Hammerson Full-Year Results

Transcription

1 Hammerson Full-Year Results 1 March 2013 Hammerson Full-Year Results Creating winning retail locations 1 March

2 Today s presentation Overview and operations David Atkins CEO Financials Timon Drakesmith CFO Our business in France Jean-Philippe Mouton MD France Capital allocation Peter Cole CIO Conclusion David Atkins CEO 2

3 Headline results Operating results (continuing portfolio) 31 Dec Dec 2011 Occupancy 97.7% 97.9% Like-for-like income growth +2.1% +3.8% Leasing vs ERV +4% +1% Financial results YoY change EPS +8.3% 20.9p 19.3p Dividend per share +6.6% 17.7 p 16.6p NAV per share +2.3% 542p 530p 3

4 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 4

5 Our strategy in action... 1 Recycling capital 2 A pure retail player Completion of office disposal programme 541m re-invested into winning retail locations Year-End 2011 Year-End 2012 (1) 7% premium to book value Office 11% Retail 89% 100% Retail Strategic focus 5 4 Reducing costs 7% YoY savings in operating costs 6.8m reduction, well ahead of target Cost/income ratio improved by 130 bps Managing interest expense 5 Reducing Costs 2012 TSR +41% Creating winning retail venues 4 Managing interest expense 3 1 Recycling capital 2 Maximising income 3 Maximising income High Occupancy Positive NRI Growth 97.0% 97.7% Group 2.1% France 1.0% 11% reduction in finance costs 220m bond buy back Increasing use of floating rates 500m unsecured bond 20bps reduction average interest cost Min target Dec-12 UK 2.5% 5

6 ...And plenty more to come Investment & Development Commitment to start Le Jeu de Paume, Beauvais Deliver Les Terrasses du Port Spring 2014 Advance development pipeline of c.520,000 sq. m Further selective acquisitions Leasing & Asset Management Advance UK extension and refurbishment programme of c.200,000 sq. m Complete 100m French SC refurbishment Drive LfL NRI growth Supports future EPS and DPS growth Financing & Operations Aim to further reduce cost/income ratio Reduce average interest rate to below 5% Maintain LTV below 40% and high liquidity 6

7 Shopping centres: Experience and excitement Our market position 22 Shopping Centres 2,200 shops / 250m visitors pa 1.25msq. m Top three operator in both UK and France 2012 highlights Occupancy 97.8% 160 new leases / 12m rents pa at +4% ERV Limited impact of administrations Tenants sales: UK +0.4%/France -3.0% Footfall: UK -2.3%/France-3.4% 33new retail brands to the group secured in 2012 mobile website use +190% online dwell time +150% 7

8 Retail Parks: Bringing together clicks and bricks Our market position 260million acquisition of Junction Fund UK s largest direct owner / 400,000 sq. m 65%of open A1, 17 sq. ft. average rents 11% units let to catering operators 2012 highlights Occupancy 98.2% 13 leases / 1.6m annual rent at +8.4% ERV Pre-letting to M&S at Merthyr Tydfil Pre-letting to Debenhams at Rugby Planning applications submitted at Merthyr and Rugby Cinema redevelopment at Cramlington 8

9 Designer outlets; Luxury and tourism Our market position 9 villages in Europe s major cities, 165,000 sq. m floor space 22% stake in VR holding companies Total brand sales 1.3bn 30 million annual shoppers 2012 highlights Additional 100m invested Tenants sales +13% Extension completed at La Vallee / floor space +20% Burberry flagship opened at La Vallee Planning permission granted for additional 5,800 sq. m at La Roca 25% floor space re-let / remerchandised Village valuations +18%, driven by income growth 9

10 Financial Results Timon Drakesmith 10

11 Financial highlights Income statement 31 Dec 2012 Change vs 31 Dec 2011 Net RentalIncome ( m) (1) % (2) Adjusted Profit Before Tax ( m) % Adjusted EPS (pence) % Final Dividend (pence per share) % Balance sheet 31 Dec 2012 Change vs 31 Dec 2011 Portfolio Value ( m) (1) 5, % NAV (pence per share) % LTV (%) 36 n/a Notes: (1) For continuing portfolio (2) For continuing portfolio on a like for like basis 11

12 Growth in like-for-like net rental income (1) NRI to Dec ( m) % UK Shopping Centres UK Retail Parks France Retail Other Interests Group For continuing operations 12

13 Adjusted EPS vs 2011 Admin cost reduction Value Retail 0.6 Exchange and other (0.7) Interest initiatives Net disposals L for L NRI % 19.3 (0.9) 0.8 Dec 2011 Dec 2012 Adjusted EPS (pence) 1 Interest saving initiatives: Buy back 220million 4.875% bonds saving 3.6million Cancelled interest rate swap on 100million floating rate reset bond saving 3.4million Contracted new interest rate swap on 250 million 6.875% bond saving 2.0 million 13

14 Cost management Operating Costs (1) ( m) (LHS) Cost/income (1)(2) ratio (%) (RHS) Net interest expense ( m) (LHS) WAIR (3) (%) (RHS) Operating cost control - 6.3m saving Interest expense management m saving (1) Continuing operations (2) Cost ratio is defined as: net service charge expense + property outgoings + administration expenses management fees receivable / Gross rental income (3) WAIR: Weighted average interest rate 14

15 Portfolio value capital movement Value at 31 Dec 2012 m % Change From Dec 2011 UK Shopping Centres 2, UK Retail Parks 1, France Retail 1, Current Developments Other UK interests (1) Discontinued Operations (2) Total (3)(4) 5, IPD UK Index % Notes: (1) Principally assets held for redevelopment (2) The remaining London office portfolio has been contracted for sale. Excludes 10 Grosvenor Street and The Goodsyard that have been retained (3) Excludes Value Retail (4) Continuing portfolio had capital movement of -0.5% 15

16 NAV per share movement NAV Dec 2011 Continuing inv. portfolio revaluation (10) Cost of bond buybacks (8) Dividends (17) Dev portfolio revaluation 3 Profit on disposals 6 Value Retail revaluation 1 16 Adjusted profit 21 Exchange and other NAV Dec % 490 Adjusted NAV per share (pence) 1 Value Retail revaluation comprises 74.4 million prior to equity accounting and 38.1 million thereafter. Reflects an underlying valuation increase for the portfolio of 18.5% during the year. Further detail on VR provided in appendices 16

17 Positive impact of Value Retail investment Hammerson s summer 2012 transactions provide economic interest in VR s operating profit of 29% 1 Value Retail s business had a stellar 2012 Retail sales up 13% EBITDA increase of 20% Village valuations up by 18.3% m EPRA Net Income 8.2 Hammerson s share of key VR figures 12.6 m EPRA Net assets For period from 21/8/12 to 31/12/12, based on operating profit before other net gains 2 Includes 80m of new investment in summer

18 Healthy financing ratios Financing policies 31 Dec Dec 2011 Net debt 2,036m 1,964m Gearing <85% 53% 52% Loan to value <40% 36% 34% Cash/undrawn facilities 696m 696m (1) Weighted average (cost of finance) 5.0% 5.2% Interest cover >2.0x 2.8x 2.6x Net debt/ebitda <10x 7.9x 7.7x Debt fixed/hedged 80% 88% Note: (1) Restated to exclude FX swaps. Previously reported at 711million 18

19 Growing net rental income (1) m (4) % (3) (2) NRI 2012 Full year effect of Acquisitions and disposals Like for like NRI Developments & extensions NRI Forecast 2015 Notes: (1) Excludes Value Retail (2) Full year impact of acquisitions: Victoria Quarter, The Junction Fund and stake in Whitgift, net of disposals, Faubourg St Honore and 50% interest in Croydon (3) 2012 NRI income from continuing operations (4) Committed developments: Terrasses du Port, Monument Mall, Manor Walks, Beauvais and extensions due to complete by end

20 Converting revenue growth to EPS uplifts Full year impact of 2012 acquisitions Like for like growth in NRI Developments and extensions Share of Value Retail Profits Brand sales growth of over 10% pa anticipated Village extensions at Paris and Barcelona Rise in tourism drives spend per visit Growth in anticipated EPRA net income of 20% pa Management of cost base Further specific actions to reduce cost/income ratio Net debt to rise slightly but limited to 40% LTV Expected fall in WAIR below 5% Further strong growth in EPS and DPS 20

21 Our Business in France Jean-Philippe Mouton 21

22 Our business in France Nine retail assets, concentrated in the greater Paris region 400,000 sq. m and 928 retail tenants Halles en Ville, Mantes Le Jeu de Paume, Beauvais Paris region O Parinor Bercy 2 Italie 2 Espace Saint Quentin Les 3 Fontaines SQY Ouest Gross rents of 69m per annum (Hammerson share) Gross asset value of 1.2 billion (Hammerson share) Joint #2 best shopping centre owner by Sites Commerciaux Place des Halles, Strasbourg Annual indexation +2.9% in 2012 Grand Maine, Angers Major tenants include; Groupe Mulliez, H&M, Printemps and Groupe Etam Developments at Marseille, Beauvais and Mantes Les Terrasses du Port, Marseille 22

23 Investing in our assets Italie 2 O Parinor Refurbishment Extension & redevelopment Only Parisian shopping centre with a department store Adjacent one of Paris busiest metro stations Renovation to be complete by Q million 1 project Leases agreed with Adidas and Armand Thierry 7 further leases agreed +14% previous rents New 7,200 sq. m, 14 screen cinema and food court extension Anchor letting exchanged with UGC Predicted to attract over 1 million visitors per annum 20million 1 extension project 58% food court rent already secured Retail and building permits received Note: (1) Before recharged to tenant and JV partners 23

24 Le Jeu de Paume, Beauvais Catchment population of 250,000 people with limited competition Located 60km north west of Paris 23,700 sq. m, 76 shops and 5 restaurants. Anchored by Carrefour, H&M and Le Furet du Nord Land acquired January 2013 Good progress on lettings; 34% pre-let. Start on site Q Completion Q Key financials Total development cost: 79m Gross rents: 6m 24

25 Les Terrasses du Port, Marseille 83% pre-let including all MSU s Construction 75% completed Agreement for lease exchanged with Printemps 1,200 sq. m letting to Deltaccord completes letting of lower level Lettings agreed with high quality fashion retailers; Sandro, Maje, Michael Kors, G-Star Key financials; Total development cost: 450m Gross rents: 33.6m Focus on optimising tenant mix and driving rents 25

26 Multi-channel retail Jean-Philippe Mouton 26

27 A busy year for digital engagement Venteprivee.com Drive to store operation Average basket : +34% Foursquare Aps for each shopping center Venteprivee.com Drive to store operation Average basket : +30% Trial web/mobile platform live at Oracle Full portfolio websites launched/mobile enabled Google indoor mapping BX/WQ Google product search rolled out to all UK centres March 2013 Jan July October Nov January 2013 April Amazon lockers introduced Fidall Aps partnership : digital loyalty card acquisition (40% of new members / 100% opt in) Ocado shopping August Dance Flashmob in O Parinor displayed on Facebook (23% footfall increase) Sept Portfolio student Highcross, 11k students attended Google product search live at The Oracle Free public wifi across UK shopping centres 27

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29 Capital Allocation Peter Cole 29

30 Our investment criteria and recent acquisitions Our investment criteria Experience Principle cities and dominant market positions Well anchored and strong tenant mix Sustainable rent:sales ratio Developments and acquisitions Luxury Value Retail investments City centres and tourist destinations Selective developments and acquisitions Convenience Well located and good transport links Open A1 planning consents Low rents Development and asset management situations Whitgift, Croydon Victoria Quarter, Leeds The Junction Fund 30

31 Whitgift, Croydon: The south London retail opportunity Joint venture announced January % stake in Centrale sold to Westfield Outline planning anticipated Q ,000 sq. m project 1 billion total forecast investment Whitgift Centrale Accelerated programme targets 2015 start on site World class retail venue to open in

32 Commitment to Eastgate Quarters, Leeds Agreement for lease exchanged with John Lewis Outline planning consent already achieved Detailed planning application in Q Start on site Spring 2014 Completion Autumn ,000 sq. m scheme initial phase 130m total development cost Gross rents 10m Linking Victoria and Eastgate Quarters 32

33 Excellent progress on Junction Fund 100,000 sq. m 70% floor space openly consented Low average rents of 19 psf 7% yield rising to 8% with fixed uplifts Thurrock Development of former UCI Cinema completed UK s first Nike retail park store 6 hectare conditional land sale agreed for 18.5m Paisley Former Comet re-let to CSL Planning permission secured for 5,000 sq. m. redevelopment Solicitors instructed with Wren Kitchens, Maplin and Dunelm Extension now >60% under offer Performance 25m (10%) valuation uplift since acquisition 33

34 Conclusion David Atkins 34

35 Delivering against our vision Delivering on our strategy Reorientation to a specialist retail REIT complete Operating expenses lower by 7% Les Terrasses du Port 83% let JV agreed for Whitgift, Croydon Focused on winning retail venues NRI +2.1% Leases agreed 4% above ERV Digital engagement with consumers Excellent contribution from Value Retail Industry leading shareholder returns 8.3% EPS growth and 7.5% growth in final dividend 2012 total shareholder return of 41% Strong growth in EPS and dividends Acquisitions to further boost returns 35

36 Questions 36

37 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 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 revisions 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. 37

38 Appendices 38

39 Our assets 5.5 billion property portfolio Assets in UK and France 20 shopping centres 22 retail parks Investment in Value Retail 2,800 shop units 250 million annual visitors

40 Developments and extensions Scheme Lettable area Earliest start Potential completion Value at 31/12/12 Estimated costs to complete Estimated annual income m 2 m m m % ON SITE Les Terrasses du Port, Marseille 61,000 Commenced Q Manor Walks, Cramlington 5,900 Commenced Q n/a Monument Mall, Newcastle 11,400 Commenced Q , NEAR TERM Abbotsinch, Paisley 4, Cyfarthfa, Methyr Tydfil 14, Elliott's Field, Rugby 16, Le Jeu de Paume, Beauvais 23, Brent Cross Cinema, London NW43 9, Eastgate Quarters (phase 1), Leeds 37, Halle en Ville, Mantes 32, Silverburn extension 10, SQY Ouest 30, Watermark, Southampton 19, , MEDIUM TERM Croydon town centre1 200, Italie 2, Paris 13eme 6, Orchard Centre, Didcot 21, Sevenstone, Sheffield 60, The Goodsyard, London# 1,2 5, phased Brent Cross extension, London NW43 87, Eastgate Quarters (phase 2), Leeds 73, ,250 1, , Let Notes: all costs and income are incremental, income is stated net of head rents and rent-free periods ( converted at 1= 1.233) % let comprises let or in solicitors hands by income at 25 February 2013 # Phase 1 only, area reflects retail space component 150% ownership interest 2 retail space only % interest

41 Value Retail performance drivers (1) Value Retail Year ended 31 December 2012 Year ended 31 December 2011 m m Income statement Distributions received Share of results of associate Interest receivable Less: EPRA adjustments (43.2) - Total impact of VR on income statement EPRA basis Balance sheet Other investments Investment in associate Add: EPRA adjustments EPRA adjusted investment in associate Loan to VR Total impact of VR on balance sheet EPRA basis Share of result of associate, less EPRA adjustments, equals 4.3m, the net income from VR recognised from 21 August to 31 December

42 Hammerson s Investments in Value Retail Hammerson 47 m 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 (%) Total Village ownership (%) Hammerson invests directly in Asset Companies at Investor level. 42

43 Value Retail investment to associate m Revaluation Share of Distribution Income (1) (2) 48 EPRA adjustments Additions Jan 2012 Investment 31 Aug 2012 Associate 31 Dec 2012 Associate 1. Includes 38 million portfolio revaluation uplift 43

44 Debt maturity (1) m Bank debt drawn Secured debt Euro bonds Sterling bonds Undrawn facilities 1 Does not include new 175m credit facility with April 2018 maturity 44

45 2012 components of valuation change m Yield Income Development and other Total (7.1) (9.2) (4.9) (21.2) (25.9) (30.4) (15.6) (30.7) (6.6) (4.0) (6.7) (17.3) -60 (48.6) -80 UK shopping centres France retail UK retail parks UK other Total continuing portfolio (70.0) 45

46 Rental uplifts from reversions Expiries and breaks (UK and France) Outstanding rent reviews Total m m m m m ERV Passing rents Uplift Rent reviews (UK only) ERV Passing rents Uplift Total uplift

47 Trading environment Sales & Footfall UK Shopping Centres Sales +0.4% Footfall -2.3% Rent:Sales 12.3% (Dec 2011: 13.2%) France Shopping Centres Sales -3.3% Footfall -3.4% Rent:Sales 10.3% (Dec 2011: 9.7%) Group administrations 2800 units in portfolio 31 Dec units in administration (1.19% passing rent) 25 units unoccupied (0.5% passing rent) 27 Feb in administration (2.3% passing rent) 28 units unoccupied (0.7% passing rent) 47