Interim Management Statement

RNS Number : 2973E

Hammerson PLC

09 May 2013

 



For release 0700 9 May 2013

Hammerson plc

Interim Management Statement for the period from 1 January 2013 to 8 May 2013    

Highlights:

·     Acquisition of 17% stake in Bullring for £154m at a yield of 5.7%, taking ownership to 50%

·     Occupancy across the portfolio remains high at 96.6%

·     Group leasing in line with ERV (4.4% above in the UK and 1.3% below in France)

·     Group rents secured at 31% above previous passing rent

·     Secured Citadium's first store outside Paris for Les Terrasses du Port, Marseille, now 86% pre-let

·     Croydon JV with Westfield completed the acquisition of 25% stake in Whitgift Centre

·     Successful public consultation to launch Victoria Gate development in Leeds

David Atkins, Chief Executive, said:

"Our operational performance, against a weak consumer backdrop, demonstrates the quality of our portfolio. Since the start of 2013 we have continued to review opportunities selectively and have deployed capital to winning locations, increasing our stake in Bullring and making excellent letting and construction progress at Les Terrasses du Port."

Operations

Occupancy in the portfolio remains high at 96.6% as at 31 March 2013. This is broadly in line with the same period last year (97.1% as at 31 March 2012), but slightly down on the figure of 97.7% at 31 December 2012.

Occupancy (%)	UK Shopping Centres	France Retail	UK Retail Parks	Group
31 March 2013	96.2	96.8	98.0	96.6
31 December 2012	98.1	97.5	98.2	97.7
31 March 2012	96.4	98.1	98.1	97.1

In the UK, despite the impact of poor weather, retailer sales in the shopping centre portfolio increased by 0.3% over the period. In France, retailer sales fell 5.1% as a consequence of disruption caused by our shopping centre renovation works, poorly performing electrical retailers and exceptionally cold weather in Paris impacting sales of spring fashion collections.

We have seen continued demand from retailers for prime retail space. Over the period we exchanged 46 leases for 16,500m² with annual passing rents of £2.4m per annum. In the UK retail portfolio, rents on new long-term lettings were agreed 4.4% ahead of ERV, in France leases were agreed 1.3% below ERV. Overall, at the group level, rents from these lettings were broadly in line with ERV and 31% ahead of previous passing rents.

Significant new lettings in the UK include: Hugo Boss at The Oracle, Reading; Bose at Bullring, Birmingham; and Coast to Coast at Highcross, Leicester, the latter significantly improving the catering offer at the centre. We signed Pravins Jewellers to WestQuay, Southampton, and now have four of their five UK stores in our portfolio. In France, leases were signed with: Téléshopping at O'Parinor, Paris; Geox at Place des Halles, Strasbourg; and Promovacances at Espace St Quentin, Paris.

The number of units in administration at 31 March 2013 was 81 (27 February: 79) representing

2.4% of passing rents. Of this, 33 units, representing just 0.9% of group passing rents, were unoccupied.

Value Retail, Hammerson's partner in the premium designer outlet market, has continued to trade well and in line with expectations during the first four months of 2013. Brand sales grew at a high single digit rate compared to the same period last year and the 6,000m² extension project at La Roca, Barcelona, started on site this month and is due to complete in early summer 2014.

Portfolio

In May, Hammerson acquired an additional 17% stake in Bullring for £154 million (5.7% yield), taking its ownership to 50%. Bullring is one of the UK's top ten retail destinations, anchored by Selfridges and Debenhams, is over 99% let and attracts 40 million shoppers per annum. The deal, which was satisfied in cash from existing resources, underlines Hammerson's commitment to prime retail destinations and generating income growth through investment in winning sectors of the retail property market.

Our major retail and leisure development at Les Terrasses du Port, Marseille, is progressing well and the project is on schedule to open in spring 2014. The scheme is 86% pre-let, with a further 12% of rents in negotiation. Urban fashion brand Citadium has agreed to lease a 1,820m² store, which will be its first outside Paris. Brazilian high-end shoe brand Carmen Steffens has agreed a lease for an 85m² store which will be its first in a French shopping centre. Other pre-letting agreements were exchanged during the quarter with Eden Park, Mephisto and La Fabrique de Lunettes.

Following a successful public consultation, detailed designs for the new Victoria Gate development in Leeds, formerly Eastgate Quarters, will be submitted to the council for planning approval later this month. Construction of phase 1 of the development, which includes the 24,000m² John Lewis department store, 30 shops, 5 restaurants and an 800 space car park, is due to begin in spring 2014, and completion is scheduled for autumn 2016.

In Croydon, the 50:50 joint venture between Hammerson and Westfield has completed the acquisition of the 25% stake in the Whitgift Centre and is working up detailed plans for the project. An outline planning application for the £1bn retail regeneration scheme has already been submitted and is due to be determined by the summer.

At Italie 2, Paris, our largest asset in France, we are undertaking a major renovation project that will be completed later this summer. Printemps has renewed its lease, 6.5% ahead of its previous rent. Three additional MSU renewals were signed: Darty (30% above previous passing rents), Tati (16% ahead of previous passing rents) and Jennyfer (in line with previous passing rents).

At O'Parinor, Paris, we have commenced construction of the 7,200m² leisure extension, and signed a pre-let with UGC to anchor the redevelopment with a 14 screen cinema. The scheme will also include a food court, of which 63% is pre-let to restaurants including Pizza del Arte, Goutu, Manhattan Store and O Food Asia.

Planning permission has been secured for the 14,500 m² extension of Cyfarthfa Retail Park in Merthyr Tydfil. The scheme will be anchored by a 4,600m² Marks & Spencer store, the brand's first in the town. Further stores for five new retailers are included in the plans. Construction work is due to start later this year, with stores open for trading by Christmas 2014.

A planning application has been submitted for the leisure-led development Watermark WestQuay in Southampton, adjacent to WestQuay shopping centre. The first phase will comprise a cinema, up to 15 restaurants and additional retail space.

Financing

Borrowings were £2.2 billion at 31 March 2013 and cash balances were £73 million, to give net debt of £2.1 billion (31 December 2012: £2.0 billion).

The loan-to-value and gearing ratios at 31 March 2013 were 37% and 54% respectively (based on 31 December 2012 portfolio values). Cash and committed unutilised bank facilities totalled £677 million. Proforma for the recently announced Bullring acquisition and the second tranche of office sales to Brookfield, that will complete in June, loan-to-value and gearing ratios are 36% and 52% respectively.

Outlook

Despite challenging economic conditions, our regionally dominant shopping centres, conveniently located retail parks and premium designer outlets continue to attract successful retailers. Our targeted asset selection and sector expertise will allow us to capitalise on prevailing retail trends and we remain confident in the earnings outlook for our business. 

Conference call

There will be a conference call for investors and analysts at 0800 BST today. To participate in the call, please dial:

UK	[phone]
US	[phone]
Netherlands	[phone]
France	[phone]

The participant code is 698469.

For a replay of the conference call, please visit: www.hammerson.com                            

For further information

David Atkins, Chief Executive Timon Drakesmith, Chief Financial Officer Morgan Bone, Director of Corporate Communications

Tel:  [phone] Tel:  [phone] [e-mail]

Financial information

The financial information contained in this statement is based on unaudited management accounts for the three months ended 31 March 2013.

Forward-looking statements

This document 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 this document. Information contained in this document relating to the Company should not be relied upon as a guide to future performance.

 

END

 

 

IMSUWSBROAAVRAR