Hammerson plc held its 81st Annual General Meeting at its head office at 10 Grosvenor Street, London, W1 today at
11 a.m. At the meeting, John Nelson, the Chairman of Hammerson plc, made the following statement:
"Our results posted in February this year show a strong operational performance. Our portfolio increased in value to £5.7 billion, which meant that our net asset value per share at 31 December 2011 was £5.30, up 7% from £4.95 at the start of the year.
Earnings per share of 19.3p were slightly down on last year. Although EPS was bolstered by growth in like for like rental income and developments, this was offset by lower management fees, higher administration expenses and restructuring charges. A programme to reduce ongoing administration expenses is underway and expected to yield material benefit in the coming year.
Significantly, like-for-like income from our existing centres grew by 2.5% in 2011, and has been positive in each of the last five years. This is in part driven by increased occupancy which at the year-end stood at 98% - matching the highest level that it has been in the last ten years.
I regard this performance as creditable against a backdrop of very difficult economic conditions in both the UK and France.
Reflecting our increased confidence in the future of the business we are declaring a dividend for the year of 16.6 pence per share, up 4% on the previous year, and we have committed to growing future dividends at a higher rate than in recent history.
We conducted transactions worth over £640 million in 2011. We acquired the Centrale shopping centre in Croydon and SqyOuest shopping centre near Paris, both good opportunities to create value from undermanaged assets in strong locations. We sold a further stake in O'Parinor, Paris and at the end of the year sold 60 Threadneedle Street at a level well above its book value. This demonstrates good investment demand for the type of London office assets that we currently hold.
At the end of the year we increased our investment in the highly successful Value Retail business, which operates premium outlet villages in Europe's wealthiest cities, of which the most well known is Bicester Village near Oxford. And in February this year, we sold 54-60 rue du Faubourg Saint-Honoré, realising a substantial profit for shareholders.
Turning to developments, we have made excellent progress on site with our major £400 million retail and leisure project in Marseille, Les Terrasses du Port. This scheme is now 65% prelet, construction is progressing well, and it is on track to open in the spring of 2014.
We received planning consents last year for a cinema and reconfiguration of Manor Walks, Cramlington and Monument Mall, Newcastle. We will start construction on both sites later this month. We are making good progress with a number of our major development schemes and in addition have other extension opportunities within our existing portfolio in both the UK and France worth some £320 million.
Hammerson is in a strong financial position. We signed two new revolving credit facilities in 2011 worth a total of £655 million, further improving our financial flexibility. The effect of net disposals in the year, combined with rising capital values, left gearing at the year end steady at 52%, equating to a loan to value ratio approaching 30%, one of the lowest in the sector.
Also we have today announced a tender offer to buy back short-term bonds, which will manage near-term debt maturities and achieve a lower running cost of debt.
So far this year we have continued our strong operating performance, with new leases struck at levels above estimated rental values (ERV), and occupancy remains above our target of 97%.
Looking forward, we announced that, following a full review of our strategy, the Board had decided to focus on being a specialist retail property company. We believe that this strategy will enable us to generate superior returns, deepen customer relationships, capitalise on multi-channel opportunities and better position Hammerson to exploit acquisitions and developments.
The Group is currently split 89/11 retail to offices (with all office assets in the UK), and roughly 3/4 of the portfolio is in the UK with 1/4 in France. The decision to focus purely on retail is therefore not a major shift in terms of capital allocation but allows management to focus solely on the retail market.
Hammerson has a strong track record in retail. Over the last ten years the portfolio has been repositioned to new, large dominant centres. We own eighteen major shopping centres which attract some 250 million visitors a year. Most of our UK centres, such as Bullring (Birmingham), Highcross (Leicester), Cabot Circus (Bristol), and Union Square (Aberdeen), we have built ourselves, rejuvenating the city centres and creating thousands of jobs in the process.
We have entered the retail parks sector which now represents over £1 billion of our assets. We have implemented a successful multi-channel strategy and introduced a customer focused leasing programme, as well as bringing catering and leisure expertise into our team to match consumer requirements.
This commitment and expertise in retail has shown in both our operational results and ability to attract a number of retail firsts, such as Apple, Hollister, Banana Republic and the new House of Fraser.com store in Union Square.
I believe this combination of retail expertise coupled with our development credentials is why we were selected by the majority leaseholders as the preferred development partner for the Whitgift centre in Croydon. This important scheme is directly adjacent to our Centrale centre, and the opportunity exists to create a combined south London retail hub in the area, which has been starved of retail investment for many years.
As a consequence of this singular focus on retail, we intend to sell some £500 million of London standing office investments over the medium term to maximise value. However, we do have a small number of London office development projects, where we will continue to allocate capital to realise superior returns.
Despite global macro economic uncertainty, we believe that occupier and investor demand for retail space will continue to be concentrated on modern, well-maintained properties in the best locations such as Hammerson's.
We have a strong management team running a portfolio of the highest quality. Our revised strategy will deliver an increased focus that will generate both growth opportunities and cost savings, both of which will be passed on to shareholders through increasing dividends."
Morgan Bone, Director Corporate Communications Tel: 020 7887 1009
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