So,
hello,
everybody.
Good
morning.
Welcome
to
Hammerson's
2021
Full
Year
Results
and
my
first
full
year
with
the
company.
It's
great
to
be
able
to
welcome
some
of
you
in
person
this
morning.
This
time
last
year,
we
were
all
in
lockdown.
While
we
are
now
learning
to
live
with
COVID,
we're
aware,
however,
of
the
terrible
events
taking
place
in
Ukraine
and
we'll
be
following
this
closely.
Let me
run
through
our
agenda.
I
will
start
by
giving
you
an
overview
of
our
2021
priorities
and
achievements.
Himanshu
will
take
you
through
the
financials.
I
will
then
give
you
more
detail
on
our
operational
and
strategic
progress,
finishing
with
our
focus
on
the
future.
Let
me
start
with
what
we
said.
We
always
said
that
2021
was
going
to
be
a
challenging
year
and
a
year
of
change.
This
time
last
year,
I
set
out
our
priorities
and
agenda
for
the
years
to
come.
We
announced
a
review
of
our
strategy,
portfolio
and
operating
model,
while
at
the
same
time,
recognizing
the
need
to
strengthen
our
balance
sheet.
So,
what
did
we
do?
As
you
can
see
here
on
this
slide,
it
was
a
year
of
two-halves.
In
the
first
half
of
the
year,
we
focused
on
addressing
the
immediate
challenges.
Those
were
stabilizing
and
derisking
the
balance
sheet,
which
was
exacerbated
by
the
pandemic.
We
disposed
of
403
noncore
assets
and
refinanced
around
£940
million
of
debt.
This
includes
the
issuance
of
a
sustainably –
of
our
first sustainability-linked
bond.
We
concluded
a
strategic
and
organizational
review
that
clearly
identified
our
unique
position
and
the
important
value
creation
opportunities
within
our
prime
urban
estates
and
land
bank.
To
do
all
this,
it
was
clear,
however,
that
we
needed
radical
change
in
our
portfolio,
in
our
platform,
in
our
focus,
and
in
our
leadership.
The
second
half
of
the
year
was
all
about
execution.
So,
regaining
lost
ground
and
laying
strong
foundations
for
future
value
creation.
So, here's
what
we
did.
We
established
a
clear
path
to
execute
our
strategic
focus
underpinned
by
stronger
financial
discipline.
We
introduced
a
new
asset-centric,
customer-focused
model
across
the
business,
and
by
doing
so,
removed
layers
to
create
a
flatter,
leaner
organization.
We
disposed
of
a
further
£30
million
of
UK
noncore
assets,
simplifying
and
cleaning
up
our
portfolio
and
exchanged
our
share
of
Silverburn
for
£70
million.
Just
last
week,
we
completed
the
sale
of
Victoria
Leeds
for
£120
million.
That
gives
a
total
of
£620
million
since
I
arrived.
We
also
began
repositioning
our
core
assets,
actively
leasing
up
and
injecting
placemaking.
Last
but
not
least,
we
are
accelerating
plans
to
take
forward
our
development
sites.
So,
it's
clear
that
we
have
delivered
against
what
we
said,
but
we
know
there
is
more
to
do
and
significantly
more
opportunity
ahead.
Under
the
new
leadership,
a
lot
has
changed
at
Hammerson.
On
this
slide,
you
will
see
our
approach
to
disciplined
financial
management,
which
underpins
everything
we
do.
This
year
has
been
– we
have
seen
a
relentless
focus
on,
first
of
all,
realigning
our
portfolio.
Secondly,
on
leasing,
we
revised
leasing
policies
and
processes,
creating
better
data
to
drive
improved
performance,
speed
to
market,
and
cash.
Thirdly,
we
focus
on
cash
collections
with
daily
reporting
and
updates.
Four,
on
reducing
our
cost
base
through
our
route
and
branch
review
of
the
organization.
Fifth
point
is
on
our
approach
to
capital
allocation,
thinking
about
it
with
disciplined
underwriting
and
decisional
processes.
The
last
two
points
are
all
about
debt
management
and
maintaining
a
resilient
and
sustainable
capital
structure
throughout
the
cycle.
I'm
pleased
to
say
that
last
month,
we
secured
a
stable
investment
grade
credit
rating
reaffirmed
by
Moody's
as
a
result
of
all
this
work.
This
disciplined
financial
delivery
has
already
had
an
impact
on
our
financial
results,
which
Himanshu
will
now
walk
you
through.
Himanshu?
H
Himanshu Haridas Raja
Thank
you,
Rita-Rose,
and
good
morning
and
thank
you
again
for
joining
us
here
at
Kings
Place
this
morning
and
of
course,
on
the
webcast.
I
also
have been
at
Hammerson
for
nearly
a
year
now.
As
Rita-Rose
said,
it's
been
a
year
of
profound
change
during
which
we've
made
significant
financial
and
operational
progress.
You
can
see
the
highlights
here. NRI
was
£190
million,
up
12%
year-on-year.
Like-for-like
NRI
was
up
22%
year-on-year,
driven
by
stronger
rent
collections,
lower
bad
debt
charges,
and
increased
variable
income
from
turnover
rent,
car
parks
and
commercialization.
Rent
collections
for
2021
are
currently
at
90%
and
2020
collections
are
at
99%.
And-year-to
date,
collections
were
83%
for
2022.
And
consistent
with
what
I
said
at
the
half
year,
we
did
not
grant
any
material
concessions
in
the
second
half.
Adjusted
earnings
were
£81
million,
up
122%
on
2020,
benefiting
from
the
improvement
in
net
rental
income,
a
strong
recovery
at
Value
Retail,
and
the
lower
financing
costs
from
refinancing
and
our
debt
reduction.
Our
managed portfolio
is
valued
at
£3.5
billion,
down
21%.
And
when
you
look
at
that,
around
half
that
was
[indiscernible]
(00:07:00)
disposals,
benefiting
net
debt,
of
course,
and
about
half
from
valuations.
The
valuations
in
the
second
half
were
down
only
3%.
We
have
made substantial
progress
in
reducing
debt
and
strengthening
the balance
sheet. The net
debt
at
the
year-end
was
£1.8
billion,
19%
lower
and
LTV
is
39%
headline
and
47%
on
fully
proportionally
consolidated
basis.
Now,
let's
look
at
the
rest
of
the
numbers
in
a
bit
more
detail.
I
covered
the
headlines
already
so
additionally
[ph]
go
out
(00:07:37) on
the
slide. Premium
outlets
bounced
back
strongly
from
COVID
with
earnings
up
130%
year-on-year
up
£15.9
million
compared
with
£7 million
in
2020.
And
remember in
the
prior
year,
we
had
a
positive
£14 million
earnings
contribution from
VIA
Outlets
we
disposed
of
in
October.
So,
Value
Retail
[indiscernible]
(00:07:59)
and
I'll
return
to
Value
Retail
in
more
detail
later.
The
IFRS loss
is
£429
million,
the
key
driver
being
revaluation
losses,
which
has
slowed
in
H2
as
yields
began
to
stabilize.
NTA
per
share
was
down
22%
from
£0.82
to
£0.64.
Now,
to
the
adjusted
earnings
walk from
£36.5
million
to
£81
million
in
a
bit
more
detail.
As
you'd
expect,
NRI
is
up
£33.1
million
and
that
was
the
largest
element
with
growth
from
our
flagships
of
£25
million
and
a
further
£11
million
from
our
developments
in
other
portfolio.
During
the
year,
we
benefited
from
£17
million
of
one-offs
around
the
premiums
year-on-year.
And
most
of
that
space
either had
been
re-let
or
was
part
of
our
repurposing
plans.
Interest
was
better
by
nearly
£24
million
year-on-year,
benefiting
from
the
disposal
program
from
debt
reduction
and
refinancing
from
our
sustainability-linked
bond
and
our
RCF.
And
as
already
explained,
Value
Retail
had a recovery
of
£23
million.
Whilst
our
gross
admin
costs
posted
a
net
increase
of
£3.9
million,
we've
done
a
lot
on
cost
during
the
year,
which
Rita-Rose
has
already
referenced,
and
the
key
message
here
is
there
remains
more
to
do.
The
effects
of
the
disposals
of
the
retail
parks
portfolio
and
the
French
assets
in
H1
2021
and
VIA
in
late
2020
of £27
million
completes
the
adjusted
earnings
walk of
£81
million.
And
just
before
I
leave
this
slide, after
effect
of the
2021 disposals
and
surrender
premiums,
underlying
earnings
are
around
£52
million,
and
this
£52 million
acts
as
your
reference
point
for
2022.
Now,
let's
turn
to
the
balance
sheet
and
review the
NTA
per
share
walk.
The
key
takeaway
on
this
slide
is
that the
second
half
saw
a
more
modest
decline
of
£0.05,
£0.02
from
the
H2
revaluation
deficit
and
£0.04
from
the
scrip
dividend,
offset
by
£0.01
of
earnings.
The
total
dilution
from
the
scrip
was
therefore
£0.07
per
share
in
the
year.
Now,
turning
to
our
portfolio
valuations.
Going
from
left
to
right,
this
slide
shows
the
portfolio
summary
and
capital
returns.
On
the
left-hand
side,
the
yield
in
the
ERV
impact,
and
the
total
property
return
in
the
middle.
And
on
the
right-hand
side,
the
net
equivalent
and
the
net
initial
yield
ranges.
Again,
the
key
takeaway
is
the
contrast
in
performance
between
the
full
year
and
the
second
half.
Our
managed
portfolio
of
£3.5
billion
saw
a
double-digit
decline
of
11.3%
for
the
full
year,
but
only
2.4%
in
the
second
half,
and
it
was
good
to
see
yields
beginning
to
stabilize
in
the
second
half.
The
downward
pressure
on
ERVs also
began
to
abate
in
the
second
half,
down
only
2.5%.
And
this
was
underpinned
by
stronger
second
half
leasing
performance,
which
Rita-Rose
will
cover
momentarily
in
more
detail.
The
total
property
return
for
the
year
on
our
managed
portfolio
was
therefore
minus
6.7%
and
a
minus
3.9%,
including
Value
Retail.
On
the
net
equivalent
yields,
we
are
seeing
liquidity
returning
to
the
retail
investment
markets.
And
to
that
end,
our
assets
are
well
positioned
to
benefit
from
our
investment
in
reinvigorating
and
repurposing
our
existing
space.
And
the
valuations
on
our
Value
Retail
investment
remain
resilient.
Let
me
now
just
break
down
the
flagship
capital
returns
by
geography.
So,
the
minus
11.6%,
this
slide
shows
the
breakdowns
by
half
year
of
the
capital
returns,
giving
you
a
little
more color
around
the
trajectory
over
the
last
four
years.
As
you
can
see
from
the
pink
and
red
bars,
2020
was
the
worst
performing
year
due
to
the
impact
of
COVID-19.
But
by
the
time
we
get
to
H2
2021,
the
dark
blue
bar
on
the
right-hand
side,
the
rate
of
decline
in
capital
returns
has
markedly
slowed
in
each
of
the
three
territories.
I'm
taking
each
of
those
in
turn.
UK
capital
returns
were
down
16.7%
with
a
slowdown in
the
second
half,
helped
by
the
emergence
of
some
transactional
evidence.
From
the
peak,
UK
flagships
have
declined
by
62%
and
seen
an
ERV
decline
of
31%.
Net
equivalent
yields
in
the
UK
have
expanded
290
basis
points
to
7.7%.
In
France
and
Ireland,
the
rate
of
decline
from
peak
valuations
has
been
less
significant
than
the
UK,
particularly
on
ERV, reflecting
the
more
benign
occupational
markets
and
strong
leasing
performances.
The
net
equivalent
yields
in
France
and
Ireland
are
therefore
at
5%
and
5.3%,
respectively and feel
prudently
valued
when
compared
with some
of
our
European
peers.
Have
we
turned
the
corner?
There's
certainly an
emerging
consensus
that
yields
are
beginning
to
bottom
out
and
our
negative
reversion
is
modest
in
absolute
terms.
I
said
I'll
come back
to
Value
Retail
in
more
detail,
so
first,
to
the
Value
Retail
P&L.
Keying
off
from
the
loss
of
£7.1
million
from
Value
Retail,
GRI
improved
by
£26.4
million
in
2021.
I
remember
this
is
against
the
backdrop
of
all
the
villages
being
closed
and
minimal
rent
collected
in
the
first
quarter
of
the
year.
And
you'll
recall
that
Value
Retail
rents
are
largely
turnover
based,
and
we
saw
the
benefits
of
this
coming
through
in
the
numbers
with
stronger
brand
sales
and
footfall
as
villages
were
able
to
operate
with
fewer
to
no
restrictions.
The
villages
signed
288
leases
in
2021,
collection
rates
were
around
99%
and
occupancy
continues
to
be
around
96%.
Value
Retail
also
successfully
launched
a
wide
range
of
initiatives
aimed
at
their
domestic
audience,
including
virtual
shopping,
on
a
click-and-collect
basis.
And
these
initiatives
have
gone
some
way
to
mitigate
the
absence
of
tax
free
sales
resulting
in improved
spend
per
visit
year-on-year.
And
Value
Retail
also
showed
good
cost
discipline
as
property
operating
costs
increased
by
only
£3.3
million
year-on-year.
We
do
anticipate
a
continued
recovery
in
Value
Retail
in
2022,
particularly
as
they
expect
the
initial
return
of
the
international
traveler
in
the
second
half
of
2022
ahead
of
a
fuller
recovery
in
2023.
Let
me
now
turn
to
the
valuations
of
the
Value
Retail
portfolio
and
their
relationship
to
yield
and
density.
This
chart on
the
left
maps
each
village
by
sales
density
and
exit
yield
with
the
size
of
the
bubbles
reflecting
the
valuation.
The
sales
density
shown
here,
of
course,
is
2021,
which
is
a
reference
point
reflects
a
subdued
trading
due
to
periods
of
closure.
And
Bicester Village
stands
out
by
virtue
of
its
size,
followed
by
La
Vallée.
And
together,
these
account
for
approximately
60%
of
our
£1.9
billion
investment
in
Value
Retail.
There are
also
the
more
mature
villages
and
that
is
reflected
in
the
higher
sales
density.
The
less
mature
villages
such
as
Maasmechelen
and
Fidenza
are
at
the
lower
end
of
the
spectrum
in
terms
of
exit
yield,
sales
density
and
corresponding
valuation,
but
have performed
strongly
as
is
Kildare,
which
was
expanded
during
the
year.
Value
Retail
operates
very
much
at
the
premium
end
of
the
outlets
segment,
with
net initial
yields
of
4%
and
7%
and
an exit
yield
range
of
5%
to
6%
using
the
discount
rate
shown
here.
And
there
have
been
a
couple
of
transaction
reference
points
in
2021
which
support
these
valuations.
We've,
of
course,
seen
the
first
completed
sale
since
2019
of
outlets,
that's
Outlet
Aubonne
in
Switzerland
at a
7%
yield.
And
in
the
UK,
Bridgend
Designer
Outlet
and
UK
Outlet
Mall
are
also
currently
under
offer.
The
latter,
believes
to
be
a
reported
blended
yield
of
6%.
And
more
recently,
Quintain,
a
market
in
their
London
outlet
at Wembley,
with
a
reported
net
initial
yield
of
6%.
And
finally,
before
I
leave
Value
Retail,
they
have
made
good
progress
on
their
refinancings,
with
two
loans
refinanced
and
upsized
since
the
beginning
of
2021.
They
are
in
the
advanced
stages
of
the
refinancing
of
La
Vallée
and
expect
to
refinance
Bicester
in
the
ordinary
course
during
2022.
Now,
let's
turn
to
the
strengthening
of
our
balance
sheet.
I've
already
said
we've
made
significant
progress
in
bringing
down
net
debt
and
reported
net
debt
at
£1.8 billion
was
19%
lower
with
pro
forma
net
debt
starting
at
£1.6
billion
following
the
sale
of
Victoria
Leeds,
and
the
exchange
of
Silverburn.
We
have
strong
liquidity,
£1.7
billion
pro
forma, and
we
have
no
material
refinancing
until
2025,
not
covered
by
existing
cash
and
liquidity.
And
Rita-Rose
has mentioned
testament
to
our
progress. It
was
great
to
see
Moody's
recently
reaffirming
our
IG
credit
rating
and
removing
the
negative
outlook
to
stable.
And
turning
to
the
cost
base,
a
key
focus
in
the
second
half
was
to
reset
the
organization
and,
of
course,
following
due
an
appropriate
consultation,
reduce
the
head
count
by
18%.
We
retendered
and
reduced
our
insurance
premiums
by
64%.
And
we
saw
some
in-year
savings
in
payroll
costs,
but
these
were
offset
by
the
return
to
normalized
levels
of
variable
pay
following
minimal
payouts
in
the
2020
pandemic
here.
As
we
look
forward,
we
continue
to
review
our
organization
to
make
sure
we
have
the
right
skills
and
talent,
and
that
we
also
rightsize
for
the
effects
of
disposals.
And
for
those
of
you
physically
here
today,
we
of
course,
are
looking
to
rightsize
the
office
space and
there'll
be
further
opportunities
to
reduce
costs
as
we
simplify
and
automate.
And
this
will
drive
to
a
leaner
and
more
agile
company
for
the
future.
So,
to
my
final
slide,
let
me
close
by
giving
you
some
guidance
on
modeling
assumptions.
You'll
see
the
different
elements
of
the
very
detailed
guidance on here.
And
we've
provided
you
with
the
starting
GRI
stripped
of
disposals and
surrenders,
including
Silverburn
and
Leeds
and
that
rebased
GRI
is
£193
million.
If
you
take
each
of
the
components
from
disposal
through
to
finance
costs,
you
have
all
the
elements
that
give
you
the
drop
through
to
adjusted
earnings.
The
key
variable,
of
course,
will
be
the
magnitude,
timing,
and
exit
yield
on
disposals.
On
CapEx,
we
expect
2022
CapEx
of
around
£125
million,
balanced
between
the
reinvestment
and
repurposing,
in
placemaking,
and
in
stewardship,
stewardship
being
a
reference
to
the
need
in
some
of
our
assets
to
put
in
CapEx
to
make
up
for
underinvestment
in
previous
years.
Rita-Rose
already
talked
about
our
disciplined
approach
in
financial
management,
and
that
will
certainly
entail
in
our
deployment
of
capital.
And
finally
to
dividends,
we
continue
to
cover
our
outstanding
REIT
and
SIIC
obligations
for
our
scrip
dividend
in
2022
before
intending
to
return
to
cash
dividends
from
2023
onwards.
With
that,
let
me
hand
back
to
Rita-Rose.
R
Rita-Rose Gagné
Thanks, Himanshu.
So,
let
me
start
quickly
with
who
we
are
and
what
drives
us.
So,
we
are
an
owner,
operator,
and
developer
of
sustainable
prime
urban
real
estate.
Our
competitive
advantage
is
our
core
assets,
which
have
a
unique
city
center
footprint
illustrated
by
the
map
you
can
see
on
this
slide.
250
million
people
pass
through
our
assets
every
year. We support
more
than
40,000
jobs,
so
we
play
an
essential
role
in
our
communities.
Today,
that
portfolio
remains
focused
on
traditional
uses.
We
are
now
executing
against
a
clear
strategy
to
reposition
our
prime
urban
estates.
You
can
see
this
on
the
right
of
the
slide.
My
experience
from
other
international
markets
inspire
me
when
I
think
about
the
future
of
our
destinations,
a
more
asset-focused
mindset
and
a
broader
mix
of
uses
adapted
to
reflect
the
demands
of
the
cities,
neighborhoods,
and
the
communities
they
serve.
So,
this
is
a
real
opportunity
for
us
and
it's
already
happening.
At
the
half
year
we
set
out
our
strategy
to
unlock
value,
which
you
can
see
on
the
left
of
this
slide.
It
comprises
of
four
key
elements;
reinvigorating
our
assets,
accelerating
development,
creating
an
agile
platform,
and
delivering
a
sustainable
and
resilient
capital
structure.
On
the
right
of
the
slide,
you
can
see
our
near-term
opportunities,
which
include
maximizing
cash
flow
off
the
existing
asset
footprint
by
repositioning
and
filling
space.
Second,
generating
capital
to
reduce
net
debt
and
reinvest.
Third,
increasing
organizational
speed
and
efficiency,
also
further
reducing
costs.
And
fourth,
creating
value
and
optionality
in
the
land
bank
by
hitting
early
milestones.
In
the
medium
to
long
term,
we
will create value
through
the combination
of
our existing
assets footprint
and
adjoining
sites.
Our
ambition
is
to
deliver
a
total
return
via
a
sustainable
cash
dividend
and
capital
appreciation.
Turning
to
the
first
of
those
key
elements,
reinvigorating
our
assets,
we
have
had
a
strong
year
on
leasing.
Before
I
cover
that,
let
me
show
you
the
recovery
of
footfall
and
spend.
On
the
left-hand
side,
you
can
see
the
significant
uplift
in
footfall
following
the
relaxation
of
COVID
restrictions.
In
our
core
assets,
we
have
seen
footfall
increase
above
2019.
Spend
per
visit
has
also
remained
high
with
sales
recovering
almost
to
2019
levels.
As
sales
have
recovered
and
rental
levels
rebased,
occupancy
costs
are
now
affordable.
This
slide
shows
our
higher
leasing
volumes
and
improved
matrix,
particularly
in
H2.
Let
me
walk
you
through
a
few
data
points.
We
signed
a
total
of
371
leases
in
2021.
So,
it's
around
equivalent
of
20%
of
the
portfolio,
70%
up
on
2020.
This
represented
2.9
million
square
feet
of
space
by
value.
This
was
£25
million
at
our
share,
150%
up
on
2020.
Principal
leases
represented
71%
of
deals
and
94%
of
volume.
Net
effective
rent
for
principal
deals
was
11%
below
ERV
but
with
a
clear
improvement
to
minus
5%
in
the
second
half.
Overall,
headline
rent
was
broadly
in
line
with
previous
passing.
There
is
a
breakdown
by
country
in
the
additional
disclosures.
In
summary,
the
UK
remains
the
most
challenging
and
fast-moving
market.
But
even
there,
one-third
of
deals
were
above
ERV
and
41%
were
above
passing
rent.
France
continues
to
exhibit
stability
and
growth
and
the
Irish
market
is
strong.
But
this
year,
it's
skewed
by
a
small
sample.
As
we
continue
to
execute
our
strategy
to
actively
lease-up
and
increase
vibrancy,
we
are
targeting
now
a
broader
mix
and
saw
69%
of
leases
to
non-fashion
this
year.
For
fashion,
we
remain
focused
on
best-in-class
brands.
We
also
continue
to
use
temporary
leasing,
particularly
to
bridge
periods
between
deals,
keep
options
open,
or
try
out
new
concepts.
These
remain
at
a
steep
discount
across
the
portfolio
but
are
cash
accretive.
We
indeed
saved
around
£6.5
million
of void
costs
on
an
annual
basis
this
year.
As
for
vacancy,
this
has
reduced
from
7%
at
the
half
year
to
4.5%.
Momentum
continues
to
build
with
data
in
2022
showing
that
January
and
February
our
volume
of
leases
is
up
and
rents
are
now
in
line
with
ERV
and
ahead
of
passing
rent,
which
is
a
KPI
we
follow
closely,
which
I
call
internally
the
cash-on-cash.
So,
those
were
the
numbers.
On
the
following
slide,
I
want
to
talk
to
you
a
bit
about
what
it
looks
like
on
the
ground
with
a
samples
of
our
occupiers.
Our
leasing
activity
in
2021
is
roughly
grouped
into
six
leasing
themes,
which
you
can
see
on
the
left-hand
side.
For
asset
management,
we
engage
proactively
and
at
a
portfolio
level.
Next,
in
response
to
the
changing
landscape,
we
are
doing
big
box
repurposing
and
introducing
a
wider
mix
of
F&B,
leisure,
and
non-traditional
uses
to
these
spaces.
Commercialization
and
events
also
play
an
important
role
in
cash
flow,
creating
vibrancy,
and
we
trial
new
concepts.
I
could
talk
to
you
all
day
about
all
the
examples
on
this
slide,
we
had
a
lot.
In
the
interest
of
time,
I
will
stop
on
to
great
examples
that
cover
a
number
of
these
themes,
Goldsmiths
and
Brown
Thomas.
Goldsmiths
wanted
to
upsize
in
the
Bullring.
We
proactively
engaged
at
the
C-suite
level
to
gain
a
better
understanding
of
their
needs.
Today,
Goldsmiths
occupy
a
total
of
14
units
across
the
portfolio,
making
them
a
top
20
occupier
and
partner.
We
also
opened
Brown
Thomas
in
Dundrum
in
Ireland
last
week
in
the
House
of
Fraser
vacant
space.
This
62,000-square-feet
beauty
hall
and
lifestyle
brand
features
the
apartment,
a
lounge
for
luxury
shoppers,
and
a
range
of
other
innovations
such
as
vitamin
injections,
designer
handbag
exchange,
glad
rags
rentals,
etcetera.
Penneys
takes
over
the
remaining
floors,
making
this
an
exciting
and
innovative
retail
experience.
As
we
execute
our
strategy,
we
need
to
realign
obviously
our
portfolio
and
generate
capital.
On
this
slide,
I
will
take
you
through
our
disciplined
disposal
program.
As
we continue
to
follow
the
plan
set
out
at
half
year,
you
can
see
on
the
left-hand
side
of
this
slide
the
sales
in
2021
and
early
2022,
bringing
us
to
£623
million
of
disposals.
On
the
right,
we
have
our
two
buckets
of
disposal
candidates
with
both
in
the
near term
and
in
the
medium term.
Sales
will
depend
on
both
pricing
and
market
conditions.
We
anticipate
at
least
a
total
of
£500
million
by
end
of
2023,
and
that
includes
Victoria
Leeds
and
Silverburn.
Having
said
that,
you
will
see
on
the
next
slide
how
we
think
about
capital
allocation.
Today,
we
are
still
focused
on
reducing
in
total
absolute
indebtedness.
We
have
a
total
return
philosophy.
But
as
a
REIT, we
must
keep
or
meet
our
payout
obligations.
We
also
have
a
clear
intent
to
return
to
a
cash
dividend
once
our
SIIC
obligations
are
met,
and
that
was
covered
by
Himanshu's
guidance.
Next,
mindful
of
our
relatively
high
cost
of
capital,
we
will
look
continuously
at
our
capital
structure,
and
Himanshu
is
all
over
that.
Organic
investment
in
our
existing
core
assets
and
land
bank
means
we
could
consider
consolidating
our
core
assets
[ph]
and
markets (00:31:18).
We
remain
[indiscernible]
(00:31:20) the
opportunity
for
exceptional
[ph]
returns
arise (00:31:23).
Turning
to
creating
the
agile
platform,
which
is
another
key
element
of
our
strategy,
I
mentioned
at
the
start
that
we
have
enhanced
the
leadership
team.
You
can
see
on
the
left-hand
side
of
the
slide
the
new
skills
and
insights
that
supplement
our
existing
talent
within
the
business.
The
shape
of
the
leadership
and
[ph]
colleague
team
(00:31:48)
will
continue
to
evolve
as
we
realign
the
portfolio
requiring
new
skills.
It
has
not
only
been
about
getting
the
right
team
in
place
of
course,
but
making
sure
the
right
governance
structures
are
there
to
empower
and
support
colleagues
and
to
drive
a
high-performance
culture.
When
I
arrived,
decision-making
was
spread
across
more
than
30
committees,
and
today
we
concentrate
on
three.
Hammerson
was
at
an
inflection
point
when
I
arrived,
and
we
needed
to
reset
the
organization
to
be
more
efficient
and
effective.
I've
said
that
at the
half
year.
The
most
material
change
that's
derived
from
our
review
was
the
shift
from
a
geographic
silo
structure
to
an
asset-centric
and
customer-focused
operating
model.
This
new
structure
also
delivers
a
more
empowered
organization,
which
is
closer
to
our
assets
and
occupiers.
In
the
near
term,
we
are also
focusing
on
simplifying
and
automating
key
processes
to
improve
that
speed-to-market,
increase
efficiency,
and
speed
to
cash.
Staying
with
our
four
strategic
elements,
I
will
now
turn
to
accelerating
development.
Most
of
you
are
aware
of
the
opportunity
set
in
the
portfolio,
and
there
is
the
usual
slide
in
the
additional
disclosures
showing
the
potential
mix
of
uses.
I
wanted
to
give
you
a
sense
of
what
stage
we
are
at
with
each
of
these
projects
on
this
slide.
Today,
the
land
promotion
portfolio
can
be
divided
into
three
buckets.
First,
our
four
near-term
projects,
and
that
is
Dublin
Central,
The
Goodsyard,
Martineau
Galleries,
and
Grand
Central.
These
are
either
well
advanced
on
detailed
planning
or
will
be
able
to
be
advanced
rapidly.
Progressing
these
projects
in
the
near term
to
a
point
where
they
are
ready-to-go
development
opportunities
will
create
significant
short-term
value
and
optionality
as
to
how
we
take
them
forward
and/or
look
for
liquidity
or
deliver
partnerships.
Next
are
the
medium-term
projects,
which
are
largely
at
the
feasibility
or master
planning
stages.
Therefore,
more
midterm
prospects
in
terms
of
value
creation
and
liquidity
as
we
define
the
appropriate
project
and
phasing
to maximize
value.
Finally,
we
have
a
longer
term
strategic
project,
which
is
in
Ireland.
Let
me
show
you
a
bit
more
detail
on
the
four
near-term
land
promotion
projects.
These
have
potential
to
be
on site
as
early
as
2023, 2024.
On
the
left
of
this,
you
can
see
the
milestones
we
achieved
in
2021
and
what
you
should
look
out
for
in
2022
and
2023.
There's
a
lot
going
on
here.
But
the
key
message
is
that
this
is
relatively
capital-light
activity,
a
total
of
around
£73
million
over
the
next
two
years.
And
you
can
see
from
the
right-hand
side
that
this
delivers
an
immediate
valuation
uplift
of
approaching
£110 in
that
period.
There
is
of
course
a
very
significant
long-term
opportunity
on
top
of
that
with
potential
GDV
of
more
than
£2.5
billion
at
our
share.
But
the
near-term
work
gives
us
optionality
to
select
the
best
returns
for
the
shareholders.
Let
me
talk
now
a
few
minutes
about
sustainability,
which
is
a
key
focus
of
the
company
and
underpins
everything
we
do.
It's
a
very
important
topic
whether
we
are
thinking
about
embedded
carbon
in
future
developments
or
the
existing
emissions
footprint
to-date.
Hammerson
has
a
long-standing
and
recognized
commitment
to
sustainability.
Since
the
launch
of
our
goals
in
2015,
we
have
reduced
our
carbon
emissions
by
68%.
We've
already
talked
about
the
sector-first
sustainability-linked
bond
we
issued.
So,
let
me
pull
out
two
other
highlights,
expanding
renewable
energy
across
the
portfolio
this
year.
In
France,
we
connected
Terrasses
du
Port to
the
Thassalia
geothermical
(sic) [geothermal] system
for
heating
and
cooling.
We
also
installed
the
new
PV
array
at
Dundrum
in
Ireland.
Looking
ahead,
we
are
in
good
shape
to
meet
our
targets.
We
are
already
2023
compliant
with
EPC ratings
of
E
or
above.
We
estimate
the
total
cost
of
works
to
get
to
B EPC
ratings
at
£35
million
to
£50 million
spread
over
the
portfolio
as
is
across
eight
years
at
our
share.
Before
concluding,
I
wanted
to
show
you
how
we
bring
strategy
to
life,
and
Birmingham
is
a
great
example.
In
Birmingham,
three
assets
are
becoming
a
prime
urban
estate.
This
shows
you
the
near-term
opportunity
we
have
in
real
life.
Today,
you
can
see
Bullring
and
Grand
Central
in
the
middle
and
to
the
left.
A
marquee
project
on
this
journey
is
the
repositioning
of
a
former
department
store
space
to
a
flagship
grocery-led
offer
and
a
competitive
sports-led
leisure
concept.
This
will
be
in
place
by
early
2023.
We
are
in
early
stages
of
engagement
on
the
remaining
floor
for
another
new
leisure
concept.
This
is
about
revitalizing
interest
in
this
end
of
the
Bullring
for
both
existing
and
new
occupiers.
We
are
very
excited
about
the
leasing
pipeline
we
are
actually
seeing.
At
Grand
Central,
we
have
another
great
opportunity
to
repurpose
the
former
JLP
space.
And
at
Ladywood
House,
repurposing
will
see
a
modern
workspace-led
asset.
These
two
important
projects
sit
astride
New
Street
station,
the
main
commuting
hub
for
the
West
Midlands,
which
sees
almost
50
million
people
in
transit
in
an
average
year.
To
the
right
of
the
picture,
a
stone's
throw
away,
you
can
see
Martineau
Galleries.
Today,
this
site
is
a
collection
of
yielding
secondary
and
tertiary
assets.
Next
to
where
the
Curzon
Street
HS2
station
is
being
constructed,
it
has
tremendous
potential
as
a
residential
and
workspace
scheme
in
the
medium
to
long
term.
Linking
this
back
to
our
longer
term
strategy,
when
we
think
about
the
future
of
our
exposure
to
the
city,
we
think
about
Birmingham
estate,
not
about
three
separate
assets.
Taking
this
up
to
the
portfolio
level
now
and
to
give you
a
picture
of
our
aspirations,
by
bringing
together
the
near-term
repositioning
and
longer-term
opportunities,
you
create
a
clear
link
and
pass
the
significant
value
for
the
future.
On
the
left-hand
side,
you
see
the
shape
of
the
managed
portfolio
to-date
by
value.
Delivering
on
those
near-term
opportunities
brings
you
to
the
chart
in
the
middle.
A
stronger
balance
sheet,
reducing
debt,
and
recycling
into
our
existing
assets
and
land,
higher
quality
earnings
and
a
sustainable
dividend
stream,
further
repositioning
of
the
portfolio,
and
some
valuation
uplift
from
hitting
those
early
land
promotion
milestones.
On
the
right-hand
side,
you
can
see
the
indicative
shape
of
the
portfolio
in
five
years
or
so.
And
that's
a
fully
realigned
portfolio,
repositioning
of
those
assets
completed,
further
underpinning
the
earnings
and
the
blend
of
active
phased
development
to
core,
and
further
land
promotion
activity
is
possible.
During
this
journey
from
left
to
right,
we
will
create
absolute
optionality
about
which
opportunities
to
pursue
for
best
returns
for
the
shareholders.
There
remains
obviously
a
significant
earnings
and
capital
growth
opportunity
in
the
future.
To
my
closing
remarks,
under
new
leadership
we
have
addressed
our
immediate
priorities
and
delivered
on
our
early
milestones.
I
do
believe
Hammerson
has
turned
the
corner,
but
we
realized
and
recognized
we
have
more
to
do
and
that
we
continue
to
operate
in
a
challenging
market.
We
have
the
right
[audio gap]
(00:41:27), a
robust
strategy,
[audio gap]
(00:41:29)
and
operating
model.
Our
focus
is
relentlessly
on
reducing
vacancy
and
void
costs,
repurposing
space,
delivering
a
mix
that
occupiers
and
customers
demand,
and
unlocking
value
from
the
development
opportunities
in
the
portfolio.
As
we
continue
to
execute
our
strategy,
we
will
build
a
stronger
business
and
one
that
delivers
value
for
shareholders.
So,
thank
you
for
your
time
today.
I
will
now
open
to
the
floor
and
the
lines
are
also
open
for
questions.
Josh
will
be
taking
the
questions
online.
If
you
are
in
the
room,
please
raise
your
hand
and
there
is
a
microphone
that
will
come
to
you.
Thank
you
very
much.
R
Rita-Rose Gagné
Chris.
C
Christopher Fremantle
Analyst, Morgan Stanley & Co. International Plc
Hi.
R
Rita-Rose Gagné
Hi.
C
Christopher Fremantle
Analyst, Morgan Stanley & Co. International Plc
Good
morning.
This
is
Chris
Fremantle
from
Morgan
Stanley.
I
have
two
questions,
one
on
leasing
trends
in
the
UK
and
the
other
on
rebased
earnings
for
2022.
So,
on
the
UK,
I
think
you
gave
some
disclosure
in
the
back,
which
you
highlighted,
which
is
showing
that
the
leasing
activity
is,
in
the
UK
at
least
on
I
think it's
slide
40,
showing
that
the
leasing
is still
quite
a
long
way
below
ERV.
I
wonder
if
you
can
just
give
us
some
color
on
that,
please,
and
just
suggest
how
that
can
reassure
us
for
stabilizing
ERVs
in
the
UK,
if
that's
happening
or
not.
R
Rita-Rose Gagné
Okay.
C
Christopher Fremantle
Analyst, Morgan Stanley & Co. International Plc
So,
that's
the
first
question.
The
second
on
rebased
earnings,
I
think
you
gave
a
£52
million...
R
Rita-Rose Gagné
Yeah.
C
Christopher Fremantle
Analyst, Morgan Stanley & Co. International Plc
...number
for
rebased
earnings.
I
think
there
are
some
disposals
post
year-end
of
course,
which
you've
announced,
which
are
quite
high-yielding
disposals
and
which
I
think
have,
if
I'm not
wrong,
quite
big
impact
on
2022
earnings
as
well.
So,
I
wonder
if
you
can
just
give
a
little
bit
more
color
on
that.
And
particularly,
when
you
are
disposing
of
those
very
high-yielding
earnings
in
order
to
recycle,
can
you
give
us
some
color
about
the
yields
on
cost
that
you're
using
that
capital
to
recycle
into?
If
you're
disposing
7%
to
9%
net
initial
yields,
are
the
yields
on
cost
that
you're
reinvesting
that
capital
in
comparable
or
better?
Thank
you.
R
Rita-Rose Gagné
Great. Thank
you
very
much,
Christopher.
I
will
start
with
the
leasing
questions
for
the
trends
for
the
UK,
and
then
I
will
ask
Himanshu
to
take
on
the
rebased
earnings
and
I
may
come
back
with
a
few
things.
So,
just
for
the
UK,
you're
right.
I
mean,
there
is
the
UK
in
2021
still suffered
in
terms
of
ERV
and
passing.
What
you
have
to
know
however
is
that
there's
a
big
volume
of
deals.
And
in
H2
there
was
a
clear,
as
we
always
said,
a
clear
rebound.
So,
40%
of
our
deals
in
the
UK
were
over
passing
rent
and
about
35%
were
over
ERV.
And
obviously,
as
we
proceeded
in
the
year,
the
statistics
became
better.
The
other
thing
I
would
say
in
the
UK
is
that
we
did
do
eight
strategic
deals
in
the
year
that
were
below
ERV,
and
we
made
them
for
strategic
reasons
in
terms
of
wanting
to
occupy
some
part
of
the
asset
and
with
some
brands
that
we
absolutely
wanted
to
include
to
the
mix.
So,
that
has
potentially
skewed
the
statistics.
But
we're
clearly
seeing
the
trends,
ERV
declines
have
slowed.
I
would
also
tie
up
2022,
what
are
we
seeing
December,
January,
February.
Now,
we
are,
in
all
geographies,
well
ahead
of
passing
rent.
And
again,
passing
rent
for
me
is
very
important,
and when
I
say
well
ahead,
it's
over
20%,
and
same
thing
for
ERV.
And
that's
in
all
our
regions.
France
is
more
stability
and
more
growth,
but
the
UK
is
really
showing
a
strong
rebound.
And
I
think
that's
related
to
the
demand
coming
back
and
we're
starting
to
see
a
bit
more
tension
in
the
discussions
we
have,
sometimes
even
having
more
than
one
tenant
for
a
unit,
for
example.
And
the
retailers,
the
strong
retailers
really,
really
want
their
physical
space.
And
you're
starting
to
feel
that
they're
ready
to
pay
up
for
the
right
locations.
So,
the
volume
is
continuing
to
trend
very
well
for
January
and
February
2022,
and
we
think
for
the
year
to
come.
Himanshu,
do
you want
to
say
a
few...
H
Himanshu Haridas Raja
Yeah,
sure.
R
Rita-Rose Gagné
...things
on
the GRI?
H
Himanshu Haridas Raja
I
think
on
your
question,
Chris,
on the
rebased
earnings
and
disposals,
let
me
just
take
you
back
up
a
level.
The
disposals
are
about
realigning
the
portfolio,
first
and
foremost.
It's
about
reshaping
of
portfolio
for
the
future
where
we
feel
we
can
diversify
the
income
streams
for
the
future
and
really
have
those
urban
estates
for
the
future.
And that's
what
informs
the
disposal
strategy.
With
the
strengthening
of
the
balance
sheet,
of
course,
we
can
be
patient.
And
one
of your
modeling
challenge
is,
as
I
referenced,
is
what
might
the
timing
of
those
be.
But
I
think
you
had
a
follow-on
question,
which
is
really
about
the
recycling
of
that
capital,
which
is
all
about
capital
allocation.
And
Rita-Rose
shared
our
philosophy
on
that
capital
allocation.
And
it's
really
about
creating
that optionality,
which
Rose
referenced,
the
land
promotion
projects,
for
example.
But
she
also
referenced
the
near-term
ones.
We
use
Birmingham
to
illustrate.
But
we
see
those
opportunities
[ph]
to
rise
(00:47:57) across
the
portfolio.
And
then
we
referenced
in
Rita-Rose's
speech
also
there'll be
opportunities
on
the
balance
sheet
as
well.
So,
we're
mindful
of
cost
of
capital and
making
sure
that
as
we
recycle
that
capital,
we
create
those
options
for
the
future.
R
Rita-Rose Gagné
I
think
that's complete.
Thanks.
Hi.
P
Paul May
Analyst, Barclays Investment Bank
Hi.
Paul
May,
Barclays.
[ph]
Several (00:48:28)
questions
from
me.
The
first one
just
on
the
earnings
point moving
forwards.
I
think
you
started with
[indiscernible]
(00:48:36).
Let's
try
again.
[ph]
So,
here
we
go (00:48:45).
That's
probably
better.
Paul
from
Barclays.
Sorry.
Just
on
the
earnings
moving
forwards,
if
you
start
with
the
[ph]
£52 million (00:48:51),
I
think
you
get
to
quite
a
different
number
versus
the
building
blocks
that
you
gave
on
the
separate
slide
where
very,
very
quickly
you
just, all of a
sudden, you're
getting
to
around about
mid-70s
if
you
adjust
for all
the
various
things
that
you've
mentioned,
assuming
some
recovery
in
value
retail
and
other
things.
Just
wondered
which
is
the
best
start
point.
As
in,
do
you
look
at
the
[ph]
£52
million (00:49:10) or
do
you
look
at
the
slide
where
you
keep
the
building
blocks
and
the
guidance?
Second
one
just
on
the
gross
development
value
of
the
near-term
opportunities
that
you
mentioned
greater
than
£2.6
billion,
are
you
able
to give
any
guidance
as
to
what
the
CapEx
is
to
get
to
that
£2.6
billion
and
the
timeframe
over
which
you
might
be
able to
achieve
that
£2.6
billion?
And
then
finally
on
disposals
and
to
Chris's
point
about
selling
higher
yielding
assets,
obviously
France
is
something
I
think
you've
kind
of
highlighted
as
a
potential
exit,
stability
in
income
there,
yields
are
lower
there.
Is
that
something
that
now
you're
seeing
the
rebound
in
the
UK
you
don't
necessarily
need
France
to
kind
of
stabilize
the
numbers?
Is
that
something
that
you're
looking
to
actively
dispose
of?
Thank
you.
R
Rita-Rose Gagné
So,
thank
you
for
your
questions.
Himanshu,
maybe
take
the
first
one
on
the
earnings,
and
I'll
pitch
in
for
the
two
others.
H
Himanshu Haridas Raja
So,
Paul,
welcome.
The
issue
we
saw
with
the
[ph]
£52
million
(00:50:08) is you
got
to remember
all
the
periods
of
closure.
So,
in
giving
you
the
normalized
£193
million
GRI number
and
to
work
from
that,
our
base
assumption
is
that
we're
beyond
that
COVID
period.
Whether
[ph]
it's
us (00:50:23)
or
value
retail
villages
or
even
when
France
was
open,
they
had
a
period
where
there was
a
sanitary
pass
required
to
be
worn,
not
just
to
enter
a
shopping
center,
but
to
actually
enter
individual
stores,
which
they
then
relaxed.
I
was
in
Ireland
a
few
weeks
ago
and
actually
there
was
restrictions
as
recently
as
three
weeks
ago
with
closures
at sort of
8:00 PM.
So,
the
modeling
guide
is
around
the
normalized
GRI
going
forward
and also
helps
you
by
stripping
out
the
effect
of
Silverburn
and
Leeds.
Rita-Rose,
back
to
you.
R
Rita-Rose Gagné
Thanks,
Himanshu.
So,
on
the
second
question,
make
sure
I
understood,
you're
asking
what
are
the
near-term
CapEx
to
unlock
or
the
overall
program.
I'll
answer
both.
I'll
go
back
to
the
whole...
P
Paul May
Analyst, Barclays Investment Bank
It's
more
on
the
overall
program
to...
R
Rita-Rose Gagné
Yeah.
P
Paul May
Analyst, Barclays Investment Bank
...get
to
the
£2.6
billion.
R
Rita-Rose Gagné
Yeah.
So
yeah.
And
so,
the
overall
program,
the
gross
development
cost
is
about
£2.5
billion,
£2.6
billion
at
our
share.
What
I'd
like
to
say
here,
just
to
make
sure
we
state
this
clearly,
is
that
what
we
are
doing
at
the
moment
on
the
–
we
separated
this
year
in
three
buckets.
Those
land
promotion
projects
was
really
a
focus
at
the
moment
of
creating
maximum
value
short
term,
bringing
those
lands
at
a
point
where
we
will
have
the
opportunity
as
– optionality,
as
I
was
saying,
of
having
created
value
monetizing
or
determining
if
the
development
or
how
we
would
go
about
in
a
development.
At
the
moment,
there
is
a
lot
of
demand
around
those
developments.
So,
we
really
have
to
view
this
in
buckets,
the
short-term
value
and
then
the
decision
points,
what
we
crystallize
then
and
how
we
go
forward.
And
then
you
get
into
this
potential
of
£2.5
billion,
£2.6
billion
CapEx.
On
the
question
of
France,
France
is
a –
I
spent
a
bit
more
time
there
and
was
there
actually
recently.
France
is
a
market
at
the
moment,
which
we
have
four
assets.
We
have
two
assets
in
minority
holdings
and
two, Terrasses
du Port and Cergy,
two
strong
assets
in
which
there's
some
value
creation
to
do
that
we
would
like
to
capture.
At
the
moment,
the
portfolio
is
trending
very
well.
I
gave
stats
for
leasing
on
the
UK.
But
for
France
it's
very,
very
positively
and
the
reversion
is
positive.
ERV,
passing
rent,
there's
a
strong
demand.
We
want to
capture
that.
At
the
moment,
the
diversification
we
have
in
our
portfolio
with
UK,
France,
and
Ireland
has
served
us
very
well.
We
just
want
to
capture
maximum
value
there,
and
we'll
see
in
time.
But
at
the
moment,
for
us,
it's
a
good
contributor
in
our
portfolio
in
the
plan
and
the
time lines
of
what
we
have
to
do.
J
Julian Livingston-Booth
Analyst, RBC Capital Markets
Thank
you.
Good
morning.
R
Rita-Rose Gagné
Hi.
J
Julian Livingston-Booth
Analyst, RBC Capital Markets
It's
Julian
Livingston-Booth
from RBC.
Just
you've
highlighted
the
importance
of
the urban
estates
as
you
look
forward.
Maybe
you
could
talk
a
little
bit
about
the
decision
to
sell
the
shopping
center
in
Leeds
given
you've
got
significant
piece
of
land
nearby.
Did
it
make
it
harder
to
sell
those
shopping
centers
or
maybe
turn
it
around?
Does
it
make
you
less
excited
about
the
land
that
you
still
hold
there?
R
Rita-Rose Gagné
Okay.
If you
have
a
few
questions
in
there,
I'll
just
come
back
on
Leeds
and
Leeds
for
us.
The
strategy
we
have
is
to
repurpose
into
urban
estates
that
have
some
repurposing
potential
and
adjoining
land.
We
didn't
see
that
as
much
in
those
physical
assets.
Leeds
is
also
a
different
profile
of
leasing
that
had
a
bit
less
synergies
with
the
Hammerson
portfolio.
The
asset
have
[audio gap]
(00:54:31)
level
of
vacancy.
So,
it
was
a
question
for
us
of
looking
at
the
risk
return
[indiscernible]
(00:54:37) determining
if
we
wanted
to
have
that
in
the
portfolio
and
ultimately
others
–
it's
a
type
of
asset that
is
better
in
the
hands
of
others
than
in
the
hands
of
Hammerson
with
what
we
have
to
do.
As
for
the
land,
the
land
is
there.
It's
a
great
piece
of
land
and
we'll
see
in
time
what
happens
there.
R
Rita-Rose Gagné
Last
question
from
the
room,
so
we'll
hand
over
to
the
phone
lines
now.
[Operator Instructions]
Operator
The
first
question
comes
from the
line
of
Colm
Lauder
from
Goodbody.
Please
go
ahead.
C
Colm Lauder
Analyst, Goodbody Stockbrokers ULC
Good
morning
all,
and
thank
you for
taking
my
question.
I'd
like
to
ask, sort
of
see
your
– and
to
hear
your
views
around
the
market
rental
side.
And
obviously
particularly
when we
look
at
the
lead
that's
been
taken
from
the
UK
market,
obviously,
ERV
declines
have
been
more
advanced
in
those
markets,
and
we
look
at
how
the
capital
value
growth
story
played
out, obviously,
UK
moved
quicker,
Ireland,
and
then
France
followed.
I
just wanted
to
understand
your
view
in
terms
of
guidance
around
the
expectations
on
potential
future
ERV
declines
in
Ireland
and
France,
obviously,
acknowledged
that
[indiscernible]
(00:56:03)
are
probably
more
prime
than
the
broader
UK
side.
But
is
this
a
case
that
those
assets
are
stronger?
So
those
ERVs
are
being
more
resilient?
Or
is
it
a
situation
whereby
perhaps
those
markets
are
lagging
the
UK?
Thank
you.
R
Rita-Rose Gagné
Thank
you
very
much,
Colm.
So
well,
my
view,
overall
view,
and
it
also
comes
from
my
past
experience
of
having
worked
into
– in
the
markets
in
France
and
looked
at
investments
in
Ireland.
I
mean,
these
three
countries
have
very
different
profiles
to
them
in
terms
of
the
lease
profiles,
how
the
lease
are
structured,
the
supply/demand
of
the
retail
sector.
I
mean,
the
UK
is
oversupplied
and
has
had
a
history
of
the
big-box
department
stores,
which
you
didn't
see
in
France.
In
France,
the
big
boxes
are
convenience
and
food.
So,
the
assets
just
have
a
– there
are
less
retail
assets
in
France.
Let's
talk
about
France
more
particularly.
And
they're
just
composed
and
mixed
in
a
different
way.
And
again,
different
lease
structures
so
that
the
ERVs
have
obviously,
and
I
think
that
the
demand
is
strong
because
there
is
a
bit
less
demand.
So, I
know
there
is
this
debate,
will
France
join
UK?
My
opinion
is,
I
don't
really
think
so
because
it's
just
very
different
environments.
And
we've
just
went
through
a
period
where
there's
been
extreme
conditions,
UK
has
went
down
about
35%
to
peak
in
terms
of the
ERVs.
You
didn't
see
that
in
France
or
Ireland.
We're
at
ultimately
also
have
the
worst –
we've
seen
the
worst
in
France
and
Ireland,
in
terms
of
the
pandemic.
So,
I'm
not
saying
we
won't
see
additional
pain,
but
I
don't
think
we
can
correlate
totally
these
countries.
The
other
thing
is
that
I
have
a
bit
of
difficulty
painting
broad
brushes
when
we
talk
about
these
things
because
it's
really
the
more
and
more
specifically
in
our
sector.
It's
going
to
be
about
the
quality
of
the
asset
in
terms
of
the
mix
of
these
assets,
the
adaptability
of
these
assets
to
the
new
world,
basically.
So,
it's
going
to
be
very
specific
to
the
assets.
In
France,
we
have
two
assets
there.
One
in
Paris
and
one
very
close
to
Paris,
very
well
located
in
their
catchment
areas.
And
as
I
said,
flagship
in
Marseille
and
Cergy,
that
is
one
that
is
in
a
– is
a
lone
ranger
in
its
catchment
area.
So
a
great
mixed
use
asset
potential.
So,
I
think
we
really
start
– have
to
start
thinking
about
these
things
pretty
much
specifically
with
the
assets,
their
locations,
their
mix
and
how
they're
operated. This
is
my
view.
C
Colm Lauder
Analyst, Goodbody Stockbrokers ULC
Thank
you.
And
just
one
follow-on
question
just
also
looking
at
leasing
and
rental
trends.
And
it'd
be
good
to
understand
the
types
of
structures
that
we're
seeing
in
terms
of
the
demand
from
your
occupiers,
the
key
trend
of
the
market
had
been
or
is
the evolution
of
alternative
lease
structures,
turnover-linked
leases,
etcetera,
versus
more
traditional
open
market
rent
[ph]
filled (00:59:33)
structures.
If
we
look
at
that
good
volume
of
leasing,
which
you
concluded
over
the
period,
what
sort
of
changes
are
you
seeing
within
lease
terms?
Are
you
seeing
increased
occupier
demand
for
those
turnover-linked
or
perhaps
inflation
or
[ph]
fixed
uplift-linked (00:59:46)
style
leases?
Or
is
the
dominance
still
an
open
market
rent
reviews
given
that
ERVs have
fallen?
Thank
you.
R
Rita-Rose Gagné
Sorry.
The
technology
over
here
skewed
your
question
a
bit
but
I
think
your
question
has
to
do
about
what
we're
seeing
in
terms
of
demand
in
terms
of
types
of
structures
of
leases.
I
can
answer
to
that
question
on
the
side
of
the
demand,
but
I
also
– I'll
answer
the
question
on
the
side
of
what
we
want
to
do
on
our
portfolio
and
how
we
see
the
risk
profile.
So,
currently,
yes,
you
will
see
more
and
more
demand
pushing
for
turnover
[ph]
leasing (01:00:27)
turnover
rent.
And
that
may
be
good
in
some
cases
but
it
may
be
risky
in
other
cases.
And
in
the
case
of
Hammerson,
at
the
moment,
we
are
still
leasing
and,
leaning
towards
the
maximum
guaranteed
rent
with
some
performance
elements
to
it.
So,
the
majority
still
–
[ph]
that's
still
what
we
achieved (01:00:48).
And
I
think,
as
I
said,
it's
a
question
of
strategy
and
I
don't
think
we're
getting
paid
enough
to
be
capped on
turnover
rent
in
many
cases.
So,
that's
really
the
drivers.
C
Colm Lauder
Analyst, Goodbody Stockbrokers ULC
That's
perfect.
Thank
you
very much.
U
Next
question,
[ph]
Tom
(01:01:17).
[audio gap]
U
(01:01:18-01:02:03).
Thank
you.
R
Rita-Rose Gagné
Okay.
So,
there's
different
things
in
your
question,
just
very
quickly,
and
I'll
ask
Himanshu
to
pitch
in
on
some
elements.
But
the
view
on
earnings,
yes,
there
is
loss
of
income
with
the
sales,
and
that's
why
we're
proceeding
in
a
very
disciplined
way,
and
that's why
we
put
ourselves
in
a
situation
at
midyear
where
we
were
not
forced
to
sell
rashly
[indiscernible]
(01:02:32).
So,
it's
all
very
much
a
balancing
act
that
we're
achieving.
I
would
say
that
we
still
have
vacancy
on
the
portfolio.
So,
our
earnings,
we
do
want
to
increase
the
top
line
and
we
can
whatever
we
sell,
and
then
working
on
the
cost
structure
and
having
– and
working
on
having
strong
earnings
and
increasing
those
earnings.
So,
there's
different
elements
at
play
and
some
of
them
are
totally
under
our
control.
But
that's
how
I
think
about
that
earning.
And
also,
we
are
total
return
focused,
so
there's
the
earnings,
but
there's
also
this
thinking
about
we
do
want
to
create
capital
appreciation
in
the
portfolio
also,
so
that's
why
we're
managing
our
strategy
in
those
–
within
those
two
blocks
at
this
time.
In
terms
of
the
leverage
Value
Retail,
maybe
Himanshu,
you
want
to
say
a
few
words
on
that
one?
H
Himanshu Haridas Raja
Yeah,
for
sure.
Look,
we're
committed,
as
you
know,
to
an
IG
rating,
and
we
talked
about
both
a
resilient
and
a
sustainable
capital
structure.
For
us,
it's
not
about
a
specific
number
around
LTV,
we're
at
37%
pro
forma
today,
[ph]
it's right
number
35% (01:03:47),
it
depends
where
you
are
in
cycle
or
whether
it's
[ph]
33% (01:03:51).
But
I
think
behind
your
question
is
really
how
do
you
finance
the
longer
term
developments?
And
Rita-Rose
has
articulated that,
I
think,
really
strongly,
which
is
it's
about
land
promotion
projects
and
creating
optionality
and
that
pivot
point
when
we
reach
points
of
liquidity.
As
to
then,
do
we
follow
our
money
and
invest
or
do
we
take
liquidity
off
the
table? And
it's
about
total
returns
and
best
returns
to
shareholders.
Rita-Rose?
R
Rita-Rose Gagné
Well,
I
think,
does
that
answer
fully
to
your
question?
[indiscernible]
U
(01:04:29-01:04:37)?
R
Rita-Rose Gagné
If
I
understand
the
question
right,
you're
asking
us
if
the
sell
of
Value
Retail
is
still
in
our
options?
H
Himanshu Haridas Raja
Yeah.
[indiscernible]
(01:04:46).
U
Yes.
R
Rita-Rose Gagné
Okay,
great.
Listen,
on
that,
we –
I
think
we
showed
today
how
strong
the
rebound
has
been
in
Value
Retail.
And
we
expect
that
rebound
to
continue.
These
are
great
assets,
great
platform,
a
lot
of
people, the
sector
that's
very
much
in-demand
at
the
moment.
Investors
are
looking
for
that and
we
have
them.
And
we
want
to
benefit
from
the
value
that
is
getting
out
of
that.
Of
course,
this
is
a
very
strong
platform.
There
are
strong,
sophisticated
partners
in
the
platform.
And
there
is
always
for
that
types
of
assets
and
platforms,
there's
always
going
to
be
optionality
for
doing
whatever
we
want
to
do
in
terms
of
exits
eventually.
But
for
now,
we're
still
benefiting
off
that
rebound
in
the
portfolio.
And
it
just
goes
to
show
how
much
opportunity
Hammerson
has
in
its
portfolio.
The
last
thing
I
would
say
and
Himanshu
did
touch a
point
in
his
presentation
on
the
transactional
evidence.
When
I
say
these
assets
are
very
coveted,
we
just
saw
some
assets
come
to
the
market
at
about
6%
yield.
So,
we're
quite
happy
with
what
we
have
at
the
moment.
But
again,
it's
options
we
have
for
the
future
in
the
portfolio.
U
Thank
you.
J
Joshua Warren
We
are just
about
out
of
time.
But
there
are
a
couple
of
clarification
questions
from
[ph]
Michael
at (01:06:22)
Jefferies
online,
which
is
worth
covering.
First
is
the
CapEx
guidance
for
FY 2022
including
the
£35
million
cost
of
going
green?
And
then
second,
what
is
the
balance
sheet
liquidity
after
meeting
or
refinancing
and CapEx
obligations
to
December
2022?
H
Himanshu Haridas Raja
Thanks,
Josh
and
[ph]
Michael (01:06:42).
So,
Himanshu,
I
think
you're
well-positioned
to
deal with
this.
H
Himanshu Haridas Raja
So,
the
reference –
Good
morning,
[ph]
Mike (01:06:49).
The
reference
to
the
£35 million
to
£50
million was
that our
share
and
it
is
inclusive
because
that
£35
million to
£50
million
was
spread
over
eight
years
to
get
to
the
equivalent
of
EPC
B.
As
Rita-Rose
referenced, it's
actually –
we're
already
at
the
2023
standards
in
our
portfolio
with
the
vast
majority
stay
already
at
E.
Josh,
would
you
just
repeat
the
second
question
for
me,
please?
J
Joshua Warren
What
is
year-end
liquidity
after
meeting
CapEx
and
financing
obligations
for
December
2022?
H
Himanshu Haridas Raja
Well, look,
liquidity
today
is
£1.7
billion.
There
are
no
major
refinancings
till
2025
that
aren't
covered.
We
have
an
opportunity
to
refinance
with
cash
€235
million
bond
[ph]
part
call (01:07:46)
in
December
of
this
year.
And
that's
the
only
near-term
maturity.
The
next
maturities
are
in
the
USPP
portfolio,
it's
about
£140
million
of
our
£216
million
USPPs.
They
don't
come
available
till
actually
2024,
so
liquidity
just
remains
strong.
And
actually,
you
could
argue
after
where
this
business
has
been
over
the last
two
years.
Actually,
the
balance
sheet,
some
might
say
is
a
little
inefficient,
but
I
just
remind
people
where
this
business
was
two
years
ago
and
the
progress
made.
So,
high
liquidity
remains
through
2022.
R
Rita-Rose Gagné
So
I
think
–
I'm
told
that
there's
no
other
questions
at
the
moment.
Obviously,
you
all
know
Josh,
and
you
can
call
Josh
for
additional
information.
So
again,
thank
you
very
much
for
your
attention.
A
lot
of
information,
but
we
really
appreciate
your
presence
physically
here
in
the
circumstances
and
see
you
soon,
I
hope. Thank you.
So, hello, everybody. Good morning. Welcome to Hammerson's 2021 Full Year Results and my first full year with the company. It's great to be able to welcome some of you in person this morning. This time last year, we were all in lockdown. While we are now learning to live with COVID, we're aware, however, of the terrible events taking place in Ukraine and we'll be following this closely.
Let me run through our agenda. I will start by giving you an overview of our 2021 priorities and achievements. Himanshu will take you through the financials. I will then give you more detail on our operational and strategic progress, finishing with our focus on the future.
Let me start with what we said. We always said that 2021 was going to be a challenging year and a year of change. This time last year, I set out our priorities and agenda for the years to come. We announced a review of our strategy, portfolio and operating model, while at the same time, recognizing the need to strengthen our balance sheet.
So, what did we do? As you can see here on this slide, it was a year of two-halves. In the first half of the year, we focused on addressing the immediate challenges. Those were stabilizing and derisking the balance sheet, which was exacerbated by the pandemic. We disposed of 403 noncore assets and refinanced around £940 million of debt. This includes the issuance of a sustainably – of our first sustainability-linked bond. We concluded a strategic and organizational review that clearly identified our unique position and the important value creation opportunities within our prime urban estates and land bank. To do all this, it was clear, however, that we needed radical change in our portfolio, in our platform, in our focus, and in our leadership.
The second half of the year was all about execution. So, regaining lost ground and laying strong foundations for future value creation. So, here's what we did. We established a clear path to execute our strategic focus underpinned by stronger financial discipline. We introduced a new asset-centric, customer-focused model across the business, and by doing so, removed layers to create a flatter, leaner organization.
We disposed of a further £30 million of UK noncore assets, simplifying and cleaning up our portfolio and exchanged our share of Silverburn for £70 million. Just last week, we completed the sale of Victoria Leeds for £120 million. That gives a total of £620 million since I arrived. We also began repositioning our core assets, actively leasing up and injecting placemaking.
Last but not least, we are accelerating plans to take forward our development sites. So, it's clear that we have delivered against what we said, but we know there is more to do and significantly more opportunity ahead.
Under the new leadership, a lot has changed at Hammerson. On this slide, you will see our approach to disciplined financial management, which underpins everything we do. This year has been – we have seen a relentless focus on, first of all, realigning our portfolio. Secondly, on leasing, we revised leasing policies and processes, creating better data to drive improved performance, speed to market, and cash. Thirdly, we focus on cash collections with daily reporting and updates. Four, on reducing our cost base through our route and branch review of the organization. Fifth point is on our approach to capital allocation, thinking about it with disciplined underwriting and decisional processes.
The last two points are all about debt management and maintaining a resilient and sustainable capital structure throughout the cycle. I'm pleased to say that last month, we secured a stable investment grade credit rating reaffirmed by Moody's as a result of all this work. This disciplined financial delivery has already had an impact on our financial results, which Himanshu will now walk you through. Himanshu?
Thank you, Rita-Rose, and good morning and thank you again for joining us here at Kings Place this morning and of course, on the webcast. I also have been at Hammerson for nearly a year now. As Rita-Rose said, it's been a year of profound change during which we've made significant financial and operational progress. You can see the highlights here. NRI was £190 million, up 12% year-on-year. Like-for-like NRI was up 22% year-on-year, driven by stronger rent collections, lower bad debt charges, and increased variable income from turnover rent, car parks and commercialization. Rent collections for 2021 are currently at 90% and 2020 collections are at 99%. And-year-to date, collections were 83% for 2022. And consistent with what I said at the half year, we did not grant any material concessions in the second half.
Adjusted earnings were £81 million, up 122% on 2020, benefiting from the improvement in net rental income, a strong recovery at Value Retail, and the lower financing costs from refinancing and our debt reduction.
Our managed portfolio is valued at £3.5 billion, down 21%. And when you look at that, around half that was [indiscernible] (00:07:00) disposals, benefiting net debt, of course, and about half from valuations. The valuations in the second half were down only 3%. We have made substantial progress in reducing debt and strengthening the balance sheet. The net debt at the year-end was £1.8 billion, 19% lower and LTV is 39% headline and 47% on fully proportionally consolidated basis.
Now, let's look at the rest of the numbers in a bit more detail. I covered the headlines already so additionally [ph] go out (00:07:37) on the slide. Premium outlets bounced back strongly from COVID with earnings up 130% year-on-year up £15.9 million compared with £7 million in 2020. And remember in the prior year, we had a positive £14 million earnings contribution from VIA Outlets we disposed of in October. So, Value Retail [indiscernible] (00:07:59) and I'll return to Value Retail in more detail later.
The IFRS loss is £429 million, the key driver being revaluation losses, which has slowed in H2 as yields began to stabilize. NTA per share was down 22% from £0.82 to £0.64. Now, to the adjusted earnings walk from £36.5 million to £81 million in a bit more detail. As you'd expect, NRI is up £33.1 million and that was the largest element with growth from our flagships of £25 million and a further £11 million from our developments in other portfolio.
During the year, we benefited from £17 million of one-offs around the premiums year-on-year. And most of that space either had been re-let or was part of our repurposing plans. Interest was better by nearly £24 million year-on-year, benefiting from the disposal program from debt reduction and refinancing from our sustainability-linked bond and our RCF. And as already explained, Value Retail had a recovery of £23 million.
Whilst our gross admin costs posted a net increase of £3.9 million, we've done a lot on cost during the year, which Rita-Rose has already referenced, and the key message here is there remains more to do. The effects of the disposals of the retail parks portfolio and the French assets in H1 2021 and VIA in late 2020 of £27 million completes the adjusted earnings walk of £81 million.
And just before I leave this slide, after effect of the 2021 disposals and surrender premiums, underlying earnings are around £52 million, and this £52 million acts as your reference point for 2022.
Now, let's turn to the balance sheet and review the NTA per share walk. The key takeaway on this slide is that the second half saw a more modest decline of £0.05, £0.02 from the H2 revaluation deficit and £0.04 from the scrip dividend, offset by £0.01 of earnings. The total dilution from the scrip was therefore £0.07 per share in the year.
Now, turning to our portfolio valuations. Going from left to right, this slide shows the portfolio summary and capital returns. On the left-hand side, the yield in the ERV impact, and the total property return in the middle. And on the right-hand side, the net equivalent and the net initial yield ranges. Again, the key takeaway is the contrast in performance between the full year and the second half. Our managed portfolio of £3.5 billion saw a double-digit decline of 11.3% for the full year, but only 2.4% in the second half, and it was good to see yields beginning to stabilize in the second half. The downward pressure on ERVs also began to abate in the second half, down only 2.5%. And this was underpinned by stronger second half leasing performance, which Rita-Rose will cover momentarily in more detail.
The total property return for the year on our managed portfolio was therefore minus 6.7% and a minus 3.9%, including Value Retail. On the net equivalent yields, we are seeing liquidity returning to the retail investment markets. And to that end, our assets are well positioned to benefit from our investment in reinvigorating and repurposing our existing space. And the valuations on our Value Retail investment remain resilient.
Let me now just break down the flagship capital returns by geography. So, the minus 11.6%, this slide shows the breakdowns by half year of the capital returns, giving you a little more color around the trajectory over the last four years. As you can see from the pink and red bars, 2020 was the worst performing year due to the impact of COVID-19. But by the time we get to H2 2021, the dark blue bar on the right-hand side, the rate of decline in capital returns has markedly slowed in each of the three territories. I'm taking each of those in turn.
UK capital returns were down 16.7% with a slowdown in the second half, helped by the emergence of some transactional evidence. From the peak, UK flagships have declined by 62% and seen an ERV decline of 31%. Net equivalent yields in the UK have expanded 290 basis points to 7.7%. In France and Ireland, the rate of decline from peak valuations has been less significant than the UK, particularly on ERV, reflecting the more benign occupational markets and strong leasing performances.
The net equivalent yields in France and Ireland are therefore at 5% and 5.3%, respectively and feel prudently valued when compared with some of our European peers. Have we turned the corner? There's certainly an emerging consensus that yields are beginning to bottom out and our negative reversion is modest in absolute terms.
I said I'll come back to Value Retail in more detail, so first, to the Value Retail P&L. Keying off from the loss of £7.1 million from Value Retail, GRI improved by £26.4 million in 2021. I remember this is against the backdrop of all the villages being closed and minimal rent collected in the first quarter of the year. And you'll recall that Value Retail rents are largely turnover based, and we saw the benefits of this coming through in the numbers with stronger brand sales and footfall as villages were able to operate with fewer to no restrictions.
The villages signed 288 leases in 2021, collection rates were around 99% and occupancy continues to be around 96%. Value Retail also successfully launched a wide range of initiatives aimed at their domestic audience, including virtual shopping, on a click-and-collect basis. And these initiatives have gone some way to mitigate the absence of tax free sales resulting in improved spend per visit year-on-year. And Value Retail also showed good cost discipline as property operating costs increased by only £3.3 million year-on-year.
We do anticipate a continued recovery in Value Retail in 2022, particularly as they expect the initial return of the international traveler in the second half of 2022 ahead of a fuller recovery in 2023. Let me now turn to the valuations of the Value Retail portfolio and their relationship to yield and density. This chart on the left maps each village by sales density and exit yield with the size of the bubbles reflecting the valuation. The sales density shown here, of course, is 2021, which is a reference point reflects a subdued trading due to periods of closure. And Bicester Village stands out by virtue of its size, followed by La Vallée. And together, these account for approximately 60% of our £1.9 billion investment in Value Retail.
There are also the more mature villages and that is reflected in the higher sales density. The less mature villages such as Maasmechelen and Fidenza are at the lower end of the spectrum in terms of exit yield, sales density and corresponding valuation, but have performed strongly as is Kildare, which was expanded during the year.
Value Retail operates very much at the premium end of the outlets segment, with net initial yields of 4% and 7% and an exit yield range of 5% to 6% using the discount rate shown here. And there have been a couple of transaction reference points in 2021 which support these valuations. We've, of course, seen the first completed sale since 2019 of outlets, that's Outlet Aubonne in Switzerland at a 7% yield. And in the UK, Bridgend Designer Outlet and UK Outlet Mall are also currently under offer. The latter, believes to be a reported blended yield of 6%. And more recently, Quintain, a market in their London outlet at Wembley, with a reported net initial yield of 6%.
And finally, before I leave Value Retail, they have made good progress on their refinancings, with two loans refinanced and upsized since the beginning of 2021. They are in the advanced stages of the refinancing of La Vallée and expect to refinance Bicester in the ordinary course during 2022.
Now, let's turn to the strengthening of our balance sheet. I've already said we've made significant progress in bringing down net debt and reported net debt at £1.8 billion was 19% lower with pro forma net debt starting at £1.6 billion following the sale of Victoria Leeds, and the exchange of Silverburn. We have strong liquidity, £1.7 billion pro forma, and we have no material refinancing until 2025, not covered by existing cash and liquidity. And Rita-Rose has mentioned testament to our progress. It was great to see Moody's recently reaffirming our IG credit rating and removing the negative outlook to stable.
And turning to the cost base, a key focus in the second half was to reset the organization and, of course, following due an appropriate consultation, reduce the head count by 18%. We retendered and reduced our insurance premiums by 64%. And we saw some in-year savings in payroll costs, but these were offset by the return to normalized levels of variable pay following minimal payouts in the 2020 pandemic here.
As we look forward, we continue to review our organization to make sure we have the right skills and talent, and that we also rightsize for the effects of disposals. And for those of you physically here today, we of course, are looking to rightsize the office space and there'll be further opportunities to reduce costs as we simplify and automate. And this will drive to a leaner and more agile company for the future.
So, to my final slide, let me close by giving you some guidance on modeling assumptions. You'll see the different elements of the very detailed guidance on here. And we've provided you with the starting GRI stripped of disposals and surrenders, including Silverburn and Leeds and that rebased GRI is £193 million.
If you take each of the components from disposal through to finance costs, you have all the elements that give you the drop through to adjusted earnings. The key variable, of course, will be the magnitude, timing, and exit yield on disposals. On CapEx, we expect 2022 CapEx of around £125 million, balanced between the reinvestment and repurposing, in placemaking, and in stewardship, stewardship being a reference to the need in some of our assets to put in CapEx to make up for underinvestment in previous years.
Rita-Rose already talked about our disciplined approach in financial management, and that will certainly entail in our deployment of capital.
And finally to dividends, we continue to cover our outstanding REIT and SIIC obligations for our scrip dividend in 2022 before intending to return to cash dividends from 2023 onwards.
With that, let me hand back to Rita-Rose.
Thanks, Himanshu.
So, let me start quickly with who we are and what drives us. So, we are an owner, operator, and developer of sustainable prime urban real estate. Our competitive advantage is our core assets, which have a unique city center footprint illustrated by the map you can see on this slide. 250 million people pass through our assets every year. We support more than 40,000 jobs, so we play an essential role in our communities. Today, that portfolio remains focused on traditional uses. We are now executing against a clear strategy to reposition our prime urban estates. You can see this on the right of the slide.
My experience from other international markets inspire me when I think about the future of our destinations, a more asset-focused mindset and a broader mix of uses adapted to reflect the demands of the cities, neighborhoods, and the communities they serve. So, this is a real opportunity for us and it's already happening.
At the half year we set out our strategy to unlock value, which you can see on the left of this slide. It comprises of four key elements; reinvigorating our assets, accelerating development, creating an agile platform, and delivering a sustainable and resilient capital structure. On the right of the slide, you can see our near-term opportunities, which include maximizing cash flow off the existing asset footprint by repositioning and filling space. Second, generating capital to reduce net debt and reinvest. Third, increasing organizational speed and efficiency, also further reducing costs. And fourth, creating value and optionality in the land bank by hitting early milestones.
In the medium to long term, we will create value through the combination of our existing assets footprint and adjoining sites. Our ambition is to deliver a total return via a sustainable cash dividend and capital appreciation.
Turning to the first of those key elements, reinvigorating our assets, we have had a strong year on leasing. Before I cover that, let me show you the recovery of footfall and spend. On the left-hand side, you can see the significant uplift in footfall following the relaxation of COVID restrictions. In our core assets, we have seen footfall increase above 2019. Spend per visit has also remained high with sales recovering almost to 2019 levels. As sales have recovered and rental levels rebased, occupancy costs are now affordable.
This slide shows our higher leasing volumes and improved matrix, particularly in H2. Let me walk you through a few data points. We signed a total of 371 leases in 2021. So, it's around equivalent of 20% of the portfolio, 70% up on 2020. This represented 2.9 million square feet of space by value. This was £25 million at our share, 150% up on 2020.
Principal leases represented 71% of deals and 94% of volume. Net effective rent for principal deals was 11% below ERV but with a clear improvement to minus 5% in the second half. Overall, headline rent was broadly in line with previous passing. There is a breakdown by country in the additional disclosures.
In summary, the UK remains the most challenging and fast-moving market. But even there, one-third of deals were above ERV and 41% were above passing rent. France continues to exhibit stability and growth and the Irish market is strong. But this year, it's skewed by a small sample. As we continue to execute our strategy to actively lease-up and increase vibrancy, we are targeting now a broader mix and saw 69% of leases to non-fashion this year. For fashion, we remain focused on best-in-class brands.
We also continue to use temporary leasing, particularly to bridge periods between deals, keep options open, or try out new concepts. These remain at a steep discount across the portfolio but are cash accretive. We indeed saved around £6.5 million of void costs on an annual basis this year. As for vacancy, this has reduced from 7% at the half year to 4.5%.
Momentum continues to build with data in 2022 showing that January and February our volume of leases is up and rents are now in line with ERV and ahead of passing rent, which is a KPI we follow closely, which I call internally the cash-on-cash. So, those were the numbers.
On the following slide, I want to talk to you a bit about what it looks like on the ground with a samples of our occupiers. Our leasing activity in 2021 is roughly grouped into six leasing themes, which you can see on the left-hand side. For asset management, we engage proactively and at a portfolio level. Next, in response to the changing landscape, we are doing big box repurposing and introducing a wider mix of F&B, leisure, and non-traditional uses to these spaces. Commercialization and events also play an important role in cash flow, creating vibrancy, and we trial new concepts.
I could talk to you all day about all the examples on this slide, we had a lot. In the interest of time, I will stop on to great examples that cover a number of these themes, Goldsmiths and Brown Thomas. Goldsmiths wanted to upsize in the Bullring. We proactively engaged at the C-suite level to gain a better understanding of their needs. Today, Goldsmiths occupy a total of 14 units across the portfolio, making them a top 20 occupier and partner.
We also opened Brown Thomas in Dundrum in Ireland last week in the House of Fraser vacant space. This 62,000-square-feet beauty hall and lifestyle brand features the apartment, a lounge for luxury shoppers, and a range of other innovations such as vitamin injections, designer handbag exchange, glad rags rentals, etcetera. Penneys takes over the remaining floors, making this an exciting and innovative retail experience.
As we execute our strategy, we need to realign obviously our portfolio and generate capital. On this slide, I will take you through our disciplined disposal program. As we continue to follow the plan set out at half year, you can see on the left-hand side of this slide the sales in 2021 and early 2022, bringing us to £623 million of disposals. On the right, we have our two buckets of disposal candidates with both in the near term and in the medium term. Sales will depend on both pricing and market conditions. We anticipate at least a total of £500 million by end of 2023, and that includes Victoria Leeds and Silverburn.
Having said that, you will see on the next slide how we think about capital allocation. Today, we are still focused on reducing in total absolute indebtedness. We have a total return philosophy. But as a REIT, we must keep or meet our payout obligations. We also have a clear intent to return to a cash dividend once our SIIC obligations are met, and that was covered by Himanshu's guidance.
Next, mindful of our relatively high cost of capital, we will look continuously at our capital structure, and Himanshu is all over that. Organic investment in our existing core assets and land bank means we could consider consolidating our core assets [ph] and markets (00:31:18). We remain [indiscernible] (00:31:20) the opportunity for exceptional [ph] returns arise (00:31:23).
Turning to creating the agile platform, which is another key element of our strategy, I mentioned at the start that we have enhanced the leadership team. You can see on the left-hand side of the slide the new skills and insights that supplement our existing talent within the business. The shape of the leadership and [ph] colleague team (00:31:48) will continue to evolve as we realign the portfolio requiring new skills. It has not only been about getting the right team in place of course, but making sure the right governance structures are there to empower and support colleagues and to drive a high-performance culture.
When I arrived, decision-making was spread across more than 30 committees, and today we concentrate on three. Hammerson was at an inflection point when I arrived, and we needed to reset the organization to be more efficient and effective. I've said that at the half year. The most material change that's derived from our review was the shift from a geographic silo structure to an asset-centric and customer-focused operating model. This new structure also delivers a more empowered organization, which is closer to our assets and occupiers. In the near term, we are also focusing on simplifying and automating key processes to improve that speed-to-market, increase efficiency, and speed to cash.
Staying with our four strategic elements, I will now turn to accelerating development. Most of you are aware of the opportunity set in the portfolio, and there is the usual slide in the additional disclosures showing the potential mix of uses. I wanted to give you a sense of what stage we are at with each of these projects on this slide.
Today, the land promotion portfolio can be divided into three buckets. First, our four near-term projects, and that is Dublin Central, The Goodsyard, Martineau Galleries, and Grand Central. These are either well advanced on detailed planning or will be able to be advanced rapidly. Progressing these projects in the near term to a point where they are ready-to-go development opportunities will create significant short-term value and optionality as to how we take them forward and/or look for liquidity or deliver partnerships.
Next are the medium-term projects, which are largely at the feasibility or master planning stages. Therefore, more midterm prospects in terms of value creation and liquidity as we define the appropriate project and phasing to maximize value. Finally, we have a longer term strategic project, which is in Ireland.
Let me show you a bit more detail on the four near-term land promotion projects. These have potential to be on site as early as 2023, 2024. On the left of this, you can see the milestones we achieved in 2021 and what you should look out for in 2022 and 2023. There's a lot going on here. But the key message is that this is relatively capital-light activity, a total of around £73 million over the next two years. And you can see from the right-hand side that this delivers an immediate valuation uplift of approaching £110 in that period. There is of course a very significant long-term opportunity on top of that with potential GDV of more than £2.5 billion at our share. But the near-term work gives us optionality to select the best returns for the shareholders.
Let me talk now a few minutes about sustainability, which is a key focus of the company and underpins everything we do. It's a very important topic whether we are thinking about embedded carbon in future developments or the existing emissions footprint to-date.
Hammerson has a long-standing and recognized commitment to sustainability. Since the launch of our goals in 2015, we have reduced our carbon emissions by 68%. We've already talked about the sector-first sustainability-linked bond we issued. So, let me pull out two other highlights, expanding renewable energy across the portfolio this year. In France, we connected Terrasses du Port to the Thassalia geothermical (sic) [geothermal] system for heating and cooling. We also installed the new PV array at Dundrum in Ireland. Looking ahead, we are in good shape to meet our targets. We are already 2023 compliant with EPC ratings of E or above. We estimate the total cost of works to get to B EPC ratings at £35 million to £50 million spread over the portfolio as is across eight years at our share.
Before concluding, I wanted to show you how we bring strategy to life, and Birmingham is a great example. In Birmingham, three assets are becoming a prime urban estate. This shows you the near-term opportunity we have in real life. Today, you can see Bullring and Grand Central in the middle and to the left. A marquee project on this journey is the repositioning of a former department store space to a flagship grocery-led offer and a competitive sports-led leisure concept. This will be in place by early 2023.
We are in early stages of engagement on the remaining floor for another new leisure concept. This is about revitalizing interest in this end of the Bullring for both existing and new occupiers. We are very excited about the leasing pipeline we are actually seeing. At Grand Central, we have another great opportunity to repurpose the former JLP space. And at Ladywood House, repurposing will see a modern workspace-led asset. These two important projects sit astride New Street station, the main commuting hub for the West Midlands, which sees almost 50 million people in transit in an average year. To the right of the picture, a stone's throw away, you can see Martineau Galleries. Today, this site is a collection of yielding secondary and tertiary assets. Next to where the Curzon Street HS2 station is being constructed, it has tremendous potential as a residential and workspace scheme in the medium to long term. Linking this back to our longer term strategy, when we think about the future of our exposure to the city, we think about Birmingham estate, not about three separate assets.
Taking this up to the portfolio level now and to give you a picture of our aspirations, by bringing together the near-term repositioning and longer-term opportunities, you create a clear link and pass the significant value for the future. On the left-hand side, you see the shape of the managed portfolio to-date by value. Delivering on those near-term opportunities brings you to the chart in the middle. A stronger balance sheet, reducing debt, and recycling into our existing assets and land, higher quality earnings and a sustainable dividend stream, further repositioning of the portfolio, and some valuation uplift from hitting those early land promotion milestones. On the right-hand side, you can see the indicative shape of the portfolio in five years or so. And that's a fully realigned portfolio, repositioning of those assets completed, further underpinning the earnings and the blend of active phased development to core, and further land promotion activity is possible.
During this journey from left to right, we will create absolute optionality about which opportunities to pursue for best returns for the shareholders. There remains obviously a significant earnings and capital growth opportunity in the future.
To my closing remarks, under new leadership we have addressed our immediate priorities and delivered on our early milestones. I do believe Hammerson has turned the corner, but we realized and recognized we have more to do and that we continue to operate in a challenging market. We have the right [audio gap] (00:41:27), a robust strategy, [audio gap] (00:41:29) and operating model. Our focus is relentlessly on reducing vacancy and void costs, repurposing space, delivering a mix that occupiers and customers demand, and unlocking value from the development opportunities in the portfolio. As we continue to execute our strategy, we will build a stronger business and one that delivers value for shareholders.
So, thank you for your time today. I will now open to the floor and the lines are also open for questions. Josh will be taking the questions online. If you are in the room, please raise your hand and there is a microphone that will come to you. Thank you very much.
Chris.
Hi.
Hi.
Good morning. This is Chris Fremantle from Morgan Stanley. I have two questions, one on leasing trends in the UK and the other on rebased earnings for 2022. So, on the UK, I think you gave some disclosure in the back, which you highlighted, which is showing that the leasing activity is, in the UK at least on I think it's slide 40, showing that the leasing is still quite a long way below ERV. I wonder if you can just give us some color on that, please, and just suggest how that can reassure us for stabilizing ERVs in the UK, if that's happening or not.
Okay.
So, that's the first question. The second on rebased earnings, I think you gave a £52 million...
Yeah.
...number for rebased earnings. I think there are some disposals post year-end of course, which you've announced, which are quite high-yielding disposals and which I think have, if I'm not wrong, quite big impact on 2022 earnings as well. So, I wonder if you can just give a little bit more color on that. And particularly, when you are disposing of those very high-yielding earnings in order to recycle, can you give us some color about the yields on cost that you're using that capital to recycle into? If you're disposing 7% to 9% net initial yields, are the yields on cost that you're reinvesting that capital in comparable or better? Thank you.
Great. Thank you very much, Christopher. I will start with the leasing questions for the trends for the UK, and then I will ask Himanshu to take on the rebased earnings and I may come back with a few things.
So, just for the UK, you're right. I mean, there is the UK in 2021 still suffered in terms of ERV and passing. What you have to know however is that there's a big volume of deals. And in H2 there was a clear, as we always said, a clear rebound. So, 40% of our deals in the UK were over passing rent and about 35% were over ERV. And obviously, as we proceeded in the year, the statistics became better.
The other thing I would say in the UK is that we did do eight strategic deals in the year that were below ERV, and we made them for strategic reasons in terms of wanting to occupy some part of the asset and with some brands that we absolutely wanted to include to the mix. So, that has potentially skewed the statistics. But we're clearly seeing the trends, ERV declines have slowed. I would also tie up 2022, what are we seeing December, January, February. Now, we are, in all geographies, well ahead of passing rent. And again, passing rent for me is very important, and when I say well ahead, it's over 20%, and same thing for ERV. And that's in all our regions.
France is more stability and more growth, but the UK is really showing a strong rebound. And I think that's related to the demand coming back and we're starting to see a bit more tension in the discussions we have, sometimes even having more than one tenant for a unit, for example. And the retailers, the strong retailers really, really want their physical space. And you're starting to feel that they're ready to pay up for the right locations. So, the volume is continuing to trend very well for January and February 2022, and we think for the year to come.
Himanshu, do you want to say a few...
Yeah, sure.
...things on the GRI?
I think on your question, Chris, on the rebased earnings and disposals, let me just take you back up a level. The disposals are about realigning the portfolio, first and foremost. It's about reshaping of portfolio for the future where we feel we can diversify the income streams for the future and really have those urban estates for the future. And that's what informs the disposal strategy. With the strengthening of the balance sheet, of course, we can be patient. And one of your modeling challenge is, as I referenced, is what might the timing of those be.
But I think you had a follow-on question, which is really about the recycling of that capital, which is all about capital allocation. And Rita-Rose shared our philosophy on that capital allocation. And it's really about creating that optionality, which Rose referenced, the land promotion projects, for example. But she also referenced the near-term ones. We use Birmingham to illustrate. But we see those opportunities [ph] to rise (00:47:57) across the portfolio.
And then we referenced in Rita-Rose's speech also there'll be opportunities on the balance sheet as well. So, we're mindful of cost of capital and making sure that as we recycle that capital, we create those options for the future.
I think that's complete. Thanks. Hi.
Hi. Paul May, Barclays. [ph] Several (00:48:28) questions from me. The first one just on the earnings point moving forwards. I think you started with [indiscernible] (00:48:36). Let's try again. [ph] So, here we go (00:48:45). That's probably better. Paul from Barclays. Sorry. Just on the earnings moving forwards, if you start with the [ph] £52 million (00:48:51), I think you get to quite a different number versus the building blocks that you gave on the separate slide where very, very quickly you just, all of a sudden, you're getting to around about mid-70s if you adjust for all the various things that you've mentioned, assuming some recovery in value retail and other things. Just wondered which is the best start point. As in, do you look at the [ph] £52 million (00:49:10) or do you look at the slide where you keep the building blocks and the guidance?
Second one just on the gross development value of the near-term opportunities that you mentioned greater than £2.6 billion, are you able to give any guidance as to what the CapEx is to get to that £2.6 billion and the timeframe over which you might be able to achieve that £2.6 billion?
And then finally on disposals and to Chris's point about selling higher yielding assets, obviously France is something I think you've kind of highlighted as a potential exit, stability in income there, yields are lower there. Is that something that now you're seeing the rebound in the UK you don't necessarily need France to kind of stabilize the numbers? Is that something that you're looking to actively dispose of? Thank you.
So, thank you for your questions. Himanshu, maybe take the first one on the earnings, and I'll pitch in for the two others.
So, Paul, welcome. The issue we saw with the [ph] £52 million (00:50:08) is you got to remember all the periods of closure. So, in giving you the normalized £193 million GRI number and to work from that, our base assumption is that we're beyond that COVID period. Whether [ph] it's us (00:50:23) or value retail villages or even when France was open, they had a period where there was a sanitary pass required to be worn, not just to enter a shopping center, but to actually enter individual stores, which they then relaxed.
I was in Ireland a few weeks ago and actually there was restrictions as recently as three weeks ago with closures at sort of 8:00 PM. So, the modeling guide is around the normalized GRI going forward and also helps you by stripping out the effect of Silverburn and Leeds.
Rita-Rose, back to you.
Thanks, Himanshu. So, on the second question, make sure I understood, you're asking what are the near-term CapEx to unlock or the overall program. I'll answer both. I'll go back to the whole...
It's more on the overall program to...
Yeah.
...get to the £2.6 billion.
Yeah. So yeah. And so, the overall program, the gross development cost is about £2.5 billion, £2.6 billion at our share. What I'd like to say here, just to make sure we state this clearly, is that what we are doing at the moment on the – we separated this year in three buckets. Those land promotion projects was really a focus at the moment of creating maximum value short term, bringing those lands at a point where we will have the opportunity as – optionality, as I was saying, of having created value monetizing or determining if the development or how we would go about in a development.
At the moment, there is a lot of demand around those developments. So, we really have to view this in buckets, the short-term value and then the decision points, what we crystallize then and how we go forward. And then you get into this potential of £2.5 billion, £2.6 billion CapEx.
On the question of France, France is a – I spent a bit more time there and was there actually recently. France is a market at the moment, which we have four assets. We have two assets in minority holdings and two, Terrasses du Port and Cergy, two strong assets in which there's some value creation to do that we would like to capture.
At the moment, the portfolio is trending very well. I gave stats for leasing on the UK. But for France it's very, very positively and the reversion is positive. ERV, passing rent, there's a strong demand. We want to capture that. At the moment, the diversification we have in our portfolio with UK, France, and Ireland has served us very well. We just want to capture maximum value there, and we'll see in time. But at the moment, for us, it's a good contributor in our portfolio in the plan and the time lines of what we have to do.
Thank you. Good morning.
Hi.
It's Julian Livingston-Booth from RBC. Just you've highlighted the importance of the urban estates as you look forward. Maybe you could talk a little bit about the decision to sell the shopping center in Leeds given you've got significant piece of land nearby. Did it make it harder to sell those shopping centers or maybe turn it around? Does it make you less excited about the land that you still hold there?
Okay. If you have a few questions in there, I'll just come back on Leeds and Leeds for us. The strategy we have is to repurpose into urban estates that have some repurposing potential and adjoining land. We didn't see that as much in those physical assets. Leeds is also a different profile of leasing that had a bit less synergies with the Hammerson portfolio. The asset have [audio gap] (00:54:31) level of vacancy. So, it was a question for us of looking at the risk return [indiscernible] (00:54:37) determining if we wanted to have that in the portfolio and ultimately others – it's a type of asset that is better in the hands of others than in the hands of Hammerson with what we have to do. As for the land, the land is there. It's a great piece of land and we'll see in time what happens there.
Last question from the room, so we'll hand over to the phone lines now. [Operator Instructions]
The first question comes from the line of Colm Lauder from Goodbody. Please go ahead.
Good morning all, and thank you for taking my question. I'd like to ask, sort of see your – and to hear your views around the market rental side. And obviously particularly when we look at the lead that's been taken from the UK market, obviously, ERV declines have been more advanced in those markets, and we look at how the capital value growth story played out, obviously, UK moved quicker, Ireland, and then France followed.
I just wanted to understand your view in terms of guidance around the expectations on potential future ERV declines in Ireland and France, obviously, acknowledged that [indiscernible] (00:56:03) are probably more prime than the broader UK side. But is this a case that those assets are stronger? So those ERVs are being more resilient? Or is it a situation whereby perhaps those markets are lagging the UK? Thank you.
Thank you very much, Colm. So well, my view, overall view, and it also comes from my past experience of having worked into – in the markets in France and looked at investments in Ireland. I mean, these three countries have very different profiles to them in terms of the lease profiles, how the lease are structured, the supply/demand of the retail sector.
I mean, the UK is oversupplied and has had a history of the big-box department stores, which you didn't see in France. In France, the big boxes are convenience and food. So, the assets just have a – there are less retail assets in France. Let's talk about France more particularly. And they're just composed and mixed in a different way. And again, different lease structures so that the ERVs have obviously, and I think that the demand is strong because there is a bit less demand.
So, I know there is this debate, will France join UK? My opinion is, I don't really think so because it's just very different environments. And we've just went through a period where there's been extreme conditions, UK has went down about 35% to peak in terms of the ERVs. You didn't see that in France or Ireland. We're at ultimately also have the worst – we've seen the worst in France and Ireland, in terms of the pandemic.
So, I'm not saying we won't see additional pain, but I don't think we can correlate totally these countries. The other thing is that I have a bit of difficulty painting broad brushes when we talk about these things because it's really the more and more specifically in our sector. It's going to be about the quality of the asset in terms of the mix of these assets, the adaptability of these assets to the new world, basically.
So, it's going to be very specific to the assets. In France, we have two assets there. One in Paris and one very close to Paris, very well located in their catchment areas. And as I said, flagship in Marseille and Cergy, that is one that is in a – is a lone ranger in its catchment area. So a great mixed use asset potential. So, I think we really start – have to start thinking about these things pretty much specifically with the assets, their locations, their mix and how they're operated. This is my view.
Thank you. And just one follow-on question just also looking at leasing and rental trends. And it'd be good to understand the types of structures that we're seeing in terms of the demand from your occupiers, the key trend of the market had been or is the evolution of alternative lease structures, turnover-linked leases, etcetera, versus more traditional open market rent [ph] filled (00:59:33) structures.
If we look at that good volume of leasing, which you concluded over the period, what sort of changes are you seeing within lease terms? Are you seeing increased occupier demand for those turnover-linked or perhaps inflation or [ph] fixed uplift-linked (00:59:46) style leases? Or is the dominance still an open market rent reviews given that ERVs have fallen? Thank you.
Sorry. The technology over here skewed your question a bit but I think your question has to do about what we're seeing in terms of demand in terms of types of structures of leases. I can answer to that question on the side of the demand, but I also – I'll answer the question on the side of what we want to do on our portfolio and how we see the risk profile. So, currently, yes, you will see more and more demand pushing for turnover [ph] leasing (01:00:27) turnover rent. And that may be good in some cases but it may be risky in other cases.
And in the case of Hammerson, at the moment, we are still leasing and, leaning towards the maximum guaranteed rent with some performance elements to it. So, the majority still – [ph] that's still what we achieved (01:00:48). And I think, as I said, it's a question of strategy and I don't think we're getting paid enough to be capped on turnover rent in many cases. So, that's really the drivers.
That's perfect. Thank you very much.
Next question, [ph] Tom (01:01:17). [audio gap]
(01:01:18-01:02:03). Thank you.
Okay. So, there's different things in your question, just very quickly, and I'll ask Himanshu to pitch in on some elements. But the view on earnings, yes, there is loss of income with the sales, and that's why we're proceeding in a very disciplined way, and that's why we put ourselves in a situation at midyear where we were not forced to sell rashly [indiscernible] (01:02:32). So, it's all very much a balancing act that we're achieving.
I would say that we still have vacancy on the portfolio. So, our earnings, we do want to increase the top line and we can whatever we sell, and then working on the cost structure and having – and working on having strong earnings and increasing those earnings. So, there's different elements at play and some of them are totally under our control. But that's how I think about that earning. And also, we are total return focused, so there's the earnings, but there's also this thinking about we do want to create capital appreciation in the portfolio also, so that's why we're managing our strategy in those – within those two blocks at this time.
In terms of the leverage Value Retail, maybe Himanshu, you want to say a few words on that one?
Yeah, for sure. Look, we're committed, as you know, to an IG rating, and we talked about both a resilient and a sustainable capital structure. For us, it's not about a specific number around LTV, we're at 37% pro forma today, [ph] it's right number 35% (01:03:47), it depends where you are in cycle or whether it's [ph] 33% (01:03:51).
But I think behind your question is really how do you finance the longer term developments? And Rita-Rose has articulated that, I think, really strongly, which is it's about land promotion projects and creating optionality and that pivot point when we reach points of liquidity. As to then, do we follow our money and invest or do we take liquidity off the table? And it's about total returns and best returns to shareholders. Rita-Rose?
Well, I think, does that answer fully to your question? [indiscernible]
(01:04:29-01:04:37)?
If I understand the question right, you're asking us if the sell of Value Retail is still in our options?
Yeah. [indiscernible] (01:04:46).
Yes.
Okay, great. Listen, on that, we – I think we showed today how strong the rebound has been in Value Retail. And we expect that rebound to continue. These are great assets, great platform, a lot of people, the sector that's very much in-demand at the moment. Investors are looking for that and we have them. And we want to benefit from the value that is getting out of that. Of course, this is a very strong platform. There are strong, sophisticated partners in the platform. And there is always for that types of assets and platforms, there's always going to be optionality for doing whatever we want to do in terms of exits eventually. But for now, we're still benefiting off that rebound in the portfolio. And it just goes to show how much opportunity Hammerson has in its portfolio.
The last thing I would say and Himanshu did touch a point in his presentation on the transactional evidence. When I say these assets are very coveted, we just saw some assets come to the market at about 6% yield. So, we're quite happy with what we have at the moment. But again, it's options we have for the future in the portfolio.
Thank you.
We are just about out of time. But there are a couple of clarification questions from [ph] Michael at (01:06:22) Jefferies online, which is worth covering. First is the CapEx guidance for FY 2022 including the £35 million cost of going green? And then second, what is the balance sheet liquidity after meeting or refinancing and CapEx obligations to December 2022?
Thanks, Josh and [ph] Michael (01:06:42). So, Himanshu, I think you're well-positioned to deal with this.
So, the reference – Good morning, [ph] Mike (01:06:49). The reference to the £35 million to £50 million was that our share and it is inclusive because that £35 million to £50 million was spread over eight years to get to the equivalent of EPC B. As Rita-Rose referenced, it's actually – we're already at the 2023 standards in our portfolio with the vast majority stay already at E.
Josh, would you just repeat the second question for me, please?
What is year-end liquidity after meeting CapEx and financing obligations for December 2022?
Well, look, liquidity today is £1.7 billion. There are no major refinancings till 2025 that aren't covered. We have an opportunity to refinance with cash €235 million bond [ph] part call (01:07:46) in December of this year. And that's the only near-term maturity. The next maturities are in the USPP portfolio, it's about £140 million of our £216 million USPPs. They don't come available till actually 2024, so liquidity just remains strong. And actually, you could argue after where this business has been over the last two years. Actually, the balance sheet, some might say is a little inefficient, but I just remind people where this business was two years ago and the progress made. So, high liquidity remains through 2022.
So I think – I'm told that there's no other questions at the moment. Obviously, you all know Josh, and you can call Josh for additional information. So again, thank you very much for your attention. A lot of information, but we really appreciate your presence physically here in the circumstances and see you soon, I hope. Thank you.
Thanks, [ph] Rose (01:08:53).