Hammerson H2 2024 Earnings Report

Hammerson EPS Results

• Actual EPS: GBX 19.90
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Hammerson Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Hammerson Announcement Details

• Quarter: H2 2024
• Date: 2/26/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, February 26, 2025
• Conference Call Time: 4:00AM ET

Hammerson (LON:HMSO) is a cities business. An owner, operator and developer of prime urban real estate, with a portfolio value of £4.7billion (as at 30 June 2023), in some of the fastest growing cities in the UK, Ireland and France. Our portfolio and adjacent lands leverage our experience and capabilities to create and manage exceptional city centre destinations with the opportunity to drive value and reshape entire neighbourhoods. Our assets are high profile and play an important role in our communities, welcoming c. 175 million visitors each year and supporting 20,000+ jobs though our retail, dining and social occupiers. These destinations include Bullring in Birmingham, The Oracle in Reading, Dundrum Estate, Dublin and Terraces du Port in Marseille. We also hold investments in Value Retail, best-in-class villages such as Bicester Village, Oxfordshire. Hammerson also holds 80 acres of attractive pre-development and strategic land. This includes complementary adjacent land, creating optionality to enhance both the scale and diversity of the existing estate, and stand-alone land opportunities. These include Martineau Galleries in Birmingham and Bishopsgate Goodsyard, Shoreditch.

Hammerson H2 2024 Earnings Call Transcript

Presentation

[Rita-Rose Gagné, Chief Executive at Hammerson]

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 four years.

[Rita-Rose Gagné, Chief Executive at Hammerson]

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 non core 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 West Key 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.

[Rita-Rose Gagné, Chief Executive at Hammerson]

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 destination and we delivered another strong year, actually another record year of leasing. We did two sixty two leases signed on 1,000,000 square feet of space that generated $41,000,000 of rent and that is up two percent like for like. That represents $255,000,000 of rent contracted to first break. That is a long term of visible income stream and that is our business.

[Rita-Rose Gagné, Chief Executive at Hammerson]

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 reflected in the ERVs with like for like growth in all three geographies.

[Rita-Rose Gagné, Chief Executive at Hammerson]

The valuations in The UK are up 4.21.5% in France. Ireland was down 13% and that's due to the valuers 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 destination.

[Rita-Rose Gagné, Chief Executive at Hammerson]

So they are thriving. We welcome 170,000,000 visitors and excluding assets that are in major repositioning, footfall was up 2%, an extra 2,500,000 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, West Key was up 4%, Wolverine was up 3% after a big year last year and L'Etros Fontaine was up 6%. Sales performance was also good.

[Rita-Rose Gagné, Chief Executive at Hammerson]

They are up 5% in The UK and 3% in France. There were some standout performances on the portfolio. And then as an example, Bullring was up 11% in terms of its sales growth and that is the strongest performing asset in its UK peer group in accordance with the 2024 Lloyd's 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 drive the largest increases and where we have repositioned or introduced new brands or new formats, the sales densities are up 42% per square foot.

[Rita-Rose Gagné, Chief Executive at Hammerson]

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 UK was up 3% and France was up 8%. Ireland was down 3%, but that's largely due to a tough comp in 2023 was a great year for Dundrum and one significantly over rented unit in I LAC. Given the level of repositioning activity in the portfolio, like for like NRI was flat, but better than anticipated and GRI to NRI in flagship at a healthy 82%. As we said we would in 2021, we have invested in a new operating model, automation and digital tools to increase productivity.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Costs were therefore down another 16% year on year and that is ahead of our guidance. So adjusted earnings came in at $99,000,000 on the back of a strong Q4 and the four percent increase in the dividend reflects this overall strong performance and our confidence in delivering more growth in the years to come. We've already signed $9,000,000 of leasing in January and February, '10 percent above, but actually it's more than $9,000,000 I learned this morning. And that is 10% ahead of previous passing and 11% over ERV. So the trend is continuing strongly as we have fewer space.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Footfall continued to grow in January with particularly strong performances in West Key, which was up 8% and Bullring up 10%. This performance didn't happen by accident and it's not a new found strategy. It's the result of our wider strategy to transform and position the business we've been pursuing over the last four years. So we've strategically realigned the portfolio to 10 landmark destinations and 80 acres of strategic land, which are perfectly placed to benefit from three major positive structural trends. First, cities are engines of growth.

[Rita-Rose Gagné, Chief Executive at Hammerson]

I have a conviction on cities. The team has a conviction on cities. Our cities generate a third of GDP in each of their countries. Our catchment contains 40,000,000 of customers and the demographic is young, affluent with purchasing power 10% above average. Secondly, unified commerce is the dominant and most profitable model used by retailers.

[Rita-Rose Gagné, Chief Executive at Hammerson]

We've seen a renaissance in the physical experience for customers and brand partners. At least 80% of all retail transactions touch a store. That's the new normal. Customers who spend with our brand partners in store are also spending with the same brand partners online. So it's not one or the other.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Thirdly, flight to quality continues. Brands want fewer, better and more productive stores in only the best locations with the most resilient demographics. For example, it takes only 40 stores to reach 80% of The UK population, which is concentrated in urban areas. So as a consequence, the supply of this space is scarce and shrinking and that's where we are. These city destinations are vital to the social and economic fabric of their communities.

[Rita-Rose Gagné, Chief Executive at Hammerson]

They are treated as social infrastructure with the potential of a broader mix of uses. This sets them far apart from the obsolete shopping malls that do not possess the scale, the flexibility or the inherent brand value of our destinations. In many ways, I sort of think about them as a different asset class altogether. What we are doing is integrating retail, leisure and community hubs to engage customers and occupiers in our destination. So it's how we have positioned the portfolio and the strength of our operating platform that is driving our performance.

[Rita-Rose Gagné, Chief Executive at Hammerson]

And that is what gives me confidence as we look to 2025 and beyond. So let's walk quickly with Himanshu. He will give you the numbers and the modeling assumptions for 2025. But essentially the entry run rate of adjusted earnings is $85,000,000 if we adjust for the net effective of 2024 disposals and acquisitions. We anticipate growth of this base from investments in our portfolio and ongoing discussions on possible acquisitions.

[Rita-Rose Gagné, Chief Executive at Hammerson]

We see further earning growth from the full run rate of investments coming through in 2026. I'll come back to explain our growth drivers to get there and our medium term financial framework. But again, first we'll go to Himanshu to cover the financials of a very busy year. Himanshu?

[Himanshu Raja, CFO at Hammerson]

Thank you, Ishwariz.

[Himanshu Raja, CFO at Hammerson]

Good morning and thank you, Ishwariz again. Let's dive straight in. Reported GRI was down 21,000,000 year on year due to the impact of the disposals that Rita Rose has mentioned. On a like for like basis, GRI was up 1.6%, but with underlying GRI up 3% excluding the repositionings. Both reported and underlying NRI was flat on a like for like basis with underlying UK flagships up 3.1% alongside France, which was up 4.2% and offset by Ireland, which was down 6% due to the strong comps and the over rented unit that Rich Rose has already mentioned.

[Himanshu Raja, CFO at Hammerson]

You'll recall in terms of comps, the Ireland this time last year was up 6%. The overall GRI, NRI ratio was 77% and that brought home the adjusted earnings after good performance on both interest and finance costs to $99,000,000 The IFRS loss of $526,000,000 and no new news here of this $497,000,000 is attributable to value retail, which was valuation losses in the second half and the impairment on value retail and a much more modest net valuation loss therefore in the retained portfolio. Turning now to the balance sheet. Total property returns were up 2.1%, a positive income return of 5.7% offset by a capital return of minus 3.4%. And the total property return in The UK and France is up.

[Himanshu Raja, CFO at Hammerson]

The UK up 8.7%, France up 5.1% with Ireland and developments down. Net debt reduced 40% year on year with the resulting net debt to EBITDA of 5.8 times and LTV and FPC LTV at 30%. And therefore, I'm pleased to say we'll be retiring FPC going forward. The LTV is the LTV at 30%. Liquidity is £1,400,000,000 including GBP $814,000,000 of cash on balance sheet.

[Himanshu Raja, CFO at Hammerson]

So all really good numbers on capital structure. Now turn to the adjusted earnings walk. Keying off from $116,000,000 in FY 2023, NRI was down $16,000,000 from non core disposals. VR was also down reflecting its disposal in Q3 and a weaker in year P and L performance as well as the valuation loss that I mentioned on VR. Like for like NRI was down 1,000,000 and reflects the ongoing repurposing that we've already talked about.

[Himanshu Raja, CFO at Hammerson]

Non like for like accounts for the acquisition of West Quay, offset by $4,000,000 from securing vacant possession in the development portfolio and adverse FX. Our cost performance was strong. Gross admin costs down $8,000,000 and a net saving of $4,100,000 after the loss of property income from disposals. And with an average cash balance of $675,000,000 from both the disposals and our successful refinancings during the year, our net finance costs improved by $14,000,000 dollars But in turn, the tax amount always gets you. This meant our tax charge increased by $1,700,000 year on year as interest income falls outside the REIT wrapper, albeit that was slightly better than anticipated.

[Himanshu Raja, CFO at Hammerson]

And that rounds off the adjusted earnings walk to $99,000,000 And then on the right hand side of your chart for your models, you can see the annualized effect of the twenty twenty four disposals and acquisitions giving you a go forward run rate of $85,000,000 adjusted earnings as an entry for 2025. Onto the NTA walk. We start with $5.00 8p at the January 1, adjusted earnings adds 20p per share. And then you see the effect of value reseller 116p comprising the impairment of 111p per share and 5p from our share of the revaluation loss. Property revals and loss on disposals accounted for a further 20p.

[Himanshu Raja, CFO at Hammerson]

Dividends paid represents an outflow of 15p and the premium on our bond refinance was a further 5p. FX and other movements including share buyback totaled 2p, which brings home the NCA walk to $3.70 pence. And to valuations, our flagship portfolio is valued at £2,400,000,000 with like for like valuations up in The UK Four Point Two Percent, One Point Five Percent in France and down 13% in Ireland. It was great to see our positive leasing performance come through in ERV growth in all territories and to see positive income returns. The yields reflected in your transactional evidence in all geographies and were broadly flat in The UK and in France.

[Himanshu Raja, CFO at Hammerson]

And in Ireland, yields went down 90 bps, but Richard Rose has already covered that. And in Ireland, that means yield spreads to five year swaps are four forty bps, even higher than The UK at three forty bps and France at two sixty bps. And whichever way you look at it, you guys are low better than me historically pretty high, if not all time historical highs. So let's now move on to the balance sheet. We've already covered the strength of the balance sheet on the left hand side of this chart, but I'd just like to call out one or two highlights on the right hand side.

[Himanshu Raja, CFO at Hammerson]

First, the refinancing of the maturing facility on Dundrum with a new EUR $350,000,000 loan at 100%, the largest European secured financing in retail in 2024. And the second highlight was our £400,000,000 bond issuance in October, which on the back of improved credit ratings saw a seven times peak order book. The new issue proceeds were used to repurchase $412,000,000 of the group's 2026 and 2028 bonds. At high coupons, the average interest rate of the redeemed bonds was 7.1%. And therefore, our results in capital structure is completely transformed today.

[Himanshu Raja, CFO at Hammerson]

And you can see that on the debt maturity chart on the next page. The group's average debt maturity extended two point two years to four point seven years and the weighted average grossed interest rate increased by only 20 bps, a 3.5%, which is a function of retiring that expensive debt following the bond issue. Looking ahead of the $814,000,000 of cash, the 2025, '20 '20 '6 matures are fully covered and we expect to refinance the $574,000,000 of euro bonds maturing 2027 in the ordinary course. And so to my last slide, the modeling assumptions. Richard Rose has given you the short answer on guidance, which is that off our new base of $85,000,000 we anticipate further growth from our investments in our own portfolio and in acquisitions.

[Himanshu Raja, CFO at Hammerson]

The benefit of these will naturally depend on timing. For those of you guys in the room who prefer modeling line by line, there's a very detailed guidance in the back of your packs. And of course, offline, you can pick up with Josh or myself and we look forward to guiding you through those. I'd also like to just spend a minute on CapEx. We get a lot of questions on CapEx.

[Himanshu Raja, CFO at Hammerson]

For 2025, pension CapEx of around $85,000,000 dollars That's $30,000,000 for repositioning and $55,000,000 across $25,000,000 and $26,000,000 So $30,000,000 20 5 million dollars 50 5 million dollars 20 5 million dollars 20 6 million dollars for asset enhancements and placemaking, dollars 10,000,000 to complete the ironworks and up to $15,000,000 of what we call light touch development CapEx. And again, there's a detailed slide in the appendix on how we will fund this between balance sheet and FFO. The key point here being that we've got a strong grip on CapEx. We've always been and we'll remain disciplined in the deployment of CapEx. And lastly on guidance returns to shareholders, assuming the buyback continues at the current rate through 2025 and assume a dividend payout ratio within our 80% to 85% payout range.

[Himanshu Raja, CFO at Hammerson]

With that, back to Ishvos.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Thank you, Himanshu. So we've covered 2024 highlights and the key financials with a view on 2025. Now let's discuss our steps to drive growth. And first, I want to take a moment to talk about the track record of the last four years because that is what gives us the foundation for growth. So in 2021, we set out to realign the portfolio, the platform and the balance sheet to be all aligned to our vision around prime city destination with community at their hearts.

[Rita-Rose Gagné, Chief Executive at Hammerson]

In doing so, we completed 1,500,000,000 of disposal. We reduced net by 64 net debt by 64% over that period. So today, as we mentioned, we have one of the strongest balance sheets in the sector with net debt to EBITDA 5.8 times and that was 14.1 times when I started. So we have room to grow now. At the same time, we've rebuilt the platform.

[Rita-Rose Gagné, Chief Executive at Hammerson]

We've increased our efficiency and reduced our cost by 36%. For me, the hard decisions have been taken there and we will continue to create additional operational leverage from this point on. We identified space that needed repositioning early on, on the journey and invested $112,000,000 at our share to attract new brands and more diverse mix of uses. Over the period, our occupiers have invested $350,000,000 into our stores. So that's a very strong endorsement of our proposition.

[Rita-Rose Gagné, Chief Executive at Hammerson]

In doing so, we were tackling the rebasing of rents, as you know, notwithstanding that we managed to create tangible rental tension and we decreased the vacancy and rents are now growing. There's more to come on that. Overall, again, over this period of four years, we secured nine fifty six long term leases, totaling $156,000,000 of annual rent on an average of 32% over passing rent and 4% over ERV. And that equates to SEK 1,100,000,000.0 of rent to contracted first break. 50% of the portfolio has been actively churned since full year 2020.

[Rita-Rose Gagné, Chief Executive at Hammerson]

We are still working some old leases and structures out of the portfolio, some of which are over rented. However, all territories are now reversionary. During that time also, we've grown the flagship rent 4% like for like to $174,000,000 of annual rent. We enhanced returns to shareholder, returning it to a cash dividend in 2023 and we progressively increased the payout ratio and commence the buyback program. We've also embedded fully funded net zero asset plans into our business plans.

[Rita-Rose Gagné, Chief Executive at Hammerson]

UK EPCs are already fully compliant and there's not much to do to meet the 2027 standard and that's great news. And we have already reduced our carbon emissions by 43% like for like. So we have a clear pathway to net zero by 02/1930. And you'll find more details of that in your packs in the appendixes. So we did what we said we would do.

[Rita-Rose Gagné, Chief Executive at Hammerson]

All these metrics support our success. And today, we have the strongest balance sheet and we have started to deploy capital in a disciplined and accretive manner. All of this gives me confidence in our ability to generate growth. And now, let me tell you about how we build that growth. You'll recall on the right hand side of or the left hand side of this slide that I laid out the medium term financial framework.

[Rita-Rose Gagné, Chief Executive at Hammerson]

I did that sometime this summer or this fall. The chart on the right shows you the growth drivers of our base and sets the agenda for the rest of this presentation. Starting from the right hand side, there are five key drivers of growth here. First of all, the asset repositioning, we'll talk about that. Targeted leasing, now that we've created the scarcity and the rental tension, placemaking and events, new income streams and JV consolidation and other acquisitions.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Now I've skipped over the platform and the refinancing as we've already covered those. Needless to say, we expect to generate further operating leverage. The key overriding message of these growth drivers is that we anticipate significant earnings opportunity in the medium term. And there's also a fixed growth driver where we have optionality and flexibility on a compelling pipeline of redevelopment and development opportunities. So let's now look at each of these growth drivers in a bit more detail.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Turning to the first, organic growth in existing assets and repositioning. You'll be familiar with our success in the stories of Dungrum and Bullring and the high returns achieved shown on the left hand side. The key takeaway here is that we've been we're still living the halo effect of these investments as they unlock the next phase of leasing. In Dundrum, we contracted a further $45,000,000 of rent to first break in 2024, including key up sizes with leading global brands. There are two first for Ireland.

[Rita-Rose Gagné, Chief Executive at Hammerson]

There's Line seven, which is Boeing and we are building with them our relationship on the back of their successes in bowling. And the first fifteen units of social housing were delivered on our Ironworks residential project, which is set to complete this year. With only incremental CapEx in 2024, that all means that Dundrum delivered a total of $150,000,000 of contracted rent of a $33,000,000 of investment at 100%. If we now look at Bullring, we secured another $50,000,000 of contracted rent in 2024 for this asset, including new lettings with Space NK and a partnership between Adidas and Aston Villa, etcetera. There are others that have been signed in the last days I can't mention, as well as leasing and opening of Sephora.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Again, that means at Goling a total of $89,000,000 of contracted rent was delivered off $32,000,000 investment at 100%. On the back of these successes and the experience we gained doing that, we are confident in the current repositionings at Cabot Circus and the Oracle. Those were initiated in 2024 and they are going to be delivered in 2025 with the full benefit coming in, in 2026. So Cabot Circus is slightly ahead on its journey and 2024 was a year of reinvestment there with 8,000,000 deployed at 100% to re anchor the retail and the leisure proposition. So we secured a vacant possession of the House of Fraser and Showcase in the first half of twenty twenty four there.

[Rita-Rose Gagné, Chief Executive at Hammerson]

We're welcoming two new occupiers with their latest concept. So a full range M and S and a premium offer from Odeon, both will open in 2025. These anchor investments underscored the enduring strength of the scheme and of the catchment. And they precipitated as always a flurry of leasing and allowed us to attract existing and new retail and leisure brand partners. Again, there's things that have been signed we can't talk about yet, but promising a year for $25,000,000 The repositioning of so overall, if I finish on this asset, that means we saw $43,000,000 of contracted rent to first break in Cabot and our occupancy improved from 93% to 97% in this destination.

[Rita-Rose Gagné, Chief Executive at Hammerson]

The repositioning of Crackers Friars in this asset affords the opportunity to bring a greater mix of uses, including cultural and healthcare. And that's in line with our strategy. Planning has been submitted there and we may have the possibility to commence that in the second half of twenty twenty five. Now turning to Oracle, we've commenced a 25,000,000 works program at 100% to repurpose the former house of Fraser there and to enhance the Riverside experience and F and B offering and improve our entrances and circulation in the estate as a whole. So we do have around 40% of the asset of the space in scope, which makes it our most material repositioning to date.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Two thirds of the former department store space is already let. In fact, we've just handed over to Hollywood Bowl and TK Maxx with new formats and they are going to be opening in 2025. So we're in advanced negotiations for the remaining third and as with Cabot Circus, our investments have reinvigorated demand across the destination. For the medium term, we are awaiting final planning for a built to rent scheme in the former Dedanen space. And that would add a new use, a new customer and densify the estate.

[Rita-Rose Gagné, Chief Executive at Hammerson]

And there's further residential opportunity on this overall site. Now the second growth driver, leasing. Leasing is a core part of carefully curating the right mix in all destinations and offer the right product to our brand partners and also cater to the local demand and the local communities. While we are diversifying uses, 45% of leasing value in 2024 was with the leading global and national fashion brands and they're the ones that the consumers are demanding. Health and beauty, jewelry and services comprised a sizable portion and increasing portion of 37% of leasing to non fashion.

[Rita-Rose Gagné, Chief Executive at Hammerson]

And then expanding and improving our grocery, F and B and leisure offers made up most of the balance of our leasing and sales were up on those categories. Across the portfolio, we continue to increase the richness of our offering and generate incremental income and placemaking and events is something that we will do more and more. So the third growth driver is about placemaking and events. We have a digital team in house and they drove higher levels of engagement in digital channels in 2024 with our social media followers up 16% to 1,200,000. This has increased percent to 1,200,000.

[Rita-Rose Gagné, Chief Executive at Hammerson]

This has increased digital reach and that complements our physical reach and it supports the football and sales. As you know, our destinations have some uniquely attractive areas and space for events. And I'll just give you a few examples because there was a lot this year. So the Olympics line came to L'Etheras du Parr. We secured three Team GB fan zones in Bullring, Cabot And Circus and West Quay, drawing 12,500,000 visitors over twelve weeks.

[Rita-Rose Gagné, Chief Executive at Hammerson]

We hosted Sound Up Musicals West End show in West Quay's events Esplanade, which attracted 65,000 attendees. And then the opening of Sephora at Bowling in November demonstrated the power of our physical and media assets. We have a strong relationship with Sephora in France and we renewed them at Le Terras in 2024. Our insights had showed us that Sephora was the most in demand brand for Bullring and we made that happen. We developed and delivered what we call a total domination package completely tailored to Sephora.

[Rita-Rose Gagné, Chief Executive at Hammerson]

This was a paid for marketing campaign, combining events, advertising, media screens, which we have a lot of on the portfolio and digital reach. It saw the Sephora brand taking over Boeing for a total of six weeks essentially, And it was a huge success. So ahead of the opening, we had customers camp out overnight. The store saw 140,000 passers by just in the first few days and 8,000 visitors per day in the first week and that continues to be strong. So the footfall in this area was up 29% week on week.

[Rita-Rose Gagné, Chief Executive at Hammerson]

And again, it's a big draw and what's good for Sephora is good for us. Moving on to our fourth growth driver and that is complementary to what I just spoke about and it's about new income streams. So we were able to closely track the performance of Sephora due to our investments over the years in AI enhanced tools and datasets. These technologies allow us to track trends and better understand the customers, the value of our place, the space strengthening out the bargaining power and informing our decisions. So I'll just give you another quick example of that.

[Rita-Rose Gagné, Chief Executive at Hammerson]

So we opened of how the data we get helps us. So then opening of Seidman at Bullring, for those who don't know, they are Europe's largest YouTube collective group with 138,000,000 subscribers. So it drew an incremental of 80,000 visitors to a formally vacant area of the destination over that weekend and equating to around 13% of the week's total footfall. We were able to track that 15,000 visitors entered the store in the first week and there was a capture rate of 12%, which is far above what you typically see in physical and online averages. Our media screens also saw a notable pickup in audience during the same period.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Our insights also showed us that segment attracts a younger customer and we also saw an increase in footfall and sales related and we saw that effectively relating to the type of F and B and leisure brands that the population was going to. So this is a lot of data to help us position our leasing and our commercialization. So it's all a win win. And as shown by the testimony that you have on the slide from someone from Seidman, we can see the benefits of understanding the data and being able to talk about it. So there's also there is a possibility to generate returns of that to grow the top line from better monetization of our media assets.

[Rita-Rose Gagné, Chief Executive at Hammerson]

And we're excited about the possibility ahead and we're actually accelerating the rollout of this platform in 2025. Now the fifth growth driver is focused on acquisitions. So six weeks after completing the disposal of value retail, we recycled capital from an exit cash yield of 3.4% to gain 100% of West Key at a high single digit. So that was a good piece of business and there's more to be delivered on that. Our pure play operating platform puts us in a unique position to better underwrite the risk return profile as long term stewards of our destinations.

[Rita-Rose Gagné, Chief Executive at Hammerson]

And we see a remaining indicative opportunity set of $450,000,000 to $500,000,000 of JD acquisition. We remain also alive to any outstanding opportunities in the top tier city catchments consistent with our landmark destination strategy and disciplined approach to capital allocation. Now the final growth driver has to do with redevelopment and the development pipeline. So it's important to understand here that there is a sequence to these. First, obviously, there is the current repositioning and we've spoken about that and we're on that at the moment.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Then we have near term redevelopment opportunities and these have a time horizon of about from now to three years. Medium term, which we estimate is about three to five years. And then we have projects that we classify in the long term bucket, which is think about five years and more. Again, we're focused now on the repositioning of our core destinations, which you're familiar with, so Cabot Circus, Quakers Friars, the Oracle, Sergey. Now the estimated CapEx spend there in the next two years is around, as Himanshu said, million with a growth development value of around million.

[Rita-Rose Gagné, Chief Executive at Hammerson]

You have that in the far left side of the slide. So we're funded for those. Of our near term redevelopments, at the moment, we're committed to one, which is ironworks at Dundrum. This will complete this year. So there's about 10,000,000 remaining spend at our share there.

[Rita-Rose Gagné, Chief Executive at Hammerson]

A great example, that project of a residential project, which also densifies the estates while offering good risk adjusted returns and new more diverse and secure income that is bolted on to the asset. Moving to the right hand side, when we talk about the medium term, there's further potential growth development value of about $470,000,000 at our share. Longer term opportunities, both on existing destinations and stand alone assets comprise a further $4,400,000,000 of growth development value at our share. In all of these projects, we continue to analyze all potential alternatives for delivery depending on scale, depending on the market circumstances at the time a decision has to be taken. So this could include developing ourselves.

[Rita-Rose Gagné, Chief Executive at Hammerson]

It could include working with partners or it could include sites sales at the right price. So importantly, there is no funding commitment decision required before 2027 given where these sites are at different places in their timeline and their planning processes. So the particularity of our sites though, and why they are so valuable is that they are mainly surrounding our estates and they will they have the potential to add value in many ways in the years to come. So when you think about it, our pipeline has a lot of mixes of uses and it does include up to 7,000 residential units and that would add further density to a number of our destinations in time. So in the meantime, putting that aside, we have plenty to be getting on with on the short term to deliver value quickly and it does show the flexibility and the breadth of the opportunity that we are creating in this portfolio.

[Rita-Rose Gagné, Chief Executive at Hammerson]

As said, we will remain disciplined and select the best returns for the shareholders at the right time of decision. So to close now, as you can see, it's about growth and we have a lot of opportunity in the portfolio. And I'm really pleased of where we are today. And I'm really proud of the team and together we're all excited about the future and aligning aligned on a vision. With the turnaround behind us, we now have the right assets, the right platform, the right balance sheet, the right team and that all comes at the right time.

[Rita-Rose Gagné, Chief Executive at Hammerson]

We have more to do in an environment that remains uncertain, but I am confident that our portfolio is well positioned to drive rental and earnings growth from the high demand that is of the for the scarce relevant space where brands are consolidating. And before we go to Q and A, I'd like to play you a short video. It brings to life what we're doing at the moment. So it brings to life the power of a premium brand space, a leading global brand and placemaking for

the perfect for the perfect site. We knew we had to be in Birmingham, and the Bullring was the only option for us. To open the doors here today is such a treat because their reception has been phenomenal from

the local Brumby community.

We have the war up.

This isn't just about delivering the new store, but also the launch. It aligns exactly with what we're trying to do. We're trying to bring in new audiences into our destinations and give them a big payout. It's not just about the shopping. I'm so excited that my heart's gonna explode.

I'm so excited because it's finally in front.

It's buzzing. The atmosphere is amazing. So, yeah, it makes it all worth

while. The support from Hammersden and everyone at Bullring has been absolutely amazing all the way through. And the support from the security teams overnight for all of the hundreds and hundreds of people that were here camping out was just brilliant. So huge, huge, huge shout out to Siphora also.

[Rita-Rose Gagné, Chief Executive at Hammerson]

So on that, we will now open to Q and A. Thank you.

[Joshua Warren, Director of Strategy, Commercial Finance and Investor Relations at Hammerson]

We'll go to the room first and then we'll go to the phones. I think Rob Jones

[Joshua Warren, Director of Strategy, Commercial Finance and Investor Relations at Hammerson]

had his hand up first.

[Robert Jones, Operations Oversight Analyst at BNP Paribas]

Yes. Thanks. So Rob Jones from BNP Paribas. I've got three that are slightly less exciting than that video, so apologies in advance.

[Robert Jones, Operations Oversight Analyst at BNP Paribas]

One on occupied market, one on admin costs and kind of two parts from CapEx. Occupied market for 25%, you've already touched on the fact that you've been doing leasing 10% of our previous passing, 11% ahead of ERV, which is obviously good numbers. You also talk about having the confidence when you look through $25,000,000 I guess, A, what gives you that confidence to, I guess, get to a position where we can think about the $85,000,000 of earnings being the base, but obviously one driver of growth of that number will be the success of leasing activity through the year.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Yes.

[Robert Jones, Operations Oversight Analyst at BNP Paribas]

On the admin side, you guided to, I think it was a 10 saving.

[Robert Jones, Operations Oversight Analyst at BNP Paribas]

You beat that quite substantially, 16% saving. What was the driver behind that? And are we now in a position where you don't need to take any more cost out of the business? Because obviously the director of travel is growth of AUM going forward and also a reduction, yes, for cost ratio associated with that? And the final one on CapEx, so $85,000,000 Himanshu, do you think about a kind of required returns hurdle on that CapEx, maybe a spread over the cost of debt or a spread over the asset yield or an absolute figure, just to kind of how you think about that kind of go, no go decision?

[Robert Jones, Operations Oversight Analyst at BNP Paribas]

And then finally, if you would you bring the Brent Cross regeneration forward from a nearer time horizon than that kind of five year plus view if you owned 100% of it?

[Himanshu Raja, CFO at Hammerson]

Four, but anyway, I'm not counting.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Four years there. Okay, thanks. So let's go back to your first question around the occupier market because obviously our strategy does have that is driven by the performance of the leasing. I think the answer there is just the way we've positioned the portfolio. As I said, I mean, this is about being in the best possible places accessing population.

[Rita-Rose Gagné, Chief Executive at Hammerson]

So the brands are consolidating to fewer, better places. I've mentioned that in the presentation and that continues and we don't have a lot of space and that type of space city center that enables occupiers to operate their business in a more efficient way also operationally being in the center of everything. It's just scarce place. So we're obviously alert to the fact that occupiers will go through also their uncertainties around the budgets, etcetera. But given the type of strategy and the occupiers that we're attracting on the portfolio, we don't think that's going to change the demand.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Actually, the contrary, it's a time where they do want to consolidate it and to operate more efficiently. And just bear in mind, again, that the rents are affordable. So rents are 10% of sales. So I think that's the whole thesis for our strategy. So confident there.

[Rita-Rose Gagné, Chief Executive at Hammerson]

And again, it's been over four years. There's been so much going on in the market and so much times people were very nervous around the demand, around the consumer, but it is there. People are out and about, there's activity and it's a question of reducing the supply and making sure you're in the best supply and making sure you're keeping it relevant and you're investing in your properties. In terms of the cost, you asked me the what are the underlying drivers of the cost reduction. I would say to you that obviously over the last four years, it's been different things.

[Rita-Rose Gagné, Chief Executive at Hammerson]

I mean, when you think about when I came in, there were over close to 600 of headcounts. There was the costs were about $25,000,000, 20 6 million dollars higher. There was a complicated business model. So there's a lot of things that just have been changed over the four years. And today we're about 125 with the new operational model.

[Rita-Rose Gagné, Chief Executive at Hammerson]

So the big decisions, the hard decisions have been taken. I would say to you that a game changer now is the investments that we've also been doing on the automation and the AI enhanced capabilities. So that does drive better. There's some hard costs we've been able to take out of the business. It drives more efficiency and you continue to have that.

[Rita-Rose Gagné, Chief Executive at Hammerson]

But I think the bulk of the work is done because don't forget, we are scaling back up. So we do need to create leverage with from this base. So on the CapEx, Himanshu, I'll give that one to you.

[Himanshu Raja, CFO at Hammerson]

Thank you. Rob, so far, it's not been very challenging decisions. The hurdle is over the waste average cost of capital. When you look at the repurposing investments we've made, our initial underwrites, for example, at Bullring and Dundrum were 15%, twenty % IRRs. We've blown the doors off those and you've seen that in the contracted rents that we've delivered.

[Himanshu Raja, CFO at Hammerson]

When it comes to then the investments like Ironworks, again, we look to yield on costs and what it does for the overall portfolio. We are rightly cautious about the medium and longer term CapEx, where today notices are required before 2027. The light touch CapEx all builds incremental value on that land bank. And therefore, we remain open to seeing where the market settles in each local market. So none of these kind of grand corporate level plans and to seek the best risk adjusted returns at that time.

[Robert Jones, Operations Oversight Analyst at BNP Paribas]

Brent Cross.

[Himanshu Raja, CFO at Hammerson]

Brent Cross, would you bring forward, I think you asked a five year development that you've on that one?

[Rita-Rose Gagné, Chief Executive at Hammerson]

Yes. Listen, Brent Cross, we're active on the short term reinvigoration of the asset, so around the asset and creating and increasing the quality of the leasing, etcetera. There's a long term vision. It is a long term vision, and it's placed in that bucket because the reality is that I can be marketing and say, hey, that's great. But the reality is it has to go through different stages.

[Rita-Rose Gagné, Chief Executive at Hammerson]

We need to align stakeholders and that's going to take a few years. So again, we expect to do that, but it's a five to ten year venture.

[Bjorn Zietsman, Director - Equity Research Real Estate at Panmure Liberum]

Hi. Bjorn Ziesman from Panmun Librium. Just a few questions for me also on the underlying occupier market. A number of retailers have guided to earnings pressure. That's as a result of Employer NI coming through in the second half.

[Bjorn Zietsman, Director - Equity Research Real Estate at Panmure Liberum]

Do you see some of the rental tension that you've experienced subsiding as a result over the near term? Then another question on IRRs. You mentioned the circa 20% IRRs achieved on recent projects. Do you expect similar levels on the Oracle and Cabot? And then finally, considering the record spreads above swap rates and your strong balance sheet, is there not an argument that you could sweat the balance sheet harder and take advantage of acquisitions over and above the $450,000,000 to $500,000,000 that you have already earmarked?

[Rita-Rose Gagné, Chief Executive at Hammerson]

Good question, as always. In terms of the occupier demand specifically with the NI topic, I mean, obviously, as I said, it will it does impact the occupier's margin, but we didn't see any as I said, since fall and over the last month and into January, February. The reason being that as you saw in the media, some are looking to absorb the hit, some had already started efficiency programs and automation and AI initiatives, others will pass on increasing, they're going to manage it in different ways. So again, and if they are, that's where it comes the thesis of fewer, better places. So realigning their cost base and making sure they're getting into the right, the most profitable and areas where they can manage their costs and they can make the highest density sales, which we're offering in our assets.

[Rita-Rose Gagné, Chief Executive at Hammerson]

So again, I don't see the change in demand. It's just because of this, the scarce supply is what I would say, and the type of brands that we're attracting in the assets. In terms of the IRs, yes, in terms of Cabot and Oracle, definitely. I mean, it's the same program that's replicated there. And you've seen the contracted rents that we're able to block for years and years with investments with the level of investments, it just tells you that IRRs are quite are very attractive.

[Rita-Rose Gagné, Chief Executive at Hammerson]

So yes, the same level of levels of IRRs. And I think those were the two questions in terms of the deployment of capital. Yes, we've guided in the medium term framework, steady state 30%, thirty five % LTV. But I think should we at all a question for us at the moment to scale up the company, we're pure play specialists in what we do and if we can increase that by our asset or also outside opportunities, we will and we can and we have the balance sheet even at the moment to do that. Could we temporarily go over and above the 35%?

[Rita-Rose Gagné, Chief Executive at Hammerson]

Yes, I think if it makes sense, it's strategic and it creates value, we would make that call is what obviously we've worked super hard to get where we are on balance sheet. We will safeguard that, especially in an environment that remains uncertain, but we're carefully charting around that and we'll make choices also, capital allocation choices along the way. We've always been good at sequencing carefully and always making sure we can do the critical things at the right time and not trying to do everything at the same time. So that's a long answer for your questions.

[Edoardo Gili, Senior Analyst at Green Street Advisors, LLC]

Good morning.

[Edoardo Gili, Senior Analyst at Green Street Advisors, LLC]

This is Eduardo Gilead from Green Street.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Hi.

[Edoardo Gili, Senior Analyst at Green Street Advisors, LLC]

Just one for me in terms of the GBP 500,000,000 JV acquisition opportunity. How does that compare to your CapEx return expectations? How do you deploy capital between CapEx and acquisitions? And what is if you have a spread in mind between those two capital deployment opportunities?

[Rita-Rose Gagné, Chief Executive at Hammerson]

Well, it's very different capital opportunities. So you it's part of the best possible capital allocation decision. So if you look at CapEx or it's about creating it's about creating better assets and it's important to support the overall growth at the estate. And then if you have and typically they are they have a higher return and they're shorter term to execute. The risk return profile is different.

[Rita-Rose Gagné, Chief Executive at Hammerson]

So you'll calibrate your returns accordingly. When you look at outside acquisitions, it's going to depend on the type of acquisition. But obviously, as Himanshu said, the big guidance is cost of capital and then you have to assess the risk and the strategic value of the specific opportunities and calibrate different types of returns for different types of risk profiles.

[Analyst]

Hi, thanks. Good morning.

[Analyst]

It's Tim Lawson at HSBC.

[Analyst]

Just a question on like for like gross rental income, it's up 3% year on year. Just wonder how much of that was driven by increases in the base rent and how much was driven by growth in the more variable elements like turnover car park commercialization income and how should we think about those going forward?

[Rita-Rose Gagné, Chief Executive at Hammerson]

It's mainly driven by the base rent. I mean, that's the big part of our revenue on the portfolio.

[Analyst]

All right. Thank you.

[John Cahill, Managing Director - Real Estate at Stifel Institutional]

Good morning. John Keil from Stifel. You've given some really clear guidance on your near term and medium term schemes, which were very helpful. Thank you. I just wanted to ask about the long term schemes, particularly Goodyard, etcetera.

[John Cahill, Managing Director - Real Estate at Stifel Institutional]

You said that there are various outcomes for those schemes, but how realistic is for instance developing yourself or going into JV partner? Is the problem less having access to the capital to do it? But more that as you get close to pushing the button to say go, you go into a whole new category of risk in the listed equity market. I disagree with the way the list equity market treats companies in this way, but we think of St. Modrin at Nine Elms, capital in Kansas at Earl's Court as great as those schemes were on a lifetime basis.

[John Cahill, Managing Director - Real Estate at Stifel Institutional]

Once you start getting close to starting the beginning on them, the equity market gets very, very nervous indeed. Can you really go ahead with them?

[Rita-Rose Gagné, Chief Executive at Hammerson]

Listen, it's absolutely the considerations that we think about when we think about our development pipeline. But again, these are quite long term. We're talking about five to ten years. So we don't situation will be different then, the market will be different. At the moment, doing development is quite challenging to get viable projects.

[Rita-Rose Gagné, Chief Executive at Hammerson]

So fortunately, we don't have those decisions to take now. But there is a notion of how much you can do in your REIT vehicle. So the level of activity you are. And as I said to I just said, the risk profile of some given developments, and we're mainly focused on earnings and operating our core property. So I think if you're just asking me a question of what's going to be in five years and we're going to be in a different position or the environment will be in a different position.

[Rita-Rose Gagné, Chief Executive at Hammerson]

I think that I've always wanted to keep these land and development projects because they are very valuable and it's very light touch capital. You create the land value and the site preparedness in order for us at the right time to decide, well, can we do this and how will we structure ourselves? Can we do that at 100%? Can we do it with a partner? Do we sell?

[Rita-Rose Gagné, Chief Executive at Hammerson]

And you might see us, I said it in the presentation, you might see us sell a few sites, even in 25. So it's a careful selection. It all has to be in line with our overall city strategy. And then I really would like to answer to you all your questions with my cap of today, but it's that's why we're segregating the pipeline because someone can come in and tell you, hey, I have a big development pipeline of $5,000,000,000 isn't that great, but unrealistic to say that it's all doable today and how it's going to be done. It's just not how we work.

[Rita-Rose Gagné, Chief Executive at Hammerson]

We're very selective in creating the steps to the journey, making sure we can do what we have to do and do it right and do it doing more of the short term risk return thing. And then the planning will bring us to different times of decision in time. They're just not all feasible at the same time. So, I don't know if that answers gives you a view, but all options are open at the right point in time.

[John Cahill, Managing Director - Real Estate at Stifel Institutional]

That's very helpful. Thank you.

[Joshua Warren, Director of Strategy, Commercial Finance and Investor Relations at Hammerson]

It doesn't look like any more questions

[Joshua Warren, Director of Strategy, Commercial Finance and Investor Relations at Hammerson]

in the room. So should we just check the phone lines? I think there's a couple of people waiting.

[Operator]

Thank you. We'll take our first question from Mark Mossey from The Bank of America.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Hi.

[Marc Mozzi, Managing Director, Head of EMEA Real Estate Equity Research at Bank of America]

Yes.

[Marc Mozzi, Managing Director, Head of EMEA Real Estate Equity Research at Bank of America]

Thank you very much. Hi, very good morning. I have three questions from my side. The first one is on your like for like net rental growth, which is flat over the year. And if I understand correctly, it has been negative in H2.

[Marc Mozzi, Managing Director, Head of EMEA Real Estate Equity Research at Bank of America]

Can you let us know what has been the driver of this negative growth in H2?

[Rita-Rose Gagné, Chief Executive at Hammerson]

Go ahead.

[Himanshu Raja, CFO at Hammerson]

Yes, principally that we've begun to take vacant possession on some of our development portfolio. So one of the enhanced disclosure we gave was the GRI and RI ratio on flagships versus the total. So it's vacant possession as we begin site preparedness.

[Marc Mozzi, Managing Director, Head of EMEA Real Estate Equity Research at Bank of America]

Okay. Thank you. My second question is on the, I would say, absence of precise guidance for 2025. It looks like you have all in your hand to give us a range at least of an EPS for 2025. And I was just wondering what has been preventing you to give us any EPS range, at least a range for '25?

[Rita-Rose Gagné, Chief Executive at Hammerson]

Well, listen, the what we're giving a lot of detail, but I would say that there's things that will move the timing of acquisitions for one, that will move and at the moment, it's going to depend on that. And I think that's the main element probably that has to be specified. That's it.

[Marc Mozzi, Managing Director, Head of EMEA Real Estate Equity Research at Bank of America]

Okay. So that's only due to that ongoing well, your acquisition plan. You don't know when something's going to be completed or not?

[Rita-Rose Gagné, Chief Executive at Hammerson]

Yes, exactly.

[Himanshu Raja, CFO at Hammerson]

Timing, yes.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Timing, yes.

[Marc Mozzi, Managing Director, Head of EMEA Real Estate Equity Research at Bank of America]

Timing, okay. And my final question is on your LTV guidance. What should we consider as a kind of a range or a threshold? You don't want to go both in terms of LTV plays because you're planning potentially million, million of acquisition and that is going to move eventually your LTV higher. Do you have any threshold in hand?

[Marc Mozzi, Managing Director, Head of EMEA Real Estate Equity Research at Bank of America]

Thank you.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Thanks. As I said, if you refer to one of the slides in the portfolio medium term financial framework tells it gives you a range of steady state now to 30, 30 five percent and our steady state is the reality is that we also have acquisitions in the steady state. So that's pretty much the range. If there are additional opportunities, of course, temporarily we could go up a bit around those. And the other key criteria around the balance sheet is the net debt to EBITDA.

[Rita-Rose Gagné, Chief Executive at Hammerson]

So we gave a guidance of being about at 6.8 or at 5.8, six to eight times net debt to EBITDA. So that sort of gives you the overall framework we're working around.

[Marc Mozzi, Managing Director, Head of EMEA Real Estate Equity Research at Bank of America]

And I'm sorry, I'm just coming back on your on my question because timing of acquisition is one thing, but you could have provided us an EPS guidance excluding acquisition. And I don't understand why because you're so detailed, but I don't see why we don't have this kind of guidance.

[Himanshu Raja, CFO at Hammerson]

I mean, let me respond to that. I've given you in the appendix a line by line P and L guidance and then make ourselves available, Josh and I and the team to kind of walk you through that. We've got a number of moving parts in the portfolio. You saw what happened on Dundrum and Bullring, for example, and how those came through to drive really positive growth from those. You can extrapolate from those and we'll help you as to when the Cabot and the Oracle lettings go live.

[Himanshu Raja, CFO at Hammerson]

We'll get the full year benefit of those in 2026 and on and so in the interest of time, I think we'll help you with the modeling and the line by line guidance offline.

[Marc Mozzi, Managing Director, Head of EMEA Real Estate Equity Research at Bank of America]

Thank you very much. Really appreciate it. Thank you.

[Operator]

We will take our next question from Paul May from Barclays.

[Paul May, Director at Barclays]

Hi guys. It's a couple from May.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Hi.

[Paul May, Director at Barclays]

Just following on from Mark's question on the NRI. I suppose the question is, there's a lot of positive headline numbers with regard to leasing versus passing and leasing versus ERV. But as yet, we're not really seeing that flow through and I appreciate the vacancy point around developments, but when should we expect to see those numbers actually flowing through into cash flow and earnings over time? Appreciate the building blocks you've given on the $85,000,000 and the timing there. I think that's very useful.

[Paul May, Director at Barclays]

Just wondered, are you actually in active discussions on acquisitions as of now? Should we expect something soon? Or is there likely to be a sort of second half waiting on those deals? And then the final one, I appreciate you sort of guided to net debt to EBITDA, sort of 6% to 8% range. I think you're one of the few that actually focuses on that as a metric, which is good.

[Paul May, Director at Barclays]

But you've worked hard to come down to 5.8%. That's kind of in amongst it around the sort of global peers. Should we say it could even be on the slightly high end? The incoming we have for investors is actually at anything above five is still too over levered for a lot of generalist investors. So I just wondered why the six to eight range, why not lower seeing as you've worked hard to get it into that five to six range, which is on a global perspective is sort of seen as more normal.

[Paul May, Director at Barclays]

So I just wonder what your thoughts there. Thank you.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Okay. So for your first question around cash flows, NRI, etcetera, at the moment, again, we're not standing still in this portfolio. So we are doing major repositioning. The Cabot and Oracle, it's about 40% of those assets that are vacant at the moment. So obviously, that does impact the NOI and that as we said is going to be delivered this year and you're going to see the flow through of that.

[Rita-Rose Gagné, Chief Executive at Hammerson]

In terms of the exact timing, it's over the year and ultimately full run rate in 2026. In terms of the acquisitions, listen, I just you'll understand that I won't give any specificities on timings on that in terms of we're in current several discussions and we're looking towards delivering those over '25.

[Himanshu Raja, CFO at Hammerson]

And on your balance sheet question, Paul, look, when we look to the IG ratings and our discussions with both Moose and Fitch, that six to eight times is a good range. As we scale up, you recognize we manage 4,000,000,000 of AUM today, but at share that's 2.6. And when you do something like a West Quay acquisition, you get the benefit of the earnings that we managed. And therefore that helps your net debt EBITDA. We'd see more of that same coming through.

[Himanshu Raja, CFO at Hammerson]

So is it 5.5%, is it 6%? It's close to the 6% than it is the 8%. And it's that commitment to an IG rating that determines that six to eightth. Should we go outside the range, because we see opportunities ahead, then we'll prefer to do that. But we think close to sixth and eightth.

[Paul May, Director at Barclays]

Percent. Just a follow-up if I can on that. On the IG rating point, I think Europe is a oddity because I think if you look at the credit rating issues on The U. S, they focus on their EBITDA and I think all companies in Europe would be junk rated if they brought the same thresholds into Europe. Do you see any risk that that becomes more of a focus for the rating agencies from the conversations you've had?

[Paul May, Director at Barclays]

And actually they start to look at cash flow metrics ultimately far more in focus because given the rate environment we're in now versus where we were previously.

[Himanshu Raja, CFO at Hammerson]

Paul, I reflect it's not new actually in the European agencies. We deal with kind of Fitch and Moody's. I'm not close to S and P, but the net debt EBITDA metric that has been prominent for the last since COVID, post COVID. And it's obvious kind of why it's there in higher for longer environment that we're in. So not new.

[Himanshu Raja, CFO at Hammerson]

I don't know about the read across from The U. S. For other companies, but we remain very disciplined in the IG rating and protecting that and the strength of the balance sheet, which as Ritro says, it's we've worked very hard to get here and we intend to stay disciplined in the deployment of capital.

[Paul May, Director at Barclays]

Perfect. Thank you.

[Operator]

Thank you. We have our next question from Sakur Ghej from UBS.

[Zachary Gauge, Equity Research Analyst at UBS Group]

Yes, thanks. Good morning, everyone. Just a question for me on valuation. So I think on the first slide, you say all values now reflect transactional evidence. Could you just point me to the evidence that you've seen in France, so sort of suburban Paris shopping centers and Paris shopping centers around Marseille that support the initial yield of 4.3% valuation yield on those assets?

[Zachary Gauge, Equity Research Analyst at UBS Group]

Thanks.

[Rita-Rose Gagné, Chief Executive at Hammerson]

What we've seen in France is, if we look at the transaction in the Fram de L'EAL, which was a minority passive stake, which was at a net initial of about $4.4.0.5. 4 point 5 about net equivalent five. I mean, that's for a completely passive stake. We have assets that are 100% owned and key assets in their segments and that are high performance high performers. So I think it is a good comparative benchmark.

[Rita-Rose Gagné, Chief Executive at Hammerson]

And obviously, we've ourselves done a sale of Itadir in 2023 also at similar levels. So that is these are the benchmarks. And when you look at the spreads for France, I mean, it's quite two sixty to five year swaps and the assets are way, the yields are far from what they have been over the last years in France where the yields were much lower. So it feels that when you look at the portfolio, France, Ireland and UK, it feels that the portfolio is well positioned now in each of their geographies.

[Zachary Gauge, Equity Research Analyst at UBS Group]

So just to clarify that point, you're saying that the deals in Paris Central Paris are comparable to peripheral Paris and Marseille, which is also on a leasehold. You think those yields should be broadly in line with each other?

[Rita-Rose Gagné, Chief Executive at Hammerson]

Well, I think there are different profiles of assets. Again, you're talking about a minority non controlling passive stake in the asset that you're referring to in Paris versus 100% controlled assets that are prime and key and dominant catchment areas. So they're all A plus rated. So yes, I think they're comparable with their differences.

[Zachary Gauge, Equity Research Analyst at UBS Group]

Okay. Thank you.

[Operator]

Thank you. We will now take our next question from Vensi Elias from Sandlin Schott, Kempen.

[Ventsi Iliev, Analyst at Van Lanschot Kempen]

Hi, good morning. Thank you for taking my questions. First one is a follow-up on the NRI and I understand the vacant possession argument. But if I look at your vacancy then I see that it has improved for the total portfolio, not only for the flagship. So is the vacancy number adjusted?

[Ventsi Iliev, Analyst at Van Lanschot Kempen]

And then second one, on the bridge you provide for the adjusted earnings run rate, I see that you're taking out the income from the value from value retail, at least the recurring earnings. But I don't see you adding additional income from deposits or perhaps I don't see you adding cost savings from debts that you retired this year. Can you elaborate a bit more on that?

[Rita-Rose Gagné, Chief Executive at Hammerson]

Did you want to start with that one, the adjusted earnings question?

[Himanshu Raja, CFO at Hammerson]

So on the adjusted earnings question, on the adjusted earnings war, we talk about the net finance costs. I think that was what was beyond your question to say, do we recognize the benefit? And in terms of next year, it will all depend on the timing of acquisitions again, which we've had a previous question on, can you give me more specific timing on the deployment of capital on acquisitions and we're in active discussions as Ritro said and wait for updates on that. So again, Josh and I are available to help guide you on your models as much as we can, but you'll have to work with us on the timing of that deployment.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Yes. On the NRI question again, I mean, there's a notion of the size or the scope of what we're doing in our asset that comes to impact those numbers. There's in some cases, I mean, we'd have to go specifically asset per asset. In some cases, there have been some debts or some surrenders that have impacted the NRI number, some one off. So if you look at the underlying NRI actually and you take out the Cabot and the Oracle ones, you're at healthy low digit number growth numbers for NRI.

[Rita-Rose Gagné, Chief Executive at Hammerson]

So again, we're just not standing still on this portfolio. So we still have discrepancies with some assets that impact the overall picture. But once these stabilized, we're confident that we're back to those low growth low single digit growth numbers for NRI by 2025, '20 '20 '6.

[Ventsi Iliev, Analyst at Van Lanschot Kempen]

Okay, Claire. And maybe just one follow-up on the runway to adjusted earnings. Aren't you worried that the market will take this as some sort of official guidance?

[Rita-Rose Gagné, Chief Executive at Hammerson]

Sorry, can you repeat that?

[Himanshu Raja, CFO at Hammerson]

I mean, we are trying to help you with guidance, which is that there's an entry run rate of 85% and off that base then we see opportunities both in organic growth and in acquisitions. And then further down the P and L, we guide you on GRI to NRI conversion, we guide you on costs, we guide you on finance costs. And it's to

[Himanshu Raja, CFO at Hammerson]

kind of help you.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Just giving you a bit of perspective on the NRI. So I think ultimately that's how you need to take it, helping you to better understand. I think I may have time for another question, Josh, because I think we have one in the room.

[Joshua Warren, Director of Strategy, Commercial Finance and Investor Relations at Hammerson]

Got one in the room and then we'll be out of time.

[Analyst]

Sorry. Thank you. I was wondering if

[Analyst]

you could just give some

[Analyst]

more color on the Irish portfolio. Obviously, the like for like change was negative. And just wondering, you got high occupancy there. What is holding back that market? I know you mentioned there was a one off in the last year, but is that kind of indicative of 2025, '20 '20 '6 onwards?

[Rita-Rose Gagné, Chief Executive at Hammerson]

Yes, exactly. We've explained that by being Dundrum was coming off a very strong base in 2023. And so the comp, the comparator is tougher there. We did have an over rent leasing done in ILAC. So we that asset will when we take that noise out of the equation.

[Rita-Rose Gagné, Chief Executive at Hammerson]

And again, this is not a guidance, it's helping you on a nice on what the trend of the asset is. You're going to see good growth trends in Dendron. It's a very strong asset. And as you say, the occupancy there is very tight. It's about at 2.7%.

[Rita-Rose Gagné, Chief Executive at Hammerson]

So there's a lot going on there. As I said in the presentation, we still do have a bit of some areas specific that are over rented. That was one of it. Overall, we're reversionary. But yes, so when it happens, it does have a temporary impact and then we're back to replacing and continuing to lease up the asset.

[Analyst]

Thank you.

[Himanshu Raja, CFO at Hammerson]

Thank you.

[Rita-Rose Gagné, Chief Executive at Hammerson]

I think we have to wrap up, right, Josh?

[Joshua Warren, Director of Strategy, Commercial Finance and Investor Relations at Hammerson]

Yes.

[Rita-Rose Gagné, Chief Executive at Hammerson]

Okay, great. Well, thank you very much, everybody, for listening in and hope to see you in one on one.

Participants

Executives

• Rita-Rose Gagné, Chief Executive
• Himanshu Raja, CFO
• Joshua Warren, Director of Strategy, Commercial Finance and Investor Relations

Analysts

• Robert Jones, Operations Oversight Analyst at BNP Paribas
• Bjorn Zietsman, Director - Equity Research Real Estate at Panmure Liberum
• Edoardo Gili, Senior Analyst at Green Street Advisors, LLC
• Analyst
• John Cahill, Managing Director - Real Estate at Stifel Institutional
• Marc Mozzi, Managing Director, Head of EMEA Real Estate Equity Research at Bank of America
• Paul May, Director at Barclays
• Zachary Gauge, Equity Research Analyst at UBS Group
• Ventsi Iliev, Analyst at Van Lanschot Kempen