HMSNF - Hammerson plc (HMSNF) Q4 2024 Earnings Call Transcript

2025-02-28 17:49:05 ET

Hammerson plc (HMSNF)

Q4 2024 Results Conference Call

February 26, 2025 4:00 AM ET

Company Participants

Rita-Rose Gagné - CEO

Himanshu Raja - CFO

Josh Warren - IR

Conference Call Participants

Rob Jones - BNP Paribas

Bjorn Zietsman - Panmure Liberum

Edoardo Gili - Green Street

John Cahill - Stifel

Marc Mozzi - Bank of America

Paul May - Barclays

Zachary Gauge - UBS

Ventsi Iliev - Lanschot Kempen

Presentation

Rita-Rose Gagné

Good morning, everyone. Thanks for joining us for our full year 2024 results presentation here at our offices in Marble Arch, and welcome to those who are dialing in. So 2024 has been a very busy and transformative year. Actually, it's been busy for the last 4 years. And the key highlights around the delivery are a balance sheet for growth, a strong operational performance and now a growth agenda.

So let's get started. Following several years of strategic repositioning, selling noncore assets and reinvesting the proceeds to drive revenue in our prime portfolio, our balance sheet now stands as one of the strongest in the sector. LTV is 30%, and that is post the reinvestment in our Westquay asset. All our destinations are now in the top 20 retail venues in their countries, and they are all in the top 1% of where retail spend is concentrated. We've been obsessive about creating relevant spaces and experiences for our customers and our occupiers. And that's been powered by data and analytics.

What's clear is that the flight to quality has driven strong demand to our destinations. And we delivered another strong year, actually another record year, of leasing. We did 262 leases signed on 1 million square feet of space. That generated GBP 41 million of rent, and that is up 2% like-for-like. That represents GBP 255 million of rent contracted to first break. That is a long-term visible income stream and that is our business. We're driving a further reduction in vacancy. So we've driven that in 2024. We're now at less than 5% of vacancy. And with only a handful of lettable units, we have been -- built strong rental tension.

Long-term deals were signed 56% above previous passing and 13% ahead of ERV. That equates to an additional GBP 8 million of passing rent. Leasing performance is reflected in the ERVs with like-for-like growth in all 3 geographies. The valuations in the U.K. are up 4.2% and 1.5% in France.

Ireland was down 13%. That's due to the valuer's interpretation of what is a distressed debt sale in Ireland. We've got the best asset in Ireland, and I was happy to see yield stabilization in Q4. The key point here is that all our values in all the geographies are now reflected by in-year transactions.

Now let me tell you about what's going on in our destinations. So they are thriving. We welcome 170 million visitors. And excluding assets that are in major repositionings, footfall was up 2%, an extra 2.5 million visitors, and growing ahead of national benchmarks. Some of the strongest performances came from where we've deployed significant capital in recent years. For example, Westquay was up 4%. Bullring was up 3% after a big year last year, and Les 3 Fontaines was up 6%. Sales performance was also good. They are up 5% in the U.K. and 3% in France.

There were some standout performances on the portfolio. And as an example, Bullring was up 11% in terms of its sales growth, and that is the strongest-performing asset in its U.K. peer group, in accordance with the 2024 Lloyds Bank data. Our curation of the right product and mix in partnership with brands partners is driving better and higher sales densities. As you might anticipate, prime spaces drives the largest increases. And where we have repositioned or introduced new brands or new formats, the sales densities are up 42% per square foot. This is all delivering rental growth with a like-for-like GRI up 3% when I exclude Cabot Circus and the Oracle that are undergoing extensive repositionings at the moment. The U.K. was up 3% and France was up 8%. Ireland was down 3%, and but that's largely due to a tough comp....

For further details see: