Derwent London Plc · LSE:DLN
Derwent London — H1 2020 Earnings Presentation
83 slides from Derwent London's earnings presentation, Aug 11, 2020
Slide 1: Interim Results 2020
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Slide 2: Contents
CONTENTS Presenters Contents Paul Williams Introduction and overview 01 Damian Wisniewski Results and financial review 10 Nigel George Property review 23 Summary 39 Appendices 41 Disclaimer 81 Derwent London plc - Interim Results 2020
Slide 3: Introduction and Overview
INTRODUCTION AND OVERVIEW PAUL WILLIAMS Derwent London plc - Interim Results 2020 1
Slide 4: First Half Activity
FIRST HALF ACTIVITY • Focus on occupiers and local communities • Completion of 80 Charlotte Street W1 • Disposal of 40 Chancery Lane WC2 • EPRA vacancy rate 1.1% • Total return -0.1% • Interim dividend raised 4.8% to 22.0p per share • Publication of Net Zero Carbon Pathway to 2030 80 Charlotte Stree
Slide 5: Our Response to Covid-19
OUR RESPONSE TO COVID-19 Staff Occupiers Communities • Initially Working From Home: • 25% reduction in service charge • Donations budget +81% to £0.7m • Technology worked well • Supporting those most in need • Supporting local communities: • Increasingly returning to the • Rent collection rates: • B
Slide 6: A "Wait & See" Market
A “WAIT & SEE” MARKET • Covid-19 saw market activity slow dramatically across CENTRAL LONDON OFFICE TAKE-UP AND AVAILABILITY both the occupier and investment markets Monthly take-up (million sq ft) 2.5 Availability (million sq ft) 20 Take-up (monthly) Availability • Take-up and investment activity b
Slide 7: The Return to Offices: Tenant Survey Results
THE RETURN TO OFFICES: TENANT SURVEY RESULTS WHAT HAVE YOU MISSED FROM THE OFFICE? Views of our top occupiers Most missed • They miss social interaction, working environment and 3 collaboration most • Public transport and health remain the greatest concerns • Overall occupation levels steadily growi
Slide 8: Covid-19 - Accelerating Change
COVID-19 - ACCELERATING CHANGE Cycles Flexible Furnished & leases flexible space Working Wellness from home Sensors Technology Floor to ceiling height 3/3.5m Terraces Showers Cafés Reception area Breakout space Derwent London plc - Interim Results 2020 6
Slide 9: Market Outlook
MARKET OUTLOOK • Major challenges persist • Offices: • Two-tier market • Rents to come under pressure • Vacancy rate to rise • Investment yields expected to remain firm for the right product • Derwent London has the right product: • Adaptable spaces • Numerous amenities • Customer focus • West End a
Slide 10: Turning Brown Buildings Green
TURNING BROWN BUILDINGS GREEN Set target to achieve Net Zero Carbon (NZC) by 2030: FEB • Brought forward two decades from 2050 JUN Completed 80 Charlotte Street W1, our first Net Zero Carbon development JUL Published our NZC Pathway setting out how we will achieve this: • Driving down energy demand
Slide 11: Derwent London's Opportunities
DERWENT LONDON’S OPPORTUNITIES • Built-in growth from pre-lets: ERV PROFILE £m • £16.6m of rent from Soho Place W1 offices 400 ERV to capture Contractual pre-lets • Opportunity from existing and future developments: Contractual rental uplifts (excl. pre-lets) 350 • £8.1m of rent from The Featherston
Slide 12: Results and Financial Review
RESULTS AND FINANCIAL REVIEW DAMIAN WISNIEWSKI Derwent London plc - Interim Results 2020 10
Slide 13: Financial Highlights
FINANCIAL HIGHLIGHTS Total return EPRA Earnings Per Share2 Cash and undrawn facilities -0.1% 48.90p £502m H1 2019: 3.3% H1 2019: 51.34p Jun 2019: £495m FY 2019: 6.6% -4.8% Dec 2019: £511m EPRA NTA per share1, 2 Gross rental income Interest cover ratio (ICR) 3,900p £97.8m 435% 2019: 3,957p H1 2019: £
Slide 14: EPRA NTA Movement
EPRA NTA MOVEMENT Pence EPRA NTA PER SHARE 4,000 3,957 49 (59) 2 (51) 2 -1.4% 3,900 3,900 Investment properties (£68.3m) Trading properties £2.5m Owner-occupied property £0.1m Total (£65.7m) 3,800 3,700 3,600 31 Dec Revaluation Profit EPRA Dividends Other 30 Jun 2019 (deficit)/ on earnings paid 2020
Slide 15: EPRA Earnings
EPRA EARNINGS1 £m 120 slide slide 14 16 100 (6.5) (£36.6m) 97.8 (6.9) 80 (17.1) -4.5% 60 (13.6) 0.0 1.0 48.90p 54.7 per share 40 20 0 Gross Covid-19 Other Admin Net Tax Other EPRA rental direct property expenses finance charge earnings income impact expenditure costs 51.34p H1 2019 93.1 - (6.8) (17.
Slide 16: Gross Rental Income
GROSS RENTAL INCOME • Lettings and asset management (AM) include: £m MOVEMENT IN GROSS RENTAL INCOME 2020 2019 110 lettings lettings & AM & AM 0.3 £m £m 7.3 (4.1) +5% Brunel Building W2 0.4 6.3 100 (2.0) 80 Charlotte Street W1 1.5 - 97.8 3.2 Johnson Building EC1 0.4 0.3 90 Whitfield Street W1 - 0.5
Slide 17: Covid-19 Impact: Rent Collection
COVID-19 IMPACT: RENT COLLECTION • 81% of March quarter rents received with a further 11% due under payment plans • 78% of June quarter rents received, 6% due by quarter end plus additional 9% covered by payment plans • March quarter: agreed monthly payments received in full • June quarter: agreed J
Slide 18: Covid-19 Impact: Net Rental Income
COVID-19 IMPACT: NET RENTAL INCOME • Impact on gross rental income: H1 2020 H1 2019 Variance • £0.2m reduction as £2.5m of rent waivers £m £m £m spread over remaining lease terms Gross rental income 97.8 93.1 4.7 • £3.5m due to 2 month Covid-19 related delay at Property costs 1 (6.9) (6.8) (0.1) 80
Slide 19: Cash Flow and Movement in Net Borrowings
CASH FLOW AND MOVEMENT IN NET BORROWINGS1 • Cash from operations 30% lower than in H1 2019 after agreements to defer £12.3m of rent to H2 2020 and 2021 £m Cash from MOVEMENT IN NET BORROWINGS 100 operations £30.1m Acquisitions (£43.7m) 80 Capex (£72.7m) 71.9 (9.6) Total (£116.4m) 60 (20.2) Investmen
Slide 20: 80 Charlotte Street W1 Completion
80 CHARLOTTE STREET W1 COMPLETION • 377,000 sq ft: • 322,000 sq ft offices (100% pre-let) • 12,000 sq ft retail • 43,000 sq ft residential • Total office rent: • £25.1m headline • £22.2m annualised accounting • Returns: • 27% profit on cost • 6.9% development yield • Valuation surplus: • £162m recog
Slide 21: Committed Capital Expenditure
COMMITTED CAPITAL EXPENDITURE £m 0 50 100 150 200 67 6 Actual H1 2020 spend H2 2020 66 16 33 4 Soho Place W1 The Featherstone Building EC1 Other Forecast Capitalised interest 2021 64 31 36 13 spend 1 2022+ 73 4 14 • Potential capital expenditure at 19-35 Baker Street W1 (not yet committed) of c.£250
Slide 22: Proforma Impact of Major Projects and Disposals
PROFORMA IMPACT OF MAJOR PROJECTS AND DISPOSALS • Assumes no further lettings other than those already contracted • Shows impact of estimated remaining capital expenditure on both completed and on-site projects PROFORMA IMPACT OF COMPLETED PROFORMA IMPACT OF ON-SITE PROJECTS PROJECTS & DISPOSALS Dis
Slide 23: Use of the Green Revolving Credit Facility (RCF)
USE OF THE GREEN REVOLVING CREDIT FACILITY (RCF) • £300m green tranche included within £450m RCF • Green loan reporting and Green Finance Framework independently assured for compliance with LMA Green Loan Principles1 • Current eligible green projects: • 80 Charlotte Street W1 (completed June 2020) •
Slide 24: Debt Summary
DEBT SUMMARY MATURITY PROFILE OF DEBT FACILITIES Jun 2020 Dec 2019 £m 0 50 100 150 200 250 300 350 400 450 500 550 600 Drawn facilities £1,141m £985m 2020 Unutilised facilities £300m £456m 2021 Total facilities £1,441m £1,441m 2022 77 26 2023 2024 176 83 274 Unutilised facilities and cash £502m £511
Slide 25: Property Review
PROPERTY REVIEW NIGEL GEORGE Derwent London plc - Interim Results 2020 23
Slide 26: Valuation
VALUATION Investment portfolio valued at £5.4bn Three developments drove performance • Underlying capital growth -0.9% H2 2019: 1.9%: • Valued at £0.79bn, uplift of 4.0%: • West End -0.9% H2 2019: 1.9% • 80 Charlotte Street W13 (96% let4) 3.9% • City Borders -0.7% H2 2019: 2.4% • Soho Place W1 (86%
Slide 27: Rental Value Growth and Yields
RENTAL VALUE GROWTH AND YIELDS • Underlying rental growth of -0.7% in H1: Half-yearly rental value growth (%) RENTAL VALUE GROWTH 12 • Office -0.1% 9 • Retail -7.7% 6 4.1 3.8 4.2 4.8 5.2 6.6 4.1 3 2.6 2.8 2.1 2.8 2.6 3.0 1.0 1.1 0.6 0.5 0.6 0.4 1.0 • Average office passing rent only £39.20 psf : 1 0
Slide 28: Build-up of Portfolio ERV
BUILD-UP OF PORTFOLIO ERV • Portfolio reversion of £115.1m1: BUILD-UP OF ERV2 £m • £70.7m (61%) contracted, including: 350 • 80 Charlotte Street W1 £24.7m 4.7 5.5 300 3.1 295.9 • Brunel Building W2 £11.1m 16.6 14.5 70.7 • Horseferry House SW1 £5.2m 250 £31.1m • White Collar Factory EC1 £4.6m 200 on-
Slide 29: Property Return
PROPERTY RETURN Total property returns in H1 2020 CUMULATIVE TOTAL PROPERTY RETURN Index (31 Dec 2007=100) • Derwent London +0.7% 300 Derwent London 187% • MSCI IPD Central London Offices1 -0.7% MSCI IPD Central London Offices MSCI IPD UK All Property • MSCI IPD UK All Property1 -3.3% 250 138% TOTAL
Slide 30: Letting Activity and Vacancy
LETTING ACTIVITY AND VACANCY LETTINGS H1 2020 EPRA VACANCY RATES Rental income (£m pa) Vacancy rate (%) 45 8 Non pre-lets CBRE Central London (by floorspace) Pre-lets Derwent London (by floorspace) 40 7 Average Derwent London (by rental value) 35 6 30 5 25 4 20 3 15 2 10 5 1 0 2007 2008 2009 2010 20
Slide 31: First Half Asset Management Activity
FIRST HALF ASSET MANAGEMENT ACTIVITY • £9.1m of income subject to breaks/expiries in H1 2020: LEASE EXPIRY AND BREAK ANALYSIS1 • £2.1m taken back for projects % £8.7m £6.4m £14.6m £10.4m £7.0m • £7.0m remaining: 100 11 8 10 10 • 76% retained or re-let 90 7 24 • 24% available to let in suites ranging
Slide 32: Lease Expiry Profile
LEASE EXPIRY PROFILE • Average lease length 5.8 years EXPIRIES AND BREAKS AS A PERCENTAGE OF PORTFOLIO INCOME1 (Dec 2019: 5.8 years): • 8.0 years after adjusting for ‘topped-up’ H2 2020 2021 2022 2023 2024 Total rents and pre-lets (Dec 2019: 8.3 years) Expiries 2 11 3 3 2 21 Rolling breaks 2 4 - - -
Slide 33: Managing Lease Expiries
MANAGING LEASE EXPIRIES • A number of occupiers looking to remove uncertainty on al 2020/21 expiries new re L • Negotiations on 200,000 sq ft with a rental income of £10m UC Case Study - Q3 2020 transaction • University College London: Before After Area (sq ft) 23,300 37,400 Expiry May 2021 June 203
Slide 34: Investment Activity
INVESTMENT ACTIVITY Acquisitions 30 Blue Star House SW9 1 to 92 1-2 6 Rathbone Place W1 GR Stephen Size: 53,750 sq ft Size: 1,670 sq ft (residential) 15 ES to SE Street 7 ST RE ET 25 Price: £38.1m before costs Price: £2.6m before costs 24 16 6 15 Rent: £0.8m pa Rent: £0.1m pa 14 5 1 to CE 17 14 5 PL
Slide 35: 2020 Completion: 80 Charlotte Street W1
2020 COMPLETION: 80 CHARLOTTE STREET W1 • Completed June 2020 • 377,000 sq ft mixed-use scheme: • Offices: 100% let at £25.1m pa • Retail: 12,000 sq ft available • Residential: 14 out of 22 units sold or exchanged • Profit on cost 27% Derwent London plc - Interim Results 2020 33
Slide 36: Development Update
DEVELOPMENT UPDATE Projects update sit e The Featherstone Building EC1 On • Two developments on site for H1 2022 completion: • Soho Place W1 - 285,000 sq ft • The Featherstone Building EC1 - 125,000 sq ft • Optionality on future schemes: • 19-35 Baker Street W1 - 293,000 sq ft - expected 2021 start
Slide 37: Soho Place - What We Designed
OVERVIEW SOHO PLACE - WHAT WE DESIGNED ERVIEW STAIRS: LIFTS: Touch free speedgates and combined destination control lift system allow OVERVIEW Generous high quality staircase enables touch free journey to STAIRS: STAIRS: tenant demise Generous high Generous high quality enables touch enables quality
Slide 38: Soho Place - What We Are Adding
OVERVIEW OVERVIEW VERVIEW SOHO PLACE - WHAT WE ARE ADDING ERVIEW WASHROOMS: Introduction of sensor operated taps and WC flush to improve WASHROOMS: overall hygiene of washroom Introduction of sensor operated visits. taps and WC flush to improve STAIRS: overall hygiene of washroom OVERVIEW Washrooms
Slide 39: Future Opportunities
FUTURE OPPORTUNITIES ed l l nt isa isa se pra pra n Co Ap Ap OPTIONALITY Holden House W1 Earliest start date 2023 Francis House SW1 Earliest start date 2021 Bush House WC2 Earliest start date TBC 150,000 sq ft consent 40,000 sq ft 108,000 sq ft Existing: 482,000 sq ft Potential: 648,000+ sq ft ais a
Slide 40: Tea Building E1 - New Streetscape
Tea Building E1 - New streetscape 38
Slide 41: Summary
SUMMARY PAUL WILLIAMS Derwent London plc - Interim Results 2020 39
Slide 42: Summary
SUMMARY • Outlook will depend on the shape of the downturn our • Accelerating changes in office use • Rents under pressure and yields to remain firm MARKET • Two-tier occupier and investment markets • Office development activity likely to reduce • Extend income and minimise vacancy rate DERWENT • Ca
Slide 43: Appendices
APPENDICES Derwent London plc - Interim Results 2020 41
Slide 44: Appendices
APPENDICES 01. Headline numbers 43 20. Timing of the reversion 62 02. Group balance sheet 44 21. Portfolio summary 63 03. EPRA net asset value metrics 45 22. Rent and tenant banding 64 04. Group income statement 46 23. Major tenants 65 05. IFRS loss and EPRA earnings 47 24. Derwent London central Lo
Slide 45: Appendix 1 - Headline Numbers
APPENDIX 1 - HEADLINE NUMBERS Jun 2020 % change Dec 2019 Jun 2019 Net asset value (NAV) £4,404.7m (1.6) * £4,476.9m £4,349.7m EPRA Net Tangible Assets per share 1,2 3,900p (1.4) * 3,957p 3,851p EPRA Net Disposal Value per share1,2 3,792p (1.4)* 3,847p 3,758p EPRA total return (0.1%) n/a 6.6% 3.3% Gr
Slide 46: Appendix 2 - Group Balance Sheet
APPENDIX 2 - GROUP BALANCE SHEET Jun 2020 Dec 2019 Jun 2019 £m £m £m Investment property 5,219.1 5,174.3 5,179.0 Owner-occupied property 45.3 45.3 46.5 Investment in joint ventures 1.3 1.3 2.8 Other non-current assets 144.8 139.8 144.3 5,410.5 5,360.7 5,372.6 Non-current assets held for sale - 118.6
Slide 47: Appendix 3 - EPRA Net Asset Value Metrics
APPENDIX 3 - EPRA NET ASSET VALUE METRICS Jun 2020 Dec 2019 EPRA NTA1 EPRA NDV2 EPRA NRV3 EPRA NTA1 EPRA NDV2 EPRA NRV3 £m £m £m £m £m £m Net assets attributable to equity shareholders 4,352.7 4,352.7 4,352.7 4,421.2 4,421.2 4,421.2 Revaluation of trading properties 4.5 4.5 4.5 2.3 2.3 2.3 Deferred
Slide 48: Appendix 4 - Group Income Statement
APPENDIX 4 - GROUP INCOME STATEMENT Half year ended Year ended Half year ended Jun 2020 Dec 2019 Jun 2019 £m £m £m Gross property income 98.0 192.7 93.6 Profit on disposal of trading properties 0.8 - - Write-down of trading property (0.4) - - Other income 1.5 3.6 1.7 Write-off/impairment of receivab
Slide 49: Appendix 5 - IFRS Loss and EPRA Earnings
APPENDIX 5 - IFRS LOSS AND EPRA EARNINGS Half year ended Year ended Half year ended Jun 2020 Dec 2019 Jun 2019 £m £m £m IFRS (loss)/profit for the year attributable to shareholders (9.5) 283.4 131.8 Revaluation deficit/(surplus) 68.3 (156.4) (75.0) JV revaluation surplus - - (0.9) Profit on disposal
Slide 50: Appendix 6 - Explanation of EPRA Adjustments
APPENDIX 6 - EXPLANATION OF EPRA ADJUSTMENTS Adjustments H1 2020 H1 2019 H1 2020 EPRA EPRA A B C IFRS basis basis £m £m £m £m £m £m Net property and other income 86.5 (0.8) 0.4 86.1 88.5 Administrative expenses (17.1) (17.1) (17.1) Revaluation deficit (68.3) 68.3 - - Profit on disposal 1.7 (1.7) - -
Slide 51: Appendix 7 - Cash Flow
APPENDIX 7 - CASH FLOW Half year ended Year ended Half year ended Jun 2020 Dec 2019 Jun 2019 £m £m £m Property income 71.9 171.5 82.7 Property expenses (9.6) (18.6) (10.7) Other income 0.6 3.6 1.9 Administrative expenses (20.2) (34.3) (19.8) Finance costs (12.6) (21.6) (9.4) Tax paid in respect of o
Slide 52: Appendix 8 - Reconciliation of Like-for-Like Income to IFRS Income
APPENDIX 8 - RECONCILIATION OF LIKE-FOR-LIKE INCOME TO IFRS INCOME Adjusted Adjusted Covid-19 Like- like-for-like Like-for-like like-for-like direct for-like Development Acquisitions movement to movement to portfolio1 impact portfolio property & disposals Total H1 20201 H1 2020 £m £m £m £m £m £m H1
Slide 53: Appendix 9 - Debt Facilities
APPENDIX 9 - DEBT FACILITIES Drawn Undrawn Total Maturity £m £m £m 6.5% secured bonds 175.0 - 175.0 March 2026 3.99% secured loan 83.0 - 83.0 October 2024 1.5% unsecured convertible bonds 175.0 - 175.0 June 2025 2.68% Unsecured private placement notes 55.0 - 55.0 January 2026 3.46% unsecured private
Slide 54: Appendix 10 - Net Debt
APPENDIX 10 - NET DEBT Jun 2020 Dec 2019 £m £m Borrowings 1,134.2 976.6 Acquired fair value of secured bonds less amortisation (10.0) (10.6) Equity component of unsecured bonds 7.7 7.7 Unwinding of discount of unsecured bonds (1.3) (0.7) Unamortised issue and arrangement costs 10.4 11.5 Facilities -
Slide 55: Appendix 11 - Fixed Rates and Hedging
APPENDIX 11 - FIXED RATES AND HEDGING Jun 2020 Dec 2019 Proportion of drawn facilities at fixed rates or hedged 78% 93% Weighted average duration of swaps1 - 0.2 years Mark-to-market cost of swaps and forward-start swaps £6.3m £3.7m Weighted average duration of fixed rate instruments 7.7 years 8.2 y
Slide 56: Appendix 12 - Valuation Performance by Village
APPENDIX 12 - VALUATION PERFORMANCE BY VILLAGE Valuation Valuation Weighting movement Jun 2020 Jun 2020 H1 20201 £m % % West End Central Fitzrovia2 1,753.0 32 (1.7) Victoria 466.7 9 (0.8) Paddington 344.6 6 1.2 Soho/Covent Garden 213.0 4 4.5 Baker Street/Marylebone 148.5 3 (6.4) Mayfair 97.1 2 0.0 3
Slide 57: Appendix 13 - Rental Value Growth and Average Rents
APPENDIX 13 - RENTAL VALUE GROWTH AND AVERAGE RENTS RENTAL VALUE GROWTH1 H1 2019 H2 2019 2019 H1 2020 % % % % West End 0.1 0.3 0.4 (0.6) City Borders 0.9 1.8 2.7 (0.8) Central London 0.4 1.0 1.4 (0.7) Provincial 0.6 (0.6) 0.0 (3.1) Underlying 0.4 1.0 1.4 (0.7) AVERAGE RENTS - CENTRAL LONDON OFFICES
Slide 58: Appendix 14 - Valuation Yields
APPENDIX 14 - VALUATION YIELDS YIELD PROFILE1 EPRA INITIAL YIELDS Yield (%) Net initial ‘Topped-up’ 8 Pre-EPRA EPRA yield initial yield % % 7 West End 3.0 4.5 City Borders 4.0 4.9 6 Central London 3.3 4.7 5 Provincial 8.5 8.7 EPRA portfolio 3.4 4.7 4 Reversionary yield 3 True equivalent yield Initia
Slide 59: Appendix 15 - Context to Yield Movement
APPENDIX 15 - CONTEXT TO YIELD MOVEMENT • Gilt yield declined from 0.83% at the start VALUATION YIELDS1 of the year to just 0.12% at the half year Yield % or Gap between Derwent London True Equivalent Yield (TEY) and 10-year Gilt 9 Derwent London TEY 10-year Gilt Derwent London Initial Yield Gap bet
Slide 60: Appendix 16 - Evolution of Portfolio ERV
APPENDIX 16 - EVOLUTION OF PORTFOLIO ERV £m 350 Rent reviews and lease renewals Under refurbishment/development Available to occupy 300 Contractual rental uplifts (including pre-lets) Contractual rent 250 200 150 100 50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 H1 2020 Derwe
Slide 61: Appendix 17 - Portfolio Statistics by Village
APPENDIX 17 - PORTFOLIO STATISTICS BY VILLAGE Net Vacant Floor Vacant contracted Average space Estimated area1 floor area rental rental rental Lease Total rental Valuation Weighting ‘000 ‘000 income income value reversion5 reversion value £m % sq ft sq ft £m pa £ psf £m pa £m pa £m pa £m pa West End
Slide 62: Appendix 18 - Build-up of Portfolio ERV
APPENDIX 18 - BUILD-UP OF PORTFOLIO ERV Rent uplift pa Rent pa £m £m £m Contracted rental income, net of ground rents 180.8 Contractual rental uplifts 80 Charlotte Street W1 24.7 Brunel Building W2 11.1 Horseferry House SW1 5.2 White Collar Factory EC1 4.6 1-2 Stephen Street W1 3.2 60 Whitfield Stre
Slide 63: Appendix 19 - Available Space and Projects
APPENDIX 19 - AVAILABLE SPACE AND PROJECTS Vacant Pre-let Total Gross Net Pre-let area area area vacant Ground vacant net rent Total net ‘000 ‘000 ‘000 ERV rent ERV ERV ERV sq ft sq ft sq ft £m pa £m pa £m pa £m pa £m pa Comment Available to occupy 80 Charlotte Street W11 39 - 39 1.3 - 1.3 - 1.3 3-4
Slide 64: Appendix 20 - Timing of the Reversion
30 25 APPENDIX 20 - TIMING OF THE REVERSION 20 15 19.0 12.9 3.6 18.2 12.9 13.1 • £87.3m of the reversion contracted: • £5.5m 10of the reversion from reviews 0.1 and expiries • Contracted uplifts £70.7m 5 6.8 0.7 • Pre-let developments £16.6m 0 H2 2020 2021 2022 2023 2024 >2024 REVIEWS AND EXPIRIES £
Slide 65: Appendix 21 - Portfolio Summary
APPENDIX 21 - PORTFOLIO SUMMARY Vacant 2% Floor area: 0.96m sq ft 0-3 yrs Rental income: £30.7m 14% Income: 17% WAULT: 6.4 yrs Rent4: £45.82 Future ERV: £49.75 appraisal Potential projects 17% Floor area: 0.57m sq ft Floor area: 1.76m sq ft Rental income: £17.8m Rental income: £57.4m Income: 10% Inc
Slide 66: Appendix 22 - Rent and Tenant Banding
APPENDIX 22 - RENT AND TENANT BANDING CENTRAL LONDON ‘TOPPED-UP’ PROFILE OF TENANTS’ OFFICE RENT BANDING1 BUSINESS SECTOR2 £0-£30 ps f Other 7% Fintech 4% £30-£40 ps f 3% Financial 6% Media, TV, marketing 5% £70+ ps f and advertising 24% Flexible office 25% providers 6% £40-£50 ps f Government and 1
Slide 67: Appendix 23 - Major Tenants
APPENDIX 23 - MAJOR TENANTS ‘Topped-up’ income1 % Existing Pre-let 01 Expedia 6.9 - 02 Burberry 5.4 - 03 Boston Consulting Group 5.1 - 04 G-Research 0.4 3.6 05 Government 3.7 - 06 Arup 3.7 - 07 Apollo - 2.8 08 The Office Group 2.6 - 09 Sony Pictures 1.8 - 10 FremantleMedia Group 1.7 - 11 Publicis Gr
Slide 68: Appendix 24 - Central London Office Rent Profile
APPENDIX 24 - DERWENT LONDON CENTRAL LONDON OFFICE RENT PROFILE £ psf 65 Average office rent Average ‘topped-up’ office rent 60 Average office ERV1 55 50 45 40 35 30 25 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 1 Includes ERV of on-site schemes Derwent London plc -
Slide 69: Appendix 25 - Lease Expiry Profile and Lease Length
APPENDIX 25 - LEASE EXPIRY PROFILE AND LEASE LENGTH EXPIRIES AND BREAKS AS A PERCENTAGE OF PORTFOLIO INCOME1 West City End Borders Provincial H2 2020 2021 2022 2023 2024 Total Expiries 1 1 - 2 11 3 3 2 21 Rolling breaks 2 - - 2 4 - - - 6 Single breaks - - - - 9 6 6 6 27 3 1 - 4 24 9 9 8 54 PROFILE O
Slide 70: Appendix 26 - Take-up by Business Sector
APPENDIX 26 - TAKE-UP BY BUSINESS SECTOR CLO take-up (% of total) 100 Manufacturing industrial & energy Insurance 90 Consumer services & leisure Public sector 80 70 Professional 60 50 Creative industries 40 30 Banking & finance 20 Business services 10 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2
Slide 71: Appendix 27 - Central London Office Demand
APPENDIX 27 - CENTRAL LONDON OFFICE DEMAND Market statistics Take-up (million sq ft) OFFICE TAKE-UP 20 • Central London office take-up of 3.6m sq ft in H1 2020: Central London 18 • 43% below the half year average (2000-present) 16 Annual average • 39% below H1 2019 14 12 • 41% business & professiona
Slide 72: Appendix 28 - Central London Office Vacancy Rates
APPENDIX 28 - CENTRAL LONDON OFFICE VACANCY RATES Vacancy rate (%) 16 West End City 14 Central London West End average 12 City average 10 8 6 4 2 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Source: CBRE Derwent London plc - Interim Results 2020 70
Slide 73: Appendix 29 - Central London Office Supply
APPENDIX 29 - CENTRAL LONDON OFFICE SUPPLY Existing supply OFFICE DEVELOPMENT PIPELINE • Central London vacancy rate of 5.3%, 30 June 2020: Floor area (million sq ft) Vacancy rate (%) 12 Central London 12 Completed Completed average • 3.9% at the start of the year, up 90bp in three months Under cons
Slide 74: Appendix 30 - Central London Office Rental Growth
APPENDIX 30 - CENTRAL LONDON OFFICE RENTAL GROWTH • CBRE reported prime office rental growth of -2.1% pa CENTRAL LONDON OFFICE RENTAL GROWTH at 30 June 2020: Rental growth (% pa) 40 West End • West End: -2.3% pa (+4.2% pa at 31 Dec 2019) City 30 Central London • City: -0.7% pa (+3.6% pa at 31 Dec 20
Slide 75: Appendix 31 - Central London Office Investment Market
APPENDIX 31 - CENTRAL LONDON OFFICE INVESTMENT MARKET H1 2020 activity CENTRAL LONDON OFFICE INVESTMENT Investment transactions (£bn) 22 • CBRE reported £2.3bn of central London transactions: 20 18 • 62% below the half-year average (since 2000) 16 • 68% lower than H2 2019 and 46% lower than H1 2019
Slide 76: Appendix 32 - Acquisition: Blue Star House, Brixton SW9
APPENDIX 32 - ACQUISITION: BLUE STAR HOUSE, BRIXTON SW9 • 53,750 sq ft 11-storey building: • 41,600 sq ft offices • 3,800 sq ft restaurant • 8,350 sq ft fitness centre • 0.7 acre site including surface car park • Immediately opposite Brixton O2 Academy • Acquired for £38.1m before costs: • Low avera
Slide 77: Appendix 33 - Disposal: 40 Chancery Lane WC2
APPENDIX 33 - DISPOSAL: 40 CHANCERY LANE WC2 • 103,700 sq ft office and retail building • Sold for £121.3m (gross) in February 2020 • Fully let to Publicis Groupe at £5.5m pa • Net yield to purchaser 4.25% • Mature asset - recycling capital Derwent London plc - Interim Results 2020 75
Slide 78: Appendix 34 - On-site Developments: Profit on Cost
APPENDIX 34 - ON-SITE DEVELOPMENTS: PROFIT ON COST Summary t e- le End value 663 pr % Less: Total cost1 551 86 Project surplus 112 Less: Booked to Jun 20 34 Surplus to come 78 Profit on total cost 20% Profit to come on total cost 14% Yield on cost 5.7% Completion H1 2022 H1 2022 Sensitivity4 - proje
Slide 79: Appendix 35 - Project Summary: Current Projects
APPENDIX 35 - PROJECT SUMMARY: CURRENT PROJECTS Current Pre Total Current net scheme Proposed H2 2020 2021 2022+ capex to office income area area capex capex capex complete Delivery c.ERV Property £m pa ‘000 sq ft ‘000 sq ft £m £m £m £m date psf On-site developments Soho Place W1 - 107 285 66 64 73
Slide 80: Appendix 36 - Project Summary: Future Projects
APPENDIX 36 - PROJECT SUMMARY: FUTURE PROJECTS Current Pre- net scheme Proposed Earliest income area area possession Property £m pa ‘000 sq ft ‘000 sq ft year Comment Consented 19-35 Baker Street W11 3.5 143 293 2021 Currently Derwent 55%, The Portman Estate 45% Holden House W1 5.4 90 150 2023 8.9 2
Slide 81: Appendix 37 - Portfolio Map
Chalk Farm Key Derwent London plc 25 Savile Row London W1S 2ER APPENDIX 37 - PORTFOLIO MAP Caledonian Road Tel 020 7659 3000 www.derwentlondon.com Camden Road © Derwent London February 2020 Essex Road Camden Town Primrose Hill Carnegie St Islington TEC Wharfdale Rd Angel H BEL T Kings Cross Alban Re
Slide 82: Appendix 38 - Executive Committee and Senior Management
APPENDIX 38 - EXECUTIVE COMMITTEE AND SENIOR MANAGEMENT Executive Committee Senior Management Paul Williams Chief Executive Vasiliki Arvaniti Head of Asset Management Damian Wisniewski Chief Financial Officer Clive Johnson Head of Health & Safety Simon Silver Property Director Katy Levine Head of Hu
Slide 83: Disclaimer
DISCLAIMER This presentation has been prepared by Derwent London plc (the apparent. Past performance is not indicative of future results “Company”). No representation or warranty (express or implied) of and forward-looking statements are not guarantees of future any nature is given nor is any respon