Hammerson announced its results yesterday. The highlights were an 11.3% uplift in its EPRA NAV, a 12.6% increase in its adjusted earnings per share to 23.9p on the back of a 4.3% improvement in net rental income (2.3% like for like).
Overall occupancy rose from 97.5% to 97.7%. Retail sales at their centres rose by 1.3% in the UK and 0.6% in France.
In the £3.1bn UK retail portfolio (11 centres with 755,000 sqm of lettable space and over 1,000 tenants) rents rose by 2.1% like for like – partly by hiking car parking charges. they signed 151 leases at rates 4% above 2014 December ERVs and 9% above the passing rent. Occupancy rose to 98.3% from 98.1%.
In March, they took 100% ownership of Martineau Galleries, Birmingham by acquiring the stakes of our two joint venture partners. They are considering a number of potential strategic development opportunities for the property in the medium term. In June, Cineworld opened its new 14-screen cinema completing the 10,900sqm leisure-led extension at Silverburn. In December, they announced the disposal of Monument Mall, Newcastle for £75m, some £8m above its value at the beginning of the year. The 9,500sqm centre was acquired in 2011 and was redeveloped in 2013. The sale crystallised a £24m profit on cost and is part of the £500m disposal programme announced at the time of the Irish loan portfolio acquisition. In February 2016, they acquired Grand Central, Birmingham, a 40,400sqm shopping centre for a total cost of £350m. The centre, which opened in September 2015, is anchored by a 23,200sqm John Lewis and provides a modern retail environment for 40 premium stores including Jo Malone, Joules, Cath Kidston and The White Company. It also contains 20 casual dining brands including Yo Sushi, Caffe Concerto and Tapas Revolution. They have contracted to sell, subject to regulatory approval, 50% of the scheme to CPPIB, one of the existing joint venture partners in Bullring, for £175m.
Like for like rental growth was stronger in their retail parks (+2.6%). The £1.7bn portfolio of 21 parks with over 500,000 sqm of lettable space and 460 tenants saw a small drop in occupancy from 98.5% to 98.4% ahead of the redevelopments at Battery Retail Park, Birmingham and Parc Tawe, Swansea.
In April, they sold Drakehouse Retail Park, Sheffield for gross proceeds of £62m, generating a £2m profit compared with the 31 December 2014 valuation. At Cyfarthfa Retail Park, Merthyr Tydfil they completed a £30m, 14,500sqm extension in August. The extension includes B&Q’s first Eco-learning store, a full-line 4,600sqm M&S store and five fashion units including Next and River Island. The scheme has a yield on cost of 7% and generated a profit on cost of 34%. The redevelopment of Elliott’s Field, Rugby opened at the end of November. The scheme accommodates 16 fashion, homeware and catering brands and is anchored by a 5,600sqm Debenhams and a 4,600sqm M&S. The scheme includes new retailers to the Group’s retail park portfolio including H&M, Fat Face and Ed’s Easy Diner.
in France they have 10 centres with 360,000sqm of space and 1,100 tenants. like for like rents rose by 2.5% and occupancy rose by 0.3% to 96.9%. Les Trois Fontaine, Cergy Pontoise was the strongest performing centre with new tenants including Free, Levi’s and André. they have also been focusing on improving ancillary income across the portfolio.
In January 2015 they acquired a 10% interest in Nicetoile shopping centre in Nice, in conjunction with our partner, Allianz. The 17,600sqm centre attracts 13m visitors each year and generates passing rent of £14m. Hammerson manage the centre and their share of the acquisition cost was €31m (£24m). In October, they completed the disposal of two smaller shopping centres, Bercy 2, Paris for €64m (£47m) and Grand Maine, Angers for €63m (£46m). Both disposals were ahead of the 31 December 2014 valuations and resulted in a combined profit on disposal of £11m. In November, they opened Le Jeu de Paume, a 23,800sqm scheme in the centre of Beauvais, 60km north of Paris. The new centre, which is anchored by a Carrefour Market, has attracted high-quality tenants, the majority of which are new to Beauvais or the Oise region. Key retailers include H&M, Sephora, Superdry, New Yorker, iSwitch and G-Star Raw. The centre incorporates a number of new initiatives including car park guidance technology, interactive kiosks, mobile phone charging, a dedicated welcome desk and a children’s play area. Initial trading is positive and the scheme welcomed over 200,000 shoppers in the first two weeks of trading. In January 2016, they exchanged contracts for the sale of Villebon 2 retail park for €159m (£117m). The disposal was the final part of the £200m initial tranche of the £500m disposal programme announced to part-fund the Irish loan portfolio acquisition and the disposal is expected to complete in the Spring.
They are on-site at two developments:
- Victoria Gate, Leeds (pictured under construction) is a £165m scheme adjacent to Victoria Quarter arcade. The 35,400sqm development is anchored by a 24,200sqm flagship John Lewis store, the first in Leeds and largest outside London. The scheme includes more than 30 high-end retailers and restaurants to complement the offer at Victoria Quarter as well as an 850-space multi-storey car park. The scheme is 68% pre-let to brands including Maje, Cos, Anthropologie, The White Company, & Other Stories and Hackett and is due to open in Autumn 2016. When combined with Victoria Quarter the new scheme will create the largest premium retail and leisure destination in Northern England.
- WestQuay Watermark is a 17,000sqm leisure and catering scheme next to their jointly-owned WestQuay shopping centre. The scheme includes 23 new restaurants, which will open in late 2016, and a 10-screen Showcase Cinema de Lux which will open in early 2017. The project will create a new city centre leisure and dining destination for Southampton. Leasing continues to progress well, and the scheme is 80% pre-let. Key tenants already secured include Wahaca, Byron, Bill’s, Cabana, Cau, Five Guys and Red Dog Saloon.
Gearing rose from 46% to 54% (loan to value 38% vs. 34%) but the weighted average interest rate on their debt fell to 3.8% from 4.7% and interest cover rose to 3.6x from 2.8x.
HMSO : Hammerson figures edge upwards