Shaftesbury Capital Plc · LSE:SHC
Shaftesbury Capital — Investor Day (November 2023)
83 slides from Shaftesbury Capital's investor day presentation, Nov 27, 2023
Slide 1: The leading central London mixed-use REIT: Well-positioned for growth
The leading central London mixed-use REIT Well-positioned for growth 27 November 2023
Slide 2: Agenda
Agenda Well-positioned for growth • Ian Hawksworth Delivering financial performance • Situl Jobanputra Driving income and value growth • Michelle McGrath • Andrew Price Making a long-term, positive impact • Chris Ward Excellent future prospects • Ian Hawksworth Q&A 2 2023 Investor Event
Slide 3: Well-positioned for growth
Well-positioned for growth
Slide 4: Excellent momentum across the business
Excellent momentum across the business Delivering on our strategy • Driving rental growth • Leasing 9% ahead of Dec 22 ERV; strong leasing pipeline • Cost savings ahead of initial target • Asset disposals ahead of valuation Positive trading conditions • High footfall, customer sales +12% y-o-y • Str
Slide 5: Investing and managing iconic destinations located in the heart of the West End
Investing and managing iconic destinations located in the heart of the West End 2.9m sq. ft. c.2,000 c.670 £4.9bn Lettable space Lettable units1 Buildings Portfolio value 34% 41m exits. Retail Dean Street exit to Berwick Street: 5 mins Tottenham Court Road to Seven Dials: 6 mins 34% Hospitality & le
Slide 6: London's West End: Unrivalled appeal and features
London’s West End Unrivalled appeal and features Global destination attracting visitors and investment • Wide variety of retail, hospitality and leisure experiences in high footfall locations • Unrivalled concentration of other high-quality uses o Entertainment and cultural attractions o Hub for cre
Slide 7: Long-term resilience of the West End
Long-term resilience of the West End Strong rental growth prospects Strong track record of outperformance History of sustained demand +4%1 +5.7%1 • Track record of outperformance West End retail ERV growth (30 yr avg) West End retail ERV growth 2010-2019 1. Source: MSCI – West End retail led assets
Slide 8: Our purpose, strategy and values
Our purpose Investing to create thriving destinations in London’s West End where people enjoy visiting, working and living Our strategy To deliver long-term income and Creative and active approach value growth from our unique portfolio of properties through Place our customers at the heart of invest
Slide 9: Our competitive strengths
Our competitive strengths Underpinned by long-term approach STAKEHOLDER RELATIONSHIPS CUSTOMER FOCUS & DATA WEST END MIXED- INSIGHTS USE EXPERTISE STRONG CAPITAL STRUCTURE OUR PORTFOLIO OUR PEOPLE STRONG TRACK RECORD 9 2023 Investor Event
Slide 10: Our unique, vibrant destinations across London's West End
Our unique, vibrant destinations across London's West End World-class mixed-use destination Most immediate driver of growth; taking a holistic approach to marketing the district, integrating Seven Dials, Opera Quarter, Coliseum and Covent Garden Piazza 53% Vibrant district, with iconic shopping and
Slide 11: Our priorities over the next 3 to 5 years
Our priorities over the next 3 to 5 years 1. Deliver growth in rents, earnings and dividends Medium-term targets 2. Realise long-term potential of our assets 3. Accelerate cost savings and operating efficiencies 7-9% Total property 4. Accretive investment into portfolio returns 5. Active asset rotat
Slide 12: Delivering financial performance
Delivering financial performance
Slide 13: Drivers of financial performance
Drivers of financial performance Strong financial profile, reflecting the durability of the portfolio, its growth prospects and long-term potential Growth Attractive total property and accounting returns, Liquidity Margins including progressive dividend Return on capital 13 2023 Investor Event
Slide 14: Disciplined capital allocation
Disciplined capital allocation Accretive investment in portfolio, including Acquisitions refurbishment, asset in line with strategy to management and create long-term value repositioning Efficient balance opportunities sheet, capital discipline and returns focus Dividend Rotation of capital distribu
Slide 15: Medium-term return targets
Medium-term return targets 7-9% 8-10% Total Total Income 3% accounting Main levers: property returns returns - Property returns Capital - Administration costs - Rental growth 5-7% - Financing Assumes stable - Capex c.1% cap rates • Confident in overall direction over the next 3-5 years - Yearly outc
Slide 16: Levers for earnings growth
Levers for earnings growth Illustrative 2022 combined numbers £m 235 June 23 ERV Focus on growth in underlying and cash 188 June 23 annualised gross income earnings 1 2 3 16 2023 Investor Event
Slide 17: Delivering sustained rental growth
1 Delivering sustained rental growth £m Targeting medium-term ERV growth of 5-7% • Significant rental growth opportunity • Focused on growing cash rents and ERV +£47m • Current reversion potential to ERV current reversion of £47m, of which £20.5m is contracted • Typically >400 leasing events per 235
Slide 18: Targeting EPRA cost ratio to improve towards 30%
2 Targeting EPRA cost ratio to improve towards 30% Clear focus on enhancing margin: Irrecoverable costs Administration costs Significant efficiency Ahead of initial cost Growth in gross income opportunity from scale, savings target on quantum buying power and being a and timing, exploring partner of
Slide 19: Managing finance costs
3 Managing finance costs • Current running cash cost of debt summarised below • Current market conditions would suggest higher marginal interest costs as refinancings are completed • Management of absolute level of finance costs to ensure efficient conversion of income to earnings Interest rate1 £58
Slide 20: Balanced approach to capital structure
Balanced approach to capital structure Our approach Current capital structure1 Debt Equity • Low leverage • Access to significant • Diversified sources of liquidity funding • Operational and strategic £275m NTA: £3.5bn Public • Spread of maturities flexibility exchangeable bonds Market cap: £2.3bn •
Slide 21: Summary debt structure and metrics
Summary debt structure and metrics £1.7bn Asset Secured term loans value - £585m term loans 30% 5 years Weighted average EPRA LTV1 maturity £1.7bn Shaftesbury Capital Unsecured funding Asset PLC platform value c.£500m >2.0x - £475m private placements - £376m loan facility Liquidity1 Group ICR - £300
Slide 22: Financing priorities
Financing priorities Legacy financings Tailored capital structure 2023 financing activities 2024 onwards • Merger completion and repayment of • Refinancing of 2026 debt maturities Shaftesbury bonds o RCF (£300 million) • Re-profiling of interest rate hedging o 2026 exchangeable bond (£275 million) •
Slide 23: Key financial priorities and metrics
Key financial priorities and metrics Rental growth prospects • Medium-term rental growth target of 5–7% p.a. • Capturing reversion and growing NRI at least in line with ERV Operating efficiencies • Rigorous management of irrecoverable property costs and admin costs, to reduce EPRA cost ratio towards
Slide 24: Driving income and value growth
Driving income and value growth
Slide 25: Realise long-term potential of our assets
Realise long-term potential of our assets CREATIVE ASSET MANAGEMENT STAKEHOLDERS CUSTOMER & COMMUNITY FOCUS Long-term sustainable returns LOW CARBON DYNAMIC SUSTAINABLE LEASING BUILDINGS STRATEGY GENERATE ACCRETIVE BRAND VALUE INVESTMENT 25 2023 Investor Event
Slide 26: Market trends
Market trends Real estate Consumer Polarisation of Operating Increasing spend Digital natives demand expertise power of Gen Z Targeted, Strong Environmental Culture and purpose-driven amenity value delivery experience driven spend 26 2023 Investor Event
Slide 27: Well-positioned for sustainable rental growth
Well-positioned for sustainable rental growth Retail ITZA rental tones by street 1,200 ▪ Average Zone A rent • SHC Zone A rents significantly 1,000 ▪ ▪ Covent Garden Carnaby | Soho below West End average 800 ITZA £psf 600 • Broad range of price points across 400 all uses 200 0 SHC West End James St
Slide 28: Commercial synergies and benefits of scale so far
Commercial synergies and benefits of scale so far Benefits of scale Synergies Proof points Ability to grow rents, lease • Expanded occupational and faster and • Strong leasing activity and pipeline reduce voids investment reach • Cross-locational signings • Cross-locational opportunities Brand • Rol
Slide 29: Developing our brands
Developing our brands Enhancing the attractiveness of our locations Active marketing programme Driving incremental consumer spend Clear vision for our brands Commercial campaign calendar Tourism strategy Occupational and consumer trend focus Prioritise digital investment Driving loyalty Ongoing bran
Slide 30: Using our data to inform decisions and strategy
Using our data to inform decisions and strategy • Footfall patterns and Cross visitation map geolocational % of visitors who visit our villages analysis; cross- locational conversion • London data; tourism key indicators, forward bookings; office utilisation Seven Dials 33% 5% • Digital and campaign
Slide 31: Active portfolio management
Active portfolio management Opportunities to grow value from our existing portfolio Low capital requirements 2023 asset disposals • Refurbishments which enhance our assets • c.1% of portfolio value expected to be invested p.a. • Improving sustainability profile of our assets Investment review conduc
Slide 32: Strong momentum in H2 2023
Strong momentum in H2 2023 Strategy translating into performance • H2 23: 76 commercial new leases/renewals completed +7% vs Jun 23 ERV • H2 23: 22 rent reviews completed +13% vs previous passing rents • H2 23: 144 residential leases completed +10% vs previous rents • Low vacancy 2.2% of ERV availab
Slide 33: Covent Garden: A world-class mixed-use destination
Covent Garden A world-class mixed-use destination
Slide 34: A world-class mixed-use destination
A world-class mixed-use destination High footfall, global location with annual footfall c.45m £2.6bn £122m £97m 1.5m Portfolio ERV Annualised Square feet value gross income A premier retail and dining destination, an office growth market and high-quality residential neighbourhood Broad consumer and
Slide 35: Track record of repositioning a district
Track record of repositioning a district Floral Street King Street Royal Opera House Arcade 2023 Previous 35 2023 Investor Event
Slide 36: Covent Garden strategy
Covent Garden strategy Seven Dials 1. Reinvigorated asset and leasing strategy and a plan for every use 2. Holistic brand positioning across the district 3. Investment opportunities Covent identified Garden New Row 4. Public realm vision underway Coliseum 5. Holistic estate management Opera Quarter
Slide 37: Covent Garden & Seven Dials leasing strategy
Covent Garden & Seven Dials leasing Strong foundation of existing brands strategy Covent Garden Seven Dials World-class mixed-use destination with high- quality concepts at every price point Retail and hospitality strategy closely aligned Seven Dials leasing positioning – a bridge between Soho and C
Slide 38: Investing in our portfolio
Investing in our portfolio On site with 5 schemes totalling c.£25m • c.£4m ERV of which 75% is pre-let or has active interest A further 7 refurbishments have been identified in Seven Dials (over 18-24 months) Accretive acquisition opportunities identified Public realm vision underway • Engaging with
Slide 39: Preserving and enhancing distinct character of Seven Dials
Preserving and enhancing distinct character of Seven Dials Key Street emphasis Enhancement opportunities 2 7 9 Note this map is for indicative purposes only
Slide 40: Evolution of the Opera Quarter
Evolution of the Opera Quarter A new gateway to Covent Garden Piazza Opportunity to better connect with the Piazza • Improve the permeable flow of people • Scope for al fresco dining • Inspiration taken from global destinations Covent Garden Piazza Opportunity to enhance rents • Focus offer on consu
Slide 41: Russell Street illustrative vision
Russell Street illustrative vision Current view Illustrative future vision subject to stakeholder consultation 41 2023 Investor Event
Slide 42: Excellent progress year to date
Excellent progress year to date Excellent leasing momentum • 25 new brands introduced • 69 commercial new leases/renewals signed £9.1m, +13% vs Dec 22 ERV • Further 10 units under offer at £1.1m, +19% vs Dec 22 ERV Positive trading conditions • Customer sales consistently up 10-20% y-o-y (lfl) Compr
Slide 43: Carnaby | Soho
Carnaby | Soho Globally recognised, vibrant district
Slide 44: Carnaby | Soho: internationally renowned vibrant district
Carnaby | Soho £1.5bn £56m £75m 0.9m Internationally renowned vibrant district Portfolio value ERV Annualised gross income Square feet with a bustling day-to-night restaurant scene • Rich heritage with vast diversity of brands and experiences • High footfall with excellent connectivity • Critical ma
Slide 45: Leading dining destination with strong night-time economy
Leading dining destination with strong night-time economy Leading foodie destination • >100 F&B concepts across our Carnaby | Soho portfolio • Strong customer and consumer demand across a range of price points Kingly Court: A decade as a dining destination • Attracts best-in-class dining concepts wi
Slide 46: The evolution of Kingly Court and Kingly Street
The evolution of Kingly Court and Kingly Street Kingly Court, previous – Retail focused Kingly Court, current – Hospitality focused Kingly Street, previous Kingly Street, current 46 2023 Investor Event
Slide 47: Office developments complete and substantially let
Office developments complete and substantially let 87,000 £8m Income sq ft contracted Office space or under Successful delivery of 4 office-led schemes refurbished offer • £100 psf rents established on new prime space Completed schemes • Delivering excellent environment credentials Enhance growing r
Slide 48: Building on the success of Carnaby | Soho
Building on the success of Carnaby | Soho Existing brands Positive leasing progress • 17 new brands and concepts introduced • 69 commercial new leases/renewals signed £8.6m, +9% vs Dec 22 ERV • 11 rent reviews agreed, +12% vs previous passing rents Evolving the retail offering in Carnaby • Brand sel
Slide 49: Strengthening the ties between Carnaby and Soho
Strengthening the ties between Carnaby and Soho TOTTENHAM COURT ROAD Soho, a highly sought-after vibrant retail and restaurant destination • Critical mass of ownership on Berwick Street 5 min walk Linking Carnaby Street to Soho 1 • Elizabeth Line enhancing footfall patterns • Emergence of Broadwick
Slide 50: Chinatown
Chinatown Europe’s premier Chinatown in the heart of the West End’s entertainment district
Slide 51: Europe's premier Chinatown in the heart of the West End
Europe’s premier Chinatown located in the heart of the West End’s entertainment district 7 yrs 26 theatres Hospitality c.23,000 WAULT seats • High concentration of restaurants and food retail, benefiting from exceptional footfall Within 5 min walk 81% • 12 pedestrianised and interconnecting streets
Slide 52: Increasing popularity of Chinatown
Increasing popularity of Chinatown Significant growth in turnover • Customer sales, more recent signings +17% y-o-y Growing al fresco dining location • Delivering extra trading capacity with 500+ al fresco seats • Year-round location Broad consumer appeal • Attracting Londoners, domestic and interna
Slide 53: Hospitality and leisure strategy in action
Hospitality and leisure strategy in action Strong leasing activity • 16 new leases/renewals signed £1.3m, +23% vs 2022 +10% vs Dec 22 ERV • 33 rent reviews agreed +6% vs previous Increase in Instagram engagement passing rent Continuing to secure the best of East Asia and mainland Chinese concepts •
Slide 54: Chinatown public realm enhancements
Chinatown Public realm enhancements Enhancing al fresco dining: Newport Place 1 2 1 Enhancing public realm: Pagoda installation 2024 Key Pedestrianised streets with al fresco Key gateways to 1. Soho 2. Covent Garden Pagoda installation 54 2023 Investor Event
Slide 55: Driving income and value growth
Driving income and value growth
Slide 56: Well-positioned to deliver income and value growth from our portfolio
Well-positioned to deliver income and value growth from our portfolio • Target best brands and uses • Customer and consumer focused • Creative and active approach • Disciplined accretive approach to investment • Strengthen our operating platform • Continue to maximise commercial synergies and levera
Slide 57: Sustainability, people and technology
Sustainability, people and technology Making a long-term, positive impact
Slide 58: Sustainability adding value and tackling climate change
Sustainability, people and technology Sustainability adding value and tackling climate change Future proofing our heritage properties Creating sustainable and healthy places Supporting local communities and our people Behaving as a good neighbour Promoting diversity, talent development and creativit
Slide 59: Future proofing our heritage buildings: low-carbon retrofit first
Future proofing our heritage buildings Low-carbon retrofit first strategy Reuse, renew, revive Our heritage buildings are long- • Extend useful economic life at low capex term stores of embodied carbon • Meet evolving consumer/customer demands Reuse vs rebuild Minimise embodied carbon → Modest cost
Slide 60: Enhancing energy efficiency at low capex
Future proofing our heritage buildings Enhancing energy efficiency at low capex Simple, low-cost interventions deliver efficiency EPC status (by ERV) improvements: • Energy efficient equipment (e.g. heating, cooling, LED 78% 22% lighting) • Remove fossil fuels, buy/generate renewables A-C <C • Smart
Slide 61: Tackling climate change: Our Net Zero Commitment
Tackling climate change Our Net Zero Commitment Update/revalidate/enhance • Update baseline • Revalidate science-based targets • Longer-term carbon reduction target (2040) SHB & Capco • Consider offsetting approach 2030 NZC pledges Net zero carbon 2023 2025 Milestone targets 2021 2024 2030 SHC recon
Slide 62: Tackling climate change: Our pathway
Tackling climate change Our pathway 77k Scopes 1&2 tCO2e 66k tCO2e Scope 3 operational emissions o Scope 3 embodied carbon 1.5 pathway Residual offsetting 36k through high tCO2e quality credits Baseline 2022 2030 Net zero emissions projected carbon emissions How we will deliver Lower carbon material
Slide 63: Creating sustainable and healthy places
Creating sustainable and healthy places Places where people enjoy visiting, working and living Improve streetscapes to prioritise pedestrians • Enhance and promote public realm improvements Reduce traffic levels • Waste collection consolidation • Encourage use of electric vehicles Design for climate
Slide 64: Supporting local communities
Supporting local communities Behaving as a good neighbour Collaboration with local authorities, neighbouring owners and residents • Public realm schemes and area management Prioritising local issues • Funding and in-kind support for homelessness, youth employment and training • Pop-up space for loca
Slide 65: Supporting our people
Supporting our people Promoting diversity, talent development and creativity across our team Culture Values • High performance, professional, inclusive and entrepreneurial; Take a responsible, long- creativity and innovation promoted term view • Collaborative environment where people inspired to giv
Slide 66: Excellent future prospects
» Ay » } ca wn ae 4 ae he pr ba Excellent future
Slide 67: Our priorities over the next 3 to 5 years
Our priorities over the next 3 to 5 years 1. Deliver growth in rents, earnings and dividends Medium-term targets 2. Realise long-term potential of our assets 3. Accelerate cost savings and operating efficiencies 7-9% Total property 4. Accretive investment into portfolio returns 5. Active asset rotat
Slide 68: Excellent future prospects: Well-positioned to drive total returns
Excellent future prospects Well-positioned to drive total returns • Impossible to replicate portfolio in London’s ever vibrant West End • Deliver sustained growth in rents, earnings and dividends • Significant and operational efficiencies • Strong balance sheet and capital discipline • Experienced,
Slide 69: Q&A
Q&A
Slide 70: Appendices
Appendices _ )
Slide 71: Purpose and Values
Purpose Investing to create thriving destinations in London’s West End where people enjoy visiting, working, and living Values Take a Act with Take a Listen and Make a responsible, creative long-term view integrity approach collaborate difference We have a responsibility to We are a high-performance
Slide 72: Well balanced, diverse mixed-use portfolio
Well balanced, diverse mixed-use portfolio 14% 34% Residential Retail 710 410 Apartments Shops £4.9bn Portfolio valuation 18% 34% Hospitality Offices 382 & leisure Offices 405 Units Percentage of wholly-owned portfolio valuation as at 30 June 2023 72 2023 Investor Event
Slide 73: Portfolio summary by use
Portfolio summary by use Retail Hospitality & Offices Residential Total leisure 1 34% 34% 18% 14% 100% Valuation (£m) 1,651.1 1,650.8 897.7 696.9 4,896.5 Annualised gross income (£m) 64.3 71.4 30.1 22.5 188.3 ERV (£m) 78.2 79.3 51.3 25.9 234.7 ERV per sq. ft. (£) 103 79 73 58 80 Net initial yield 3.
Slide 74: Portfolio leasing summary by use
Portfolio leasing summary by use Retail Hospitality & Offices Residential Total leisure 34% 34% 18% 14% 100% H2 2023 transactions1,2 40 12 24 144 220 New contracted rent (£m) 5.5 1.8 2.3 6 15.6 % above Jun 23 ERV 5% 14% 5% 4% 6% Year to date transactions3 75 30 57 278 440 New contracted rent (£m) 10
Slide 75: Significant reversionary potential
Significant reversionary potential Active asset management and leasing activity delivering rental growth £m Net 25% under/(over) rented Under EPRA vacancy refurbishment Of which £7.6m Realised on L-f-L is under completion and Contracted offer, resulting in letting of schemes +3.3% Realised on availa
Slide 76: Underlying earnings
Underlying earnings Restated H1 2023 H1 2022 £m1 £m2 Net rental income 63.4 26.9 Other income3 2.6 3.9 Administration costs (17.9) (12.8) Net finance costs (21.5) (14.3) Share of joint venture profit 0.9 - Taxation - (0.5) Underlying earnings 27.5 3.2 Underlying earnings per share (pence) 1.9p 0.4p
Slide 77: EPRA balance sheet
EPRA balance sheet Pro forma 30 Jun 2023 31 Dec 20221 31 Dec 2022 £m £m £m Investment property 4,865 4,829 1,715 Investment in joint ventures 84 87 - Financial assets at fair value2 - – 357 Net debt3 (1,554) (1,488) (634) Other 159 98 124 Net assets 3,554 3,526 1,562 EPRA net tangible assets 3,541 3
Slide 78: Debt covenants summary
Debt covenants summary Nominal Average Maturity Test ICR LTV Value interest rate Frequency Covenant Covenant Aviva term loan £450m 4.7% 2030: £130m Half yearly 1.35x 65% 2033: £200m 2035: £120m Canada Life term loan £135m 4.5% 2029 Quarterly 1.4x 60% Exchangeable bond1 £275m 2.0% 2026 - - - Loan Fac
Slide 79: Per share metrics: Number of shares
Per share metrics Number of shares Per share metric No. of shares (million) FY 23 Underlying earnings (Dec 2023) Estimated weighted average number of shares 1,653 Dividends Total ordinary shares in issue1 1,822 EPRA NTA, NDV, NRV Adjusted, diluted number of shares 1,827 1. Total ordinary shares in i
Slide 80: A sustainable and responsible business
A sustainable and responsible business Benchmarks1 EPRA sustainability Standing Investments Assessment Recognised as a climate 68/100 with 2 Green Stars reporting awards leader 2022 by the Gold Financial Times FTSE4Good Carbon Disclosure ISS ESG Corporate Rating: S&P Global CSA 68th percentile Proje
Slide 81: Principal risks
Principal risks • Inability of the Group to adopt the appropriate strategy or to react to changing market conditions or changing consumer behaviour • Decline in real estate valuations due to macroeconomic conditions Economic, political • Impact of higher interest rates and lack of availability or in
Slide 82: Important notices
Important notices This presentation contains “forward-looking statements” regarding the belief or current expectations of Shaftesbury Capital PLC, its Directors and other members of its senior management about Shaftesbury Capital PLC’s businesses, financial performance and results of operations. The
Slide 83: Shaftesbury Capital PLC
Shaftesbury Capital PLC Regal House, 14 James Street London, WC2E 8BU T 020 3214 9150 shaftesburycapital.com