Hammerson PLC HMSO Interim Management Statement

  Hammerson PLC (HMSO) - Interim Management Statement

RNS Number : 7164Q
Hammerson PLC
09 November 2012






  For immediate release 9 November 2012



Hammerson plc



Interim Management Statement for the period from 1 July 2012 to 8 November
2012



·Hammerson now  exclusively retail  focused having  sold £627  million  of 
office property and reinvested £551 million in attractive retail assets  since 
February



·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 
results."



Operations



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
footfall.



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 
EC2.



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 
million.



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.





Financing



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 
million.



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.





Outlook



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.





Conference call



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:
www.hammerson.com



For further information

www.hammerson.com



David                              Atkins,                               Chief 
Executive Tel: 020  7887 
1000

Timon Drakesmith, Chief Financial Officer

Morgan Bone, Director of Corporate Communications Tel: 020
7887 1009


morgan.bone@hammerson.com





Financial information



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





Forward-looking statements



This document contains certain statements that are neither reported  financial 
results nor other historical information. These statements are forward-looking
in nature and are  subject to risks and  uncertainties. Actual future  results 
may differ materially from those expressed in or implied by these  statements. 
Many of  these risks  and  uncertainties relate  to  factors that  are  beyond 
Hammerson's ability to control  or estimate precisely,  such as future  market 
conditions, currency fluctuations, the behaviour of other market participants,
the actions of  governmental regulators  and other  risk factors  such as  the 
Company's ability to continue to obtain financing to meet its liquidity needs,
changes in the political, social and regulatory framework in which the Company
operates or  in  economic or  technological  trends or  conditions,  including 
inflation and consumer confidence,  on a global,  regional or national  basis. 
Readers are cautioned  not to  place undue reliance  on these  forward-looking 
statements, which speak only as of  the date of this document. Hammerson  does 
not undertake  any  obligation to  publicly  release any  revisions  to  these 
forward-looking statements to reflect events  or circumstances after the  date 
of this  document. Information  contained  in this  document relating  to  the 
Company should not be relied upon as a guide to future performance.





                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IMSUWAKRUBAARAA -0- Nov/09/2012 07:00 GMT
 
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