Annual Report 2023

Strategic Report

1 Welcome from our Chief Executive

2 Hammerson At a Glance

4 Strategy in Action

6 Chair of the Board’s Statement

8 Chief Executive’s Statement

including Strategy

16 Market Overview

18 Our Business Model

20 Our Stakeholders

23 KPIs

24 Our Colleagues

26 Environmental, Social and

Governance (ESG)

31 Task Force on Climate-related Financial

Disclosure (TCFD)

41 Financial Review

54 Risks and Uncertainties

64 Viability Statement

66 Non-financial and Sustainability Information

Statement

Corporate Governance

68 Board of Directors

70 Corporate Governance Report

78 Nomination and Governance

Committee Report

84 Audit Committee Report

90 Directors’ Remuneration Report

110 Directors’ Report

112 Statement of Directors’ Responsibilities

Financial Statements

113 Independent Auditor’s Report to the

members of Hammerson plc

122 Consolidated Financial Statements

127 Notes to the Consolidated Financial

Statements

171 Company Financial Statements

173 Notes to the Company Financial

Statements

Other Information

180 Additional Information

193 Five Year Record

194 Shareholder Information

196 Glossary

Highlights

Our results are evidence of the significant

strategic, operational and financial progress

made in 2023

INCOME STATEMENT

IFRS loss for the year

£(51)m

2022: £(164)m

Adjusted earnings K A

£116m

2022: £105m

BALANCE SHEET

Net assets

£2,463m

2022: £2,586m

Total accounting return K A

(2.1)%

2022: (6.8)%

CREDIT METRICS

LTV: Headline/Fully proportionally

consolidated A

34%/44%

2022: 39%/47%

Net debt:EBITDA K A

8.0 times

2022: 10.4 times

PER SHARE METRICS

Basic/Adjusted EPS A

(1.0)p/2.3p

2022: (3.3)p/2.1p

NTA per share A

51p

2022: 53p

OPERATIONAL METRICS

Leasing activity K

£29.0m

2022: £25.4m

Footfall (like-for-like change) K

2.7%

2022: 38.8%

Passing rent (like-for-like

change) K

2.5%

2022: 1.4%

Carbon emissions (like-for-like

change GHG basis) K

-13.4%

2022: -7.9%

CONTENTS

K KPI A Alternative Performance Measure

This report provides alternative performance measures (APMs). We believe these APMs provide

readers with important additional information on our business. Further explanation of the key

APMs and why we use them is set out in note 1C to the financial statements with a reconciliation to

their IFRS equivalents in note 9. Other APMs are contained in the Additional Information section of

this Annual Report.

Well positioned for growth

and value creation

Rita-Rose Gagné

Chief Executive

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

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.

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 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.

1Hammerson plc Annual Report 2023

Strategic Report

Welcome from our Chief Executive

Dundrum Town Centre, Dundrum

Les Terrasses du Port, Marseille

A city centre business well

positioned for growth

We create exceptional city centre destinations

that realise value for our stakeholders, connect

our communities and deliver a positive impact

for future generations.

Managed portfolio

Birmingham Estate, Birmingham

Bishopsgate Goodsyard, London

Brent Cross, London

Bristol Estate, Bristol

Eastgate, Leeds

The Oracle, Reading

Union Square, Aberdeen*

Westquay, Southampton

Dublin Central, Dublin

Dundrum Estate, Dublin

Ilac Centre, Dublin

Pavilions, Swords

Les 3 Fontaines, Cergy

Les Terrasses du Port, Marseille

Value Retail

Bicester Village, Bicester

Fidenza Village, Milan

Ingolstadt Village, Munich

Kildare Village, Dublin

La Roca Village, Barcelona

Las Rozas Village, Madrid

La Vallée Village, Paris

Maasmechelen Village, Brussels

Wertheim Village, Frankfurt

* On 26 February 2024, the Company announced the

exchange of contracts for the disposal of Union Square.

2Hammerson plc Annual Report 2023

Strategic Report

Hammerson at a glance

River Clean Up, Brent Cross

Urban Rooftop Farm, Marseille

Our investment proposition

A core portfolio realigned to growing

urban locations; resilient capital

structure ; lean platform; sustainable

earnings and income stream.

Our purpose and values

We create outstanding experiences in

unique city locations. We are Ambitious,

Connected and Respectful.

Our commitment to ESG

Our customer and asset-centric

approach is underpinned by our

commitment to ESG.

Hammerson is a value generating

platform with great opportunities for growth.

Our transformed platform is lean and efficient,

able to source and deploy capital with

discipline. Our balance sheet maintains our IG

credit rating and capacity for investment.

See Strategy in Action on

page 4

See Risks and uncertainties on

page 54

See Financial review on

page 41

Our colleagues are now focused on strategic

value creation as a result of the overhaul of

our operations.

We are building a high performance, high

engagement culture as part of our strategy

to retain and develop key talent.

See Our Colleagues on

page 24

See Governance on

page 70

See Stakeholder engagement on

page 20

The ESG agenda continued to grow in 2023,

with a continued focus on achieving our

targets, addressing both the Climate and

Nature emergencies, whilst continuing to

deliver our Social Value programme.

We commenced our Net Zero Asset Plan

programme of works focusing on

degasification in Ireland, renewable energy

in France, and HVAC and lighting design

in the UK.

See Our Colleagues on

page 24

See ESG on

page 26

See TCFD on

page 31

Flagship destinations

11m

Sq ft of lettable area

Cities

180m

Shopper visits per year

Figures above as at 31 December 2023

Premium outlets

Acres of development land

3Hammerson plc Annual Report 2023

Another year of consistent

strategic execution

STRATEGY IN ACTION

Execution enabling growth

Consistent delivery against our strategic

milestones over the last three years means we

now have a focused city centre portfolio which

is well positioned for further investment for

growth and value creation.

Broadening our scope

ESG underpins everything we do. In 2023, we commenced our Net

Zero Asset Plan (NZAP) programme of works focusing on degasification

in Ireland, renewable energy in France, and HVAC and lighting design

in the UK. Our progress was recognised with Pavilions, Swords, winning

a Best Energy Achievement in Retail and Best Overall Achievement at

the Business Energy Achievement Awards 2023 (Ireland) for going gas

free in 2023, four years ahead of schedule.

We also broadened our scope to recognise not only the Climate Crisis,

but also Nature, where we are seeing rapid biodiversity loss which

needs to be addressed to maintain essential ecosystems and to deliver

Repurposing obsolete and underutilised space in Bullring

In 2023, we completed the hand over of former Debenhams space

in Bullring to M&S, which opened in November, and to TOCA Social,

the football themed entertainment operator, which will become their

first operation outside of London when it opens in 2024.

We aim to complete the repositioning of the former Debenhams

store, about 15% of the area in Bullring, by leasing the final space to

a best-in-class operator. The project has concentrated the city centre

pitch and built critical leisure and entertainment mass to complement

openings in 2023, including those to Lane 7, VR Sandbox, Bershka,

JD Sports, Footlocker and Pull and Bear.

Taken together our investment into this repositioning project will be

around £17m (at 100%). This will deliver not only an IRR in excess

of c.40% on our equity investment, but also a positive halo on the

performance and presentation of the asset and the consequent rental

demand and values, which we expect to further capitalise with future

asset management and value creation.

a low carbon future. We have more to do here but this year we gifted

woodland and natural grassland in Lowestoft to the Wildlife Trust,

and commenced work on asset-by-asset plans to address Nature.

We also increased our efforts to improve our Social Value, delivering

asset-centric events to support local communities and boosting

participation in Giving Back Day.

In terms of governance, we were delighted to maintain sector and

regional ratings with ISS ESG and Sustainalytics, regained our Global

Real Estate Sustainability Benchmark (GRESB) 4-star rating, and score

a peer first A for GRESB ESG public disclosure.

The realignment of our portfolio has materially

strengthened the balance sheet. Having

executed complex transactions in volatile

markets, we have already begun to redeploy

capital at attractive rates of return, with a

demonstrable positive impact on footfall

and sales.

At the same time, we have introduced a new

and more efficient operating model, exceeding

our cost reduction targets for three years in a

row. Off this solid base, we are able to focus on

what we do best – value creation – and we see

a wealth of opportunities ahead of us.

Investment for growth and value creation, case study:

Environmental, Social and Governance (ESG)

Bullring ERV YoY:

+5%

Bullring value YoY:

+£35m

Bullring footfall YoY:

+5%

New brands and Flagship opening, Bullring

4Hammerson plc Annual Report 2023

Strategic Report

Strategy in Action

Recycling capital for financial strength and redeployment

Reflective of our operational strength, strategic progress and the

disciplined realignment of the portfolio through our disposals

programme, today we have a resilient balance sheet, ample liquidity,

and have maintained our IG credit rating.

Generating total gross proceeds of £216m, in 2023 we exited minority

stakes in France and non-core land in Croydon and Ireland. In addition,

£125m of secured borrowings have been derecognised in connection

with our exits from non-core assets in Highcross and O’Parinor. We

“tapped” the bond market to extend average maturity.

As a result of another year of prudent financial management and

disciplined capital allocation, the Group has de-risked its refinancing

profile and created capacity for investment.

Embedding a new and more efficient operating model

2023 was another year of intensive change in our ways of working,

both in terms of technology – systems and automation – and in terms

of greater collaboration, encouraging cross pollination of ideas and

practices across the organisation.

By introducing these agile, more efficient ways of working we not

only reduced costs but are creating a highly engaged, high

performance workforce fit for the future, with increasing speed to

market and productivity.

Today, we deliver more leasing and commercialisation activity than

in 2019, with a smaller team, on a more focused portfolio.

Consistent delivery against our

strategic milestones over the last

three years means we now have

a focused city centre portfolio

which is well positioned for

further investment for growth

and value creation.

Sustainable and

resilient capital structure

Agile platform

Net debt reduction YoY:

-23%

Carbon emissions YoY:

-13%

GRESB rating:

4 star

See Environmental, Social and

Governance (ESG) on page 26

Giving Back Day participation:

>90%

Social Value investment:

£2.5m

LFL leasing deal value YoY:

+23%

Liquidity:

£1.2bn

Gross administration cost YoY:

-14%

Diwali, Brent Cross

Open Age, Giving Back Day

5Hammerson plc Annual Report 2023

Business environment

In response to stubbornly high levels of

inflation, central banks spent the first nine

months of 2023 further raising interest rates

to levels not seen since the Global Financial

Crisis, and commencing a period of

quantitative tightening. Falling values across

all asset classes has seen a funding gap

emerge and these factors combined have

resulted in a reduction of debt availability

impacting returns and liquidity, although

values for retail anchored assets have been

relatively insulated due to already higher

spreads over base rates.

The resulting ‘higher for longer’ interest rate

environment and ‘cost of living crisis’ have

dominated headlines. Despite this, job

markets have continued to be tight,

underpinning continued wage growth. Overall,

consumers and occupiers have proved to be

more resilient than anticipated with solid

demand for best-in-class retail anchored city

centre destinations.

Against this backdrop, I am pleased to report

the Hammerson management team has

continued to deliver against its strategy: further

strengthening the balance sheet; building a

more efficient and agile platform for growth;

and investing in our assets. Consistent

execution over the last three years means

that today Hammerson is able to invest for

growth. The Board and I are excited by the

Company’s prospects.

Board changes and evaluation

There has been no change to the Board in

2023, which comprises six non-executive

and two Executive Directors, with an average

tenure of 3.5 years; and no further changes

are currently planned.

Two new directors were proposed by our

largest shareholder at the time, Lighthouse,

ahead of the AGM held in May, together with

the stated intention to vote against at least two

members of the Hammerson Board. Following

the Board’s unanimous recommendation to

vote against Lighthouse’s candidates, and

the overwhelming support of remaining

shareholders, all ordinary Board

recommended resolutions were passed

and Lighthouse’s requisitioned resolutions

did not receive the necessary support.

Two special resolutions relating to the

customary authority to disapply pre-emption

rights, did not achieve the 75% required

threshold to pass, whilst six ordinary

resolutions, largely relating to remuneration

and the election of certain Non-Executive

Directors, received less than 80% of the vote

in favour. In accordance with provision 4 of the

UK Corporate Governance Code, the Board

continued to consult with shareholders to

understand and discuss the reasons behind

the result. Further details can be found on the

Company’s website and on page 73 in the

Corporate Governance Report.

Following 2022’s external evaluation by

Board Alchemy, our 2023 Board evaluation

was internal. The review of the effectiveness

of the Board and its committees included a

questionnaire and confidential one-to-one

interviews between Directors and the General

Counsel and Company Secretary to discuss

key issues and themes in more detail.

Overall, I am pleased to report findings were

positive. Further detail on key themes of the

2023 review and the implementation of

recommendations from our 2022 Board

evaluation can be found on pages 76 to 77

in the Corporate Governance Report.

The Board values its diversity. I’m pleased to

report that 37.5% of the Board are female and

37.5% of the Board identify as non-white.

Further details are contained in the Corporate

Governance and Nomination and Governance

Committee Reports on pages 70 and 78.

ESG and people

The Board is fully committed to the Group’s

continuing recognition as an ESG leader and

ensuring the highest standards of operational

performance and corporate governance.

Hammerson is committed to being a

sustainable business and to reaching net

zero carbon emissions by 2030.

To achieve our aims we need to maintain the

support of our occupiers, customers, partners,

the communities affected by our operations,

our colleagues, and our equity and debt

investors. Collectively, our stakeholders have

numerous and changing demands on the way

the business conducts itself. We endeavour to

maintain the right balance as these demands

continue to evolve, and to treat everyone in line

with our values.

In 2023, building on our progress in 2022

including the introduction of Net Zero Asset

Plans for each of our flagship assets, we

started to address a broader range of ESG

subjects. We continue to focus on our

Climate impacts, taking a risk based

approach, but also recognise that globally

we are experiencing another emergency:

Nature as well as Climate.

Whilst we continue to focus on energy

efficiency, we have also undertaken revised

Physical Climate Risk Assessments and

Nature based action plans to be completed

Chair of the Board’s Statement

Consistent execution over the last three years

means that today Hammerson has a

strengthened balance sheet and is able to

invest for growth.

Robert Noel

Chair of the Board

6Hammerson plc Annual Report 2023

Strategic Report

Chair of the Board’s Statement

London Wildlife Trust, Giving Back DayLate Night Out, Bullring

in early 2024. We have also increased our focus

on Social Value – a key focus for colleagues –

supported by further development of our

governance and reporting approach ahead of

the introduction of the Corporate Sustainability

Reporting Directive (CSRD).

Further details of our plans, materiality

assessment and our ESG performance are

set out on pages 26 to 40, with more detail

available in our ESG Report 2023, which is

available on our website.

Over the last three years, the management

team has transformed Hammerson’s

operating platform and cost base to create

a customer and asset-centric model focused

on growth and value creation. Tough decisions

have been made and a significant reduction

to headcount realised.

At the same time, the key talent required to

be fit for the future has been identified and

either developed internally or brought in.

Hammerson is fast evolving towards a higher

performance, high engagement culture with

an emphasis on strategic value creation.

The Board and I commend the achievements

of all colleagues over the last three years, and

I once again thank them for their commitment,

professionalism and contribution.

Dividend

As announced at the 2023 half year results

and outlined in the 2022 Annual Report, the

Board reinstated a cash dividend in 2023,

declaring an interim cash dividend of 0.72p

in July which was paid entirely as a PID.

At the same time, the Board announced a new

sustainable dividend policy of 60% to 70% of

annual Adjusted earnings to be paid semi-

annually. This policy is based on disciplined

capital allocation seeking to balance returns to

shareholders whilst continuing to invest to drive

growth and value creation in our core assets.

Therefore, the Board recommends a final cash

dividend of 0.78p per share in respect of 2023

to be paid as an ordinary dividend subject to

shareholder approval, which would represent

a full year cash dividend of 1.50p per share and

a payout ratio of 64%, commensurate with the

half year.

The Board recognises dividends are an

important constituent of shareholder returns

and the policy will be kept under review.

Looking ahead

I remain confident that the strategy of

disciplined investment into core city centre

assets in high growth cities will deliver

significant shareholder value in the years

to come.

Following the work on strengthening the

balance sheet; transforming our platform,

operations and ways of working; and

commencing significant reinvestment into our

core assets, Hammerson is well positioned to

invest for further growth over the coming years.

Robert Noel

Chair of the Board

“ I remain confident

that the strategy of

disciplined investment

into core city centre

assets in high growth

cities will deliver

significant shareholder

value in the years

to come.”

Robert Noel

Chair of the Board

7Hammerson plc Annual Report 2023

In 2023, we delivered another year of

significant strategic, operational and financial

progress and growth, reflecting three years of

transformational change for the business. We

are now well positioned to invest for growth

and value creation. Today, the Group is focused

on a core portfolio of city centre destinations in

some of the fastest growing cities in Europe

that are evolving to my vision: 24/7, urban

‘living spaces’. Occupier flight to quality –

fewer, better stores in prime locations – is

undeniable, with high flagship occupancy at

95% following another year of record leasing in

our uniquely located city centre destinations.

We signed 306 leases representing £46m of

headline rent, £29m at our share, split roughly

evenly between: new to portfolio brands, new

concepts, social and entertainment offers; and

renewals with our current occupiers, including

new concepts and upsizes. We attract

best-in-class occupiers who in turn make

significant investments in their physical

footprint. Rental levels have rebased and we

are driving growth with permanent deals

signed 12% ahead of ERV on a net effective

basis, and 37% ahead of previous passing rent,

equating to additional annualised passing rent

of £7m on our £179m flagship rent roll.

The exceptional environments we create for

our occupiers and visitors is reflected in strong

operational fundamentals. Despite the volatile

macroeconomic environment, footfall and

like-for-like sales continue to grow. Notably,

we have seen particularly strong operational

performances at assets where we have made

significant investments in recent years, such

as Bullring, Dundrum and Les 3 Fontaines.

Since 2020, we have transformed our

operating model, and reshaped our

organisation. We have brought in new skills

and talent in asset management, leasing,

commercialisation and placemaking, which

means we can focus our energies on value

creation. On-site property management and

associated accounting services in the UK and

France have largely been consolidated with

proven scale strategic partners.

We have invested to realign and upgrade our IT

and digital platform in areas where speed and

data quality is critical. Today we are a more

agile, resilient and market facing asset-centric

organisation, one that continues to evolve and

reshape our destinations to be fit for the future.

We have again reduced gross administration

costs, down 14% year-on-year and we are

targeting a further 10% reduction in 2024.

We have further realigned our portfolio, exiting

non-controlling minority stakes in Italie Deux

in France, alongside realising value from

standalone development assets in Croydon,

and other non-core land generating £216m in

disposal proceeds in 2023. At the same time,

we have been disciplined in not allocating

capital to assets with secured debt where

these did not meet our location and

catchment, investment or return criteria.

Whilst recognising an impairment of £22m,

£125m of secured debt was derecognised in

the period following exits from Highcross and

O’Parinor, also bringing a sharper focus to

investment opportunities in the core portfolio.

Since the balance sheet date, we have

exchanged on the sale of Union Square, which

will bring to a close our £500m disposal

programme set out at FY 21.

Chief Executive’s Statement

Today, the Group is focused on a core portfolio

of city centre destinations in some of the fastest

growing cities in Europe that are evolving to my

vision: 24/7 urban ‘living spaces’. Recycling

capital to our core assets is generating value

and a positive social impact.

Rita-Rose Gagné

Chief Executive

2023 Highlights

Like-For-Like GRI

+6%

Gross Administration Cost

-14%

Flagship occupancy

95%

Carbon emissions

-13%

Net effective rent vs ERV

+12%

8Hammerson plc Annual Report 2023

Strategic Report

Chief Executive’s Statement

Social and Dining, WestquaySound of Musicals, Westquay

At 31 December 2023, our financial position

was significantly strengthened, with ample

cash and undrawn committed facilities of

£1.2bn, more than covering near term

maturities and providing capital for

investment. We will continue to be disciplined

allocators of capital and select the best returns

for shareholders, mindful of our own cost of

capital and all options for capital deployment

including maintaining balance sheet strength

and flexibility.

FINANCIAL AND OPERATIONAL REVIEW

Adjusted earnings were up 11% to £116m or

2.3p per share, reflecting 6% like-for-like

growth in GRI and 4% growth in like-for-like

NRI, combined with significant further

reductions in gross administration and net

finance costs.

At FY 22, we committed to reduce our gross

administration costs by 20% by FY 24. We

have delivered a 14% reduction in 2023. There

are more efficiencies to come as we pursue

greater automation and digitalisation of our

business, as well as outsourcing and

consolidation of supplier opportunities. We

expect to deliver a further 10% reduction in

2024 which means we are on track to exceed

our target of 20% reduction by 2024, which

would bring cumulative savings of more than

30% since FY 20.

Net debt was down 23% to £1,326m

(FY 22: £1,732m). Headline LTV was 34%

(FY 22: 39%) and 44% (FY 22: 47%) including

the Group’s proportionate share of Value Retail

net debt. Our Net debt: EBITDA improved to

8.0x from 10.4x at FY 22, reflecting both lower

debt and the improved operating performance.

EPRA NTA was 51p per share at 31 December

2023 (FY 22: 53p), with higher earnings in

part offsetting disposal and impairment and

revaluation losses, totalling £167m. Having

been broadly flat for the first three quarters

of the year, we saw some marginal yield

expansion in the fourth quarter in all territories,

which offset incremental flagship ERV growth

in the UK, Ireland and France. Moreover, all but

two of our core flagship assets benefited from

positive ERV movements, and all ten in the

second half of the year. We are starting to

see positive valuation movements on

selected assets.

Overall, the Group recorded an IFRS loss of

£51m (FY 22: £164m loss), and a negative

total accounting return of -2.1%.

Footfall and sales

Footfall and sales performance reflects the

exceptional nature of our destinations and the

improving mix of uses. The recovery in footfall

that we saw across our assets in FY 22

continued through FY 23 with consumers also

increasingly returning to city centres, both for

leisure and work. Footfall was +3% year-on-

year (UK+1%, France +7% and Ireland +4%),

closing the gap on 2019 levels, of which we are

now on average less than 10% below. Average

dwell time was up 5% to 88 minutes.

Overall, total sales and sales densities have

risen by mid-teens percentages since 2019,

with substantial evidence that repurposed

space and new concepts materially

outperform that which it is replacing.

Consumer spending continues to be resilient,

with an improving outlook for 2024. Despite

the ‘cost of living’ crisis, savings built during

the Covid-19 pandemic, high levels of

employment and strong wage growth, which

outpaced inflation in the second half of 2023,

have helped underpin continued consumer

spending, along with evolving lifestyle trends.

Like-for-like sales were up 1% in the UK and

3% for France.

Occupancy

Our core portfolio continues to benefit from

the increasing polarisation in the market and

the flight to quality reflected in the wealth of

key new openings, leasing demand and

tension, and growing footfall and sales. It is

now a fact that online/offline has balanced

and occupiers have now adopted a holistic

view, understanding that a high quality

physical presence is an essential part of the

supply chain.

Flagship portfolio occupancy remained strong

at 95%, broadly flat year-on-year. UK flagship

occupancy stands at 95% and Ireland at 96%,

with some assets in these geographies full.

France was slightly weaker at 93% reflecting

the continuing lease-up at Les 3 Fontaines

extension.

Value Retail

Value Retail delivered another solid

operational performance. Brand sales

increased 10% year-on-year and were 5%

above 2019 levels. Footfall across the Villages

saw a 9% increase year-on-year but remained

below 2019 levels. Sales densities grew

broadly in line with footfall and were marginally

ahead of 2019, whilst spend per visit was up

1% year-on-year and 6% ahead of 2019.

Average occupancy was 95%, marginally up

on 2022 but remaining around one percentage

point below 2019 levels.

Overall, the Group’s share of Adjusted earnings

was £32m (FY 22: £27m). Positive GRI growth

was partially offset by rising finance costs

reflecting the refinancing in FY 22 at Bicester

and La Vallée, and higher administration

costs. Year-to-date, Hammerson has received

£74m of cash distributions from Value Retail,

in part reflecting catch up payments from

2019 to 2023.

9Hammerson plc Annual Report 2023

At 31 December 2023, the Group’s interest in

Value Retail’s property portfolio was £1.9bn,

unchanged year-on-year. Net assets were

£1.1bn, down 6%, primarily due to

distributions paid to the Group. The difference

between gross and net asset value is

principally due to £0.7bn of net debt within the

Villages which is non-recourse to the Group.

The average LTV across the Villages is 39%.

STRATEGY UPDATE

We own city centre destinations and adjacent

land around which we can reshape entire

neighbourhoods. Our strategy recognises the

unique position that we have in our locations

and the opportunities to leverage our

experience and capabilities to create and

manage vibrant 24/7, multi-use, urban

‘living spaces’ that realise value for all our

stakeholders, connects our communities

and delivers a positive impact for generations

to come.

Our aim is simple and clear – to chart a path to

growth that delivers strong income and total

returns for shareholders through consistent

execution against our strategic goals.

Following three years of strategic and

operational progress, we are now investing for

growth and value creation in our core assets.

We are combining targeted leasing with

repurposing and redevelopment

opportunities, which are integral and

complementary to our destinations, directing

capital expenditure to our core estates, where

we are able to realise high returns. This asset

focus is underpinned by our now increasingly

agile platform, our strong capital structure and

by our commitment to ESG.

net effective basis, principal deals were 12%

ahead of ERV (FY 22: +2%), with new leases

+14% and renewals +8%. In terms of mix, just

under half of leasing was to best-in-class and

new fashion concepts, and the balance to

non-fashion, services, leisure, food, workspace

and Printemps in France.

Providing the exceptional spaces with high

footfall, high demand, growing leasing tension

and thereby rental levels which underpins this

leasing performance requires investment:

investment to repurpose obsolete or

underutilised space; investment in time to

select the right brand partners to enhance the

mix and complete works to a high standard;

investment alongside key brand partners in

their offer; investment in public realm to

maintain our appeal to customers and

occupiers whilst ensuring further integration

with the communities we serve; and

investment in key leasing, asset management,

placemaking and marketing talent. From our

investments in the last few years, we’ve

delivered solid returns and created value.

Looking at two key examples that came to

fruition this year:

— In Dundrum, we opened Penneys (Primark)

and Nike Live, to complete the repurposing

of the former House of Fraser space, with

the backfill allowing Dunnes Stores, which

opened in November, to enter the

destination for the first time. Taken as a

whole, the significant increase in rents with

an incremental ERV benefit to adjacent

units generated an IRR in excess of 20%

from an investment of €31m (at 100%).

Elsewhere in Dundrum, we converted

underutilised storage space to modern

workspace and leased it to Western Union,

bringing a new use and income stream to

the asset, as well as incremental customers

to the food and leisure oriented Pembroke

Square area. Dundrum has already seen an

increase in footfall and sales following

these openings in the second half of

the year.

In FY 23, we made significant progress

towards all our goals as follows:

Investment for growth and value creation

The key source of competitive advantage for

Hammerson is the quality and location of our

destinations in some of Europe’s fastest-

growing cites. We have some of the best assets

in the very best prime city centre catchments

and transportation hubs, and, due to the strong

ties we have in the communities in which we

operate, supportive local authorities.

Additionally, our pre-development and

strategic land represent a considerable set of

unrealised long-term opportunities which we

can selectively draw upon.

The consumer and occupier landscape

continues to evolve at pace. Occupiers are

continuing to shift to using physical space for a

broad mix of uses, including: point of sale; last

mile fulfilment; returns; servicing; experiential;

marketing; brand development; education;

workspace; and leisure – ‘living spaces’. At the

same time, visitors demand top quality

environments and experiences. We continue

to invest in our assets to partner with best-in-

class occupiers to cater to the communities

and catchments in which we operate, whether

this be repurposing of obsolete department

store space into leisure and modern retail, or

redevelopment to residential, workspace,

healthcare and lifestyle uses.

Our investments to date have attracted some

of the very best global brands. Our leasing

strategy has evolved from an emphasis on

filling space and increasing occupancy as we

emerged from the Covid-19 pandemic. We

now focus more proactively on a high quality,

diverse and complementary mix and offer for

both occupiers and customers, which in turn

underpins a more diverse, resilient and higher

quality income profile.

Following our best year for leasing in FY 22

since FY 18, our momentum continued in FY

23 with another record year: 306 leases signed

on a more focused portfolio (FY 22: 317),

a volume increase of 10% on a like-for-like

basis, representing £46m of headline rent at

100% (FY 22: £45m), or £29m at share (FY

22: £25m), up 23% like-for-like. In this

context, we saw much greater competitive

tension with occupiers not exercising breaks

to leverage better terms, which meant an

additional £2m of rent retained.

For principal deals, headline rent was 37%

ahead of previous passing rent (FY 22: +34%),

continuing to reflect strong demand, the lease

up of vacant space and the conversion of

temporary leases onto long term deals. On a

“ Providing the

exceptional spaces

with high footfall, high

demand, growing

leasing tension and

thereby rental levels

which underpins this

leasing performance

requires investment.”

Rita-Rose Gagné

Chief Executive

10Hammerson plc Annual Report 2023

Strategic Report

Chief Executive’s Statement continued

Penneys opening, Dundrum Town Centre The Bull, Bullring

— In Bullring, we handed over former

Debenhams space to M&S, which also

opened in November, with an extremely

strong sales performance and establishing

a further consolidation of the city centre into

our estate. We also handed over the top

floor space to TOCA Social – the football

themed entertainment operator – which

will become their first operation outside

London when it opens in 2024. This will

strengthen the critical mass and

complement the entertainment and social

operators we opened in 2023, which

included Lane 7 Bowling, and a new leisure

concept, VR Sandbox. We target to

complete the repositioning of the

Debenhams space – representing about

15% of the total floorspace of the Bullring

– by concluding negotiations with a

best-in-class fashion operator which will

concentrate the retail pitch alongside

openings in 2023, including those to

Bershka, JD Sports, Footlocker, and Pull

and Bear. Taken together we expect our

investment into this repositioning project

will be around £17m (at 100%), which will

deliver not only a high double digit IRR, but

also a positive halo on the performance and

presentation of the asset and the

consequent rental demand and values,

which we expect to further capitalise with

future lettings. Following these openings,

Bullring experienced a particularly strong

Christmas period, with sales and footfall

up in stark contrast to national indices.

Importantly, it also saw an uplift in value of

£35m (at 100%), reflecting a 5% increase

in ERVs year-on-year.

We have a rich set of similar opportunities

in our core portfolio relating to former

department store space. Having proactively

secured vacant possession, we have already

commenced the repurposing of the former

House of Fraser space in The Oracle, having

agreed terms with Hollywood Bowl and TK

Maxx, and are in detailed negotiations with

other key partners. At the other end of the

scheme, we await the outcome of a planning

application for the major regeneration of the

eastern quarter, including the former

Debenhams, with the potential to develop

c.450 residential units in phases alongside

renewed landscaping and other commercial

uses, much in demand in this strong catchment.

In Birmingham, we achieved planning consent

for Drum, an amenity rich workspace led

proposal, which predominantly occupies the

former John Lewis Partnership space at Grand

Central and is directly served by the UK’s most

connected rail station, Birmingham New

Street. Strip out works have been completed,

and we are working with stakeholders to

unlock the next stages of de-risking and

delivering this scheme.

In Cabot Circus, we are working up investment

plans, alongside relevant operators, to

reposition and maximise the value of major

spaces including the House of Fraser

department store at the gateway to the asset

and to replace the cinema operator as part of

the development of a social and entertainment

quarter. Overall, of the department store space

the Group had at FY 19, roughly two-thirds has

been repurposed or is in advanced planning,

and a third has been sold.

Elsewhere, we continue to lease to high quality

brand partners, enhancing the quality of the

mix and bringing new uses to our destinations.

Other than those already mentioned, key deals

and openings in 2023 included:

— Renewals and new deals were secured with

JD Sports, Uniqlo, Decathlon, Olympique de

Marseille, Levi’s, Puma, Hugo Boss, Michael

Kors and Five Guys at Les Terrasses du Port

as we approach the ten year anniversary of

the opening of Marseille’s super prime

destination.

— At Les 3 Fontaines, we opened H&M in

March and brought in New Yorker to an

adjacent unit later in the year, whilst

reconfigurations allowed the entry of

Action, Celio and a new leisure offering from

Smile World. In the extension, additions

comprised increased presence from global

brands including Eden Park and Swarovski.

— In Brent Cross, we signed a deal with Social

Sports Society to bring a padel tennis and

other outside sports facilities to the

underutilised Southern Lands, subject to

planning, alongside reconfigurations that

allowed the renewal of Boots and the

introduction of Superdrug into the scheme.

We also relocated Moorfields Eye Hospital

into an underutilised area of the scheme,

after a period of testing customer appetite

for alternative uses. In 2024, we expect

to create a new market hall offering,

where we have already agreed terms

with three occupiers.

11Hammerson plc Annual Report 2023

Reserved, Brent Cross The Oracle, Reading

— In Bullring, in addition to repurposing

and new leasing related to the former

Debenhams unit, we opened the first Nike

Rise concept outside of London, brought

Footasylum in for the first time, and saw

Goldsmiths undertake a significant refit and

expansion which included the introduction

of a separate Rolex store.

— Westquay saw the delivery of new offers

from premium lifestyle and beauty brands

Sweaty Betty and Space NK, and F&B from

Wingstop and Mettricks.

— Cabot Circus saw four portfolio firsts,

including the introduction of Stradivarius,

bringing another sought-after Inditex brand

into the destination, alongside the debuts of

Lounge, German Donor Kebab and Lids.

— Meanwhile in Ireland, in Dundrum, Space

NK signed a lease to open their second

store in Ireland. Both with minimal vacancy,

it was a quieter year at Pavilions and Ilac,

although the former opened a new leisure

offer from Zero Latency, whilst the latter

signed a new flagship city centre store for

Liverpool FC.

Our approach to leasing works in parallel with

our greater emphasis on placemaking, which

not only serves to enliven space and enhance

the experience and environment for

customers and occupiers, but also increasingly

contributes meaningfully in its own right in

terms of incremental footfall, income, and

engagement across all channels. Key

highlights in the year included:

— Staging our first Late Night Out ticketed

event, bringing the after hours economy

to Bullring.

— We increased our social media presence

and partnerships with local influencers,

contributing to increased visibility and

customer engagement with our destinations.

Turning to other near term projects which are

integral to our existing assets, at Ironworks in

Dundrum, a 122 unit residential development,

construction continued during 2023. We also

agreed a long term indexed lease for the social

housing units that we have built as part of the

scheme and were completed in the year.

In France, we are considering options for an

incremental repurposing of underutilised

space at Cergy 3, to capitalise on strong

demand, following the opening of Les 3

Fontaines extension in March last year, and

are in discussions on heads of terms with

two operators.

During 2023, we have been disciplined with

our resourcing and capital expenditure on our

development projects and pre-development

and strategic lands; focusing on those

initiatives which give short term routes to

value, and those integral projects which add

most value to our wider estate.

The wider development market has been

somewhat fractured during the course of

2023; with viability under pressure due to

ongoing challenges with construction costs,

cost of capital and valuation yield movements,

alongside uncertainty of public policy and

decisions. Nevertheless, structural demand

from occupiers – and therefore rental

performance – remains strong across most

asset classes where we have exposure,

particularly in city centre locations for

best-in-class workplace and purpose-built

rental apartments.

— We brought the Charity Super.Mkt, the UK’s

first shop space bringing multiple charities

under one roof, to Brent Cross, The Oracle

and Cabot Circus, driving incremental

footfall, significant media coverage and

winning us a Revo award for Pop-up of the

Year. We aim to continue working with

Charity Super.Mkt through 2024.

— We had further success bringing digitally

native brands to physical space, most

notably SHEIN to Bullring and Grand

Central, and UK firsts including Trinny

London’s kiosk to Bullring.

— In France, we hosted a two week pop-up

store at Les Terrasses du Port for local

rapper Jul, and then ‘Sunset Live’ later in

the year, which showcased local and

international musical artists on the seafront

terrace, attracting significant media and

influencer attention, and involving 25

brand partners.

— Meanwhile, at Les 3 Fontaines we hosted

the second edition of the 3Festival which

celebrates ‘Art in all its forms’ with local

partners from street art workshops to

culinary battles.

— We continue to exploit underutilised car

parking space with new uses, occupiers

and events, including the UK’s largest Tesla

collection point, the Florescenza garden

centre, and Big Kid Circus at Brent Cross;

Skatepark with Red Bull at Cabot Circus,

and the Supercar Weekend at Dundrum.

— We enlivened our destinations with

summer bars including large external

screens showing major sporting events,

and created winter wonderlands in our

unique outside spaces with Apres ski bars

and ice rinks plus a visit from the much

loved Coca-Cola truck in Bullring and Grand

Central creating high footfall.

12Hammerson plc Annual Report 2023

Strategic Report

Chief Executive’s Statement continued

Charity Super.Mkt, Cabot Circus Le Sunset Live, Les Terrasses du Port

We have continued to advance planning

consents and land assembly agreements

across the portfolio, which is capital light.

In Ireland, we expect the initial planning

consents to be finalised in 2024 at Dublin

Central and there are ongoing discussions

wit1otential end users, while our planning

application for a strategic residential

masterplan at Dundrum Phase II remains

in consideration with the local authority.

At Martineau Galleries, part of the wider

Birmingham Estate, we have been working

closely with Birmingham City Council and

other stakeholders to ensure that we have a

route to prepare for the development of this

multi-use estate which will complement and

benefit from our other holdings in the city.

Lastly, in our longer term development

opportunities, standing alone from existing

destinations, we exited our 50% share of all

land and corporate interests at Croydon at a

narrow discount to book value, as well as some

small land interests in Clonsilla, Dublin,

focusing our core portfolio and creating

additional liquidity for investment. At Eastgate,

Leeds, we have agreed to update an historical

development agreement with the City Council

paving the way to unlock the value of the site.

At Bishopsgate Goodsyard, we are progressing

with detailed design and feasibility, the

procurement of initial demolition and

preparation works, and engagement with

Network Rail.

Looking ahead to FY 24, key priorities for

investment for growth and value creation

include:

— Completing the repurposing of space at

Bullring and advancing accretive projects

integral to our assets across the portfolio

— Maintaining our leasing momentum with

a diverse mix of high quality operators.

— Further increasing our emphasis on

placemaking, commercialisation and

digital marketing.

— Accelerating the realisation of value from

our strategic land, whilst maintaining

capital discipline.

Agile platform

We have transformed our platform and cost

base to create an organisation focused on

growth and value creation. We took decisive

action in 2021 and 2022, shifting from a top

heavy, geographically oriented and siloed

organisation to a simplified, asset-centric

operating model.

In 2023, we continued to drive efficiencies and

adapt our ways of working, both in terms of

technology – systems and automation – and in

terms of greater collaboration, encouraging

cross pollination of ideas and practices

between asset management, leasing,

placemaking and marketing, ESG, strategy

and insights, finance and communications.

We are creating a high performance, high

engagement culture with an emphasis on

strategic value creation focused on asset

management and delivery, placemaking and

the repositioning of our assets. Property

management and associated accounting

services have largely been consolidated to

proven third party partners of scale.

In 2023, we implemented the consolidation of

our property management suppliers in the UK

in February, and similar activity in France in the

second half. Our 164 colleagues are now

focused on strategic tasks as a result of the

overhaul of our operations.

The actions we have taken over the last three

years in realigning our portfolio and business

model as well as introducing new systems,

tools and more efficient ways of working have

necessarily resulted in a reduction of

headcount of 68% since FY 20. This has

delivered a gross administration cost reduction

of 24%.

By introducing these agile, more efficient and

sustainable ways of working we are increasing

speed to market and productivity. Today, we

deliver more leasing and commercialisation

activity than in 2019, with a leaner team, on

a more focused portfolio. Other sources of

savings include reductions in office space in

the UK and France, insurance renewals, and

a rigorous management of costs in general.

We have also increased our efforts on

employee engagement and talent

management as part of our strategy to retain

and develop key talent and we continue to

invest in and promote key talent to be fit for

the future.

Looking ahead to FY 24, key priorities for

our increasingly agile platform include:

— Embedding our new ways of working

and consolidation of suppliers.

— Further improvement of our technology

stack and automation of business

processes, including investment into

new data sources like AICCTV.

— Improve colleague engagement to

encourage retention of key talent and

to instill a high performance culture.

— Reduce gross administration costs

by a further 10%.

13Hammerson plc Annual Report 2023

Birmingham Weekender, Bullring Lane 7, Bullring

Sustainable and resilient capital structure

Our capital allocation framework remains the

same. We will maintain a stable and resilient

capital structure, with an IG credit rating, to

maintain access to capital markets. We are

committed to a sustainable and growing cash

dividend, covered by cashflow, and balanced

with our total returns focus. We are mindful

of our cost of capital, but will remain

opportunistic on capital deployment. After

strengthening of the balance sheet, our priority

is to invest for growth and value creation.

Today, we have a resilient balance sheet,

ample liquidity, and have maintained our IG

credit rating. In 2023, in France we completed

the sale of our 25% share of Italie Deux, and

100% of the Italik extension, and our 50%

share of our interests in Croydon, together

with non-core land in the UK and Ireland,

generating gross proceeds of £216m.

Moreover, £125m of secured debt has been

derecognised in connection with our exits from

non-core assets in Highcross and O’Parinor.

Since the balance sheet date, we have

exchanged unconditional contracts for the

disposal of Union Square to an affiliate of Lone

Star Real Estate Fund VI L.P. for gross proceeds

of £111m, taking total proceeds since FY 21 to

£521m and thereby completing our targeted

£500m disposals programme. In September

2023, we issued a £100m increase of our

existing £200m 7.25% coupon bonds

We commenced our Net Zero Asset Plan

(NZAP) programme of works focusing on

degasification in Ireland, renewable energy in

France, and HVAC and lighting design in the

UK. To support this, we also undertook revised

Physical Climate Risk Assessments in the UK

and Ireland. These combine with our NZAPs to

ensure a diligent, asset-centric approach to

climate risk mitigation. Alongside the delivery

of the NZAP projects across our destinations,

renewable energy purchasing with true

‘additionality’ is a central pillar of our Net Zero

transition and we are proactively seeking

a Corporate Power Purchase Agreement

(CPPA) to support our 2025 interim

carbon target. Overall, our like-for-like scope

1, 2 and landlord 3 carbon emissions are down

13% year-on-year, and 35% since 2019.

Our climate and energy focus continues to

receive external focus with Pavilions, Swords

winning a Best Energy Achievement in Retail

and Best Overall Achievement at the Business

Energy Achievement Awards 2023 (Ireland)

for going gas free in 2023, four years ahead

of schedule.

In addition to this we have launched a

quantifiable program to deliver nature-based

action plans for each asset. This recognises

that globally we are experiencing two

emergencies, Nature and Climate. The rapid

biodiversity loss globally not only needs to be

addressed to maintain essential ecosystems

but also to ensure a low carbon future aligned

maturing in 2028. The new issue was priced

at a yield of 9.1%. In parallel, we redeemed

£100m of our 3.5% coupon bonds maturing

in 2025 and 6.0% coupon bonds maturing

in 2026, at a discount of £4m.

Overall, net debt reduced 23% to £1,326m

at 31 December 2023. Headline LTV stood at

34% (FPC: 44%), down from 39% (FPC: 47%)

at FY 22. Net debt to EBITDA improved to 8.0x

from 10.4x. At 31 December 2023, the Group

had liquidity of £1.2bn in the form of cash

balances (£570m) and undrawn committed

RCFs (£655m), and had no significant

unsecured refinancing requirements until

2026 not covered by existing cash.

Looking ahead to FY 24, key priorities for our

sustainable and resilient capital structure

include:

— Maintaining our IG credit rating and prudent

approach to refinancing of Group debt in

a ‘higher for longer’ interest rate

environment.

— Completing the refinancing of the secured

debt on Dundrum in the ordinary course,

which matures in September 2024.

Environmental, Social and Governance

Our ESG agenda grew in 2023, with a

continued focus on achieving our targets,

addressing both the Climate and Nature

emergencies, whilst continuing to deliver

an expanded Social Value programme.

14Hammerson plc Annual Report 2023

Strategic Report

Chief Executive’s Statement continued

Nike, Dundrum Town CentreBullring, Birmingham

Brown Thomas, Dundrum Town Centre

Dunnes Store, Dundrum Town Centre

to the Paris agreement. In 2023 we took the

step to gift a woodland and natural grassland

in Lowestoft to the Wildlife Trust. This land gift

recognised the natural value of the land over

its commercial value and ensure it is preserved

for nature and the community for the

foreseeable future.

From a Social Value perspective, we delivered

asset-centric events to support the

communities we serve whilst also continuing

to support our corporate charity partner,

LandAid. We also introduced an all-colleague

Giving Back Day which coincided with

volunteering week and will occur annually in

the future. We had very high participation rates

of more than 90%, with 152 colleagues taking

part doing everything from CV workshops to

clearing wetlands.

We continued to focus on benchmarks

identified by our stakeholders as key to their

decision making. We rank as one of the top

property companies in ISS ESG with a score

of C+. We maintained our low-risk rating by

Sustainalytics, making us a regional leader,

and we also regained our 4-star GRESB rating

with a ten-point score improvement to 85

points. We also achieved a related GRESB ESG

public disclosure score of 96/100, scoring us an

A, which ranks us first out of our peers in our

transparency surrounding our ESG practices.

Over time, we have a unique opportunity

to complement our core with a broader mix

of uses by repurposing existing space,

consolidating, and unlocking value on adjacent

land. We have a strong platform with long term

visibility of income. We are confident in our

ability to grow top line and earnings off a new

base, and therefore create value for

shareholders in the years to come.

Rita-Rose Gagné

Chief Executive

CONCLUSION AND OUTLOOK

Since FY 20, we have navigated the Company

through a high-risk period of deleveraging and

repositioning. We have realigned our portfolio

to a core of unique city centre destinations,

started to deliver strong investment returns

in our properties, and we have ample further

opportunity to invest for growth and value

creation. In the wider portfolio, we remain

capital disciplined and have realised value

from our pre-development and strategic lands,

most recently with the exit from Croydon.

At the same time, we have transformed our

platform. We have become leaner and

‘developed muscle’, with headcount and costs

down by more than two-thirds and a quarter

respectively since FY 20, but with speed to

market and performance increased. We

remain committed to a high performance,

high engagement culture with the right talent

to be fit for the future.

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. City centres

remain the dominant locations for commerce

and lifestyle. Our destinations are in high

demand by occupiers and visitors. The

importance of a physical presence in a digitally

integrated strategy for best-in-class operators

is undeniable.

15Hammerson plc Annual Report 2023

Eurovision, Westquay

Market Overview

We are well positioned for growth due to

our focus on prime assets in fast growing,

young cities. These economically vibrant

locations are benefiting from a ‘flight to

quality’ as occupiers reinvest in fewer,

larger, brand building flagship stores.

Economy and customers

Customers were resilient in 2023 with the

outlook for disposable income improving in

2024 and 2025.

Despite the ‘cost of living’ crisis, savings built

up from Covid-19, high levels of employment

and strong wage growth have helped underpin

continued customer spend.

Inflation is now falling quickly, alongside

energy prices, and is anticipated to continue

to do so throughout 2024. Central banks are

expected to start cutting rates over the course

of 2024 supporting continued customer spend

as well as creating liquidity, investment and

growth across business sectors.

There will be continued geopolitical

uncertainty with Ukraine and the Middle East

as well as elections in the USA and UK, but the

outlook is cautiously optimistic.

Beyond the macro-economic outlook,

customers’ lifestyles and spending patterns

are changing too and with it our propositions

must adapt. At Bullring, Birmingham, where

we have repositioned 20% of space in 2023, we

have seen a 5% uplift in footfall with total visitor

numbers for this destination approaching 32

million. In total, Hammerson assets attracted

around 180m visitors in 2023.

Visitors continue to seek out experiences with

the best brands alongside high quality food

and entertainment. All generations are

becoming more environmentally conscious,

with customers increasingly interested in

whether a product, is environmentally friendly,

will last and can be re-sold. Resale has the

benefits of providing a cheaper, ever-changing

wardrobe which allows consumers to buy and

sell, making environmental and financial sense.

These trends were evident in the success we

saw with the pop-up Charity Super.Mkt at

Brent Cross and The Oracle where over 70,000

items were sold, with demand so great at

Cabot Circus that its opening period was

extended four times.

Return to physical

The desire for experiences is driving customers

back to physical destinations. At the same time,

occupiers are recognising that a right-sized

store portfolio is instrumental to truly

profitable multi-channel retail by encouraging

consumers to shop across channels. This is

evidenced most clearly in the published results

of leading multi-channel and pure play

operators showing a marked difference in

operating margins.

Whilst online has enjoyed a long run of strong

revenue growth, profitability especially around

deliveries and returns were overlooked. The

two key differentiators in pure play are speed

of delivery and price, with return rates as high

as 40% in the clothing sector (leading to no

sale). This and the increasing cost of standing

out in a crowded online marketplace, and cost

of customer acquisition, has made many

operators re-evaluate.

As online has become more challenged,

physical space, through rental resets and

falling business rates has become cheaper.

The most successful operators now use their

stores to control the variable costs of online by

incentivising customers to pick-up and return

via stores, with the added opportunity to

on-sell and for brand engagement. This

rebalance between online and store

investment is further underpinned by the

customer desire for better experiences.

As occupiers reinvest they are looking for

fewer, larger, brand building flagship stores

with more experiential fitouts and seamless

technology to support more profitable

multi-channel operations. Our research shows

that in the UK over the last 10 years, clothing

retailers have typically reduced their store

portfolio by 18% but average store size has

increased by 17%, with city centre locations

being the main beneficiary.

“ Years of indecision

had left M&S with a

sprawling store network

… By rotating into new

high productivity

digitally-enabled stores

… we can increase sales

and margins and the

year ahead will see

some exciting new

developments.”

M&S Annual Report 2023

16Hammerson plc Annual Report 2023

Strategic Report

Market Overview

Les Terrasses du Port, Marseille Bullring, Birmingham

Hammerson cities and portfolio

Hammerson’s portfolio is well positioned by

virtue of our focus on assets in fast growing,

young cities. These economically vibrant

locations have outperformed despite recent

headwinds due to their large, fast growing,

relatively affluent catchments.

Our assets occupy prime locations in these

cities, providing flagship destinations for

brands as they invest in fewer, larger

experiential focused stores. Our portfolio gives

occupiers direct access to 20m customers.

The diversity of our offer allows customers the

choice to trade-up or down depending on their

economic situation. This is evidenced by our

positive like-for-like sales performance in 2023.

And this sales growth is seen most clearly in

the outperformance of newer repurposed

space that reflects evolving customer needs.

Real estate outlook

Real estate has seen a delayed recovery in

capital values and investment due to a mix

of tight credit conditions, weak sentiment,

high debt costs, and low risk premiums.

Construction has been impacted by high

material and labour costs.

Despite this subdued investment market,

Hammerson disposed of three assets in

2023 at narrow discounts to book value,

indicating our skill to maximise the market

notwithstanding headwinds.

Investment in the UK Shopping Centres

market in 2023 finished at £1.2bn, down 44%

on 2022 levels according to JLL research with

only five transactions occurring that were

greater than £50m lot sizes. French All Retail

volumes were down 51% at €2.9bn but the

sale of Italie Deux/Italik accounted for 45%

of the €1bn worth of French Shopping

Centre investment.

In a subdued investment market, we raised

£216m through the disposals of Croydon,

Italie Deux and another non-core asset in

2023. In addition, we took a disciplined

approach to capital allocation in assessing our

options on Highcross and O’Parinor, ultimately

handing back the keys on both assets, and

benefiting net debt by £125m, recognising an

impairment charge of £22m. Since the year

end, the Group has exchanged unconditional

contracts for the sale of Union Square,

Aberdeen for £111m.

With the improving economic outlook, there

is cautious optimism across our three markets.

There is an expectation that central banks

will start cutting rates in the first half of 2024.

This will initially encourage activity from

opportunistic investors before the wider

market follows.

Following structural changes driven by

technology, online shopping and Covid-19

alongside a focus on sustainability and the

costs of upgrading buildings, the market will

be increasingly drawn to quality assets in

prime locations.

Oxford Economic

Forecasts

2024

Inflation

(CPI)

2024

Interest

Rates

(EOP)

UK 1.5% 4.50%

Ireland 0.9% 3.25%

France 2.1% 3.25%

“ Hammerson have been

an important partner to

us for many years across

the UK, Ireland and

France. The quality of

their schemes and their

people has undoubtedly

allowed our partnership

to flourish, especially

with their ongoing

commitment to

reinvesting and evolving

the assets to introduce

new brands, alongside

improved social and

entertainment offers.”

James Air

Director, JD Sports

17Hammerson plc Annual Report 2023

Asset

management

Maximising value

from development

opportunities

Complementary

development

opportunities

Capital cycling

Our Business Model

Our Purpose

We create outstanding

experiences in unique

city locations.

What we do

Our Culture and Values

We are an owner, operator and developer

of sustainable prime urban real estate.

We create vibrant, continually evolving

spaces in and around thriving cities,

where people and brands want to be.

Our destinations sit at the very heart of

communities and in many cases form

part of the city’s very identity.

See How the Board Manages and Monitors

Our Purpose and Culture on pages 71

and 72

Our resources

Expertise in asset management,

placemaking, investment, and

development through our people

and platform

Strong and diverse customer base

with some of Europe’s largest brands

Deep understanding of our occupiers

and what they need to succeed

Access to a broad range of capital

providers

01 02

Asset management

We optimise the use of space by

delivering exceptional occupier

line-up, placemaking and integral

repurposing projects

Complementary

development opportunities

We bring new uses and revenue

streams through developments

which are complementary to our

core destinations and in turn

enhance the proposition of

the whole

03 04

Maximising value from

development opportunities

We unlock the value of our stand-

alone development opportunities

through disciplined risk-adjusted

capital allocation

Capital cycling

We reinvest for growth in the

highest return opportunities

18Hammerson plc Annual Report 2023

Strategic Report

Business Model

Our strategy

INVESTING FOR GROWTH AND VALUE

CREATION

Investing into our destinations to

strengthen and diversify the customer

proposition through repurposing,

leasing with best-in-class operators,

and public realm

AGILE PLATFORM

Focus on strategic asset management,

placemaking and investment through

a transformed, increasingly agile

operating platform

SUSTAINABLE AND

RESILIENT CAPITAL STRUCTURE

We prioritise a strong balance sheet and

maintaining an investment-grade credit

rating. Our capital allocation is disciplined,

with a focus on recycling capital into our

core portfolio.

The value created

FOR OCCUPIERS

We deliver best-in-class destinations through vibrant and exciting

placemaking, and industry leading analytics that attract high footfall

and allow our occupiers to succeed

FOR CUSTOMERS

We create outstanding experiences in unique city locations that surpass

the changing needs of our customers

FOR COLLEAGUES

We promote a high performance, high engagement environment where

colleagues can realise their full potential

FOR COMMUNITIES

We create better places for our communities through improved

infrastructure and public realm, sustainable buildings, exemplary

placemaking, events and local employment

FOR PARTNERS

We create partnerships with our JV and debt investors, suppliers,

local authorities and communities based on a collaboration where each

partner benefits

FOR INVESTORS

We aim to generate attractive returns for our investors over the long

term. We ensure a sustainable capital structure, maintaining our

investment grade credit rating

See Our Stakeholders on

page 20

See KPIs on

page 23

Managing risk and

opportunities

We identify, quantify and monitor risk to the

Group through a systematic review of the

Group’s strategic priorities

Risks and Uncertainties on

page 54

Environmental, Social

and Governance

To ensure we can consistently unlock the

value in our portfolio, we have a strong

governance framework which sets us up

for long-term success.

See ESG on

page 26

19Hammerson plc Annual Report 2023

Our Stakeholders

KEY AREAS OF INTEREST

Stakeholders Key areas of interest How we engage

Occupiers

We deliver best-in-class destinations through vibrant and

exciting placemaking, and industry leading analytics that

attract high footfall and allow our occupiers to succeed

– Shared commercial objectives attracting consumers

– Vibrant and well-operated destinations

– ESG

– Occupancy cost

– Our dedicated leasing team has a leasing strategy for each asset, underpinned by the Group’s strategic objectives

– We hold regular executive management meetings with our occupiers

– We have a targeted programme of engagement for future occupiers and partners

– We run a brand feedback study with our occupiers to gather input on their satisfaction to help drive stronger, mutually beneficial relationships

– We have undertaken an additional series of in-depth interviews with core occupiers to understand what our occupiers value and to help expand our

relationships. The results were presented and discussed at the Board Strategy Day

– A panel of occupiers and consultants who work with our occupiers participated in a moderated panel discussion at the Board Strategy Day

– The Board receives reports from the senior management team on matters relating to occupiers, which are discussed at its meetings

Customers

We create outstanding experiences in unique city locations

that surpass the changing needs of our customers

– Vibrant destinations with engaging occupier mix

– Future winning brands

– Continuous improvement to enhance consumer

engagement and experience

– ESG

– We regularly undertake both quantitative and qualitative insight studies to understand consumer needs

– Our marketing, leasing and asset management strategies are focused on ensuring that we curate vibrant destinations for multi-use estates

– We invest in optimising space and occupier mix and improving customer facilities

– The Board receives regular reports on consumer behaviours and associated needs, including detailed sessions at the Board Strategy Day, which provide

useful insights into emerging trends at a local and national level and will inform investment decisions and identify future revenue drivers

Colleagues

We promote a high performance, high engagement

environment where colleagues can realise their full potential

– Strategic, operational and financial performance

– Colleague engagement

– Reward

– Diversity, equality and inclusion

– Training and development

– Health and wellbeing

– ESG

– High performance

– We hold regular colleague briefings with the Chief Executive and other members of the senior management team

– We undertake all colleague engagement surveys. In 2023, this was followed by workshops with each team across the business. Learnings will be

embedded into goal setting and business processes to drive colleague engagement and a high performance culture

– In addition, during the year, colleague surveys were conducted on discrete areas, including Health & Safety and the move of our office

– Updates on current business and performance is delivered to all colleagues via regular town hall ‘squad’ meetings and other engagement tools

– The Colleague Forum was established in May 2019 and we have a Designated Non-executive Director for Colleague Engagement who attends its meetings

– Affinity Groups, which champion equality, diversity and inclusion (ED&I), cover Race & Ethnicity, LGBTQ+, Women and Wellbeing. These groups drive

our ED&I calendar of colleague engagement activations

– Our comprehensive programme for new joiners includes an online training programme

– The Board receives updates from the designated NED for Colleague Engagement on interactions and reports regarding colleague engagement,

including culture and ED&I

Communities

We create better places for our communities through

improved infrastructure and public realm, sustainable

buildings, exemplary placemaking, events and local

employment

– Measurable positive impact in socio-economic issues

relevant to the communities in which we operate

– ESG

– Community projects focus on four areas:

– Employment and skills

– Local investment and enterprise

– Developing young people

– Health and wellbeing

– Our local community impacts are positive, and our business activities attract significant additional investment into local economies

– We create a localised placemaking strategy for each asset through our asset management programme, reflecting the needs of our communities

– We set community engagement plans that address issues identified as relevant to local communities

– We develop long-term partnerships with organisations that share our focus areas and local authorities

– We consider donations to suitable charities in line with our four focus areas, including charities local to our assets, complementing our ESG goals

– The Board receives regular ESG reports, including progress on social value targets within our sustainability strategy, and has oversight of key ESG policies

Partners

We create partnerships and strive for alignment with our

JV and debt investors, suppliers, local authorities and

communities based on a collaboration where each

partner benefits

– Long-term partnership, collaboration and engagement

– Current and future financial performance

– Operational excellence

– Corporate governance

– Innovation, consumer trends and insight

– Shared objectives and values

– ESG, community projects and impact

– Development and planning

– We seek open and collaborative relationships with our partners

– We hold quarterly joint venture board meetings together with more regular engagement as needed, and approve asset business plans annually, setting

parameters for the next year and over the longer term

– We organise regular meetings with partners to highlight key areas of focus, including ESG, customer experience, innovation and other areas of shared focus

– Active dialogue and engagement with key suppliers

– We are signatories to the Prompt Payment Code, to support our partners, suppliers, local authorities and debt investors

– The Board is regularly updated on engagement with partners and considers relevant matters in the context of ongoing oversight and decision making

– Health & Safety is emphasised as a top priority at all times

Investors

We aim to generate attractive total returns for our investors

over the long term. We ensure a sustainable capital structure,

maintaining our investment grade credit rating

– Current and future financial performance

– Strategy

– Corporate governance

– ESG

– Risk management and capital allocation

– Regular and transparent communication and reporting

– We actively engage with investors through regular meetings, including discussions on strategy, operations, capital allocation, ESG, and governance.

Throughout the year, we meet with institutional shareholders to discuss progress on our strategy, operational updates, capital allocation, as well as

matters of governance. The Chair of the Remuneration Committee consults with major shareholders on remuneration matters

– Key shareholder publications including the annual report, the full year and half year results announcements, operational updates, ESG report, press

releases and other information for investors are available on the Company’s website

– The AGM provides a valuable opportunity for shareholders to engage with Hammerson and vote on resolutions. Shareholders can ask questions

during the meeting or submit inquiries beforehand. Extensive engagement with shareholders and major proxy advisers occurred in the run-up to,

and following the 2023 AGM

– The Board regularly receives reports on investor relations, including engagement updates. Directors actively participate in engagement opportunities

throughout the year

20Hammerson plc Annual Report 2023

Strategic Report

Our Stakeholders

HOW WE ENGAGE