Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong first half performance with significant benefits from recent investments.
- Leasing activity shows high demand for Hammerson PLC (HMSNF, Financial)'s destinations, with a 24% increase in value from 140 deals.
- Footfall and sales are up in key locations, indicating successful repositioning efforts.
- Operational costs reduced by 16% year-on-year, enhancing operating leverage.
- Successful disposal of Value Retail for GBP600 million, strengthening the balance sheet and enabling a share buyback program.
Negative Points
- UK sales are down 3% on a like-for-like basis, indicating regional challenges.
- Value Retail earnings were disappointing, down GBP1.7 million year-on-year.
- IFRS loss of GBP517 million and a reduction in NTA per share to 38p due to write-downs and revaluation losses.
- Ireland segment has seen a valuation decline despite other segments showing stronger valuations.
- Interest receivable on net cash proceeds may be subject to tax, impacting net earnings.
Q & A Highlights
Q: Can you provide more details on the Dundrum secured loan and whether it required extra equity into the JV, considering Ireland's valuation decline?
A: (Himanshu Raja, CFO) We are in advanced stages of completion and expect to sign in early August. We will make an announcement in due course, but it would be inappropriate to discuss specifics ahead of the signature.
Q: Regarding the redeployment of cash from the Value Retail sale, do you expect tender activity or will it be used for future debt maturities?
A: (Himanshu Raja, CFO) It would be inappropriate to discuss intentions on tenders. The key takeaway is that we now have a strong balance sheet and are well-positioned to access debt and capital markets at the right time.
Q: Is there an elevated level of lease expiries in 2025, and how are you managing this?
A: (Rita-Rose Gagne, CEO) The leasing profile is flat with no spikes, and the pipeline is good. We expect to continue increasing the performance of the asset smoothly.
Q: Will the interest receivable from the Value Retail sale proceeds be taxable, and how should it be modeled?
A: (Himanshu Raja, CFO) The interest will stay within the REIT wrap-up, so there is no material tax effect. We can provide more details offline on how to model the rates.
Q: Why have valuations in France remained stable despite a lack of evidence, and what discussions are you having with appraisers?
A: (Rita-Rose Gagne, CEO) The valuations have held stable due to the high quality and strategic nature of our assets. There is a polarization in the market, with prime assets maintaining their value. We are comfortable with the current valuations.
Q: Can you explain the contribution from surrender premiums to like-for-like rental income and whether this is a normal level?
A: (Rita-Rose Gagne, CEO) Surrender premiums are part of our proactive asset management strategy. We do not shy away from them if they align with our repositioning plans. (Himanshu Raja, CFO) The absolute numbers are not significant, but they do impact percentage swings.
Q: Why is the like-for-like rental income in France lower than the ILC index, and what factors are influencing this?
A: (Himanshu Raja, CFO) The lower like-for-like rental income in France is primarily due to the effect of CVAs (Company Voluntary Arrangements) coming through in the numbers.
Q: What are your plans for the future growth and capital allocation following the Value Retail sale?
A: (Rita-Rose Gagne, CEO) We are focused on further strengthening the balance sheet, investing for growth, and enhancing returns to shareholders. We have a disciplined approach to capital allocation and are exploring various opportunities for organic investment and consolidation within our existing portfolio.
Q: How are you leveraging technology and data analytics to enhance your operations and tenant relationships?
A: (Rita-Rose Gagne, CEO) We are deploying AI analytics in Bullring to quantify customer engagement and provide robust measures of brand value. This technology will be rolled out across our estate to enhance our data analytics capability and support our leasing and advertising strategies.
Q: What are your ESG goals and how are you progressing towards them?
A: (Rita-Rose Gagne, CEO) We are committed to our ESG goals, with a focus on reducing carbon emissions and driving social impact. We have achieved a 5% reduction in carbon emissions year-on-year and continue to support local charities and organizations through initiatives like our Annual Giving Back Day.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
