Les Terrasses du Port Capital Markets Day Thursday 12 th June 2014
Today’s agenda Introduction David Atkins 1. France overview Jean-Philippe Mouton 2. Marseille Renaud Mollard 3. Les Terrasses du Port Renaud Mollard/Alice Roudaut/ Edouard Detaille 4. Sandra Chalinet BREAK Anticipated retailer performance Michaël Farbos 5. Pipeline Michaël Farbos/David Atkins 6. Product of the future Jean-Philippe Mouton 7. Conclusion David Atkins 8. 2
The Hammerson team Peter Cole David Atkins Timon Drakesmith Jean-Philippe Mouton Gérald Férézou André Bentze CEO CEO CFO CFO CIO CIO MD Hammerson France MD Hammerson France Deputy MD, France Deputy MD, France CFO, France CFO, France Michaël Farbos Barthélémy Doat Edouard Detaille Renaud Mollard Alice Roudaut Sandra Chalinet Director Investments & Director of Operations, Marketing & Project Leader, Deputy Director Retail Centre Manager, Asset Management, France Communication France Letting, France Les Terrasses du Port France Director, France 3 3
Our trading assets in France 1 6 O’Parinor, Aulnay-sous-Bois Grand Maine, Angers Acquired 2002, refurbished/extended Acquired 2007, refurbished 2013 Paris 2013-2014 Occupancy 95.9% Occupancy 96.8% 1 Key tenants: Carroll, Etam, Yves Key tenants: C&A, Primark, UGC Rocher 2 7 Place des Halles, Strasbourg 2 Italie Deux Acquired 1998, refurbished 2013 Acquired 1998, refurbished 2013 3 Occupancy 99.1% Occupancy 97.1% 5 Key tenants: Darty, H&M, Zara, Go Key tenants: Printemps, Sephora, Sport FNAC, Carrefour 8 8 Saint Sébastien, Nancy Saint Sébastien, Nancy Bercy 2 Bercy 2 3 3 Acquired 2014 Acquired 2000, refurbished 2012 Occupancy 99% Occupancy 93.6% Key tenants: C&A, Sephora, Key tenants: H&M, Go Sport, La Monoprix, Intersport Grande Recré 4 8 4 9 7 Les 3 Fontaines, Cergy Villebon 2 9 Acquired 1995 Acquired 2005 6 Occupancy 99.3% Occupancy 98% Key tenants: H&M, Darty, Mango Key tenants: Armand Thierry, Darty, C&A 5 Espace Saint Quentin, Saint Les Terrasses du Port, Marseille 10 Quentin-en-Yvelines Opened 2014 Acquired 1994, reconfigured 2007 Occupancy 97% 10 Occupancy 98.5% Key tenants: Printemps, Darty, Key tenants: C&A, H&M, Sephora Citadium, H&M 4
Retail property landscape Existing shopping centre stock 680 shopping centres, representing 15,000,000 m² Retail space per inhabitant is in line with the EU average Existing stock is ageing with 50% opened before 1980 Regional sized shopping centres (>40,000 m²) represent 30% of the total GLA. Shopping centres > 40,000m 2 GLA Market participants Highly concentrated sector with 6 players (Unibail-Rodamco, Klepierre, Hammerson, Corio, 1,178,168 Top 6 owners Top 6 REITs 25% Altarea and Immochan) controlling 75% of the dominant Other investors 3,447,791 shopping centres 75% Hammerson ranks 3 rd with 6 regional shopping centres 5
Section Section 2 2 France overview France overview Italie Deux, Paris
Growth anticipated despite high unemployment GDP % growth Source : IMF % UK France Germany 6.0 France suffered less during the financial crisis 4.0 2.0 and shows modest capacity for growth in the 0.0 short term 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -2.0 -4.0 -6.0 -6.0 Source : IMF Unemployment % % 12 France Germany UK Rising unemployment since 2008 despite 11 10 government stated commitment • 9 100k / 150k subsidised jobs 8 • 7 6 5 4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 7
Strong fundamentals for customer spending Household consumption growth Source : INSEE % Household consumption (manufactured goods) 6% 4% Consumption growth has been steady throughout the last three decades… 2% 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -2% -4% -4% -6% % 6 Wages and Inflation (% chg y/y) Source : Eurostat, PMA Wages Inflation (HICP) 4 …and disposable income still rising with 2 falling inflation 0 -2 Q4-06 Q4-07 Q4-08 Q4-09 Q4-10 Q4-11 Q4-12 Q4-13 8
And healthy levels of household debt and savings Household savings rate (% disposable household income) France UK Source : OECD % 16.6 15.9 16.0 18 15.6 15.5 French households have maintained their historically high savings rate 12 7.3 7.0 7.3 6.7 6 2.2 0 0 2008 2009 2010 2011 2012 Household debt (% available income) Source : Banque de France Germany France UK Euro zone USA % 180 …and still have a relatively low level of 160 household debt compared to peers 140 120 100 77.3 73.6 80 70.9 83.4 84.8 82.1 79.6 60 T4 07 T4 08 T4 09 T4 10 T4 11 T4 12 T4 13 9
Recent reforms in progress Need for structural reforms Labour market regulations an obstacle to job creation French welfare state is costly and perceived as increasingly inefficient: not sustainable in the long term (medical, pensions, unemployment benefits) Local governments are numerous and often with overlapping responsibilities and staff The Responsibility Pact The Responsibility Pact Early 2014 a more ambitious program announced: €30bn tax breaks for companies through wage tax reductions and corporate income tax • breaks €50bn spending cuts though rationalising the number of local governments and cuts in social • welfare and public expenditure Simplification of regulation • Tough reforms to implement and will take time to unfold 10
Steady consumer sentiment and indexation positive Consumer confidence Source : INSEE Index 95 90 85 Steady consumer confidence through the crisis, and rising over LTM 80 75 70 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 M M M M M M J S J S J S J S J S J Rent Indexation and CPI Source : INSEE 10.0% ILC ICC CPI Indexation positive and moving with inflation 8.0% 6.0% 90% of French portfolio based on ILC, a less 4.0% volatile indicator based on CPI and retail sales 2.0% 0.0% 2008 2009 2010 2011 2012 2013 -2.0% -4.0% -6.0% 11
Retailer interest still strong but more selective on location % Local consumer spending outlook (% pa) Better growth perspective for Paris, Lyon and Source : PMA 2008-2013 2013-2018 2.0 Marseille 1.5 French portfolio largely in major population 1.0 areas, 7 assets in the Paris region 0.5 0.0 Well positioned to capture retailer demand -0.5 Lille Lille Lyon Lyon Marseille Marseille Paris Paris 30 city ave 30 city ave Main 25 French urban areas by population New foreign brands opening in French malls, 2011-13 Paris Lyon Aix-Marseille Toulouse Lille Bordeaux Nice Hammerson Centre Nantes Strasbourg Rennes Grenoble Rouen Toulon Montpellier Douai - Lens Avignon Saint-Étienne Tours Clermont-Ferrand Nancy 12
Anticipated market ERV growth Forecast French S.C. ERV growth (% p.a.) % Source: PMA 2.5 2.3 2.0 2.0 1.5 1.2 1.2 1.1 1.1 1.0 0.5 0.3 0.2 0.0 -0.1 -0.5 -0.4 2010 2011 2012 2013 2014 2015 2016 2017 2018 13
Section Section 3 3 Marseille Les Terrasses du Port, Marseille
Wealthy, vibrant region Provence-Alpes-Cote d’Azur region population of 5 million 4 major cities: Marseille, Nice, Toulon and Avignon 90 % of the population live in urban areas 3 rd largest economic region in France 34 million visitors per annum 34 million visitors per annum 15 15
Strong local catchment 1.5 million inhabitants (less than 35 min drive) 2 million passengers through the port including 600,000 for Corsica 1,200,000 cruise passengers (+30% YoY) 1.5m cruise passengers estimated for 2015 €5 billion spent by Marseille inhabitants per annum, €600 million spent outside the city 16 16
Marseille: France’s second city Population of 850,000 Exceptional location and weather Intense tourist activity Largest port in the Mediterranean sea European capital of culture 2013 – 900 new projects and 10 million visitors throughout the year Third largest economic region in France – 4,500 companies and 35,000 new employees Third largest economic region in France – 4,500 companies and 35,000 new employees 17
Euroméditerranée: transforming Marseille The largest urban regeneration project in Southern Europe representing €7bn of investment By 2020 Euroméditerranée will deliver 24,000 residential units units 1,000,000m 2 office space 200,000m 2 Public infrastructure 40 hectares parks and public space 18 18
Les Terrasses du Port facts and figures Section Les Terrasses du Port 4 19 Les Terrasses du Port, Marseille
Les Terrasses du Port 1,500m² food hall 190 shops and restaurants 61,000 m² 260m restaurant terrace Open 7 days a week 1,200m² event terrace 2,600 car park spaces 4 shopping levels 20 20
Project background Tender offer launched in 2003 by the Port of Marseille and won in 2006 by Forum Invest (FIF) A 70-year lease signed between FIF and the Port of Marseille Purchased in December 2009 for €35 million (including Purchased in December 2009 for €35 million (including Beauvais) Hammerson implemented major scheme design changes Enabling works August 2010, main construction started March 2011 Total development cost €485 million Net rental income €34 million IRR 14.5% Yield on cost 7% 21 21
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