Interim Management Statement

RNS Number : 6329S

Hammerson PLC

11 November 2013

 



For release Monday 11 November 2013

Hammerson plc

Interim Management Statement for the period from 1 July 2013 to 10 November 2013   

Highlights:

·        Completed refurbishments of: Italie Deux, Paris; Place des Halles, Strasbourg; and Grand Maine, Angers

·        Progressed on site developments at: Les Terrasses du Port, Marseille; Silverburn, Glasgow; Cyfarthfa Retail Park, Merthyr Tydfil; and O'Parinor, Paris

·        Planning consent granted for the development of Victoria Gate, Leeds

·        Revised planning application submitted for the extension of Brent Cross

·        Signed 94 new leases across the portfolio year to date, representing £9.1 million per annum, in line with ERV and 13% ahead of previous passing rents 

·        Total value of new leases signed year to date in 2013 is 82% higher than equivalent period in 2012

David Atkins, Chief Executive, said,

"We are seeing ongoing signs of recovery in our markets, particularly the UK, where improving retailer confidence is generating increased demand for our retail space. We are capturing this momentum by advancing developments, refreshing our assets and pushing ahead with multichannel initiatives to enhance the shopper experience at our centres. We are well positioned to capitalise on opportunities in our markets."

Growing income by securing high quality tenants and creative marketing

Overall occupancy in the portfolio remained above our target at 97.1% as at 30 September 2013 (30 June 2013: 97.4%). We have signed 94 new leases across the portfolio in the year to date, representing £9.1 million per annum, in line with ERV and 13% ahead of previous passing rents.

We are making good progress implementing our multichannel strategy. In October we successfully launched our loyalty app in Highcross, Leicester and The Oracle, Reading. The app enables customers to receive exclusive offers tailored to their preferences, and allows us to gain greater insight into the way our consumers shop. Usage of the app has been above our expectations, and we intend to roll out further enhanced digital and mobile applications across the portfolio in 2014.

Tenants' sales in our UK shopping centres were flat in the third quarter, with strong menswear and sports goods sales offset by weak sales of ladies fashion. Footfall was -2.1% against the same period in the prior year. In France, tenants' sales were -4.0%, largely as a consequence of the continued disruption from refurbishment works, particularly at O'Parinor and Italie Deux. Encouragingly, in the two weeks following its relaunch in September, 650,000 people visited Italie Deux, a 7.5% increase on the same period last year. Footfall across the French portfolio was -2.8% for the quarter.

There has been no impact on passing rents from additional administrations since June.

Value Retail, Hammerson's partner in the premium designer outlet market, has continued to trade well and in line with expectations during the first nine months of 2013. Brand sales grew at a double digit rate compared to the same period last year. Construction of the extension project at La Roca Village, Barcelona, remains on track for an opening in early summer 2014.

Constantly improving our high-quality asset base

On site development

Construction work continues on schedule at Les Terrasses du Port, our 61,000m² shopping and leisure destination in Marseille. New leases have been signed with Hugo Boss and Ted Baker, which is opening its first French store outside the capital. The scheme is now over 90% let and Printemps, the high-end French department store which anchors the scheme, has commenced its fit out ahead of the scheme opening in May next year.

The refurbishment and 7,200m² extension of O'Parinor, Paris, to create a new cinema and a significantly enhanced catering offer at the centre, is progressing well and due to complete in spring next year.

Works are progressing on schedule at the 11,000m² leisure extension at Silverburn, Glasgow, with the first phase due for completion in autumn 2014. The scheme, which is 84% pre-let, will be anchored by a 14-screen Cineworld multiplex cinema, and include new restaurants such as Zizzi and Pizza Express.

At Cramlington, following our successful completion of the 4,000m² catering and leisure scheme in the summer, the 5,400m² extension to Manor Walks Retail Park was completed in the period, with the majority of units already handed over to retailers in advance of the key Christmas trading period.

Works to extend Cyfarthfa Retail Park, Merthyr Tydfil, are progressing well, where B&Q is due to open the first of a new generation of Eco Learning Stores in May 2014. The second phase, anchored by a 5,000m² Marks & Spencer store with an additional 5,000m² fashion terrace, is due for completion in autumn 2015.

At Abbotsinch Retail Park, Paisley, which was acquired as part of the Junction Fund transaction, works have begun on the 5,500m² extension project, which is 90% pre-let.

Development: planning and work up

In September we secured detailed planning consent for the Victoria Gate development in Leeds. The 37,000m² scheme will be anchored by a 24,000m² flagship John Lewis store and provide 30 additional retail units, six restaurants, new leisure space and an 800-space car park in the city centre. Construction is due to begin in spring 2014 with completion by the end of 2016.

In London, we have submitted a revised planning application for the regeneration of Brent Cross Cricklewood, following a successful consultation with local residents and stakeholders, which will pave the way for a world-class retail, dining and leisure venue at Brent Cross. In Croydon, our joint venture with Westfield to redevelop the Whitgift centre is making good progress and we anticipate securing planning resolution before the end of the year.

Investment activity

We continue to screen our markets in both the UK and France for selected attractive acquisition opportunities, whilst reviewing our own portfolio to ensure that we recycle capital into higher-return opportunities where appropriate.

Financing

Borrowings were £2.3 billion at 30 September 2013 and cash balances were £71 million, to give net debt of £2.2 billion (30 June 2013: £2.2 billion).

The loan-to-value and gearing ratios at 30 September 2013 were 38% and 57% respectively (based on 30 June 2013 portfolio values). Cash and committed unutilised bank facilities totalled £660 million.

Outlook

We are seeing signs of recovery in our occupational markets, particularly in the UK, and there is good demand from retailers in response to improving economic conditions. Our portfolio of well located prime shopping centres, convenient retail parks and designer outlet villages continues to perform well, with improving demand in the investment markets providing good support for valuations. We are on course to perform in line with our earnings guidance provided earlier this year.

Conference call

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

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

The participant code is 237888

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 30 September 2013.

Financial Calendar

Hammerson's proposed financial calendar for 2014 is as follows:

2013 Full Year results	17 February 2014
Q1 IMS & AGM	23 April 2014
2014 Half Year results	24 July 2014
Q3 IMS	10 November 2014

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

 

 

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