TIDMHMSO
RNS Number : 9891V
Hammerson PLC
09 November 2017
Hammerson plc
9 November 2017
Hammerson Investor and Analyst Event and Trading Update
Hammerson is today hosting a visit to Westquay shopping centre,
Southampton, for investors and analysts. Westquay is the leading
retail and leisure destination on the south coast, with over 1
million sq ft of retail, dining and leisure space, welcoming over
18 million visitors per year. The new dining and leisure extension,
Westquay South, was opened at the start of this year with 20 new
restaurants, nearly all of which are brand new to Southampton, a
10-screen Cinema de Lux and Hollywood Bowl, delivering strong net
footfall across the centre up 12% year on year.
Trading update
The event will include an update on performance across the wider
Group for the period since the Half Year results in July, including
key trading information for the Q3 period (1 July 2017 to 30
September 2017).
Highlights for Q3 2017
-- Continued positive momentum in leasing across the Group; in
Q3 total leasing volumes were up 17% on the same quarter last year,
with leases signed 4% above previous passing and at 11% above
December 2016 ERV
-- Improved tenant sales performance in the period; UK sales
flat and France +5.6% year on year in the quarter
-- Bicester Village extension opened with 30 new stores; Value
Retail portfolio sales were up +8% year on year after a successful
European summer tourist season and VIA Outlets +12% in the Q3
period
-- Dublin continues to outperform other European cities with
retail sales currently growing at 4% year on year
-- Active approach to refinancing with early redemption of the
2020, GBP250 million, 6.875% bond and a new EUR312.5 million
(Hammerson share) 7-year financing secured on Dundrum at 1.9% total
rate
-- Continued progress on our Brent Cross extension project with
detailed planning consent approved and Laing O'Rourke selected as
preferred contractor
Leasing momentum continues
Retailers and brands continue to be motivated to take space in
our prime European shopping centres, convenient retail parks and
premium outlets. In the Q3 period, the Group (excluding Premium
Outlets) signed leases worth GBP6.8 million of rental income, up
17% on the same quarter last year, with leases signed 4% above
previous passing and at 11% above December 2016 ERV. In the year to
30 September, leasing volumes grew by double-digit rates in all
segments, up 35% in total (2017:GBP24.9 million versus 2016:GBP18.4
million). Year to date, Group lettings are 6% ahead of previous
passing and 9% ahead of ERV, with no material change to levels of
incentives. A total of 125 rent reviews were settled year to date
in the UK and Ireland, securing a total uplift in rent of 7%.
Occupancy is stable at 97% (30 June 2017: 97%). Across our
European platform, we have seen the strongest leasing demand from
the differentiated fashion and sports brands (such as Flannels,
Coach, Ben Sherman, JD Sports and G-Star) and personal luxury goods
(such as Sephora, Rituals, L'Occitane, Hotel Chocolat and Pandora).
Thanks to the strength of the catering offer at our centres we have
seen good leasing in this category with deals at 7% ahead of ERV
this year and introduced innovative dining offers including Mowgli
and Pho. On our retail parks, homeware brands such as Oak
Furnitureland and Sofology have been the most active. We see
retailers increasingly investing in store technology and layouts to
support their multichannel offer and using data analytics from
their online platform to inform store location decisions, capturing
the increased productivity of a 'clicks & bricks' strategy.
Supportive tenant sales
European consumer spending was more encouraging in the third
quarter of 2017, albeit remaining somewhat erratic. Our UK shopping
centre instore tenant sales have shown an improving trend and were
flat in the quarter (Q3 0.0% vs H1 -3.6% (Q1 -5.0%; Q2 -2.4%))
(retail sales now include Grand Central in all periods) following a
tougher first half around the UK General Election and security
concerns. In France, sales were strongly up (Q3 +5.6% vs H1 -3.1%
(Q1 -0.5%; Q2 -3.8%)) with the seasonality of the summer sales
period boosting fashion sales in particular. In Ireland, retail
market sales were up 4.2% in Q3 (Source: Central Statistics Office)
and our centres performed in line with the market. Following a
strong first half, Value Retail sales growth continued at a similar
rate, up 8.3%, boosted by an impressive performance at Bicester
Village and Fidenza, Milan, which is also benefiting from a new
extension. VIA Outlets sales were up 12.4% in Q3, with strong
performances at Batavia Stad Fashion Outlet, Amsterdam, partly as a
result of the new extension, and Fashion Arena, Prague, which
benefited from better brands such as Polo Ralph Lauren.
Product Experience Framework driving footfall outperformance
Our successful customer-focused initiatives, implemented as part
of our Product Experience Framework, helped to drive an
outperformance in footfall at our centres this quarter. In the
period year to date, our footfall has outperformed the market by
260bps in the UK and 220bps in France. The highlight of Q3 was the
rollout of our bespoke 'StyleSeeker' app, which helps shoppers
identify and locate similar outfits within their shopping centre,
into all of our UK centres and introduction into two centres in
France so far. New retailer partners for the app include Harvey
Nichols, The White Company, New Look, Gant and Superdry. Our
augmented reality quest featuring Scooby Doo was run at nine UK
centres, Dundrum and Elliott's Field retail park, featuring
retailer giveaways and promotions. Following a successful trial of
hands-free shopping at the Oracle, where over half of shoppers
stayed for up to two hours, the initiative is now live at
Silverburn, Victoria and Union Square.
Development and reconfiguration
The much anticipated extension of Bicester Village (5,800m(2) )
opened in October, welcoming 30 new stores including Charlotte
Tilbury, Joseph, Zadig & Voltaire, Cowshed and Rapha. The
extension includes a VIP facility called The Apartment, new dining
offers and enhanced tourist services. Within the VIA Outlets
portfolio, the newly designed space at Freeport Lisboa Fashion
Outlet will be launched to the public later this month with brands
including Furla and Tumi and a new restaurant quarter.
A number of key milestones have been met in the development of
Brent Cross, including the granting of detailed planning consent by
Barnet Council and the announcement of our preferred contractor,
Laing O'Rourke, for the main construction contract. At our Retail
Park developments we have completed Phase two at Elliott's Field
and Parc Tawe is on track to complete this December, both schemes
are on track to be 90% pre-let upon opening.
Capital recycling to drive value
In September, the acquisition by VIA Outlets of Oslo Outlet,
Norway, completed (Hammerson share GBP47 million). We also secured
direct ownership of the Pavilions Shopping Centre, Dublin, (a 50%
stake) allowing asset management initiatives to be advanced such as
an improved dining offer. Following the changes to stamp duty in
Ireland as part of the recent Government budget in October this
year, stamp duty for commercial property in Ireland has increased
from 2% to 6%. This will directly impact the value of commercial
property assets in Ireland, including the carrying value of our own
Irish assets albeit income returns are unaffected and remain
positive for our portfolio.
We added to our flagship asset, Les Trois Fontaines, Cergy,
Paris, with the acquisition in October of the adjoining shopping
centre, Cergy 3 for EUR81 million. This will strengthen our
investment by increasing the scale of the retail offer and growing
our catchment share as well as supporting the future extension of
the centre.
We are progressing our planned disposal programme and remain
confident of achieving our target of GBP400 million of disposals
this year.
Debt refinancing
Together with our joint venture partner, Allianz Real Estate, we
completed a new EUR625 million loan secured against Dundrum Town
Centre, Dublin. Demand was strong due to the quality of the asset
and hence pricing was attractive resulting in an all-in interest
rate of 1.9%. Following receipt of our 50% share of the proceeds
(EUR312.5 million), we exercised our redemption option on our next
maturing bond, a GBP250m 6.875% bond originally maturing in
2020.
David Atkins, Chief Executive of Hammerson, commented:
"In the third quarter we have maintained good leasing activity
across our portfolio of leading retail assets, demonstrating that
brands are continuing to prioritise space in well-invested, prime
locations. In the UK and France, our tenant sales have shown an
encouraging pattern of improvement in Q3. The backdrop for
retailers in the UK remains challenging but we believe our assets
are well-positioned and will be resilient. Our growth markets of
Dublin and Premium Outlets continue to outperform strongly and
differentiate our attractive investment case. We continue to
achieve important milestones at the Brent Cross extension with
detailed planning and appointment of a preferred contractor.
Today's event in Southampton will demonstrate our strategy of
creating differentiated destinations which offer an attractive
retail and leisure experience, driving increased footfall and dwell
time."
Materials from today's visit to Westquay, Southampton, will be
available on Hammerson's website shortly following the event
(www.hammerson.com).
For further information:
Rebecca Patton, Head of Investor Relations
Email: Rebecca.patton@hammerson.com
Phone: 0207 887 1009
www.hammerson.com
Note: the announcement above has also been released on the SENS
system of the Johannesburg Stock Exchange.
Notes to Editors
Hammerson is a FTSE 100 owner, manager and developer of retail
destinations in Europe. Our portfolio of high-quality retail
property has a value of around GBP10.5 billion and includes 23
prime shopping centres, 17 convenient retail parks and investments
in 20 premium outlet villages, through our partnership with Value
Retail and the VIA Outlets joint venture. Key investments include
Bullring, Birmingham, Bicester Village, Oxfordshire, Dundrum Town
Centre, Dublin and Les Terrasses du Port, Marseille.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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