bicester village & bullring thriving retail destinations…tesco launch clubcard, 1995 2000 2009...
TRANSCRIPT
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Bicester Village & Bullring Thriving retail destinations
26 September 2012
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Today’s Agenda
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Introduction David Atkins Value Retail presentation Scott Malkin and Timon Drakesmith Hammerson update David Atkins Travel to Bullring Lunch Browns Restaurant Bullring presentation Martin Plocica
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Our vision is to be the best owner-manager and developer of retail property within Europe
By capitalising on our strengths we aim to provide
industry-leading shareholder returns
Vision
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19.3
2011
Hammerson and Value Retail
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19.3
2011
4
1998-2001 £22.6m investment in Bicester Village LPs, gaining 33% economic interest
2001-2002 £10.0m initial investment for 7.4% interest at holding company level
2002-2008 £7.3m phased acquisition of minority interests at Wertheim, Kildare, La Roca, Las Rozas & Fidenza
2007 £21.0m investment for a further 4.8% of holding company interests
2011 £24.7m invested in ‘LP’ interests at La Roca, Las Rozas, Maasmechelen, Fidenza & Wertheim
2012 £78.3m invested in holding company interests , increasing loan to VR to €58 million
A mutually beneficial relationship
146
163
51 47
£407 million
Bicester Village Holding companies
European villages Loan to Value Retail
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Scott Malkin Founder & Chairman Value Retail
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Why do outlets exist?
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Fashion brands have surplus stock and
need an efficient means to deal with it in a way which does not compromise their integrity and image
Why do outlets exist?
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How does Value Retail service this need?
The Value Retail Villages provide a high quality sales environment for goods that are: • Authentic • At least one year old • Same season • Sold at a 33% - 70% discount to full price
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Where are the European Villages? LOCATIONS TOTAL CATCHMENT THE COLLECTION
Carefully selected based on proximity to Europe’s wealthiest cities and most popular tourist attractions.
Within 45 to 60 minutes of major metropolitan centres and close to regional tourist destinations.
Residents within 120 mins drive: 163m Annual tourists to cities served by Villages: 100m Annual cars that pass the Villages: 289m
162,158m2 of gross lettable area. 958 Boutiques. 96.1% Occupancy.
Milan Year opened: 2003 GLA: 17,267m2 Occupancy: 98% Sales/m2: 5,741 Boutiques: 104 Catchment1: 21m
London Year opened: 1995 GLA: 22,071m2 Occupancy: 99% Sales/m2: 22,032 Boutiques: 140 Catchment1: 30m
Dublin Year opened: 2006 GLA: 10,978m2 Occupancy: 96% Sales/m2: 7,134 Boutiques: 65 Catchment1: 4m
Munich Year opened: 2005 GLA: 20,544m2 Occupancy:: 100% Sales/m2: 5,460 Boutiques: 121 Catchment1: 14m
Barcelona Year opened: 1998 GLA: 17,517m2 Occupancy: 99% Sales/m2: 8,710 Boutiques: 106 Catchment1: 6m
Frankfurt Year opened: 2003 GLA: 20,873m2 Occupancy: 99% Sales/m2: 5,855 Boutiques: 119 Catchment1: 21m
Brussels Year opened: 2001 GLA: 19,062m2 Occupancy: 98.0% Sales/m2: 5,470 Boutiques: 104 Catchment1: 41m
Madrid Year opened: 2000 GLA: 16,456m2 Occupancy: 98% Sales/m2: 9,693 Boutiques: 112 Catchment1: 8m
Paris Year opened: 2000 GLA: 121,289m2 Occupancy: 100% Sales/m2: 13,780 Boutiques: 113 Catchment1: 18m
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Formula for success; a virtuous cycle of value creation
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Timon Drakesmith
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Hammerson’s Investments in Value Retail
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Holding Companies 22% equity (£163 million)
Hammerson £47 m shareholder
loan
Bicester Village
La Roca Village
Las Rozas Village
La Vallée Village
Maasmechelen Village
Fidenza Village
Wertheim Village
Ingolstadt Village
Kildare Village
Hammerson invests directly in Asset Companies at ‘Investor’ level. The current carrying value as at June 2012 was £146 million for Bicester and £51 million for the European assets.
Total Village ownership (%)
Village Ownership via LP’s (%)
33 15 15 0 13 20 31 0 3
45 26 26 11 24 32 43 11 14
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Bicester Village – Recent performance
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143 168
241
302
392
468
-
50
100
150
200
250
300
350
400
450
500
2007 2008 2009 2010 2011 2012 *
Brand Sales (£m) * 2012 forecast
228 277
340
451.5
559
646
0
100
200
300
400
500
600
700
2007 2008 2009 2010 2011 2012 *
Asset Valuation (£m) * as at June 2012
Asset values based upon external valuations
CAGR 23% pa CAGR 27% pa
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Value Retail – Income returns to Hammerson
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3.2
11
3.6% 4.0%
1
2
3
4
5
0
2
4
6
8
10
12
2008 2012 (proforma)
LHS income from Value Retail (£m p a)
RHS income yield (%)
Income yield
Income from Value Retail CAGR 36.2% p a
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An attractive sector of retail property
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•Growing sector of retail market
•Domestic and international customer base
•Geared to increasing prosperity in emerging markets
•High quality portfolio in Europe’s principle cities
•Aligned with best in class operator
•Significant opportunities for collaboration
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David Atkins
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€500 bond issue 2.75% coupon LTV 27% (Pro-forma for Brookfield transaction) Reduction in operating expenses of 3%
Printemps signed at Les Terrasses du Port Commenced extension projects Heads of terms signed with JLP for Leeds
Disposal of offices £518m, 5% above book value £65m Whitgift acquisition £136m Victoria Quarter acquisition Additional £100m investment in Value Retail
Delivering on our vision…..
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Investment & Development
Leasing & Asset
Management
Financing & Operations
…but more to come
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Capital allocation to enhance portfolio returns
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Investment in our assets offer attractive low-risk returns
Developments will amplify returns - target YOC ≥7.5% - target IRR ≥ 12.5%
Continual recycling of capital into higher return opportunities Selected acquisitions
Prime Shopping Centres
Convenient Retail Parks
Premium
Designer Outlets
Extension and refurbishment
Development
Acquisition
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Allocating capital to winning locations
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Acquisition of 25% of Whitgift, Croydon
•600,000 sq ft shopping centre •£65 million headlease investment •Low initial yield pending development •Highly reversionary •Commitment to Croydon regeneration
Growing retail warehouse portfolio •Open A1 planning consents •Low average rents •Accessible and high car park provision •Development and asset management opportunities
Acquisition of Victoria Quarter, Leeds •210,000 sq ft luxury retail destination •£136 million (5.25% initial yield) •100% occupancy •Rents anticipated to grow c.15% •Adjacent Eastgate Quarters project
Experience Convenience Luxury & Value
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Whitgift, Croydon
• Large catchment population
•Strong growth location
• Weak competition
• Limited supply of modern retail accommodation
• Encouraging demand from key retailers and leisure operators
• Potential to create south London’s premier retail destination (1.6 million sq ft)
HOF
M&S
Debenhams
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Whitgift, Croydon
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Victoria Quarter, Leeds
• 6th largest UK catchment population
• Anchored by Harvey Nichols
• £6 billion total catchment spend
• Strong trading by successful designer brands
• 100% occupancy
• Only 20% of luxury demand currently met
•Synergies with Eastgate Quarters
Harvey Nichols
John Lewis
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Victoria Quarter, Leeds
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David Atkins & Martin Plocica
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Revised UK structure – focus on core retail areas
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David Atkins Chief Executive
Timon Drakesmith Chief Finance Officer
Peter Cole Chief Investment
Officer
Andrew Berger-North
Portfolio Director, Retail Parks
Simon Travis Business Development Director (Value Retail)
Marty Plocica Director UK Shopping
Centres
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Supported by specialist staff
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Sheila King Leasing Director, New
Business
Stephen Brown UK Marketing Director
Robin Dobson Director Retail Development
Kevin Crowley Business Development
Director
Mike McGuinness Development Director
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Marty Plocica; Director UK shopping centres
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•25 years of work history in retail real estate.
•Experienced in retail real estate markets in the UK, US, India, China and Mexico.
•20 years of experience in asset management, business development and revenue generation.
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Consumer Trends Retailer Response Hammerson response
Increased brand awareness
Convenience
Technology
Experience
Consolidation
Easy to access locations
Multi- Channel
Experiential Retail
Winning Retail Venues
Retail Parks
In-house skills Innovation
Click & Collect
Exciting brands Leisure & catering
Events
Responding to market dynamics
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Environment of fast paced change
32
Amazon.com launches. In 2010, turnover is $10billion Ocado wall at Bullring
Tesco launch Clubcard,
1995 2000
ASOS launches. In 2010 reported profits of £20m
2001
Launches johnlewis.com
2004
Launches and in 2010 reports breaking 600m worldwide users
2006
First ‘bricks’ business to report a profit in online click and delivery
2007
Launches mobile payment with paypal.
2008
Argos becomes the most visited retail site in the UK
2009
Daily Deal site launches and is now the globes fastest growing company
Relaunches johnlewis.com with emphasis on click and collect facilities
2011
ASOS launches facebook store and Argos launch TV channel
2010
Launch 1st transactional websites
2012
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UK at forefront of multi-channel retailing
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Many rich people online
Centralised retail Legacy of home delivery
Large, concentrated population
Source; Javelin
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“Excite me……”
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….. with great environments
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….. adapted to meet customer preferences
Introducing cinemas Improving catering
Bren
t Cro
ss
Cent
rale
Uni
on
Squa
re
Silv
erbu
rn
High
cros
s
Ora
cle
Wes
tQua
y
Cabo
t Ci
rcus
Bullr
ing
Que
ensg
ate
Free wi-fi by Dec 12
Mobile websites
Path Intelligence
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.. and attracting footfall through innovative marketing
• Location based real time offers at Silverburn • Google indoor mapping at Brent Cross • Student nights • “Everyone’s a winner” Olympics campaign • Guest bloggers across portfolio
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• UK’s second largest City
• Largest urban population outside London
• 1.2m sq ft
• Anchored by Selfridges and Debenhams
• 3,200 parking spaces
• 39.1m visitor per annum
• 161 shops and 28 cafes/restaurants
• 99.1% occupancy
• £915 million asset value (June 2012)
• 5.6% TEY
The Bullring, Birmingham
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The Bullring, Birmingham
Family zone
Sports fashion
High street mass
Catering
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The Bullring, Birmingham
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Outstanding catchment fundamentals…..
Total catchment spend on non-grocery of £7.9
billion
Resident population of
2.7 million
56% of consumers belong to the top
ACORN groups
Limited competition
Bullring captures 51% of non-
grocery spend in Birmingham
Largest professional and financial sector outside London
2 major railway stations
Competing centres
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….. and marketing and commercialisation activities
0.06
1.2
1.77 1.83
2.385 2.34 2.46
3
2.7
0
0.5
1
1.5
2
2.5
3
3.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Com
mer
cial
isat
ion
inco
me
£m (1
00%
)
3.2
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Attract successful retailers ….
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2003 2006 2009 2012
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…. and leads to strong performance
Average vacancy 1.8% CAGR annual rents 5.2% CAGR ERV 3.6%
£33
£42 £43
£45 £47 £46 £46
£49
£52
£30
£35
£40
£45
£50
£55
2003
2004
2005
2006
2007
2008
2009
2010
2011
4.4% 4.0%
2.1%
1.4%
0.5%
3.0%
1.9%
0.6% 0.9%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
2003
2004
2005
2006
2007
2008
2009
2010
2011
£38
£45 £46
£48 £49 £50 £50
£51 £52 £52
£30
£35
£40
£45
£50
£55
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
£million £million
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Summary
Portfolio aligned to “winning” locations
Exciting our consumers by providing great retail venues
Enhancing the visitor experience through leisure and catering
Industry leading multi-channel and social media initiatives
Drives sales, footfall and rental growth
Hammerson - a pure retail REIT that delivers industry-leading shareholder returns
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