Hammerson PLC. 2013 Annual Day Key Highlights
- UK economy held up better than expected during Christmas
- UK retailers are confident of improving demand in coming quarters
- The higher confidence comes from falling unemployment rate and improving GDP
- Reported retail sales data doesnt provide the correct picture of demand
- As per Hammerson calculation which they showcased for 2 retailers the real demand for these retailer increased dramatically when adjusted for online sales which does not get recorded otherwise
- Starting 2015 Hammerson will make GBP5mn annual investments to support higher growth in business.
- Company remains committed to its GBP1bn capex till 2018
- Value retail has grown strongly during 2013 with sales up 13% to Euro1.9bn
- In summary the Performance Drivers are
- Value Retail
- Growth from existing portfolios
- New developments
- Extensions and refurbishments
- Acquisitions on track to deliver significant shareholder value
- Bullring - increase stake to 50% in 2013; lease renewal at 10% plus
- Junction Fund
- La Vallee Village
- 2014 Specific plans in London
- Brent Cross - will complete S106; submit leisure planning application; secure CPO resolution
- Croydon - will conclude
- Goodsyard located at Shoreditch sitting at Euro14mn in books whereas market value is ~30mn
- Earnings are expected to grow at rate of 20%-25%
In summary, Hammerson management is quite bullish about UK commercial property and is calling for tipping point in ERVs. In many cases, rentals inching up 10% plus on renewals should also calm the fears of bubble in UK real estate. We believe that UK and Europe REITs offer the best risk-reward in the world today and should deliver very strong returns over the next 2 years.
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