Interim Management Statement

RNS Number : 2678F

Hammerson PLC

23 April 2014

 



Embargoed until 0700 Wednesday 23 April 2014

Hammerson plc

Interim Management Statement for the period from 1 January to 22 April 2014   

Highlights

·     UK leases signed 8% above ERV, French leases 1% above ERV

·     Footfall and sales in UK shopping centres up 0.6% and 0.5% respectively

·     Value Retail brand sales continued to grow at double-digit rate

·     Occupancy remains high at 96.6% (31 March 2013: 96.6%)

·     Les Terrasses du Port, Marseille, now 96% let, scheduled to open 24 May 2014

·     Completed £109 million acquisition of Saint Sébastien shopping centre, Nancy

David Atkins, Chief Executive, said,

"Economic recovery, particularly in the UK, is generating confidence in our consumer markets. We have seen improving leasing demand over the period, and have struck deals at good levels in both the UK and France. In addition the ongoing strength of investment demand in both our territories is providing support for valuations. We are on site with a number of retail developments, and are progressing other major retail schemes, to capitalise on this demand from both the consumer and investment markets."

Strategy

Hammerson has three strategic priorities which guide our capital deployment, operating model and financial management: creating high-quality property; maximising income; and capital strength. Our strategy is underpinned by high-quality real estate. We create compelling retail venues in successful locations with services and experiences tailored to the local consumer demographic.

Creating high-quality property - development

Our retail and leisure scheme in Marseille, Les Terrasses du Port, will now launch on the 24th May this year. The scheme features a 260 metre event terrace overlooking the Mediterranean Sea, will be open seven days a week, and is part of the major regeneration of the port area of Marseille. Tenant demand for space in this iconic centre remains strong, with a further 1,500m² leased during the quarter and 96% of rents now secured. The scheme will bring around 30 new retailers to Marseille, including Ted Baker, Citadium and Michael Kors.

Construction is underway at Victoria Gate, Leeds and Le Jeu de Paume, Beauvais. At Victoria Gate, Sir Robert McAlpine has been appointed the contractor, and the £150 million scheme, which will deliver 34,000m² of high-quality retail including a new John Lewis, is due to be completed by the end of 2016. Construction of Le Jeu de Paume in Beauvais is progressing well, and we expect the 24,000m² scheme north west of Paris to complete toward the end of next year.

Croydon Council has approved the use of compulsory purchase orders required for the
£1 billion redevelopment of the Whitgift Centre by the Hammerson/Westfield joint venture. We welcome the decision made by the Council, which is an integral part of the land assembly process, and will help deliver the major retail regeneration of Croydon's town centre. 

Detailed designs for phase one of Watermark WestQuay have been submitted to Southampton City Council. The proposals comprise a 10-screen cinema and up to 20 restaurants alongside a major, high-quality public piazza adjoining the existing WestQuay shopping centre. The application focuses on the architectural features, landscaping design and materials proposed within the development.

We have continued to progress our plans for Bishopsgate Goodsyard in conjunction with our JV partner Ballymore, and following a period of consultation with stakeholders we anticipate submitting a planning application for the mixed-use site in the coming months.

Creating high-quality property - extensions/refurbishment

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 October this year. This will add to the vibrancy of the centre which has already been enhanced following the opening of Primark.

We have submitted a detailed planning application to Swansea City Council for the refurbishment of its 22,600m² Parc Tawe retail park. The £10 million retail park redevelopment will create six new retail units, four new restaurants and a drive-through coffee pod. This is in addition to upgrading the existing retail fascias for leisure brands including Odeon and TenPin, and a flagship Toys R Us store.

In March our planning consent for the redevelopment of Elliott's Field Retail Park, Rugby, was successfully upheld following a Judicial Review challenge being dismissed. We are now in discussion with retailers ahead of a start on site this Autumn.

Creating high-quality property - investment

Following the announcement in January that we had agreed to acquire the majority stake in Saint Sébastien shopping centre in Nancy for £109 million, we completed the acquisition in February. We are now working up plans to implement identified asset management initiatives within the centre and improve its links with the Nancy Grand Coeur rejuvenation project.

Maximising income

Over the period we signed a total of 80 new leases across the portfolio for 22,000m² representing over £5 million per annum. In the UK leases were struck 8% above ERV, in France 1% above, and there has been evidence of ERV growth in selected units. Overall occupancy in the portfolio was 96.6% as at 31 March 2014 (31 March 2013: 96.6%).

Already this year we have secured a number of leasing firsts across the portfolio, including the first French Sole store outside London at Victoria Quarter, Leeds, and Five Guys' first restaurant in the Midlands at Bullring in Birmingham. In April, Primark opened its first store in the Paris region at O'Parinor. The event was a huge success, with significantly increased visitor numbers, full car parks and consumers queuing to enter the store. The additional footfall had a beneficial impact on other tenants, with restaurants in particular recording notable increases in turnover.

In the first three months of the year, footfall and sales in our UK shopping centres were both slightly up, in French centres they were down c. 3%. Value Retail, Hammerson's partner in the premium designer outlet market, has continued to trade well during the first three months of the year with brand sales growing at a double digit rate.

The next iteration of our multi-channel technology is being implemented at Les Terrasses du Port and a successful pilot app was trialled at Italie Deux, testing geo-location and voucher redemption technology. The pilot was tested on a closed group of 400 consumers over two weeks, and incorporates lessons learned from the trial of the Kudos app at Highcross and The Oracle in the UK.

We have been recognised for our creative approach to securing income from our portfolio. WestQuay recently won the BCSC Opal Award for best use of interactive media for its Monster Headphones interactive window, and Brent Cross won the award for best use of unusual commercial space with its 'drive-in movie' concept.

Capital strength

Borrowings were £2.3 billion at 31 March 2014 and cash balances were £58 million, to give net debt of £2.3 billion (31 December 2013: £2.3 billion).

The loan-to-value and gearing ratios at 31 March 2014 were 38% and 57% respectively (based on 31 December 2013 portfolio values). Cash and committed unutilised bank facilities totalled £803 million (31 December 2013: £716 million).

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 359474. 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 2014.

Financial Calendar

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

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. 

 

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