Derwent London plc · LSE:DLN
Derwent London — FY2015 Earnings Presentation
90 slides from Derwent London's earnings presentation, Feb 25, 2016
Slide 1: Annual Results 2015
ANNUAL RESULTS 2015 DERWENT LONDON PLC
Slide 2: Contents
CONTENTS Presenters: Contents: John Burns Introduction and overview 01 Simon Silver Results and financial review 07 Damian Wisniewski Valuation and portfolio analysis 18 Nigel George Portfolio management 27 Paul Williams Projects 35 David Silverman Investment activity 44 Summary 51 Appendices 53 Dis
Slide 3: Introduction and Overview
INTRODUCTION AND OVERVIEW John Burns Derwent London plc Annual Results 2015 1
Slide 4: Highlights
HIGHLIGHTS ANOTHER STRONG PERFORMANCE FINANCIAL SET OF RESULTS AND OPERATIONS HIGHLIGHTS ■■ NAV growth +21.6% ■■ £27.1m pa of lettings in 2015 with ■■ LTV 17.8% at 31 December 2015 ■■ EPRA EPS +25.0% another £10.1m1 pa in 2016 to date ■■ Interest cover ratio increased to 362% ■■ 226,000 sq ft of maj
Slide 5: Central London Office Outlook for 2016
CENTRAL LONDON OFFICE OUTLOOK FOR 2016 Estimates for our portfolio Market factors ■■ Current demand - Derwent London has let £10.1m pa YTD ■■ London’s economic growth estimated at greater than 2% pa Rents 5 - 8% ERV growth ■■ Central London’s low vacancy rate - 2.5% in Dec 2015 ■■ Central London dev
Slide 6: Potential External Risks
POTENTIAL EXTERNAL RISKS ■■ Global economic slowdown ■■ Global stockmarkets ■■ Geopolitical uncertainties continue ■■ London specific: ■■ Mayoral election - 5 May 2016 ■■ EU referendum - 23 June 2016 ■■ New business rates - 1 April 2017 Derwent London plc Annual Results 2015 4
Slide 7: Derwent London's Substantial Growth Opportunities (1)
DERWENT LONDON’S SUBSTANTIAL GROWTH OPPORTUNITIES (1) 1. INCREASING POTENTIAL INCOME £m 300 Rent reviews and lease renewals December 2015 £m Development / under refurbishment Available to occupy Contractual rent 137.1 250 Contractual rental uplifts (including pre-lets) Reversion 141.0 Contractual re
Slide 8: Derwent London's Substantial Growth Opportunities (2)
DERWENT LONDON’S SUBSTANTIAL GROWTH OPPORTUNITIES (2) 2. REVERSION ANALYSIS 3. POTENTIAL IMPACT FROM DEVELOPMENTS AND REFURBISHMENTS In December 2015: A. 25% contractual / ‘topped-up’ income £172.6m pa In December 2015: D B. 2% available to occupy A D A C. 52% development / refurbishment Income £m D
Slide 9: Results and Financial Review
RESULTS AND FINANCIAL REVIEW Damian Wisniewski Derwent London plc Annual Results 2015 7
Slide 10: Headline Numbers
HEADLINE NUMBERS Dec 2015 Dec 2014 % change Total portfolio at fair value £4,954.5m £4,168.1m 18.9 EPRA net asset value per share1 3,535p 2,908p 21.6 EPRA triple NAV per share 1 3,463p 2,800p 23.7 Gross property income £152.0m £138.4m 9.8 EPRA profit before tax2 £81.6m £62.3m 31.0 EPRA earnings per
Slide 11: NAV Growth
NAV GROWTH ■■ EPRA NAV per share up 21.6%: DEBT, NET ASSETS AND GEARING ■■ 3,535p from 2,908p £m % ■■ Split 10.9% / 10.7% in H1 / H2 4,000 Net debt NAV gearing 3,923 80 Net assets1 LTV ratio 3,500 70 ■■ Equity shareholders’ funds increased to £3,923m 3,000 3,012 60 ■■ Net debt decreased by 10.0%: 2,
Slide 12: EPRA NAV Movement
EPRA NAV MOVEMENT Revaluation surplus: EPRA NAV PER SHARE Income statement £650.0m Pence (p) Comprehensive income1 £1.4m 4,000 Per accounts £651.4m Trading property2 (£3.3m) 71 39 (17) EPRA surplus3 £648.1m 581p 3,500 581 (30) (8) (9) 3,535 Profit on disposal: 3,000 2,908 Wedge House SE1 £15.2m Port
Slide 13: EPRA Profit Before Tax
EPRA PROFIT BEFORE TAX1 ■■ EPRA profit £81.6m, up 31% from £62.3m in 2014 EPRA PROFIT BEFORE TAX ■■ Excludes £3.2m profit on sale of trading property £m ■■ Property income & outgoings covered on pages 12-13 180 ■■ Admin costs up 7%, mainly due to higher staff costs 160 3.7 2.3 (8.9) 148.3 ■■ Net fin
Slide 14: Gross Property Income
GROSS PROPERTY INCOME ■■ Acquisitions include: MOVEMENTS IN GROSS PROPERTY INCOME 2015 20 Farringdon Road EC1 £2.9m £m Angel Square EC1 (Nov 2014) £0.9m 160 3.3 (4.5) 18.1 (2.6) 2.3 ■■ Disposals include: 150 152.0 22 Kingsway WC2 £2.5m 4.0 Mark Square House EC2 £1.2m 140 138.4 (7.0) 9 and 16 Prescot
Slide 15: Property Outgoings, EPRA Rental Income and Cost Ratios
PROPERTY OUTGOINGS, EPRA RENTAL INCOME AND COST RATIOS PROPERTY OUTGOINGS 2015 2014 £m £m Property outgoings 9.2 7.6 Increase due to higher rent review fees, rates payable and capped service charge Ground rents 0.4 0.4 Surrender premiums paid - 0.4 Dilapidation receipts (0.7) (0.2) 8.9 8.2 EPRA COST
Slide 16: Cash Flow
CASH FLOW ■■ Decrease in net debt by £101.6m to £911.7m FORECAST CAPITAL EXPENDITURE1 NET CASH FLOW MOVEMENTS Capital expenditure Capital expenditure Capitalised interest 2015 2014 (Major projects) (Other projects) £m £m 146 8 Forecast spend 2018+ Cash from operations 76.0 65.6 15.9% 154 21 Acquisit
Slide 17: Proforma Impact of Major Schemes
PROFORMA IMPACT OF MAJOR SCHEMES ■■ Assumes no disposals and no further lettings other than those already contracted ■■ Shows impact of committed capital expenditure and schemes commencing Contracted Committed income on Schemes Dec 2015 capex1 schemes commencing2 Proforma Gross property income £152m
Slide 18: Debt Summary
DEBT SUMMARY ■■ £175m of 2.75% convertible bonds 2016 redeemed early and converted into new ordinary shares in January 2015 Dec 2015 Dec 2014 ■■ A new £75m unsecured and fully revolving facility Total facilities £1,161m £1,351m arranged with Wells Fargo was partially drawn down in Net debt £912m £1,
Slide 19: Debt Facilities
DEBT FACILITIES Dec 2015 Dec 2014 Average interest rate (spot)1 3.68% 3.78% MATURITY PROFILE OF DEBT FACILITIES Average interest rate (spot)2 3.93% 4.22% £m 0 50 100 150 200 250 300 350 400 450 500 550 600 Proportion of drawn facilities at 85% 94% 2016 fixed rate or hedged 2017 Average maturity of f
Slide 20: Valuation and Portfolio Analysis
VALUATION AND PORTFOLIO ANALYSIS Nigel George Derwent London plc Annual Results 2015 18
Slide 21: Valuation
VALUATION Strong capital growth throughout 2015: ■■ Underlying 16.5% (2014: 20.4%, 2013: 12.6%) ■■ City Borders outperformed at 22.5% (2014: 26.3%) Five developments delivered excellent performance: ■■ Valued at £457.5m (+31.5% in 2015): ■■ Completed: 40 Chancery Lane WC2, Turnmill EC1 and 73 Charlo
Slide 22: Valuation Performance and Drivers
VALUATION PERFORMANCE AND DRIVERS Our total property return was ahead of benchmarks: ■■ Derwent London 19.9% (2014: 25.1%) ■■ IPD Central London Offices 1 19.7% (2014: 23.5%) ■■ IPD All Property1 13.1% (2014: 17.9%) DRIVERS OF VALUATION SURPLUS VALUATION PERFORMANCE Development ERV/Income Yield Capi
Slide 23: Rental Value Growth
RENTAL VALUE GROWTH ■■ Underlying rental growth of 11.8% in 2015: ■■ Highest growth in City Borders (Tech Belt) at RENTAL VALUE GROWTH 15.2% with 10.8% achieved in the West End Half-yearly rental value growth (%) 15 ■■ Strong rental growth performance: 13.3 12 9 8.1 Tech Belt 6 5.2 6.6 ■■ Tea Buildi
Slide 24: Movement in Yields
MOVEMENT IN YIELDS EPRA yields ■■ Net initial yield 3.1% (Dec 2014: 3.4%): TRUE EQUIVALENT YIELD MOVEMENT1 ■■ ‘Topped-up’ net initial yield 3.8% (Dec 2014: 4.0%) True equivalent yield (%) 7.5 15bp ■■ True equivalent yield 4.52% (Dec 2014: 4.73%): 97bp 7.0 ■■ 21 basis points reduction in 2015 83bp ■■
Slide 25: Context to Yield Movement
CONTEXT TO YIELD MOVEMENT ■■ There is a spread of 256bp between true equivalent yield and 10-year Gilt: ■■ A low interest rate rise horizon ■■ Positive rental growth outlook VALUATION YIELDS1 Yield % or Gap between DL TEY and 10-year Gilt 9 Derwent London True Equivalent Yield 10-year Gilt ■■ Undema
Slide 26: Portfolio Income Potential - Reversion
PORTFOLIO INCOME POTENTIAL - REVERSION ■■ Net income of £137.1m with ERV of £278.1m BUILD-UP OF INCOME POTENTIAL Rental uplift (£m) 160 ■■ Significant income potential of £141.0m1: £9.2m (gross) £8.3m (net) ■■ 25% (£35.5m) locked in, including: 140 pre-let 29.1 2016 YTD 1-2 Stephen Street £5.4m 120
Slide 27: Central London Office Rental Values
CENTRAL LONDON OFFICE RENTAL VALUES 84% of portfolio income from central London offices: ■■ Potential to drive rents CENTRAL LONDON OFFICE RENT PROFILE £ psf 50 51.221 Dec-14 Jun-15 Dec-15 ‘Topped-up’ rents 2015 2014 45 44.73 <£30 psf 9% 18% 41.77 £30-£40 psf 18% 22% 40 41.04 £40-£50 psf 29% 31% 36.
Slide 28: Portfolio Summary
PORTFOLIO SUMMARY Net Vacant ERV net income Available Refurbishment Development £m £m £m £m On site: White Collar Factory EC1 The Copyright Building W1 (0.3) - - 57.3 80 Charlotte Street W1 Brunel Building W2 Consented Consented: 0.14m sq ft 1 Oxford Street W1 Monmouth House EC1 2.1 - 0.3 - On site
Slide 29: Portfolio Management
PORTFOLIO MANAGEMENT Paul Williams Derwent London plc Annual Results 2015 27
Slide 30: Lettings Highlights
LETTINGS HIGHLIGHTS LETTING ACTIVITY ■■ A record year for letting activity: Rental income (£m pa) ■■ £27.1m pa of income 30 Pre-lets ■■ 523,800 sq ft Non pre-lets ■■ 79 transactions 25 20 ■■ Strong performance against ERV: ■■ 10.8% above Dec 2014 ERV 15 ■■ 14.3% above for open market transactions ■■
Slide 31: Capturing the Reversion Across the Portfolio
CAPTURING THE REVERSION ACROSS THE PORTFOLIO A number of lettings in 2015/2016 have raised the rental tone of properties across central London: OLD STREET SHOREDITCH ISLINGTON £63.50 £57.50 £55.00 psf psf psf White Collar Factory EC1 Tea Building E1 Angel Square EC1 ■■ Adobe ■■ Transferwise ■■ DrEd
Slide 32: Letting Progress on Our Recent Acquisitions
LETTING PROGRESS ON OUR RECENT ACQUISITIONS Angel Square EC1 20 Farringdon Road EC1 ■■ 126,900 sq ft - acquired in Q4 2014 ■■ 170,600 sq ft - acquired in Q1 2015 ■■ Light touch refurbishment undertaken (Capex £6m) ■■ 25,700 sq ft ground floor re-let at £42.50 psf / £1.1m pa - ■■ 100% let or under of
Slide 33: Pre-Letting Our Development Pipeline
PRE-LETTING OUR DEVELOPMENT PIPELINE White Collar Factory EC1 ■■ 293,000 sq ft development (ERV £16.5m): ■■ 112,600 sq ft pre-let (38%): ■■ £6.7m pa rental income ■■ In negotiations on further lettings ■■ Completes Q4 2016 Rent Min uplift Q1 2016 Adobe £1.8m pa 28,600 sq ft £63.50 psf £70.00 psf Q3
Slide 34: Pre-Letting Our Development Pipeline
PRE-LETTING OUR DEVELOPMENT PIPELINE The Copyright Building, 30 Berners Street W1 ■■ 107,150 sq ft office and retail development ■■ Office element of 87,150 sq ft pre-let to Capita: ■■ 20-year lease, no breaks ■■ Rental incentives equate to 34 months rent free ■■ £7.4m pa gross rent (£6.5m pa net) ■
Slide 35: Active Demand in the Market
ACTIVE DEMAND IN THE MARKET OCCUPIER DEMAND Demand (million sq ft) ■■ Total occupier demand for central London offices 30 Potential Demand stood at 16.0m sq ft at the year end: Active Demand ■■ Up from 14.5m sq ft at the start of 2015 25 ■■ 7% higher than the long-term average 20 15 ■■ Active demand
Slide 36: Business Rates
BUSINESS RATES ■■ 1 April 2017 - implementation of business rates revaluation, based on rental values at 1 April 2015 ■■ CBRE expects London to see the greatest rate rise: ■■ A 40% increase on prime offices, equating to a 10.8% rise in occupancy cost (rent plus rates) ■■ 81% of our portfolio falls w
Slide 37: Projects
PROJECTS Simon Silver Derwent London plc Annual Results 2015 35
Slide 38: Delivering Our Pipeline
DELIVERING OUR PIPELINE Developments 40 Chancery Lane WC2 ■■ 226,000 sq ft completed in 2015: ■■ Turnmill EC1 - Q1 ■■ Tottenham Court Walk W1 - Q2 ■■ 40 Chancery Lane WC2 - Q3 ■■ 73 Charlotte Street W1 - Q3 ■■ 1,018,000 sq ft on site: ■■ White Collar Factory EC1 ■■ The Copyright Building W1 ■■ 80 Ch
Slide 39: 2015 Completions
2015 COMPLETIONS Four schemes totalling 226,000 sq ft completed over the year: 100% 100% let let Turnmill EC1 40 Chancery Lane WC2 ■■ 70,500 sq ft office and retail ■■ 102,000 sq ft office and retail ■■ Tenants: Publicis Groupe, Sosharu, Albion ■■ Tenant: Publicis Groupe ■■ Rental income: £3.5m pa ■
Slide 40: 2016 Completion: White Collar Factory EC1
2016 COMPLETION: WHITE COLLAR FACTORY EC1 ■■ 293,000 sq ft scheme due to complete in Q4 2016: ■■ 237,000 sq ft 16-storey office tower ■■ Additional office campus, restaurants, residential and a new public square ■■ 38% pre-let ■■ Capex to complete £62m Derwent London plc Annual Results 2015 ▪▪ Appen
Slide 41: 2017 Completion: The Copyright Building W1
2017 COMPLETION: THE COPYRIGHT BUILDING W1 ■■ 107,150 sq ft development: ■■ 87,150 sq ft of offices, including reception (100% pre-let) ■■ 20,000 sq ft of retail (to let) ■■ ERV £7.0m (net) ■■ Capex to complete £49m ■■ Completion H2 2017 Derwent London plc Annual Results 2015 ▪▪ Appendix 28 39
Slide 42: Recent Start: 80 Charlotte Street W1
RECENT START: 80 CHARLOTTE STREET W1 ■■ Commenced 380,000 sq ft development in H2 2015: ■■ 321,000 sq ft offices ■■ 45,000 sq ft residential ■■ 14,000 sq ft retail ■■ ERV £23.9m – Offices c.£75 psf ■■ Capex to complete £207m ■■ Completion H1 2019 Derwent London plc Annual Results 2015 ▪▪ Appendix 28
Slide 43: Recent Start: Brunel Building W2
RECENT START: BRUNEL BUILDING W2 ■■ Commenced 240,000 sq ft office development in January 2016 ■■ ERV £14.8m (net) - Offices c.£62.50 psf ■■ Capex to complete £122m ■■ Completion H1 2019 Derwent London plc Annual Results 2015 ▪▪ Appendix 28 41
Slide 44: Adding Value Through the Planning Process: Monmouth House EC1
Hoxton ADDING VALUE THROUGH THE PLANNING PROCESS: MONMOUTH HOUSE EC1 Silicon Roundabout St M at nwell thew’s 2 Row 33 1 Clerkenwell Green Shoreditch High Street eld henfi rt | S irpo ity A d on C Farringdon | Lon Whitechapel ouse Barbican om H Cust Liverpool Street Crossrail Moorgate ail ss r Chance
Slide 45: Adding Value Through the Planning Process: 1 Oxford Street W1
ADDING VALUE THROUGH THE PLANNING PROCESS: 1 OXFORD STREET W1 ■■ Agreement signed in July 2015 with Crossrail for a new 150-year lease ■■ We have paid £2m and Crossrail will receive a further £5m on release of the site, with the residual £48m paid on practical completion: ■■ Crossrail will also rece
Slide 46: Investment Activity
INVESTMENT ACTIVITY David Silverman Derwent London plc Annual Results 2015 44
Slide 47: Principal Acquisitions in 2015
PRINCIPAL ACQUISITIONS IN 2015 Lease Property Date Area Total cost Net yield Net rental income length sq ft £m £ psf % £m £ psf years 20 Farringdon Road EC1 Q1 170,600 92.7 545 3.5 3.2 271 2 50 Oxford Street W1 2 Q3 6,050 14.5 2,395 2.6 0.4 74 3 The White Chapel Building E1 3 Q4 255,000 139.3 545 -
Slide 48: Acquisition: The White Chapel Building E1
ACQUISITION: THE WHITE CHAPEL BUILDING E1 ■■ 255,000 sq ft office acquired in Dec 2015 ■■ Rebranded from Aldgate Union ■■ Light touch refurbishment underway with a capex of £18m: ■■ ERV of £9.5m ■■ Further 30,500 sq ft lower ground floor acquired in Jan 2016 for £12.0m after costs Derwent London plc
Slide 49: Creating a New Destination: The White Chapel Building
CREATING A NEW DESTINATION: THE WHITE CHAPEL BUILDING ■■ Phase 1 (200,000 sq ft) - Remodelled and enlarged reception area, refurbishment of floors 1-7 and fé introduction of a number of new amenities: Ca ■■ ERV £45 psf ■■ Delivery Q4 2016 ■■ Phase 2 (70,000 sq ft) - Integration of ground and lower g
Slide 50: Acquisition: 50 Oxford Street W1
ACQUISITION: 50 OXFORD STREET W1 30 ■■ Four properties acquired for £14.5m after costs 1 to 1-2 Fi 92 GR ES Stephen 15 SE ■■ Adds to our existing to ST 7 RE ET 25 Street holdings in the area - close 24 16 to Charlotte Building, 6 15 Rathbone Studios and 5 14 1 to 17 E AC 14 5 PL 13 Charlotte AY Hold
Slide 51: Principal Investment Disposals
PRINCIPAL INVESTMENT DISPOSALS Recycling capital - six principal properties sold in 2015 for £247.8m after costs: ■■ Rental income of £9.2m pa Net yield Net surplus Property Date Area Net proceeds to purchaser Dec 2014 sq ft £m £ psf % % 22 Kingsway WC2 Q1 91,400 64.1 700 4.4 (2) Mark Square House E
Slide 52: Disposals: H2 2015
DISPOSALS: H2 2015 DAVIDSON BUILDING WC2 PORTOBELLO DOCK W10 WEDGE HOUSE SE1 ■■ £65.4m after costs ■■ £34.7m after costs ■■ £33.0m after costs ■■ 43,100 sq ft offices / retail ■■ 52,600 sq ft mixed-use scheme that ■■ 38,700 sq ft vacant offices ■■ Four floors recently refurbished and completed in 20
Slide 53: Summary
SUMMARY John Burns Derwent London plc Annual Results 2015 51
Slide 54: Summary
SUMMARY ■■ London economic growth slowing Our ■■ ERV growth estimate of 5-8% in 2016 for our portfolio market ■■ Low valuation yields supported by low interest rates: ■■ Expected to remain firm in 2016 ■■ Significant reversionary potential of £141.0m pa: ■■ 25% contractual - now 32% ■■ 52% from deve
Slide 55: Appendices
APPENDICES Derwent London plc Annual Results 2015 53
Slide 56: Appendices
APPENDICES 1. Group balance sheet 55 18. Lease expiry profile and lease length 72 2. Net asset value per share 56 19. Central London office demand 73 3. Group income statement 57 20. Central London office supply 74 4. Reconciliation of IFRS and EPRA profits 58 21. Central London office vacancy 75 5.
Slide 57: Appendix 1 - Group Balance Sheet
APPENDIX 1 - GROUP BALANCE SHEET Dec 2015 Dec 2014 £m £m Investment property 4,832.3 4,041.0 Owner-occupied property 36.1 24.8 Investments in joint ventures 30.7 7.4 Other non-current assets 94.8 81.3 4,993.9 4,154.5 Other current assets and liabilities (73.7) (58.4) Trading property 10.5 24.0 Cash
Slide 58: Appendix 2 - Net Asset Value per Share
APPENDIX 2 - NET ASSET VALUE PER SHARE Dec 2015 Dec 2014 Diluted Diluted £m p £m p Net assets attributable to equity shareholders 3,922.5 3,012.2 Conversion of unsecured convertible bonds 140.2 170.5 Net assets for diluted NAV 4,062.7 3,501 3,182.7 2,864 Revaluation of trading properties 1.4 4.1 Fai
Slide 59: Appendix 3 - Group Income Statement
APPENDIX 3 - GROUP INCOME STATEMENT Year ended Year ended Dec 2015 Dec 2014 £m £m Gross property income 152.0 138.4 Profit on disposal of trading properties 3.2 3.9 Other income less other costs 2.3 2.0 Property outgoings (8.9) (8.2) Net property and other income 148.6 136.1 Admin expenses (30.0) (2
Slide 60: Appendix 4 - Reconciliation of IFRS and EPRA Profits
APPENDIX 4 - RECONCILIATION OF IFRS AND EPRA PROFITS Reconciliation of IFRS profit before tax to EPRA profit before tax Year ended Year ended Dec 2015 Dec 2014 £m £m IFRS profit before tax 779.5 753.7 Revaluation surplus (650.0) (667.1) Joint venture revaluation surplus (3.6) (1.9) Profit on disposa
Slide 61: Appendix 5 - Explanation of EPRA Adjustments
APPENDIX 5 - EXPLANATION OF EPRA ADJUSTMENTS Adjustments 2015 2015 2014 IFRS A B C EPRA EPRA £m £m £m £m £m £m Net property and other income 148.6 (3.2) 145.4 132.2 Total administrative expenses (30.0) (30.0) (28.1) Revaluation surplus 650.0 (650.0) - - Profit on disposal of investment property 40.2
Slide 62: Appendix 6 - EPRA Like-for-Like Rental Income
APPENDIX 6 - EPRA LIKE-FOR-LIKE RENTAL INCOME Properties owned throughout Development the year Acquisitions Disposals property Total £m £m £m £m £m 2015 Rental income 114.9 6.4 3.5 23.5 148.3 Property expenditure (4.5) (0.5) (0.8) (3.8) (9.6) Net rental income 110.4 5.9 2.7 19.7 138.7 Profit on disp
Slide 63: Appendix 7 - Debt Facilities
APPENDIX 7 - DEBT FACILITIES £m £m Maturity 6.5% secured bonds 175 March 2026 3.99% secured loan 83 October 2024 1.125% unsecured convertible bonds 150 July 2019 4.41% unsecured private placement notes 25 January 2029 4.68% unsecured private placement notes 75 January 2034 Committed bank facilities
Slide 64: Appendix 8 - Net Debt
APPENDIX 8 - NET DEBT Dec 2015 Dec 2014 £m £m Financial liabilities - current - 170.5 Financial liabilities - due after more than 1 year 918.2 857.6 Acquired fair value of secured bonds less amortisation (15.0) (16.0) Equity component of unsecured bonds 12.6 22.3 Unwinding of discount of unsecured b
Slide 65: Appendix 9 - Fixed Rates and Hedging
APPENDIX 9 - FIXED RATES AND HEDGING Dec 2015 Dec 2014 Proportion of drawn facilities at fixed rates or hedged via swaps 85% 94% Weighted average duration of swaps 1 4.6 years 4.0 years Mark-to-market cost of swaps £17.6m £25.2m Weighted average duration of fixed rate instruments 9.3 years 7.7 years
Slide 66: Appendix 10 - Valuation Performance by Village
APPENDIX 10 - VALUATION PERFORMANCE BY VILLAGE Valuation Valuation Weighting movement Dec 2015 Dec 2015 20151 £m % % West End Central Fitzrovia2 1,779.0 36 14.8 Victoria 576.6 12 15.1 Baker Street/Marylebone 203.8 4 11.9 Soho/Covent Garden 105.6 2 9.3 Mayfair 86.0 2 2.7 Paddington 67.0 1 6.3 2,818.0
Slide 67: Appendix 11 - Rental Value Growth
APPENDIX 11 - RENTAL VALUE GROWTH RENTAL VALUE GROWTH1 2014 H1 2015 H2 2015 2015 % % % % West End 8.4 5.0 5.8 10.8 City Borders 11.3 6.3 8.9 15.2 Central London 9.2 5.3 6.7 12.0 Provincial 3.8 2.9 0.4 3.3 Underlying 9.0 5.2 6.6 11.8 1 On EPRA portfolio Derwent London plc Annual Results 2015 65
Slide 68: Appendix 12 - Valuation Yields
APPENDIX 12 - VALUATION YIELDS YIELD PROFILE1 EPRA INITIAL YIELDS Yield (%) 8 Pre-EPRA EPRA Net initial ‘Topped-up’ yield initial yield % % 7 West End 3.1 3.6 6 City Borders 2.9 3.8 Central London 3.0 3.7 5 Provincial 6.1 6.1 4 EPRA portfolio 3.1 3.8 Reversionary yield 3 True equivalent yield Initia
Slide 69: Appendix 13 - Portfolio Statistics by Village
APPENDIX 13 - PORTFOLIO STATISTICS BY VILLAGE Rent Net Vacant review/ Estimated Floor Vacant contracted Average space lease area1 floor area rental rental rental renewal Total rental Valuation Weighting ‘000 ‘000 income income value reversion reversion value £m % sq ft sq ft £m pa £ psf £m pa £m pa
Slide 70: Appendix 14 - Portfolio Income Potential - Reversion
APPENDIX 14 - PORTFOLIO INCOME POTENTIAL - REVERSION Rent uplift pa Rent pa £m £m £m Contracted rental income at Dec 2015, net of ground rents 137.1 Contractual rental uplifts 1-2 Stephen Street W1 5.4 1 Page Street SW1 3.0 40 Chancery Lane WC2 2.81 20 Farringdon Road EC1 2.51 Turnmill EC1 2.1 Other
Slide 71: Appendix 15 - Available Space and Projects
APPENDIX 15 - AVAILABLE SPACE AND PROJECTS Vacant Pre-let Total Gross Net Pre-let Total area area area vacant Ground vacant rent 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 (EPRA) Angel Square EC1 13 - 13 0.6 - 0.6 - 0.6 9,900 s
Slide 72: Appendix 16 - Rent and Tenant Banding
APPENDIX 16 - RENT AND TENANT BANDING CENTRAL LONDON ‘TOPPED-UP’ PROFILE OF TENANTS’ OFFICE RENT BANDING1 BUSINESS SECTOR2 £0 - £30 psf Other £60+ psf 9% 8% Financial 12% 2% Charities 4% Media, TV, marketing and advertising Government and 29% public admin £30 - £40 psf 5% 18% Retail sales £50 - £60
Slide 73: Appendix 17 - Lease Expiries and Breaks / Vacancy Rates
APPENDIX 17 - LEASE EXPIRIES AND BREAKS / VACANCY RATES ■■ £17.0m of income subject to breaks / expiries in 2015: ■■ EPRA vacancy rate of 1.3%2 at the year end – ■■ £5.7m taken into projects down from 4.1% at the start of 2015 ■■ 89% of remainder retained or re-let ■■ Vacant space ERV totals £2.4m p
Slide 74: Appendix 18 - Lease Expiry Profile and Lease Length
APPENDIX 18 - LEASE EXPIRY PROFILE AND LEASE LENGTH EXPIRIES AND BREAKS AS A PERCENTAGE OF PORTFOLIO INCOME1 West City End Borders Provincial 2016 2017 2018 2019 2020 Total Expiries 3 2 - 5 2 12 6 7 32 Holding over - - - - - - - - - Rolling breaks 2 - - 2 - 1 - - 3 Single breaks - 1 - 1 4 5 5 3 18 5
Slide 75: Appendix 19 - Central London Office Demand
APPENDIX 19 - CENTRAL LONDON OFFICE DEMAND Market statistics OFFICE TAKE-UP ■■ Central London take-up of 14.5m sq ft in 2015: Take-up (million sq ft) 20 Central London ■■ 14% above the annual average (since 2000) 18 16 ■■ 3% below 2014 14 Annual average 12 ■■ West End take-up of 4.4m sq ft: 10 8 ■■
Slide 76: Appendix 20 - Central London Office Supply
APPENDIX 20 - CENTRAL LONDON OFFICE SUPPLY Market statistics OFFICE DEVELOPMENT PIPELINE Falling and low levels of available space across the capital in 2015: Floor area (million sq ft) Vacancy rate (%) 12 12 ■■ Central London vacancy rate of 2.5% (3.4% Dec 2014) against Central London Completed Vac
Slide 77: Appendix 21 - Central London Office Vacancy
APPENDIX 21 - CENTRAL LONDON OFFICE VACANCY Vacancy rate (%) 16 West End City 14 Central London West End average 12 City average 10 8 6 4 2 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Derwent London plc Annual Results 2015 75
Slide 78: Appendix 22 - Central London Office Rental Growth
APPENDIX 22 - CENTRAL LONDON OFFICE RENTAL GROWTH Rental growth (% pa) 40 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -10 -20 West End -30 City Central London -40 Derwent London plc Annual Results 2015 76
Slide 79: Appendix 23 - Central London Office Investment Market
APPENDIX 23 - CENTRAL LONDON OFFICE INVESTMENT MARKET Strong demand in 2015 ■■ Central London office investment market saw £16.2bn of transactions: ■■ 40% above long-term average of £11.6bn although 12% below 2014 ■■ Overseas investors accounted for 58%, down from 69% in 2014 ■■ Prime yields down 25
Slide 80: Appendix 24 - Property Swap in H1 2015
APPENDIX 24 - PROPERTY SWAP IN H1 2015 20 Farringdon Road EC1 22 Kingsway WC2 ired So ld cqu A Mark Square House EC2 ld So 9 & 16 Prescot Street E1 ■■ Acquired 20 Farringdon Road for £92.7m: % 50 ld ■■ 170,600 sq ft of offices and retail So ■■ Sold 22 Kingsway, Mark Square House and a 50% interest i
Slide 81: Appendix 25 - The Tech Belt
APPENDIX 25 - THE TECH BELT Primrose Hill Tech Belt Islington ■■ Stretches in an arc from King’s Cross to Carnegie St Whitechapel with White Collar Factory at the TEC H Wharfdale Rd BEL Angel Haggerston Kings Cross epicentre Park T Alban Regent’s Park y St S t Pancras Hoxton International ■■ Almost
Slide 82: Appendix 26 - Current Pipeline
APPENDIX 26 - CURRENT PIPELINE Estimated completions ('000 sq ft) 700 Under construction 620 (developments) 600 581 20 Under construction Farringdon (refurbishments) Road EC1 80 500 Charlotte The Street White W1 Chapel 400 Building E1 (Phase 1) 300 200 White Collar Brunel Factory Building EC1 1051 W
Slide 83: Appendix 27 - Completed Developments - Profit on Cost
APPENDIX 27 - COMPLETED DEVELOPMENTS - PROFIT ON COST Turnmill 40 Chancery Lane 73 Charlotte Street Completed Q1 2015 Q3 2015 Q3 2015 Commercial area (sq ft) 174,400 70,500 102,000 1,900 Residential area (sq ft) 13,600 - - 13,600 Est. future capex (£m) 4 - 4 - Total cost (£m)1 116 34 61 21 Income (£
Slide 84: Appendix 28 - Current Projects - Profit on Cost
APPENDIX 28 - CURRENT PROJECTS - PROFIT ON COST White Collar Factory The Copyright Building 80 Charlotte Street Brunel Building Completion Q4 2016 H2 2017 H1 2019 H1 2019 Commercial area (sq ft) 965,000 285,000 105,000 335,000 240,000 Residential area (sq ft) 53,000 8,000 - 45,0002 - Est. future cap
Slide 85: Appendix 29 - Project Summary - On Site
APPENDIX 29 - PROJECT SUMMARY - ON SITE Current Pre Total net scheme Proposed 2016 2017 2018+ capex to Current income area area capex capex capex complete Delivery office Property £m pa ‘000 sq ft ‘000 sq ft £m £m £m £m date c.ERV psf On-site developments White Collar Factory EC1 - 124 293 60 2 - 62
Slide 86: Appendix 30 - Project Summary - Future Schemes
APPENDIX 30 - PROJECT SUMMARY - FUTURE SCHEMES Current Pre net scheme Proposed Earliest income area area possession Property £m pa ‘000 sq ft ‘000 sq ft year Comment Consented 1 Oxford Street W1 - - 275 2018 Offices, retail and theatre Monmouth House1 EC1 1.7 69 125 2017 Opposite White Collar Factor
Slide 87: Appendix 31 - Project Pipeline
APPENDIX 31 - PROJECT PIPELINE On-site On-site Consented developments 1.02m sq ft + refurbishments 0.33m sq ft + projects 0.68m sq ft + Appraisals 0.84m sq ft = Potential pipeline 2.87m sq ft White Collar Factory EC1 1 Oxford Street W1 Monmouth House EC13 t en te d ed pm en nt 1.35m sq ft velo 1.52m
Slide 88: Appendix 32 - Portfolio Map
APPENDIX 32 - PORTFOLIO MAP Primrose Hill Islington Carnegie St Wharfdale Rd Angel Haggerston Kings Cross Park Alban Regent’s Park y St S t Pancras Hoxton International Th am Euston es lin k Euston Up Old Street Old Street pe rW St Mat ob Clerkenwell urn Pl thew’s Warren Street Great Shoreditch Row
Slide 89: Appendix 33 - Management Structure - Executive Team
APPENDIX 33 - MANAGEMENT STRUCTURE - EXECUTIVE TEAM John Burns* Chief Executive Officer Damian Wisniewski* Finance Director Simon Silver* Property Director Nigel George* Property Director Paul Williams* Property Director David Silverman* Property Director Tim Kite* Company Secretary Richard Baldwin*
Slide 90: Disclaimer
DISCLAIMER This presentation has been prepared by Derwent London plc (the may become apparent. Past performance is not indicative of future “Company”). No representation or warranty (express or implied) of results and forward-looking statements are not guarantees of future any nature is given nor is