Hammerson and Intu… · 2017-12-06 · Conditional on Hammerson and Intu shareholder approval In aggregate, Hammerson has received support from Intu shareholders holding 50.6% (2)

intu Trafford Centre, Manchester

Hammerson and Intu

Setting the new benchmark for European retail destinations

6 December 2017


01 The improved business

02 A leading portfolio

03 Enhanced operating and development platform

04 Significant financial benefits

05 Conclusion and Q&A

2

3

01 The improved business

Madrid Xanadú, Spain

Apply best practice operating skills to unlock the performance potential of the enlarged portfolio

Rigorous income-focused strategy

Creates a pan-European leading portfolio of high-quality retail and leisure property

4 (1) Pro-forma GAV as at 30 Jun 2017, adjusted for Hammerson acquisition of Cergy 3, Paris and disposal of Place des Halles, Strasbourg, and Intu disposal of 50% of Madrid Xanadú and 50% of intu Chapelfield, Norwich

A leading portfolio

Compelling financial benefits

Superior combined operating platform

Strong development expertise

Significant capital recycling opportunities

More differentiated destinations

Top-three pan-European retail focused REIT with total GAV of £21 billion (1)

Increased exposure to higher-growth destination shopping centres

Better aligned to meet the needs of retailers in a multichannel world

Combining Ireland and Spain, two of Europe’s fastest growing economies

Clear rationalisation programme – at least £2 billion of disposals over the short to medium term

Reinvest into higher return opportunities – premium outlets, Spain, Ireland and developments

Enhanced resources in events, customer service, online and brand

Better equipped to drive footfall and dwell time to deliver productive, attractive space for retailers

Deploy Hammerson’s expertise in delivering successful developments and extensions across the combined development pipeline

Earnings accretion expected

Approx. £25 million p.a. cost synergies; further from operational efficiencies and refinancing

Strengthens Hammerson's consistent earnings and dividend profile

Key transaction terms

(1) Based on Hammerson closing price of 534.5p (2) Includes irrevocable undertakings from Peel Group and associates and Intu Directors , and a letter of intent from Coronation

The offer

All-share offer by Hammerson for Intu of 0.475 new Hammerson shares per Intu share, equivalent to 254p per Intu share (1)

Pro-forma ownership Hammerson/Intu 55%/45%

Combined group to be listed on LSE and JSE

Leadership and governance

Board of the enlarged group will comprise:

• David Tyler as Chairman

• John Whittaker as Deputy Chairman

• David Atkins as CEO

• Timon Drakesmith as CFO

• John Strachan as Senior Independent Director

The Board of the enlarged group will comprise six directors nominated by Hammerson and four directors nominated by Intu

Expect to have experienced and diverse Board

Relationship agreement in place with Peel Group (15% shareholder in enlarged group)

Shareholder support

Conditional on Hammerson and Intu shareholder approval

In aggregate, Hammerson has received support from Intu shareholders holding 50.6% (2)

5

Includes irrevocable undertakings from Estonia, Cheeseden and Crescent

6

02 A leading portfolio

Puerto Venecia, Spain

Recycle and reinvest into European growth markets

More high-quality retail and leisure destinations

18 centres over 1 million sq ft

Attractive portfolio balance

(1) Pro-forma GAV as at 30 Jun 2017, adjusted for Hammerson acquisition of Cergy 3, Paris and disposal of Place des Halles, Strasbourg, and Intu disposal of 50% of Madrid Xanadú and 50% of intu Chapelfield, Norwich

(2) Based on annualised NRI for 6 months ending 30 Jun 2017 (3) Darker blue indicating top-10 largest combined group ownerships in UK shopping centres by value

Pro-forma enlarged group, GAV (£bn) (1) Top-3 European retail platform

£21 billion GAV (1)

£820 million NRI (2)

Combining Ireland and Spain, two of Europe’s fastest growing

economies

Close to 20% higher growth categories of Premium outlets,

Spain, Ireland and developments (1)

£0.6bn £0.6bn

UK shopping centres (3)

UK retail parks

France

Ireland

Spain

Developments & UK other

£0.9bn £13.1bn

£1.3bn

£2.0bn

£2.0bn

7

Premium outlets

8

More relevant to retailers expanding across Europe

Glasgow

Dublin Leeds

Manchester

Bristol

Southampton

Madrid

Paris

Marseille

Asturias

Zaragoza

Aberdeen

Newcastle

Nottingham

London

Nice

London Brent Cross, Croydon

Paris Italie 2, Les Trois Fontaines

Madrid Xanadu, Las Rozas

Barcelona La Roca

Frankfurt Wertheim

Dublin Dundrum, Kildaire

Manchester Trafford, Arndale

Marseille Terrasses du Port

Birmingham Bullring / Grand Central, Merry Hill

Glasgow Braehead, Silverburn

Bristol Cribbs Causeway, Cabot Circus

0.0 1.0 2.0 3.0 4.0 5.0

UnitedKingdom

France

Ireland

Spain

2018 2017

Zweibrücken

Amsterdam

Lisbon

Porto

Mallorca

Zurich

Gothenburg

Prague

Wroclaw

Seville

Oxford

Barcelona

Brussels

Milan

Munich

Frankfurt

Birmingham

Cardiff

Intu largest shopping centres

Hammerson largest shopping centres

Premium outlets (VR and VIA Outlets)

14 European countries

43% of portfolio in top-20 European cities (1)

3 top-10 shopping centres create a platform in Spain

8

ADD READING AND OSLO (check which centres are not

included as ‘largest’)

Add footnotes, what constitutes ‘largest’?

Multichannel - experiential shopping centres - convenient retail parks - luxury premium outlets - online affiliate website

Oslo

(1) Oxford Economics Note: largest shopping centres defined as those over 500,000sq ft

9

03 Enhanced operating and development platform

Bullring, Birmingham

Enhanced operating and development platform

Superior combined operating platform

More differentiated destinations

Strong development

expertise

Rigorous focus on best brand mix

F&B experts

Sophisticated commercialisation

Harmonised customer services and branding across centres

Enhanced events and promotions

Complementary digital strategies – affiliate website and bespoke apps

Expertise in property development and extensions

Enlarged development pipeline

Combination drives benefits for retailers, consumers and shareholders

10

11

Rigorous focus on best brand mix

Skinnydip, Brent Cross Smiggle, Dundrum

Rituals, Bullring Nespresso, Oracle

Rigorous focus on curating the right retail mix and brand adjacencies

Close retailer relationships

Leasing informed by dedicated consumer insights team

Future opportunities

Combined leasing expertise with enhanced regional structure

intu Braehead and intu Lakeside - curate category clusters and zones

intu Metrocentre - reconfigure large spaces and further improve brand adjacencies

Market-leading delivery

New portfolio leasing opportunities:

12

F&B experts

Mowgli, Grand Central

Comptoir Libanais, Oracle

Franco Manca, Oracle

Bill’s, Westquay

Diversity and innovation in F&B leasing

Experienced F&B leasing team. Recent track record at Westquay, Victoria Gate and Silverburn

Close relationships with established restaurant brands as well as start-ups


intu Trafford Centre – trial curated street food

intu Merry Hill – review and enhance current F&B offer with extension


New F&B leasing opportunities:

13

Sophisticated commercialisation

Beach bar pop-up, Oracle Amazing Chocolate Workshop, Brent Cross

Up Market, Bullring Mercedes pop-up, Oracle

Maximise income from pop-ups, digital screens, sponsored events and enhance customer experience

Invest in high quality design and fit-out to improve returns

Car park investment programme

Innovative approach to pop-ups


Roll out more sponsorship-led events

Introduce more regionally-themed events

Widen relationship with partners, e.g. AppearHere

What/where is this


14

Complementary digital strategies

Enhanced destinations for consumers

Driving footfall & dwell time, benefitting consumers, retailers and communities

Events

Customer service

Affiliate online platform B2C branding

Sponsorship & promotions

Harmonised branding and customer service across centres

Enhanced events and promotions

Bespoke apps

15

Deploy development expertise

(1) Timeframe 2017-2020

Les Terrasses du Port, Marseille 62,700 sq m 7% YoC

Victoria Gate, Leeds 37,500 sq m 6% YoC

Add a lot more development – see p8&9 half year results

release

Strong development track record Intu development pipeline

Additional pipeline, UK and Spain £1.2 billion (1)

intu Lakeside intu Merry Hill

intu Watford intu Costa del Sol

Disciplined capital recycling to enhance future growth

16

Rigorous portfolio assessment of enlarged group

Asset location Real estate characteristics

(e.g. size)

Occupier profile Financial performance

Multichannel relevance Consumer proposition

Identified non-strategic assets At least £2 billion of disposals in short to medium term

Enhance growth prospects through reinvestment

Ireland

Reinvestment opportunities across a wide range of higher return growth channels

17 (1) Value Retail sales density CAGR 2007-2016 (2) Retail property rental growth in 2016, according to Capital Economics as of Sep-17 (3) Hammerson’s published forecast ERV growth guidance (4) Total committed development cost for Brent Cross extension, Les 3 Fontaines, Cergy, and Croydon town centre redevelopment

Sales density growth 11% p.a. (1)

Premium outlets

Sales density growth 11% p.a. (1)

ERV growth 4-5% p.a. (3)

0.6

2.0

2012 30-Jun-17

Puerto Venecia 119,000 sq m

Dundrum Phase 2 100,000 sq m

Dublin Central 5 acres

Bicester Village extension 15% YoC

Spain Developments

Brent Cross London 90,000 sq m

Les 3 Fontaines, Cergy 33,000 sq m

Hammerson pipeline £1.5bn (4)

Madrid Xanadú 153,000 sq m

GA

V a

t H

am

mers

on s

ha

re

(£b

n)

2012 2017

Value Retail

€0.6bn 9 villages

€1.5bn 9 villages

VIA Outlets

0 outlets €0.5bn

10 outlets

confirm Market rental growth 5.4% (2)

18

04 Significant financial benefits

intu Eldon Square, Newcastle

Potential to optimise capital structure and funding

19 (1) Pro forma net debt and LTV as at 30 June 2017, adjusted for Hammerson acquisition of Cergy 3, Paris and disposal of Place des Halles, Strasbourg, and Intu disposal of 50% of Madrid Xanadú and 50% of intu Chapelfield, Norwich

Hammerson financing policies unchanged

Maintain solid investment grade credit rating

Proceeds from £2 billion disposals used partially to reduce leverage

Adapt Intu credit/bank facilities to Hammerson’s cheaper and more flexible unsecured financing structure

Proactive approach to refinancing

Ongoing financial strategy Debt ratios (1)

Hammerson Intu Combined

Net debt £3.6bn £4.6bn £8.2bn

LTV 37% 45% 41%

Optimising the enlarged group’s financing structure

20 Note: 2018 excludes convertible bonds repurchased since 30 June 2017; 2022 includes additional £250m intu Trafford Centre debt and only 50% of Madrid Xanadú debt; 2024 includes intu Merry Hill refinanced loan

Debt maturity profile at 30 June 2017 (£m)

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027-2031

2032-2036

Hammerson Intu Selected Intu near-term debt maturities

Selected Intu near-term debt maturities:

Facility Drawn Maturity

Convertible bonds £160m 2018

intu Milton Keynes bank loan £140m 2019

CMBS 2019 £20m 2019

Sprucefield bank loan £33m 2020

SGS bank loan £352m 2021

RCF £363m 2021

intu Trafford Centre loan £250m 2022

Convertible bonds £375m 2022

CMBS 2022 £50m 2022

Total £1,743m

21

Approximately £25 million run-rate cost synergies per annum; one-off integration cost of approximately £40 million

Opportunity for further cost savings from operational efficiencies and refinancing

Greater confidence in positive LfL NRI growth through enhanced operating platform

Earnings accretive in first full financial year

Anticipated dividend growth at least in line with Hammerson’s track-record

Strong income profile and superior growth prospects

Bullring, Birmingham Dundrum, Dublin

intu Lakeside, Essex intu Trafford Centre, Manchester

22

Indicative timetable

Announcement of transaction 6 December 2017

Hammerson/Intu full-year 2017 results announcement 26 February 2018 / 22 February 2018

Hammerson/Intu shareholder votes Q2 2018

Expected completion Q4 2018

23

05

Puerto Venecia, Spain

Conclusion


24

Exciting milestone in Hammerson’s history

Enhanced growth prospects

More high quality retail destinations

Superior retailer proposition

Better consumer experience

Strong earnings profile and dividend growth intu Trafford Centre, Manchester

Victoria, Leeds

TBC

Hammerson and Intu Setting the new benchmark for European retail destinations

intu Trafford Centre, Manchester

26

Appendices

27

Hammerson track record of operating performance:

Superior operating platform supports LfL NRI growth

Greater confidence in positive LfL NRI growth

Reported UK shopping centre LfL NRI growth (%)

4.6

2.8 3.2 2.2 2.1 2.4

3.6

-2.7 -1.9

-3.2

1.8

3.6

-4

-2

0

2

4

6

2011 2012 2013 2014 2015 2016

Hammerson Intu

Reported UK shopping centre occupancy (%)

98 98 96 96

75

80

85

90

95

100

2015 2016

Hammerson Intu

Superior operating platform

Implement income focussed process

28

Platform of attractive retail and leisure destinations

intu Trafford Centre, Manchester 183,300 sq m 31m footfall

Bullring, Birmingham 126,900 sq m 35m footfall

intu Lakeside, Essex 133,300 sq m 25m footfall

Zaragoza, Spain 119,000 sq m 19m footfall

Arndale, Manchester 148,600 sq m 42m footfall

Located in leading European cities

Well-invested

Combination of in-town and out-of-town

[ ]m total footfall

High brand recognition

Resilient income profile

Brent Cross, London 85,200 sq m 12m footfall

Merry Hill 155,200 sq m 21m footfall

Dundrum, Dublin 123,800 sq m 18m footfall

intu Eldon Square, Newcastle 125,400 sq m 34m footfall

Les Terrasses du Port, Marseille 62,700 sq m 13m footfall

St David’s, Cardiff 129,200 sq m 40m footfall

intu Metrocentre, Gateshead 195,800 sq m 21m footfall

Bicester Village, Oxfordshire 28,500 sq m 6m footfall

The Mall, Cribbs Causeway 99,900 sq m 12m footfall

Victoria Centre, Nottingham [ ] sq m [ ]m footfall

Braehead, Glasgow 104,400 sq m 17m footfall

Madrid Xanadú 153,000 sq m 13m footfall

TBC – possibly move back to just Intu

29

Top-three European retail REIT

29.5

20.6

17.4

10.4 10.2

7.9 6.6

4.6

0

5

10

15

20

25

30

35

Unibail Rodamco Hammerson post-transaction

Klepierre Hammerson Intu Land Securities British Land Carmila

Notes: Peer retail/shopping centre GAV based on latest reported financials. For Unibail, Klepierre and Carmila, numbers exclude transfer taxes and converted into GBP at exchange rates as of the balance sheet date (1) Pro-forma GAV as of 30 Jun 2017, adjusted for Hammerson acquisition of Cergy 3, Paris and disposal of Place des Halles, Strasbourg (2) Pro-forma GAV as of 30 Jun 2017, adjusted for Intu disposal of 50% of Madrid Xanadú and 50% of intu Chapelfield Norwich

Publicly listed European REITs by retail GAV (£bn)

Notes: EUR/GBP exchange rate of 0.89 as of 27-Nov-17 (1) Retail gross asset value only Source: Company reports

(1) (2)

30

Highlights of Q3 2017 trading updates

(1) RNS released 9 November 2017. Group figures including UK, France and Ireland shopping centres, and retail parks (2) RNS released 2 November 2017

Hammerson (1) Intu (2)

Occupancy 96%

Q3 leasing £13million (in line with Q3 2016)

• 5% above previous passing

• In line with ERV

YTD rent reviews 10% above previous passing

Footfall +2% vs. Q3 2016; YTD flat vs. 2016

Intu brand net promoter score consistently high at 70

Disposal of 50% intu Chapelfield, Norwich for £148 million (5% NIY); in line with 31 December 2016 book value, small discount to 30 June 2017 book value

“Anticipate positive like-for-like net rental income in 2017”

Occupancy 97%

Q3 leasing £6.8million (+17% vs. Q3 2016)

• 4% above previous passing

• 11% above ERV

YTD rent reviews 7% above previous passing

UK in-store tenant sales flat; France in-store tenants sales +5.6%

Footfall outperformed benchmarks in both UK and France

Opening of Bicester Village extension and acquisition of Cergy 3, Paris

[5/12/17 Disposal of Place des Halles, Strasbourg, completion of £400m 2017 disposal programme]

31

THIS PRESENTATION AND ITS CONTENTS ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR

INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL.

This presentation has been prepared solely for information and for use in connection with the acquisition by Hammerson plc (“Hammerson") of Intu Properties plc ("Intu").

For the purposes of this notice, "presentation" means this document, any oral presentation and any question and answer session by Hammerson or Intu during the presentations.

The release, publication or distribution of this presentation in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the

United Kingdom should inform themselves about and observe any applicable requirements. This presentation is not directed to or intended for distribution to, or use by, any person or entity in any jurisdiction where

such distribution, publication, availability or use would be contrary to local laws or regulations or require any registration or licensing within such jurisdiction. Any failure to comply with applicable requirements may

constitute a violation of the laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, Hammerson and Intu disclaim any responsibility or liability for the violation of such

requirements by any person.

This presentation does not constitute or form part of, and should not be construed as, investment advice or part of any offer, invitation or recommendation to purchase, sell or subscribe for any securities or the

solicitation of any vote for approval in any jurisdiction and neither the issue of the information nor anything contained herein shall form the basis of or be relied upon in connection with, or act as an inducement to enter

into, any investment activity, or the making of any investment decision.

This presentation does not purport to contain all of the information that may be required to evaluate any investment in Hammerson or Intu or any of their securities. Any investment decision should be made solely on the

basis of approved formal offer-related documentation to be released in connection with the acquisition, if made. Nothing in this presentation should be construed as constituting legal, business, tax or financial advice

and any person considering an investment in Hammerson or Intu is advised to obtain independent advice as to the legal, tax, accounting, financial, credit and other related advice prior to making an investment.

The presentation has not been independently verified and no representation or warranty, express or implied, is made or given by or on behalf of Hammerson or Intu or their directors, officers, subsidiaries,

shareholders, affiliates, associates, employees, representatives, advisers or any person acting on their behalf ("Associates"), as to, and no reliance should be placed on, the accuracy, completeness or fairness of the

information or opinions contained in this presentation and no responsibility or liability is assumed by any such persons for any such information or opinions or for any errors or omissions. Each of Hammerson and Intu

and their respective Associates disclaims, to the fullest extent permitted by applicable law and regulation, all and any responsibility or liability whether arising in tort, contract or otherwise, which they might otherwise

have in respect of any of the information in this presentation. No duty of care is owed or will be deemed to be owed to you or any other person in respect of the information in this presentation.

The information in this presentation is provided as at the date of the presentation, is of a preliminary nature and is subject to change, without notice. Neither Intu nor Hammerson nor any of their respective Associates

assumes any obligation to update or correct the information contained in this presentation (whether as a result of new information, future events or otherwise) or to provide you with any additional information, except

as required by applicable law.

This presentation and any materials distributed in connection with this presentation may contain certain forward-looking statements, beliefs or opinions, with respect to the financial condition, results of operations and

business of Hammerson and Intu. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as “anticipate”,

“target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “hope”, “aims”, “continue”, “will”, “may”, “should”, “would”, “could”, or other words of similar meaning.

These statements are based on assumptions and assessments made by Intu, and/or Hammerson, in light of their experience and their perception of historical trends, current conditions, future developments and other

factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors

described in the context of such forward-looking statements in this document could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements.

Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and you are therefore

cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this presentation.

Quantified financial benefits statements contained in this presentation relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies and which may in some cases be

subject to consultation with employees or their representatives. The synergies and cost savings referred to may not be achieved, or may be achieved later or sooner than estimated, or those achieved could be

materially different from those estimated. For the purposes of Rule 28 of the City Code on Takeovers and Mergers, the quantified financial benefits statements contained in this presentation are the responsibility of

Hammerson and the Hammerson Directors. No statement in this presentation (including any statement of estimated synergies) is intended as a profit forecast or estimate for any period and no statement in this

presentation should be interpreted to mean that earnings or earnings per share or dividend per share for Hammerson, Intu or the combined group of Hammerson and Intu, as appropriate, for the current or future

financial years would necessarily match or exceed the historical published earnings or earnings per share or dividend per share for Hammerson, Intu or the combined group of Hammerson and Intu as appropriate.

To the extent available, the industry, market and competitive position data contained in this presentation have come from official or third party sources. Third party industry publications, studies and surveys generally

state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data.

While Hammerson and Intu believe that each of these publications, studies and surveys has been prepared by a reputable source, neither Hammerson nor Intu has independently verified the data contained therein. In

addition, certain of the industry, market and competitive position data contained in this presentation are sourced from the internal research and estimates of Hammerson and Intu based on the knowledge and

experience of Hammerson and Intu management. While each of Hammerson and Intu believes that such research and estimates are reasonable and reliable, they, and their underlying methodology and assumptions,

have not been verified by any independent source for accuracy or completeness and are subject to change without notice. Accordingly, undue reliance should not be placed on any of the industry, market or

competitive position data contained in this presentation. You should not base any behaviour in relation to financial instruments

Documents

Hammerson and Intu… · 2017-12-06 · Conditional on Hammerson and Intu shareholder approval In aggregate, Hammerson has received support from Intu shareholders holding 50.6% (2)