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Investor briefing 2018 full-year results
roadshow
March 2019
Victoria, Leeds
Agenda
01 2018 overview and 2019 priorities
02 2018 financial results
03 Actively managing the changing shape of retail
04 Conclusion and Q+A
2
2018 overview
Structural shift in retail
UK online penetration 18% (1)
Significant increase in tenant failures
Winning and losing brands
3
Progress in a challenging market
1 Global Data 2019 online penetration 2 See slide 4 3 Dividends and share buyback
Challenges 2018 performance
Continued demand for our space
Total leasing £27.7m rent
6% above ERV, 5% above previous passing rent
Occupancy 97.2%
Tough UK market
Prevailing economic uncertainty impacting consumer confidence
Declining sales and footfall
Diversified portfolio supports performance
48% portfolio non-UK
LfL NRI: Ireland +1.6%; premium outlets +5.2%
Weak investment markets resulting in
valuation decline
Transaction volumes down 41% in 2018 (2)
£570m disposals achieved
Disposals include 50% Highcross and four retail parks
Net debt reduced by £95m, LTV 38%
£331m returned to shareholders (3)
2018 overview
4 1 Source: UK volumes: PropertyData; Other sectors: Cushman & Wakefield 2 Valuation change reflects capital return. UK Other and Development portfolios not shown
0
2
4
6
8
10
12
2016 2017 2018
UK shopping centres UK retail parks
France shopping centres Ireland shopping centres
Outlets
Market investment volumes (£bn) (1) 2018 valuation change (%) (2)
-12
-10
-8
-6
-4
-2
0
2
UKflagships
UK retailparks
Franceflagships
Irelandflagships
Premiumoutlets
Group
H1 H2
£9.7bn
£6.7bn
£4.0bn
Weakening investment market impacting our valuations
2019 priorities
5
Structural retail shift and increasingly challenging markets driving our priorities
Capital efficiency Optimised portfolio Operational excellence
Reducing debt Exiting retail parks
Pursuing portfolio-wide disposals
Managing structural shift in retail
2019 priorities
0
100
200
300
400
500
600
6
Number one priority for 2019 is reducing debt
1 Shown gross of selling costs. Net proceeds £553 million 2 See slide 14 for capex details. Premium outlets acquisitions of £109m relate to additional Value Retail investor stakes acquired during 2018 3 Reflects cash flow in year, additional £2 million settled in 2019 4 See slide 13 for details
Cash proceeds/uses (£m)
£570m disposals
completed (1) >£500m target
disposals
£127m share
buyback (3)
2018 2019 forecast
£339m capex and premium
outlet acquisitions
£140m forecast capex
Future share buybacks on hold until we achieve our enhanced portfolio disposal goal and see greater market certainty
£179m debt reduction in H2 18
Target net debt c.£3.0bn by December 2019
£95m reduction in debt
Reducing debt
Other (4)
(2)
0
100
200
300
400
500
600
700
2014 2015 2016 2017 2018 2019 target
UK flagships UK retail parks UK other UK office France Ireland
2019 priorities
7
Hammerson annual disposal proceeds (£m)
Absolute commitment to disposals
2018 disposals
£570m achieved
50% Highcross and four retail parks
7% below Dec 2017 book value
2019+ disposals
>£500m target
Exit retail parks
Pursuing disposals from across the portfolio; discussions under way for over £900m
2014 – 2018 average £395m p.a.
2018 financial results
8
image
Headline financial results
9 1 Capital return 2 Proportionally consolidated LTV 43% (2017: 40%)
Income statement 31 Dec 2018 31 Dec 2017 Change
Net rental income (£m) 347.5 370.4 (6.2%)
Adjusted profit (£m) 240.3 246.3 (2.4%)
Adjusted EPS (p) 30.6 31.1 (1.6%)
Final dividend (p) 14.8 14.8 −
Total dividend (p) 25.9 25.5 1.6%
Balance sheet Change
Portfolio value (£m) 9,938 10,560 (4.3%)(1)
EPRA NAVPS (p) 738 776 (4.9%)
Net debt 3,406 3,501 (2.1%)
LTV – headline (%) (2) 38% 36% +2pp
10 1 At constant exchange rates 2 Figures on a proportionally consolidated basis
Sector FY 2018 capital return (1)
H2 2018 capital return (1)
Value at 31 Dec 18 (2)
Portfolio weighting (2)
% % £m %
Flagship destinations
UK (10.6) (9.3) 2,921 29
France (1.7) (0.7) 1,885 19
Ireland 0.9 (1.0) 979 10
Premium outlets 2.4 1.2 2,459 25
Developments 4.1 1.2 648 6
UK other 4.5 (5.5) 173 2
UK retail parks (13.2) (9.9) 873 9
Total (4.3) (4.0) 9,938 100
Portfolio valuation summary
11 1 Figures on a proportionally consolidated basis and exclude UK Other and Developments 2 Premium outlets NEY is based on Cushman & Wakefield exit yields
Sector (1) NEY 31 Dec 2018
NEY increase/
(decrease) in 2018
ERV increase/
(decrease) in 2018
Commentary
% bps %
Flagship destinations
UK 5.3 +37 −2.0 Yields underpinned by transactions (Highcross, Clapham) and Dec 18 RICS guidance
France 4.2 −6 +0.5 ERVs driven by leasing at Les Terrasses du Port
Ireland 4.4 +4 +2.8 ERV progression at Dundrum and Pavilions
Premium outlets (2) 5.7 −9 +1.7 Driven by sales growth and remerchandising
UK retail parks 6.5 +53 −2.7 Weakening transactional evidence and CVA impact
Valuation drivers: yield and ERV movements
12
Internal guidelines 31 Dec 2018 31 Dec 2017
Net debt - £3,406m £3,501m
Gearing <85% 63% 58%
LTV – headline (1) <40% 38% 36%
LTV – fully proportionally consolidated (2) <45% 43% 40%
Cash and undrawn facilities - £729m £958m
Debt maturing in <2 years - nil £491m
Weighted average cost of debt - 2.7% 2.9%
Interest cover >2.0x 3.4x 3.4x
Net debt/EBITDA <10x 9.5x 9.3x
Fixed rate debt >50% 74% 78%
GBP/EUR FX balance sheet hedging 70% - 90% 79% 78%
Credit ratios
1 Net debt excludes premium outlets and value includes premium outlet net assets 2 Includes VIA Outlets and Value Retail net debt and property values
Net debt analysis
3,501
3,406
3,406
c.3,000
570
203 204
127
230
117
2600
2700
2800
2900
3000
3100
3200
3300
3400
3500
3600
Dec 2017 Disposalproceeds
Net operatingcashflow
Dividend Share buyback Capex Outletacquisitions and
other
Dec 2018 2019 target
13 1 On a proportionally consolidated basis, excluding premium outlets 2 Excludes selling costs of £17 million which are included in ‘outlets acquisitions and other’ 3 Includes £31 million held in escrow for future Croydon land acquisitions and a £16 million movement in capex receivables and payables 4 Includes outlet acquisitions of £109 million, selling costs, foreign exchange, outlet distributions, debt and loan cancellation costs, acquisition-related costs and dividends paid to
non-controlling interests
Net debt analysis (£000m) (1)
(4)
Reduce debt
(3)
(2)
Committed 2018
Actual
£m
2019
Forecast
£m
2020
Forecast
£m
On-site developments 95 70 80
Other committed capex (1) 74 25 -
169 95 80
Discretionary
Flagship destination investment 43 38 40
City Quarters 2 7 20
45 45 60
Total 214 140 140
14
Flexibility over future capital expenditure
1 2018 includes £31 million held in escrow for future Croydon land acquisitions
Defer start of Brent Cross development
Capex 2018-2020
LfL NRI movements
15
0.3
10.4
4.1
1.6
(0.9)
(1.3)
(4.3)
-6 -4 -2 0 2 4 6 8 10 12
Group
VIA Outlets
Value Retail
Ireland Flagships
France Flagships
UK Flagships
UK Retail Parks
LfL NRI movements across the portfolio (%)
CVAs (-2.1%), Westquay and Grand Central
Lower occupancy and backdated turnover rent in 2017
Rent reviews and leasing Growth at all centres
CVAs (-4.7%)
Landquart, Lisbon, Mallorca
Fidenza, Kildare, La Vallée
Key drivers
Stand out growth rates from premium outlets
16 1 All figures at Hammerson share. Source: 2014-2018 Company Annual Reports and Accounts. 2 4 year CAGR 2014-2018 3 Marketing expenditure derived from Value Retail and VIA Outlets annual reporting packs
Premium outlets financial summary 2014-2018 (1)
2014 2015 2016 2017 2018 CAGR (2)
£m £m £m £m £m
GRI 72 87 101 139 160 22.4%
NRI 52 66 68 98 113 21.3%
Marketing expenditure (3) 13 14 23 27 34 26.5%
Marketing:GRI ratio 18% 16% 23% 19% 21%
EBIT 32 37 43 59 68 21.1%
EBIT margin 44% 43% 43% 42% 43%
EPRA earnings 17 23 30 38 41 24.8%
Property valuations 1,028 1,244 1,689 2,234 2,459 24.4%
EPRA net assets 769 921 1,288 1,575 1,754 22.9%
2% 3% 4% 5% 6% 7% 8%
€3,000-5,000/m
€5,000-8,000/m
€8,000-39,000/m
Yields on premium outlets
Premium outlet valuations are driven by sales density levels
17 1 ‘Very high’ includes Bicester Village, Fidenza Village, Ingolstadt Village, Kildare Village, La Roca Village, Las Rozas Village, La Vallée Village and Wertheim Village 2 ‘High’ includes Batavia Stad Fashion Outlet, Maasmechelen Village, Mallorca Fashion Outlet, Vila do Conde Porto Fashion Outlet and Zweibrücken Fashion Outlet 3 ‘Medium’ includes Fashion Arena Prague Outlet, Freeport Lisboa Fashion Outlet, Hede Fashion Outlet, Landquart Fashion Outlet, Oslo Fashion Outlet, Sevilla Fashion
Outlet and Wroclaw Fashion Outlet
(1)
2
(3)
Very high (1)
High
Medium
Sales densities illustrate appeal to consumers, brands and investors 2018 weighted average sales density was €10,000/m2, up +5% YoY Weighted average NIY 4.70% Comparable to European prime shopping centres
Sales densities illustrate appeal to consumers, brands and investors 2018 weighted average sales density was €9,800/m2, up +5% YoY Weighted average NIY 4.7% Comparable to European prime shopping centres
High (2)
Medium (3)
2
2
Dec 2018 NIY (%)
Sa
les
densi
ty (
€000/m
2)
2018 earnings and future guidance
30.6
30.2
28.1
27.1
27.1
27.6
31.1
0.4
2.1
1.0
(0.5)
(3.5)
2018
Premium Outlets
Interest, net admin andother
Development and other
LfL NRI
Net disposals
2017
18
2018 EPS walk (pence per share) Debt reduction phase 2019-2020
Negative – Disposals Future 2021+
Neutral – Flat or net acquisitions
Neutral – Deferring projects
Negative
Neutral
Positive
Negative
Positive
Neutral
Positive
Positive
Positive
Positive
EPS: Positive EPS: Negative
Actively managing the changing shape of retail
19
label Rooftop at Les Terrasses du Port, Marseille
UK France Ireland Premium outlets
2019 online penetration (1) 18% 11% 10% 10%
Consumer spending growth 2019 (2)
1.1% 1.3% 2.2% 3-5%
Rental income growth 2019-2020 (3)
-1.6% 1.1% 4.7% 6.2%
29%
19%
10%
25%
9%
8%
Hammerson’s geographic diversification mitigates risk
20 1 Sources: Global Data, CRR Retailmenot 2 Source: Oxford Economics 2019 forecast. Real prices 3 Source: PMA 2019-2020 mall rental growth per annum 4 Source: Bain 2018 Luxury Goods Worldwide Market Study online penetration reflects global luxury sales 5 Source: Bain 2018 Luxury Goods Worldwide Market Study based on spending on personal luxury goods 2019-25 6 Source: Bain 2018 Luxury Goods Worldwide Market Study. Growth in luxury off-price sales used as proxy for rental income growth as brand sales drive turnover rent
Hammerson portfolio split by value
UK flagships
France flagships
Ireland flagships
Premium outlets
UK retail parks
Developments and UK other
48% non-UK
(4)
(5)
(5)
Responding to our changing markets
21
Teneo
Structural shift in retail Elevating experience
Our response: Leasing strategy Our response: Leisure & super events
Luxury sales outperform
Our response: Premium outlets platform
Thriving cities
Our response: City Quarters
Structural shift in retail
22
Online growth a key factor in declining store numbers
1 Global Data 2 LDC
• Urgent right sizing of estates from legacy ‘every’ high street to ‘selective’ flagship required
• Rest of Europe likely to experience faster channel shift in coming years to catch-up
Channel shift has been fast in the UK
UK retail online penetration % (1)
Those slow to adapt are failing
UK net store openings & closures by category (2)
6
8
10
12
14
16
18
20
22
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
0
1,000
2,000
2012 2013 2014 2015 2016 2017 2018
Non-Food Grocery Leisure Service
14.2% 7.7% 0.1%
-2.2% -2.7% -3.0% -3.3% -3.5% -4.8% -5.4% -9.4%
-45%
-35%
-25%
-15%
-5%
5%
15%
25%
35%
45%
Structural shift in retail
23
Differentiation between categories and brands in our UK portfolio
1 Source: Tyco 2 Source: BDO 3 BRC Nielsen shop price index
Hammerson UK flagship destinations category sales and range
Home, consumer brands & gifts
Selected winning brands
2018 footfall
Hammerson -1.8%
Index -3.5% (1)
2018 sales
Hammerson -2.9%
Index -2.7% (2)
2018 price deflation (3)
Non-food -1.5%
Clothing -7%
Dept. stores
(aspirational)
Leisure Sportswear Health &
beauty
F&B Jewellery &
personal luxuries
High street
fashion (contemporary)
Fashion (aspirational)
Dept. stores
(mainstream)
High street
fashion (traditional)
0
5
10
15
20
25
30
High street fashion(traditional)
F&B Department stores(mainstream)
Home, consumerbrands and gifts
Health & beauty Jewellery &personal luxuries
2017 2018
Structural shift in retail
24
Managing the significant increase in tenant failures
1 Includes UK flagship destinations, UK retail parks and UK other portfolios
Number of units impacted by CVAs and admins in UK by category, 2017-2018 (1)
86 stores impacted; 80% of units trading
£6m NRI impact in 2018, 1.7% group passing rent
7 units impacted YTD 2019
Add market data?
Selected tenant failures:
24
Rent at risk £8.7m (2.5% group passing rent)
Online catchment sales
Service
Fulfilment
Returns
Brand awareness
Structural shift in retail
25
Successful brands want the right physical presence
1 Source: LDC growth in brands with at least five UK stores, 2013-2019
+11% brands taking space (vs. 2013) (1) The role of physical space is evolving
[Brewdog]
Morphe, Bullring
Teneo
0.0
5.0
10.0
15.0
20.0
25.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Janu
ary
Febru
ary
Marc
h
April
May
June
July
Aug
ust
Sep
tem
ber
Oct
ober
Nove
mber
Dec
ember
Monthly leasing 2018 (LHS) Cumulative leasing activity 2017 (RHS) Cumulative leasing activity 2018 (RHS)
Structural shift in retail
26
Strong leasing volumes in our flagship destinations
1 New lettings across UK, France and Ireland flagship destinations. 2017: group average lease term 11 years; group average incentive 6 months
Flagship destinations leasing (£m)
2018 Leasing £m
Principal leasing 17.9
Reconfigurations 6.4
Temp and other 3.5
Total 27.8
Group leasing key facts
Leasing vs. Dec 17 ERV +6%
Leasing vs. previous passing +5%
Average lease term: 11 years (1)
Average incentive: 6 months (1)
Flagship leasing volumes
2018 £m
2017 £m
UK 14.4 13.4
France 7.3 9.8
Ireland 2.6 1.9
Total 24.3 25.1
Structural shift in retail
27
Actively managing the mix, leasing to winners
1 UK flagship destinations 2018 new lettings
Category Current mix Future mix Rent/sq ft New leasing (1)
Near-term rental levels
Department stores 38% c.28% c.£10/sq ft nil
High street fashion (traditional) 16% c.10% c.£30/sq ft 13%
F&B 10% c.12% c.£40/sq ft 11%
High street fashion (contemporary)
8% c.12% c.£30/sq ft 24%
Non-fashion and consumer brands 18% c.20% >£50/sq ft 31%
Leisure/events 6% c.10% c.£15/sq ft 14%
Fashion (aspirational) 4% c.8% >£30/sq ft 7%
100% 100% 100%
Data being reviewed
Structural shift in retail
28
Proven success with repurposing department store space
Cabot Circus: income uplift of £1.1 million, yield on cost +9%
Former BHS store TK Maxx Metro Bank
Indicative plan for further repurposing
Indicative financials
Income uplift +50%
Costs c. £20m
Target yield on cost 5-8%
0 20 40 60 80 100
Theatre/music concerts
Going to pubs/bars/clubs
Going to the cinema
Internet/emailing
Days out or visits to places
Eating out at restaurants
Shopping
Spending time with friends/family
Watching TV
2016/17 2006/7
29 1 Department for Digital, Culture, Media and Sport. Proportion of adults who participated in specific free time activities in the 12 months prior to interview, 2006/07 to 2016/17, England
Elevating experience
Humans are social creatures
Shopping and socialising are growing leisure activities
Participation in free time activities (%) (1)
estination shopping is increasing as a share of shopping missions +29% vs. 2013(2)
Experiential 23% of shopping trips are experience led, driving 47% of spend(2)
Social Leisure market is 70%(3) of the size of the non-food retail market, and forecast to grow from £130bn to £141bn in the next four years(4)
YouTube vlogger James Charles at Bullring
Elevating experience
30
Bringing excitement back to F&B Content moved to appendix, replace
with hero F+B photography
55% of new UK F&B
lettings in 2018 were to
independent, local or
emerging brands
Miami Burger
Mowgli
Herman Ze German Little Dessert Shop Mission Burrito
Brewdog
Add Irish/French brands
BH by Beef House
Elevating experience
31
Creating a buzz: events people want to experience
1 Transactional websites allow shoppers to purchase online from tenants within our flagship destinations with access through the venue’s website
Festival of Light at Westquay, Southampton
+£2m investment in experiential events in 2019
+£2m investment in experiential events in 2019
£10m online sales - 2019
Transactional websites at Bullring and Westquay (1)
€31bn
€47bn
0
5
10
15
20
25
30
35
40
45
50
2018 2025F
Luxury sales outperform
32
A desire for off-price luxury underpins high-end spending
1 Source: 2018 Bain luxury goods study
La Roca Village
Las Rozas Village
La Vallée Village
Wertheim Village
Zweibrücken Fashion Outlet
6.2% CAGR
Image of Gucci/Prada?
Bicester Village
Global personal luxury goods off-price store sales (€bn) (1)
Luxury sales outperform
33 1 Top four Value Retail Villages and top two VIA Outlets based on brand mix 2 Source: Cushman and Wakefield. Figures represent annualised base and turnover rent at 31 December 2018 at Hammerson’s ownership share
Our premium outlets are differentiated
The six most high-end outlets (1) make up more than 65% of total income
Income by outlet – Hammerson share (£m)
Bicester Village, London
La Vallée Village, Paris
La Roca Village, Barcelona
Las Rozas Village, Madrid
Freeport Lisboa Fashion Outlet
Mallorca Fashion Outlet
Other
Income £183.5m (2)
London
Birmingham
Croydon Dublin
Leicester
Paris
Marseille
Nice
Reading
Aberdeen
Leeds
Southampton
Glasgow
Bristol
UK
France
Ireland
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
£10k £12k £14k £16k £18k £20k £22k £24k £26k
Thriving cities
34
Format to change – LHS
Map, RHS table
We are in thriving cities
Consumer spending and population growth forecast in Hammerson flagship locations (1)
Total consumer spending per capita (2018)
Fore
cast
po
pula
tio
n g
row
th (
2018
-23),
%
0.7% £15.1k
European average
Country Benchmarks
1 Source: Oxford Economics
Thriving cities
35
Development expertise in action: on-site at two French flagship destinations
2018 progress
Brent Cross
Ongoing discussions with key stakeholders
Reviewing optimum mix of uses
Croydon
CPO powers granted H2 2018
Size Size
44,300m2 Total development cost
£290m
6,400m2 Total development cost
£39m Target rent
£16m Target rent
£2m
Started June 2018
34% pre-let
Open spring 2020
Started January 2018
22% pre-let
Open spring 2021
Les 3 Fontaines, Cergy
Cergy
On-site schemes
Cergy: Italik:
Les 3 Fontaines, Cergy Italik, Paris
Start on site Jan 18 Jun 18
Opening Q2 2021 Q2 2020
Cost to complete £145m £22m
Pre-let 23% 34%
Italik, Paris Future outlook
Reviewing schemes to ensure they respond to changing retailer requirements and are appropriate for the future
On-site schemes Major developments
Thriving cities
36 Metrics include City Quarters and major developments
City Quarters: an opportunity beyond retail
6,600 residential units
1.8m sq ft work space
1,000 hotel rooms
9 parks and public
spaces
Bristol
Moving beyond retail to create vibrant city neighbourhoods
200,000m2 work space
1,200 hotel rooms
9 parks and public spaces
97 acres
37
Thriving cities
City Quarters: creating value today and tomorrow Update content and images
Residential building, Dundrum Short term opportunities
Uses to include residential, co-working, hotel
Planning consent on at least two sites in 2019
Initial delivery by end of 2021
Target YOC 5-6%
Strategic sites
Key schemes include:
Martineau Galleries, Birmingham
Broadmead, Bristol
Dublin Central
Dundrum Phase 2
Victoria Phase 2, Leeds
Existing land value £360m
Current NRI £10m
Hotel, Victoria Leeds
Martineau Galleries, Birmingham
Conclusion
38
Continually evolve our
spaces
Build balance sheet strength
A clear plan to create value
39
Reducing debt
Exiting retail parks and pursuing portfolio-wide
disposals
Repurposing retail space
Enhancing experience with
F&B, super events and digital
City Quarters beyond flagship
destinations
Vibrant neighbourhoods in
thriving cities
Slide title TBC
Format tbc
Teneo
Shareholder returns
Beyond retail
Continually evolve
our spaces
Build balance sheet
strength
Questions
40
Supplementary Appendices
41
Victoria, Leeds
Contents
01 Group
02 UK flagship destinations
03 France flagship destinations
04 Ireland flagship destinations
05 Premium outlets
06 UK retail parks
42
Group
43
01
Westquay, Southampton
14 countries
UK flagship destinations - £2.9bn
France flagship destinations - £1.9bn
Ireland flagship destinations - £1.0bn
Premium outlets - £2.5bn
UK retail parks - £0.9bn
Development & UK other - £0.7bn
£9.9 billion leading pan-European retail platform
44
48% non-UK assets
430m visitors
4,800 tenants
11 - UK flagship destinations
7 - France flagship destinations
3 - Ireland flagship destinations
13 - UK retail parks
20 - Premium Outlets
Map update in progress
54 European flagship destinations
Top 3 market position in all chosen sectors
2.3m m2 retail space
update
29%
19% 10%
25%
9%
8%
Appendices: Group
45
2018 Group leasing performance
0
5
10
15
20
25
30
35
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Janu
ary
Febru
ary
Marc
h
April
May
June
July
Aug
ust
Sep
tem
ber
Oct
ober
Nove
mber
Dec
ember
Monthly leasing 2018 (LHS) Cumulative leasing activity 2016 (RHS) Cumulative leasing activity 2017 (RHS) Cumulative leasing activity 2018 (RHS)
2018 leasing and cumulative vs. 2017 and 2016 (£m)
Appendices: Group
46
2018 Group leasing performance by sector
2018 leasing by sector (£m)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Janu
ary
Febru
ary
Marc
h
April
May
June
July
Aug
ust
Sep
tem
ber
Oct
ober
Nove
mber
Dec
ember
UK flagship destinations France flagship destinations Ireland flagship destinations UK retail parks UK other
Appendices: Group
47 1 Including UK Other properties (principally assets held for development and non-core)
Leasing vs previous passing
(%)
Leasing vs ERV (%)
Like-for-like ERV growth
(%)
New rent secured from leasing
(£m)
UK flagship destinations +1 +5 –2.0 14.4
France flagship destinations +5 +5 +0.5 7.3
Ireland flagship destinations +28 +8 +2.8 2.6
UK retail parks +19 +11 –2.7 2.4
Group +5 +6 –0.9 27.7 (1)
2018 portfolio leasing overview
Appendices: Group
48 Note: 50 units in administration at 31 December 2017 (0.9% group passing rent). 41 of these units were occupied (0.8% group passing rent)
Insert logos of brands affected 2018 administrations and CVAs
UK flagship
destinations
France flagship
destinations
Ireland flagship
destinations
UK retail parks
UK other
interests
Group
Dec 17 total units in administration or CVA
17 27 - 3 3 50
Dec 18 total units in administration or CVA
49 23 - 12 8 92
Dec 18 total units occupied 40 23 - 12 6 81
Admin/CVA % of Group passing rent at Dec 18
1.8% 0.7% - 0.5% 0.2% 3.2%
NRI impact – FY 2018 (£m) 3.0 1.0 0.2 2.8 0.1 7.1
FY 2018 impact (% passing rent)
0.9% 0.3% - 0.8% - 2.0%
Appendices: Group
0
5
10
15
20
25
Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19
49
CVAs and administrations by month
Units in CVA or administration by month, January 2018 – March 2019, UK flagship destinations
Appendices: Group
50 1 Sales: 2018 UK benchmark –2.7% (Source: BDO); 2018 France benchmark -1.8% (Source: CNCC, as at Dec 2018) Retail sales on same-centre basis 2 Footfall: 2018 UK benchmark -3.5% (Source: Tyco Shoppertrak); 2018 France benchmark -1.7% (Source: CNCC) 3 Excludes anchor stores. French data includes VAT (rent:sales and OCR), excludes Les 3 Fontaines, Cergy 4 Excludes anchor stores. French data includes VAT 5 French data restated to exclude Les 3 Fontaines, Cergy, due to redevelpment
Occupancy (%) UK flagship destinations
France flagship
destinations
Ireland flagship
destinations
UK retail parks
Group
31 December 2018 97.6 97.1 99.0 96.9 97.2
30 June 2018 97.2 97.1 98.9 94.5 96.6
31 December 2017 98.1 97.9 99.7 99.4 98.3
UK flagship destinations
France flagship destinations
Sales (1) –2.9% +2.2%
Footfall (2) –1.8% +2.5%
Rent:sales (3) 13.3% 10.7%
OCR (3) 22.6% 13.7%
Sales densities (4)
UK £/ft2
France (5) £/ft2
2018 235 – 496 356– 490
2017 240 – 490 402 – 500
2016 250 – 515 350 – 562
2018 operational statistics
Appendices: Group
51
Our Product Experience Framework
We create desirability
Iconic destinations
Built environment
Placemaking
Seamless technology
Flexible construction
Customer first
Insight driven
Frictionless experience
Enhanced services
Sensory experience
Experience led
Food & beverage
Leisure as anchor
Engaging events
Surprise & delight
Retail specialism
Optimal retail mix
Fresh concepts
Innovative retail technology
Operational efficiency
Positive for the environment | Positive for the community
Appendices: Group
52 1 Development and other includes the movement in the UK Other interests portfolio where valuations increased by a total of £7m and Developments which increased by £23m during 2018. Other capital movements reflect the impact of changes in purchasers’ costs, development surpluses and capital expenditure
Components of valuation change in 2018, total portfolio (£m)
-279
-8 -10
16
-98
-6
-385
-73
-8
19 40
-26
2
-46
5 2
-2
34 39
-347
-14
9
56
-126
30
-392
-500
-400
-300
-200
-100
0
100
UK flagshipdestinations
France flagshipdestinations
Ireland flagshipdestinations
Premium outlets UK retail parks Developments andother
Group
Yield Income Development and other Total(1)
2018 components of valuation change
Appendices: Group
53
UK flagship
destinations
France flagship
destinations
Ireland flagship
destinations
UK retail parks
UK other
interests
Total portfolio
True equivalent yield (%)
31 Dec 2018 5.5 4.3 4.5 6.8 8.0 5.3
31 Dec 2017 5.1 4.4 4.4 6.2 7.2 5.0
Change (bps) +40 –10 +10 +60 +80 +30
ERV (£m)
31 Dec 2018 169.3 89.3 45.3 59.7 13.3 376.9
31 Dec 2017 186.7 91.7 43.3 75.4 14.1 411.2
LfL change (%) –2.0 0.5 2.8 –2.7 0.3 –0.9
2018 valuation data
Appendices: Group
54
Key disposals achieved 2016 - 2018
1 Gross proceeds 2 Total annual gross proceeds: 2016 - £651m; 2017 - £402m; 2018 - £570m
2016 : average -2% below book value Proceeds (1) £m
Buyer
Monument Mall, Newcastle 75 Standard Life
Villebon 2, Villebon-sur-Yvette 132 French Institution
Thurrock Shopping Park 100 TH Real Estate
Manor Walks shopping centre, Cramlington 78 Arch (local authority)
Westmoreland retail park, Cramlington 36 Arch (local authority)
Grand Central, Birmingham (50%) 175 CPPIB
Westquay South, Southampton (50%) 47 GIC
2017: average -3% below book value
Westwood and Westwood Gateway Retail Parks, Thanet 80 BMO (private equity)
Saint Sébastien, Nancy(2) 140 AEW (private equity)
Place des Halles, Strasbourg 167 Greenstone Oxford Limited
2018: average -7% below BV
Battery Retail Park, Selly Oak 58 NFU Mutual
Wrekin Retail Park, Telford 35 Ediston/Europa
Imperial Retail Park, Bristol/Fife Central Retail Park, Kirkcaldy 164 Capreon (private equity)
Highcross, Leicester (50%) 236 Asian investor, introduced by M&G Real Estate
Total 2016 – 2018 (2) £1.6bn
Appendices: Group
On-site developments Lettable area m2
Expected completion
Value 31 Dec
2018 £m
Estimated cost to
complete (2)
£m
Estimated annual
income (3)
£m
Let (5)
%
Italik, Italie Deux extension, Paris 6,400 Q2 2020 22 22 2 34
Les 3 Fontaines extension, Paris 44,300 Q2 2021 194 145 16 23
Total 50,700 216 167 18
55 1 Group ownership 100% for all on-site schemes 2 Incremental capital cost including capitalised interest 3 Incremental income net of head rents and after expiry of rent-free periods 4 Estimated rental value as per the Group’s valuers at 31 December 2018 5 Let or in solicitors' hands by income at 22 February 2019
Recently completed developments
Lettable area m2
Completed Total development cost (2) £m
ERV (4) £m Let (5)
%
Parc Tawe redevelopment, Swansea 21,400 Feb 2018 16 2 67
Orchard centre extension, Didcot 8,700 Mar 2018 44 3 76
Total 30,100 60 5
On-site and recently completed developments
Appendices: Group
56
Debt maturity profile
Note: Proportionally consolidated, excluding premium outlets
0
100
200
300
400
500
600
700
800
900
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Revolving credit facilities
Private placement
Sterling bonds
Euro bonds
Secured debt
Debt maturity profile 31 December 2018 (£m)
Appendices: Group
57
LTV methodology
31 December 2018
Net debt Headline (£m) Fully proportionally
consolidated (£m)
Group 3,406 3,406
VIA Outlets - 242
Value Retail - 658
Loan 3,406 4,306
Property values
Group 7,480 7,480
VIA Outlets - 636
Value Retail - 1,823
VIA Outlets net assets 326 -
Value Retail net assets 1,211 -
Value 9,017 9,939
LTV 38% 43%
Appendices: Group
58
Gearing sensitivity
1 Gearing sensitivity on changes in December 2018 values and future disposal proceeds. Values on a proportionally consolidated basis including premium outlets 2 Calculations assume disposals are achieved at December 2018 book values 3 Group’s tightest gearing covenant on unsecured bank facilities and private placement senior notes
Disposals (£m) (2)
0 100 200 300 400 500 600 700 800 900 1000
Red
uct
ion in G
roup
va
lues
(1)
0% 63% 61% 59% 57% 55% 54% 52% 50% 48% 46% 44%
5% 69% 67% 65% 63% 61% 59% 57% 55% 53% 51% 49%
10% 77% 74% 72% 70% 68% 65% 63% 61% 59% 56% 54%
15% 86% 84% 81% 79% 76% 74% 71% 69% 66% 64% 61%
20% 99% 96% 93% 90% 87% 84% 81% 79% 76% 73% 70%
25% 116% 112% 109% 105% 102% 99% 95% 92% 88% 85% 82%
Gearing covenant 150% (3)
Appendices: Group
59
Cost savings delivery on track to support reinvestment
Breakdown of annual cost savings (£m)
£5.7m p.a. of cost savings
delivered in 2018
£1.3m p.a. from future disposals
Board and management
£2.7m
Operational £2.7m
Disposals £0.3m
£7m p.a.
2019 reinvestment (£m)
£4m p.a.
Technology and innovation
£2m
Super events £2m
Appendix?
Our Sustainability Vision: To create retail destinations that deliver positive impacts economically, socially and environmentally Positive Places is our strategy for making that happen
Material Issues Our Response
Governance and Reporting
Energy demand and security of supply
Materials use and waste management
Climate risk
Sustainability of our product
Community engagement
Building certifications
Placemaking
Comprehensive, sector leading sustainability reporting
Clear focus on energy demand management
Net Positive targets for carbon emissions, water and resource use
Portfolio wide climate risk review completed
Driving operational excellence in the environmental performance of our assets
Extensive, locally focused community engagement programme
Positive Places thinking underpinning our City Quarters concept to deliver best in class placemaking
2018 Materiality Review We regularly review our sustainability strategy with key stakeholders to ensure we stay focused on the most relevant issues for our business and stakeholders. Following our 2018 review, our material sustainability issues and response to them are as follows:
60
Delivering against our Positive Places Strategy
Reducing energy demand across the managed
retail portfolio by a further 11%
Installing additional renewable electricity
capacity at three sites
Reviewing our energy procurement model to
leverage additional renewable capacity and
offer grid balancing
Working with retailers to support efficiency
improvements through fit out
Embedding Positive Places within City Quarters
concept
Working with our design teams to deliver best in
class sustainability in our Dublin developments
Working with regional water companies to
support water reduction initiatives
Working with re-use partners to reduce waste
Continuing our programme of portfolio-wide,
locally focused community engagement
initiatives
11% reduction in energy demand
£790k energy costs savings for retailers and JV
partners
11% reduction in carbon emissions across UK,
Ire and France portfolios
Completed climate risk study for the managed
retail portfolio using 2030 & 2050 scenarios
Generated 450mWh clean electricity
Installed smart metering at nine sites to enable
daily energy monitoring
Recycled of 75% of operational waste across
the portfolio
100% diversion of waste from landfill at 18 of
25 directly managed centres.
£1.7 million+ invested in work with 452
community groups and organisations.
Supporting 150+ business start-ups with Pop-
Up Business and Initiative France
Our achievements in 2018 Our plans for 2019
61
Hammerson has set a target to be Net Positive for carbon, water, resource use and socio-economic impacts by 2030
Carbon Net Positive for carbon means carbon emissions avoided exceed emissions generated.
Resource Use Net Positive for resource use means waste avoided, recycled or re-used exceeds materials used that are neither recycled, renewable nor sent to landfill.
Water Net Positive for water means water replenished by external projects exceeds water consumed from mains supply.
Resource Use Net Positive for socio-economic impacts means making a measurable positive impact on socio-economic issues relevant to our local communities beyond a measured baseline.
“Hammerson was the first real estate company globally to set such comprehensive, challenging Net Positive targets and we are making good progress. Creating Positive Places underpins our delivery of best in class retail assets that respond to the major challenge presented by climate change.” David Atkins, CEO
62
Steps to becoming Net Positive Our phase one target is to be Net Positive for landlord controlled carbon emissions, water demand, resource use and socio-economic impacts by the end of 2020
2015
27,000 tonnes CO2e
539,082 m3 water
18,243 tonnes waste not recycled or reused
2016
24,000 tonnes CO2e
511,888 m3 water
17,293 tonnes waste not recycled or reused
40,000 FTE jobs supported across our assets
2017
Delivered carbon neutral development at Rugby
Installed 3 further solar PV arrays
Reduce energy demand by further 8% v 2015 baseline
Achieved 73% recycling rate and reduced net operational resource use from 3,000 tonnes to1,200 tonnes
2018 32% reduction in phase 1 NP Carbon footprint
23 tonnes CO2e savings from EV charging
Generated 450mWh clean power
4 additional PV arrays installed
16% reduction in phase 1 NP water demand
34% reduction in Phase 1 NP resource use footprint
150+ business start ups supported
2019-2021
Landlord CO2 e reductions optimised and offset opportunities in place for remainder
Energy procurement model driving additional renewable capacity
Net positive approach embedded City Quarters
Increase onsite renewable and EV capacity
Improve energy efficiency of retail units
63
UK flagship destinations
64
02
Westquay, Southampton
Appendices: UK flagship destinations
65
2018 operational update
1 Sales: 2018 UK benchmark –2.7% (Source: BDO) Retail sales on same-centre basis 2 Footfall: 2018 UK benchmark -3.5% (Source: Tyco Shoppertrak)
UK flagship destinations
2018 2017
LfL NRI (%) −1.3 +1.8
Occupancy (%) 97.6 98.1
Leasing activity (£m) 14.4 13.4
Leasing vs. ERV (%) +5 +8
Leasing vs previous passing (%) +1 +6
In-store retail sales (%) (1) −2.9 −2.7
Footfall (%) (2) −1.8 +0.4
Map showing UK SC assets only
UK flagship destinations
11
Appendices: UK flagship destinations
66
2018 UK flagship leasing performance
1 New permanent lettings only. 2017: average lease term 11 years; average incentive 8 months
0
2
4
6
8
10
12
14
16
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Janu
ary
Febru
ary
Marc
h
April
May
June
July
Aug
ust
Sep
tem
ber
Oct
ober
Nove
mber
Dec
ember
Monthly leasing 2018 (LHS) Cumulative leasing activity 2016 (RHS)
Cumulative leasing activity 2017 (RHS) Cumulative leasing activity 2018 (RHS)
2018 leasing and cumulative vs. 2017 and 2016 (£m) 2018 leasing
£m
Principal leasing 8.6
Reconfigurations 3.7
Temporary and other
2.1
Total 14.4
UK flagship leasing key facts
Leasing vs. Dec 17 ERV +5%
Leasing vs. previous passing +1%
Average lease term: 11 years (1)
Average incentive: 7 months (1)
Appendices: UK flagship destinations
67
Profile of leasing at UK flagships
Principal lettings vs ERV (%)
26% to reconfigured space
Drives income Rebases value
14% to short term/pop ups
Trial new concepts Enliven space Contribute to NRI but rents below ERV
Vs ERV
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
60% of total leasing to principal lettings
Next, Oracle
Mercedes, Highcross
Appendices: UK flagship destinations
68
UK flagship destinations leasing vs. previous passing rent
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
Principal lettings vs previous passing rent (%)
71% leases at or above previous passing
Appendices: UK flagship destinations
69
Digital brands and direct to consumer
Personal luxuries Fashion – aspirational F&B and leisure
With Iain to update
Leasing to quality operators in 2018
Appendices: UK flagship destinations
70
Selection of UK flagship destination leasing deals and terms
Centre Category Lease length (yrs)
Headline rent (£’000)
Headline rent vs ERV
Incentive (months)
Principal leases
Brent Cross Fashion – aspirational 10 187 +1% 9
Highcross Health & beauty 10 80 -38% 3
Westquay Leisure 10 168 +28% 7
Bullring Health & beauty 10 257 +3% 6
Reconfigurations
Bullring Fashion – contemporary 15 500 +43% (1) 18
Oracle Fashion – traditional 10 650 -11% (1) 5
Silverburn Leisure 10 150 +7% (1) 12
Temp leases
Victoria Quarter Sportswear 1 125 -1% 0
Cabot Circus Fashion – traditional 3 78 (2) -55% 0
Note: above deals shown at 100%, not Hammerson ownership share 1 Estimated 2 Turnover only lease. Figure reflects rent forecast
Appendices: UK flagship destinations
0
100
200
300
400
500
600
700
800
900
1000
Coffee and Grab& Go
Fast casual Mid market Other
2017 2018
71
Continued leasing demand in F&B
1 Other includes bars and restaurants, and premium dining categories
2018 F&B leasing (£000)
Oracle
Renewal +11% uplift
Fast Casual
Mid Market Other
Key leasing deals
Coffee and Grab & Go
+38% YoY
Dundrum
New unit +104% vs ERV
Union Square
Former Byron unit
-28% below previous rent
Highcross
Former House of Fraser
Rent +630% (1)
Appendices: UK flagship destinations
72
Exposure to department stores
Number of stores
Floorspace
(‘000 sq ft)
Hammerson sales growth
Harvey Nichols 2 85
Selfridges 1 260
John Lewis 5 1,230
Marks & Spencer 4 305
Fenwick 1 175
Debenhams 5 805
House of Fraser 3 490
Total 21 3,350 -ve
Hammerson exposure to department stores in UK
+ve
John Lewis, Grand Central, Birmingham
Check HoF
Proactively reconfiguring department store space
73
House of Fraser Highcross, Leicester
Upsized Zara store now trading
11,000m2 across 3 floors
Replaced with upsized Zara and JD Sports flagships, Adventure Golf, restaurants and
additional car parking
Additional £1.5m of rental income
£17m project cost
Advanced negotiations underway with F&B operator
Proactively took back underperforming House of Fraser unit
Appendices: UK flagship destinations
Repurposing retail to F&B at Grand Central
Holy Moly Macaroni
Opportunity to create vibrant 1,700m2 F&B terrace
Replaced underperforming retailers with local and independent F&B operators
Income uplift of £835,000
Comptoir Libanais Mowgli
74
UK flagship destination investment
75 1 £9.3m capex in 2018 excludes £14.5m for the reconfiguration of the HOF unit at Highcross. If this was included, the maintenance capex would be 14% of total income in 2018
Capitalised Recoverable from tenant
Direct/indirect return?
Selection of examples
1. Hammerson operating expenses n/a Car park & commercialisation expenditure; landlord marketing;
interactive hoardings, upkeep collection lockers/mobile phone charge points, research and marketing costs
2. Service charge (maintenance) n/a Painting, flooring upkeep, M&E :CCTV, wifi , IT systems
maintenance
3.a Investment projects (hygiene) Partial Direct / Indirect Wayfinding projects, WC upgrades, LED relamping, public
seating upgrades, family room implementation & upgrade, smart metering
3.B Investment projects (value-add) Direct Creating new lettable space: eg Oracle- Next reconfig
+Riverside upgrade +Debenhams re-gear at Oracle & HX
Hammerson UK shopping centre cash flow statement 2018 £m
2017 £m
2016 £m
Gross rental income 178.2 180.2 174.2
Service charge income 35.9 35.4 34.0
Total income 214.0 215.6 208.2
Service charge expenses (excl. investment) -32.9 −31.5 −32.9
Other property expenses (Hammerson NRI) -21.8 −25.4 −22.4
Net cash flow before maintenance capex 159.3 158.7 153.0
Investment spend (service charge maintenance projects) -7.2 −5.8 −4.6
Investment projects (capex on maintenance or ‘value-add’ projects) (1) -9.3 −15.6 −12.6
Net cash flow from Operations 142.8 137.3 135.8
Maintenance capex: total income, % 8% 10% 8%
1
2
3a + 3b
1
2
A
B
A/B
3a
3b
France flagship destinations
76
03
Les Terrasses du Port, Marseille
Appendices: France flagship destinations
77
2018 operational update
1 Sales: 2018 France benchmark -1.8% (Source: CNCC, as at Dec 2018)Retail sales on same-centre basis 2 Footfall: 2018 France benchmark -1.7% (Source: CNCC)
France flagship destinations
2018 2017
LfL NRI (%) −0.9 +2.6
Occupancy (%) 97.1 97.9
Leasing activity (£m) 7.3 9.8
Leasing vs. ERV (%) +5 +5
Leasing vs. previous passing (%) +5 +8
In-store retail sales (%) (1) +2.2 +0.1
Footfall (%) (2) +2.5 +1.6
France flagship destinations
7
Appendices: France flagship destinations
Portfolio weighted towards flagship assets
78 1 Les Terrasses du Port, Les 3 Fontaines, Italie Deux; by value at 31 December 2018
Investing to enhance leading assets
Les 3 Fontaines, Cergy
Major 44,300m2 extension started in Jan-18
23% pre-let
Italie Deux, Paris
Transforming the centre into a cultural destination
Italik extension launched in Jun-18
Les Terrasses du Port, Marseille
Consistently strong footfall growth +5%
New brands including Boggi Milano, Polo Ralph Lauren
Largest three assets 89% of portfolio (1)
Les Terrasses du Port
Italie Deux
Les 3 Fontaines
Other
89%
Focus on flagship destinations
5.0% 2.7% 0.6% 0.5%
-0.6% -1.0% -1.5% -2.1% -2.4% -2.7% -3.3%
-45%
-35%
-25%
-15%
-5%
5%
15%
25%
35%
45%
Appendices: France flagship destinations
79
Differentiation between categories and brands in France
1 Sales: 2018 France benchmark -1.8% (Source: CNCC, as at Dec 2018) Retail sales on same-centre basis 2 Footfall: 2018 France benchmark -1.7% (Source: CNCC)
Hammerson flagship destination category sales and range, France
Sportswear Health &
beauty
F&B Fashion (aspirational)
Home, consumer brands & gifts
Jewellery &
personal luxuries
High street fashion
(contemporary)
Leisure
Sales 2018
Hammerson +2.2%
Index -1.8% (1)
Footfall 2018
Hammerson +2.5%
Index -1.7% (2)
Dept. store
(aspirational)
Dept. store
(mainstream)
High street
fashion (traditional)
Appendices: France flagship destinations
80
2018 leasing performance
1 New permanent leasing only. 2017: average lease term 10 years; average incentive 3 months
2018 leasing and cumulative vs. 2017 and 2016 (£m) 2018 leasing
£m
Principal leasing 5.5
Reconfigurations 1.4
Temporary and other
0.4
Total 7.3
France flagship leasing key facts
Leasing vs. Dec 17 ERV +5%
Leasing vs. previous passing +5%
Average lease term: 10 years (1)
Average incentive: 3 months (1)
0
2
4
6
8
10
12
0.0
0.5
1.0
1.5
2.0
2.5
Janu
ary
Febru
ary
Marc
h
April
May
June
July
Aug
ust
Sep
tem
ber
Oct
ober
Nove
mber
Dec
ember
Monthly leasing 2018 (LHS) Cumulative leasing activity 2016 (RHS)
Cumulative leasing activity 2017 (RHS) Cumulative leasing activity 2018 (RHS)
Ireland flagship destinations
81
04
Dundrum, Dublin
Ireland flagship destinations
2018 2017
LfL NRI (%) +1.6 +7.4
Occupancy (%) 99.0 99.7
Leasing activity (£m) 2.6 1.9
Leasing vs. ERV (%) +8 +10
Leasing vs previous passing (% +28 +4
Appendices: Ireland flagship destinations
2018 operational update
82 82
Dundrum: repurposing retail space to F&B
4,100 sq m former Hamleys store
Extended and repurposed into 5,220 sq m of catering and leisure space
Rental uplift from €20/sq ft to €37/sq ft
Cost €14.8m
Value uplift €21.1m
YOC 7.9%
Hammerson portfolio (2)
Appendices: Ireland flagship destinations
2.2m sq ft of prime space and sustainable development opportunities
83 1 Hammerson share at 31 December 2018 2 Hammerson portfolio participation under 50:50 Allianz joint venture structure 3 50% co-ownership with IPUT (25%) and Irish Life (25%). Development site 100% Hammerson 4 50% co-ownership with Irish Life (50%)
Dundrum
Contracted rent
66%
18%
11% 5%
Dundrum Town Centre
Swords Pavilions
Ilac Shopping Centre
Other (inc. Dublin Central)
The Pavilions, Swords (3) The Ilac Centre (4)
Dundrum Phase 2 Development Site
Dublin Central Development Site (100%)
Hammerson / Allianz 50:50 JV
Total rent: €51m (£45m) (1)
Appendices: Ireland flagship destinations
Platform encompasses key retail centres in Dublin
84
Appendices: Ireland flagship destinations
85
Progress with ERV uplift at Dundrum
1 Dundrum ERV 100%
Uplift in Dundrum ERV since ownership (1)
€65m
c.€90m
€11m
Acquisition ERVJuly 2016
Uplift at Dec 2018 Expected growth2019-2021
Forecast 2021 ERV
+17%
On track with targeted 4-5% ERV CAGR
Dundrum, Dublin
Premium outlets
86
05
Bicester Village, Oxfordshire
Value Retail (1) VIA Outlets (1)
2018 2017 2018 2017
Brand sales (€m) (2) 2,903 2,693 1,071 930
Brand sales growth (%) (3) 8 8 9 13
Footfall (m) (2) 36.8 35.4 30.3 28.3
Average spend per visit (€) (2) 79 76 35 33
Average sales density growth (%) (3) 4 5 5 10
Like-for-like net rental income growth (%) (4) 4 14 10 5
Occupancy (%) (5) 97 95 92 91
Appendices: Premium outlets
87 1 With the exception of LfL net rental income growth, figures reflect overall portfolio performance, not Hammerson’s ownership share. 2017 figures have been restated at 31 December 2018 exchange rates 2 Figures include acquired assets from the acquisition date. 2017 VIA Outlets figures have been restated to reflect more accurate footfall data and include Zweibrücken Fashion Outlet from the acquisition
date 3 Figures include assets owned for 24 months 4 LfL NRI growth now excludes the impact of extensions and re-modellings. VIA Outlets 2017 LfL NRI has been restated for a foreign exchange correction (-4% impact to 2017 LfL NRI) 5 2017 VIA Outlets figures have been restated to reflect spot occupancy rather than assets owned for 12 months
2018 operational update
Appendices: Premium outlets
88 Note: TDC (total development cost) at 100%
Kildare Village, Dublin
La Roca Village, Barcelona
2,700m2
15 units
TDC €11m
Opening Q4 2019
5,500m2
29 units
TDC €50-70m
Pipeline
2,500m2
c.25 units
TDC €50-60m
Opening Q4 2020
Expanding outlets through extensions and remodelling
Hede Fashion Outlet, Gothenburg
Value Retail Villages VIA Outlets centres
Bicester Village, Oxford
GLA: 28,000m2
Boutiques: 161
Batavia Stad Amsterdam Fashion Outlet
GLA: 30,900m2 Units: 130
La Roca Village, Barcelona GLA: 23,400m2 Boutiques: 135
Fashion Arena Prague Outlet GLA: 24,100m2 Units: 99
Las Rozas Village, Madrid GLA: 16,500m2 Boutiques: 98
Landquart Fashion Outlet, Zürich GLA: 21,100m2 Units: 79
La Vallée Village, Paris GLA: 21,900m2 Boutiques: 106
Freeport Lisboa Fashion Outlet GLA: 36,500m2 Units: 119
Maasmechelen Village, Brussels GLA: 19,800m2 Boutiques: 97
Hede Fashion Outlet, Gothenburg GLA: 16,100m2 Units: 52
Fidenza Village, Milan GLA: 20,900m2 Boutiques: 120
Mallorca Fashion Outlet GLA: 30,500m2 Units: 78
Wertheim Village, Frankfurt GLA: 21,200m2 Boutiques: 113
Wroclaw Fashion Outlet, Poland GLA: 13,700m2 Units: 88
Ingolstadt Village, Munich GLA: 21,100m2 Boutiques: 113
Seville Fashion Outlet GLA: 15,800m2 Units: 64
Kildare Village, Dublin GLA: 16,700m2 Boutiques: 98
Zweibrücken Fashion Outlet, Germany GLA: 29,100m2 Units: 114
Vila do Conde Porto Fashion Outlet GLA: 27,800m2 Units: 117
Norwegian Outlet, Oslo GLA: 13,300m2 Units: 96
Premium outlets portfolio
89
Appendices: Premium outlets
Holding companies 25% equity
Bicester Village
37
50
La Roca Village
29
41
Las Rozas Village
25
37
La Vallée Village
14
26
Maasmechelen Village
14
27
Fidenza Village
22
34
Wertheim Village
33
45
Ingolstadt Village
2
15
Kildare Village
28
41
1 Total Village ownership calculated as economic entitlement of directly held and indirectly held interests
Village ownership via LPs (%)
Total Village ownership (%) (1)
Hammerson’s total investment in Value Retail
90
45.9%
14.5%
10.2%
4.4%
3.5%
1.8%
19.8%
91 1 Source: Global Blue, (Value Retail Villages and European Snapshot December 2018) 2 Other includes countries which are not in the top 15
Tax free sales in our premium outlets portfolio have outperformed the overall European trend (1)
Appendices: Premium outlets
Outperformance due to enhanced international marketing strategy, an appealing and comprehensive brand offer and a best-in-class hospitality management
Tax free sales by source market
YoY growth (%) (1)
CAGR 2014-2018
Greater China +3% +13%
South and East Asia +15% +15%
Gulf/Middle East +10% +8%
Russia -5% -8%
India +18% +33%
USA +32% +27%
Other (2) +10% +11%
Total +7% +12%
European benchmark (1) -4%
City Quarters
92
06
Birmingham City Centre
Appendices: City Quarters
Ladywood House Birmingham
93
9,400m2 vacant office
Opportunity to upgrade to modern workspace
City centre hub with leading retail and leisure adjacencies
Will drive footfall and spend into the Bullring Estate
Forecast development cost £24m (1)
Short to medium term concepts
1 At Hammerson share
Victoria hotel Leeds
Under offer with international hotel operator
Opportunity to develop 200 bed hotel
Adjacent to Victoria Gate, Leeds
Will complement existing offer and drive evening economy
c.£28m development cost
Dundrum residential Dublin
Opportunity to develop 100 unit residential scheme adjacent to Dundrum
Strong local PRS market
Target planning permission Q4 2019
Phase one of 600 unit opportunity at Dundrum
Will drive additional retail and leisure spend at Dundrum
Forecast development cost £17.5m (1)
Target YOC 5-6%
Key schemes Area Next
planning submission
Start on site
Retail F&B Residential Workspace Leisure Education Culture Hotel Public spaces
Nea
r te
rm
Les 3 Fontaines, Cergy 8,500m2 n/a On site
Citywall House, Southampton 2,800m2 2019 Q2 2020
Dundrum Building 5, Dublin 10,000m2 2019 Q2 2020
Victoria Hotel, Leeds
8,400m2 2019 Q2 2020
Ladywood House, Birmingham 9,400m2 2019 Q2 2020
Str
ate
gic
Martineau Galleries, Birmingham
7 acres 2019
Dundrum Phase 2 5 acres 2020
Broadmead, Bristol 9 acres 2020
Dublin Central 6 acres 2021
Pavilions Phase 3, Swords 13 acres 2021
Victoria Phase 2, Leeds 10 acres 2021
Ma
jor
Brent Cross 15 acres n/a
Croydon 22 acres n/a
Bishopsgate Goodsyard, London
10 acres 2019
TOTAL 97 acres
94
Appendices: City Quarters
The City Quarters opportunity
UK retail parks
95
07
Elliott’s Field Shopping Park, Rugby
96
UK retail parks 2018
2018 2017
LfL NRI (%) −4.3 −2.5
Occupancy (%) 96.9 99.4
Leasing activity (£m) 2.4 6.3
Leasing vs. ERV (%) +11 +11
Leasing vs previous passing (%) +19 +9
Footfall (%) (1) −1.3 −0.4
1 Footfall: 2018 UK benchmark -0.5% (Source: Springboard Retail Parks index)
Decathlon
Hobbycraft
NCF furnishings
Soletrader
TK Maxx
River Island
H&M
Boots
Starbucks
M&S
Costa
Nandos
Loungers
Fat face (base plus turnover est) Mountain Warehouse Jo Jo
Sole Trader (turnover only)
71% let
Appendices: UK retail parks
2018 operational update
97 1 Source: MSCI. Market and portfolio split by number of parks
Shopping parks Hybrid parks Key homeware goods parks
Standard homeware parks
Solus units
Higher rental growth segments
Shopping parks
Hybrid parks
Key homeware goods
Standard homeware
Solus
58% 92%
Hig
her
renta
l g
row
th
UK retail parks market (1) Hammerson portfolio
Appendices: UK retail parks
UK retail parks market split and Hammerson ownership
Appendices: UK retail parks
98
Retail park disposals 2016 to 2018
1 Gross proceeds
2016: average 7% below BV Proceeds (1)
£m Buyer
Thurrock Shopping Park, Thurrock 100 TH Real Estate
Fir Lane, Folkestone (2) 7 The Drapers Company
Cramlington Retail Park, Cramlington 78 Arch (local authority)
Westmorland Retail Park, Cramlington 36 Arch (local authority)
2017: average -3% below BV
Thanet Retail Parks, Kent 80 BMO (private equity)
Avenue Retail Park, Cardiff (2) 6 Greenstone Oxford Limited
2018: average -7% below BV
Battery Retail Park, Selly Oak 58 NFU Mutual
Wrekin Retail Park, Telford 35 Ediston/Europa
Imperial Retail Park, Bristol/Fife Central Retail Park, Kirkcaldy 164 Capreon (private equity)
Total 2016 – 2018 £564m