Derwent London Plc · LSE:DLN
Derwent London — H1 2022 Earnings Presentation
102 slides from Derwent London's earnings presentation, Aug 11, 2022
Slide 1: Interim Results 2022
Interim Results 2022
Slide 2: Contents
CONTENTS Presenters Contents Paul Williams Introduction and overview 01 Damian Wisniewski Developments 07 Nigel George Leasing and asset management 13 Emily Prideaux Results and financial review 20 Valuation and investment 29 Sustainability 37 Summary 42 Appendices 44 Executive committee and senior
Slide 3: Introduction and Overview
INTRODUCTION AND OVERVIEW PAUL WILLIAMS 1
Slide 4: Introduction and 2022 Guidance
INTRODUCTION AND 2022 GUIDANCE Flight to quality continuing 2022 GUIDANCE • Offices key to attracting and retaining talent • Limited supply of top tier buildings in our core areas ERV growth Upward yield pressure unchanged at Our portfolio more • Return to longer-term leasing strategies post-Covid 0
Slide 5: Occupational Market - A Flight to Quality
OCCUPATIONAL MARKET - A FLIGHT TO QUALITY Market drivers Occupier drivers Flexibility, adaptability & Constrained supply in amenity core areas Strong environmental Differentiation by quality credentials Location Transport links Return to long-term occupational strategies Derwent London plc - Interim
Slide 6: Investment Market - London in Focus
INVESTMENT MARKET - LONDON IN FOCUS CENTRAL LONDON OFFICE INVESTMENT CENTRAL LONDON PRIME OFFICE YIELDS Prime office yield or UK Gilt (%) Investment transactions (£bn) 8 22 CBRE prime West End yield CBRE prime City yield 10-yr UK Gilt 20 7 18 6 16 14 5 Annual average 12 4 10 3 8 6 2 4 1 2 0 00 01 02
Slide 7: Upgrading the Portfolio: Leveraging on the Flight to Quality
UPGRADING THE PORTFOLIO: LEVERAGING ON THE FLIGHT TO QUALITY • Good progress since 2019 £1.1bn Disposals: £715m Acquisitions: £529m Capex: £618m • Selling lower growth • Acquiring future opportunities • Developing prime ‘long-life, loose-fit, low carbon’ buildings Premier House SW1 250 Euston Road N
Slide 8: Continuing to Create Value Responsibly
CONTINUING TO CREATE VALUE RESPONSIBLY Sustainable assets • Reducing energy intensity and operational carbon • EPC upgrades – 62.5% 2030 compliance • Clear embodied carbon targets • Scottish solar park – resolution to grant consent Balance sheet • Conservative leverage • Limited near-term refinancin
Slide 9: Developments
DEVELOPMENTS PAUL WILLIAMS 7
Slide 10: Creating the Next Generation of Quality Assets
CREATING THE NEXT GENERATION OF QUALITY ASSETS Total proposed floorspace c.2.2m sq ft 1 3 5 +90% uplift 2 4 6 7 sq ft 5 Old Street 7 Quarter1 The 1 White 25 3 Baker 50 6 230 Chapel Street 2 Baker 4 Holden Building Blackfriars Network Street JV House Road On site (PC due 2025) Medium-term Longer-term
Slide 11: 2022 Completions
2022 COMPLETIONS 1 Soho Place W1 The Featherstone Building EC1 Offices t % 100% let t % ofi 5 ofi 0 Pr st 2 Pr st 3 22% let co Retail co on available on 2 & 4 Soho Place W1 Francis House SW1 (H2 completion) Forward- 100% sale pre-let completed Derwent London plc - Interim Results 2022 • Appendices 4
Slide 12: On Site: 25 Baker Street W1
ON SITE: 25 BAKER STREET W1 (PREVIOUSLY 19-35 BAKER STREET) • Completion H1 2025 • Scheme ERV £18.4m • Office ERV £90 psf • Capex to complete £241m • 97% office capex fixed (80% of total) • 10% pre-sold Derwent London plc - Interim Results 2022 • Appendices 44 and 46 10
Slide 13: On Site: Network W1
ON SITE: NETWORK W1 • Completion H2 2025 • 137,000 sq ft • Scheme ERV £11.9m • Office ERV £87.50 psf • Capex to complete £105m • Demolition underway Derwent London plc - Interim Results 2022 • Appendices 44 and 46 11
Slide 14: Future Pipeline
FUTURE PIPELINE Total proposed: c.1.3m sq ft MEDIUM-TERM PROJECTS LONGER-TERM SUPER-SITES (99% uplift) 50 Baker Street W1 JV Old Street Quarter EC1 • Existing • Existing 122,200 sq ft c.400,000 sq ft (at 100%) • Proposed • Proposed 750,000+ sq ft c.240,000 sq ft • Planning (at 100%) application • Pl
Slide 15: Leasing and Asset Management
LEASING AND ASSET MANAGEMENT EMILY PRIDEAUX 13
Slide 16: Occupational Market
OCCUPATIONAL MARKET • Take-up 6.4m sq ft in H1 2022 CENTRAL LONDON OFFICE TAKE-UP AND AVAILABILITY • 16% above the 10-year H1 average Monthly take-up (million sq ft) 2.5 Availability (million sq ft) 30 Take-up (monthly) Availability • Vacancy rate reduced to 8.2% (Dec 2021: 8.8%) 2.0 24 • West End 4
Slide 17: Constrained Development Pipeline and Active Demand
CONSTRAINED DEVELOPMENT PIPELINE AND ACTIVE DEMAND • Supply of Grade A space to remain constrained CENTRAL LONDON DEVELOPMENT PIPELINE Floor area (million sq ft) Vacancy rate (%) 12 Completed 12 • 13.7m sq ft under construction over next 5 years Under construction Proposed • 35% pre-let or under off
Slide 18: Derwent London's Leasing Activity
DERWENT LONDON’S LEASING ACTIVITY • £7.1m of lettings on 109,300 sq ft in H1 LETTING ACTIVITY • 9.3% above Dec 2021 ERV Rental income (£m pa) 45 Pre-let • Average term to break 6.1 years Non pre-let 40 35 • 90 Whitfield Street W1 30 • £1.4m on 18,850 sq ft to Michael Kors 25 • 7% above Dec 2021 ERV
Slide 19: Derwent London's Asset Management Activity
DERWENT LONDON’S ASSET MANAGEMENT ACTIVITY ASSET MANAGEMENT ACTIVITY H1 2022 VACANCY New rent vs EPRA vacancy rate (%) Vacant ERV (£m) Previous New Dec 2021 8 EPRA vacancy rate Vacant ERV The Featherstone 20 Building (TFB) Area rent rent Uplift ERV H1 2022 lettings ‘000 sq ft £m pa £m pa % % 6 15 Re
Slide 20: Proactive Approach to Evolving Occupier Needs and Flex
PROACTIVE APPROACH TO EVOLVING OCCUPIER NEEDS AND FLEX CLO stock (million sq ft) CENTRAL LONDON FLEX SPACE 250 13.1m sq ft (5.7%) 13.8m sq ft (5.9%) • Occupier needs cover a broad spectrum 2.0m sq ft (0.9%) 5.0m sq ft (2.3%) • High growth businesses = flexible leases 200 (Furnished + Flexible) • Est
Slide 21: The Importance of Amenity
THE IMPORTANCE OF AMENITY • An asset and portfolio amenity strategy • Derwent’s approach: • Building amenity – generous spaces at ground floor and roof, end of trip, etc • Portfolio amenity – occupier club space DL/78 • Customer service and engagement • Since opening, new leases with a combined rent
Slide 22: Results and Financial Review
RESULTS AND FINANCIAL REVIEW DAMIAN WISNIEWSKI 20
Slide 23: Financial Highlights
FINANCIAL HIGHLIGHTS EPRA NTA per share1, 2 EPRA earnings per share2 Cash and undrawn facilities 4,023p 53.13p £452m Dec 2021: 3,959p H1 2021: 54.04p Jun 2021: £527m +1.6% -1.7% Dec 2021: £608m Gross rental income Net rental income Interest cover ratio (ICR)3 £101.7m £93.9m 419% H1 2021: £98.1m H1 2
Slide 24: Debt Summary
DEBT SUMMARY MATURITY PROFILE OF DEBT FACILITIES2 £m 0 100 200 300 400 500 600 700 800 Proforma1 Jun 2022 Dec 2021 Bank facilities drawn £5m £131m £10m 2022 2023 Fixed rates borrowings £1,238m £1,238m £1,238m 2024 83 Drawn facilities £1,243m £1,369m £1,248m 2025 175 Unutilised facilities and cash £5
Slide 25: Managing Rising Interest Rates
MANAGING RISING INTEREST RATES • 90% of debt is fixed • Additional £75m forward-start interest rate swap at 1.36% expiring in April 2025 • Substantial headroom under financial covenants • Property income can fall 65% • Property values can fall 61% • No refinancing until October 2024 • Current margin
Slide 26: Committed Capital Expenditure
COMMITTED CAPITAL EXPENDITURE £m 0 50 100 150 200 250 1 Soho Place W1 H1 2022 64 5 70 headlease costs1 72 142 Actual spend 2 Forecast spend H2 2022 5 2 22 8 31 70 2023 3 105 24 45 6 183 2024+ 114 73 26 12 225 Soho Place W1 The Featherstone Building EC1 25 Baker Street W1 Network W1 Other 2 Capitalis
Slide 27: 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 capex on both completed and on-site projects PROFORMA IMPACT OF DISPOSALS & COMPLETED/ON-SITE PROJECTS Disposal of Soho Place Other Contracted Void
Slide 28: EPRA NTA Movement
EPRA NTA MOVEMENT Pence EPRA NTA PER SHARE 4,100 53 (54) - 1 +1.6% 64 4,023 4,000 Revaluation deficit (£1.1m) (1p) Operating profit £1.2m 1p 3,959 Total results from JVs 0.1m Investment property £71.4m 63p Assets held for sale £2.0m 2p 3,900 Trading properties (£1.7m) (2p) Owner-occupied property £0
Slide 29: EPRA Earnings
EPRA EARNINGS1 £m EPRA EARNINGS 140 120 Slide (£44.9m) 28 2.2 0.6 101.7 (8.3) 100 (17.8) 80 (18.5) 0.8 60 (1.1) 59.6 53.13p per share 40 20 0 Gross Premiums Waivers Other Admin Net Tax Other EPRA rental & other & property expenses finance charge earnings income income impairments expenditure costs 5
Slide 30: Rental Income
RENTAL INCOME £m MOVEMENT IN GROSS RENTAL INCOME 140 120 4.6 3.7 0.7 +3.7% LIKE-FOR-LIKE 1 (5.4) 100 101.7 98.1 Gross rental income 80 6-8 Greencoat Place SW1 £0.9m Soho Place W1 £3.7m 250 Euston Road NW1 Angel Square EC1 Other £2.4m (£2.2m) £0.5m H1 2021: 1.3% Total £4.6m Total £0.7m H2 2021: 1.1%
Slide 31: Valuation and Investment
VALUATION AND INVESTMENT NIGEL GEORGE 29
Slide 32: Valuation
VALUATION Valuer appointment Valuation themes • Transition from CBRE to Knight Frank • Impact of inputs • H1 2022 joint valuation ERV Yields Values Offices – high quality • Knight Frank as valuer going forward Offices – other Retail and hospitality2 Investment portfolio valued at £5.9bn • Greater at
Slide 33: Property Return
PROPERTY RETURN H1 2022 total property returns Total property return (%) TOTAL PROPERTY RETURN 18 Derwent London MSCI Central London Offices MSCI UK All Property • Derwent London 3.3% 16.5 15 • MSCI Central London Offices1 2.5% • MSCI UK All Property1 7.8% 12 9 • Outperformance due to: 7.4 7.8 • Dev
Slide 34: Rental Value and Yields
RENTAL VALUE AND YIELDS Rental values Rental growth (%) RENTAL VALUE GROWTH 15 • Rental values increased 0.9% in H1 • Offices: 92% of portfolio1 0.9% 10 • Retail: 8% of portfolio1 0.8% 5 • Average office passing rent low at £42.64 psf2 0 (Dec 2021: £44.18 psf) Derwent London H1 growth • Average ‘top
Slide 35: Build-up of Portfolio ERV
BUILD-UP OF PORTFOLIO ERV • Portfolio reversion of £123.9m1 £m BUILD-UP OF ERV2 • £68.1m or 55% contracted, including 350 7.0 • Soho Place W1 £17.8m 300 3.2 17.3 (4.9) 303.3 • 80 Charlotte Street W1 £12.1m 68.1 2.9 30.3 4.9 250 • £55.8m of further reversion 63.2 200 • £33.2m from on-site schemes 179
Slide 36: Acquisition and Disposal Activity in 2022 YTD
ACQUISITION AND DISPOSAL ACTIVITY IN 2022 YTD Major acquisitions in 2022 YTD Total Net rental Net rental Area after costs Net yield income income Property Date sq ft £m % £m pa £ psf 230 Blackfriars Road SE1 Q1 60,300 58.3 3.5 2.1 41.00 Soho Place W1 headlease Q1 - 71.9 - - - Total acquisitions 60,3
Slide 37: Major Acquisitions (Super-Sites)
MAJOR ACQUISITIONS (SUPER-SITES) 230 Blackfriars Road SE1 Old Street Quarter EC1 • Purchase price £58.3m (after costs) • Conditional contract exchanged • 60,300 sq ft multi-let office, a residential block • Purchase price £239.0m and a car park • Acquisition expected to complete in 2027 • 100-year l
Slide 38: Major Disposals
MAJOR DISPOSALS New River Yard EC1 Bush House WC2 • £65.9m after costs • £83.9m after costs • 70,700 sq ft, multi-let to 13 tenants • 103,700 sq ft, sold with vacant possession • 2.6 years to lease break/expiry • 41% premium to Dec 2021 valuation • Management intensive, low returns • Early profit cr
Slide 39: Sustainability
SUSTAINABILITY NIGEL GEORGE 37
Slide 40: Our Journey to Net Zero
OUR JOURNEY TO NET ZERO • Our net zero pathway1 was published in July 2020 • Reduce energy consumption in line with 1.5ºC climate scenario Scope Main carbon components 1 Energy consumed directly (total building) Gas (operational) 2 Energy used in landlord areas (indirectly) Landlord-controlled elect
Slide 41: Building Energy Usage - Good Progress
BUILDING ENERGY USAGE - GOOD PROGRESS Reducing operational energy and carbon Our target – 4% YoY reduction from 2019¹ Actions emissions kWh/sqm 180 162 Baseline Target • Energy targets set 160 • Monthly performance meetings with Building 140 112 Management teams 120 90 100 80 • Asset appraisals 60 •
Slide 42: Embodied Carbon on Developments
EMBODIED CARBON ON DEVELOPMENTS Reducing the embodied carbon of development Our target Actions projects • Commercial office new build developments • Setting targets • 2025: <600kgCO2e/sqm • Targets within Responsible Development Framework • 2030: <500kgCO2e/sqm • Low carbon design Our performance to
Slide 43: Green Energy - Usage & Self-Generation
GREEN ENERGY - USAGE & SELF-GENERATION Procuring and investing in renewable energy Our target Scottish holdings 100% green tariffs for electricity & gas • 5,500 acres, with the opportunity to contribute to our pathway • Solar park on 107 acres, cost c.£20-25m • Resolution to grant consent received O
Slide 44: Summary
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Slide 45: Summary
SUMMARY THE MARKET • Uncertain macro backdrop • Flight to quality continues • Shortage of grade A space DERWENT LONDON • Developing prime, green buildings • Capturing reversion • Strong balance sheet 43
Slide 46: Appendices
APPENDICES 44
Slide 47: Appendices
APPENDICES Financials 46 Valuation 60 Portfolio income profile 67 Sustainability 78 London office market 83 Developments 92 45
Slide 48: Financials
FINANCIALS Appendices 01. Headline numbers 47 02. Group balance sheet 48 03. EPRA net asset value metrics 49 04. Group income statement 50 05. IFRS profit and EPRA earnings 51 06. Explanation of EPRA adjustments 52 07. Cash flow 53 08. Rent collection 54 09. Reconciliation of like-for-like income to
Slide 49: Appendix 1 - Headline Numbers
APPENDIX 1 - HEADLINE NUMBERS Jun 2022 % change Dec 2021 Jun 2021 Net asset value (NAV) £4,518.8m 1.7* £4,441.8m £4,382.9m EPRA net tangible assets per share 1,2 4,023p 1.6* 3,959p 3,864p EPRA net disposal value per share1,2 4,069p 4.8* 3,884p 3,769p EPRA total return 3.0% n/a 5.8% 2.7% Gross rental
Slide 50: Appendix 2 - Group Balance Sheet
APPENDIX 2 - GROUP BALANCE SHEET Jun 2022 Dec 2021 Jun 2021 £m £m £m Investment property 5,495.9 5,359.9 5,068.6 Owner-occupied property 50.0 49.3 46.6 Investment in joint ventures 51.3 51.1 0.9 Other non-current assets 184.7 166.1 160.3 5,781.9 5,626.4 5,276.4 Non-current assets held for sale 115.4
Slide 51: Appendix 3 - EPRA Net Asset Value Metrics
APPENDIX 3 - EPRA NET ASSET VALUE METRICS Jun 2022 Dec 2021 EPRA NTA1 EPRA NDV2 EPRA NRV3 EPRA NTA1 EPRA NDV2 EPRA NRV3 £m £m £m £m £m £m Net assets attributable to equity shareholders 4,518.8 4,518.8 4,518.8 4,441.8 4,441.8 4,441.8 Revaluation of trading property 0.2 0.2 0.2 1.9 1.9 1.9 Deferred ta
Slide 52: Appendix 4 - Group Income Statement
APPENDIX 4 - GROUP INCOME STATEMENT Half year ended Year ended Half year ended Jun 2022 Dec 2021 Jun 2021 £m £m £m Gross property income 102.1 199.8 101.7 Profit on disposal of trading properties 0.3 0.7 0.5 Write-down of trading property - (1.4) (0.7) Other income 1.8 3.5 1.5 Movement in impairment
Slide 53: Appendix 5 - IFRS Profit and EPRA Earnings
APPENDIX 5 - IFRS PROFIT AND EPRA EARNINGS Half year ended Year ended Half year ended Jun 2022 Dec 2021 Jun 2021 £m £m £m IFRS profit for the period attributable to shareholders 135.3 252.3 120.2 Revaluation surplus (73.4) (130.8) (57.8) Joint venture revaluation deficit 1.1 14.2 - Profit on disposa
Slide 54: Appendix 6 - Explanation of EPRA Adjustments
APPENDIX 6 - EXPLANATION OF EPRA ADJUSTMENTS Adjustments H1 2022 H1 2021 H1 2022 EPRA EPRA A B C IFRS basis basis £m £m £m £m £m £m Net property and other income 96.5 (0.3) - - 96.2 95.3 Administrative expenses (17.8) - - - (17.8) (19.4) Revaluation surplus 73.4 - (73.4) - - - Profit on disposal of
Slide 55: Appendix 7 - Cash Flow
APPENDIX 7 - CASH FLOW Half year ended Year ended Half year ended Jun 2022 Dec 2021 Jun 2021 £m £m £m Property income 94.2 192.7 88.2 Property expenses (8.4) (14.3) (7.7) Other income 1.5 4.1 2.1 Administrative expenses (18.7) (34.7) (18.5) Finance costs (13.7) (25.0) (12.9) Costs recoverable from t
Slide 56: Appendix 8 - Rent Collection
APPENDIX 8 - RENT COLLECTION1 Mar 2022 quarter Jun 2022 quarter Retail/ Retail/ Office hospitality Total Office hospitality Total % % % % % % Rent received to date 100 90 99 97 83 96 Due later in the quarter 2 - - - 1 3 1 Outstanding - 10 1 2 14 3 100 100 100 100 100 100 Total £41.7m £2.4m £44.1m £3
Slide 57: Appendix 9 - Reconciliation of Like-for-Like Income to IFRS Income
APPENDIX 9 - RECONCILIATION OF LIKE-FOR-LIKE INCOME TO IFRS INCOME Like-for-like Like-for-like Development Acquisitions movement to portfolio property & disposals Total H1 2022 £m £m £m £m H1 2022 Gross rental income 90.6 5.4 5.7 101.7 Other property expenditure (6.1) (2.0) (0.3) (8.4) Movement in i
Slide 58: Appendix 10 - Green Debt Facilities and Expenditure
APPENDIX 10 - GREEN DEBT FACILITIES AND EXPENDITURE • £650m of green debt facilities GREEN BORROWINGS AND QUALIFYING EXPENDITURE • £300m green tranche within £450m revolving £m 800 Green RCF Green expenditure Available green headroom credit facility Green bond Drawn green facilities • £350m green bo
Slide 59: Appendix 11 - Debt Facilities
APPENDIX 11 - DEBT FACILITIES Drawn Undrawn Total Maturity £m £m £m 3.99% secured loan 83.0 - 83.0 October 2024 6.5% secured bonds 175.0 - 175.0 March 2026 1.875% unsecured green bonds 350.0 - 350.0 November 2031 1.5% unsecured convertible bonds 175.0 - 175.0 June 2025 2.68% unsecured private placem
Slide 60: Appendix 12 - Net Debt
APPENDIX 12 - NET DEBT Jun 2022 Dec 2021 £m £m Borrowings – current 14.6 12.3 Borrowings – non-current 1,359.3 1,237.1 Acquired fair value of secured bonds less amortisation (7.3) (8.0) Unamortised discount on unsecured green bonds 1.8 1.8 Equity component of convertible bonds 7.7 7.7 Unwinding of d
Slide 61: Appendix 13 - Fixed Rates and Hedging
APPENDIX 13 - FIXED RATES AND HEDGING Jun 2022 Dec 2021 Proportion of drawn facilities at fixed rates 90% 99% Weighted average duration of fixed rate instruments 6.7 years 7.2 years Mark-to-market of forward-start swap £2.7m £(0.8m) HEDGING PROFILE 1 MATURITY PROFILE OF FIXED RATES £m 0 50 100 150 2
Slide 62: Valuation
VALUATION Appendices 14. Valuation performance by village 61 15. Rental value growth and average rents 62 16. Valuation yields 63 17. Context to yield movement 64 18. Evolution of portfolio ERV 65 19. Portfolio statistics by village 66 60
Slide 63: Appendix 14 - Valuation Performance by Village
APPENDIX 14 - VALUATION PERFORMANCE BY VILLAGE Valuation Valuation Weighting movement Jun 2022 Jun 2022 20221 £m % % West End Central Fitzrovia2 1,916.2 32 (0.1) Soho/Covent Garden 534.5 9 12.9 Victoria 533.3 9 1.2 Paddington 400.0 7 1.5 Baker Street/Marylebone3 201.1 3 3.2 Mayfair 108.3 2 2.0 3,693
Slide 64: Appendix 15 - Rental Value Growth and Average Rents
APPENDIX 15 - RENTAL VALUE GROWTH AND AVERAGE RENTS RENTAL VALUE GROWTH1 H1 2021 H2 2021 2021 H1 2022 % % % % West End (0.4) (0.1) (0.5) 0.6 City Borders (0.1) 0.4 0.3 1.6 Central London (0.3) 0.1 (0.2) 0.9 Provincial 0.0 0.1 0.1 0.0 Underlying (0.3) 0.1 (0.2) 0.9 AVERAGE RENTS - CENTRAL LONDON OFFI
Slide 65: Appendix 16 - Valuation Yields
APPENDIX 16 - VALUATION YIELDS YIELD PROFILE1 EPRA INITIAL YIELDS Yield (%) Net initial ‘Topped-up’ 8 Reversionary yield yield initial yield True equivalent yield Initial yield % % 7 West End 2.7 4.2 6 City Borders 3.6 4.3 Central London 3.0 4.2 5 Provincial 7.5 7.6 EPRA portfolio 3.1 4.2 4 3 Pre-EP
Slide 66: Appendix 17 - Context to Yield Movement
APPENDIX 17 - CONTEXT TO YIELD MOVEMENT • UK 10-year Gilt yield of 2.21% at H1 2022, up from VALUATION YIELDS1 • 0.97% in Dec 2021 Yield % or gap between Derwent London True Equivalent Yield (TEY) and 10-year Gilt 9 Derwent London (TEY) • 0.75% in Jun 2021 Derwent London initial yield 8 10-year Gilt
Slide 67: Appendix 18 - Evolution of Portfolio ERV
APPENDIX 18 - EVOLUTION OF PORTFOLIO ERV £m 350 Rent reviews and lease renewals Under refurbishment/development Available to occupy 300 Contractual rental upli�s (including pre-lets) Contractual rent 250 200 150 100 50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 H1 2
Slide 68: Appendix 19 - Portfolio Statistics by Village
APPENDIX 19 - 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 reversion2 reversion value £m % sq ft sq ft £m pa £ psf £m pa £m pa £m pa £m pa West End
Slide 69: Portfolio Income Profile
PORTFOLIO INCOME PROFILE Appendices 20. Build-up of portfolio ERV 68 21. Available space and projects 69 22. Lease expiry analysis and vacancy rate 70 23. Timing of the reversion 71 24. Portfolio summary 72 25. Rent and tenant banding 73 26. Major tenants 74 27. Rent profile and portfolio breakdown
Slide 70: Appendix 20 - Build-up of Portfolio ERV
APPENDIX 20 - BUILD-UP OF PORTFOLIO ERV Rent uplift pa Rent pa £m £m £m Contracted rental income, net of ground rents 179.4 Contractual rental uplifts Soho Place W1 17.8 80 Charlotte Street W1 12.1 Brunel Building W2 7.0 Horseferry House SW1 5.2 1-2 Stephen Street W1 3.0 Tea Building E1 2.8 Other 20
Slide 71: Appendix 21 - Available Space and Projects
APPENDIX 21 - AVAILABLE SPACE AND PROJECTS Vacant Pre-let/ Total Gross Net Pre-let area sold 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 The Featherstone Building EC1 100 - 100 6.7 -
Slide 72: Appendix 22 - Lease Expiry Analysis and Vacancy Rate
APPENDIX 22 - LEASE EXPIRY ANALYSIS AND VACANCY RATE LEASE EXPIRY AND BREAK ANALYSIS1 EPRA VACANCY RATES % £14.6m £10.4m £12.5m £19.7m £7.0m Vacancy rate (%) 100 10 CBRE central London offices (by floorspace) Derwent London (by rental value) 10 10 13 90 23 9 7 14 37 80 22 8 70 7 30 60 6 19 50 5 83 4
Slide 73: Appendix 23 - Timing of the Reversion
APPENDIX 23 - TIMING OF THE REVERSION • £71.0m of the reversion contracted • £2.1m of the reversion from reviews and expiries • £68.1m of contracted uplifts • £2.9m from pre-let refurbishments £m REVIEWS AND EXPIRIES CONTRACTED UPLIFTS AND PRE-LETS 5 Future contracted growth above current ERV Expiri
Slide 74: Appendix 24 - Portfolio Summary
APPENDIX 24 - PORTFOLIO SUMMARY Floor area: 1.43m sq ft Rental income: £45.9m WAULT: 4.7 yrs Rent4: £47.38 ERV: £49.73 Future appraisal Potential projects Floor area: 0.33m sq ft Floor area: 1.85m sq ft 25% Rental income: £3.9m Rental income: £53.7m WAULT: 1.8 yrs WAULT: 4.3 yrs Rent4: £36.16 Rent4:
Slide 75: Appendix 25 - Rent and Tenant Banding
APPENDIX 25 - RENT AND TENANT BANDING CENTRAL LONDON ‘TOPPED-UP’ PROFILE OF TENANTS’ OFFICE RENT BANDING1 BUSINESS SECTOR2 £0-£30 psf Other 3% Fintech 5% £30-£40 psf Flexible office 3% 9% providers Media 4% 21% £70+ psf 29% Financial 7% £40-£50 psf 15% Government & public admin 7% Technology Busines
Slide 76: Appendix 26 - Major Tenants
APPENDIX 26 - MAJOR TENANTS ‘Topped-up’ income % Existing Pre-let 01 Expedia 6.2 - 02 Burberry 5.8 03 Government1 5.7 - 04 Boston Consulting Group 5.5 - 05 G-Research 4.3 - 06 Arup 3.8 - 07 Apollo 3.2 - 08 The Office Group 2.2 - 09 Sony Pictures 1.9 - 10 FremantleMedia Group 1.8 - 11 VCCP 1.6 - 12 A
Slide 77: Appendix 27 - Rent Profile and Portfolio Breakdown
APPENDIX 27 - RENT PROFILE AND PORTFOLIO BREAKDOWN DERWENT LONDON CENTRAL LONDON OFFICE RENT PROFILE PORTFOLIO BREAKDOWN Number of Weighting £ psf Valuation properties % 65 > £200m 7 47 Average office ERV1 £100m – £200m 13 31 Average topped-up office rent 60 £50m – £100m 12 13 Average office rent <
Slide 78: Appendix 28 - Lease Expiry Profile and Lease Length
APPENDIX 28 - LEASE EXPIRY PROFILE AND LEASE LENGTH West City EXPIRIES AND BREAKS AS A PERCENTAGE OF PORTFOLIO INCOME1 End Borders Provincial H2 2022 2023 2024 2025 2026 Total Expiries 1 - - 1 3 4 10 3 21 Rolling breaks 1 1 - 2 1 1 - - 4 Single breaks - - - - 11 10 2 1 24 Total 2 1 - 3 15 15 12 4 49
Slide 79: Appendix 29 - Key Lettings
APPENDIX 29 - KEY LETTINGS Q1 Q2 Q2 90 Whitfield Street W1 The Featherstone Building EC1 The Featherstone Building EC1 • Michael Kors • Marshmallow • Dept Agency • 18,850 sq ft • 16,220 sq ft on 1st floor • 11,450 sq ft on 9th and 10th floors • £1.4m pa at £72.50 psf • £1.2m pa at £71.50 psf • £1.0m
Slide 80: Sustainability
SUSTAINABILITY Appendices 30. Portfolio EPC profile 79 31. EPC rating – 2030 compliance 80 32. Derwent London’s Net Zero Carbon 2030 pathway 81 33. Offsetting residual carbon 82 78
Slide 81: Appendix 30 - Portfolio EPC Profile
APPENDIX 30 - PORTFOLIO EPC PROFILE A B C D E Project Under review/outstanding Exempt 0.5 ERV 8.6 41.5 17.9 13.5 5.6 12.2 0.2 EPC A-B: 50.1% EPC A-E: 87.1% 0.7 Floorspace 7.1 39.0 19.2 13.6 8.0 9.1 3.3 EPC A-B: 46.1% EPC A-E: 86.9% 0 10 20 30 40 50 60 70 80 90 100 London commercial portfolio (%) Der
Slide 82: Appendix 31 - EPC Rating - 2030 Compliance
APPENDIX 31 - EPC RATING - 2030 COMPLIANCE London commercial portfolio (%) 100 Not 2030 compliant 2030 compliant – project 90 2030 compliant – existing1 39.0 37.5 42.5 41.5 80 70 60 12.2 9.1 18.6 50 16.9 40 30 50.3 49.4 42.4 40.6 20 10 0 Dec 2021 Jun 2022 Dec 2021 Jun 2022 ERV Floorspace 1 Includes
Slide 83: Appendix 32 - Net Zero Carbon 2030 Pathway
APPENDIX 32 - DERWENT LONDON’S NET ZERO CARBON 2030 PATHWAY Guiding principles Action Delivery Transparency Communication and Operational collaboration carbon Integrity Governance Offsetting Influence Reducing Reducing the operational Procuring and residual embodied carbon energy and carbon investing
Slide 84: Offsetting Residual Carbon
APPENDIX 33 - OFFSETTING RESIDUAL CARBON Offsetting residual carbon emissions we cannot eliminate Embodied Embodied carbon carbon footprint intensity Year Scheme tCO2e kgCO2e/sqm 2020 80 Charlotte Street W1 19,790 506 2021 19-23 Fitzroy Street W1 18 358 3-5 Rathbone Place W1 161 185 6-8 Greencoat Pl
Slide 85: London Office Market
LONDON OFFICE MARKET Appendices 34. Central London office demand 84 35. Central London office supply 85 36. Central London office vacancy rates 86 37. Available space 87 38. Central London office construction starts 88 39. Central London office rental growth 89 40. Central London office investment m
Slide 86: Appendix 34 - Central London Office Demand
APPENDIX 34 - CENTRAL LONDON OFFICE DEMAND Market statistics Take-up (million sq ft) OFFICE TAKE-UP • 6.4m sq ft of central London take-up in H1 2022 20 Central London 18 • 109% above H1 2021 16 • 4% above Long Term Average (LTA) 14 Annual average 12 • Activity by sector: 24% banking & finance, 19%
Slide 87: Appendix 35 - Central London Office Supply
APPENDIX 35 - CENTRAL LONDON OFFICE SUPPLY Existing supply OFFICE DEVELOPMENT PIPELINE • Central London vacancy rate of 8.2% at H1 2022 Floor area (million sq ft) 12 Vacancy rate (%) 12 Central London Completed • 8.8% at both the start of the year and H1 2021 Under construction 10 Proposed 10 • LTA
Slide 88: Appendix 36 - Central London Office Vacancy Rates
APPENDIX 36 - CENTRAL LONDON OFFICE VACANCY RATES Vacancy rate (%) 16 West End West End average City City average 14 Central London 12 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 21 22 Source: CBRE Derwent London plc - Interim Results 2022 86
Slide 89: Appendix 37 - Available Space
APPENDIX 37 - AVAILABLE SPACE Floorspace (million sq ft) 30 Secondhand New completed New under construction 25 20 10-year average 15 10 5 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: CBRE Derwent London plc - Interim Results 2022 87
Slide 90: Appendix 38 - Central London Office Construction Starts
APPENDIX 38 - CENTRAL LONDON OFFICE CONSTRUCTION STARTS Construction starts (million sq ft) 3.0 Construction starts 4-quarter rolling average 2.5 2.0 1.5 1.0 0.5 0.0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: CBRE Derwent London plc - Interim Results 2022 88
Slide 91: Appendix 39 - Central London Office Rental Growth
APPENDIX 39 - CENTRAL LONDON OFFICE RENTAL GROWTH • CBRE reported prime office rental growth of +7.7% pa at H1 2022 CENTRAL LONDON OFFICE PRIME RENTAL GROWTH Prime rental growth (% pa) 40 • West End: +11.1% pa (+14.2% pa in Q4 2021) West End City 30 • City: +0.8% pa (0.0% pa in Q4 2021) Central Lond
Slide 92: Appendix 40 - Central London Office Investment Market
APPENDIX 40 - CENTRAL LONDON OFFICE INVESTMENT MARKET • CBRE reported £8.3bn of investment transactions Value of investment transactions (£bn) CENTRAL LONDON OFFICE INVESTMENT in H1 2022 9 Quarter total 4-quarter average • 113% above H1 2021 8 7 • 37% above LTA 6 • 68% by value in Q1 5 • 79% of acti
Slide 93: Investment Market Themes - London Is in Demand
APPENDIX 41 - INVESTMENT MARKET THEMES - LONDON IS IN DEMAND INVESTMENT DEMAND EUROPEAN PRIME OFFICE YIELDS Yield (%) 5.0 Cyclical low Q2 2022 Q1 2022 Middle East 6% 4.5 SE Asia 15% UK & Europe 4.0 33% 3.5 £37bn North America 3.0 18% 2.5 East Asia 28% 2.0 Berlin Barcelona Amsterdam West End Dublin P
Slide 94: Developments
DEVELOPMENTS Appendices 42. H1 2022 completion: Soho Place W1 93 43. H1 2022 completion : The Featherstone 94 Building EC1 44. Project summary: current projects 95 45. Project summary: future projects 96 46. Developments on site: profit on cost 97 47. Portfolio map 98 92
Slide 95: Appendix 42 - H1 2022 Completion: Soho Place W1
APPENDIX 42 - H1 2022 COMPLETION: SOHO PLACE W1 • 285,000 sq ft mixed-use scheme • 88% let or sold (100% for offices) • 34,000 sq ft retail available with ERV of £3.2m • Embodied carbon 550kgCO2e/sqm (offset) Derwent London plc - Interim Results 2022 93
Slide 96: Appendix 43 - H1 2022 Completion: The Featherstone Building EC1
APPENDIX 43 - H1 2022 COMPLETION: THE FEATHERSTONE BUILDING EC1 • 125,000 sq ft office scheme – 22% let • 16,220 sq ft let to Marshmallow at £1.2m pa • 11,450 sq ft let to Dept Agency at £1.0m pa • Embodied carbon 540kgCO2e/sqm (estimate) Derwent London plc - Interim Results 2022 94
Slide 97: Appendix 44 - Project Summary: Current Projects
APPENDIX 44 - PROJECT SUMMARY: CURRENT PROJECTS Current Pre Total Current net scheme Proposed H2 2022 2023 2024+ 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 Completed projects Soho Place W1 - 107 285 5 - - 5 The
Slide 98: Appendix 45 - Project Summary: Future Projects
APPENDIX 45 - 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 Holden House W1 3.9 90 150 2025 3.9 90 150 Under appraisal 1 50 Baker Street W1 JV 2.4 61 120 2024 Joint venture, shown at
Slide 99: Appendix 46 - Developments on Site: Profit on Cost
APPENDIX 46 - DEVELOPMENTS ON SITE: PROFIT ON COST Summary £m End value 788 Less: Total cost1 697 Project surplus 91 Less: Booked to Jun 22 0 Surplus to come 91 Profit on total cost 13% Yield on cost2 5.5% Completion H1 2025 H2 2025 Commercial area (sq ft) 383,000 246,0003 137,000 Residential area (
Slide 100: Appendix 47 - Portfolio Map
APPENDIX 47 - PORTFOLIO MAP TECH The Knowledge BEL T Quarter Floor space • Current 5.16m sq ft • On site 0.47m sq ft Valuation £5.9bn Income £179.4m pa ERV £303.3m Derwent London plc - Interim Results 2022 98
Slide 101: Executive Committee and Senior Management
EXECUTIVE COMMITTEE AND SENIOR MANAGEMENT Executive Committee Senior Management Paul Williams Chief Executive Lesley Bufton Head of Property Marketing Damian Wisniewski Chief Financial Officer Matt Cook Head of Digital Innovation & Technology Nigel George Executive Director Robert Duncan Head of Inv
Slide 102: 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