Strong 2023: rental growth and earnings up, more to come
Rita-Rose Gagné, Chief Executive of Hammerson, said:
“Our city centre destinations are in high demand. This year we delivered a positive performance across our key strategic, operational and financial metrics. Like-for-like gross rental income was up 6%, following another record year of leasing. Occupancy remains strong and footfall and sales were up again. We’ve strengthened our operational platform, whilst reducing costs by 14%. As a result, adjusted earnings rose 11% to £116m, whilst net debt was down 23%, with ample liquidity.
Over the last three years, we have delivered against all strategic milestones. We now have a core portfolio focused on urban locations which are evolving into my vision: vibrant, 24/7 multi-use estates. These destinations are fast growing, and part of the fabric and infrastructure of the cities in which we operate.
Whilst our eyes are open to the current macro-economic environment, our occupiers are thriving and our visitor numbers are on the rise in our realigned portfolio. We are reaping the rewards of the investments we are making in our core portfolio alongside best-in-class occupiers, which underpins the high levels of demand for our space. We expect this trajectory to continue in the year ahead. We have a strong pipeline of leasing and repurposing opportunities. There is still more for us to do, but we are now entering a time where having the capability to invest and operate with discipline and conviction will be rewarded.”
Positive performance across our key operational and financial metrics:
- Another record year of leasing with 306 deals, representing £46m of headline rent, £29m at our share, up +23% LFL
- Permanent deals signed +37% vs previous passing; net effective rent +12% vs ERV
- Footfall up +3% year-on-year; dwell time +5%; LFL sales +1% UK, +3% France
- Adjusted earnings growth of +11% to £116m, or 2.3p per share (+10%), driven by like-for-like GRI up +6%, NRI +4%
- Continued cost reduction outperformance: gross administration cost -14% year-on-year bringing total cost reduction since FY 20 to -24%; guiding to a further -10% cost reduction in 2024
- Value Retail adjusted earnings of £32m (FY 22: £27m), and £74m of catch-up cash distributions received
- Group portfolio value of £4.7bn (FY 22: £5.1bn), mainly due to disposals and derecognitions; capital return -2.6%
- IFRS loss of £51m (FY 22: £164m loss), basic loss per share of -1.0p (FY 22: -3.3p)
- EPRA NTA per share 51p (FY 22: 53p)
- Execution of disposal programme has strengthened balance sheet: net debt down 23% to £1,326m; LTV 34% (FY 22: 39%), FPC LTV 44% (FY 22: 47%); Net debt to EBITDA of 8.0x (FY 22: 10.4x); liquidity of £1.2bn (FY 22: £1.0bn)
- Balance sheet further strengthened since the year-end with the exchange for the sale of USQ for £111m
Dividend
- In July 2023, the Board reinstated a cash dividend as guided and announced a new dividend policy of 60-70% of annual adjusted earnings, balancing distributions to shareholders with our focus on reinvesting in our core portfolio to deliver further growth and value.
- Today, the Board has recommended a final cash dividend of 0.78p per share subject to shareholder approval, which will be paid as an ordinary dividend, bringing the full year cash dividend to 1.50p per share, representing a 64% payout, commensurate with the half year payment. The dividend declaration will be released as a separate announcement.