2021 half-year results 5 August 2021
1
The Oracle, Reading Agenda
Overview
Financial results
Strategy update
Q&A
2 Overview Progress against FY20 priorities
Balance sheet Strategy Operational
Strengthened capital structure Update on portfolio & organisational reviews Rent collection improving(1) £403m of disposals, including French presented today: FY20 now at 90% minority stakes Simplify organisation by more efficient HY 21 at 71% Issue of €700m 1.75% sustainability- structures and platform linked bond Footfall c.80% pre-Covid levels Redeemed €500m 2022 bond & 53% New leadership: of 2023 €500m bond CFO with experience in transformation Leasing volumes improving (+£5.4m on H1 £297m of private placement notes & technology 20, £+1.4m on H1 19)(2) repaid Expertise in repositioning of assets and Right categories and structures £415m RCF maturing 2022 refinanced development to £200m of facilities maturing 2026 Strong pipeline
Net debt reduced from £2.2bn to £1.9bn
No significant unsecured maturities until 2025
1 Rent collection was FY20 89%, HY 21 68% as at 9 July 2021 3 2 Flagships only Half-year results
Westquay, Southampton 2021 half-year financial results H1 headline results
30 June 2021 30 June 2020 Change
Income statement Adjusted net rental income (£m)(1) (2) 87.2 94.4 (8%)
LFL NRI (£m) 67.70 67.60 0.1%
Premium outlets earnings (£m)(3) (2.0) (7.4) 73%
Adjusted earnings (£m) 20.1 17.7 14%
IFRS loss (£m)(4) (375.5) (1,088.4) 65%
30 June 2021 31 Dec 2020 Change
Balance sheet Managed portfolio value (£m)(1) 3,596 4,414 (19%)
Value Retail net asset value (£m) 1,130 1,154 (2%)
Net debt (£m)(1) (1,879) (2,234) 16%
Value Retail value (£m) 1,902 1,924 (1%)
Value Retail net debt (£m) (690) (689) 0%
EPRA NTAPS (p) 69 82 (16%)
1 Figures on a proportionally consolidated basis excluding Value Retail. 2 Calculated on an adjusted basis to exclude the change in the provision for amounts not yet recognised in the income statement 5 3 30 June 2020 includes VIA Outlets earnings of £5.6m which was disposed of on 31 October 2020 4 Includes revaluation deficit on Group portfolio including Premium Outlets of £361.2m (30 June 2020: £939.6m) 2021 half-year financial results Adjusted earnings walk slide 41
H1 2021 Adjusted earnings walk (£m)(1) Surrender premiums 11.3
20.0 Provisions 6.2 Tenant failure, 18.0 leasing, and void (9.2) costs
16.0 Concessions (6.6)
Variable income 14.0 (1.6) 11.3 7.8 and other
12.0 LFL NRI 0.1 10.0 20.1 17.7 8.0 5.0 6.0
4.0 8.3 8.8 2.8 2.0 4.9 1.3 0.0 0.4 0.1 (2) (3) H1Jun 2020 Disposals Other NRI D&O insurance Other net FX & tax LFL NRI Net interest Value Retail H1 20212021 admin
1 At constant FX 2 Disposals include VIA H120 earnings of £5.6m and year on year change in NRI for H121 disposals 6 3 Other NRI reflects year-on-year non-LFL changes in NRI on Les 3 Fontaines, Cergy, which is undergoing a major extension, and assets classified as Developments and UK Other portfolio 2021 half-year financial results Premium outlets earnings walk slides 56-60
H1 2021 Premium outlets earnings walk (£m)(1)
5.0 (2.0) 3.0 5.6 1.3 1.0 2.7 -1.0 (2.0) (0.3) -3.0 1.3 (13.0) -5.0 2.7
-7.0 2.5
-9.0
-11.0 4.8
-13.0 VIA Outlets Value Retail GRI Property operating Net administration Interest Tax Value Retail H1 2020 H1 2020 costs costs H1 2021
Premium outlets H1 2020 -£7.4m
1 At constant FX 7 2021 half-year financial results NTAPS walk
H1 2021 EPRA NTAPS walk (pence)
90
80 9 70 3 1
60
50
40 82 69 30
20
10
0 (1) Dec 2020 Revaluation deficit Scrip dividend Loss on disposal Jun 2021 EPRA NTA EPRA NTA
1 On a proportionally consolidated basis including Value Retail 8 2021 half-year financial results Rent collection performance(1) slides 42-43
Total Demanded Total Waived, Total Due Total Collected Total Outstanding Collected of due in Quarter Written Off and as at 30th July Not Yet Due
£m £m £m £m £m %
FY20 261 28 233 210 23 90%
Q1 21 58 13 45 36 9 79%
Q2 21 54 - 54 34 20 64%
H1 21 112 13 99 70 29 71%
Q3 21 43(2) 2 41 27 14 65%
2021 YTD 155 15 140 97 43 69%
Collections: • Key priority to maximise income and collection rates in H2 2021, good progress made since 9 July • Trade receivables reduced in the UK as restrictions are lifted and concessions agreed, France and Ireland lagging at balance sheet date • Extension of moratorium on rental collection ‘inexplicable’
Level of provisioning marginally increased from FY20: • Maintain a prudent provisioning approach, and limitations on collection powers in UK. • Provisions for arrears at 30 June 2021 £77m, 67% (31 Dec 20: £80m, 64%) • Provisions for tenant incentives at 30 June 2021 £55m, 24% (31 Dec 20: £68m, 22%)
1 Excludes Value Retail 2 Decline in total demanded in Q3 predominantly reflects disposal of retail parks portfolio to Brookfield completed on 19 May 2021 9 2021 half-year financial results Portfolio valuation summary(1)
Sector Value H1 2021 ERV & other Yield Peak to ERV Yield shift Yield range 30 June capital impact impact date decline from 30 June 2021 return decline(2) from peak(3) 2021(3) £m peak(2)
Managed portfolio
UK 1,320 (13.4%) (6.7%) (6.7%) (60%) (29%) +294bp 6.8% - 9.5%
France(4) 1,023 (4.2%) (2.0%) (2.2%) (25%) (4%) +59bp 4.6% - 6.3%
Ireland 679 (6.6%) (0.3%) (6.3%) (28%) (14%) +91bp 5.2% - 5.7%
Total flagships 3,022 (8.9%) (3.7%) (5.2%) Developments & UK Other 574 (9.5%) (9.1%) (0.4%) UK RPs - (8.8%) (8.8%) - Managed portfolio 3,596 (9.0%) (4.6%) (4.4%) Value Retail 1,902 (0.4%) (0.4%) - (7%) slide 47-48 Total 5,498 (6.4%) (3.4%) (3.0%)
1 At Hammerson share, translated at 30 June 2021 FX rate 10 2 Like-for-like cumulative capital return since peak values (December 2017 – UK & France, December 2018 – Ireland, December 2019 – Value Retail) 3 Nominal equivalent yield 4 France includes Italik which has been reclassified to Trading properties as at 30 June 2021 2021 half-year financial results Net debt analysis
Net debt analysis (£m)(1)
2,400
2,300 Adj. operating profit 62
Working capital (14) 2,200 changes
Cash generated from 2,100 48 operations 396 2,000
1,900 50 2,234 1,800 77 103 48 1,700 13 1,879 1,600 1,829
1,500
1,400 (5) NetNet debtdebt Disposals(2) Exchange and other Cash generated from Dividends Interest Capital expenditure NetNet debtdebt 11 Jan Jan 2021 flows (3) operations (4) 3031 Jun Dec 20212020
1 On a proportionally consolidated basis, excluding Value Retail 11 2 Reflects net proceeds from the sale of eight retail parks portfolio, Espace St. Quentin and Nicetoile 3 Includes favourable foreign exchange translation of £80m 4 Includes withholding tax of £12m in relation to the 2020 interim dividend 5 Interest includes redemption costs of £14m and purchase of interest rate swap for £21m 2021 half-year financial results Debt maturity profile
Debt maturity profile - pro forma (£m)(1) (2) Refinancing achieved
Euro bonds 1,200 Sterling • €700m 1.75% 6 year sustainability-linked bond bonds 1.8% avg 4.7% avg coupon • 2022 bonds repaid (62% in H1, 38% on 8th July, €500m total) coupon • 2023 Euro bonds (53% repaid in H1, €265m) New RCF(3) 1,000 Private Secured debt placement 2.1% avg • £415m 2022 RCF refinanced (with two new facilities totalling £200m 3+1+1 year RCF) 2.4% avg coupon coupon • Private placement notes due in June 2021 (£113m) repaid on maturity and 46% (£184m) of notes prepaid at par 800 Revolving credit facilities floating rate • O’Parinor JV debt (€55m at 25% share) refinanced with new €53m loan on 6th July
600
Liquidity position (£m) 400 £m RCF – fully undrawn 1,030
Cash 587 200 Total liquidity 30 June 2021 1,617
July refinancing(2) (165) 0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Pro forma liquidity 1,452
1 Proportionally consolidated debt, excluding Value Retail. Interest rates are on a weighted average basis, post hedging derivatives 2 Pro-forma for final €190m repayment of 2022 Euro Bonds and refinancing and €2m partial repayment of O’Parinor JV debt in July 2021 12 3 New 3+1+1 year RCF shown at current maturity, with options to extend, subject to lender consent, to 2026 2021 half-year financial results Balance sheet metrics slide 50
30 June 2021 31 Dec 2020
Net debt £1,879m £2,234m
Value Retail net debt £690m0 £689m0
Group debt Headroom Internal 30 June 2021 31 Dec 2020 covenants guidelines Gearing(1) <150%/175% 28% valuation decline <85% 68% 70%
Unencumbered Asset Ratio(2) >1.5x 18% valuation decline >1.75x 1.83x 1.89x
Interest cover(3) >1.25x 40% NRI decline >2.00x 2.08x 1.81x
LTV – incl. Value Retail net asset value(4) no covenants IG rating 40% 40%
LTV – fully proportionally consolidated(5) no covenants IG rating 47% 46%
Net debt/EBITDA(6) no covenants IG rating 15.1x 14.1x
1 Covenant within the Group’s unsecured bank facilities, bonds and private placement notes 2 2021 Covenant within the Group’s unsecured private placement notes only. Covenant was temporarily amended to 1.25x between June 2020 and June 2021, before reverting to 1.40x in October 2021 and 1.50x in December 2021 13 3 Covenant within the Group’s unsecured bank facilities and private placement notes 4 Loan excludes Value Retail net debt and value includes Value Retail net asset value 5 Includes Group’s share of Value Retail net debt and property values 6 EBITDA calculated on a 12 months rolling basis as at 30 June 2021 2021 half-year financial results Modelling assumptions
UK rental levels: declining c.35% peak to trough (29% to date), France and Ireland more stable
Rent collections: rates continue to improve, absent further lockdowns, 80-90% by FY21 – provisioning rates flat
Net admin costs: assume same run rate in H2, 15-20% savings to come in FY22-23
Value Retail: H2 earnings to exceed H2 20 (£5.9m) – assume no cash distribution
Finance costs: annualised run rate saving of £10m
FY 21 capex guidance: £100m, of which £64m in H2 21 (c.50% Cergy and Italik)
Dividends: assume further c.£210m of scrip by end of 2022 to cover REIT/SIIC obligations
14 Strategy update
15
Martineau Galleries, Birmingham Strategy update Future of Hammerson
Owner, operator, developer of focused, prime, urban estates
Indicative long-term core portfolio
Precarious capital structure Sustainable capital structure
Costly, complex organisation Agile, lean, streamlined platform
Complex, retail-only portfolio Reinvigorated mixed-use portfolio
Lack of focus on strategic Accelerated development pipeline opportunities
Department store Non fashion retail Fashion retail F&B and leisure Alternative use
16 Strategy update Existing asset footprint and structural shift in retail underpins our strategic choices
Area Strategic options
Disposals to focus Scale Maintain status quo Consolidate on core assets
Refocus / Enter logistics & Grow emphasis Re-enter office Enter lodging Mix rebalance industrial on residential at scale at scale retail at scale
Concentrate footprint in set Footprint Maintain status quo Enter new territories of core urban estates
Develop, own, Model Asset light Pure developer Financial investor operate
17 Strategy update Covid-19 has accelerated existing structural change
DEMOGRAPHIC TRENDS CONSUMER TRENDS RETAIL TRENDS
Ageing population Value for money Polarisation of retail markets
Rise in single-person households Digitalisation Channel shift
Increased digital penetration Experience over things Evolving role of the store
Urbanisation Connected self Commercial model evolution
Changing consumer confidence Value of time Data & analytics
High and increasing avg. income Personalisation Importance of technology
Source: Accenture 18 Strategy update Prime urban retail has an important role to play in the omnichannel environment, but reduction of space required
Forecasts for UK retail space reduction Encouraging re-opening sales despite restrictions Low High -6% -14%
Market CBRE Cushman & BNPP Savills UK May & June France June overall Net 16% Wakefield 30% 40% overall sales vs 2019 sales vs 2019 Vacancy (2021) 25-30% (2021) (2020) 14% (2019)
Physical sales & fulfilment remains key to profitability Role of physical space in omnichannel world
• c.70% of UK retail sales remain physical, c.80% in France & Ireland1 • Not only about legacy metrics, but also marketing and brand exposure
• Falling average retailer pre-tax profit margins in UK: • New technology = new metrics, comparable to online: • Passing footfall = brand impressions • Dwell time outside shopfront = click through 9.2% 5.5% 3.2% 2010-11 2019-20 2024-25 • Complementary to existing metrics: • Conversion rates • Customer acquisition costs • Online costs rising through pandemic: delivery & fulfilment costs +20%; • Logistics returns costs fashion returns >40%; paid search +26%; social media +25% slide 40
19 Strategy update Hammerson today – high quality assets; strong locations; overexposed to fashion and department stores
Asset quality by grade(1) Portfolio by city exposure(2) Portfolio mix by ERV and NIA(3)
Birmingham London Leeds Aberdeen Other Value 7% 6% 3% 3% 1% B Retail 7% Southampton 14% By ERV 1% A++ 17% B+ 3% 9% 23% 6% 20% Bristol 8% 26% 3% By NIA Reading 14% 2% A- 79% of assets 10% graded A A+ Leicester 15% Bicester 2% 28% 17% 19% 27% 41% A Glasgow 1% 31% Dublin 14% Paris Marseille 12% Black border indicates significant 10% Department store Fashion Non-fashion JV/associate structures F&B / Leisure Other Vacant
Initial diagnosis stands: we will capitalise on the competitive advantage of the quality and location of our core assets, with clear valuation upside from repositioning.
1 As at 30 June 2021, UK, Ireland and France flagships, and Value Retail. Source: Green Street Advisors database July 2021, quality grade, 20 weighted by value as of FY20, at Hammerson share 2 As at 30 June 2021 3 As at 30 June 2021, excluding Value Retail Strategy update Positioning Hammerson as an owner, operator, developer of focused, prime, urban estates
Deliver Accelerate Create agile Reinvigorate sustainable development platform the assets capital structure pipeline
• Disposals of non strategic • Flatter organisation • Generate incremental cash • Disciplined capital recycling assets: • Automation and digitalisation flow to scale development • reduce net debt • Build skill sets for the future • Optimise use of space – opportunities • generate capital for • Speed to value/opportunity minimise void • Explore different models reinvestment ready • Repurposing & redevelopment • Create holistic prime urban • IG credit rating estates • Disciplined capital allocation
• Simplify portfolio & platform - focus on core assets • Net positive/sustainability lens over all initiatives
Capital redeployment & value Stabilisation & simplification creation
21 Strategy update A sustainable capital structure remains a core near term priority
FY 20 HY 21
€700m £834m rights Recycling £403m of sustainability- Further issue & VIA Refinancing capital disposals linked bond disposals disposal Refinancing issued
Approach through the cycle:
• Focus on total return
• IG credit rating
• Balance LTV & net debt/EBITDA depending on phasing of disposals and redeployment of capital
22 Strategy update Strategic repositioning of portfolio
Near term disposals Optimise to sell Core
• Minority stakes (lack of control) • Opportunities to create more • Prime city centre locations in most attractive catchments: value prior to disposal • Better off in the hands of others • >250k people within 15 minutes / 1 mile • More liquid assets • Not the right time to sell • >1m people within 1 hr walk/cycle/public transport or car • Non core for the business • Opportunities for remix/repurposing/development • Income growth potential • Ability to scale: asset value potential c.£1bn for some, with at least three non-retail uses with potential for >£100m value each • Opportunities to consolidate ownership • Support from central / local public leadership and policy NEAR-TERM DISPOSALS MEDIUM-TERM DISPOSALS depending on market conditions depending on asset conditions
Market conditions and third party interest will drive individual assets and portfolio disposals
23 Strategy update Create agile platform for the benefit of all stakeholders
AMBITION
Create an efficient & agile, fit for purpose organisation Develop a more empowered, accountable culture - conducive to delivering speed to value
Current organisation Future organisation
Capable, recognised platform Flatter organisational structure
High commitment from teams Asset-centric operations Centralised core functions New senior leadership in place Fill capability gaps and build expertise High cost Explore strategic partnerships Fragmented operating model Increase automation & digitalisation Complex and bureaucratic Renewed focus on cost discipline Nascent automation and digital capability Net admin costs reduced by 15-20%
24 Strategy update Significant value creation opportunities from reinvigorating current prime portfolio
Generate incremental income Lease up & shift mix Repurpose
• Commercialisation • Minimise void • Capital light & more intensive options
• Last mile delivery • Try new concepts • Alternative use: residential; workspace;
• Operating services lodging
• Digitalisation/Data • Target categories: F&B; leisure; culture; services
Opportunity in underutilised space(1)
• 2m sq ft UK department store space, 800k sq ft department store space vacant or in temporary leases: £3/sq ft ERV; £9/sq ft value • Ten UK car parks; four in France; one in Ireland: c.47k spaces • 1.9m sq ft UK MSU space; 540k sq ft French MSU space; 220k sq ft Irish • c. 600k sq ft targeted for repurposing/new lettings in UK
1 At 100% 25 Strategy update Leasing highlights slide 35-39
Prime brands
New anchors F&B, leisure, grocery, services
Digitally - native
26 Strategy update Wide variety of scale development opportunities, yielding returns and upscaling existing assets to neighbourhoods
Retail F&B Leisure Residential Workspace Hotel Education Culture Public spaces Outline Earliest (k sq ft) (k sq ft) (k sq ft) (units) (k sq ft) (beds) (k sq ft) (k sq ft) Key schemes Area planning/ start on policy site
Les 3 Fontaines, Cergy 8,400m2 on site on site 10 20 45
The Podium at Dundrum, Dublin 10,000m2 2022 1 107
Victoria Hotel, Leeds 8,400m2 On hold 205
25,600m2 2021 2022 305 Near term St Peters Lane, Leicester
Residential Quarter, Reading TBC- 2022 TBC
Victoria Phase 2, Leeds 10 acres TBC 50 50 50 1000 540 200 55 50
Martineau Galleries, Birmingham 7.5 acres H2 2023 90 70 20 1300 1100 200 10
Callowhill Court, Bristol 9 acres 2022 TBC
Dublin Central 6 acres 2021 H1 2023 60 40 94 475 210
Dundrum Village, Dublin 6 acres 2022 H2 2023
Pavilions Phase 3, Swords 18 acres 2023 TBC
Brent Cross 15 acres TBC TBC Medium to long term long to Medium Croydon 22 acres TBC TBC
The Goodsyard, London 10 acres 2024 120 75 500 1400 150 40
TOTAL 103 acres 6m sq ft 4.5m sq ft 1m sq ft
27 Case study: Birmingham Estate
28 Strategy update Evolution of Hammerson: retail-centric assets to mixed use estates
Indicative evolution of identified core portfolio mix by NIA
Core portfolio by current mix Indicative mid-term core portfolio Indicative long-term core portfolio
Department store Fashion retail Non fashion retail F&B and leisure Alternative use
29 Strategy update Summary and priorities – Hammerson at inflection point
Clear direction of travel: owner, operator, developer of focused, prime, urban estates
H1 21 progress: Near-term priorities: Looking ahead:
• Balance sheet strengthened: • Disposals to reduce debt • Sustainable capital structure • net debt reduced; • IG credit rating • refinancing achieved • Create agile platform • cost reduction 15-20% • Focus on core - simplify the • Business transformation underway: portfolio • new leadership in place • Improve rent collection performance • Maximise existing and incremental • Improving operational performance: cash streams • rent collection up; • Maintain leasing momentum • encouraging leasing volumes • Commence recycling of capital to & pipeline value creation opportunities
• Seek options to accelerate scale development pipeline
30 Questions
Dundrum, Dublin Additional disclosure
32
Cabot Circus, Bristol Contents
Managed portfolio
Net Positive
Value Retail
33 Managed portfolio
34
The Oracle, Reading Additional disclosure: Managed portfolio Leasing cumulative activity – managed portfolio
H1 2021 managed portfolio leasing and cumulative vs. H1 2020 and H1 2019 (£m) Leasing volumes H1 21 H1 20 £m £m
5 12 UK 4.3 2.7 4.5 10 France 4 5.1 1.4
3.5 Ireland 8 0.4 0.3 3 Total 9.8 4.4 2.5 6
2 4 UK retail parks 1.2 1.6 1.5
1 UK other 0.2 0.5 2 0.5 Managed portfolio 11.2 6.5 0 0 June May April March January February
Monthly leasing H1 2021 (LHS) Cumulative leasing activity 2019 (RHS)
Cumulative leasing activity 2020(RHS) Cumulative leasing activity 2021 (RHS)
1 Monthly leasing LHS axis, cumulative leasing RHS axis 35 Additional disclosure: Managed portfolio Leasing cumulative activity – UK flagships
H1 2021 UK flagships leasing and cumulative vs. H1 2020 and H1 2019 (£m) H1 2021 leasing 5 5 £m 4.5 4.5 Principal leasing 2.5 4 4
3.5 3.5 Reconfigurations 0.5
3 3 Flexible and other 1.3 2.5 2.5 Total 4.3 2 2
1.5 1.5
1 1 UK flagships leasing key facts(1) 0.5 0.5 0 0 Leasing vs. Dec 20 ERV -24% June May April
March Leasing vs. previous passing -26% January February
(2) Monthly leasing H1 2021 (LHS) Cumulative leasing activity 2019 (RHS) Average lease term: 8 years
Cumulative leasing activity 2020 (RHS) Cumulative leasing activity 2021 (RHS) Average incentive: 11 months(2)
1 Principal leases only 36 2 FY 2020: average lease term 6 years, average incentive 5 months Additional disclosure: Managed portfolio Leasing cumulative activity – France flagships
H1 2021 France flagships leasing and cumulative vs. H1 2020 and H1 2019 (£m) H1 2021 leasing £m 1.2 4.5 Principal leasing 4.0 4 1.0 Reconfigurations 0.5 3.5 Flexible and other 0.6 0.8 3 Total 5.1 2.5 0.6 2
0.4 1.5 France flagships leasing key facts(1) 1 0.2 Leasing vs. Dec 20 ERV 3% 0.5 Leasing vs. previous passing 0% 0.0 0 Average lease term: 10 years(2) June May April March
January (2) February Average incentive: 2 months
Monthly leasing H1 2021 (LHS) Cumulative leasing activity 2019 (RHS) Cumulative leasing activity 2020 (RHS) Cumulative leasing activity 2021 (RHS)
1 Principal leases only 37 2 FY 2020: average lease term 7 years, average incentive 1 months Additional disclosure: Managed portfolio Leasing cumulative activity – Ireland flagships
H1 2021 Ireland flagships leasing and cumulative vs. H1 2020 and H1 2019 (£m) 2021 leasing £m 0.1 1.2 Principal leasing 0.1 0.1 1 Reconfigurations 0.1 0.1 Flexible and other 0.2 0.1 0.8 Total 0.4 0.1 0.6 0.0
0.0 0.4 Ireland flagships leasing key facts(1) 0.0 0.2 Leasing vs. Dec 20 ERV 16% 0.0 Leasing vs. previous passing 72% 0.0 0 Average lease term: 9 years(2) June May April March
January (2) February Average incentive: 4 months
Monthly leasing 2021 (LHS) Cumulative leasing activity 2019 (RHS) Cumulative leasing activity 2020 (RHS) Cumulative leasing activity 2021(RHS)
1 Principal leases only 38 2 FY 2020: average lease term 6 years, average incentive 2 months Additional disclosure: Managed portfolio Leasing analysis by type – flagships
UK France Ireland % vs previous % vs previous % vs previous £’000s % vs ERV £’000s % vs ERV £’000s % vs ERV passing passing passing Principal 2,470 -26% -24% 3,958 0% 3% 119 72% 16%
Other 1,873 -76% -76% 1,125 -49% -28% 263 -75% -80%
Total 4,343 -53% -63% 5,083 -13% -5% 382 -38% -72%
UK France Ireland % vs previous % vs previous % vs previous £’000s % vs ERV £’000s % vs ERV £’000s % vs ERV passing passing passing Fashion 2,446 -47% -57% 2,596 -15% 0% 114 -79% -89%
Non Fashion 1,479 -68% -70% 2,079 -6% -12% 266 60% -6%
F&B 418 -54% -58% 408 -23% -1% 2 n/a -97%
Total 4,343 -53% -63% 5,083 -13% -5% 382 -38% -72%
39 Additional disclosure: Managed portfolio White box leasing – new metrics relevant to digitally-native brands
Use of physical space is evolving in omnichannel world
• Hammerson “white boxing” initiatives encouraging digitally native brands into physical space
• Not only about legacy metrics, e.g. sales and OCRs, but also marketing and brand exposure
• New technology, e.g. AI in CCTV, is allowing development of new metrics, comparable to online:
• Passing footfall = brand impressions
• Dwell time outside shopfront = click through First store outside of London for omnichannel retailer of rare sneakers • Complementary to existing metrics: Additional 9% footfall in store zone in first week • Conversion rates 3.5p cost per walk by / brand impression • Customer acquisition 15% of passing visitors entered store • Logistics returns costs 3x footfall/sq ft of neighbouring leading brands
High average basket size
Cost of acquisition only 3% of sales
40 Additional disclosure: Managed portfolio LfL NRI analysis - flagships
H1 2021 LfL NRI analysis UK flagships France flagships Ireland flagships Total
(2.7% 27.0% 6.2% 16.7% Surrender Premiums )
(7.8% (1) 15.2% 9.9% 9.2% Provision for incentives and arrears )
(0.9% 2.1% 0.7% 1.3% Other )
(2.8% (5.5%) 1.4% (3.6%) Variable income )
(10.8 (0.6% (0.3% (6.7%) Tenant failure (CVAs/Administrations) %) ) )
(13.7 2.0% 4.1% (6.9%) Leasing and void costs %)
(12.0 (4.2% (8.2% (9.8%) Concessions %) ) )
Total LfL NRI (£m) £41.5m £13.8m £12.4m £67.7m Change LfL (%) +2.3% +13.6% -17.0% +0.1%
Change LfL (£m) +£0.9m +£1.7m -£2.5m +£0.1m 1 Excludes provisioning for arrears from tenants subject to CVA or administrations which have been included in the tenant restructuring category 41 Additional disclosure: Managed portfolio Rent collection performance - flagships
UK France Ireland
Collected at 31 July Collected at 31 July Collected at 31 July
(%) (%) (%)
FY20 91 93 83
Q1 21 92 67 64
Q2 21 71 43 66
H1 21 79 56 65
Q3 21 67 60 67
2021 YTD 76 57 65
42 Additional disclosure: Managed portfolio Provisions for arrears – managed portfolio
H1 2021 provisions vs FY 2020
Provision as % Provision as % Net trade Change since Change since Provisions at Provisions at of net trade of net trade receivables 31 December 31 December 30 June 2021 31 Dec 2020 receivables receivables at 30 June 2021(1) 2020 2020 at 30 June 2021 at 31 Dec 2020
£m £m £m £m % % ppts
UK 64.1 42.1 53.1 -11.0 66 65 +1
France 34.9 24.4 18.9 +5.5 70 66 +4
Ireland 15.9 10.9 7.8 +3.1 69 53 +16
Managed 114.9 77.4 79.8 -2.4 67 64 +3 portfolio
1 Net of VAT and deposits 43 Additional disclosure: Managed portfolio Tenant restructuring – leases in CVA/admin as at 30 June 2021
UK France Ireland UK Group NRI LfL impact of CVAs & admins (£m) flagships flagships flagship other
H121 FY20 FY19 5 Passing rent impact of (0.6) (0.2) - - (0.8) new units in CVA/admin 0 in H1 21(£m)
(5) Number of units in 132 31 n/a 12 175 CVA/admin (10) as at 30 June 2021
(15) Passing rent subject to 5.1 2.1 n/a 0.3 7. 5 CVA/admin as at (20) 30 June 2021 (£m) (25) % of Group passing rent 2.2% 0.9% n/a 0.1% 3.3% as at 30 June 2021(1) (30)
(35)
(40)
UK flagships France flagships Ireland flagships UK Retail Parks
1 Group passing rent £227.3m 44 Additional disclosure: Managed portfolio Top 20 tenants exposure(1)
Rental Rental % of passing % of passing Retailer Exposure % of NIA Retailer Exposure % of NIA rent rent (£m) (£m)
Inditex 8.1 3.6% 2.7% TK Maxx 2.3 1.0% 1.6%
H&M 6.1 2.7% 2.5% Superdry 2.3 1.0% 0.6%
Next 4.5 2.0% 4.5% Signet 2.2 1.0% 0.2%
Boots 3.7 1.6% 1.3% Apple 2.1 0.9% 0.4% Watches of Switzerland 2.0 0.9% 0.2% JD Sports 3.3 1.4% 0.8% Company
CK Hutchison Holdings 3.0 1.3% 0.7% Natl Amusements (UK) 1.9 0.8% 1.5%
River Island Clothing Co 2.9 1.3% 1.0% McDonald's 1.7 0.8% 0.5%
Marks & Spencer 2.9 1.3% 3.2% Etam Group 1.5 0.7% 0.2%
France Printemps (Borletti) 2.5 1.1% 1.8% Debenhams 1.5 0.7% 2.1%
John Lewis PLC 2.4 1.1% 6.5% Freedom Sportsline 1.4 0.6% 0.3%
Total 58.5 26% 33%
1 Ranked by passing rent as at 30 June 2021 45 Additional disclosure: Managed portfolio Top ten occupiers by region(1)
UK France Ireland
Rental % of Rental % of Rental % of Retailer exposure passing % of NIA Retailer exposure passing % of NIA Retailer exposure passing % of NIA (£m) rent (£m) rent (£m) rent
Inditex 4.4 1.93% 1.60% Printemps 2.5 1.12% 1.83% Inditex 1.9 0.84% 0.39%
Next 3.6 1.60% 4.12% Inditex 1.8 0.79% 0.70% River Island 1.7 0.73% 0.24%
H&M 3.5 1.53% 1.78% H&M 1.8 0.78% 0.42% Marks & Spencer 1.1 0.49% 0.82%
Boots 3.0 1.32% 1.12% Etam Group 1.5 0.67% 0.22% Primark 0.9 0.39% 0.35%
John Lewis PLC 2.4 1.05% 6.53% C&A Europe 1.2 0.52% 0.51% Next 0.9 0.39% 0.34%
JD Sports 2.3 1.03% 0.60% Rallye 1.0 0.44% 0.42% H&M 0.8 0.37% 0.30%
Signet 2.1 0.93% 0.22% FNAC Group 0.9 0.39% 0.63% Boots 0.7 0.33% 0.19%
CK Hutchison Holdings 2.1 0.92% 0.55% Monoprix 0.9 0.38% 0.28% TK Maxx 0.7 0.32% 0.51%
Watches of Switzerland 2.0 0.90% 0.20% Grand Vision 0.8 0.37% 0.16% JD Sports 0.6 0.25% 0.15%
Natl Amusements (UK) 1.9 0.83% 1.55% Happy Chic 0.8 0.33% 0.10% Staunton Sports 0.6 0.25% 0.19%
Total 27 12% 18% Total 13 6% 5% Total 10 4% 3%
1 As at 30 June 2020 46 Additional disclosure: Managed portfolio Valuation data (net initial & nominal equivalent yields)(1)
NIY (%) UK flagships France flagships Ireland flagships UK other Managed portfolio(2)
30 June 2021 6.7 4.3 4.9 5.3 5.5
31 Dec 2020 6.6 4.4 4.6 6.2 5.7
30 June 2020 5.9 4.3 4.6 5.9 5.4
Change 6m (pp) 0.1 -0.1 0.3 -0.9 -0.2
Change 12m (pp) 0.8 0.0 0.3 -0.6 0.1
NEY (%) UK flagships France flagships Ireland flagships UK other Managed portfolio(2)
30 June 2021 7. 8 5.0 5.3 9.4 6.4
31 Dec 2020 7. 3 4.9 5.0 9.0 6.3
30 June 2020 6.6 4.7 4.7 8.6 5.9
Change 6m (pp) 0.5 0.1 0.3 0.4 0.1
Change 12m (pp) 1.2 0.3 0.6 0.8 0.5
1 Yields as reported at period end, i.e. not like for like 47 2 Total portfolio for 31 December 2020 and 30 June 2020 include Retail Parks Additional disclosure: Managed portfolio Valuation data (ERV)
ERV (£m) UK flagships France flagships Ireland flagships UK other Managed portfolio(2)
30 June 2021(1) 122.0 59.6 37. 4 9.9 228.9
31 Dec 2020(1) 132.4 62.9 39.0 10.0 279.7
30 June 2020(1) 144.2 64.7 42.0 10.2 299.3
LfL change 6 months (%) -6.8 -0.3 -1.1 -3.5 -4.1
LfL change 12 months (%) -14.4 -1.0 -4.4 -5.3 -9.3
1 ERVs as reported at period end, i.e. not like for like 48 2 Total portfolio ERVs for 31 December 2020 and 30 June 2020 include Retail Parks Additional disclosure: Managed portfolio Key disposals achieved 2019 – 2021 YTD
NIY Gross proceeds Buyer (%) £m 2019: Dallow Road, Luton 7.6 24 Private equity Italie Deux, Paris (75%) 4.1 363 AXA Abbotsinch, Paisley 7.8 67 Ashby Capital St Oswald's Retail Park, Gloucester 8.5 54 Local authority Parc Tawe, Swansea 4.7 22 Private investor 2020: Abbey, Belfast 8.4 33 Slate Asset Management SQY Ouest n/a 10 Société des Grands Magasins Retention of exchange deposit for portfolio of retail parks n/a 21 Orion European Real Estate Fund V VIA 6.5 277 APG 2021 YTD: Brent South Shopping Park 6.2 22 London Borough of Barnet Nicetoile 5.8 23 Allianz Espace Saint Quentin 8.5 28 Allianz Retail parks portfolio 8.6 330 Brookfield Total 2019 – 2021 YTD(1) 1,288
1 Total annual gross proceeds (includes ancillary disposals): 2019 - £542m, 2020 - £343m, 2021 YTD (30 June 2021): £403m 49 Additional disclosure: Managed portfolio LTV methodology
30 June 2021 31 December 2020
With Value Fully proportionally consolidated With Value Fully proportionally consolidated Retail net asset (£m) Retail net asset (£m) Net debt value (£m) value (£m) Managed portfolio 1,879 1,879 2,234 2,234 Value Retail - 690 - 689 Loan 1,879 2,569 2,234 2,923
Property values
Managed portfolio 3,596 3,596 4,414 4,414 Value Retail - 1,902 - 1,924 Value Retail net assets 1,130 - 1,154 - Value 4,726 5,498 5,568 6,338 LTV 40% 47% 40% 46%
50 Additional disclosure: Managed portfolio Maintenance capex 2018- H1 2021: Flagships
H1 2020 2019 2018 2021 Service charge (maintenance) Service charge income (£m) 24 55 69 73
Maintenance expenditure within service charge (£m) 3.5 13 13 13 Examples: Painting, flooring upkeep, M&E: CCTV, wifi , IT systems maintenance
Capital expenditure
Gross rental income (£m) 102 229 282 306
Capital expenditure – no additional area (£m) 8 17 16 53
Yield on cost from capital expenditure – no additional area 0 0 3 6 (%) Capital expenditure – no additional area: gross rental income (%) 8 7 7 17
Examples: Income accretive: Repurposing and reconfiguration, recladding, CCTV upgrade, digital screens Other (partly recoverable from tenants): Wayfinding projects, WC upgrades, LED relamping, seating upgrades, family rooms, smart metering
51 Net Positive Our Sustainability 2021 Half year update Vision: Operations remain affected by COVID-19 but strong sustainability platform has supported efficient operation and delivery of two key projects. We are continuing to focus on To create retail destinations that delivering against out Net Positive carbon, water, waste and social impact targets through deliver net positive impacts efficiencies and investment in technology and innovation projects and through our strong economically, socially and relationships with community organisations. environmentally Key projects delivered Positive Places is our strategy for making that happen • the connection of Les Terrasses du Port to the Thassalia geothermal system • the successful launch of our sustainability linked bond (SLB)
EPRA LFL Portfolio (unit) H1 2021 H1 2019 % Change 2021 Target
Energy demand (MWh) 33,710 40,505 -17% -8%
Carbon emissions (mtCO2e) 6,442 9,101 -29% -17%
3 Water demand (‘000m ) 108 183 -41% -7%
53 Additional disclosure: Net Positive Sustainability-linked bond
Issued in June 2021 and confirmed as being beyond business as usual and Paris aligned, our sustainability-linked bond (“SLB”) links ambitious Scope 1,2 and 3 targets to financing without restricting our use of proceeds. This was the first SLB to be issued by a real estate company and reaffirms the strength of our sustainability strategy.
KPI 1 – Absolute Emissions KPI 2– Absolute Emissions
16,000 80,000 71,742 14,000 13,357 70,000
12,000 60,000
10,000 50,000
8,000 40,000 5,343 6,000 30,000 35,527 4,000 60% reduction versus 20,000 50% reduction versus 2,000 2019 Baseline 10,000 2019 Baseline
0 0 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 BAU Scope 1, 2 & selected Scope 3 KPI 1 - Hammerson Scope 1, 2 & selected Scope 3 targets BAU Scope 3 tenant emissions KPI 2 Hammerson Scope 3 tenant emissions targets SPT 2 Sustsainability Performance Target 1
Performance to date: During H1 2021, Scope 1 and 2 emissions for this portfolio* have fallen by 10% v 2020 and 36% v 2019 baseline. These reductions are significantly influence by the closure of assets during the pandemic. However we are continuing to invest in energy efficiency measures and our procurement strategy and expect to revert to a more normal downwards trend in 2022. Scope 3 emissions performance will be calculated at year end. However, 50 units have been fitted out in accordance with our energy efficiency standards in H1 2021 and environmental data sharing clauses included in new leases as standard.
If these targets are not met, an additional margin will be payable of 37.5 basis points per annum for the last year of the bond between June 2026 to the June 2027 maturity date for each of the two targets, 75 basis points in total, payable at the final interest payment date.
Notes: Emissions forecasts are location based and reflect a Steady Progress Future Energy Scenario BAU reflects only forecast grid carbon emissions reductions for GB, Ireland and France, provided by Aurora Energy Research reflecting an adapted Steady Progress Future 54 Energy Scenario. It excludes any corporate carbon reduction activities. The portfolio includes all assets under Hammerson ownership during the reporting period at equity share. The same portfolio is reflected in each trajectory Value Retail
55 Additional disclosure: Value Retail H1 2021 operational update
30 June 30 June Change Value Retail value creation (£m) 2021(1) 2020(1)
Brand sales (£m) 626 585 +7%
Footfall (m) 8.5 8.8 -3% 1,200 9 year IRR - 18% Sales density (£/m2) 3.1 3.3 -4%
Like-for-like NRI (£m) 24.9 16.8 +48% 1,000
Occupancy (%) 95.3 94.7 +0.6% 800
950 600 1,107
400 (147) 280
(190) 200
214
0 (2) NAV Jan-12 Capital invested Distributions - Distributions - Valuation uplift NAV Jun-21 operating refinancing
1 With the exception of like-for-like net rental income growth, figures reflect overall portfolio performance, not Hammerson’s ownership share 2 Premium outlets NAV as at 30 June 2021 includes liabilities in respect of distributions received in advance of £23m which will be repayable upon disposal of stakes in Value Retail 56 Additional disclosure: Value Retail Tiered European outlet market
Sales densities €/m2
€30,000+ International fashion and luxury brands
€2,000–€10,000 Mainstream fashion brand outlets
<€2,000 Low-end discount outlets
57 Additional disclosure: Value Retail Value Retail villages
Bicester Village, Oxford GLA: 28,100m2 Boutiques: 163 La Roca Village, Barcelona GLA: 25,900m2 Boutiques: 148 Las Rozas Village, Madrid GLA: 16,600m2 Boutiques: 100 La Vallée Village, Paris GLA: 21,600m2 Boutiques: 105 Maasmechelen Village, Brussels GLA: 20,000m2 Boutiques: 100 Portfolio value Fidenza Village, Milan GLA: 21,100m2 £1.9bn Boutiques: 116 Wertheim Village, Frankfurt GLA: 21,200m2 Boutiques: 118 Ingolstadt Village, Munich GLA: 21,000m2 Boutiques: 114 Kildare Village, Dublin GLA: 16,200m2 Boutiques: 97
58 Additional disclosure: Value Retail Hammerson’s total investment in Value Retail
Holding companies 25% equity
Las Rozas La Vallée Maasmechelen Wertheim Ingolstadt Kildare Bicester Village La Roca Village Fidenza Village Village Village Village Village Village Village
37 29 25 14 14 22 33 2 29
50 41 38 26 27 34 45 15 41
Village ownership via LPs (%)
Total Village ownership (%) (1)
1 Total Village ownership calculated as economic entitlement of directly held and indirectly held interests 59 Additional disclosure: Value Retail Absolute sales growth delivered through active management, acquisitions and extensions
Sales and Sales Growth 2012 – 2021 (€m)(1)
3,500 +9%
+8% 3,000 +8% +8% 2,500 +11% +11% +12% 2,000 -45% +13%
1,500
1,000 +7%
500
0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
H1 Sales H2 Sales
1 Figures have been restated at constant FX rates 60