Capital Markets Day 2015 13th November 2015
Today’s agenda
Introduction David Atkins – CEO
01 Retail Parks Andrew Berger-North – Director, UK Retail Parks
02 Elliott’s Field Tom Cochrane – Development Manager
03 Our portfolio position today David Atkins – CEO Peter Cooper – Director of Asset Management UK Retail Sarah Fox – Head of Restaurants and Leisure Sophie Ross – Group Head of Multichannel Simon Betty – Director of Retail, Ireland
04 Leeds Victoria James Hepburn – Development Manager Nick Fay – Senior Project Manager Lucy Philips – Leasing Executive, Leeds
2
We create desirability
20 prime shopping centres UK & France
Around 250 million visitors each year
£2bn annual sales
£240m passing rents
3
15 Premium Outlets
12 countries
Value Retail and VIA Outlets
£1.1bn GAV
Bullring, Birmingham Fife Central Retail Park, Kirkcaldy Batavia Stad, Amsterdam
Hammerson is creating destinations where more happens for communities, for consumers and for brands
(1) Includes Villebon 2, France
Experience Convenience Luxury
21 retail parks(1)
2nd largest owner of retail parks in UK
Over 500,000m2
£80m passing rents
Retail parks Andrew Berger-North Director, UK retail parks
4
01
483,000m2
Retail parks: a major strength within our portfolio
5
Why are we invested in retail parks?
1. Exceptional occupational demand – both ‘traditional’ and fashion
2. Have the experience required to deliver skilful management of the tenant mix and to drive rental growth
3. Efficient to run
4. Extensions and developments are quick to deliver and highly profitable
5. Total returns are equivalent to UK shopping centres
Selective about the market sub-segments we invest in…
Hammerson portfolio
Total retail parks area
No of parks over 20,000m2
15 of 20 Occupancy (at 30 Sept 2015)
98.5% Unexpired lease term to expiry or break
8.7 years Open A1 consented space
58%
Retail parks are not all the same…the market has a number of sub-segments
6 Source: Hammerson; Cushman and Wakefield, October 2015 (1) Market and portfolio split by number of parks (see Appendix for split by value)
Shopping parks Hybrid parks Key homeware goods parks
Standard homeware parks
Solus units
£30-50/sq ft £20-30/sq ft £15-30/sq ft £12-15/sq ft £8-15/sq ft
4.5% 4.5–5.0% 5.25–6.0% 6.5–7.0% 7.0–9.0+%
Hammerson investment focus
Indicative rents
NEY
UK Retail Parks market(1)
5%
23%
12%
16%
43%
13%
30%
39%
8%
13%
Shopping park
Hybrid park
Key homeware goods
Standard homeware
Solus
79% by number of properties
40% by number of properties
Hammerson portfolio(1)
Vacancy is falling but remains high for secondary homeware goods parks; is at an all-time low for Hammerson
7 Source: PMA (PROMIS)
Vacancy across retail parks (%)
0%
5%
10%
15%
20%
25%
30%
2008Q1
2008Q3
2009Q1
2009Q3
2010Q1
2010Q3
2011Q1
2011Q3
2012Q1
2012Q3
2013Q1
2013Q3
2014Q1
2014Q3
2015Q1
All Retail Parks Shopping parks Secondary Bulky Goods Parks Hammerson
Exceptional occupational demand: ‘traditional’ homeware goods
Recovery in housing market driving sales
Surge in demand for homeware goods units – especially from home furnishings retailers
Currently one of the best performing retail segments
ScS, Sofa Works, Oak Furniture Land, Homesense, Dunelm and new entrant Tapi – all acquiring new physical space
B&Q and Homebase reducing estates – opportunity to substitute new tenants
Strong ERV growth wide-reaching across the portfolio
8
“The out-of-town non-food sector has the most positive occupier market for the best part of a decade.” Cushman & Wakefield, UK Retail Warehouse report Q3 2015
Household goods sector driven by strong furniture sales
9 Souce: ONS (September 2015)
Household goods sales growth % p.a.
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
2008SEP
2009JAN
2009MAY
2009SEP
2010JAN
2010MAY
2010SEP
2011JAN
2011MAY
2011SEP
2012JAN
2012MAY
2012SEP
2013JAN
2013MAY
2013SEP
2014JAN
2014MAY
2014SEP
2015JAN
2015MAY
2015SEP
DIY Electricals Furniture
Low vacancy together with strong occupational demand is triggering impressive letting deals
10
Hobbycraft, Imperial Bristol ERV: £19psf, NER: £23.12psf (+22%)
ScS, Westwood Retail Park Thanet ERV: £20.50psf, NER: £26.13psf (+27%)
Oak Furnitureland, Abbotsinch Paisley ERV: £22.50, NER £26.37psf (+17%)
Note: NER = net effective rent
Tapi, Westwood Retail Park Thanet ERV: £21.50psf, NER: £28.50psf (+32%)
Selection of homeware goods lettings across Hammerson’s portfolio (YTD)
Tenant administrations and right-sizing of DIY retailers presents an opportunity
11
1
2 3
Phase 1 Extension: completed
Phase 2 Reposition: Tenant administrations facilitated upsize of Next and introduction of M&S Food
Phase 3 New facias: Took back Homebase and introduced new stores
Passing rent +150% (to £1.2m p.a.)
Profit on cost >25%
Fife Central Retail Park, Kirkcaldy
Actively managing retailer substitution
12 (1) Design image of future scheme
Fife Central Retail Park, Kirkcaldy
Phase 2 Reposition park tenant mix
Phase 3 Replace Homebase
Before
After
Before
After (1)
Strong occupational demand: shopping parks
Strong tenant demand for best shopping parks
Next, Primark, M&S Simply Food, Outfit, Wilko and H&M active in
10-15,000 sq ft segment
Next: 75% of new space on retail parks
New River Island kidsware range – expansion focused on shopping
parks
Key size requirement of 2-5,000 sq ft for new entrants including Fat
Face, Schuh, Mountain Warehouse and Moss Bros
Packages stable
13
“Retail parks have outperformed the wider retail market with respect to footfall and vacancy rates. The sector saw a 4% increase in footfall in September, the best performance since January 2014 and bucking an overall drop of 0.2%.” Cushman & Wakefield, UK Retail Warehouse report Q3 2015
Material tenant overlap with shopping centres creates synergies
14
Hammerson coordinated approach Tenant overlap with shopping centres
“Retailer of the Month” meeting
Customer-centric approach: one voice to our customers
Retailers’ leasing teams are regional, not by property type
Coherent approach to leasing terms with retailers
Multiple touch points open more opportunities
More attractive landlord proposition
Extensions and developments are quick to deliver and highly profitable
15
Abbotsinch Retail Park, Paisley Cyfarthfa Retail Park, Merthyr Tydfil
• £9m
• 5,000m2
• Yield on cost 13%
• Profit on cost 91%
• £27m
• 14,500m2
• Yield on cost 7%
• Profit on cost 34% Annualised return on incremental capital 2012 – 2014 of 20%
16
17.4 15.4
1.2
-20.7
-3.1
19.3
7.0
4.3
7.8
15.0
24.1
12.0
-1.8
-26.6
8.1
18.1
7.9
3.0
7.8
15.0
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14
UK Shopping Centres UK Retail Parks
Total returns at Hammerson retail parks vs. Hammerson UK shopping centres within portfolio (%)
Total returns at retail parks are equivalent to shopping centres
Retail parks portfolio is efficient to run
17
Retail parks team: 8 people
(1) As at 30 June 2015. Property outgoings include net service charge expense and property outgoings, exclude corporate and central overhead costs
4.6%
12.2%
0%
4%
8%
12%
16%
UK RetailParks
UK ShoppingCentres
Property outgoings : rent(1)
Elliott’s Field, Rugby
Tom Cochrane Development Manager
18
02
Elliott’s Field one year ago…
19
Elliott’s Field Shopping Park: the vision
20
Elliott’s Field: scheme overview
21 (1) Profit on total development cost including land acquisition
Size
15,700m2
Key facts
Total project cost
£76m
Gross rental income at completion
£4.5m
Profit on cost(1) / Profit
23% / £17.5m
IRR
20%
Start on site
Sep 2014
Official opening
28 Nov 2015
BREEAM rating
Excellent
Rugby offers an ideal ‘in-fill’ location for retailers
Total catchment: 443,000 Primary catchment: 124,000 Affluent families: 22,000 Conveniently located 1 mile north of the town centre under 2 miles south of junction 1 of the M6 motorway
22 Source: Javelin
Rugby is an affluent growing town with a weak town centre retail offering
Working with retailers to deliver best in class service
23
Before After
Fashion shopping on your doorstep
24
Portfolio firsts
Enhanced customer experience
Shopping parks: the next generation parks
25
Interface with the digital age
Forward looking initiatives
Family friendly facilities including
• Customer WCs and baby change
• Parent and child car parking
• Play area Centre management suite
Uniformed customer services representatives
Free mobile phone charging points
Free Wi-Fi
Click and collect lockers
Consumer website, Twitter feed and Facebook profile promoting retailer offers
Retailers have designated click and collect points
Electric car charging points
Car and customer flow tracking
Consistent Hammerson branding across scheme
Part landlord, part retailer funded marketing budget
Great returns, and more to come
26 (1) Profit margin on total development cost including land acquisition
Valuation components for Elliott’s Field (£m)
0
20
40
60
80
100
120
Acquisition2011
Developmentcost
Profit Valuation atcompletion
23% profit on cost
Further profit to come from expected rental uplift
2020
(1)
10,470m2
£47m
£3m
6.5%
£7m
24%
18%
27
Size
Total project cost
Expected GRI at completion
Expected yield on cost
Expected profit
Key Facts
Start on site
Practical completion
Dec 2015
Feb 2017
Expected POC
Hammerson’s next fashion park: Orchard Centre, Didcot (phase two)
IRR
Our portfolio position today
David Atkins CEO
28
03
We create desirability
20 prime shopping centres UK & France
Around 250 million visitors each year
£2bn annual sales
£240m passing rents
29
15 Premium Outlets
12 countries
Value Retail and VIA Outlets
£1.1bn GAV
Bullring, Birmingham Fife Central Retail Park, Kirkcaldy Batavia Stad, Amsterdam
Hammerson is creating destinations where more happens for communities, for consumers and for brands
(1) Includes Villebon 2, France
Experience Convenience Luxury
21 retail parks(1)
2nd largest owner of retail parks in UK
Over 500,000m2
£80m passing rents
Guided by clear strategic priorities
30
High quality property
Income generation
Capital strength
Our strategy to drive consistent earnings growth
1. Strong and improving consumer backdrop
2. Applying our unique insight and skill to match latest retail trends
3. Investing incremental resources into fast-growing end markets
4. Focus on cost management and capital structure
5. Delivering a pipeline of prime developments to secure future growth
31
Track-record of sector-beating earnings and dividend growth
32 Source: Company; Bloomberg (1) Bloomberg data as at 11 November 2015 (2) Bloomberg data. Average of Unibail, Klepierre, Intu, British Land and Land Securities
Hammerson EPS (pence) Hammerson DPS (pence)
Consensus forecast
2014-17F(1)
8%
13.6
5
10
15
20
25
2011 2012 2013 2014 2015
H1 H2
9.5
5
10
15
20
25
2011 2012 2013 2014 2015H1 H2
CAGR 7.4% CAGR 7.1%
Consensus forecast
2014-17F(1)
7%
Peer group average consensus forecast
2014-17F(2)
4%
Peer group average consensus forecast
2014-17F(2)
3%
A larger and enhanced European retail portfolio
33 (1) Pro-forma as at 30 June 2015, including acquisitions of Project Jewel and disposals of Bercy 2 and Grand Maine
Hammerson portfolio breakdown by value(1)
UK Shopping Centres
34%
France 19%
UK Retail Parks 19%
Premium Outlets
13%
Ireland Retail (loans) 10%
Total Portfolio Value
£8.6bn £7.1bn
UK shopping centres
£2.9bn £2.6bn
France £1.6bn £1.8bn
UK Retail Parks £1.6bn £1.6bn
Premium Outlets £1.1bn £0.8bn
Ireland retail (loans)
£0.9bn n/a
Other/ developments
£0.5bn £0.3bn
30 Jun 2014 30 Jun 2015 Other/developments 6%
Investing in fast-growing markets
34 (2) Pro-forma as at 30 June 2015, including acquisitions of Project Jewel and disposals of Bercy 2 and Grand Maine
UK Shopping Centres
34%
France 19%
UK Retail Parks 19%
Premium Outlets
13%
Ireland Retail (loans) 10%
Other/developments 6% Ireland retail
Retail sales growth 6 – 8% p.a.
Acquired established leading platform
Synergies with UK portfolio
Longer-term attractive developments
Expected 5-year ungeared IRR: 7 – 8%
Premium Outlets Retail sales growth +10% p.a.
Extending Value Retail villages
VIA Outlet acquisitions
Expected IRRs on VIA Outlets acquisitions: 10 - 12%
Only REIT with meaningful strategic exposure to both:
End market sales: good in UK; flat in France; strong in Ireland
35 (1) Source: ONS. Predominantly non-food store sales (2) Source: Banque de France. Predominantly non-food store sales (3) Source: Central Statistics Office. Predominantly non-food retail sales index
UK retail sales(1) France retail sales(2) Ireland retail sales(3)
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
Sep
-05
Sep
-06
Sep
-07
Sep
-08
Sep
-09
Sep
-10
Sep
-11
Sep
-12
Sep
-13
Sep
-14
Sep
-15
Volume Value
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
Sep
-05
Sep
-06
Sep
-07
Sep
-08
Sep
-09
Sep
-10
Sep
-11
Sep
-12
Sep
-13
Sep
-14
Sep
-15
Volume ValueYoY % YoY %
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
Sep
-05
Sep
-06
Sep
-07
Sep
-08
Sep
-09
Sep
-10
Sep
-11
Sep
-12
Sep
-13
Sep
-14
Sep
-15
Volume ValueYoY %
Improving trend in Hammerson’s tenant sales
36
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
H1
12
FY 1
2
H1
13
FY 1
3
H1
14
FY 1
4
H1
15
YTD
UK: benefitting from continued focus on best tenant mix and customer experience
UK tenant sales
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
H1
12
FY 1
2
H1
13
FY 1
3
H1
14
FY 1
4
H1
15
YTD
France: Les Terrasses du Port and retenanting delivering results
France tenant sales
Note: Growth in retailer revenues on a same-centre basis, including Primark revenues at O’Parinor based on Hammerson’s estimates. Full year data reflects previous 12 months.
+2.2%
+0.8%
Strong fundamentals for rental tension in UK portfolio
37
Falling vacancy
UK portfolio vacancy (%)
Fewer temporary lettings
Temporary leases in UK retail portfolio
3.4%
2.8% 2.9%
1.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
UK SCs UK RPs
Sep-14 Sep-15
86
61
53
0
10
20
30
40
50
60
70
80
90
100
Dec-14 Jun-15 Sep-15
All temporary leases < 1 year
Latest retail trends driving occupier demand
38
1 Brand
flagships
2 Trending brands
3 New
concepts
4 Personal
treats
5 Restaurant
heroes
39 (1) Year to date to 30 September 2015 (2) Chart shows principal lettings where comparable LfL ERV for 31 December 2014 is available
Individual leases signed by Hammerson 2015 YTD – % above/(below) ERV(2)
80% of lettings at or above ERV at UK Shopping Centres; total rents signed at 5% above ERV(1)
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Letti
ng a
bove
/ (
bel
ow
) ER
V
Flagship clothing Non fashion Catering
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
6 m
ont
h ER
V g
row
th
6mth ERV - H1 2014 6mth ERV - H1 2015
Hammerson shopping centre rental growth – moving on ERVs centre by centre
40 (1) Monument Mall excluded as equivalent ERV as at 30 June 2014 not available due to development (2) Source: PMA Autumn 2015 forecasts for large shopping centres; CBRE National Forecasts for large shopping centres (as at August 2015)
Oracle
Hammerson 6 month ERV growth per UK shopping centre (%) (1)
Market forecast ERV
growth (2)
FY 2015
PMA 1.2% p.a. CBRE 1.5% p.a.
2016 – 2020
PMA 2.8% p.a. CBRE 1.6% p.a.
Driving ERV growth at the Oracle – “We Create Desirability”
41
International flagship deal
Victoria’s Secret
Upsizing existing tenants
Topman, Topshop, Miss Selfridge, H&M
Exciting new retailers
Smiggle, Kiko
Improved catering offer
Five Guys; Côte; CAU; TGI Friday’s
Value-add projects
Creation of bespoke catering unit for CAU
Product Framework initiatives
Lighting; phone charging; interactive hoardings
Riverside Pavilion and public realm upgrade
Start on site H1 2016
Before
Bespoke catering unit for CAU
After
6m ERV
+2.5%
Retail sales YTD
+3.1%
Footfall YTD
+2.6%
Growth in non-rental revenue
Income from digital screens +31% since 2013
Mall catering income grown by +110% since 2012
Operators recognise need for more engaging kiosk design to boost sales, driving rents by up to +30%
New Hammerson ‘Head of Commercialisation’
42 (1) Gross revenue received from commercialisation initiatives across UK shopping centres. Net income received by Hammerson from commercialisation includes c.30% cost margin
(2) Net car park income £16m 12 months to 30 June 2015
4
6
8
10
12
14
16
2009 2010 2011 2012 2013 2014
Advertising & promotions Kiosks
Car valeting Vending
Storage Other
UK shopping centre commercialisation revenue (£m) (1)
13% CAGR
Car park income +8.8%(2)
Current catering trends
1 in 4 visitors come to shopping centres specifically to eat(1)
Food & beverage space in Hammerson portfolio: 8.7% (2010: 6.7%)(2)
43
Staple cuisines such as burgers, pizza, and pasta are diversifying Italian remains a firm favourite; new market entrants include Franco Manca, Pizza Pilgrims Trend is towards informal dining; sharing food/grazing e.g. Polpo Mexican, BBQ & noodle chains continue to grow in popularity Traditional food court offering more relevant Restaurants embracing all day offering
Catering insights
(1) Source: CBRE (2) Total space including leisure: 14%
Catering sales continue to be strong
44 (1) Sales growth figures for Sep 2014 – Sep 2015 for catering units where provided (2) Includes restaurants that have exchanged but are not yet trading
Top performing restaurant brands in Hammerson’s portfolio by sales growth (YoY %)
+26% 2
+15% 1
+15% 5
+12% 1
+12% 5
+11% 8
+11% 2
+10% 5
Restaurants in Hammerson portfolio (2)
Hammerson YoY sales growth % (1)
What can an improved catering offer bring to a centre?
45
Silverburn – Winter Garden extension Phased opening from Jan 2015
Highcross – St Peter’s Square dining quarter Completed August 2014
Dwell time increased 16 minutes, +21% Centre LFL sales +5.0% Restaurant LFL sales +6.2%
Post 5pm footfall +20% Centre LFL sales +4.6% Restaurant LFL sales +2.6%
Digital engagement: driving positive behaviour from our shoppers across all our shopping centres
46
Know who our loyal shoppers
are: gender, age, interests
Understand shoppers’
preferences
Communicate with shoppers in
real time based on their
expressed and learned interests
Consumer engagement
6 preferences identified
2 push messages received
1 offer redeemed
40,000 beacon
detections
270 instances of
precise location data collected
Insight from one shopper visit
Engaged customers visit more
retailers and spend longer in
our centres
Stores visited
Not registered 3 Registered users 6 Redeemers 12 While more women are using
the app, men are more likely to
redeem offers than women
Increasing customer spend
Product Framework 2015 initiatives delivered
47
Iconic destinations Placemaking art
Best at retail Design guidelines
Retail Trust/College of Fashion sponsorship
Convenient & easy
Mobile phone charging units
Click & collect
Premium toilets
Best in class car parks
Customer service desk
Internal and external seating
Best practice wayfinding
Interactive & engaging
Digital infrastructure
Interactive hoardings
Virtual gift cards
Wedding/gift list
Sound/light/smell improvements
Entertaining & exciting
Pianos in the mall
Disco bull's head
In-centre family entertainment
Mobile phone charging
Placemaking art
Disco bull’s head, Bullring
Premium toilets
Click & collect
Customer service desks
Our Jewel portfolio assets
48
Dundrum
Dundrum
Pavillions, Swords
Ilac Centre
Dundrum
5.5
3.7
2.7
1.8
0
2
4
6
2013 2014 2015F 2016F
Ireland is the fastest growing European economy
49 Source: Ireland Central Statistics Office, Department of Finance
Highest GDP growth in Europe
Strong declining trend in unemployment
0.9 1.5
1.9
0
1
2
3
4
5
2014 2015F 2016F
Ireland Euro AreaGDP %
13.1 11.4
10.2 9.4
0
7
14
2013 2014 2015F 2016F
Unemployment rate %
Broad based recovery
Deficit as % of GDP
3.6 3.6
1.9
0
1
2
3
4
5
2014 2015F 2016F
Domestic demand contribution to GDP growth %
77% 92%
56%
Four straight years of fiscal outperformance
4.7
3.9 3.4
Strong support for the Dublin retail rental market
50
All retail sales index (1)
90
95
100
105
110
115
120
Jan-05 Jul-06 Jan-08 Jul-09 Jan-11 Jul-12 Jan-14 Jul-15
Dublin prime retail rental growth (%)
-10 -11
25
14 11
6
-15
-10
-5
0
5
10
15
20
25
30
2012 2013 2014 2015E 2016E 2017E
International investment
Arnott’s purchased by Westons (Selfridges group)
54% property investment from overseas (YTD)
Infrastructure improvement
DART connection
Metro North to Swords
Source: CBRE; Ireland Central Statistics Office (1) All retail business sales volume index, excluding motor sales
Hammerson on the ground in Dublin
Simon Betty appointed Director of Retail, Ireland
Other recruitment underway
51
Appointments
Loan management
Asset management
All outstanding loan balances verified
Dundrum rent accounts swept monthly
First interest cash flows received by JV in-line with investment underwriting
Constructive engagement with borrowers
Interim asset management approval process implemented
Recent leasing deals coming in ahead of acquisition assumptions
Value Retail, Kildare: new extension opened in Dublin
52
Strong sales momentum
Sustained interest from overseas visitors
€50m Phase 2 extension adding over 50% incremental space, 400 new parking
spaces and a further 400 jobs
New Visitor Centre offering enhanced hospitality services
33 new boutiques and two new restaurants
Extension opened in October
Sales growth hit a record high of 18% year to date
Kildare Village attracts 2.5+ million visitors a year
Significant increase in travellers from China, the Middle East and USA
Our strategy to drive consistent earnings growth
1. Strong and improving consumer backdrop
2. Applying our unique insight and skill to match latest retail trends
3. Investing incremental resources into fast-growing end markets
4. Focus on cost management and capital structure
5. Delivering a pipeline of prime developments to secure future growth
53
In summary, a proven strategy delivering consistent shareholder returns
54
Improving end markets
Operational excellence
Strong development pipeline
Effective cost management
Delivering EPS and DPS growth
EPS (pence) DPS (pence)
13.6
5
10
15
20
25
2011 2012 2013 2014 2015
H1 H2
9.5
0
5
10
15
20
25
2011 2012 2013 2014 2015
H1 H2
CAGR 7.4% CAGR 7.1%
Leeds Victoria 04
56
Leeds: a major northern city with an affluent catchment and excellent transport links
Population
800,0000 Rank in UK by population size
3rd
Leeds city centre’s retail core
57
Today’s venue
A strong local economy
58
Leeds city business sector strengths Economic hub
Manufacturing Financial and professional services
Health
Banking
Legal
Insurance
Financial technology
Health informatics
Regenerative
medicine
Technology
enabled care
Diagnostics
Pharmaceuticals
Medical devices
Energy
Chemicals
Health
Precision engineering
Agri-tech, food and
drink
£60.5 billion economic output
109,000 companies
Recent inward investment into Leeds’ cultural space, infrastructure and manufacturing
59
Leeds Arena
£60 million
A major new entertainment venue
Investment
HS2 infrastructure
Station South entrance development
Investment
£17 million
Burberry textile factory
1,000 jobs created
£50 million Investment
Leeds poised to overtake Manchester as 2nd retail city in UK
Souce: Accenture (Javelin) and Deloitte
Rank Venue VENUESCORE
London West End 1,614
London, City 809
1 Glasgow 785
2 Manchester 756
3 Leeds 622
4 Birmingham 621
5 Liverpool 569
Consolidation of positions with Leeds predicted to move
into 2nd in 2017
New UK openings
Leeds 2013
Trinity
Birmingham 2015
Grand Central
Leeds 2016
Victoria
60
Hammerson is investing in the city in partnership with Leeds City Council and John Lewis
Key facts
11 acres of City Centre regeneration
10 years in the making
Partnership with Leeds City Council
61
Victoria Quarter The Vision: The premium retail destination in the north of England
Victoria Gate The Vision: The premium retail destination in the north of England
To secure the ‘Victoria’ brand as the
destination for premium and aspirational shopping in the north of England
The Victoria vision
Brand positioning
64
The Victoria opportunity
65
Catchment Leeds
Source: FSP
50% Leeds’ population in Social Grade A B C
Shopper spend per head on
womenswear is 7% higher than both Manchester and Birmingham
41% Shoppers aged 16-24
£9.5bn Total catchment non-grocery spend
£729m Food and non-food spend available
81% Shopper demand for premium goods that is not being satisfied
Positioning Victoria amongst the leading premium retail destinations
Common themes
• One landlord
• Evolution of retail and architecture
• Premium experience
66
Regent Street, London Bicester Village, Oxfordshire Kings Road, London
67
Historical architecture creates a unique retail setting
Victoria Quarter
Size
19,200m2
Anchor
Harvey Nichols
Key facts
Annual footfall
6 million Built
1898-1900 Acquired
2012
68
Victoria Quarter
ERV
£8.3m
Number of stores
82
Key facts Victoria Quarter leasing plan
69
Integrating Victoria Gate with the existing Victoria Quarter scheme
70
Creating the Victoria Gate development
5,300 sqm retail
4,100 sqm restaurants
4,200 sqm casino
Hammerson branded scheme
Victoria Gate Arcades
24,200 sqm store
Largest store outside London
Restaurant
Roof garden
Bespoke design
John Lewis
850 spaces
Major Transport Hub
Multi Storey Car Park
71
Exterior arcade design pays homage to Leeds’ architectural history
North facing Eastgate façade
72
Differentiating internal arcades with iconic flooring
Internal arcade design and flooring
73
Creating John Lewis’s northern flagship store
74
Multi Storey Car Park
75
Victoria Gate financials
Financial metric Current forecast
Total project cost £165m
Expected rental income £11m
Profit on cost £m £19m
Profit on cost % 11%
Yield on cost 6.5%
IRR 12%
Size
34,200m2
Number of units
35
Car park spaces
850
76
On track with construction programme
Tender Oct 2013
Started on site April 2014
Demolition Complete
Steel works Complete
Topping out Nov 2015
John Lewis access Feb 2016
Tenant access April 2016
Centre opening Oct 2016
Image: February 2015
Key milestones
77
Modern design management: BIM 3D modelling
78
Progress on site: precast facades
Image: October 2015 79
On track to achieve BREEAM ‘Excellent’
15% improvement on Building Regulations – target 25%
Solar panels under consideration
Tenant collaboration
80
Energy
40% more efficient than a typical shopping centre
Ground water used to suppress dust
Water
98% of construction and demolition waste diverted from landfill
Concrete, brick and slate crushed and reused as fill
Waste
Tenant mix strategy influenced by Victoria Quarter
Victoria leasing plan
81
Introducing new international and premium brands to Leeds
82 (1) Legal documents signed ready for exchange
Brands signed include
John Lewis
Casino (GGV)
The White Company
Maje
Cos
& Other Stories
D&D (rooftop restaurant)
Anthropologie
Hackett(1)
Victoria Gate will bring
8 new brands to Leeds
6 new brands to Hammerson’s portfolio
(1) Commercialisation accounts for remaining 6%
Brands % of rental income
Exchanged or under offer 66%
Advanced negotiation 78%
In discussion 94%(1)
83
Encouraging leasing progress to date
A selection of target retailers
84
Critical mass
Commitment from premium brands
Unique destination outside London
Target restaurant operators
85
Integration of Victoria Estate
Re-branding: Victoria
Public realm
Interior design
Customer service
Digital
Way finding
86
Victoria Gate: phase two
Creating a family-friendly destination
9 acres of regeneration
Consent for 1 million sq ft
Revised master plan Summer 2016
Phase 2 site boundary
2012 master plan
87
Victoria: a home for superbrands
Size
51,400sq m
Expected ERV
£19m
Key facts
88
Tenants
117 units Car parking spaces
1,500
Expected footfall
12 million
Victoria Gate timelapse
89
Questions
90
Appendix
91
Our retail parks portfolio is focused on selective market sub-segments
92
UK Retail Parks market Hammerson portfolio
Source: Based on PMA market classification (see Appendix) 2015
5%
23%
12%
16%
43%
17%
40% 8%
16%
19%
13%
30%
39%
8%
13%
21%
44%
29%
3% 3%
Shopping park
Hybrid park
Key homeware goods
Standard homeware
Solus
79% by number of properties
40% by number of properties
65% by value
94% by value
Hammerson focus
The retail parks market is segmented
Sub-market PMA Category Definition Typical tenants No of parks in UK
Share of UK market by value
Shopping Park
Shopping Park Retail parks of > 75 sq. ft featuring six or more key ‘high street’ retailers that account for more than 50% of all floor space; ‘key’ refers to that subset of ‘High Street’ retailers (mainly, but not exclusively, fashion retailers’ that are most able/likely to pay higher rents
Outfit Next New Look River Island
56 17%
Hybrid Parks
Key Hybrid Park
Retail parks of > 75 k sq ft which typically feature between three and five key 'High Street' retailers; this sub-market also includes retail parks with six or more such retailers where these account for less than 50% of total floorspace
Next Pets at home Matalan Argos Sports Direct
117 26%
Other Hybrid Park
All other hybrid parks, ie those retail parks with at least three ‘High Street’ operators, up to two of which may be ‘key’ retailers
As above 129 14%
Key Homeware Goods Parks
Key Large Bulky Goods Park
Retail parks of >120k sq ft occupied principally by bulky goods retailers but including 1-2 key retailer(s)
Argos Debenhams DFS Harveys Sofaworks
30 4%
93
The retail parks market is segmented
Sub-market Definition Typical tenants No of parks in UK
Share of UK market by value
Large Bulky Goods Park
Retail parks of >120k sq ft occupied predominantly by bulky goods retailers with no key retailers
B&Q Homebase DFS
35 4%
Standard homeware
Key Bulky Goods Park
Retail parks of <120k sq ft occupied principally by bulky goods retailers but including 1-2 key retailers
B&Q Homebase Argos Matalan
91 8%
Other Bulky Goods Park
Retail parks of <120k sq ft occupied predominantly by bulky goods retailers with no key retailers
Homebase Wickes B&Q
142 8%
Solus parks Non-park space (or solus units/clusters)
All other retail warehousing properties, consisting primarily of solus units, but also unplanned clusters or retail parks which do not meet our definition in terms of units (minimum of 3) and floorspace (at least 40,000 sq ft); these properties are broken down in to four sub-markets according to ERV quartile
Homebase Wickes Go Outdoors The Range
452 19%
94
Outlet market: international tourism continues to support strong retail sales growth
95
International tourism continues to support strong sales growth for Value Retail
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
F
Outlet/Tax free sales vs LY
Top three international markets
Alcochete, Lisbon
+22% 1. Brazil 38% 2. Angola 30% 3. China 15%
Batavia, Amsterdam
+43% 1. China 22% 2. Egypt 8% 3. Israel 8%
Fashion Arena, Prague
+17% 1. Russia 41% 2. Israel 12% 3. China 10%
Diverse source of tourist spending across VIA Outlets