Hammerson PLC (HMSO) - Interim Management Statement
RNS Number : 7164Q
09 November 2012
For immediate release 9 November 2012
Interim Management Statement for the period from 1 July 2012 to 8 November
·Hammerson now exclusively retail focused having sold £627 million of
office property and reinvested £551 million in attractive retail assets since
·Announced today the disposal of our final office property, Stockley
House, London SW1, for £42 million, 10% above book value
·Robust operational results with occupancy of 97.3% at 30 September 2012
and leasing in the period 5% above ERV, reflecting continued strong demand for
prime retail property
·Tenants' sales increased by 3.2% in the UK, 0.3% in France
·Strong development progress: Les Terrasses du Port, Marseille, now 80%
pre let. Leases signed with John Lewis for Eastgate Quarters, Leeds, and
Debenhams for Elliott's Field, Rugby
·Substantial financial resources with approximately £850 million of
liquidity available for further investment
David Atkins, Hammerson Chief Executive, said:
"I'm delighted to have completed the transition to a retail focused company
just nine months after announcing our revised strategy. We sold over £600
million of office properties above book value, and have redeployed £551
million of proceeds into prime retail locations in our chosen specialist
sectors. In addition, we are making excellent progress with our developments,
and our strong operational performance demonstrates that high quality
properties in winning retail locations are continuing to deliver positive
Overall occupancy in the portfolio remains high at 97.3% (30 June 2012:
97.5%). This is ahead of both our target of 97%, and the equivalent figure of
97.1% at 30 September 2011.
We signed 134 new leases in the period representing 41,000m^2, and worth £7.6
million of rental income per annum. In the UK we signed long-term leases 2%
above December 2011 ERV. In France, long-term leases were signed at levels 7%
above ERV, to give a group figure of 5%. Key lettings in the period include:
· Ugg at Bullring, Birmingham
· Armani Exchange and Jamie's Italian at Monument Mall, Newcastle
· Wilkinson at Manor Walks, Cramlington
· Kiko and Levi's at Bercy 2, Paris
· Esprit and Promovacances at O'Parinor, Paris
· Adidas and Armand Thierry at Italie 2, Paris
UK tenants' sales increased by 3.2% in our UK shopping centre portfolio,
notwithstanding a small decline in footfall of 1.1% compared to Q3 2011. Over
the quarter sales were particularly strong in August and September with
Bullring, Highcross and Union Square performing well. In France, tenants'
sales increased by 0.3% across the portfolio in line with a slight increase in
There were 73 units in administration at 30 September 2012, broadly unchanged
since the half year, of which 50 were still trading. Units in administration
represent 1.7% of group rents, however recent tenant administrations may
impact occupancy over the remainder of the year.
Portfolio - Investment
In the period we completed the first tranche of the disposal of office
properties to Brookfield and sold our interest in 10 Gresham Street, London
We announce today the sale of Stockley House, London SW1, which completes our
office disposal programme and finalises the reorientation of the Company to a
specialist retail REIT. The property, which was valued at £38 million at 30
June 2012, was sold to a private investor for £42 million.
Overall the office properties were sold for £627 million at a 7% premium to
December 2011 book values.
We have invested £551 million into successful retail venues offering growth
potential across our defined areas of: prime regional shopping centres
offering experience; UK retail parks offering convenience; and designer outlet
villages offering luxury and value.
In July we announced the acquisition of further interests in Value Retail
holding companies for a total of £72 million and increased our shareholder
loan to the company from €28 million to
€58 million. In September, we acquired Victoria Quarter in Leeds for £136
In September we also exchanged contracts to acquire a 25% share of the
leasehold interest in Whitgift, Croydon for £65 million. We have undertaken a
detailed public consultation programme and recently presented the emerging
scheme to Croydon's Strategic Planning Committee. We expect to submit our
outline planning application next month.
In October we purchased The Junction Fund for £255 million. The fund consists
of four retail parks located in strong catchments, as well as 34,000m^2 of
consented development opportunities and 17 ha (46 acres) of additional
development land. Since completing the transaction we have achieved practical
completion of the conversion of the former UCI unit at Thurrock, which will
accommodate the first out-of-town Nike store in the UK.
Portfolio - Development
Our major retail and leisure development at Les Terrasses du Port, Marseille,
is now 80% pre-let. During the period, pre-letting agreements were exchanged
with Intimissimi, G-Star, Kusmi Tea and Calezdonia. Construction is on
schedule and on budget, with the project expected to open in spring 2014.
The pre-letting of our proposed Le Jeu de Paume retail development at Beauvais
is progressing well. We have secured H&M as the main fashion anchor at the
scheme, where 34% of the income is now exchanged or in solicitors' hands. It
is anticipated that construction will commence next year.
At Queensgate shopping centre in Peterborough, we reached practical completion
of the 5,000m^2 Primark store. Primark is fitting out the unit which remains
on schedule to open in time for Christmas trading. In addition, Topshop /
Topman and Office have opened for trade in the period, further enhancing the
retail mix and vitality of this asset.
We are making good progress with extensions and redevelopments across the
portfolio. We have exchanged contracts with Debenhams for a 5,575m^2 store
that will anchor the redevelopment of Elliott's Field, Rugby, where we intend
to submit a planning application early next year. In Cramlington, the
13,500m^2 extension of Manor Walks shopping centre is progressing well on site
and we anticipate the scheme opening on schedule in spring 2013. At the
neighbouring Westmorland Retail Park, where we have secured planning approval
for the 3,700m^2 extension and secured a pre-let to Marks & Spencer,
construction is due to start early next year.
In September we issued a seven year €500 million 2.75% unsecured bond due in
2019. Borrowings were £2.1 billion at 30 September 2012 and cash balances were
£395 million, to give net debt of £1.7 billion (30 June 2012: £1.9 billion).
At 31 October 2012, proforma for the completion of the Junction Fund and
Victoria Quarter acquisitions and the sales of Stockley House and Gresham
Street, net debt was £2.0 billion reflecting loan-to-value and gearing ratios
of 35% of 51% respectively. Proforma cash and unutilised facilities were £850
The Group's nearest short-term debt maturity is £100 million nominal of
floating rate reset bonds that were issued in July 2008. These bonds have put
options at par from February 2013 in favour of the lender and a call option at
fair value in favour of Hammerson. It is estimated that the fair value of
these instruments was £141 million at 30 September 2012. We are currently
evaluating options for this bond, including whether to exercise the Hammerson
call option to reduce the Group's future interest costs.
We remain cautious about the overall economic outlook in the UK and Europe.
However, we have a portfolio of modern, well-located retail properties which
offer consumers leisure, catering and multi-channel capabilities. These assets
continue to attract both domestic and international retailers, which gives us
confidence in our ability to grow underlying rental income.
There will be a conference call for investors and analysts at 08.00 GMTtoday.
To participate in the call, please dial:
UK +44 (0)20 3147 4971
USA +1 212 444 0889
Netherlands +31 (0)20 713 9243
France +33 (0)3 59 36 17 32
The participant code is 278270
For a replay of the conference call, please visit:
For further information
David Atkins, Chief
Executive Tel: 020 7887
Timon Drakesmith, Chief Financial Officer
Morgan Bone, Director of Corporate Communications Tel: 020
The financial information contained in this statement is based on unaudited
management accounts for the three months ended 30 September 2012. The exchange
rate used in preparing this statement is £1 = €1.255
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.
This information is provided by RNS
The company news service from the London Stock Exchange
IMSUWAKRUBAARAA -0- Nov/09/2012 07:00 GMT
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