CLARKSBURG PREMIUM OUTLETS AT CABIN BRANCH IN MONTGOMERY COUNTY MARYLAND
Investor presentation Premium Outlets July 2017… · 2017-07-04 · Today’s agenda 01...
Transcript of 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
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£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
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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
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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
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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
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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
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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
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Operational summary Value Retail (1) VIA Outlets (1)
Year ended 31 Dec 2016
Year ended 31 Dec 2015
Year ended 31 Dec 2016
Year ended 31 Dec 2015
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
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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
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VIA Outlets: investment in joint venture (2016 annual report & accounts) – Note 12
Summary tables: Value Retail and VIA – Tables 12 & 13
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(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
n-0
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Se
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Jun
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Prime Shopping Centre Yields vs. Prime Outlet Yields
Outlets Top European Cities Shoppping Centres
Hammerson | Cushman & Wakefield 22
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
Hammerson | Cushman & Wakefield 23
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!
Hammerson | Cushman & Wakefield 24
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
Source: Cushman and Wakefield Outlet Valuation Team
Hammerson | Cushman & Wakefield 25
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
Hammerson | Cushman & Wakefield 26
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
Source: Cushman and Wakefield Outlet Valuation Team
Majority of European Outlets fit into these categories
Hammerson | Cushman & Wakefield 27
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
Hammerson | Cushman & Wakefield 28
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
Hammerson | Cushman & Wakefield 29
C O R E I N V E S TO R SCore Group of Experience
Hammerson | Cushman & Wakefield 30
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
Hammerson | Cushman & Wakefield 31
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
Hammerson | Cushman & Wakefield 32
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
Hammerson | Cushman & Wakefield 33
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