Shaftesbury Capital PLC · LSE:SHC
Shaftesbury Capital — H1 2016 Earnings Presentation
61 slides from Shaftesbury Capital's earnings presentation, 2016
Slide 1: Six months ended 31 March 2016
six months ended 31 March 2016
Slide 2: Agenda
Agenda Introduction Brian Bickell Results and finance Chris Ward Portfolio review Brian Bickell Summary and outlook Brian Bickell Q&A Brian Bickell Chris Ward Simon Quayle Tom Welton Note: All data refers to the wholly-owned portfolio unless otherwise stated
Slide 3: Introduction
Introduction
Slide 4: Our portfolio
Shaftesbury 4 Our portfolio % of current income = Exceptional portfolio in the heart of the West End = Mostly clustered in iconic areas hy, G = Comprehensive management strategy for each village Shops Restaurants, cafés and leisure = Initiatives bring compound benefits to our nearby holdings = Limit
Slide 5: Buoyant demand underpinned by robust footfall and spending
Shaftesbury C5 ] Buoyant demand underpinned by robust footfall and spending = The West End continues to flourish - Growth in London’s population, visitors and economy - Large working and resident populations = Sustained occupier demand across each location and all uses; availability of space constra
Slide 6: Extensive asset management activity and investment
Shaftesbury Extensive asset management activity and investment = Busy period for lettings, renewals and rent reviews = Avariety of schemes extending to 150,000 sq. ft. during the period = Major schemes in Chinatown, Carnaby and Seven Dials now on-site = Continue to identify and accelerate future pro
Slide 7: Current income and estimated rental value
135 124 114 103 107 97 96 89 91 79 78 80 79 83 69 74 66 62 64 54 56 59 Sept 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Current Income Estimated Rental Value (independent valuers' estimate)
Slide 8: Results and finance
Results and finance
Slide 9: Headlines
Shaftesbury Headlines 6 months’ After SDLT L-f-L impact 12 months' After SDLT L-f-L impact Portfolio value growth’ +3.0% +2.1% 412.5% +11.6% EPRA NAV: £8.93° (30.9.15: £8.69) —_+3.9% +2.8% +16.5% +15.2% NAV return before dividends +4,7% +3.6% +18.3% +17.0% CHANGE H1 2016 H1 2015 (%) EPRA EPS 7.3p 6.
Slide 10: Earnings
Shaftesbury © Earnings £42.1m £20.2m 7.3p EPRA earnings (£m) 3.4 ot 0.2 -1.4 ; Higher net debt Rental means (acquisitions & L-f-L: +8.9% capex) H1 2015 Net property income Admin costs Finance costs Longmartin H1 2016 | J Appendix 3
Slide 11: Balance Sheet
Shaftesbury @ Balance Sheet £43.2m £12.8m Portfolio value (£m)' Net debt (£m) 54 56 69 3,248 | | -2 P| 638 20 t 23 Underlying £97m SDLT (£28m) Sept 2015 Acquisitions/ Revaluation Mar 2016 Sept 2015 Operating Dividend Acquisitions/ JV receipts Mar 2016 capex cash flow capex 1. Including our 50% share
Slide 12: Valuation
Shaftesbury Valuation £3.26bn +3.0% tom +2.1% (6m) Components of the reversion (£m)' 6m 12m 9.9 134.8 _ ERV 3.1% 6.7% L-f-L rental growth"’ Annualised current income 4.1% 12.0% = Continuing strong occupier demand and low vacancy = Sustained growth in actual and prospective rents = Converting reversi
Slide 13: Valuation
Valuation Equivalent yields DTZ continue to advise potential Mar 16 Sept 15 additional value in this unique Wholly-owned portfolio 3.57% 3.61% portfolio Longmartin 3.68% 3.75% = Some prospective purchasers may recognise = Continuing strong investor demand compelling opportunity, to own a substantial
Slide 14: Net asset value
Shaftesbury ® Net asset value +3.6% (6m) EPRA NAV (pence per share) 34 869 7 | -10 L-f-L Valuation growth: impact: +3.9% -1.2% Sept 2015 EPRA earnings Dividend Revaluation SDLT increase Mar 2016
Slide 15: Debt summary
Shaftesbury ® Debt summary £101.4m 23.2% 9.7 years Debt maturity profile’ (£m) Total facilities £855.8m £855.8m 2016 : a 2018 150 Undrawn committed facilities £101.4m £150.3m 2020 - 125 LTV 23.2% 22.5% 2022 Gearing 30.2% 29.1% 2024 a 1 2026 60 Weighted average cost” 4.71% 4.92% 2028 Weighted average
Slide 16: Portfolio review
Portfolio review
Slide 17: Demand and occupancy
Shaftesbury @ Demand and occupancy CONTINUED STRONG DEMAND ACROSS THE PORTFOLIO £10.8m £1.2m £1.5m = Demand remains strong across each village and for all uses = £13.6m leasing and rent review transactions (H1 2015: £11.2m) - Commercial: £10.8m +6.5% vs Sept 2015 ERV +12.3% vs Mar 2015 ERV ~ Residen
Slide 18: Retail
Shaftesbury ® Retail DOMESTIC AND INTERNATIONAL DEMAND REMAINS GOOD Overview = Sustained demand from domestic and international retailers = Wide range of shop sizes and rental levels attract a diverse range of retailers >) = High footfall locations but rental tones competitive G Leasing activity = 1
Slide 19: A selection of retail lettings/openings
Shaftesbury A selection of retail lettings/openings in H1 Envy Barbers Sugar Sin Le Jeune Chocolatiers Johnny’s Chop Shop os . Pare “CRS Bia ye! ‘Stee Se 0! Cry 1% ‘guyee Drop Dead Mackintosh Ron Dorff
Slide 20: Restaurants, cafés and leisure
Shaftesbury ® Restaurants, cafés and leisure DEMAND REMAINS EXCEPTIONALLY STRONG Overview = Largest single provider of dining and leisure space in the West End = A footfall driver in their own right, increasing dwell times and complementing other uses = Occupier demand remains strong = Availability
Slide 21: A selection of new restaurant, café and leisure lettings/openings
Shaftesbury A selection of new restaurant, café and leisure lettings/openings in H1 Black K Sheep Coffee Pizza Pilgrims! Dickie Fitz The Ninth The Barbary Balans Soho Society 1. Tenant that has expanded within our villages
Slide 22: Offices
Shaftesbury @ Offices WEST END SUPPLY CONSTRAINTS CONTINUE Overview = Important provider of small office space in the core West End = Average area: 1,400 sq. ft.; Average current rent: £48 psf (ERV: £60 psf) = Occupier demand remains strong, particularly from SME media, creative, 406,000 sq. ft, fas
Slide 23: Residential
Shaftesbury 3) Residential GOOD CASH FLOW AND LOW VACANCY £2.8m £0.1m Overview = West End a popular place to live = Sustained demand to rent our mid-market apartments = Continue to upgrade and reconfigure existing apartments * 45 under construction or being upgraded (ERV: £1.7m) Leasing activit ngs
Slide 24: Schemes
Shaftesbury 24) Schemes CREATING VALUE THROUGH IMPROVING OUR PORTFOLIO 150,000 sq. ft. £12.8m Continued high level of refurbishment activity " Three major schemes now on site - ERV: £7.3m, 5.9% of ERV (pro-forma including 57 Broadwick St) — Thomas Neal’s Warehouse, Seven Dials — Charing Cross Road/C
Slide 25: Thomas Neal's Warehouse, Seven Dials
Shaftesbury Thomas Neal’s Warehouse, Seven Dials = Short walk from new interchange at Tottenham Court Road = Will provide up to 22,000 sq. ft. of flagship retail space = Estimated capital expenditure: £2.0m = Loss of annualised net income: £0.8m = Completion anticipated in late 2016
Slide 26: Thomas Neal's Warehouse
Thomas Neal's Warehouse, | Lies zi cGl Basement
Slide 27: Charing Cross Road/Chinatown
Charing Cross Road/Chinatown Located next to Leicester Square Underground and a short walk from Tottenham Court Road Crossrail hub Substantial improvements to the configuration of space: - 32,000 sq. ft. of large, double-height retail space on Charing Cross Road (330 ft. frontage) - 13,500 sq. ft. o
Slide 28: Charing Cross Road/Chinatown
Charing Cross roadeninatte \ *. yy: * ; ¥ : | A vp 4, i ly i y
Slide 29: Broadwick Street, Carnaby
Shaftesbury 57 Broadwick Street, Carnaby = Situated within a few minutes’ walk of Tottenham Court Road’s new Dean Street ticket hall. = Works commenced May 2016 = 30,000 sq. ft. scheme comprising: - 8,000 sq. ft. of flagship retail and restaurant space - 20,000 sq. ft. of refurbished and extended gr
Slide 30: Charlotte Street, Seven Dials and Soho schemes
Charlotte Street 2 shops 3 cafés}6,100 sq. ft. Seven Dials Soho 2 shops (3,700 sq. ft.) 1 shop } 1 restaurant 6,400 sq. ft. 2,850 sq. ft. offices 1 apartment (2,100 sq. ft.)
Slide 31: Summary and outlook
Summary and outlook
Slide 32: Outlook
Outlook SUSTAINED OCCUPIER DEMAND UNDERPINS INCOME AND CAPITAL VALUE GROWTH London and the West End = Destination for businesses and visitors from across the world Robust trading conditions; no noticeable effects from emerging economic and political uncertainties = Regeneration stimulated by Crossra
Slide 33: Conclusion
Conclusion Growing contracted income and potential future income J Growth in earnings and dividends J Long-term growth in portfolio value and total shareholder returns
Slide 34: Appendices
Appendices 1. Exceptional portfolio in the heart of the West End 2. Delivering our strategy 3. Finance analysis 4. Valuation analysis 5. Vacancy 6. Portfolio analysis 7. Retail rental tone - prime Zone A vs Shaftesbury 8. Schemes 9. Village summaries 10.Key risks
Slide 35: Exceptional portfolio in the heart of the West End
245 MILLION PASSENGERS ANNUALLY at the six tube stations closest to our villages 100% of our portfolio is within 5 TO 10 MINUTES’ WALK OF A CROSSRAIL STATION 322 SHOPS 267 RESTAURANTS, CAFES AND LEISURE 406,000 SQ. FT. OFFICE SPACE 539 APARTMENTS. Appendix 1 EXCEPTIONAL PORTFOLIO IN THE HEART OF THE
Slide 36: Delivering our strategy
Shaftesbury Appendix 2 DELIVERING OUR STRATEGY IMPROVE FOCUS ON THE PUBLIC RETAIL REALM AND LEISURE PROMOTE ESTABLISH OUR VILLAGES OWNERSHIP CLUSTERS CREATE DISTINCTIVE RETAIL AND RECONFIGURE LEISURE AND IMPROVE DESTINATIONS SPACE eg Co, Mey SURE AND improve s*x™
Slide 37: Earnings and dividends per share
Shaftesbury . @ Appendix 3 EARNINGS AND DIVIDENDS PER SHARE 7.7p _ 7.3p 7.15p H2 2009 H12010 H2 2010 H12011 H2 2011 H12012 H2 2012 H12013 H2 2013 H12014 H2 2014 H12015 H2 2015 H12016 seneee EPRAEPS -==EPRA EPS (Excl. IFRS 2) ==—=Dividend per share
Slide 38: Reported profit after tax
Reported profit after tax Adjust for fair value movements: Investment properties Financial derivatives Adjustments re: Longmartin JV: Investment property revaluation Deferred tax EPRA earnings Number of shares for EPS calculation (million) EPRA EPS 80.1 (58.2) 12.1 (10.4) (3.4) 20.2 278.3 7.3p 180.2
Slide 39: Income statement and costs
Appendix 3 (cont.) Rental income 53.4 48.4 98.7 Property costs (11.3) (9.7) (19.9) Net property income 42.1 38.7 78.8 Admin expenses (6.4) (6.5) (14.0) 35.7 32.2 64.8 Net finance costs (16.6) (15.2) (30.7) Share of Longmartin JV profit before tax’ 1.3 11 2.3 Recurring profit before tax 20.4 18.1 36.
Slide 40: Reconciliation of IFRS to proportionate consolidation
Appendix 3 (cont.) RECONCILIATION OF IFRS TO PROPORTIONATE CONSOLIDATION BALANCE SHEET Investment properties Investment in Longmartin Net debt Other assets and liabilities Net assets INCOME STATEMENT Net property income Admin costs (6.4) Revaluation surplus 58.2 Operating profit 93.9 Net finance cos
Slide 41: Debt analysis
Debenture! Term loans - wholly-owned Term loan - Longmartin JV Hedged bank loans? Variable bank loans Weighted average cost® - drawn facilities - incl. non-utilisation costs on undrawn facilities Average margin on bank loans - drawn - if all facilities are drawn Current marginal cost of additional d
Slide 42: Valuation: £3.26bn at March 2016
Shaftesbury Appendix 4 VALUATION: £3.26BN' (AT 31 MARCH 2016) Charlotte Street £109m 3% Carnaby £1,140m Covent Garden’ £1,070m 33% 35% Chinatown £705m 22% 1. Including our 50% share of Longmartin
Slide 43: Like-for-like increase in capital values
Shaftesbury Appendix 4 (cont.) LIKE-FOR-LIKE INCREASE IN CAPITAL VALUES % of portfolio H1.2016 Year to March 2016 ohen Total 100% =| 2.1% 15.6% Carnaby 35% a 2.6% 18.5% Covent Garden 26% 1.7% 13.5% Chinatown 22% 0.8% 13.5% Soho 7% 2.6% 14.6% Charlotte St 3% 2.2% 13.5% Longmartin 7% 4.7% 17.7%
Slide 44: Yields
Shaftesbury ® Appendix 4 (cont.) YIELDS Equivalent yield (%) 3.94 3.85 3.84 3.91 3.84 375 3:86 3.66 3.69 3.69 3.63 3.62 3,57 3.61 5.68” 3.55 3.55 3.56 3.53 3.52 3.45 Carnaby Covent Garden Chinatown Soho Charlotte Street Topped-up initial yield (%) 3.28 3, 3.26 3.3 3.25 3.39 5.23 3.07 9 95 3.06 5.19
Slide 45: Current income
Current income Vacancy - EPRA - Major schemes - Other schemes Future schemes - 57 Broadwick Street Contracted (rent frees, stepped rents) Under-rented ERV 341 1.6 4.0 1.0 6.6 0.3 1.2 2.5 44.7 Appendix 4 (cont.) 35.7 0.6 1.0 0.5 21 0.2 0.4 2.7 41.1 16.8 24.1 13.1 1.7 1.8 15.3 75 0.1 0.3 0.7 9.6 107.2
Slide 46: Vacancy
Appendix 5 Major schemes’ 4.0 1.0 2 2 5.0 4.0% - 5.0 3.7% Other schemes 1.0 0.5 1.6 1.7 4.8 3.9% 0.1 4.9 3.6% Total held for or under refurbishment 5.0 1.5 1.6 1.7 9.8 7.9% 0.1 9.9 7.3% Under offer 0.7 0.5 0.3 = 1.5 1.2% 0.1 1.6 1.2% Available to let 0.9 0.1 0.1 0.1 1.2 1.0% 0.1 1.3 1.0% EPRA vacanc
Slide 47: Vacancy as % of wholly-owned ERV
% of wholly-owned ERV 12% Note 57 Broadwick St will add 1.9% (pro-forma) to major scheme vacancy 10% 8% 6% 4% 2% 0% Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Mar-16 EPRA vacancy Other schemes Carnaby schemes Major schemes
Slide 48: Portfolio by use
Shops Restaurants, caf s Offices Residential and leisure Wholly-owned Wholly-owned Wholly-owned Wholly-owned 322 267 539 466,000 sq. ft. 582,000 sq. ft. 406,000 sq. ft. 321,000 sq. ft. Longmartin joint venture Longmartin joint venture Longmartin joint venture Longmartin joint venture 21 10 75 67,000
Slide 49: Mix of uses (wholly-owned portfolio)
Shaftesbury Appendix 6 (cont.) MIX OF USES (WHOLLY-OWNED PORTFOLIO) % OF CURRENT RENT Residential Offices Restaurants, cafés and leisure Sept 2008 Mar 2016
Slide 50: Wholly-owned portfolio
Wholly-owned portfolio Carnaby Covent Garden Chinatown Soho Charlotte Street Longmartin joint venture (our 50%) Total Shops Restaurants, cafés and leisure Offices Residential Total 1. Shaftesbury has a 50% share of these figures Appendix 6 (cont.) Number 322 267 539 1,140.1 846.9 704.5 233.6 109.2 3
Slide 51: Retail rental tone - prime Zone A vs Shaftesbury
Appendix 7 RETAIL RENTAL TONE — PRIME ZONE A VS SHAFTESBURY 1,500 £650* £210 £137 Bond Se ES ~L£1,500* Newburgh Street Berwick Street 500 500 ° ~ 275 210 210 199 Monmouth Street Oz 137 Charing Neal Street ey) Source: Cushman & Wakefield, company data. Data as at 31 March 2016. Shaftesbury Zone As ar
Slide 52: Charing Cross Road/Chinatown ground floor plan
Shaftesbury Appendix 8 CHARING CROSS ROAD/CHINATOWN - GROUND FLOOR PLAN HARING CROSS ROAD Key: Proposed Units Hi AL Retail Oo ALIAS RetailSmall Cafe BH A3 Restaurant Building Facilities | Waste Management Facility Hi Cycle Storage LJ Service Yard / Service Corridor Outside of Shaftesbury’s Demise H
Slide 53: Earlham Street public realm proposals
Shaftesbury 53) Appendix 8 (cont.) EARLHAM STREET PUBLIC REALM PROPOSALS = Important gateway to Seven Dials from Cambridge Circus = Rental tone has lagged nearby streets for some time (Zone A: £190 psf) = Designs to improve the public realm have been prepared and are subject to public consultation i
Slide 54: Village summaries
Village Carnaby Covent Garden Chinatown Soho Charlotte Street Appendix 9 VILLAGE SUMMARIES Page 55 56 57 58 59
Slide 55: Carnaby
55) Carnaby Footfall> 40M pa 35% of our portfolio March 2016 Sept 2015 Vawetion €1,140.1m oe 511099 Acquisitions Nil £3.2m Capital expenditure £1.4m £9.5m Capital value return (L-f-L)' 3.5% 21.0% Equivalent yield 3.66% 3.69% Reversion £9.2m £11.1m 1. Before 0.9% decrease for SDLT increase Reversion
Slide 56: Covent Garden
Footfall > 30m pa (Seven Dials) * Current Rent ERV
Slide 57: Chinatown
Chinatown Footfall> 50M pa 22% of our portfolio March 2016 Sept 2015 Valuatig er ees onan seek bm Acquisitions Nil Nil Capital expenditure £5.0m £8.0m Capital value return (L-f-L)' 1.7% 17.3% Equivalent yield 3.45% 3.56% Reversion £6.1m £4.0m 1. Before 0.9% decrease for SDLT increase . Reversion (£m
Slide 58: Soho
Soho 7% of our portfolio March 2016 Sept 2015 ee ona ison Acquisitions £6.3m £7.7m Capital expenditure £1.3m £0.9m Capital value return (L-f-L)' 3.5% 15.2% Equivalent yield 3.63% 3.62% Reversion £1.8m £1.5m 1. Before 0.9% decrease for SDLT increase . Reversion (£m) % of CO Shops current income D Res
Slide 59: Charlotte Street
Charlotte Street 3% of our portfolio March 2016 Sept 2015 ——— OO on Acquisitions £14.8m £9.1m Capital expenditure £1.6m £0.6m Capital value return (L-f-L)' 3.1% 20.3% Equivalent yield 3.53% 3.52% Reversion £1.1m £1.1m 1. Before 0.9% decrease for SDLT increase : Reversion (£m) % of (Shops { current i
Slide 60: Key risks
Appendix 10 KEY RISKS Geographic Concentration Risk Sustained fall in visitor numbers and/or spending could affect the West End and our villages, leading to reduced occupier demand, higher vacancy and reduced rental income/capital values e.g. as a result of: ~ External threats e.g. terrorism/securit
Slide 61: Disclaimer
Disclaimer This presentation may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or im