Land Securities Group Plc · LSE:LAND
Land Securities — Landsec — H1 2017 Earnings Presentation
46 slides from Land Securities's earnings presentation, November 2017
Slide 1: Half-yearly results 2017
Half-yearly results 2017 a, i : BE
Slide 2: Welcome
Welcome Robert Noel Chief Executive
Slide 3: A busy six months
Landsec – Half-yearly results 2017 3 A busy six months 21 Moorfields, EC2 Outlets Debt 20 Fenchurch Street, EC3 — Best six months’ — Prepared to buy — Continued debt — No asset is leasing activity when we see management sacrosanct since financial crisis opportunities EPS NAV PS Cost of debt Debt Und
Slide 4: Financial results
Financial results Martin Greenslade Chief Financial Officer
Slide 5: Financial summary
Landsec – Financial results 2017 5 Financial summary Six months ended Six months ended Change 30 Sept 16 30 Sept 17 £m £m % 193 Revenue profit(1) 203 5.2 (260) Valuation deficit(1) (19) -0.1(2) (95) Loss before tax (33) 24.3p Adjusted diluted earnings per share(1) 25.7p 5.8 1,417p(3) Adjusted dilute
Slide 6: Revenue profit
Landsec – Financial results 2017 6 Revenue profit Six months ended Six months ended Change 30 Sept 17 30 Sept 16 £m £m £m Gross rental income(1) 325 314 11 Net service charge expense (5) (2) (3) Net direct property expenditure (17) (14) (3) Net rental income 303 298 5 Indirect costs (20) (18) (2) Se
Slide 7: Net rental income analysis
Landsec – Financial results 2017 7 Net rental income analysis £m 350 9 300 – – – (1) (7) (1) 250 159 159 200 7 – 1 150 – 3 (4) (2) 100 139 144 50 - Six months Like-for-like Proposed Development Completed Acquisitions Sales Non-property Six months ended developments programme developments since since
Slide 8: Combined Portfolio valuation
Landsec – Financial results 2017 8 Combined Portfolio valuation Market value Combined Portfolio Valuation deficit at 30 Sept 17 by value Six months to 30 Sept 17 £m % % £m Like-for-like 11,742 82.5 -0.5 (56) Proposed developments 110 0.8 19.4 18 Development programme 663 4.6 3.4 22 Completed develop
Slide 9: Movement in adjusted net assets
Landsec – Financial results 2017 9 Movement in adjusted net assets Pence per share and number of shares 1,417p 26p (2)p 10p (21)p (22)p (8)p 1p (60)p 91p 1,432p 791m (50)m 741m £m 12,000 11,500 84 (163) 203 (19) (173) 12 11,000 (62) (475) N/A 11,206 10,500 10,613 10,000 Adj. net Revenue Valuation Pr
Slide 10: Adjusted net debt
Landsec – Financial results 2017 10 Adjusted net debt(1) Year-on-year comparison by month Adjusted net debt £3.8bn £3.7bn £3.6bn £3.5bn £3.4bn £3.3bn £3.2bn £3.1bn £3.0bn Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2016/17 2017/18 2017/18 pro forma (1) On a proportionate basis
Slide 11: Financing
Landsec – Financial results 2017 11 Financing — Group LTV(1) at 21.8% down from 22.2% Debt and gearing 30 Sept 17 31 Mar 17 at 31 March 2017 — Pro forma Group LTV: 25.1% Adjusted net debt £3,150m £3,261m — Weighted average maturity of debt: Weighted average maturity 15.1 years 9.4 years 15.1 years W
Slide 12: Financial summary
Landsec – Financial results 2017 12 Financial summary — Increased earnings — Active balance sheet management — Opportunistic sale — £475m return of capital — £1bn long-term debt issued — NAV per share up — Modest gearing Piccadilly Lights, W1
Slide 13: London Portfolio
London Portfolio Colette O’Shea Managing Director
Slide 14: Highlights
Landsec – London Portfoilo 14 Highlights — Achieved a UK record price for an office building 20 Fenchurch Street, EC3 — Agreed significant office pre-let in the City of London — Switched on the lights of the largest outdoor advertising screen in Europe 21 Moorfields, EC2 Piccadilly Lights, W1
Slide 15: Strong operations
Landsec – London Portfoilo 15 Strong operations — Letting remainder of the development programme — Crystallising reversion within the portfolio — Progressing future development pipeline Nova Victoria, SW1 One New Change, EC4 62 Buckingham Gate, SW1 Cardinal Place, SW1
Slide 16: Investment market
Landsec – London Portfoilo 16 Investment market — H1 2017 investment volumes 62% higher than H1 2016 — Record pricing of trophy assets have supported values — Investment volumes year to date equal whole of 2016 — Yields remained firm whilst rental values weakening — Increase in buildings offered for
Slide 17: Occupational market
Landsec – London Portfoilo 17 Occupational market — Take-up level in Q2 and Q3 above the 10-year average — Vacancy rate broadly stable at 4.6% — 16% of H1 take-up by serviced office sector — 1.7m sq ft take-up by serviced office sector in last 12 months vs long-term average of 0.5m sq ft — Customers
Slide 18: Development lettings
Landsec – London Portfoilo 18 Development lettings Attracting great businesses — Let or ISH 186,000 sq ft since March with 151,000 sq ft left to let — Average lease term 12 years — The Zig Zag Building now 95% let — Nova now 75% let or in solicitors’ hands — Only 5% of the 3m sq ft development progr
Slide 19: Residential
Landsec – London Portfoilo 19 Residential Small exposure — Our £49m exposure represents 0.6% of the London Portfolio — Sold 7 units since March at Kings Gate and Nova at an average of £2,311 per sq ft — 2 out of 100 units left to sell at Kings Gate — 18 out of 170 units left to sell at Nova — Sold 9
Slide 20: Asset management: Delivering results
Landsec – London Portfoilo 20 Asset management Delivering results — Completed £18m of rent reviews at 20% above passing rent — Voids broadly flat at 3%, excluding Piccadilly Lights — Office WAULT now 9.9 years Cardinal Place, SW1
Slide 21: Asset management: Crystallising reversion
Landsec – London Portfoilo 21 Asset management Crystallising reversion and seizing opportunities to add value — Completed significant rent reviews at Moorgate Hall and Westminster City Hall, increasing passing rents by 19% and 45%, respectively — Continued momentum at Cardinal Place. We have now rev
Slide 22: Asset management: One New Change
Landsec – London Portfoilo 22 Asset management Continued momentum at One New Change — We have now reviewed nearly all of the £22m due for review as at 1 April 2016, increasing the office rent by 3% and the retail by 10% above passing — The retail element of ONC increased in value by 1.5% over the si
Slide 23: Piccadilly Lights
Landsec – London Portfoilo 23 Piccadilly Lights Implementing a plan to create value — Refurbishment completed on time and budget — L’Oreal, Hunter, Stella McCartney and Ebay have joined the Coke, Samsung and Hyundai line-up — Introduced flexibility for advertisers, letting on shorter term leases, ta
Slide 24: Sale of 20 Fenchurch Street
Landsec – London Portfoilo 24 Sale of 20 Fenchurch Street Right product, in right place, at right time — Completed the 38 storey tower in 2014 — 87% pre-let at PC on long leases — Agreed a sale of 100%, gross proceeds of £1,282.5bn — Net initial yield of 3.4% showing a 12% premium to March 2017 book
Slide 25: 21 Moorfields: Pre-let secured
Landsec – London Portfoilo 25 21 Moorfields Pre-let secured — 1.9 acre site sitting above Liverpool Street Crossrail Station — Purchased 79-year leasehold interest from an administrator in 2012 — Settled CPO claim with Crossrail and agreed two new 250 year leases with TfL — Finished demolition and s
Slide 26: 21 Moorfields: Building on a strong partnership
Landsec – London Portfoilo 26 21 Moorfields Building on a strong partnership — Deutsche Bank Wealth and Asset Management business took 90,000 sq ft in 2015 at The Zig Zag Building — Planning submitted last month to provide a 564,000 sq ft building with trading floors, a gym and a highly resilient an
Slide 27: 21 Moorfields
Landsec – London Portfoilo 27 Winchester House, London Wall 313,000 sq ft 1 Appold Street 21 Moorfields Minimum 185,000 11 Throgmarton Avenue sq ft 469,000 43,000 Pinners Hall, sq ft sq ft Old Broad Street 15 Throgmarton Avenue 67,000 sq ft 43,000 sq ft 21 Moorfields, EC2
Slide 28: 21 Moorfields: Creating the workplace of the future
Landsec – London Portfoilo 28 21 Moorfields Creating the workplace of the future — Deutsche Bank will vacate 5 buildings totalling 650,000 sq ft and relocate into one building taking a minimum of 469,000 sq ft — Deutsche Bank will start fitting out in 2021 ready for occupation in 2023 — Development
Slide 29: Future pipeline
Landsec – London Portfoilo 29 Future pipeline — Tracking range of assets — Progressing future pipeline of 1.4m sq ft 21 Moorfields, EC2 Southwark estate, SE1 564,000 sq ft 492,000 sq ft Nova East, SW1 1 Sherwood Street, W1 196,000 sq ft 142,000 sq ft
Slide 30: Summary
Landsec – London Portfoilo 30 Summary — More leasing activity than in any other six month period since financial crisis One New Change, EC4 The Zig Zag Building, SW1 — Portfolio team all over our assets — Record pricing at the Walkie Talkie — Secured conditional pre-let to Deutsche Bank 20 Fenchurch
Slide 31: Retail Portfolio
Retail Portfolio Scott Parsons Managing Director
Slide 32: A solid performance
Landsec – Retail Portfoilo 32 A solid performance Outlets 15% Hotels 9% Retail Shopping Portfolio centres by valuation 50% Leisure 12% Retail parks 14%
Slide 33: A solid performance
Landsec – Retail Portfoilo 33 A solid performance — £6.6m lettings — Like-for-like voids 20bps at 2.6% Outlets Outlets 12% 15% — Administrations 10bps to 0.3% Hotels 7% Hotels — Net rental income in line with last year 9% Retail Shopping Shopping Leisure centres centres — Sales and footfall figure
Slide 34: A solid performance
Landsec – Retail Portfoilo 34 A solid performance — £6.6m lettings Footfall 26 weeks to 1 Oct 17 — Like-for-like voids 20bps at 2.6% Landsec Benchmark — Administrations 10bps to 0.3% -1.8% -2.7% — Net rental income in line with last year Same store retail sales 26 weeks to 1 Oct 17 1.1% — Sales an
Slide 35: Destination shopping centres
Landsec – Retail Portfoilo 35 Destination shopping centres A great day out — Curating new brands — Primark, Apple, Missguided at Bluewater — Flagship Next and leisure extension open at White Rose — Southside refurbishment and expansion complete The Beach at Bluewater, Kent
Slide 36: Westgate Oxford
Landsec – Retail Portfoilo 36 Westgate Oxford A transformational new destination Westgate Oxford
Slide 37: Leisure
Landsec – Retail Portfoilo 37 Leisure Occupiers investing in our locations — Leisure spend relatively resilient — Key operators reporting strong results — Cinema upgrades and refurbishments Xscape, Yorkshire
Slide 38: Hotels
Landsec – Retail Portfoilo 38 Hotels Profitable and trading well — Positive trading environment — Turnover up — Long unexpired lease term — Euston hotel CPO Novotel, London Tower Bridge
Slide 39: Retail parks
Landsec – Retail Portfoilo 39 Retail parks Quality and resilience — Fully let portfolio — Selective pre-let extensions — Affordable rents Bishop Centre, Taplow
Slide 40: Selly Oak
Landsec – Retail Portfoilo 40 Selly Oak 93% pre-let or in solicitors’ hands Selly Oak, Birmingham
Slide 41: Outlets
Landsec – Retail Portfoilo 41 Outlets Curating consumer experience — Largest owner-manager in UK — Positive sales growth across portfolio — Focus on brand mix and upsizes Gunwharf Quays, Portsmouth
Slide 42: Three new outlet destinations
Landsec – Retail Portfoilo 42 Three new outlet destinations Strong growth potential Clarks Village, Street
Slide 43: Summary
Landsec – Retail Portfoilo 43 Summary Everything is experience — Solid performance in the first half Dino Mania, Clarks Village Fireworks Extravaganza, Gunwharf Quays — Resilient portfolio — Vibrant destinations — Sales growth ahead of benchmarks — Four fantastic experience-led destinations added to
Slide 44: Outlook
Outlook Robert Noel Chief Executive
Slide 45: Summary and outlook
Landsec – Half-yearly results 2017 45 Summary and outlook Great operations Westgate Oxford 21 Moorfields, EC2 — Strong leasing activity — Opportunistic buying — Profitable selling — Balance sheet management — Successful completion of Westgate Oxford 20 Fenchurch Street, EC3 Piccadilly Lights, W1 Tec
Slide 46: Q&A
– London Portfoilo 46 Q&A