Hammerson : 2019 full-year results presentation

2019 full-year results

25 February 2020

Village Noël, Les Terrasses du Port, Marseille

Agenda

01	2019 full-year overview

02	2019 full-year financial results
03	Strategic and operational review
04	Conclusion
	Additional disclosure

2

Full-year overview

Delivering strategic progress in a challenging environment

Debt reduction target surpassed, retail parks exited

Gross proceeds of £975m since January 2019 12 Retail Parks and 75% of Italie Deux

Pro forma(1) net debt at £2.4bn (vs target 2019 <£3bn), Gearing 55%, LTV 35%, LTV 42% fully proportionally consolidated

Earnings reducing due to disposals

EPS 28.0p (-8.5%), DPS 25.9p (no change)

FY20 dividend to be rebased to 14.0p

Decline in flagship valuations; premium outlets growth

Group capital return -9.8%, flagships -14.8%, premium outlets +8.2% NAVPS 601p (-18.6%)

Diverse portfolio dilutes UK income weakness

Group LfL NRI +0.5%, UK flagships -6.7%, premium outlets +10.8% Weak UK leasing metrics, stronger in France and Ireland

Proactive management vital in polarising market

100% of new UK flagship leasing to target categories Repurposing department stores in Dundrum and The Oracle Footfall up in all regions, outperforming benchmarks

Summer fest, Dundrum, Dublin		Freeport Lisboa, Lisbon

Les Terrasses du Port,		Westquay, Southampton
Marseille

1

Reflects net proceeds of £428m from disposal announced on 21 February 2020 of seven retail park portfolio and Abbey Retail Park, Belfast

3

Full-year financial results

£1bn transacted in the last 12 months

Hammerson annual disposal proceeds (£m)

700

600

500

400

300

200

100

0

2015

See slide 69

		2016	2017	2018			2019 (1)	2020 YTD(2)
UK flagships		UK retail parks		UK other		France			Ireland
1	Key disposals: Italie Deux (75%), Dallow Road, Abbotsinch, St Oswald's and Parc Tawe						4
2	Eight retail parks: Abbey, Central, Cleveland, Cyfarthfa, Elliott's Field, Telford Forge, Ravenhead and The Orchard Centre

Full-year overview

Delivering against strategy in polarising retail market

				July 2018
				Strategic Agenda
	Capital Efficiency		• Delever to mid 30%s LTV
			•	£300m share buybacks
			•	Defer Brent Cross
	Optimised Portfolio		•	Exit Retail Parks
			• £1.1bn of disposals targeted
			• Focus on flagships and premium outlets
			•	Progress City Quarters
	Operational
	Excellence		• Step change retailer line-up
			•	Reducing costs

Progress to date

• Net debt reduced by a third to £2.4bn
• Buybacks programme ended July 2019
• Brent Cross and Croydon on hold
• Retail Parks exit achieved
• Total disposals of £1.4bn
• Portfolio - flagships now 57%, premium outlets 34%
• VIA Outlets 50/50 JV
• Planning for three City Quarters schemes
• Significant repurposing underway
• 100% of new leasing to target categories(1)
• Strong leasing in France and Ireland
• £7m annualised cost savings

1

UK Flagships, FY19 only

5

Full-year overview

Priorities remain: reduce debt; maintain vibrancy; City Quarters

					Key priorities
	Capital Efficiency		• Further cross-portfolio disposals to strengthen balance sheet
			•	Disciplined capital expenditure
			•	Cost control
	Optimised Portfolio		• Diverse portfolio: Flagships; Premium Outlets; City Quarters
			• VIA Outlets: organic growth and acquisitions
			•	Progress City Quarters
	Operational		•	Repurposing department stores
	Excellence
		• Shift tenant line-up to target categories
			• Enhance visitor experience and drive footfall
			•	Net Positive

6

Full-year overview

Our Net Positive commitments

Hammerson set a target in 2015 to be Net Positive for carbon, water, resource-use and socio-economic impacts by 2030

2016 - 2020	2021 - 2025	2026 - 2030
Phase One	Phase Two	Phase Three

Hammerson		Hammerson		Hammerson,
controlled impacts		controlled &		tenant
			development		& development
			impacts		impacts

7

See slides

76-78

Full-year overview

Significant progress against ambitious targets

FY19 achievements towards Net Positive

-12%	-12%	-7%	£900k	£1.4m
carbon(1)	electricity(1)	water(1)	energy cost savings(2)	community investment spend(3)

Thassalia project, Les Terrasses du Port		PV array, Silverburn

1	EPRA LfL	8
2	Service charge and car park savings from at directly managed assets at 100%
3	Source: London Benchmark Group at 100%

2019 full-year financial results

Victoria Leeds, Leeds

Full-year financial results

FY headline results

			31 December 2019	31 December 2018	Change
Income statement	Net rental income (£m)	308.5		347.5		(11.2%)
	Adjusted profit (£m)	214.0		240.3		(10.9%)
	Adjusted EPS (p)	28.0		30.6		(8.5%)
	Total dividend (p)	25.9		25.9		−
Balance sheet	Portfolio value (£m)(1)	8,327		9,938		(9.8%)(2)
	EPRA NAVPS (p)	601		738		(18.6%)
	Net debt (£m)	2,843		3,406		(16.5%)
	Gearing	65%		63%		+2pp
	LTV - headline	38%		38%		−
	LTV - full proportionally	45%		43%		+2pp
	consolidated

1	Figures on a proportionally consolidated basis including premium outlets and assets held for sale	10
2	Portfolio value change reflects capital return

Full-year financial results

EPS walk - disposals remain key driver of EPS decline

2019 EPS walk (pence per share)

30.0
	3.1
28.0		0.4
	1.5	1.5
26.0	0.5	0.6
	30.6
24.0		28.0
22.0
20.0

Dec 2018	Net disposals	LfL NRI	Net admin	Premium outlets	Interest	FX, tax and other (1) Dec 2019
		1 Other includes change in NRI due to developments (-0.3p) and impact of share buyback (+0.8p)		11

Full-year financial results

LfL NRI movements

LfL NRI movements across the portfolio (%)

	UK Flagships					-6.7					FY19
					-6.8					H1
							-6.6					H2
									FY19		2.1
France Flagships						H1
						0.1
									H2				4.2
Ireland Flagships						-5.0				FY19
					-7.4					H1
								-2.6				H2
								-1.4					FY19
UK Retail Parks									H1
								1.0
							-5.5						H2
Premium Outlets					(1)	FY19						10.8
					H1						11.1
									H2						10.6
	Group							0.5		FY19
						-0.1					H1
												1.0		H2
-8			-6			-4	-2	0			2	4	6	8	10	12
				1	Value Retail 12.5%,	VIA 6.2%											12

Full-year financial results

Flagships LfL NRI analysis

2019 FY LfL NRI analysis

Tenant restructuring

Leasing(1)

Void costs

Surrender premiums

Marketing

Car park, commercialisation and other

UK flagships	France flagships		Ireland flagships
-2.9%		-0.5%		-3.8%
-1.6%						0.4%
		4.3%
-1.9%		-1.3%		-0.5%
	-0.2%		-1.4%
	0.2%
-0.4%			0.0%	0.0%
-0.1%		-0.2%
			0.3%

Total	-6.7%		2.1%	-5.0%

1

Includes rent reviews, indexation and turnover

13

See slide 54

Full-year financial results

Portfolio valuation summary

Sector		FY 2019		H2 2019	Value at	Portfolio
		capital return(1)		capital return(1)	31 Dec 19(2)	weighting(2)
	%	%	£m	%
Flagship destinations

UK

France

Ireland

Premium outlets

-19.9	-11.9	2,351		28
-10.2	-6.6	1,270	15
-7.5	-4.5	860		10

Value Retail

VIA

Developments

UK other

UK retail parks(3)

Total

	+9.5	+4.0		1,966		24
	+4.5	+2.1		693		8
	-10.7	-3.2		599		7
	-23.6	-13.1		135		2
	-19.5	-9.6		545		6
	-9.8	-5.3	8,419	100

	1	At constant exchange rates	14
See slides	2	Figures on a proportionally consolidated basis
3	Excludes impact of impairment recognised on reclassification to assets held for sale on 31 December 2019
64-67

Full-year financial results

NAVPS walk

2019 EPRA NAV movement (pence per share)

850
800			12
		26
		19
750	28		26
	738
700
650			134
600			601
550
500

Dec 2018	Adjusted profit	Premium outlets	Retail parks	Fx & other (incl. (1) Dividend	Reval deficit	Dec 2019
			reval	impairment	loss on disposal)	(ex outlets)
	1	Includes loss on sales of properties of £92m (12p) and foreign exchange of £73m (10p)		15

See slide 68

Full-year financial results

Components of valuation change

Components of capital return for FY19, total portfolio (%)(1)

8%

3%

-2%

-7%

-12%

-17%

-22%

7.8% 8.2%

		0.6%	0.4%
-0.5%	-0.3%									-1.6%-0.9%
-2.2%			-1.4%					-2.6%
		-6.7%	-5.5%	-5.3%	-5.9%
		-7.5%						-7.3%
-8.1%	-7.7%
		-10.2%									-9.8%
-11.3%
												-13.4%-13.6%

-19.9%

-19.5%

UK retail parks(3)

UK flagships

France flagships

Ireland flagships

Premium outlets

Developments and UK

Group

other (2)

Yield

Income

Development and other (4)

Total

1	On a proportionally consolidated basis	16
2	Capital return of UK other -23.6%, Developments -10.7%
3	Excludes impact of impairment recognised on reclassification to assets held for sale on 31 December 2019
4	Developments and other capital movements reflects the impact of changes in purchasers' costs, development surpluses/(deficits) and capital expenditure

Full-year financial results

ERVs reflective of underlying leasing markets since December 2017

Two year change in ERVs Dec 2017 - Dec 2019, by unit type(1) (%)

UK	France	Ireland
-9.8%	-1.2%	+4.3%

10%

• ERVs derived by external valuers to reflect leasing and market evidence
• Largest ERV declines from department store and fashion space

								• UK anchor ERV: £6/sq ft
5%								• UK MSU ERV: £24/sq ft
								• French & Irish ERVs: stronger trading
0%								Valuation appointment tendered in 2019:
								• New valuation panel includes JLL
-5%								and CBRE alongside C&W
								• Effective from Q2 2020
-10%
-15%
Anchor	MSU	Smaller	Anchor	MSU	Smaller	Anchor	MSU	Smaller
		units			units			units

1

Unit types: Anchor >50,000 sq ft, MSU 10-50,000 sq ft, Smaller units <10,000 sq ft

17

Full-year financial results

Net debt analysis

Net debt analysis (£m)(1)

3,400
3,200
			536
3,000
2,800	3,406
				174
																	199
																								428
2,600									172
																110
																						2,843
2,400												27			37									2,415
2,200
Net debt	Disposals, net of	Net cash inflow	Exchange and	Value Retail	VIA Outlets acqn		Capital	Dividends		Net debt	Retail park	Pro forma
	1 Jan 2019	selling costs(2)	from operations	other flows	distribution	and capex	expenditure		31 Dec 2019	proceeds	net debt(3)

1	On a proportionally consolidated basis, excluding premium outlets	18
2	Principally reflects proceeds from the sale of Italie Deux (75%), Abbotsinch RP, St Oswald's RP, Parc Tawe and Dallow Road RP, excluding forward sale of Italik.
3	Reflects net proceeds of £428m from disposal announced on 21 February 2020 of seven retail park portfolio and Abbey Retail Park, Belfast

Full-year financial results

Credit ratios

31 Dec 2019	31 Dec 2019 31 Dec 2018
(pro forma)(1)

Net debt

Cash and undrawn facilities

£2,415m £2,843m £3,406m

£1,638m £1,210m £729m

Group debt

Internal

31 Dec 2019

31 Dec 2019

31 Dec 2018

covenants

guidelines

(pro forma)(1)

Gearing(2)

<150%/175%

<85%

55%

65%

63%

Unencumbered Asset Ratio(3)

>1.50x

>1.75x

2.08x

1.89x

2.13x

Interest cover(4)

>1.25x

>2.0x

n/a

3.3x

3.4x

LTV - headline(5)

no covenants

<40%

35%

38%

38%

LTV - fully proportionally consolidated(6)

no covenants

<45%

42%

45%

43%

Net debt/EBITDA

no covenants

<10x

8.5x

8.9x

9.5x

See slides

70-71

1	Reflects net proceeds of £428m from disposal announced on 21 February 2020 of seven retail park portfolio and Abbey Retail Park, Belfast	19
2	Covenant within the Group's unsecured bank facilities, bonds and private placement senior notes

1. Covenant within the Group's unsecured private placement senior notes only
2. Covenant within the Group's unsecured bank facilities and private placement senior notes
3. Loan excludes premium outlets net debt and value includes premium outlet net assets
4. Includes VIA Outlets and Value Retail net debt and property values

Full-year financial results

Debt maturity profile

Debt maturity profile at 31 December 2019 (£m)(1)

Revolving credit facilities

floating linked to IBOR

Sterling bonds

4.7% wav coupon

Private placement

2.5% wav coupon

Euro bonds

2.0% wav coupon

Secured debt

2.1% wav coupon

900

800

700

600

500

400

300

200

100

0

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

1	Group proportionally consolidated debt, excluding premium outlets. Interest rates are on a weighted average basis, post hedging	20

derivatives

Full-year financial results

FY20 modelling assumptions

Planning for a challenging but transitional year

FY20 NRI:

• UK negative, weaker first half
• Ireland positive
• France positive
• Premium outlets positive
  Disposals:
• -2pfrom Italie Deux
• -5pRetail Parks

Capex:

• £140m

Weighted average cost of borrowing:

• 2.6% (no change)

Admin costs:

• flat

Indicative 2020 EPS sensitivity to disposals, assuming

completion at 30 June, proceeds held as cash:

			Disposals (£m)
		200	400	600	800	1000
Yield	2%	0.3	0.5	0.8	1.0	1.3
4%	0.5	1.0	1.6	2.1	2.6
	6%	0.8	1.6	2.3	3.1	3.9
	8%	1.0	2.1	3.1	4.2	5.2
				p (EPS)

21

See slides

72-74

Full-year financial results

Dividend to be rebased in 2020

2019 final dividend of 14.8p (no change), full year dividend of 25.9p (no change) due to:

• Confidence in debt reduction
• REIT & SIIC tax obligations - therefore 100% PID

2020 dividend to be rebased to a sustainable level

• Board adopting prudent approach
• Meet tax obligations

Board therefore expects to recommend 2020 full year dividend of 14p

• A clear departure from recent earnings linkage
• Usual H1/H2 phasing anticipated
• Cash savings: pay down debt; invest in the business

From 2021, growth from this minimum will be dependent on:

• Further disposals
• Rental income
• Strength of balance sheet
• Capital requirements for investment in the business
• Macro-economicfactors
• Health of the real estate sector

22

Strategic and operational review

Bullring and Grand Central, Birmingham

Strategic and operational review

Agenda

01 Diversity of portfolio

02 Flagships

03 Premium outlets

04 City Quarters

Pavilions, Swords

24

Diversity of portfolio

Diverse portfolio of leading pan-European destinations

Portfolio by value(1)

Developments

• UK other(2) (9%)
  9%

25%

Premium Outlets (34%)

Value Retail

VIA Outlets

9%

30%

16%

11%

Flagships (57%)

UK flagships

France flagships

Ireland flagships

FY19 operational statistics

15.0%

10.0%

5.0%

0.0%

-5.0%

-10.0%

-15.0%

UK flagships	France	Ireland	Value Retail VIA Outlets
		flagships	flagships
LFL NRI		Footfall			Leasing vs ERV		Leasing vs previous passing

See slides

52-53

1	On a pro forma basis, reflects net proceeds of £428m from disposal announced on 21 February 2020 of seven retail park portfolio and Abbey Retail Park, Belfast	25
2	UK other includes Brent South retail park held for sale

Diversity of portfolio

Diverse tenant base(1)

Hammerson and peers(2) : % of retail rent accounted for by top 10 tenants

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

UK Peer

See slides

60-61

UK Peer	UK Peer	UK Peer	Hammerson	Euro Peer (3)	Euro Peer(3)
1	As at 31 December 2019, excluding Retail Parks				26
2	Peers include: British Land, Capital & Regional, intu, Klepierre, Land Securities and URW. Data reflects most recently reported figures as at 24 February 2020.
3	Breakdown data of top 10 tenants unavailable for Klepierre and URW

Flagships

Skate Southampton, Westquay

Flagships

Tenant restructuring: managing the challenge since December 2017

Restructuring impact on rent: Dec17 - Dec19(1) (£m)

149

units

	14
	12
	10
	8	44
	6
	units
	4	38
	units
£m
2	3
		units
	0
	-2
	-4
	-6
	-8

UK flagships	UK Retail Parks/Other		France	Ireland
		Post restructuring passing rent +		Annualised rent lost
			=		Pre restructuring passing rent

Key flagships restructuring stats (two years to December 19):

• 234 units affected by restructuring
  (149 units in UK flagships)
• • 9% of 2,700 units across group
  • 11% of 1,400 units in UK flagships
• £14.5m run rate of group rent lost (4.5% of passing rent)(2)
• 48% of Hammerson UK flagship units subject to CVA in "no rent change" category vs 37% of market(3)
• Impacted UK flagships units: 91% trading, 70% with original occupier

	1	As at 31 December 2019. Includes all units affected by restructuring since 31 December 2017	28
See slides	2	Run rate of passing rent lost reflects difference between pre-restructuring rent and rent at 31 December 2019 from units affected
3	Analysis based on Hammerson leases impacted by CVAs between 31 December 2017 and 31 December 2019, weighted by Hammerson's share of passing rent pre-CVA
58-59

Flagships

Leasing: 70% of flagship leasing at or above previous passing

Group, UK, France and Ireland flagship destinations FY19 leasing vs previous passing rent(1)

Group

UK

France

Ireland

0%	10%	20%	30%	40%	50%	60%	70%	80%	90%	100%
			Leases below previous passing		Leases in line with previous passing		Leases above previous passing
				1	Reflects all leasing by income							29

See slide 57

Flagships

Leasing: high street fashion remains most challenged category

UK flagship destinations leasing(1) vs previous passing rent by category - FY19 (£'000s)

200

150

100

50

-50

-100

-150

-200

-250

-300

-350

See slide 57

		Type						£'000s		No.		% vs
														previous
														passing
		High street fashion			3,652		34	-36%
		Non-fashion consumer brands	4,238		56	+9%
		F&B					1,053		23	+8%
		Aspirational fashion			1,444		18	+8%
		Leisure					120		3	+118%
	Total					10,507 134	-13%
						% of flexible leases in portfolio(2)
	Flagships:		% flexible		by passing rent					by ERV
		leasing in 2019
	UK	23%			2.1%				9.1%
	France	11%			0.9%				2.9%
	Ireland	28%			2.1%				6.9%
	Total	20%			1.8%				7.1%
1 All leasing, new and renewal, excluding storage and nine reconfigurations											30
2 Lease term < 3 years

Flagships

Shifting the occupier mix - UK

					Mix							2019 leasing				ERV			Rent
Category		Current	Current		Future	New		Renewals				Average			Average	Average of
			mix	mix		mix	leasing		by area				across			across	2019
			by income	by area(1)		by area	by area						portfolio			portfolio	leasing
																		£/sq ft			£/sq ft	£/sq ft
Department stores	6%	38%		c.28%	nil		nil		6	4		n/a
High street fashion	16%	15%		c.10%	Nil	58%		31	29		21
(traditional)
F&B	15%	9%		c.12%	27%	2%		43	40		59
High street fashion	14%	8%		c.12%	nil	9%		47	46		48
(contemporary)
Non-fashion and	36%	17%		c.20%	53%	22%		54	53		62
consumer brands
Leisure/events	5%	7%		c.10%	1%	3%		17	16		21
Fashion (aspirational)	8%	3%		c.8%	19%	6%		63	57		57

1

Excludes 3% vacant space

31

Flagships

Proactive portfolio management: repurposing department stores

House of Fraser

Dundrum, Dublin

13,200m2

House of Fraser

The Oracle Reading

13,300m2

Dundrum

Ireland's leading luxury retail store, Brown Thomas, is to open a flagship store

£14m	>12%
project	forecast
cost(1)	YOC

The Oracle

innovative leisure,

F&B and flagship retail

£13m	>7%
project	forecast
cost(1)	YOC

1

At Hammerson's 50% ownership share

32

See slide 82

Flagships

Footfall compares favourably with national indices(1)

UK- strong polarisation
4%
2%
0%
-2%
-4%
-6%
-8%
Jan	Feb Mar Apr May Jun Jul	Aug Sep Oct Nov Dec Jan Feb Mar Apr May	Jun Jul	Aug Sep Oct Nov Dec
	2018			2019
		Hammerson	UK National Index		Cabot Circus Christmas lights switch on

France & Ireland - tracking broadly in line with more stable markets

4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
-5%
Jan	Feb Mar Apr May Jun Jul	Aug Sep Oct Nov Dec Jan	Feb Mar Apr May Jun	Jul	Aug Sep Oct Nov Dec
	2018			2019
		Hammerson	France National Index

8%
6%
4%
2%
0%
-2%
-4%
-6%
Jan Feb Mar Apr May Jun	Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun	Jul Aug Sep Oct Nov Dec
2018	2019	33
	Hammerson	Ireland National Index

1	Hammerson flagships footfall vs national index three month moving average. Index source: Shoppertrak (index data restated since HY19 results)

Flagships

Customer experience and innovation are driving commercial benefits

Super Events

Village Noël, Les Terrasses du Port		Festival of Light, Dundrum		The Maze & Urban Treehouse,
		Westquay

+11.1% footfall		+8.7% footfall		+2.7% footfall
+13% social media engagement		+169% social media engagement		+156% social media engagement

Year on year footfall changes. Source: ShopperTrak

34

Social Media Engagement is defined in 'Impressions'; the number of times that any content associated with the event page was displayed to a user during the reporting period. This includes both organic and paid activity. Source: Sprout Social

Flagships

Customer experience and innovation are driving commercial benefits

Frictionless parking

Last mile fulfilment

rooms Family

labour Flexible

35

Flagships

Physical space is key to success of retail brands

Higher	Drives web
conversion	traffic and
rates than	engagement

online

Cheaper for

online fulfilment

and returns

36

Flagships

Physical retail offers competitive acquisition and distribution cost

Operational Acquisition

Cost per visitor	50p - 170p	9p - 95p
occupancy costs(1)	visitor costs(2)
In-store conversion rate	c.25-50%(3)	c.2-4%(4)
Acquisition cost per sale(5)	£1.00+	£2.25+
Merchant payment cost(2)	1.2%	1.7 - 2.5%
Logistics costs(6)	2-5%	5-15%
Returns rate(6)	5-10%	15-40%
Cost per return(6)	70p - £1	£2 - £3

Based on fashion sector. Sources:

1. Hammerson footfall by unit trial (Sept-Dec 2019 data annualised) and annual occupancy costs by unit
2. Practicology
3. Hammerson exit surveys
4. Practicology / IRP

5	Calculation based on lower end of cost per store visitor range and higher end of in-store	37
	conversion range to create a minimum implied acquisition cost per sale
6	Accenture

Flagships

The path towards stabilisation of UK rents

Upward pressures on rents

Online rent increasing

Physical retail proven to drive awareness and reduce costs

Polarisation of footfall and vibrancy

Retailers making progress on right-sizing of portfolios

Increasing consumer confidence, employment, wages

Downward pressures on rents

Uncertain macroeconomic backdrop

Cyclical increase in costs

Structural pressure from online

Leasing structure

Excess retail space

Tenant restructuring

38

Premium outlets

Hede Fashion Outlet, Gothenburg

Premium outlets

2019 operational update

		Value	VIA
		Retail(1)	Outlets(1)
Gross Asset Value (£m)	1,966	693
Net Asset Value (£m)	1,506	445
Brand sales growth (%)	9	8
Footfall growth (%)	5		6
Average sales density	9		2
growth (%)
Like-for-like NRI growth (%)	13	6
Occupancy (%)	97		93

Premium outlets value creation (£m)

		8 year IRR - 22%
1,800
1,600
1,400
1,200
1,000				1,276
800		(149)			1,711
600	683		(313)
400
200
214
0					NAV Dec-19(2)
NAV Jan-12	Capital	Distributions - Distributions -	Valuation
	invested	operating	refinancing	uplift

	1	With the exception of property valuations and like-for-like net rental income growth, figures reflect overall portfolio performance, not Hammerson's ownership share	40
See slides	2	Premium outlets IFRS NAV as at 31 December 2019 includes liabilities in respect of distributions received in advance of £24m which will be repayable upon disposal of stakes in Value Retail
91-97

Premium outlets

Diverse customer base underpins progressive sales growth

2019 tax free sales (TFS) as a proportion of total sales(1)

Value Retail: TFS customers 26% of total sales

China

S. Korea

9%Russia

2%

1%

Other 14%

Domestic and

European sales

74%(2)

VIA Outlets: TFS customers 4% of total sales

Brazil China

Angola

0.6% 0.5%

0.4%

Other 2.5%

Domestic and

European sales

96%(2)

1	Portion of total TFS as at 31 December 2019. Source: Global Blue and Premier Vision	41
2	Including non tax-free overseas sales

Premium outlets

Diverse customer base underpins progressive sales growth

Premium outlets sales (€m)(1)(2)

3,500
3,000
2,500
				Bird flu
2,000
1,500			MERs
1,000		Swine flu
		GFC
500
	SARS
0
1998	2003	2008	2013	2018
		Value Retail	VIA Outlets

1	The sales figures have been restated at constant FX rates	42
2	The sales figures show absolute reported sales figures, which includes acquisitions and developments

City Quarters

Dublin Central

City Quarters

Beyond retail

>100 acres of City Quarters potential

See slide 99

6,600

residential units

1,600

Dundrum Phase 2, Dublin

hotel rooms	Callowhill Court, Bristol

9

parks and public spaces

300,000m2

work space

The Goodsyard, London			Dublin Central

44

City Quarters

2019 progress

Martineau Galleries, Birmingham		The Podium at Dundrum, Dublin		Leeds Hotel, Victoria

Planning committee approval			Planning committee approval			Planning committee approval
7.5 acres 1,300 residential units			107 apartments			205 rooms
130,000m2 of workspace			Gym, lounge and terrace and co-working space			In discussions with major international hotel operator
400 hotel rooms			On-siteH2 2020			Planned start H2 2020
Next planning submission H2 2021

45

Conclusion

Festival of Light, Bullring & Grand Central, Birmingham

Conclusion

Near-term will remain challenging but confident in long-term value creation

Balance sheet strength		Evolve our spaces		Beyond retail

Reducing debt, repurposing and recycling capital

into more diverse prime portfolio

Disposals will impact

Strong pipeline of

Flagships		Premium Outlets		City Quarters

47

Questions

Highcross, Leicester

Additional disclosure

Festival of light, Westquay, Southampton

Contents

01	Group
02	Net Positive
03	UK flagship destinations
04	France flagship destinations
05	Ireland flagship destinations
06	Premium outlets
07	City Quarters

50

01 Group

Bullring & Grand Central, Birmingham

Additional disclosure: Group

Distinctive market characteristics help explain variation in performance

		UK		France	Ireland
Macro backdrop		▲ Low unemployment and		▲ Stable consumer outlook	▲ Strong economic growth
		increasing wages		▼ Occasional political unrest	▼ Near-term uncertainty over
		▼ Low consumer confidence				Brexit and general election
		▼ Cyclical cost pressures

Premium Outlets

• Diverse exposure to highly affluent European and Global customer base

• Near-termrisk from Coronavirus

Leasing structures		▼ Legacy of longer-terms and		▲ Indexation and three-year
		upward only rent reviews		break clauses
Geography		► High population density		► Lower population density
		▼ Pure play online more		▲ Lower online penetration
		disruptive		▲ Footfall only high in primary
		▲ High footfall in urban		urban locations
		locations
Culture		► Enthusiastic adopters of		▲ More leisure time
		omnichannel		▲ Daily visit to supermarket
		▼ Less leisure time		anchor common
		▲ Increasing focus on big day
		out
Online penetration(1)		c.17% - growth slowing		c.11%

• Upward only rent reviews banned for new leases
• Low population density ▲ Lower online penetration

• Dublin only urban location of scale
• Lack of postcodes until 2015 means greater focus on click & collect

c.10%

• Highly flexible model

• Risk-sharingfrom turnover component

• Located near affluent conurbations
• Best locations able to attract high tourist traffic
• Strong growth in Global demand for luxury goods

12% - very limited appetite from luxury brands for online discounting

Retail sales growth

3.3%

3.1%

5.0%

8.8%

(5yr CAGR)(2)(3)

1	Source: GlobalData	52
2	Source: Oxford economics. National sales growth 2014-2019.
3	Premium outlet figure represents Value Retail sales growth due to lack of publicly available data.

Additional disclosure: Group

Group statistics

2019		UK		Ireland		France		Retail	Premium
								parks	outlets
Occupancy (%)	97	100	97	97		95
Leasing activity (£m)	11	2	6	3		n/a
Leasing vs. ERV (%)(1)	-8	-2	+5	+1		n/a
Leasing vs. previous passing (%)(1)	-11	+9	+9	-10		n/a
In-store retail sales (%)(2)	-2		n/a	+3		n/a	+9
Footfall (%)(3)	+1	+2	+2	+1		+5
2018
Occupancy (%)	98	99	97	97			94
Leasing activity (£m)	14	3	7	2			n/a
Leasing vs. ERV (%)(1)	+5	+8	+5	+11			n/a
Leasing vs. previous passing (%)(1)	+1	+28	+5	+19			n/a
In-store retail sales (%)(2)	-3		n/a	+2		n/a	+8
Footfall (%)(3)	-2	-2	+3	-1			+4

1	Principal leases only	53
2	Sales: UK benchmark -2.2% (Source: Visa) premium outlets YoY. Retail sales on same-centre basis.
3	Footfall: UK benchmark -4.6%, Ireland: -0.2% (source: Shoppertrak), France: +0.3% (source: CNCC), Retail parks +0.1% (source: Springboard), premium outlets YoY

Additional disclosure: Group

H1 flagships LfL NRI analysis

H1 2019 LfL NRI analysis

Tenant restructuring

Leasing(1)

Void costs

Surrender premiums

Marketing

Car park, commercialisation and other

UK flagships

-1.8%

-0.6%

-1.4%

-0.2%

-0.6%

-2.1%

France flagships

-1.3%

2.2%

-0.7%

0.1%

-0.2%

Ireland flagships

-4.1%

1.0%

-0.5%

-2.1%

-1.7%

Total	-6.8%	0.1%	-7.4%

1

Includes rent reviews and indexation

54

Additional disclosure: Group

2019 Group leasing performance cumulative

2019 leasing and cumulative vs 2018(1) (£m)

4.0		30

3.5

25

3.0

20

2.5

2.0

15

1.5

10

1.0

0.5

5

0.0

0

January

February

March

April

May

June

July

August

September

October

November

December

Monthly leasing 2019 (LHS)

Cumulative leasing activity 2018 (RHS)

Cumulative leasing activity 2019 (RHS)

Flagship leasing		Dec 19		Dec 18
volumes		£m		£m
UK	11.2	14.4
France	6.0	7.3
Ireland	2.1	2.6
Total	19.3	24.3

1

Includes retail parks and other

55

Additional disclosure: Group

2019 portfolio leasing key metrics

		Leasing vs previous	Leasing vs ERV	Like-for-like ERV	New rent secured
		passing (%)(1)	(%)(1)	growth	from leasing
						(%)	(£m)(2)
UK flagships	-11.1	-8.1	-8.6	11.2
France flagships	8.3	5.0	-1.9	6.0
Ireland flagships	9.5	-1.5	1.2	2.1
UK retail parks	-10.3	0.9	-6.7	2.6
Group	-4.1	-2.8	-5.9	22.6

1	Principal leases only	56
2	Total group leasing includes UK Other £0.7m

Additional disclosure: Group

Leasing: UK remains most challenging

UK, France and Ireland flagship destinations FY19 leasing vs previous passing rent and ERV

			UK				France				Ireland
Type		£'000s % vs previous	% vs ERV		£'000s	% vs previous	% vs ERV		£'000s	% vs previous	% vs ERV
			passing				passing				passing
Principal	6,167	-11%	-4%	3,659	8%	6%	834	9%	7%
Flexible	2,441	-38%	-57%	516	-70%	-75%	490	23%	-7%
Flexible/	1,899	60%	-18%	422	240%	-3%	419	103%	-16%
vacant to principal
Total(2)	10,507	-13%	-28%	4,597	-8%	-19%	1,743	27%	-3%

Leasing performance varies by type

• Broad range of leasing performance in all markets
• UK suffering from lack of rental tension and highest proportion of flexible leasing
• Stronger rental tension in France and Ireland underpins ability to convert flexible/vacant units back to principal leases on attractive terms

1	Based on passing rent, as at 31 December 2019	57
2	Excludes storage and reconfigurations

Additional disclosure: Group

Run rate of tenant restructuring in the UK & Ireland

Units in CVA or administration by month since January 2018

25

20

15

10

5

0

(1)

1

Passing rent of Jan 2020 tenant restructuring £0.4m

58

Additional disclosure: Group

Tenant restructuring: 31 December 2017 - 31 December 2019

			UK			France			Ireland	UK	UK			Group
			flagships			flagships			flagship	retail parks	other
Number of units impacted	149	38	3	27	17	234
Passing rent pre restructuring (£m)	21.6	2.7	1.9	6.3	2.4	34.9
Current passing rent lost - 31 December 2019 (£m)	7.5	1.4	1.7	2.5	1.4	14.5
% of Group passing rent - 31 December 2019(1)	2.5%	0.5%	0.5%		0.8%	0.5%	4.8%

1

Group passing rent £300.8m

59

Additional disclosure: Group

Top 20 tenants exposure(1)

Retailer

H&M

Inditex

Next

River Island

Boots

John Lewis PLC

Debenhams

JD Sports

CK Hutchison Holdings

Superdry

Rental

Exposure (£m)

8.7

8.4

4.7

4.1

3.9

3.7

3.1

3.0

2.9

2.9

% of

passing % of NIA rent

3.4% 1.8%

3.3% 1.7%

1.8% 1.9%

1.6% 1.4%

1.5% 0.7%

1.5% 1.0%

1.2% 6.3%

1.2% 0.5%

1.1% 4.0%

1.1% 0.5%

Retailer		Rental
	Exposure (£m)
TK Maxx	2.4
Printemps	2.4
Signet	2.3
SportsDirect	2.3
Arcadia	2.1
Natl Amusements	1.9
Mulliez	1.8
Watches of	1.7
Switzerland
Apple	1.7

% of

passing % of NIA rent

0.9% 0.9%

0.9% 1.2%

0.9% 0.2%

0.9% 3.6%

0.8% 0.2%

0.7% 0.4%

0.7% 0.8%

0.7% 1.2%

0.7% 0.2%

New Look

2.5

1.0% 0.5%

TOTAL

66

26%

29%

1

Ranked by passing rent as at 31 December 2019, excludes retail parks

60

Additional disclosure: Group

Only one occupier accounts for >2% of group rent from any region(1)

UK

		Rental		% of			% of
Retailer		exposure		passing
		(£m)		rent			NIA
H&M	5.3	2.06%	1.40%
Inditex	4.8	1.87%	1.20%
Next	3.8	1.47%	1.62%
John Lewis PLC	3.7	1.46%	6.30%
Boots	3.1	1.23%	0.88%
Debenhams	3.1	1.22%	3.97%
River Island	2.4	0.92%	0.56%
Superdry	2.1	0.82%	0.38%
JD Sports	2.1	0.80%	0.40%
CK Hutchison	2.0	0.77%	0.40%
Holdings
Total	32	13%	17%

France

		Rental		% of		% of
Retailer		exposure		passing
		(£m)		rent		NIA
Printemps	2.4	0.93%	1.41%
Mulliez	1.8	0.70%	0.37%
H&M	1.7	0.67%	0.32%
Groupe Etam	1.7	0.65%	0.21%
Groupe Inditex	1.6	0.64%	0.50%
Armand Thiery	1.4	0.55%	0.20%
Vivarte	1.4	0.55%	0.19%
UGC	1.2	0.47%	0.94%
Rallye	1.0	0.41%	0.42%
Punto Fa	0.8	0.32%	0.11%
Total	15	6%	5%

Ireland

		Rental				% of		% of
Retailer		exposure				passing
		(£m)				rent		NIA
SportsDirect	2.3	0.90%	0.70%
Inditex	2.0	0.77%	0.30%
River Island	1.7	0.66%	0.18%
H&M	1.7	0.65%	0.30%
Marks & Spencer	1.2	0.45%	0.63%
Primark	0.9	0.36%	0.27%
Next	0.9	0.36%	0.26%
TK Maxx	0.8	0.32%	0.40%
RSA	0.8	0.31%	0.33%
Boots	0.8	0.30%	0.14%
Total	13	5%	4%

1

As at 31 December 2019, excluding retail parks

61

Additional disclosure: Group

OCRs do not reflect store value and are not comparable between sector, peer or country

Do not reflect value

• A store's value is not only till sales, but click & collect, returns and driving online sales
• OCRs ignore margin and staff costs which can vary widely by retailer

Average hides wide

variance

Not comparable between peers

Not comparable

between countries

Low	High street fashion avg: 27%	High
10%	52%

• Hammerson OCRs only represent flagships. OCRs for retail parks and premium outlets are significantly lower
• Our peers present their OCRs as a blended average of all assets
• Hammerson UK blended flagships and retail parks OCR is 17.3%
• Same retailer in France and the UK will have very different costs beyond occupancy e.g. hourly staff costs 30% higher in France(1), distribution costs 50% higher in France(2)
• Also rate of channel shift is very different; UK c.17% and France c.11% distorting OCRs(3)

1	Source: Eurostat	62
2	Source: Javelin Group
3	Source: Global Data

Additional disclosure: Group

OCRs do not reflect store value and are not comparable between sector, peer or country

OCRs remain consistent across both markets

	2018	2019
		UK	France		UK	France
		flagships	flagships		flagships	flagships
Rent: sales	13.3%		10.7%	12.7%			10.4%
OCR	22.6%		13.7%	22.2%			13.4%

• OCRs in UK and France not comparable due to differing costs structures for retailers in UK and France. Higher staff and distribution costs in France impact rental affordability
• Also rate of channel shift is very different UK c.17% and France c.11% distorting OCRs

	% Fashion sales P&L(1)		UK retail		French retail
	Business rates	6-7%	1-2%
	Staff costs	8%	15%
	Distribution costs	1.5%	2%
1	Source: Javelin Group			63

Additional disclosure: Group

2019 valuation data (NIY)

UK	France	Ireland	UK retail	UK other	Total
flagships	flagships	flagships	parks		portfolio

NIY (%)

31 Dec 2019

30 Jun 2019

31 Dec 2018

Change 6m (pp)

Change 12m (pp)

5.5	4.1	4.1	7.3	7.4	5.1
5.2	3.8	4.0	6.8	6.0	4.8
4.8	3.7	3.9	6.0	5.7	4.6
0.3	0.3	0.1	0.5	1.4	0.3
0.7	0.4	0.2	1.3	1.7	0.5

64

Additional disclosure: Group

2019 valuation data (ERV)

UK	France	Ireland	UK retail	UK other	Total
flagships	flagships	flagships	parks		portfolio

ERV (£m)

31 Dec 2019

30 Jun 2019

31 Dec 2018

LfL change

6 months (%)

LfL change

12 months (%)

154.5	65.1	42.2	42.5	12.0	316.3
164.0	89.9	45.3	53.9	12.9	366.0
169.3	89.3	45.3	59.7	13.3	376.9
-6.1	-3.0	1.6	-1.3	-8.6	-3.9
-8.6	-1.9	1.2	-6.7	-11.4	-5.9

65

Additional disclosure: Group

2019 valuation data (TEY)

UK	France	Ireland	UK retail	UK other	Total
flagships	flagships	flagships	parks		portfolio

True equivalent yield

(%)

31 Dec 2019

30 Jun 2019

31 Dec 2018

Change 6m (pp)

Change 12m (pp)

6.2	4.7	4.7	7.6	9.4	5.8
5.9	4.5	4.6	7.2	8.7	5.5
5.5	4.3	4.5	6.8	8.0	5.3
0.3	0.2	0.1	0.4	0.7	0.3
0.7	0.4	0.2	0.8	1.4	0.5

66

Additional disclosure: Group

Widening spreads underpin institutional interest in prime assets

Historical NIYs, Hammerson flagships vs 10year gilt/bund

7.00%

6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%

-1.00%

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Dec-10

Dec-11

Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-18

Dec-19

Hammerson UK

Hammerson France

Hammerson Ireland

10 year gilt

10 year bund

67

Additional disclosure: Group

Reconciliation to new EPRA measures as at 31 December 2019

(£ million)	Old metrics				Old metrics						New metrics(1)
						NAV				NNNAV		NRV				NTA		NTV
IFRS NAV	4,377.0	4,377.0	4,377.0	4,377.0	4,377.0
Dilutive share schemes	1.6	1.6	1.6	1.6	1.6
Diluted NAV	4,378.6	4,378.6	4,378.6	4,378.6	4,378.6
Exclude: deferred tax	270.7	270.7	270.7	270.7		−
Exclude: fair value of interest rate swaps	19.9	19.9	19.9	19.9		−
Exclude: goodwill as a result of deferred tax	(70.6)	(70.6)	(70.6)	(70.6)		−
Include: property transfer taxes	−				−	522.2				−		−
Include: fair value of currency swaps as a	−				−	17.0	17.0		−
result of changes in interest rates
Include: goodwill per IFRS balance sheet	−				−		−	(27.6)	(98.2)
Include: fair value of borrowings	−	(183.3)		−				−	(183.3)
Total	4,598.6	4,415.3	5,137.8	4,588.0	4,097.1
Per share (p)	601	577	671	599	535
	1	Unaudited											68

Additional disclosure: Group

Key disposals achieved 2018 - 2020

		NIY		Proceeds(1)		Buyer
	(%)		£m
2018:
Battery Retail Park, Selly Oak	6.0	58		NFU Mutual
Wrekin Retail Park, Telford	7.4	35		Ediston/Europa
Imperial Retail Park, Bristol/Fife Central Retail Park, Kirkcaldy	7.4	164		Capreon (private equity)
Highcross, Leicester (50%)	5.5	236		Asian investor, introduced by
						M&G Real Estate
2019:
Dallow Road, Luton	7.6	24		Private equity
Italie Deux, Paris (75%)	4.1	363		AXA
Abbotsinch, Paisley	7.8	67		Ashby Capital
St Oswald's Retail Park, Gloucester	8.5	54		Local authority
Parc Tawe, Swansea	4.7	22		Private investor
2020:
Abbey, Belfast	8.4	33		Slate Asset Management
Portfolio of seven retail parks(3)	8.9	400		Orion European Real Estate Fund V
Total 2018 - 2020 YTD(2)			1,456

1	Gross proceeds	69
2	Total annual gross proceeds (includes ancillary disposals): 2018 - £570m , 2019 - £542m, 2020 - £433m (YTD)
3	Central, Cleveland, Cyfarthfa, Elliott's Field, Telford Forge, Ravenhead, The Orchard Centre (Didcot)

Additional disclosure: Group

Gearing sensitivity(1)

Reduction in Group values(2)

					Disposals (£m)(3)
	0	100	200	300	400	500	600	700	800	900	1000
0%	55%	53%	51%	48%	46%	44%	41%	39%	37%	35%	32%
5%	61%	58%	56%	53%	51%	48%	46%	43%	41%	38%	36%
10%	67%	64%	62%	59%	56%	53%	51%	48%	45%	42%	39%
15%	76%	72%	69%	66%	63%	60%	57%	54%	51%	47%	44%
20%	86%	83%	79%	76%	72%	68%	65%	61%	58%	54%	51%
25%	100%	96%	92%	88%	84%	80%	75%	71%	67%	63%	59%

1	Reflects net proceeds of £428m from disposal announced on 21 February 2020 of seven retail park portfolio and Abbey Retail Park, Belfast	70
2	Gearing sensitivity on changes in pro-forma 31 December 2019 values and future disposal proceeds
3	Calculations assume disposals are achieved at 31 December 2019 book values

Additional disclosure: Group

LTV methodology

		31 December 2019	31 December 2019	31 December 2018
				(pro forma)(1)
		Headline			Fully proportionally	Headline		Fully proportionally	Headline		Fully proportionally
Net debt		(£m)			consolidated (£m)	(£m)		consolidated (£m)	(£m)		consolidated (£m)
Group		2,415			2,415		2,843	2,843		3,406		3,406
VIA Outlets	-	238		-	238		-	242
Value Retail	-	658		-	658		-	658
Loan	2,415	3,311		2,843	3,739		3,406	4,306
Property values

Group

VIA Outlets

Value Retail

VIA Outlets net assets

Value Retail net assets

5,245	5,245		5,668	5,668		7,480	7,480
-	693		-	693		-	636
-	1,966		-	1,966		-	1,823
379	-		379	-		326	-
1,355	-		1,355	-		1,211	-

	Value	6,979	7,904	7,402	8,327	9,017	9,939
	LTV	35%	42%	38%	45%	38%	43%
			1 Reflects net proceeds of £428m from disposal announced on 21 February 2020 of seven retail park portfolio and Abbey Retail Park, Belfast	71

Additional disclosure: Group

Capex and guidance

Capex 2019-2021
Committed	2019			2020	2021
		Actual			Forecast			Forecast
		£m			£m			£m
On-site developments(1)
58			63	35
Other committed capex(2)	7			15	15

Discretionary
Flagship destination investment	31				42		60
City Quarters	6				20		20
Total	102	(3)	140	130

1	Completion of Les 3 Fontaines and Italik extensions	72
2	Other committed caoex reflects land assembly related costs at Croydon and The Goodsyard
3	Excludes amortisation of tenant incentives. 2019: -£5m

Additional disclosure: Group

Maintenance capex - FY 2019

Service charge (maintenance)

UK	France	Ireland	Total
flagships	flagships	flagships

Service charge income (£m)	34	22	13	69
Maintenance expenditure within service charge (£m)	8	4	1	13
Examples:
Painting, flooring upkeep, M&E: CCTV, wifi , IT systems maintenance

Capital expenditure

Gross rental income (£m)

158

82

42

282

Capital expenditure - no additional area (£m)	10	8	1	19
Yield on cost from capital expenditure - no additional area (%)	4%	3%	1%	3%
Capital expenditure - no additional area: gross rental income (%)	7%	9%	3%	7%
Examples:
Income accretive: Repurposing and reconfiguration, capital contributions, digital screens

Other (partly recoverable from tenants): Wayfinding projects, WC upgrades, LED relamping, seating upgrades, family rooms, smart metering

73

Additional disclosure: Group

Maintenance capex - FY 2018

Service charge (maintenance)

UK	France	Ireland	Total
flagships	flagships	flagships

Service charge income (£m)	36	25	12	73
Maintenance expenditure within service charge (£m)	7	4	2	13
Examples:
Painting, flooring upkeep, M&E: CCTV, wifi , IT systems maintenance

Capital expenditure

Gross rental income (£m)

178

84

44

306

Capital expenditure - no additional area (£m)	28	25	-	53
Yield on cost from capital expenditure - no additional area (%)	8%	4%		n/a	6%
Capital expenditure - no additional area: gross rental income (%)	16%	30%		n/a	17%
Examples:
Income accretive: Repurposing and reconfiguration, capital contributions, digital screens

Other (partly recoverable from tenants): Wayfinding projects, WC upgrades, LED relamping, seating upgrades, family rooms, smart metering

74

02 Net Positive

Declutter to refresh, Cabot Circus, Bristol

Additional disclosure: Group

FY20 a pivotal year for Net Positive

Net Positive carbon emissions (tonnes CO2e)	2015	2019	2020
	baseline(1)	outcome	Forecast	(2)

35,000

30,500

30,000

27,500

25,400

25,000

20,000	17,900
15,000	12,200
10,000	8,600

5,000

0

2015

2016

2017

2018

2019

2020

Carbon

tonnes CO2e

Water

M3 (3)

Resource use

tonnes(4)

30,500 12,241 8,600

336,000 196,000 152,000

8,539 3,414 2,820

Beehives at The Oracle rooftop, Reading

1	Net Positive Phase One (2016-2020) figures are calculated for the group on proportionate ownership basis	76
2	Offsets will be required to reach Net Positive
3	Landlord only
4	Net of recycling

Delivering against our Positive Places Strategy

Our progress against 2019 plans

2019 Target	Progress
Reducing energy demand across the managed retail portfolio by	12% reduction achieved
a further 11%
Installing additional renewable electricity capacity at three sites	2 completed 2019, 1 completed
	Jan 2020
Reviewing our energy procurement model to leverage additional	Market review completed and
renewable capacity and offer grid balancing	new strategy in progress
Working with retailers to support efficiency improvements	Worked with 200+ retailers to
through fit out	improve fit out standards
Embedding Positive Places within City Quarters concept	Sustainability a key USP for our
	City Quarters concept
Working with our design teams to deliver best in class	The Podium at Dundrum on track
sustainability in our Dublin developments	to achieve BREEAM Excellent
	and NZEB requirements
Working with regional water companies to support water	Relationship with Thames Water
reduction initiatives	delivering significant water
	savings at Oracle
Working with re-use partners to reduce waste	Partnership with Globechain
	delivering re-use opportunities
Continuing our programme of portfolio-wide, locally focused	Supported 400+ local
community engagement initiatives	community organisations
	77

Hammerson has set a target to be Net Positive for carbon, water, resource use and socioeconomic impacts by 2030

"Hammerson was the first real estate company globally to set such comprehensive, challenging Net Positive targets and we are making good progress. Creating Positive Places underpins our delivery of best in class retail assets that respond to the major challenge presented

by climate change."

David Atkins, CEO

Carbon

Net Positive for carbon means carbon emissions avoided exceed emissions generated.

Water

Net Positive for water means water replenished by external projects exceeds water consumed from mains supply.

Resource use

Net Positive for resource use means waste avoided, recycled or re-used exceeds materials used that are neither recycled, renewable nor sent to landfill.

Socio-economic

Net Positive for socio-economic impacts means making a measurable positive impact on socio-economic issues relevant to our local communities beyond a

measured baseline.

78

03 UK flagship destinations

Sensory Gardens, Westquay, Southampton

Additional disclosure: UK flagship destinations

2019 UK flagship leasing performance

2019 UK flagship destinations leasing (£m)

5.0																16
4.5																14
4.0																12
3.5
3.0																10
2.5																8
2.0																6
1.5																4
1.0
0.5																2
0.0																	0
January	February	March		May	June	July	August		October	November
		April	September	December
				Monthly leasing 2019 (LHS)					Cumulative leasing activity 2018 (RHS)
				Cumulative leasing activity 2019 (RHS)

		2019 leasing
		£m
Principal leasing	8.1
Reconfigurations	0.6
Flexible and other	2.5
Total	11.2

UK flagship leasing key facts

Leasing vs. Dec 19 ERV -8%(1) Leasing vs. previous passing -11%(1) Average lease term: 8 years(2) Average incentive: 3 months(2)

1	Principal leases only	80
2	Excludes flexible leases (FY2018: average lease term 11 years, average incentive 7 months)

Additional disclosure: UK flagship destinations

Differentiation between categories and brands in our UK portfolio

2019 Sales

Hammerson -1.8%

Index -2.2%(1)

2019 Footfall

Hammerson +0.6%

Index -4.6%(2)

2019 price deflation(3)

Non-food-0.9%

Clothing -8.0%

Hammerson UK flagship destinations category sales and range

50%

40%

30%

20%

10%

3.0%	2.3%	1.9%	1.9%	1.8%	1.8%
0%

-1.0%-3.5%-5.1%-5.5%-7.6%

-10%

-20%

-30%

-40%

Jewellery &	F&B	Sportswear	Dept Store -	Fashion -	Leisure	Health &	Fashion -	Home,	Dept Store -	Fashion -
Personal			Aspirational	Aspirational		Beauty	Modern	Consumer	Mainstream	Traditional
Luxuries								Brands & Gifts
1	Source: Visa F2F Index									81
2	Source: Shoppertrak
3	BRC Nielsen shop price index

Additional disclosure: UK flagship destinations

Exposure to department stores

Hammerson exposure to department stores in UK

		Number of		Floorspace
		stores		('000 m2)
Harvey Nichols	2	8
Selfridges	1	24
John Lewis	5	114
Marks & Spencer	4	28
Fenwick	1	16
Debenhams(1)	5	74
House of Fraser(1)	3	45
Total	21	309

Hammerson sales growth

+ve

-ve

		Highcross, Leicester
1	Includes Debenhams and House of Fraser stores at Centrale which is classified in the UK other portfolio	82

04 France flagship destinations

Village Noël, Les Terrasses du Port, Marseille

Additional disclosure: France flagship destinations

Portfolio remains weighted towards flagship assets

Focus on flagship destinations

88%

Les Terrasses du Port Italie Deux (25%) Les 3 Fontaines Other

Portfolio value: £1.4bn

Largest three assets: 88% of portfolio(1)	7 France flagship destinations

1

By value at 31 December 2019 including developments

84

Additional disclosure: France flagship destinations

2019 leasing performance

2019 leasing and cumulative vs. 2018 (£m)

5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

January	February	March	April	May	June	July	August	September	October	November	December
		Monthly leasing 2019 (LHS)					Cumulative leasing activity 2018 (RHS)
		Cumulative leasing activity 2019 (RHS)

		2019
			leasing
8.0			£m
7.0	Principal leasing	4.1
6.0
Reconfigurations	1.3
5.0
Flexible and other	0.6
4.0
Total	6.0
3.0

2.0

1.0France flagship leasing key facts

0.0	Leasing vs. Dec 19 ERV +5%(1)
	Leasing vs. previous passing +8%(1)

Average lease term: 10 years(2)

Average incentive: 0 months(2)

1	Principal leases only	85
2	Excludes flexible leases (FY2018: average lease term 10 years, average incentive 3 months)

Additional disclosure: France flagship destinations

Differentiation between categories and brands in France

2019 Sales

Hammerson +2.6%

Index +0.9%(1)

2019 Footfall

Hammerson +1.9%

Index +0.3%(1)

Hammerson UK flagship destinations category sales and range

50%

40%

30%

20%

10%
7.9%	6.4%	5.5%	4.7%	4.5%	3.9%	1.2%	1.2%	0.5%
0%
								-0.5%	-0.4%

-10%

-20%

-30%

-40%

Sportswear

Fashion -

Fashion -

Dept Store -

Jewellery &

Health &

Dept Store -

Fashion -

Leisure

Home,

F&B

Aspirational

Modern

Mainstream

Personal

Beauty

Aspirational

Traditional

Consumer

Luxuries

Brands & Gifts

1

Source: CNCC

86

05 Ireland flagship destinations

The Ilac Centre, Dublin

Additional disclosure: Ireland flagship destinations

200,000m2 of prime space plus sustainable development opportunities

Focus on flagship destinations

Dundrum		Pavilions		Ilac		Developments

Portfolio value: £1.0bn

Dundrum 65% of portfolio(1)

1

By value at 31 December 2019 including developments

88

Additional disclosure: Ireland flagship destinations

Key retail centres map

89

06 Premium outlets

Mallorca Fashion Outlet, Mallorca

Additional disclosure: Premium outlets

Tiered European outlet market

Sales densities €/m2

€30,000+	International fashion and
	luxury brands

€2,000-€10,000

Mainstream fashion brand outlets

<€2,000	Low-end discount outlets

91

Premium outlets portfolio

Value Retail Villages	VIA Outlets centres
Bicester Village, Oxford	Batavia Stad Amsterdam Fashion Outlet
GLA: 28,300m2	GLA: 31,000m2
Boutiques: 161	Units: 135
La Roca Village, Barcelona	Fashion Arena Prague Outlet
GLA: 22,800m2	GLA: 25,600m2
Boutiques: 131	Units: 102
Las Rozas Village, Madrid	Freeport Lisboa Fashion Outlet
GLA: 16,600m2	GLA: 36,600m2
Boutiques: 95	Units: 132
La Vallée Village, Paris	Hede Fashion Outlet, Gothenburg
GLA: 22,400m2	GLA: 18,500m2
Boutiques: 104	Units: 59
Maasmechelen Village, Brussels	Landquart Fashion Outlet, Zürich
GLA: 20,000m2	GLA: 21,300m2
Boutiques: 102	Units: 82
Fidenza Village, Milan	Mallorca Fashion Outlet
GLA: 21,200m2	GLA: 32,700m2
Boutiques: 121	Units: 79
Wertheim Village, Frankfurt	Wroclaw Fashion Outlet, Poland
GLA: 21,200m2	GLA: 13,700m2
Boutiques: 116	Units: 87
Ingolstadt Village, Munich	Sevilla Fashion Outlet
GLA: 21,100m2	GLA: 16,000m2
Boutiques: 112	Units: 61
Kildare Village, Dublin	Zweibrücken Fashion Outlet, Germany
GLA: 16,700m2	GLA: 30,100m2
Boutiques: 97	Units: 118

Vila do Conde Porto Fashion Outlet
GLA: 27,600m2
Units: 112
Oslo Fashion Outlet
GLA: 13,500m2	92
Units: 93

Additional disclosure: Premium outlets

Hammerson's total investment in Value Retail

Holding companies 25%

equity

Bicester Village	La Roca Village	Las Rozas	La Vallée
Village	Village

Maasmechelen

Village

Fidenza Village

Wertheim

Village

Ingolstadt

Village

Kildare

Village

37

29

25

14

14

22

33

2

29

50

41

38

26

27

34

45

15

41

Village ownership

via LPs (%)

Total Village

ownership (%) (1)

1

Total Village ownership calculated as economic entitlement of directly held and indirectly held interests

93

Additional disclosure: Premium outlets

Absolute sales growth delivered through active management, acquisitions and extensions

VR and VIA Sales and Sales Growth 2012 - 2019 (€m)(1)

3,500
13%				13%
3,000	12%
11%	12%
2,500		10%
				10%	9%
					8%
2,000				8%	8%
		8%
			7%
1,500

1,000

500

0

2012	2013	2014	2015	2016	2017	2018	2019
		VR Sales (LHS)			VIA Sales (LHS)	VIA Sales Growth (RHS)	VR Sales Growth (RHS)

14%

12%

10%

8%

6%

4%

2%

0%

1	Figures have been restated at constant FX rates	94

Sales growth include assets owned for 24 months

Sales include assets acquired from the date of acquisition

Additional disclosure: Premium outlets

Luxury outlets incur higher costs to generate outperformance

Value Retail - 2019 earnings walk (£m)

GRI	135.7
Property outgoings			(40.6)

NRI95.1

Administration costs													(44.4)
EBIT	50.7						37.4%	EBIT margin
												(7)
Interest & other							(16.2)
Tax				(3.3)			(2)
EPRA Earnings	31.2		15		23.0%	EPRA Earnings margin
-	20	40		60	80	100	120	140
														£m

GRI: 62% fixed, remainder turnover; includes brand inducement amortisation

Property outgoings: includes significant marketing costs, as well as other property outgoings, e.g. leasing and car park costs, net of service charge income

Administration costs: roughly one-third local; two-

thirds group

Interest & other: secured debt structure; weighted average cost of debt of 2.7%; net of participative loan earnings from investments in LP stakes in the Spanish villages

Tax: corporation tax ranges from 19% in the UK to 32% in France

1	All figures at Hammerson share	95

Additional disclosure: Premium outlets

Lower cost model operated below luxury end of premium outlets market

VIA Outlets - 2019 earnings walk (£m)

GRI															45.6
Property outgoings																							(13.8)
NRI							31.8										32
																					(7)
Administration costs																	(6.5)
EBIT							25.3										55.5% EBIT margin
Interest											(8.2)
Tax								(2.5)
EPRA Earnings				14.6				15								32.0% EPRA Earnings margin
-	5	10	15		20	25	30	35	40	45	50
															£m

GRI: 74% fixed, remainder turnover; includes car park income and inducement amortisation

Property outgoings: includes local marketing costs and leasing costs, net of service charge

Administration costs: include Value Retail advisory fees, internal staff costs and group marketing costs

Interest: secured debt structure; weighted average cost of debt of 2.4%

Tax: corporation tax ranges from 16% in Germany to 25% in Spain and the Netherlands

1	All figures at Hammerson share	96

Additional disclosure: Premium outlets

Multi-phase extensions - a source of significant growth

Completed/Onsite

Value Retail: La Roca Village, Barcelona

VIA: Hede Fashion Outlet, Gothenburg

2,600m2

21 units

TDC

€50m

Opening Q4 2020

2,400m2

15 units

TDC

€10m

YOC

+10%

Q4 2019

Pipeline

						5,500m2
						c.27 units
						TDC
						€60-65m
						Opening
						Q2 2021
	Value Retail: Kildare Village, Dublin
VIA - future schemes	Units				Launch
Sevilla Fashion Outlet	15-20	2022
Mallorca Fashion Outlet	30-35(1)	2023
Zweibrücken Fashion Outlet	30-35(1)	2024

1

Development to be delivered in phases

97

07 City Quarters

Martineau Galleries, Birmingham

Additional disclosure: City Quarters

The City Quarters opportunity

Next

Retail

F&B

Residential

Workspace

Leisure

Education

Culture

Hotel

Public spaces

Start on

Key schemes

Area

planning

site

submission

term

Les 3 Fontaines, Cergy

8,400m2

n/a

On site







The Podium at Dundrum, Dublin

10,000m2

n/a

H2 2020





Near

Victoria Hotel, Leeds

8,400m2

n/a

H2 2020



Victoria Phase 2, Leeds

10 acres

2020



















Martineau Galleries, Birmingham

7 acres

2021













Strategic

Callowhill Court, Bristol

9 acres

2021



















Dublin Central

6 acres

2021















Dundrum Phase 2, Dublin

6 acres

2021









Pavilions Phase 3, Swords

18 acres

2023











Major

Brent Cross

15 acres

n/a

















Croydon

22 acres

n/a















The Goodsyard, London

10 acres

In Planning















TOTAL

103 acres

99