Sunday, 20 August 2017
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freeportNow that the Alcochete shopping outlet (aka Freeport) situated just outside Lisbon has new owners, we can look at the new people and companies which now run this controversial shopping centre.

The new deal is a joint venture (VIA Outlets) between shopping centre managers Hammerson, Value Retail (operators of “premium outlets”), the Dutch pension fund APG and Meyer Bergman, a retail property investor.

In its 2014 annual report Hammerson went to great lengths to assure people that the company was bending over backwards to ensure that all its business practices are fair, and of course, ‘sustainable.’

With regards to ‘sustainable’, apart from employing Louise Ellison as Head of Sustainability, it also uses consultants like JLL (Jones Lang LaSalle Incorporated), a Chicago-based property consultant which specialises in ‘energy and sustainability services.’

Hammerson has developed an obsession with sustainability. On page 24 of its 2014 annual report, we find the word ‘sustainability’ mentioned six times in eight separate paragraphs. Maybe there now is a competition between companies to see which can include the term the most times.

Hammerson emphasises its unswerving response to the sustainability ‘challenge’ with the opening paragraph on page 27 which states, “Building on these findings (referring to its work with JLL) we have developed an ambitious set of new sustainability targets designed to take the business to new levels of sustainability leadership. The targets are under seven key themes drawn from the findings of the materiality study” produced with JLL.

The seven key themes are: Lead & Challenge; Innovate & Learn; Partner & Collaborate; Protect & Enhance; Serve & Invest; and finally, Develop & Inspire.

Five out of seven of the paragraphs describing these themes have the word “sustainability” at least once, though the other two just use similar words and phrases which essentially mean the same thing.

Under ‘Lead &challenge’: “The transition to a sustainable business model requires leaders to challenge current practice. We aim to lead the way, working with our retailers, communities and suppliers to change the status quo. Key targets will be whole life costing, the links between sustainability, value and risk and understanding the carbon footprint of our business.”

Some sections of this sound a lot like sustainability (albeit using slightly different wording and phrases)..

Compare, for example pages 29-30 of Hammerson's annual report, where it gives data on Greenhouse Gas (GHG) Emissions 2104. Detailed analysis would take too long but here we find under GHG Emissions Analysis such sections as: Direct emissions from owned/controlled operations; and, Indirect emissions from the use of purchased electricity, steam, heating and cooling.

The whole concept of a “common plan” reminds me of the line from The Dark Knight delivered by Heath Ledger (playing the Joker, of course), “Nobody panics when everything goes according to plan, even if the plan is horrifying.”

Or in the case of ‘sustainability’, just complete insanity masking some pointless and often corrupt business practices.

The insidious nature of the whole sustainability concept is that it requires weaker members of the chain (independent suppliers, smaller retailers and some others) to have to adopt often insane and expensive practices – at their own expense – or risk losing business and trade.

JLL maintains on its website that it works with its client (including, we assume, Hammerson) in ensuring that all reporting is transparent.

We will now begin looking at the second partner in the VIA Outlets joint venture, Value Retail, to see that there is remains a complete lack of transparency in many reports from these companies.

It seems that all this supposed concern for the environment and endorsing projects that have a supposed social benefit is just a glorified version of a Punch and Judy show, designed to distract, entertain (see page 12 in Hammerson's annual report where it states that its centres are “entertaining & exciting”) and generally mollify people while companies like Hammerson continue to use some rather dubious business practices.

Although a separate company, Value Retail plc, is almost totally owned by one shareholder: Bicester Investor LP. The company owns all the 2,000,000 preferences shares and controls 72.22% of the share capital. These shares have a preference for a dividend amounting to 8% pa (on the capital, i.e. £160.000), and also a priority right to repayment of capital in any such event or winding up. However, they have no voting rights.

The most important thing about Bicester Investor LP is that it is based in Bermuda. Why?

The rest of the shares are divided between A,B,C and D shares which make up the remaining 27.78% of the share capital. Apart from the D shares, all the others have equal voting rights.

The A shares, of which 283,620 have been issued, are owned by VR Holdings LLC, thus making it the majority shareholder with voting rights.

The B shares, of which 48,074 have been issued, are split (unequally) between four parties, of which VR Investment LLC has 14,274 and VR Investment LP has 6,836.The remainder of the B shares are spilt between the 14,152 owned by the managing director, Roderick Vernon Gibbs, and 12,812 owned by SDMP Services, Inc.

The initials in this last one stand for S D Malkin Properties, with S D Malkin being the Chairman of the company. We find him owning further (C) shares through another company. According to the notes to the accounts (22), SDMP Services, Inc. is controlling member of VR Holdings LLC, the largest shareholder of shares with voting rights.

There are ten separate owners of class C shares, and these are again split unequally. We again encounter VR Investment LLC and VR Investment LP which have 6,010 and 3,122 each respectively. It's in these class of shares where we find both Hammerson plc and Hammerson subsidiaries: Hammerson UK Properties plc owns 75,462, while Hammerson (Value Retail) Investments Ltd has 76,144 shares and finally Hammerson itself with 18,500 shares.

The largest shareholder in this category is Stichting Pensionfonds ABP (usually known as ABP), a Dutch pension fund, specialising in pensions for people working in government and education.

Its website states, “As one of the largest pension funds in the world, our influence is significant. This is why we... ensure that our investments contribute to a sustainable world. Indeed, just like our pension, we not only think of ourselves, but also of the generations that follow us”.

ABP owns 132,711 class C shares, making it the second largest owner of shares after VR Holdings LLC. However, what is really interesting is APG (one of the partners in the VIA Outlets) is a subsidiary of ABP and administers the funds.

APG has its own site. With the Communist Manifesto in mind, we read from the APG website: “Solidarity between co-workers and generations is the power of the pension system. The costs and risks are shared by a large group”. In other words, should the whole thing go Lehmans then the risks would be equally shared by one large group: no pensions for all!

Anyone who thinks that this is just scaremongering only has to listen to the words of Stanley Fischer (vice chair of the Federal Reserve) and Andrew Haldane (chief economist at the BoE) taking about bank “bail-ins” and negative interest rates. Both these terms mean just one thing: theft! If they can't take your money one way, they'll do it another!

Just like Hammerson, APG heavily features the concept of sustainability. Claiming that it is “sustainable and socially responsible” we read, “Managing the assets of our clients is about more than just financial results. We contribute to society by applying sustainability and ESG factors”. ESG stands for environmental, social governance.”

Returning to Value Retail, we read that it specialises in Chic Outlet Shopping® Villages. I have already suggested that much of what Value Retail does is little better than dumping surplus stock on often economically-fragile markets. This would certainly seem to be the case with the Alcochete shopping mall in Lisbon, and possibly also other outlets across Europe, including the UK. The company's first shopping centre (in Europe) was opened in Bicester, just outside Oxford, in 1995.

Value Retail reveals in a document from a seminar presented in June last year how the company develops its “luxury outlet villages”. The process begins in opening an “attractively designed village [shopping centre] in a superior location”.

That's great. But how do you get that “superior location” in the first place? Do governments give them away? They clearly do in the case of the Alcochete site, thanks to people like José Sócrates.

Value Retail confirms that “growth in sales at [VR] luxury outlets is driven primarily by overseas shoppers”. Tourists, to be exact. Further analysis of this shopping process is given in the document which states that three out of four Chinese tourists to the UK visit Bicester Village, and that they spend an average of £1,000-£1,500 each.

The question here is: How much of that capital is actually going back into the local economy? The same question would apply to the other VR villages (in Ireland, Spain, France and others) as well as the Alcochete acquisition from Freeport.

The Value Retail document states that “extensions to villages will drive further growth”, meaning that any expansion must (adversely) affect local businesses, unless there is sufficient growth to accommodate both. Lastly, in a section where the document highlights VR' strategy in attracting tourists it states that such “villages” must provide services such as “foreign language signage, hands-free shopping, multilingual shop assistants, prayer rooms, VIP rooms, and VAT cash refund booths”.

Isn’t encouraging VAT refunds just another way to extract more capital from local and national economies, especially in countries like Portugal, Spain and even France, which economically isn't much better than Spain (percentage of debt in relation to GDP is about the same in both countries at 98%?

Reverting back to Hammerson, it was reported to the editor that the land on which the Alcochete shopping mall is situated was purchased from Freeport (The Carlyle Group – CEREP), which had no right to it in the first place.

Given that the land originally belonged to the Portuguese people and it was siged over to Freeport thanks to the corrupt action actions of a now notorious former minister for the environment (Josè Sócrates), then we have to assume that Hammerson knew it was receiving stolen goods or property - and it doesn't care.

Or perhaps the company officers of Hammerson (and Value Retail, etc.) do not understand the concept of receiving stolen goods, which is: 'receiving stolen property consists of four basic elements:(1) the property must be received; (2) it must have been previously stolen;(3) the person (or company) must know it was stolen: (4) the receiver must have intent to deprive the owner of his or her property.'

If any of the company officers, of both Hammerson and Value Retail want to dispute any of the above, then feel free.

In particular I would really like to know how “whole-life costing” works. Please, David Atkins (Hammerson's CEO), won't you explain it to us? We're all ears. Then I will explain to him, using Hammerson's (and VR's etc) own data, how companies like Hammerson are costing us the earth and pretending they are doing us all a favour.

I emailed Louise Romain at Hammerson to ask three simple questions: Who are Hammerson's shareholders? The annual return from Companies House does not include them and CH told me I would have ask the company. Why are there fewer subsidiaries in Hammerson's annual report than in the annual return? And, most importantly, did Hammerson pay Freeport any goodwill as part of the deal to buy the business?

Hammerson claims to be transparent. I have had no reply.

 

 

 

AJG, 2016