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, £250 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 £6.8 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:£24.9 million versus 2016:£18.4 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 (5,800m²) 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 £47 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 £400 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 £250m 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 £10.5 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.