Shaftesbury Capital Plc · LSE:SHC
Shaftesbury Capital — Capital & Counties Properties — H1 2016 Earnings Presentation
43 slides from Shaftesbury Capital's earnings presentation, Jul 26, 2016
Slide 1: Capital & Counties Properties PLC Interim Results 2016
Capital & Counties Properties PLC Interim Results 2016 26 July 2016 www.capitalandcounties.com
Slide 2: Forward-looking statements disclaimer
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 AND OVERVIEW Financial Review Ian Hawksworth 2. FINANCIAL REVIEW Soumen Das Operating Update 3. COVENT GARDEN Soumen Das Looking Ahead 4. EARLS COURT PROPERTIES Gary Yardley 5. LOOKING AHEAD Ian Hawksworth Q&A 6. Q&A Capco Interim Results 2016 www.capitalandcounties.com
Slide 4: Introduction
Introduction Financial Review Operating Update Ian Hawksworth, Chief Executive Looking Ahead Q&A Capco Interim Results 2016 www.capitalandcounties.com
Slide 5: Clear and unchanged strategy
Covent Garden Clear and unchanged strategy Covent Garden – Transformed into a globally recognised retail estate, driving rental growth through creative asset management Earls Court – Driving value through planning, land assembly and enablement; potential for Earls Court maximisation Strong balance s
Slide 6: Earls Court / Covent Garden property values
Earls Court Covent Garden Properties £2.1bn ECPL: £699m, -14% lfl £1.2bn1 +3.0% lfl -14.3% lfl Total property value Initial Yield: 2.1% Equivalent Yield: 3.5% £3.6bn 1 Empress State: £240m, -16% lfl -3.8% lfl Lillie Square: £211m, -14% lfl Other: £45m, -2% lfl Venues £0.3bn -0.2% lfl Total property
Slide 7: Positive leasing momentum across the estate
COVENT GARDEN EARLS COURT Positive leasing momentum across the estate Opportunities to evolve and intensify the Masterplan 50 new leases and renewals, 7% above December 2015 ERV Demolition progressing well Public sector backing 4% lfl increase in ERV to £90m – TfL minority partner at ECPL ERV target
Slide 8: Financial Review
Introduction Financial Review Operating Update Soumen Das Looking Ahead Q&A Capco Interim Results 2016 www.capitalandcounties.com
Slide 9: New £150 million HCA facility; conservative 20% LTV
Jun-16 Dec-15 Conservative 20% LTV Net Debt £686m £579m Strong covenant position LTV 20% 16% Interest cover 176% 123% High liquidity Cash and available facilities £457m £412m New £150 million HCA facility (Homes Weighted average cost of debt 2.8% 3.3% & Communities Agency) Weighted average maturity
Slide 10: Modest capital commitments of £194m
£m Current committed capex timeline Modest capital commitments of £194m 140 120 – Covent Garden £85m 100 – Earls Court £71m 80 60 – Lillie Square £38m 40 Significant pre-lets at Kings Court and 20 Opera Terrace 0 H2 2016 2017 2018 2019 Over £300m of sales off plan at Lillie Covent Garden Earls Court
Slide 11: EPRA adjusted NAV
Jun-16 Dec-15 Var £m £m £m Investment & Trading Property 3,504 3,530 (26) Unrecognised surplus on trading property 64 100 (36) Net debt (686) (579) (107) Other 32 8 24 EPRA adjusted NAV 2,914 3,059 (145) Number of shares in issue (diluted) 848m 848m - EPRA adjusted NAV per share 344p 361p (17)p CLSA
Slide 12: Underlying earnings and Venues EBITDA
Jun-16 Jun-15 Var £m £m £m Net rental income 40.5 38.4 2.1 Administration costs (25.0) (25.0) - Net finance costs (9.6) (9.1) (0.5) Other 1.4 1.0 0.4 Tax on underlying earnings (1.4) (1.1) (0.3) Underlying earnings 5.9 4.2 1.7 Underlying earnings per share 0.7p 0.5p 0.2p Proposed interim dividend pe
Slide 13: Operating Update
Introduction Financial Review Operating Update Soumen Das Looking Ahead Q&A Capco Interim Results 2016 www.capitalandcounties.com
Slide 14: Capco Interim Results 2016 www.capitalandcounties.com
Capco Interim Results 2016 www.capitalandcounties.com
Slide 15: Asset management and strategic development
Asset management Tactical acquisitions Target Return Strategic development 10–12% Creativity Planning Land assembly Target Return Land enablement 12–15% Selective development Capco Interim Results 2016 www.capitalandcounties.com
Slide 16: Covent Garden portfolio value and ERV
Portfolio value ERV New lettings & renewals Net rental income (vs June 2015) £2.1bn +4% (lfl) +7% +6% +3% like-for-like £90m Ahead of Dec-15 ERV like-for-like Retailers attracted to creative asset management and managed environment Continued positive leasing momentum – 50 new leases and renewals – R
Slide 17: Royal Opera House Arcade and Henrietta Street
Retail Repositioning of Royal Opera House Arcade underway Street to Suit strategy embedded on Henrietta Street Dining Reputation for dining driving demand from global brands Capco Interim Results 2016 www.capitalandcounties.com
Slide 18: Pre-let to Petersham Nurseries at Kings Court
Significant pre-let to Petersham Nurseries at Kings Court – Lifestyle brand to create bespoke retail and dining concepts – 16,000 square feet (NIA); 60% of the commercial space – Significantly above ERV An opportunity to unlock rental potential through placemaking on Floral Street Development progre
Slide 19: Rent captured since Dec-15
£m 100 £4m of rent captured since Dec-15 £16.5m 90 80 £10.8m 70 £2.8m £8.9m 60 £2.7m £0.4m 50 £89.9m 40 £59.8m 30 £1m under offer £47.8m since 30 June 20 10 Jun-16 Gross Rent-frees & Turnover & Other Contracted & Under Total Contracted & Planned vacancy Development Under-rented Jun-16 ERV Income Ste
Slide 20: ITZA psf (£) – June 2016
ITZA psf (£) – June 2016 £1,600 £1,400 £1,200 £1,000 £800 £600 £400 £200 -- * Based on 30 ft Zone A, includes Old Bond St, Oxford St West and Regent St. (Covent Garden based on 20 ft Zone A.) ** Covent Garden average based on all streets, including Market Building. Capco Interim Results 2016 www.cap
Slide 21: Acquisitions since Dec 2009
£1,000+ £600 - £999 £450 - £599 £300 - £449 £200 - £299 £0 - £199 Acquisitions Since Dec 2009 Capco Interim Results 2016 www.capitalandcounties.com
Slide 22: Acquisitions since Dec 2009
£1,000+ £600 - £999 £450 - £599 £300 - £449 £200 - £299 £0 - £199 Acquisitions Since Dec 2009 Capco Interim Results 2016 www.capitalandcounties.com
Slide 23: Earls Court Properties
Introduction Financial Review Operating Update Gary Yardley Looking Ahead Q&A Capco Interim Results 2016 www.capitalandcounties.com
Slide 24: Capco Interim Results 2016 www.capitalandcounties.com
Capco Interim Results 2016 www.capitalandcounties.com
Slide 25: Asset management, land assembly and enablement
Asset management Tactical acquisitions Strategic development Creativity Planning Land assembly Land enablement Selective development Capco Interim Results 2016 www.capitalandcounties.com
Slide 26: Valuations impacted by market uncertainty
Empress Lillie ECPL CLSA Other Total State Square Ownership 63% 100% 100% 100% 50% Jun-16 £699m £240m n/a £45m £211m £1,195m Variance (lfl) (14)% (16)% n/a (2)% (14)% (14)% Valuations impacted by market uncertainty and weakened sentiment Valuers’ view of a reduced risk appetite in the investment mar
Slide 27: Capco Interim Results 2016 www.capitalandcounties.com
Capco Interim Results 2016 www.capitalandcounties.com
Slide 28: Lillie Square sales off plan
Over £300m of sales off plan (Group share £150m) – 44% of entire scheme sold off plan 20% deposits up front; fully funded with partner equity and external debt High levels of enquiries Phase 1 first completions on track for Q4 16 – Sales prices achieved £1,200 - £2,800 psf Phase 2 sales – 59% of fir
Slide 29: Consented, large scale scheme with high transport accessibility
Consented, large scale scheme with a high transport accessibility rating Representations have been submitted in preparation for the new London Plan expected next year – Outlines Earls Court’s ability to deliver minimum of 10,000 new homes, significantly above current consent Capco Interim Results 20
Slide 30: Looking Ahead
Introduction Financial Review Operating Update Ian Hawksworth Looking Ahead Q&A Capco Interim Results 2016 www.capitalandcounties.com
Slide 31: Prime central London assets positioned to create value
Prime central London assets well positioned to create value over the longer-term – Macroeconomic uncertainty in the short-term Strong balance sheet underpins resilience through cycles – Conservative LTV, high liquidity and modest capital commitments – Well positioned to take advantage of opportuniti
Slide 32: Capco Interim Results 2016 www.capitalandcounties.com
Capco Interim Results 2016 www.capitalandcounties.com
Slide 33: Appendix: Financials, Covent Garden, Earls Court Properties
1. FINANCIALS 2. COVENT GARDEN 3. EARLS COURT PROPERTIES Capco Interim Results 2016 www.capitalandcounties.com
Slide 34: IFRS to Group share reconciliation
Add back: Less: Joint Non-controlling IFRS Ventures1 interest2 Group share £m £m £m £m Investment & Trading Property 3,761 153 (410) 3,504 Net Debt (653) (33) - (686) Other assets and liabilities 124 (120) - 4 Non-controlling interest (410) - 410 - NAV 2,822 - - 2,822 1. This consists of the Lillie
Slide 35: EPRA NAV bridge
370 365 360 355 350 0.7p 345 361p 16.3p 0.5p 0.9p 340 344p 335 330 Dec-15 Valuation of property Underlying Profits Dividend Other Jun-16 Diluted EPRA NNNAV 338 pence per share Capco Interim Results 2016 www.capitalandcounties.com
Slide 36: Debt maturity and covenants
Maturity Loan LTV Interest cover outstanding1 covenant covenant Covent Garden2 2020 - 2026 £580m 60% 120% ECPL 2026 £11m 40% n/a Lillie Square3 2017- 2018 £66m 75% n/a Empress State 2018 £97m 60% 300% Total £754m 1. The loan values are the nominal values at 30 June 2016. The balance sheet value of t
Slide 37: Venues EBITDA £11m
45 £1.6m £1.1m 40 £0.2m £0.4m 35 Venues & Other Venues & Other £12.0m £10.6m 30 25 Earls Court Earls Court Properties £8.3m Properties £8.7m 20 15 Covent Garden Covent Garden 10 £19.1m £20.2m 5 0 H1 2015 Covent Garden Earls Court Properties Venues Other H1 2016 Venues EBITDA £11m Note: All numbers s
Slide 38: Cash and undrawn facilities movement
600 500 £457m £412m 400 300 £383m £321m 200 £82m 100 £4m £91m £91m £4m £74m 0 Dec-15 Operating cash flow Net borrowings drawn Investing activities Dividend & Other Jun-16 Cash Undrawn Facilities Note: All numbers shown at Group share Capco Interim Results 2016 www.capitalandcounties.com
Slide 39: Tax on income and capital gains
Tax on income – The underlying tax rate is 20% which is in line with the statutory corporation tax rate for 2016. This rate will fall to 19% from April 2017. – Following the Chancellor’s announcement in the March 2016 Budget, the main rate of corporation tax is expected to fall to 17 per cent from A
Slide 40: Covent Garden lease expiry and portfolio mix
LEASE EXPIRY PROFILE ANNUAL GROSS INCOME 2016: 3% Retail: 52% 2017: 12% F&B: 25% WALE 7.2yrs 2018: 14% £48m Leisure: 2% 2019: 16% Offices: 17% 2020+: 55% Residential: 4% PORTFOLIO VALUE TOTAL FLOOR AREA Retail: 52% Retail: 28% F&B: 18% F&B: 18% Leisure: 1% Leisure: 7% £2.1bn Offices: 12% 1m sq ft Of
Slide 41: Value uplift and ERV
£m VALUE UPLIFT AND REALISATION £m ERV 2,500 110 £185m £100.0m 100 £89.9m £454m 2,000 £75m 90 £86.2m £999m 1,500 80 £75.1m 70 1,000 £2,111m £58.0m 60 £51.9m 50 £45.8m 500 £37.5m £548m 40 £33.7m 0 30 Dec-09 Valuation Acquisitions Capex Disposals Jun-16 2009 2010 2011 2012 2013 2014 2015 H1 2016 Dec-1
Slide 42: Capco Interim Results 2016 www.capitalandcounties.com
Capco Interim Results 2016 www.capitalandcounties.com
Slide 43: Earls Court Masterplan and Empress State Building key areas
Earls Court Partnership Limited; Investment vehicle with TfL – Capco share 63% Empress State Building – 100% owned by Capco 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 and Empr
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