1st May 2008 07:01
Hammerson PLC01 May 2008 Interim Management Statement Hammerson plc publishes its first interim management statement for 2008. TheAnnual General Meeting of the Company takes place at 10 Grosvenor Street, LondonW1K 4BJ at 10.30 a.m. today. Key points • Further good progress made on letting and completing the currentdevelopments. Additional contracted income from developments will increaseannual rents by £36 million over the next few years. • Three major retail schemes in Bristol, Leicester and Paris open inSeptember this year. By rental income, these are respectively 83%, 73% and 85%let, taking into account leases signed and in solicitors' hands. • Additional committed borrowing facilities of £750 million arrangedsince 31 December 2007. • Hammerson's portfolio continues to show a good operationalperformance, generating a robust income stream. The average unexpired lease termis in excess of ten years and the vacancy rate remains very low at 2.1%. Commenting on Hammerson's performance in 2008, John Nelson, Chairman said: "We have made good progress in all areas of our business this year. We have aretail and office portfolio of the highest quality, both in the UK and France.It provides the potential for further good income growth over the next threeyears, both from the existing investment assets and the current developmentprojects as they are completed and let. We have a strong balance sheet and arewell-financed. Hammerson is therefore in a good position to weather the currentmarket uncertainties and take advantage of opportunities that may arise." Investment portfolio • Since the year end, Hammerson has continued its programme of capitalrecycling with the sale in March of its 50% interest in One London Wall, the18,500m2 office building developed and owned jointly with Kajima. The netproceeds from the sale were £67 million compared with a valuation at the end of2007 of £69 million. • In April, a payment of £137 million was made in respect of theacquisition of the City of London's 25% long leasehold interest in BishopsSquare, London EC1. The City retains the freehold interest in the scheme. Developments • Six major developments are currently underway at an estimated totalcost of £955 million of which approximately £330 million has still to be spent.Five of the schemes are scheduled for completion in 2008. Following completionand letting, these projects are projected to generate income of about £73million, of which £36 million has now been contracted or is in solicitors'hands. This will provide a further boost to income, particularly in 2009 and2010. • Good progress is being made on letting the 30,900m2 City officedevelopment at 125 Old Broad Street, London EC2. In February, 3,100m2 of spacewas let to French law firm Gide Loyrette Nouel for 14 years at a rent equivalentto £60 per ft2. In March, a 20 year lease was signed with international realestate advisor DTZ for 7,000m2 of accommodation at a rent equivalent to £53.50per ft2. The property is now 34% let. • The 20,600m2 nine-storey office development at 60 Threadneedle Street,London EC2 is on schedule for completion in November 2008. Hammerson is inpreliminary discussions with a number of prospective occupiers of the building. • Good progress continues to be made in advancing schemes in the longerterm development pipeline. In January, Hammerson and Town Centre Securitiesagreed terms with Marks & Spencer to anchor the Eastgate Quarters retail schemein Leeds with a 18,250m2 store. Hammerson and its development partners submitteda planning application in March, for a major mixed-use regeneration scheme atBrent Cross and Cricklewood in north London. Financing • During the first four months of the year a total of £750 million ofadditional committed financing has been arranged. New bank facilities amountingto £350 million have been put in place and in April we signed a £400 millionloan, secured on the office building at Bishops Square. This loan has afive-year term and carries a fixed rate of interest of 6.3% per annum. • Cash and undrawn committed facilities totalled £779 million at 31March 2008. • Net debt was £2,690 million at 31 March 2008, compared with £2,496million at the end of 2007. The movement of £194 million included a £131 millionexchange retranslation adjustment, with net expenditure accounting for thebalance. 64% of gross debt was at fixed rates of interest. Markets During 2008, the banking sector has remained cautious about advancing new loans,particularly to the commercial real estate sector. As a consequence, activity inreal estate markets remains restricted and it is apparent that there have beenfurther declines in UK property values in the first quarter of the year. InFrance, the office investment market has shown some signs of softening, althoughvalues of retail assets have shown resilience. Against this background,Hammerson is well placed to exploit any opportunities that may arise, given thecompany's strong financial position. With regard to the occupational markets, many retailers in the UK are continuingto face challenging conditions. Weaker consumer confidence is affecting retailspending. Nevertheless, Hammerson is continuing to attract retailers to takespace in the two major retail developments in Bristol and Leicester, both ofwhich complete in September this year. The vacancy rate within our shoppingcentre and retail parks portfolios remains low at 2.6%. In the City of London office market, demand has continued to weaken as weanticipated earlier in the year. Several banks are responding to the difficultfinancial markets by reducing staff numbers at a time when developmentcompletions are increasing the supply of new space, causing rents to soften.Hammerson's office investment portfolio in the City is over 99% let with anaverage unexpired lease term of over 15 years. In France, which accounts for nearly 30% of Hammerson's portfolio, demand fromretailers for space in shopping centres remains healthy. In the first quarterthere has been some weakening in demand from occupiers for offices. However, thegroup's offices in Paris are 93% let. Management Gerard Devaux, an Executive Director of Hammerson since 1999 and ManagingDirector of Hammerson Europe will retire in September. His responsibilities asManaging Director in France will be assumed by Christophe Clamageran who joinedHammerson France in March following a successful 20 year career in property inParis, latterly with BNP Paribas Real Estate. Conference call There will be a conference call for investors at 8.00 a.m. today. Toparticipate in the call, please dial: UK 0808 109 0700UK Local 0203 037 9060International +44 203 037 9060USA 18669665335Netherlands 08000229132France 0805630061Germany 08006737932 A replay of the conference can subsequently be accessed by dialing: UK 0208 196 1998 Code 7669410USA +44 208 196 1998 Code 7669410Netherlands +44 208 196 1998 Code 7669410France 0800942766 Code 7669410Germany 08000004324 Code 7669410 For further information, please contact: John Richards, Chief Executive Tel: 020 7887 1000Simon Melliss, Group Finance Director Tel: 020 7887 1000 Christopher Smith, Director of Corporate Affairs Tel: 020 7887 1019 [email protected] Forward-looking statements This document contains certain statements that are neither reported financialresults nor other historical information. These statements are forward-lookingin nature and are subject to risks and uncertainties. Actual future results maydiffer materially from those expressed in or implied by these statements. Manyof these risks and uncertainties relate to factors that are beyond Hammerson'sability to control or estimate precisely, such as future market conditions,currency fluctuations, the behaviour of other market participants, the actionsof governmental regulators and other risk factors such as the Company's abilityto continue to obtain financing to meet its liquidity needs, changes in thepolitical, social and regulatory framework in which the Company operates or ineconomic or technological trends or conditions, including inflation and consumerconfidence, on a global, regional or national basis. Readers are cautioned notto place undue reliance on these forward-looking statements, which speak only asof the date of this document. Hammerson does not undertake any obligation topublicly release any revisions to these forward-looking statements to reflectevents or circumstances after the date of this document. Information containedin this document relating to the Company should not be relied upon as a guide tofuture performance. Notes to Editors Hammerson plc: is a FTSE-100 Real Estate Investment Trust with operations in theUK and France. The group's core business is investing in, managing anddeveloping prime properties, principally city centre shopping centres and majoroffice buildings. Its high quality portfolio, valued at £7.3 billion at 31December 2007, includes 14 major shopping centres, 19 retail parks and eightoffice properties. The Company is currently carrying out six major developments at a total cost of£955 million further details of which are set out below. Cabot Circus, Bristol Size: 92,000 m(2) The Cabot Circus mixed-use development started in Autumn 2005. In addition to the two departmentCompletion: September 2008 stores, the scheme will provide 150 retail units, including 15 flagship stores,Developers: Hammerson 50% cafes, bars and restaurants. It includes a Land Securities 50% 6,800 m(2) cinema, 28,000 m(2) of office space, two new public squares and 2,600 parking spaces. It House of Fraser, also incorporates 250 residential units andAnchor stores: 280 units of student accommodation. Harvey Nichols Chapman Taylor,Architects: Stanton Williams 83% let or in solicitors' handsLetting status: Highcross, Leicester Size: 61,000 m(2) extension Hammerson is developing a 61,000 m(2) mixed-use extension to The Shires, Leicester's principal cityCompletion: September 2008 centre shopping destination. The scheme will more than double the size of the existing centre to overDevelopers: Hammerson 60% 100,000 m(2). In addition to John Lewis, which will Hermes 40% anchor the scheme, the development will create 30,000 m(2) of retail accommodation, including five John Lewis additional stores, 40 retail units, a 7,000 m(2)Anchor store: cinema, 6,000 m(2) of cafes and restaurants, 143 Chapman Taylor, Foreign Office residential units and a 2,000 space car park.Architects: 73% let or in solicitors' handsLetting status: Parinor, Paris Size: 66,500 m(2) Built in 1974, and refurbished in 1996, Parinor is currently subject to a 24,000 m(2) refurbishmentCompletion: September 2008 and extension, the first phase of which was completed in April 2008. The works will increaseOwnership: Hammerson 33,500 m(2) the size of the scheme to over 90,000m2, making it the largest shopping centre serving the north ofMain tenants: Carrefour, C&A, Fnac, H&M, Paris. The scheme includes a UGC cinema, restaurants and 4,500 parking spaces. New Look, Zara Letting status: 85% let or in solicitors' hands Union Square, Aberdeen Size: 49,000 m(2) Hammerson is currently developing a nine-hectare site adjacent to Aberdeen's central railway stationCompletion: Oct 2009 to provide a combination of traditional mall shopping and retail park. On completion it will beDevelopers: Hammerson the largest scheme of its type in Scotland, providing 21,000 m(2) of retail units, a 16,000 mPre-lets: New Look, Next (2) retail terrace, a 4,200 m(2) multiplex cinema, 7,800 m(2) of leisure and catering accommodation, Cine UK 1,700 parking spaces and a new civic square. Architects: BDP Letting status: 23% let or in solicitors' hands 125 Old Broad Street, London EC2 Size: 30,900 m(2) In February 2006, Hammerson started work on the redevelopment of the 26-storey tower building atCompletion: May 2008 125 Old Broad Street, to provide 29,700 m(2) of Grade A office accommodation and 1,200 m(2) ofOwnership: Hammerson - 50% retail and storage space. In November 2006, Hammerson sold a 50% stake in the scheme to two GE Real Estate - 25% joint venture partners, GE Real Estate and Bank of Ireland to show a profit of £46 million. Leases Bank of Ireland - 25% have recently been signed with French law firm Gide Loyrette Nouel and real estate advisors DTZ.Architects: GMWLetting status: 34% let or in solicitors' hands 60 Threadneedle Street, London EC2 Size: 20,600 m(2) Construction work is underway on a 20,600 m(2) nine-storey building adjacent to the group'sCompletion: November 2008 development at 125 Old Broad Street. The scheme, which forms part of the site previously occupied byOwnership: Hammerson 100% The London Stock Exchange, incorporates 1,000 m(2) of retail space. Completion is scheduled forArchitects: Eric Parry November 2008. Letting status: Available . This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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