Interim Management Statement

RNS Number : 0008L

Hammerson PLC

29 April 2010

 



For immediate release 29 April 2010

Interim Management Statement for the period from 1 January 2010 to 29 April 2010

David Atkins, Chief Executive said:

"We have made good progress with the acquisitions and projects that we announced around the year-end. Our retail assets in the UK and France have demonstrated a sound trading performance and our recently completed City developments are now almost fully let. We continue to focus on maximising income from our portfolio whilst reviewing the performance of each asset and assessing other market opportunities."

Strategy

Hammerson's aim is to be the best owner-manager and developer of retail and office property in the UK and France. We have a clear strategy of focusing on prime regional shopping centres and out-of-town retail, while exploiting opportunities in the office sector. We operate within a prudent financial structure, and are focused on income growth. We sell properties that do not meet our target returns and reinvest in assets which offer better prospects.

Portfolio update

Silverburn, Glasgow, is performing well since its acquisition, and has confirmed our initial view that this excellent, well-let shopping centre has further potential for improvement. Footfall in the first quarter of 2010 was up 3% on the same period of 2009, following a 5% year-on-year increase in 2009 as a whole, and there has been good interest from new retailers seeking representation in the scheme.

Our retail redevelopment of 54-60 rue du Faubourg St Honoré, Paris, which is 100% pre-let, is progressing well, with the first retail unit already handed over to Bally. We anticipate that the works will be concluded at the end of this year, and estimate a rental uplift of £2.5 million from the refurbishment.

At Les Terrasses du Port in Marseille, which is already over 40% pre-let, we have obtained a new CDAC trading consent and a new building permit for the scheme. We have finished our review of the development and are finalising both the design and construction contract. Preliminary site works are due to start this summer, with the main construction phase scheduled to begin in early 2011.

Operational highlights

We were appointed as development manager, with no capital commitment, by the administrators to Thornfield Ventures Limited in January. We have made good progress with both the letting and development of The Rock, a 57,000 m² shopping centre development in Bury, Lancashire. Leases for 73% of the target income have been exchanged or are in solicitors' hands. The scheme, which has secured tenants including Debenhams, H&M, Marks & Spencer, Next, Primark, and a Vue Cinema, is on track to open on 16 July.

We continue to bring major international brands into our shopping centres. At Union Square, Aberdeen, Hollister successfully opened on 26 March, and the centre is 81% let or in solicitors' hands. Hollister's addition to the fashion line-up further enhances the status of Union Square, where footfall has reached 4.8 million since opening in October last year.

Overall occupancy in the portfolio was maintained at 95.3% at 31 March 2010 (31 December 2009: 95.2%). Our recently completed developments at 60 Threadneedle Street and 125 Old Broad Street, London EC2, which offer some of the best new space in the City, are now 100% and 92% let or in solicitors' hands respectively.

Occupancy (% )	UK Retail	France Retail	Office	Group
31 March 2010	94.0	98.2	94.5	95.3
31 December 2009	94.5	98.5	91.6	95.2

Rent collection has remained excellent with 97% of UK rent, and 93% of French rent, for the quarter collected within seven days.

Our retail assets in the UK and France continue to demonstrate sound trading performance. Our UK shopping centre portfolio generated a 1.7% like-for-like sales increase over the first quarter, and in France like-for-like sales in our shopping centres fell by 0.5%. Encouragingly, the number of retail units in administration fell further to 58 at 31 March (31 December 2009: 64) and income from tenants in administration at 31 March 2010 represented 1.3% of the Group's passing rent (31 December 2009: 1.6%).

We continue to advance our development pipeline. At Bishops Place, London EC2, where we have detailed planning consent, the site could accommodate up to 60,000 m² of office space in one or more buildings. At St Alphage, London EC2, we are reviewing design concepts and consulting with local stakeholders, and intend to submit a planning application later this year. At Brent Cross, London NW4, following the resolution by the London Borough of Barnet to grant planning consent, we have obtained approval from the Mayor of London and now await a decision from the Secretary of State.

Senior Management

On 13 April we announced that Jean-Philippe Mouton, who has been with Hammerson since 2003, had been appointed as Managing Director of Hammerson France. Jean-Philippe is a member of the Group's Executive Committee and has made a major contribution during his time with our French business.

In line with our strategy of providing industry-leading asset management and customer focus we created two new senior management roles in the period. Janette Bell has joined as UK Sales and Marketing Director, a crucial role for the business as we aim to build upon our customer relationships and propositions. Sarah Booth has joined as General Counsel, coordinating and improving our approach to all legal aspects of our business.

Financing

Borrowings were £2.3 billion at 31 March 2010 and cash balances were £120 million to give net debt of £2.1 billion (31 December 2009: £2.1 billion). Cash and unutilised facilities at 31 March 2010 totalled £766 million.

We have agreed terms for the refinancing of the £75 million (Hammerson share) debt facility on our 125 Old Broad Street joint venture, and have no further debt maturing until March 2012.

Occupational markets

The retail environment in the UK has improved as low interest rates and rising confidence have lead to better than anticipated sales. Occupancy levels at strong retail locations remain higher than the industry average, and there are signs of a return to competitive bidding for some units. In France, despite a decline in retail sales, there have been fewer administrations and consequently vacancy rates and rental levels have stayed stable. 

In the City of London, take-up has increased over the first few months of 2010, and headline rents have started to recover. Completions of new developments over the next 18 months are set to be well below their historic average, which should lead to lower vacancy levels.

The economic recovery in our markets remains fragile, and uncertainties remain, not least regarding the level of unemployment and the prospect of further tax rises.

Investment markets

The relative price of commercial property remains attractive to investors, particularly for well let assets with secure income. In the UK this has contributed to a rise in values over the quarter, which has in turn led to an increasing number of properties being marketed. In France, where values fell less during the downturn, there was limited investment activity but recent evidence suggests that values were largely unchanged over the period.

Conference call

There will be a conference call for investors and analysts at 08.00 BST today. To participate in the call, please dial:

UK	0800 028 1277
International	[phone]
US	1 888 935 4577
Netherlands	0800 020 0905
France	0800 942 824

Please quote confirmation code 724 2574.

For a replay of the conference call, please visit: www.hammerson.com

For further information

David Atkins, Chief Executive Simon Melliss, Group Finance Director Morgan Bone, Director of Corporate Communications	Tel:  [phone] Tel:  [phone] Tel:  [phone] [e-mail]

Financial information

The financial information contained in this statement is based on unaudited management accounts for the three months ended 31 March 2010.

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.

 

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