 Half-year results
2013 Full-year results

36
Key milestones at Brent Cross and Croydon
Brent Cross

Whitgift, Croydon

2013
Agree masterplan

2013
Brent
Cross/Cricklewood
phasing

Submit planning

2014
S73 approval

Establish JV

Acquire RLAM
stake

Secure planning
resolution

2014
Complete
S106

2013 Half-year results
2013 Full-year results
2013 Half-year results

Submit
leisure
planning
application

Secure CPO
resolution

Complete
S106

Conclude
land
assembly

Conclude
anchor
negotiations

Complete
design

37
37
Attractive future pipeline: The Goodsyard
Total development area 260,000m2

50/50

10 acre

joint venture with site in heart of
Shoreditch
Ballymore Properties

2013 Half-year results
2013 Full-year results

£6m
per acre
valuation

Spring 2014 19,000m2
Planning submission

Retail space
(90 shops)

60,000m2

1,400

office space

residential
units

38
Additional income from developments

£56m

£63m

£m annual rents

120

90
£15m
60

£11m
£30m

30

2014
2014

2015
2015

2016
2016

2017-2019
2017-2019

Notes: Annualised passing rents assuming 100% occupancy in year of project completion, post any rent free periods
Assumes completion of all medium-term developments and extensions
2014 Les Terrasses du Port, O’Parinor, Abbotsinch Retail Park; 2015 Silverburn, Jeu de Paume Beauvais, Elliott’s Field Rugby, Cyfarthfa Retail Park Merthyr Tydfil
2016 Watermark WestQuay, Victoria Gate
2017-2019 Croydon, Brent Cross Leisure, Brent Cross extension

2013 Full-year results
2013 Half-year results
2013 half year results

39
Conclusion

2013 Half-year results
Key messages

ERV growth returning to our
markets

2013 half year results

Major development activity
amplifies returns

On track with previous
income growth guidance

41
Conclusion

ERV growth from existing portfolio

Contribution from extensions and
refurbishments

Overhead cost control
Strong returns
Confident outlook

Major developments

Liability management

Value Retail

2013 half year results
2013 Full-year results
2013 Half-year results

42
42
Questions

2013 Half-year results
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 in or implied by these statements.
Many of these risks and uncertainties relate to factors that are beyond Hammerson’s ability to control or estimate
precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the
actions of governmental regulators and other risk factors such as the Company’s ability to continue to obtain
financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the
Company operates or in economic or technological trends or conditions, including inflation and consumer
confidence, on a global, regional or national basis.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of
the date of this document. Hammerson does not undertake any obligation to publicly release any revision to
these forward-looking statements to reflect events or circumstances after the date of these materials. Information
contained in this presentation relating to the company or its share price, or the yield on its shares, should not be
relied upon as a guide to future performance.

2013 half year results
2013 Half-year results

44
Appendices

2013 Half-year results
Our assets

£5.9bn property portfolio
Assets in UK and France
21 shopping centres
22 retail parks
Investment in Value Retail
250m annual visitors

2013 half year results
2013 Full-year results
2013 Half-year results

46
46
Developments and extensions
Ownership
%

Lettable area
m2

Earliest start

Potential
completion

Value at
31/12/13
£m

Estimated cost to
complete (1)
£m

Estimated annual
income (2)
£m

Let (3)
%

Les Terrasses du Port, Marseille

100%

61,000

Commenced

Q2 2014

386

80

28

93

Abbotsinch, Paisley

100%

5,000

Commenced

Q2 2014

n/a

7

1

87

O’Parinor, Aulnay-sous-bois

25%

7,200

Commenced

Q4 2014

n/a

2

1

100

Cyfarthfa, Merthyr Tydfil

100%

14,500

Commenced

Q1 2015

n/a

19

2

46

Silverburn extension, Glasgow

50%

10,900

Commenced

Q1 2015

n/a

8

1

84

Jeu de Paume, Beauvais

100%

23,800

Commenced

Q3 2015

9

60

5

42

Victoria Gate, Leeds (Phase 1)

100%

34,300

Commenced

Q3 2016

10

135

10

28

311

48

Scheme
ON SITE

TOTAL

156,700

MAJOR DEVELOPMENTS (>30,000M2)
Croydon Town Centre
The Goodsyard, London E1

50%

2015

2018

500

35

260,000

2016

Phased

140

-

41%

Brent Cross Extension, London

200,000

50%

(4)

90,000

2016

2019

350

26

990

61

TOTAL

550,000

EXTENSIONS/REDEVELOPMENTS (<30,000M2)
Elliott’s Field, Rugby

100%

16,000

2014

2015

36

3

13

Watermark WestQuay, Southampton

100%

18,000

2014

2016

70

5

29

Brent Cross Leisure

41%

9,000

2016

2018

20

2

126

10

TOTAL

43,000

PIPELINE
SQY Ouest, Saint Quentin-en-Yvelines

50%

31,700

2014

2015

11

2

Halle en Ville, Mantes

100%

32,000

2015

2017

120

9

Italie Deux, Paris

100%

4,800

2015

2017

25

2

Victoria Gate, Leeds (Phase 2)

100%

73,000

2018

2021

480

40

141,500

636

53

891,200

2,063

172

TOTAL
(1)
(2)
(3)
(4)
(5)

Incremental capital cost including capitalised interest
Incremental income net of head rents and after expiry rent-free periods
Let or in solicitors’ hands by income at 31 January 2014
Area and cost reflects phase 1 of the scheme only. Income not applicable due to residential component of the scheme
€ converted at £1 = €1.202

2013 half year results
2013 Half-year results

47
47

30
Hammerson’s investment in Value Retail

Hammerson
€58m
shareholder
loan

Holding Companies
22% equity

Bicester
Village

La Roca
Village

Las Rozas
Village

La Vallée
Village

Maasmechelen
Village

Fidenza
Village

Wertheim
Village

Ingolstadt
Village

Kildare
Village

Village Ownership
via LP’s (%)

33

23

19

11

13

20

31

0

3

Total Village
ownership (%)

45

35

31

22

24

32

43

11

14

Note: Hammerson also provided a €25million loan to Fidenza Village in July 2013

2013 Half-year results
2013 Full-year results
2013 Half-year results

48
Value Retail share of results

Year ended 31
December 2013
£m
101.5

Year ended 31
December 2012
£m
47.5

Less: EPRA adjustments

(88.1)

(43.2)

EPRA adjusted earnings of associate

13.4

4.3

-

4.9

5.6

3.4

19.0

12.6

31 Dec 2013

31 Dec 2012

Investment in associate

545.4

428.4

Add: EPRA adjustments

19.7

16.2

EPRA adjusted investment in associate

565.1

444.6

Loan to Value Retail

68.7

47.0

633.8

491.6

Income statement
Share of results of associate

Distributions received
Interest receivable
Total impact of Value Retail on income statement – EPRA basis

Balance sheet

Total impact of VR on balance sheet – ERPA basis

2013 Half-year results
2013 Full-year results
2013 Half-year results

49
Lease expiries and breaks as at 31 December 2013
Rents passing that
expire/break in

ERV of leases that
expire/break in

Weighted average
unexpired lease term

2014

2015

2016

2014

2015

2016

£m

£m

£m

£m

£m

£m

(1)

(1)

(1)

(2)

(2)

(2)

17.9

12.4

8.5

23.6

12.6

8.0

4.7

2.3

9.2

25.9

17.1

10.8

3.5

2.7

Total United Kingdom

29.4

France retail

Notes

to break
years

to expiry
years

8.2

6.6

8.2

4.4

2.2

8.9

9.8

32.8

17.0

10.4

7.6

8.9

0.7

3.7

3.3

0.6

7.2

8.9

19.8

11.5

36.5

20.3

11.0

7.5

8.9

16.4

3.6

3.9

17.4

3.8

4.0

1.3

5.0

42.3

20.7

14.7

50.2

20.8

14.4

6.0

7.9

3.5

2.7

0.7

3.7

3.3

0.6

7.2

8.9

45.8

23.4

15.4

53.9

24.1

15.0

6.1

8.0

United Kingdom
Retail

Shopping Centres
Retail Parks

Other UK

Group
Retail
Other UK
Total Group

(1) The amount by which rental income, based on rents passing at 31 December 2013, could fall in the event that occupational leases due to expire are not renewed or replaced
by new leases. For the UK, it includes tenants’ break options. For France, it is based on the date of lease expiry.
(2) The ERV at 31 December 2013 for leases that expire or break in each year and ignoring the impact of rental growth and any rent-free periods.

2013 Half-year results
2013 Half-year results

50
50
Rent reviews as at 31 December 2013
Projected rents at current ERV of leases
subject to review in

Rents passing subject to review in
Outstanding

2014

2015

2016

Outstanding

2014

2015

2016

£m

£m

£m

£m

£m

£m

£m

£m

1

1

1

1

2

2

2

2

Shopping
Centres

40.8

15.8

9.3

9.9

43.7

17.1

10.4

10.8

Retail Parks

19.5

9.4

24.5

15.9

20.2

9.8

25.1

16.2

60.3

25.2

33.8

25.8

63.9

26.9

35.5

27.0

4.1

1.9

3.3

0.9

4.2

2.1

3.7

0.9

64.4

27.1

37.1

26.7

68.1

29.0

39.2

27.9

Notes
United Kingdom
Retail

Other UK
Total United Kingdom

(1) Rents passing at 31 December 2013, after deducting head and equity rents, which are subject to review in each year.
(2) Projected rents for space that are subject to review in each year, based on the higher of the current rental income and the ERV as at 31 December 2013 and ignoring the impact of changes in rental values
before the review date.

2013 Half-year results
2013 Full-year results
2013 Half-year results

51
51
2013 components of valuation change

Yield

Income

Development and other

Total

£m

100

92.0

88.7

80
60

54.5

52.0

40

34.0

32.8
26.0
21.2

20

11.3

8.5

13.1

12.4

0
(2.7) (9.1)

(8.8)

(1.3)

(0.5)

-20
(23.9) (25.7)

(24.4)

-40
UK Shopping centres

2013 Half-year results
2013 Full-year results
2013 Half-year results

France retail

UK retail parks

UK other

Total continuing
portfolio

52
52
Valuation data

UK Shopping
centres

France retail

UK Retail parks

Other UK

Total continuing
portfolio

31 December 2013

5.8

5.5

6.1

7.4

5.9

31 December 2012

6.0

5.6

6.3

6.6

6.0

Change (bps)

-20

-10

-20

+80

-10

31 December 2013

152.9

75.1

89.5

15.8

333.3

31 December 2012

150.4

73.4

88.7

12.6

325.1

+1.7

+2.3

+0.9

+25.4

+2.5

True equivalent yield (%)

ERV (£m)(1)

Change (%)

(1) Total ERV for continuing portfolio on a non LfL basis

2013 Half-year results
2013 Full-year results
2013 Half-year results

53
2013 leasing activity

Area of new lettings (000m2)

New rent from units leased (£m)
25

2012

180

2013

2013

2012

23.9

20

153.9
18.7
120

123.3

15

10

10.1

60

8.2

8.1

8.3
52.0

5

42.8

43.3

4.9

30.5

48.7

36.2

2.1
0

0

UK shopping
centres

UK retail parks

2013 Half-year results
2013 Full-year results
2013 Half-year results

France retail

Group

UK shopping
centres

UK retail parks

France retail

Group

54
54
Tenants in administration as at 31 December 2013

31 December 2013
70 units in administration (1.2% passing rents)
22 units unoccupied (0.5% passing rents)

30 June 2013
63 units in administration (1.6% passing rents)
25 units unoccupied (0.6% passing rents)

31 Dec 2012
63 units in administration (1.2% passing rents)
25 units unoccupied (0.5% passing rents)

2013 Half-year results
2013 Full-year results
2013 Half-year results

55
55

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Hammerson Full Year Results 2013

  • 1. 2013 Full-year 2013 Full-year Results Results Monday 17 February 2014 Monday 17 February 2014 2013 Half-year results
  • 2. Today’s presentation Section 1 Introduction and market overview David Atkins, CEO Financial results Timon Drakesmith, CFO Performance drivers David Atkins, CEO Conclusion David Atkins, CEO Section 2 Section 3 Section 4 2013 half year results 2013 Full-year results 2
  • 3. Vision Our vision is to be the best owner-manager and developer of retail property within Europe By capitalising on our strengths we aim to provide industry-leading shareholder returns EPS +10.5% 2013 half year results 2013 Full-year results Dividend +7.9% LfL NRI +2.1% NAV/share +5.7% 3 3
  • 4. 2013 highlights Best in class retail portfolio Occupancy 97.7% Leasing +2% vs ERV 7% tenant rotation rate Active financial management WAIR reduced to 4.8% Reduction in cost ratio of 240bps Over £700m liquidity 2013 Half-year results 2013 half year results 2013 Full-year results Advancing developments Les Terrasses du Port 93% let Commenced on site at Leeds and Beauvais Planning consent at Croydon and Brent Cross Capital recycling to enhance growth Queensgate disposal Leisure extensions on site Acquisition of Value Retail stakes, Bullring and Nancy 44
  • 5. Securing retail demand in France despite cyclical weakness Market indicators Structural attractiveness of indexation Index 105 105 French business confidence (Source: INSEE, France) 100 100 95 95 Low personal debt levels 90 90 Business confidence steady throughout 2013 85 85 Household disposable income increased throughout 2013 Portfolio initiatives 80 80 Jul 12 €bn 34 Jan 13 Jul 13 Jan 14 Total disposable income (Source: INSEE, France) 340000 Leasing progress at Les Terrasses du Port, Marseille and Jeu de Paume, Beauvais 335000 Repositioning existing assets through extensions and refurbishments 325000 Selective acquisitions 315000 33 330000 32 320000 31 310000 Jan 08 2013 half year results 2013 Full-year results Jan 10 Jan 14 Jan 12 5
  • 6. Stronger Christmas trading in the UK Morrison Tesco Sainsbury M&S Food Waitrose Foodstores Dunelm Maplin Dixons Halfords Topps Tiles OOT retailers WH Smith Mothercare Superdrug Ryman Greggs Thorntons Argos Carphone Warehouse Robert Dyas Fragrance Shop The Works Lush Non fashion retailers New Look Blue Inc Bon Marche JD Sports White Stuff Ted Baker Next Karen Millen Jaeger Mountain Warehouse Moss Bross Moss Bros Boux Avenue Boux Avenue Fashion retailers Debenhams M&S Gen merch House of Fraser John Lewis Liberty Selfridges Department stores -10 Source: PMA (from company statements) 2013 half year results 2013 Full-year results -5 0 5 10 15 20 25 % p.a. like-for-like sales change, Christmas trading period 2013 vs 2012 6
  • 7. Positive outlook driven by improving fundamentals Falling UK unemployment (Source: ONS) UK GDP growth (Source: ONS) % % 1.0 8.5 0.8 8 0.6 7.5 7 0.4 6.5 0.2 2013 half year results 2013 Full-year results 7 Oct-13 Jul-13 Apr-13 Jan-13 Oct-12 Jul-12 Apr-12 2013 - Q4 2013 - Q3 2013 - Q2 2013 - Q1 2012 - Q4 2012 - Q3 2012 - Q2 -0.2 2012 - Q1 0.0 Jan-12 6
  • 8. Deep investor demand and firming yields Shopping centre investment in Europe (Source: DTZ research) €bn Volume LHS 20 Number of deals Number of deals RHS 300 250 Net initial yield (Source: PMA) % 6.5 Prime Shopping centres Prime shopping centres Retail warehousing Retail Warehousing 6.0 15 200 10 5.5 150 5.0 100 2013 half year results 2013 Full-year results 2014 2013 4.0 2012 2013 2011 2009 2007 2005 2003 2001 0 1999 0 4.5 2011 50 2010 5 8
  • 9. Combined with limited supply Retail completions expected to remain modest (Source: PMA) Mil ft2 p.a. net 25 Shopping centres ShoppingCentre / Unit Shop 20 Retail Warehouse Retail warehouses 15 10 5 2013 half year results 2013 Full-year results 9 2018 2016 2014 2012 2010 2008 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 0
  • 10. Increased space requirements in selected locations International Fashion retailers multiples Leisure and catering Aspirational brands Homeware and Discounters furnishings London Regional shopping centres Out of town retail parks Prime towns Secondary towns Tertiary 2013 half year results 2013 Full-year results 10
  • 11. Leading to market ERV growth Forecast UK retail ERV growth per annum (Source: PMA) % 3.0 Prime shopping centres Retail warehouses 2.9 2.5 2.5 2.0 2.0 1.9 1.5 1.8 1.6 1.3 1.0 1.1 0.8 0.5 0.0 -0.1 -0.2 -0.5 -0.2 -0.8 -0.9 -1.0 -0.1 -1.2 -1.5 2010 2013 half year results 2013 Full-year results 2011 2012 2013 2014 2015 2016 2017 11
  • 12. Hammerson positioned to support multichannel retail Reported sales do not capture the whole picture Hammerson 2013 tenants’ sales UK France -0.4% -2.7% Click and collect sales not recorded Adjusted sales capture underlying picture Adjusted sales Reported store sales Retailer 1 +1.7% -0.7% Retailer 2 +5.7% +4.7% Online purchases returned to store reduce recorded sales Overall estimated benefit to reported sales of 1-2% increase 2013 half year results 2013 Full-year results 12
  • 13. Leasing ahead of both ERV and previous rents 12 months to 31 December 2013 vs ERV vs previous rents UK retail +4% +1% France +0% +6% Group +2% +2% UK shopping centres Five Guys at The Oracle, Reading 2013 half year results 2013 Full-year results 2013 Half-year results UK retail parks Homebase at Battery Retail Park, Selly Oak French retail Eram at Place des Halles, Strasbourg 13
  • 14. Summary Improving economic fundamentals Growing consumer confidence Increasing tenant demand Limited supply pipeline Conditions for selected ERV growth Hammerson positioned to outperform 2013 half year results 2013 Full-year results 14
  • 16. Finance agenda and progress Focus area Drive top line growth Control operating costs Manage interest expense Optimise capital structure 2013 half year results 2013 Full-year results Half-year results Progress in 2013 Growth in NRI of 2.1% Marseille opening May 2014 On track to meet our £320m NRI forecast for 2015 Cost income ratio declined by 240 bps to 24.6% Operating costs reduced by 1.5% in 2013 Further actions announced today to reduce cost income ratio WAIR falls by 20bps to 4.8% Increased % of fixed debt for protection as rates rise Over £500m of new debt financing LTV below 40% target Well funded to support development schemes 16 16
  • 17. Headline results Income statement 2013 % change 2012 Net rental income(1) (£m) 290.2 282.9 +2.1%(2) Adjusted profit before tax(3) (£m) 168.9 152.5 +10.8% EPRA EPS (p) 23.1 20.9 +10.5% Final dividend (p) 10.8 10.0 +8.0% Balance sheet 31 Dec 2013 Portfolio value (£m) EPRA NAV (pence per share) LTV (%) (1) (2) (3) (4) (5) 5,931 % change 31 Dec 2012 5,653(4) 573 542 38 +2.0%(5) +5.7% 36 - Continuing and discontinued operations On a like-for-like basis for continuing operations Continuing and discontinued operations Includes £195m for discontinued operations Underlying capital growth for total portfolio excluding Value Retail 2013 Full-year results 2013 half year results 2013 Half-year results 17 17
  • 18. YoY change (LfL) Solid uplifts in like-for-like NRI Key drivers 2013 total(2) 3.2% 2.6% 2.1%(1) 0.2% UK retail parks France retail £82.1m £62.7m Union Square Cleveland Cergy Brent Cross Thanet O’Parinor Silverburn 2012 administrations Indexation UK shopping centres £124.7m GRI up 2.2% LfL Total £282.8m(3) In line with previous guidance (1) Includes other interests LfL of £7.2m which declined YoY by 4.0% (2) Total NRI for continuing portfolio (not LfL) (3) Continuing operations, including other interests total of £13.3m 2013 Half-year results 2013 Full-year results 2013 Half-year results 18 18
  • 19. EPRA EPS vs 2012 +10.5% Net investment LfL NRI Value Retail Administration Net financing costs Exchange and other 24.0 0.2 0.6 22.5 (0.5) 0.2 23.1 0.7 1.0 21.0 20.9 2013 2012 19.5 18.0 EPRA EPS (pence) Earnings +20% since 2011 2013 half year results 2013 Full-year results 2013 Half-year results 19
  • 20. Cost management delivering results EPRA Cost/income ratio(1)(2) % Operating costs(1) £m 88 29 28.3% 28 86 86.1 27.0% 27 84 26 82 80 24.6% 25 EPRA cost/income target for 2016 21-22% 24 79.8 79.8 78 23 78.6 76 22 21 74 20 2011 2012 Year 2013 2013 (1) Continuing operations (2) Cost ratio is defined as: (net service charge expense + property outgoings + administration expenses – management fees receivable)/Gross rental income 2013 half year results 2013 Full-year results 20
  • 21. New resource management measures Additional investments to grow business Efficiency improvements Expected incremental costs - £5m p.a. from 2015 Target savings - £6m p.a. from 2016 Expanded development programme Senior management reorganisation - Headcount increases London office relocation in 2015 - Mobilisation of project teams Share incentive plans and pension benefits Digital marketing and multichannel London/Paris integration Implementation costs of £5m in 2014 Resources redeployed to growth areas Expense reductions push cost income ratio down to 21-22% 2013 half year results 2013 Full-year results 21
  • 22. Portfolio valuation change FY 2013 % H2 2013 % H1 2013 % Value at 31 Dec 2013 (£m) UK shopping centres +2.4 +1.7 +0.7 2,524 UK retail parks +1.7 +3.2 -1.5 1,471 France retail -0.3 +0.8 -1.1 1,240 +10.4 +6.8 +3.4 497 Other UK interests(1) -6.5 -1.6 -5.0 199 Discontinued operations +3.7 -1.2 +5.0 - Total +2.0 +2.2 -0.2 5,931 Value Retail(2) +12.6 +6.8 +5.4 788(3) Current developments (1) Principally assets held for redevelopment (2) Underlying overall portfolio valuation change for Hammerson interests (3) Hammerson’s share of portfolio valuation at 31 Dec 2013 Full-year results 2013 half year results 2013 Full-year results 2013 Half-year results 22
  • 23. EPRA NAV per share vs 2012 +5.7% Investment portfolio revaluation 590 Profit on disposals Value Retail revaluation Adjusted profit Dividends 23 Developments revaluation (18) 580 570 573 573 2 11 560 4 550 2013 530 542 2012 540 9 520 EPRA NAV per share (pence) 2013 Half-year results 2013 half year results 2013 Full-year results 23
  • 24. Healthy financing ratios Financing policies 31 Dec 2013 31 Dec 2012 - £2,252m £2,036m Gearing <85% 56% 53% Loan to value <40% 38% 36% Cash/undrawn facilities - £716m £696m Weighted average cost of finance - 4.8% 5.0% >2.0x 2.8x 2.8x Net debt/EBITDA <10x 8.2x 7.9x Fixed rate debt >50% 82%(1) 80% Net debt Interest cover (1) Fixed rate debt percentage at 31 December 2013 was 70% but is shown on a pro forma basis for £275m US private placement issue arranged in November 2013 2013 half year results 2013 Full-year results 2013 Half-year results 24 24
  • 25. Maturity profile of debt Bank drawn debt £m Secured debt Euro bonds 500 Sterling bonds USPP(1) Credit markets attractive 450 Weighted average coupon of 2015/2016 bonds 5.0% 400 USPP will refinance 2014 bank debt 350 300 250 200 150 100 50 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 (1) Undrawn committed US private placement due to fund February and June 14 2013 half year results 2013 Full-year results 2013 Half-year results 25 25 2028
  • 26. Forecast development expenditure £m On site developments 300 Les Terrasses du Port, Marseille 250 Victoria Gate, Leeds Jeu de Paume, Beauvais 200 Other on site developments 150 Future developments New extensions/redevelopments 100 Whitgift, Croydon Brent Cross extension 50 0 2013 2014 2015 2016 2017 2018 Note: Croydon expenditure in 2013 and 2014 reflects property acquisitions Other on site developments: Abbotsinch Retail Park, Paisley; Cyfarthfa Retail Park, Merthyr Tydfil; Silverburn, Glasgow; O’Parinor, Paris New extensions/redevelopments: Elliott’s Field Retail Park, Rugby; Watermark WestQuay, Southampton; Brent Cross leisure extension 2013 half year results 2013 Full-year results 26
  • 27. Focus on Value Retail Value Retail Villages Future growth drivers 2013 YoY change Brand sales €1.9bn +13% Forecast 72% growth in Chinese visits to Europe by 2018(2) EBITDA €111m +12% Village remerchandising with more premium brand stores Total portfolio value €3.1bn +12% More flagship stores Extensions at Barcelona and Dublin Hammerson share of(1) EPRA net income £19m +51% EPRA net assets £634m Hammerson investment plans +29% (1) Including benefit of new investments, interest receivable and loans (2) Source: European Travel Commission 2013 half year results 2013 Full-year results 27
  • 29. Performance drivers Value Retail Growth from existing portfolio Major developments Contribution from extensions and refurbishments Selected examples 2013 half year results 2013 Full-year results 2013 Half-year results 29
  • 30. Capital deployment Prime Shopping Centres Extension and refurbishment Premium Designer Outlets Convenient Retail Parks Silverburn Silverburn Abbotsinch Retail Park La Roca Village Kildare Village Development Les Terrasses du Port Cyfarthfa Retail Park Kildare Village Bullring Junction Fund La Vallée Village Acquisition 2013 Half-year results 2013 Full-year results 30
  • 31. Acquisition of a further stake in Bullring Acquired additional 33% stake in 2013 in 50/50 JV with CPPIB, taking ownership to 50% 9% total property return Recent lease renewals +10% above previous rent Continues to attract new brands 2003 2011 2013 2014 2015 Bullring opens, with 1.5 million visitors in first week Spiceal Street opens, a 1,900m2 leisure and catering development Bullring celebrates 10 years of trading Explore opportunity to increase leisure offering and add a cinema New £100 million John Lewis store opens for trade in city 2013 Half-year results 2013 Full-year results 31
  • 32. Saint Sébastien, Nancy % 105 £7m 99% 24,000m2 6% shops and restaurants annual rents let centre initial yield 2013 Half-year results 2013 Full-year results Development potential 32
  • 33. Nearing completion at Les Terrasses du Port Countdown to launch Opening 3 May 2014 93% pre-let and 95% construction complete £28 million annual rents £460 million total development cost 7.3% yield on cost Anchor store Printemps and MSUs have commenced fitting out of units 2013 Half-year results 2013 Full-year results 33
  • 34. Transforming Marseille’s retail offer 190 units 1 81 22 53 43 22 30 brands new to the portfolio catering units fashion brands international brands brands taking 1st store in a French shopping centre brands new to Marseille Brands recently signed include 2013 Half-year results 2013 Full-year results 34
  • 35. Construction commenced at Leeds and Beauvais Victoria Gate, Leeds 34,300m2 luxury retail venue John Lewis anchor store 23,800m2 retail and leisure venue Out-turn financials Total development cost Annual income 28% pre-let Jeu de Paume, Beauvais Yield on cost £150m £10m 6.7% 80km north west of Paris Large catchment and poor retail provision Out-turn financials Total development cost Annual income £5m Yield on cost 7.1% Completion Q3 2016 42% pre-let Completion Q3 2015 2013 Half-year results 2013 Full-year results £70m 35
  • 36. Advancing the development pipeline Silverburn, Glasgow O’Parinor, Paris Cyfarthfa Retail Park, Merthyr Tydfil Abbotsinch Retail Park, Paisley 10,900m2 extension 7,200m2 extension 14,500m2 extension 5,000m2 extension 14 screen cinema 14 screen cinema 4,300m2 Marks and Spencer anchor store 5 retail units in adjacent existing retail park 84% pre-let 100% pre-let 46% pre-let 87% pre-let Total development cost £13m Total development cost £4m Total development cost £23m Total development cost £9m Completion Q1 2015 Completion Q2 2014 Yield on cost 10% Yield on cost 13% Completion Q1 2015 Completion Q4 2014 Yield on cost 7% Yield on cost 5% 2013 Half-year results 2013 Full-year results 36
  • 37. Key milestones at Brent Cross and Croydon Brent Cross Whitgift, Croydon 2013 Agree masterplan 2013 Brent Cross/Cricklewood phasing Submit planning 2014 S73 approval Establish JV Acquire RLAM stake Secure planning resolution 2014 Complete S106 2013 Half-year results 2013 Full-year results 2013 Half-year results Submit leisure planning application Secure CPO resolution Complete S106 Conclude land assembly Conclude anchor negotiations Complete design 37 37
  • 38. Attractive future pipeline: The Goodsyard Total development area 260,000m2 50/50 10 acre joint venture with site in heart of Shoreditch Ballymore Properties 2013 Half-year results 2013 Full-year results £6m per acre valuation Spring 2014 19,000m2 Planning submission Retail space (90 shops) 60,000m2 1,400 office space residential units 38
  • 39. Additional income from developments £56m £63m £m annual rents 120 90 £15m 60 £11m £30m 30 2014 2014 2015 2015 2016 2016 2017-2019 2017-2019 Notes: Annualised passing rents assuming 100% occupancy in year of project completion, post any rent free periods Assumes completion of all medium-term developments and extensions 2014 Les Terrasses du Port, O’Parinor, Abbotsinch Retail Park; 2015 Silverburn, Jeu de Paume Beauvais, Elliott’s Field Rugby, Cyfarthfa Retail Park Merthyr Tydfil 2016 Watermark WestQuay, Victoria Gate 2017-2019 Croydon, Brent Cross Leisure, Brent Cross extension 2013 Full-year results 2013 Half-year results 2013 half year results 39
  • 41. Key messages ERV growth returning to our markets 2013 half year results Major development activity amplifies returns On track with previous income growth guidance 41
  • 42. Conclusion ERV growth from existing portfolio Contribution from extensions and refurbishments Overhead cost control Strong returns Confident outlook Major developments Liability management Value Retail 2013 half year results 2013 Full-year results 2013 Half-year results 42 42
  • 44. 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 in or implied by these statements. Many of these risks and uncertainties relate to factors that are beyond Hammerson’s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors such as the Company’s ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Hammerson does not undertake any obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date of these materials. Information contained in this presentation relating to the company or its share price, or the yield on its shares, should not be relied upon as a guide to future performance. 2013 half year results 2013 Half-year results 44
  • 46. Our assets £5.9bn property portfolio Assets in UK and France 21 shopping centres 22 retail parks Investment in Value Retail 250m annual visitors 2013 half year results 2013 Full-year results 2013 Half-year results 46 46
  • 47. Developments and extensions Ownership % Lettable area m2 Earliest start Potential completion Value at 31/12/13 £m Estimated cost to complete (1) £m Estimated annual income (2) £m Let (3) % Les Terrasses du Port, Marseille 100% 61,000 Commenced Q2 2014 386 80 28 93 Abbotsinch, Paisley 100% 5,000 Commenced Q2 2014 n/a 7 1 87 O’Parinor, Aulnay-sous-bois 25% 7,200 Commenced Q4 2014 n/a 2 1 100 Cyfarthfa, Merthyr Tydfil 100% 14,500 Commenced Q1 2015 n/a 19 2 46 Silverburn extension, Glasgow 50% 10,900 Commenced Q1 2015 n/a 8 1 84 Jeu de Paume, Beauvais 100% 23,800 Commenced Q3 2015 9 60 5 42 Victoria Gate, Leeds (Phase 1) 100% 34,300 Commenced Q3 2016 10 135 10 28 311 48 Scheme ON SITE TOTAL 156,700 MAJOR DEVELOPMENTS (>30,000M2) Croydon Town Centre The Goodsyard, London E1 50% 2015 2018 500 35 260,000 2016 Phased 140 - 41% Brent Cross Extension, London 200,000 50% (4) 90,000 2016 2019 350 26 990 61 TOTAL 550,000 EXTENSIONS/REDEVELOPMENTS (<30,000M2) Elliott’s Field, Rugby 100% 16,000 2014 2015 36 3 13 Watermark WestQuay, Southampton 100% 18,000 2014 2016 70 5 29 Brent Cross Leisure 41% 9,000 2016 2018 20 2 126 10 TOTAL 43,000 PIPELINE SQY Ouest, Saint Quentin-en-Yvelines 50% 31,700 2014 2015 11 2 Halle en Ville, Mantes 100% 32,000 2015 2017 120 9 Italie Deux, Paris 100% 4,800 2015 2017 25 2 Victoria Gate, Leeds (Phase 2) 100% 73,000 2018 2021 480 40 141,500 636 53 891,200 2,063 172 TOTAL (1) (2) (3) (4) (5) Incremental capital cost including capitalised interest Incremental income net of head rents and after expiry rent-free periods Let or in solicitors’ hands by income at 31 January 2014 Area and cost reflects phase 1 of the scheme only. Income not applicable due to residential component of the scheme € converted at £1 = €1.202 2013 half year results 2013 Half-year results 47 47 30
  • 48. Hammerson’s investment in Value Retail Hammerson €58m shareholder loan Holding Companies 22% equity Bicester Village La Roca Village Las Rozas Village La Vallée Village Maasmechelen Village Fidenza Village Wertheim Village Ingolstadt Village Kildare Village Village Ownership via LP’s (%) 33 23 19 11 13 20 31 0 3 Total Village ownership (%) 45 35 31 22 24 32 43 11 14 Note: Hammerson also provided a €25million loan to Fidenza Village in July 2013 2013 Half-year results 2013 Full-year results 2013 Half-year results 48
  • 49. Value Retail share of results Year ended 31 December 2013 £m 101.5 Year ended 31 December 2012 £m 47.5 Less: EPRA adjustments (88.1) (43.2) EPRA adjusted earnings of associate 13.4 4.3 - 4.9 5.6 3.4 19.0 12.6 31 Dec 2013 31 Dec 2012 Investment in associate 545.4 428.4 Add: EPRA adjustments 19.7 16.2 EPRA adjusted investment in associate 565.1 444.6 Loan to Value Retail 68.7 47.0 633.8 491.6 Income statement Share of results of associate Distributions received Interest receivable Total impact of Value Retail on income statement – EPRA basis Balance sheet Total impact of VR on balance sheet – ERPA basis 2013 Half-year results 2013 Full-year results 2013 Half-year results 49
  • 50. Lease expiries and breaks as at 31 December 2013 Rents passing that expire/break in ERV of leases that expire/break in Weighted average unexpired lease term 2014 2015 2016 2014 2015 2016 £m £m £m £m £m £m (1) (1) (1) (2) (2) (2) 17.9 12.4 8.5 23.6 12.6 8.0 4.7 2.3 9.2 25.9 17.1 10.8 3.5 2.7 Total United Kingdom 29.4 France retail Notes to break years to expiry years 8.2 6.6 8.2 4.4 2.2 8.9 9.8 32.8 17.0 10.4 7.6 8.9 0.7 3.7 3.3 0.6 7.2 8.9 19.8 11.5 36.5 20.3 11.0 7.5 8.9 16.4 3.6 3.9 17.4 3.8 4.0 1.3 5.0 42.3 20.7 14.7 50.2 20.8 14.4 6.0 7.9 3.5 2.7 0.7 3.7 3.3 0.6 7.2 8.9 45.8 23.4 15.4 53.9 24.1 15.0 6.1 8.0 United Kingdom Retail Shopping Centres Retail Parks Other UK Group Retail Other UK Total Group (1) The amount by which rental income, based on rents passing at 31 December 2013, could fall in the event that occupational leases due to expire are not renewed or replaced by new leases. For the UK, it includes tenants’ break options. For France, it is based on the date of lease expiry. (2) The ERV at 31 December 2013 for leases that expire or break in each year and ignoring the impact of rental growth and any rent-free periods. 2013 Half-year results 2013 Half-year results 50 50
  • 51. Rent reviews as at 31 December 2013 Projected rents at current ERV of leases subject to review in Rents passing subject to review in Outstanding 2014 2015 2016 Outstanding 2014 2015 2016 £m £m £m £m £m £m £m £m 1 1 1 1 2 2 2 2 Shopping Centres 40.8 15.8 9.3 9.9 43.7 17.1 10.4 10.8 Retail Parks 19.5 9.4 24.5 15.9 20.2 9.8 25.1 16.2 60.3 25.2 33.8 25.8 63.9 26.9 35.5 27.0 4.1 1.9 3.3 0.9 4.2 2.1 3.7 0.9 64.4 27.1 37.1 26.7 68.1 29.0 39.2 27.9 Notes United Kingdom Retail Other UK Total United Kingdom (1) Rents passing at 31 December 2013, after deducting head and equity rents, which are subject to review in each year. (2) Projected rents for space that are subject to review in each year, based on the higher of the current rental income and the ERV as at 31 December 2013 and ignoring the impact of changes in rental values before the review date. 2013 Half-year results 2013 Full-year results 2013 Half-year results 51 51
  • 52. 2013 components of valuation change Yield Income Development and other Total £m 100 92.0 88.7 80 60 54.5 52.0 40 34.0 32.8 26.0 21.2 20 11.3 8.5 13.1 12.4 0 (2.7) (9.1) (8.8) (1.3) (0.5) -20 (23.9) (25.7) (24.4) -40 UK Shopping centres 2013 Half-year results 2013 Full-year results 2013 Half-year results France retail UK retail parks UK other Total continuing portfolio 52 52
  • 53. Valuation data UK Shopping centres France retail UK Retail parks Other UK Total continuing portfolio 31 December 2013 5.8 5.5 6.1 7.4 5.9 31 December 2012 6.0 5.6 6.3 6.6 6.0 Change (bps) -20 -10 -20 +80 -10 31 December 2013 152.9 75.1 89.5 15.8 333.3 31 December 2012 150.4 73.4 88.7 12.6 325.1 +1.7 +2.3 +0.9 +25.4 +2.5 True equivalent yield (%) ERV (£m)(1) Change (%) (1) Total ERV for continuing portfolio on a non LfL basis 2013 Half-year results 2013 Full-year results 2013 Half-year results 53
  • 54. 2013 leasing activity Area of new lettings (000m2) New rent from units leased (£m) 25 2012 180 2013 2013 2012 23.9 20 153.9 18.7 120 123.3 15 10 10.1 60 8.2 8.1 8.3 52.0 5 42.8 43.3 4.9 30.5 48.7 36.2 2.1 0 0 UK shopping centres UK retail parks 2013 Half-year results 2013 Full-year results 2013 Half-year results France retail Group UK shopping centres UK retail parks France retail Group 54 54
  • 55. Tenants in administration as at 31 December 2013 31 December 2013 70 units in administration (1.2% passing rents) 22 units unoccupied (0.5% passing rents) 30 June 2013 63 units in administration (1.6% passing rents) 25 units unoccupied (0.6% passing rents) 31 Dec 2012 63 units in administration (1.2% passing rents) 25 units unoccupied (0.5% passing rents) 2013 Half-year results 2013 Full-year results 2013 Half-year results 55 55