Shaftesbury Capital Plc · LSE:SHC
Shaftesbury Capital — Capital & Counties Properties — H1 2018 Earnings Presentation
42 slides from Shaftesbury Capital's earnings presentation, Jul 25, 2018
Slide 1: Capital & Counties Properties PLC Interim Results 2018
Capital & Counties Properties PLC Interim Results 2018 25 July 2018 www.capitalandcounties.com
Slide 2: Forward-looking statements
This presentation includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Capital & Counties Properties PLC to be materially different from a
Slide 3: Introduction
Introduction 1. INTRODUCTION Financial Review Ian Hawksworth 2. FINANCIAL REVIEW Situl Jobanputra Operating Update 3. COVENT GARDEN Ian Hawksworth Looking Ahead 4. EARLS COURT PROPERTIES Gary Yardley 5. LOOKING AHEAD Q&A Ian Hawksworth 6. Q&A Capco Interim Results 2018 www.capitalandcounties.com
Slide 4: Introduction
Introduction Financial Review Operating Update Ian Hawksworth Looking Ahead Q&A Capco Interim Results 2018 www.capitalandcounties.com
Slide 5: Possible demerger
Possible demerger reflects – Distinct investment characteristics – Changing income profile and scale of Covent Garden – Readiness of Earls Court land for development Covent Garden - an independent, prime central London retail-focused REIT Earls Court - a London land enablement and development compan
Slide 6: Active start to the year
Active start to the year Covent Garden Covent Garden – A world-class retail and dining destination, driving rental growth through creative asset Earls Court management Earls Court – Driving and realising value through planning, land assembly, land enablement and selective development Strong financia
Slide 7: £3.3bn property value, EPRA NAV 334p per share
Covent Earls Court Garden Properties £2.6bn £0.7bn1 +1.6% lfl Total property value -7.0% lfl Initial yield: £3.3bn 1 ECPL £519m, -9.0% lfl 2.3% -0.4% lfl Equivalent yield: 3.6% Lillie Square: £148m, 0% lfl Other: £40m, -4.9% lfl EPRA NAV 334p per share Total return 0.5% Underlying earnings 0.5 pence
Slide 8: Continued income growth, realising value, strong balance sheet
Continued income growth at Covent Garden – 11.6% lfl growth in NRI (versus June 2017) – 26 new leases and renewals, 8.9% above December 2017 ERV – 1.9% lfl increase in ERV to £107m – Floral Court complete, 75% of lettable space contracted – Excellent brands introduced Realising value at Earls Court
Slide 9: Financial Review
Introduction Financial Review Operating Update Situl Jobanputra Looking Ahead Q&A Capco Interim Results 2018 www.capitalandcounties.com
Slide 10: Underlying earnings
Jun-18 Jun-17 Var £m £m £m Net rental income - Recurring 29.2 23.6 5.6 Net rental income - Empress State 3.9 8.2 (4.3) Group net rental income 33.1 31.8 1.3 Administration costs (19.2) (21.4) 2.2 Net finance costs (9.4) (10.1) 0.7 Other 0.9 1.3 (0.4) Tax (1.1) (0.3) (0.8) Underlying earnings from co
Slide 11: Net rental income bridge
£m 40 £4.9m 35 £33.1m £31.8m £3.6m Earls Court Properties 30 £4.8m Earls Court Properties £8.4m 25 20 15 Covent Garden £28.3m Covent Garden £23.4m 10 5 0 H1 17 Covent Garden Earls Court Properties H1 18 Note: All numbers shown at Group share Capco Interim Results 2018 www.capitalandcounties.com
Slide 12: ERV bridge
£m 115 £14.8m 100 £10.6m 85 £2.9m £7.6m £6.4m £1.4m 70 £107.3m 55 £79.0m 40 £63.6m 25 10 Jun-18 Gross Rent-frees & Turnover & Other Contracted & Total Contracted & Vacancy Development & Reversion Jun-18 ERV Income Stepped rents income Under Offer Under Offer Refurbishment Capco Interim Results 2018
Slide 13: EPRA NAV
Jun-18 Dec-17 Var £m £m £m Investment & trading property 3,240 3,441 (201) Unrecognised surplus on trading property 29 32 (3) Net debt (539) (734) 195 Other 120 100 20 EPRA NAV 2,850 2,839 11 Number of shares in issue (diluted) 852m 851m 1m EPRA NAV per share 334p 334p – EPRA NNNAV 335 pence per sha
Slide 14: Cash and undrawn facilities movement
£m 900 £886m 800 £691m 700 600 500 £815m 400 £639m £275m 300 £64m 200 100 £178m £14m £52m £71m 0 Cash Dec-17 Disposals Investment Financing Operating cash flow, Jun-18 Dividend & Other Undrawn Facilities Note: All numbers shown at Group share Capco Interim Results 2018 www.capitalandcounties.com
Slide 15: Strong balance sheet
Strong balance sheet – Further strengthened following the sale of the Empress State Building for £250m – Well-positioned to support the current capital requirements of both estates Access to substantial liquidity and modest capital commitments No significant near term maturities Jun-18 Dec-17 Net de
Slide 16: Operating Update
Introduction Financial Review Operating Update Ian Hawksworth Looking Ahead Q&A Capco Interim Results 2018 www.capitalandcounties.com
Slide 17: Capco Interim Results 2018 www.capitalandcounties.com
Capco Interim Results 2018 www.capitalandcounties.com
Slide 18: Covent Garden: portfolio value and ERV
Portfolio value ERV NRI (vs June 2017) Acquisitions £2.6bn +1.9% (lfl) +11.6% £19m +1.6% like-for-like £107m like-for-like Continued income growth Strong leasing activity across all uses Floral Court development completed in July Openings across the estate ERV target of £125m by December 2020 Capco
Slide 19: ITZA psf June 2018
ITZA psf (£) – 30 June 2018 Capco Interim Results 2018 www.capitalandcounties.com
Slide 20: Strong demand for Market Building
Strong demand for Market Building – Olivia Burton, Africology, Atelier Cologne, Whittards Upsizing from existing tenant, Oystermen – Demonstrating good trading prospects on estate New luxury brand signed – Tiffany launched new concept on James Street New brands on Floral Street – The Shop at Bluebir
Slide 21: Capco Interim Results 2018 www.capitalandcounties.com
Capco Interim Results 2018 www.capitalandcounties.com
Slide 22: Floral Court
New courtyard connecting Floral Street to King Street – Transforming pedestrian flow Over 75% of lettable space contracted – Alkemistry, Floral Street Fragrance, French Sole, Petersham Nurseries – Heritage residential on King Street let (16 apartments) – £3.8m of £5.2m ERV contracted Floral Court NI
Slide 23: Earls Court Properties
Introduction Financial Review Operating Update Gary Yardley Looking Ahead Q&A Capco Interim Results 2018 www.capitalandcounties.com
Slide 24: Capco Interim Results 2018 www.capitalandcounties.com
Capco Interim Results 2018 www.capitalandcounties.com
Slide 25: Earls Court ownership and values
Variance Ownership Jun-18 Dec-17 (lfl) 11 ECPL ECPL 63% £519m £561m (9.0%) 2 ESB1 - - £220m - 33 LSQ LSQ 50% £148m £156m - CLSA 2 CLSA2 100% - - LBD LBD - - - OTHER OTHER 100% £40m £42m (4.9%) £707m £979m (7.0%) 1 Capco sold the Empress State Building to MOPAC in March 2018 for £250 million. 2 Capco
Slide 26: Lillie Square progress
Delivery of Phase 1substantially complete – £245m cumulative sales proceeds received (Capco share £122.5m) – Positive customer experience on handover Progress on Phase 2 – Over 80% reserved or exchanged – Sales pricing achieved at a modest premium to comparable units in Phase 1 – Main construction c
Slide 27: Sale of the Empress State Building
Sale of the Empress State Building to the Mayor’s Office for Policing and Crime – Consideration £250m vs year end valuation of £220m The consented Earls Court Masterplan – Mixed-use development – Based on retention of ESB’s current structure Disciplined approach to capital management Capco Interim R
Slide 28: Detailed planning consent in place
Detailed planning consent in place, land available for development Continued interest from potential partners and end-users Flexibility to evolve and bring forward the masterplan – Introduction of third-party capital – Selective development across various uses Capco Interim Results 2018 www.capitala
Slide 29: Looking Ahead
Introduction Financial Review Operating Update Ian Hawksworth Looking Ahead Q&A Capco Interim Results 2018 www.capitalandcounties.com
Slide 30: Looking ahead: Covent Garden, Earls Court, possible demerger
Covent Garden – World-class retail and dining destination – Continued income and rental value growth – Introduce the best brands and enhance customer experiences on the estate – Continued strategic investment Earls Court – One of London’s most important mixed-use development opportunities – Introduc
Slide 31: Capco Interim Results 2018 www.capitalandcounties.com
Capco Interim Results 2018 www.capitalandcounties.com
Slide 32: Appendix
1. FINANCIALS 2. COVENT GARDEN 3. EARLS COURT PROPERTIES Capco Interim Results 2018 www.capitalandcounties.com
Slide 33: Reconciliation of IFRS to Group share
Add back: Joint Less: Ventures1 Non-controlling IFRS interest2 Group share £m £m £m £m Investment & Trading Property 3,426 118 (304) 3,240 Net Debt (567) 6 22 (539) Other assets and liabilities 242 (124) - 118 Non-controlling interest (282) - 282 - NAV 2,819 - - 2,819 1. This consists of the Lillie
Slide 34: EPRA NNNAV bridge
Pps 350 345 340 4.2p 0.5p 3.5p 335 1.0p 0.4p 6.2p 330 333.8p 334.4p 325 320 Dec-17 Covent Garden Earls Court Disposal of Underlying Profits Dividend Other Jun-18 revaluation Properties Empress State revaluation Building EPRA NNNAV 335 pence per share Capco Interim Results 2018 www.capitalandcounties
Slide 35: Modest capital commitments of £82m
£m Capital Commitments Timeline Modest capital commitments of £82m 80 – Covent Garden £7m 60 – Earls Court £32m – Lillie Square £43m 40 20 0 2018 2019 Covent Garden Earls Court Lillie Square Key commitments Project Commitment Completion date Floral Court1 £5m Q3 2018 CLSA instalments £30m Q4 2019 Li
Slide 36: Debt maturity and covenants
Maturity Loan LTV Interest cover outstanding1 covenant covenant Covent Garden2 2022 – 2037 £550m 60% 120% ECPL 2026 £42m 40% n/a Lillie Square3 2021 £18m 75% n/a Total £610m 1. The loan values are the nominal values at 30 June 2018 shown on a Group share basis. The balance sheet value of the loans i
Slide 37: Tax on income and capital gains
1. Tax on income The underlying tax rate is 19% which is in line with the statutory corporation tax rate for 2018. The main rate of corporation tax is expected to be 17% from April 2020. Medium-term underlying tax rate for the Group is expected to remain broadly in line with UK statutory tax rates.
Slide 38: Capco Interim Results 2018 www.capitalandcounties.com
Capco Interim Results 2018 www.capitalandcounties.com
Slide 39: Capco Interim Results 2018 www.capitalandcounties.com
Capco Interim Results 2018 www.capitalandcounties.com
Slide 40: Covent Garden portfolio metrics
LEASE EXPIRY PROFILE1 ANNUAL GROSS INCOME 2018: 11% Retail: 53% 2019: 14% F&B: 23% WALE Offices: 16% 2020: 10% 7.6yrs 2021: 10% £64m Leisure: 4% Residential: 4% 2022+: 8% 2023+: 47% 1. Lease expiry profile based on the earlier of lease break and lease expiry PORTFOLIO VALUE TOTAL FLOOR AREA Retail:
Slide 41: Value creation and ERV progression
£m VALUE CREATION £m ERV PROGRESSION 3,000 140 £1,212m £125.0m 2,500 120 £107.3m £104.8m 2,000 100 £96.0m £86.2m £316m 1,500 80 £75.1m £641m £95m £2,622m £58.0m 1,000 60 £51.9m £45.8m £37.5m 500 40 £33.7m £548m 0 20 Dec-09 Acquisitions Capex Disposals Valuation Jun-18 2009 2010 2011 2012 2013 2014 2
Slide 42: Earls Court Masterplan key areas
Earls Court Partnership Limited; Investment vehicle with TfL – Capco share 63% The landowners’ map is indicative Lillie Square – 50:50 JV with KFI Land subject to CLSA – Option exercised and binding agreement in place Lillie Bridge Depot – 100% owned by TfL Earls Court Masterplan – key areas ECPL1 C
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