investor presentation premium outlets july 2017… · 2017-07-04 · today’s agenda 01...

Premium outlets

Investor and analyst visit

3 July 2017Batavia Stad, Amsterdam

Today’s agenda

01 Introduction/welcomeTimon Drakesmith – CFO and MD Premium Outlets, Hammerson

02 Outlets investment market overview Richard Ching – Partner, Retail & Outlet Malls, Cushman & Wakefield

03 Delivering the outlets experience to brands Octavia Overholser – Business Director, VIA OutletsWilco Wortelboer – Head of Outlet, PVH Netherlands

04 VIA Outlets strategy Duncan Agar – Chief Operating Officer, Value RetailPatrick Jansen – Centre Director, Batavia Stad Fashion Outlet

Tour of Batavia Stad Fashion Outlet

2

3

The only listed European REIT with strategic exposure to premium outlets

18%Hammerson portfolio (1)

One of a kind European outlet platform accumulated over 19 years, hard to replicate

High-growth sector, aligned with consumer preferences and retailer channel orientation

Valuable, long-standing partnerships sharing complementary expertise

Consistent returns provided by diversity of centre locations and customer origination

Attractive upside through repositioning of VIA Outlets

Future growth drivers:

• Tourism

• New brands

• Extensions

• Targeted acquisitions

Meaningful strategic exposure

Leading European platform

(1) As at 31 December 2016, proforma for full completion of IRUS acquisition

424,000m2Lettable space

€0

€2,000

€4,000

€6,000

€8,000

€10,000

€12,000

€14,000

€16,000

€18,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Through-the-cycle organic sales growth

4(1) Sales density CAGR 2007 to 2016 across Value Retail current portfolio of nine Villages (opened since 2007)(2) Growth run rate for 2017 YTD to May

Value Retail: sales density growth (EUR/m2) (1)

Sales density11% CAGR

YTD (2)

19Villages

13Countries

60mVisitors p.a.

Value Retail - £1.4bn (1)

A platform of considerable scale –leading market position

5

£1.9bnGross asset value (1)

Europe’s leading operator of luxury outlet villages

Hammerson 40% ownership

Growth through extensions

Partnership between Hammerson, APG, Value Retail and Meyer Bergman

Hammerson 47% ownership

Acquisition and turnaround strategy

VIA Outlets - £0.5bn (1)

(1) Hammerson share. Includes VIA Outlets acquisitions of Zweibrücken, Porto, Seville, Wroclaw and Festival Park

Operating in two categories of the European outlet market

6

International fashion and luxury brands

Mainstream fashion brand outlets

Low-end discount outlets<€2,000

€2,000–€10,000

€30,000+Value Retail

Incr

easi

ng s

ale

s den

sitie

s €

/sq

m VIA Outlets

Working collaboratively with capital and operational partners

7

Value Retail

Luxury brand relationships

Retail management expertise

Tourism marketing

Meyer Bergman

Retail property focused

Outlets acquisition experience

Acquisition/disposal execution

Hammerson

Retail and investment market experience

Organisational structure and governance

Operations, finance and IT

APG

Long history investing in outlets

Insight into off-market acquisition pipeline

Breadth of property expertise

Significant contribution to Hammerson’s performance

8(1) NAV of Value Retail and VIA Outlets 31 December 2011 to 31 December 2016. Capital invested includes acquisition of VR investment stakes and VIA Outlet acquisitions. Excludes Zweibrücken and Villa de Conde NAV and Seville and Wroclaw debt.

26% 5 year IRR

0

200

400

600

800

1,000

1,200

1,400

Premiumoutlets NAV

2011

Capitalinvested

Incomedistribution

Valuation uplift Premiumoutlets NAV

2016

5 year value creation (£m) (1)

3.4xcapital return

La Roca Village, Barcelona

The future: confidence in continued track record of delivery

9

Organic growth

10 years consistent sales density growth

Structural tourism growth

New retailers realising outlets opportunity

Value Retail extensions

VIA Outlets acquisitions

Potential increase in Value Retail ownership

Bicester, opening October 2017

34 new boutiques

YoC 15%

Value-add asset management

Target IRR +10%

Selective further acquisitions

Value Retail economic ownership now 40% from 20% in 2011

Appendices

Value Retail Villages VIA Outlets centres

Bicester Village, UK (1)

GLA: 22,700m2

Boutiques: 135

Batavia Stad Amsterdam Fashion Outlet GLA: 31,000m2

Units: 110

La Roca Village, BarcelonaGLA: 23,400m2

Boutiques: 141

Fashion Arena Prague Outlet GLA: 24,100m2

Units: 98

Las Rozas Village, MadridGLA: 16,500m2

Boutiques: 105

Freeport Lisboa Fashion Outlet GLA: 29,500m2

Units: 98

La Vallée Village, Paris GLA: 21,400m2

Boutiques: 111

Hede Fashion Outlet, GothenburgGLA: 16,300m2

Units: 53

Maasmechelen Village, BrusselsGLA: 19,500m2

Boutiques: 106

Landquart Fashion Outlet, ZurichGLA: 20,700m2

Units: 71

Fidenza Village, MilanGLA: 20,900m2

Boutiques: 122

Mallorca Fashion OutletGLA: 33,100m2

Units: 52

Wertheim Village, FrankfurtGLA: 21,100m2

Boutiques: 121

Sevilla Fashion OutletGLA: 16,300m2

Units: 67

Ingolstadt Village, MunichGLA: 20,500m2

Boutiques: 120

Wroclaw Fashion Outlet, PolandGLA: 13,700m2

Units: 85

Kildare Village, DublinGLA: 16,800m2

Boutiques: 99

Zweibrücken Fashion Outlet, GermanyGLA: 29,400m2

Units: 113

Vila de Conde Fashion Outlet, PortugalGLA: 27,800m2

Units: 125

11

Premium outlets portfolio

(1) Not including extension opening October 2017(2) Including extension opened May 2017

Bicester Village

Commenced trading 1995

Extended: 1997, 2000, 2002, 2008

October 2017: 34 new boutiques£100m development costYoC 15%

6 million footfall

Third most visited tourist landmark in UK

Tax free sales (non-EU visitors) account for 31% of total Village sales

Largest visitor groups: China, Hong Kong, Malaysia, Saudi Arabia, India, Thailand

98% Occupancy

46% Hammerson ownership

12

Tourism is a key driver of outlets sales growth

Top 10 source markets represent 68% of sales in EU destinations, and is forecast to grow by 8%

13(1) Source: Premier Vision Annual Review 2016/2017 (data from Oxford Economics)

Growth non-EU arrivals to EU countries 2017 (%) (1)

Non-EU arrivals will see growth of c.5% in 2017. All European destination markets are predicted to see gains

Top tax free nationalities sales growth 2017 (%) (1)

Hammerson 2016 Premium Outlets operational metrics

14

Operational summary Value Retail (1) VIA Outlets (1)

Year ended 31 Dec 2016




Brand sales (€m) (2) 2,562 2,380 437 374

Brand sales growth (%) (3) 8 11 7 10

Footfall (millions) (2) 34.6 33.3 12.7 10.2

Average spend per visit (€)(2) 74 71 34 37

Average sales densities (€000/m2) 15.1 14.3 3.9 3.3

Average sales densities growth (%) (4) 6 8 19 6

Occupancy (%) 96 96 92 87

(1) Figures reflect overall portfolio performance, not Hammerson’s ownership share and 2015 figures have been restated at 2016 exchange rates(2) 2016 VIA Outlets figures include Festival Park since July 2016.(3) VIA Outlets figures six months of Festival Park sales for both 2016 and 2015(4) Average sales densities have been calculated as a weighted average based on the average occupied GLA. Festival Park has been excluded for both 2016 and 2015 due to information being

unavailable.

Hammerson’s total investment in Value Retail: 40% (1)

Holding companies 25% equity

Bicester Village

33

46

La Roca Village

23

36

Las Rozas Village

19

32

La Vallée Village

11

23

Maasmechelen Village

13

26

Fidenza Village

20

33

Wertheim Village

31

44

Ingolstadt Village

0

12

Kildare Village

27

40

15(1) Hammerson’s share of Value Retail’s net assets, excluding goodwill (2) Excludes €23m loans secured against Fidenza(3) Largely represent the economic interests in Spanish Villages, structured as loans rather than equity

Village ownership via LPs (%)

Total Village ownership (%)

Hammerson €2m(2) shareholder loan

Hammerson is the second largest shareholder in holding company after management. Largest owner of VR as a whole.Other shareholders include APG, SPG, private investors (family and friends)

VR ownership (1) Hammerson share (£m)

Value Retail 100%£m

%

GAV 1,387.3 4,095.9 34

Participative loans (3) 113.7 0 100

GAV plus participative loans 1,501.0 4,095.9 37%

Other assets 113.9 404 28%

Total liabilities (732.8) (2,308.0) 32%

Investment in associate excl. goodwill 882.1 2,191.9 40%

Hammerson accounting treatment for premium outlets

16

Due to the nature of control over these externally managed investments, Value Retail is accounted for as an associate and VIA Outlets is accounted for as a joint venture

Value Retail: share of results of associates (2016 annual report & accounts) – Note 13

Hammerson accounting treatment for premium outlets

17

VIA Outlets: investment in joint venture (2016 annual report & accounts) – Note 12

Summary tables: Value Retail and VIA – Tables 12 & 13

18

(a)

(b)

(c)(e)

(e)(d)(c)

(a) IFRS profit of Hammerson proportional share of VR and VIA, as per notes 12 and 13 of 2016 annual report & accounts.

(b) Other adjustments include £16.6m revaluation gains of Hammerson’s investor stake in La Roca and Las Rozas Villages held through Participative Loans, £0.2m loan facility costs written off, £0.2m fx gain on intercompany funding loans and £0.1m loss on disposal of Excalibur.

(c) As at 31 Dec 2016 Group had provided loans of £21.6m to Value Retail - of which £19.9m (€23.3m) was to VR Milan SRL, secured on Fidenza Village, and £1.7m (€2.0m) was a working capital facility to Value Retail European Holdings BV - for which the Group received interest of £4.2m in 2016 which is included within finance income. These loans were cancelled in 2017 in order to part fund a VIA Outlets acquisition and simplify the investment structure.

(d) Hammerson’s investment in VR China was sold in 2016 (proceeds <$10m) in order to simplify the investment structure.

(e) Premium Outlets earnings feed into the group P&L and investment to group balance sheet

OVERVIEW OF THE OUTLET INVESTMENT MARKETJuly 2017

Prepared for Investors of

Everyone can drive a car...

Hammerson | Cushman & Wakefield 21

W H Y O U T L E T S ?Yields Converging

Source: Cushman and Wakefield Outlet Valuation Team

4.00%

4.50%

5.00%

5.50%

6.00%

6.50%

7.00%

7.50%Ju

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Se

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6

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6

Ma

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Jun

-07

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Jun

-08

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8

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c-0

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r-0

9

Jun

-09

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9

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c-0

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Jun

-10

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Jun

-11

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c-1

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Jun

-12

Se

p-1

2

De

c-1

2

Ma

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3

Jun

-13

Se

p-1

3

De

c-1

3

Ma

r-1

4

Jun

-14

Se

p-1

4

De

c-1

4

Ma

r-1

5

Jun

-15

Se

p-1

5

De

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5

Ma

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6

Jun

-16

Se

p-1

6

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7

Prime Shopping Centre Yields vs. Prime Outlet Yields

Outlets Top European Cities Shoppping Centres


T H E O U T L E T M A R K E TSmall but still growing – Majority of Outlet floor space comprises secondary/tertiary centres

Total Shopping Centre floor space in Europe is

159.4 million

sqm

Total Outlet floor space in Europe is

3 million

sqm


L E A S E S T R U C T U R EHow are Outlets different?

BASE RENTAnnual reviews based on Inflation + Previous Rent

TURNOVER RENT

POTENTIAL GROWTHThe objective is to keep topping up!


S M A L L M A R K E T B U T B I G R E T U R N SDecember 2015 – December 2016

9.8%Rental Growth

Outlet MallsShopping Centres

1.8%Sales Growth (All Retail)

11.1%Sales Growth

5.82%Capital Value Growth

11%Capital Value Growth

6.5%Sales Density Growth

1.1%Rental Growth



H U G E D E M A N D V E RY L I T T L E S U P P LYCapital Markets Statistics

Cushman & Wakefield advised on

overof all outlet transactions in Europe in 2016 and value around 50 schemes a year.

50%

€ M

€200 M

€400 M

€600 M

€800 M

€1,000 M

€1,200 M

€1,400 M

€1,600 M

€1,800 M

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

European Outlet Transactions 2008 - 2017

Total Transaction Volume C & W Transaction Volume


P R O P E R T Y O R B U S I N E S S ?Density Spectrum – Assessing the Buyer Pool at Various Levels of Performance

€5,000 psm

€10,000 psm

€15,000 psm

€20,000 psm

SUPER PRIME• Sovereign wealth• Large REITS

PRIME• Specialised Outlet Funds• Institutional Investors

GOOD SECONDARY• Retail Funds• Institutional Investors• Specialised Outlet Funds• Core-plus Funds• Property Companies

SECONDARY/TERTIARY• Specialised Outlet Funds• Opportunistic Funds• Private Investors • Property Companies

Property Backed Business

Property Assets


Majority of European Outlets fit into these categories


M A I N E U R O P E A N O U T L E T O P E R ATO R SConsolidation

10

9

6

5

Num

ber

of E

urop

ean

Cen

tres

(e

xcl.

Dev

elop

men

t)

23

4

13

5

2

7

Still more than 100 outlets not managed by the “Core Group”

5


W H Y I S S P E C I A L I S T K N O W L E D G E N E E D E D ?Marketing Budgets – European Benchmark – A driven asset

€ 0

€ 1,000,000

€ 2,000,000

€ 3,000,000

€ 4,000,000

€ 5,000,000

€ 6,000,000

Super Prime Prime Good

Secondary

Secondary Tertiary

€p

er

an

nu

m

Average Marketing Budgets by Tier

€ 0

€ 500,000

€ 1,000,000

€ 1,500,000

€ 2,000,000

€ 2,500,000

€ 3,000,000

€ 3,500,000

€ 4,000,000

Tourism driven Local catchment driven

€p

er

an

nu

m

Marketing Budgets


C O R E I N V E S TO R SCore Group of Experience


E X PA N S I O N S B U T V E RY D I F F I C U LT TO G E T P L A N N I N G C O N S E N TDevelopments – In the last 4 months extensions have added more than a whole new scheme across Europe

Designer Outlet Provence

Designer Outlet Roermond – Phase 4

Batavia Stad Fashion Outlet – Phase 4 & 5

Sambil Outlet Madrid

Torino Fashion Mall

Viladecans The Style Outlets

Designer Outlet ParndorfBicester Village – Phase 4

Honfleur Normandy Outlet

Opening Soon

Recently Opened

Noventa Di Piave Designer Outlet


T H E “ P L AT F O R M ” I S K E YRecent Transactions – Large Portfolios openly transacted would command a premium

Fashion House Gdansk

Fashion HouseWarsaw

Fashion House Sosnowiec

Junction One, Antrim

The Outlet, Banbridge

McArthurGlen Ochtrup

Designer Outlet Wolfsburg

McArthurGlen Troyes

McArthurGlen Roubaix

Festival Park, Mallorca

Clarks Village, Street

Junction 32, Castleford

Braintree Freeport

Mill Green Designer Outlet, Cannock

Zweibrücken The Style Outlets

Sevilla The Style Outlet

Factory Wroclaw

Rosada Fashion Outlet

Las Rozas The Style OutletsS.S. de los Reyes The Style Outlets

Getafe The Style Outlets

Vicolungo The Style Outlets

Castel Guelfo The Style Outlets

Factory Poznan

Vila do Conde Porto Fashion Outlet

IRUS Fund Split

General

Hermes

Peakside

Ares

Tristan


V E RY L I M I T E D S U P P LYOutlets currently on the Market

Festival Park, Ebbw Vale, Wales

Designer Outlet Luxembourg

Outlet Centre Lublin

Outlet Centre Bialystok

Livingston Designer Outlet, Scotland

Norwegian Outlet


A P P E N D I XRecent Transactions

Q2 2017 Poland – Fashion House;

Gdansk, Warsaw, and Sosnowiec

PRICE: Confidential

VENDOR: Peakside

PURCHASER: Deutsche AM

Q2 2017UK – Junction 32,

Braintree Freeport, and Clarks Village

PRICE: £332.5m*

VENDOR: Hermes

PURCHASER: Land Securities

Q4 2016Zweibrucken, Villa Do

Conde, Sevilla and Wroclaw

PRICE: €587m*

VENDOR: IRUS Fund

PURCHASER: VIA Outlets

Q4 2016Getafe, Las Rozas,

Vicolungo, Castel GuelfoSSR and Poznan

PRICE: €702m*

VENDOR: IRUS Fund

PURCHASER: Neptune Fund

* Reported Prices

Not all cars are the same…..

Questions?

CONTACT DETAILS

Richard ChingPartner

Head of Outlet Mall Valuations EMEA

Direct: +44 (0) 20 7152 5870 Mobile: +44 (0) 7793 808870

[email protected]

investor presentation premium outlets july 2017… · 2017-07-04 · today’s agenda 01...

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