Derwent London Plc · LSE:DLN
Derwent London — H1 2014 Earnings Presentation
76 slides from Derwent London's earnings presentation, August 2014
Slide 1: Interim Results 2014
Derwent London plc INTERIM RESULTS 2014
Slide 2: Contents
CONTENTS Presenters: Contents: Page John Burns Introduction and overview 2 Results and financial review 10 Simon Silver Valuation and portfolio analysis 20 Projects 28 Damian Wisniewski Outlook for central London property 37 Outlook for Derwent London 42 Nigel George Appendices 44 Disclaimer 75 1
Slide 3: Introduction and Overview
INTRODUCTION AND OVERVIEW John Burns 2
Slide 4: Overview
OVERVIEW TURNMILL EC1 Strong first half performance: • NAV growth +13.6% (Portfolio +10.1%) • EPRA EPS +12.3% • Interim dividend per share up 8.4% to 11.65p • £6.8m pa of lettings in YTD, 13.0% above Dec 2013 ERV • Continued profitable recycling of smaller / non-core assets Well placed for future gr
Slide 5: Derwent London Is in a Sweet Spot
DERWENT LONDON IS IN A SWEET SPOT LONG-TERM VERY FAVOURABLE EXCELLENT RETURNS BUSINESS MODEL MARKET CONDITIONS Assets: Economic growth • Improving locations • Opportunities to Strong occupier demand: + = add value • New locations • Mid-market rents • New requirements NAV +25% Regeneration: Crossrail
Slide 6: Letting Ahead of ERV
LETTING AHEAD OF ERV • £3.6m of new lettings in H1 (89,800 sq ft, 27 transactions) at 8.6% above December 2013 ERV1 • A further £3.2m let in Q3 to date (55,100 sq ft, 8 transactions) at 17.5% above December 2013 ERV 50 ion rs rb rb 39%2 16%2 f f f ve fu fu ps ps ps Re Re C on 50 00 7. 9. 0. £3 £4 £5
Slide 7: Margins Improving at On-Site Programme
MARGINS IMPROVING AT ON-SITE PROGRAMME • Five developments on site at 30 June 2014: WHITE COLLAR FACTORY EC1 ◦◦ 502,200 sq ft ◦◦ Estimated profit on cost now 39% (34% in December 2013) ▪▪ Estimated completed value +4.4% in H1 ◦◦ Total surplus estimated at £133m at 30 June: ▪▪ +17% from December 2013
Slide 8: Rents Improving at 1-2 Stephen Street W1
RENTS IMPROVING AT 1-2 STEPHEN STREET W1 • 28,100 sq ft pre-let to Freud Communications in Q3 • A self-contained unit on the lower floors with its own entrance • Initial rent of £65 psf or £1.8m pa • Fixed increase to £75 psf or £2.1m pa after five years 7
Slide 9: Adding to Our Potential: 19-23 Featherstone Street EC1
ADDING TO OUR POTENTIAL: 19-23 FEATHERSTONE STREET EC1 Existing holdings Acquisition 1 Oliver’s Monmouth Yard House White Collar 19-23 Featherstone Street Factory Old Street roundabout • 27,500 sq ft office building acquired for £12.3m (£447 psf) • Adjacent to 41,500 sq ft Monmouth House • Appraisal
Slide 10: Second Half Progress to Date
SECOND HALF PROGRESS TO DATE CORE INCOME ON SITE APPRAISALS Sold two properties for Due to complete four Two West End planning £37.4m schemes in H2 applications submitted 62,800 sq ft 277,500 sq ft 163,000 sq ft 49% above December 66% pre-let 27% uplift in floorspace 2013 values + + 186 City Road EC
Slide 11: Results and Financial Review
RESULTS AND FINANCIAL REVIEW Damian Wisniewski 10
Slide 12: Headline Numbers
HEADLINE NUMBERS Jun 2014 Dec 2013 Jun 2013 Total portfolio at fair value £3,742.1m £3,353.1m £3,103.7m EPRA net asset value per share1 2,572p 2,264p 2,054p EPRA NNNAV per share1 2,513p 2,222p 1,955p Gross property income £69.3m £131.6m £64.0m EPRA profit before tax 2 £32.0m £57.8m £28.0m EPRA earni
Slide 13: NAV Growth
NAV GROWTH • EPRA NAV per share up 13.6%: ◦◦ 2,572p from 2,264p Debt, net assets and gearing 3,000 100 • Equity shareholders’ funds Net debt Net assets1 NAV gearing LTV ratio increased to £2,648.5m 2,700 90 2,649 2,400 80 2,304 • Net debt increased by 2.6%: 2,100 70 2,057 ◦◦ £974.1m from £949.2m 1,8
Slide 14: EPRA NAV Movement
EPRA NAV MOVEMENT • At £335.3m, the overall revaluation surplus in H1 2014 was almost the same as the surplus for the full year 2013 Revaluation surplus: Income statement £330.8m EPRA NAV per share Comprehensive income 1 £3.5m 2,700 Per accounts £334.3m 9 Trading property2 £1.0m 2,600 29 EPRA surplu
Slide 15: EPRA Profit Before Tax
EPRA PROFIT BEFORE TAX • EPRA profit £32.0m, up 14.3% from £28.0m in H1 2013 • Gross rental income increased by 6.3% to £67.9m EPRA profit before tax • Breakdown of net finance costs: 80 1.4 1.1 H1 2014 H1 2013 70 (4.5) £m £m 67.9 (13.1) 60 Interest 20.8 21.2 Capitalised interest (2.3) (3.4) 50 (21.
Slide 16: Gross Property Income
GROSS PROPERTY INCOME • Acquisitions include: Movements in gross property income 22 Kingsway £1.5m 80 Mark Square House £0.7m 19 Charterhouse Street £0.7m 75 • Disposals include: 4.9 70 (1.2) 1-5 Grosvenor Place £1.4m (2.8) 1.3 69.3 Jaeger House £0.2m 3.0 (1.6) 1.7 £m 65 • Lettings and reviews inclu
Slide 17: Property Outgoings, EPRA Rental Income & Cost Ratios
PROPERTY OUTGOINGS, EPRA RENTAL INCOME & COST RATIOS Property outgoings H1 2014 H1 2013 £m £m Property outgoings 4.0 5.1 Decreased due to reduced voids Ground rents 0.2 0.2 Surrender premiums paid 0.3 0.3 4.5 5.6 EPRA like-for-like rental income1 Rental income Net property Gross Net income Compared
Slide 18: Cashflow
CASHFLOW • Increase in net debt: Net cashflow movements ◦◦ By £24.9m to £974.1m H1 2014 H1 2013 £m £m • Acquisition of 19-23 Featherstone Street £12.3m Cash from operations 32.9 26.4 24.6% Acquisitions (14.3) (29.7) • Disposals include Jaeger House £30.3m Capex (32.1) (55.5) (64.1) (51.8) Disposal p
Slide 19: Debt Summary
DEBT SUMMARY • £100m unsecured US private placement notes drawn down in January 2014: ◦◦ £75m for 20 years at 4.68% Jun 2014 Dec 2013 ◦◦ £25m for 15 years at 4.41% Total facilities £1,351m £1,251m Net debt £974.1m £949.2m • Weighted average maturity of borrowings increased from 6.3 years to 7.2 year
Slide 20: Debt Facilities
DEBT FACILITIES Jun 2014 Dec 2013 Maturity profile of loan facilities as at 30 Jun 2014 Average interest rate (spot) 1 3.98% 3.64% £m 0 50 100 150 200 250 300 350 400 450 500 550 600 Average interest rate (spot)2 4.44% 4.10% 2014 2015 Proportion of drawn facilities at fixed 98% 83% 2016 175 rate or
Slide 21: Valuation and Portfolio Analysis
VALUATION AND PORTFOLIO ANALYSIS Nigel George 20
Slide 22: Valuation
VALUATION Strong capital growth in the first half of 2014: • Underlying 10.1% (H2 2013: 7.6%) • City Borders continue to outperform at 13.2% (H2 2013: 9.9%) Seven on-site projects valued at £462.2m (11.9% uplift in H1): • Five developments £214.1m (H1 +11.6%): ◦◦ Development surpluses to come £62m -
Slide 23: Valuation Performance Against Benchmarks
VALUATION PERFORMANCE AGAINST BENCHMARKS Our total property return is ahead of benchmarks: • Derwent London 12.2% • IPD Central London Offices 10.8% • IPD All Property 8.5% Drivers of performance Valuation performance 60 20 2013 H1 2014 55 50 15 16.5 15.7 13.92 Capital value growth (%) Contribution
Slide 24: Yields
YIELDS EPRA yields • Net initial yield 3.7% (Dec 2013: 4.2%): ◦◦ ‘Topped-up’ net initial yield 4.4% Valuation yields (Dec 2013: 4.8%) 9 Derwent London True Equivalent Yield 10-year Gilt All Coupon Derwent London Initial Yield Gap between DL TEY and 10-year Gilt Yield % or Gap between DL TEY and 10-y
Slide 25: Strong Rental Growth
STRONG RENTAL GROWTH • Underlying rental growth of 4.2% in H1 (H2 2013: 3.0%) • City Borders 5.5% ◦◦ Tea Building 7.5% Rental value growth ◦◦ Morelands 14.8% 15 ◦◦ Johnson Building 5.7% 12 13.3 9 Half-yearly rental value growth (%) • West End 3.7% 6 8.1 4.6 4.2 3 4.1 3.8 3.0 3.3 2.7 2.8 1.3 2.6 2.8
Slide 26: Significant Existing Income Growth Potential
SIGNIFICANT EXISTING INCOME GROWTH POTENTIAL • Current income of £123.0m with ERV of £206.0m • Significant reversion at £83.0m1: Build up of reversion ◦◦ 43% (£35.4m) locked-in: 90 ▪▪ Contractual growth of £27.6m includes: 80 18.9 ◦◦ 1 Page Street £3.0m 70 ◦◦ The Buckley Building £2.1m 60 23.1 ▪▪ Pr
Slide 27: Significant Future Income Growth Potential
SIGNIFICANT FUTURE INCOME GROWTH POTENTIAL • Potential from projects and core income: ◦◦ 55% earmarked for projects - substantial floor area upside Portfolio composition ◦◦ 45% core income - drive rents • Central London offices represent 84% of income: 11% ◦◦ Average ‘topped-up’ office rent £33.60 p
Slide 28: Well Placed for Growth from June Valuation
WELL PLACED FOR GROWTH FROM JUNE VALUATION • Core income 45% of portfolio floor area (2.6m sq ft) and 50% of ERV • Central London average current office rent £30.75 psf ‘Topped-up’ £39.76 psf ERV £43.15 psf 1 2 3 4 5 6 Horseferry House SW1 Charlotte Building W1 Middlesex House W1 Greencoat & Gordon
Slide 29: Projects
DERWENT LONDON PROJECTS Simon Silver 28
Slide 30: Current Project Programme Map
CURRENT PROJECT PROGRAMME MAP Islington Camden Euston Thameslink Old Street Bloomsbury Clerkenwell 6 1 Fitzrovia 8 Farringdon Shoreditch Marylebone/ 5 Liverpool Street 9 Baker Street Paddington North of 3 7 Tottenham Oxford St 2 4 Court Road The City Paddington Holborn 10 Bond Street Thameslink Proj
Slide 31: Delivering Our Pipeline
DELIVERING OUR PIPELINE On site with seven projects totalling 626,000 sq ft with a capex to complete of £155m: • 29% pre-let at £9.6m pa net (Publicis Groupe and Freud Communications) Five developments of 502,200 sq ft: 15 16 14 14 14 20 20 20 20 20 3 3 3 4 4 Q Q Q Q Q Turnmill EC1 40 Chancery Lane
Slide 32: Major Project: White Collar Factory EC1
MAJOR PROJECT: WHITE COLLAR FACTORY EC1 • Demolition completed • 293,000 sq ft scheme: ◦ 237,000 sq ft 16-storey office tower ◦ 39,000 sq ft office campus ◦ 9,000 sq ft retail ◦ 8,000 sq ft residential • Delivery Q3 2016 31
Slide 33: Completions in H2 2014 & H1 2015: 1-2 Stephen Street W1
COMPLETIONS IN H2 2014 & H1 2015: 1-2 STEPHEN STREET W1 • 83,800 sq ft office refurbishment: • 40,000 sq ft retail at Tottenham Court Walk: ◦◦ 28,100 sq ft pre-let to Freud Communications in Q3 ◦◦ Due to be delivered in Q2 2015 ◦◦ 55,700 sq ft to let including the ninth and tenth penthouse floors 32
Slide 34: Other Completions in H2 2014
OTHER COMPLETIONS IN H2 2014 Turnmill EC1 40 Chancery Lane WC2 Queens W2 • Completes Q3 2014 • Completes Q4 2014 • Completes Q4 2014 • 70,500 sq ft: • 101,800 sq ft: • 21,400 sq ft: ◦◦ 58,200 sq ft offices - pre-let to ◦◦ 97,400 sq ft offices - pre-let to ◦◦ 16 private apartments Publicis Groupe Pub
Slide 35: Next Projects
NEXT PROJECTS Four consented projects totalling 975,000 sq ft including: 80 Charlotte Street W1 55-65 North Wharf Road W2 • 380,000 sq ft mixed-use (85% offices) • 240,000 sq ft offices • Office ERV £65 psf • Office ERV £57.50 psf • Start 2015, completion H2 2017 • Start c2016, completion c2018 • Ca
Slide 36: Advancing Schemes - 25-29 Berners Street W1
ADVANCING SCHEMES - 25-29 BERNERS STREET W1 • Planning application submitted for a new Fitzrovia development: ◦◦ 105,000 sq ft: ▪▪ 85,000 sq ft offices ▪▪ 20,000 sq ft retail • 22% uplift on the existing area1 Existing ownership: • Two leasehold offices totalling 79,500 sq ft • Let to PRS for Music
Slide 37: Advancing Schemes - 25 Savile Row W1
ADVANCING SCHEMES - 25 SAVILE ROW W1 • Planning application submitted for a 58,000 sq ft seven-storey development: ◦◦ 52,400 sq ft residential (29 flats) ◦◦ 5,600 sq ft retail / gallery ◦◦ Additional space for spa, gym and car parking • Mayfair address Existing: • 42,300 sq ft six-storey freehold pr
Slide 38: Outlook for Central London Property
OUTLOOK FOR CENTRAL LONDON PROPERTY John Burns 37
Slide 39: Rental Growth Set to Continue
RENTAL GROWTH SET TO CONTINUE • West End office demand: West End office take-up 6 ◦◦ CBRE take up of 2.1m sq ft in H1 (-11% on H2 2013): 5 ▪▪ In line with average Annual average Take-up (million sq ft) 4 ◦◦ Positive economic background: 3 ▪▪ Business confidence is high Half year average 2 ▪▪ Broaden
Slide 40: Tech Belt's Coming of Age
TECH BELT’S COMING OF AGE “JLL has decided to retire its “Northern Fringe” and “Eastern Fringe” submarkets and replace them with three new submarkets: Clerkenwell, Shoreditch and Aldgate. These are now core markets in their own right.” JLL, May 2014 “One of the great success stories of London over r
Slide 41: London's Tech Belt
LONDON’S TECH BELT • JLL has defined three areas, broadly in line with Derwent London’s Tech Belt, with an office stock of 18.5m sq ft1: ◦◦ Clerkenwell (6.8m sq ft) - a new ‘medialand’, especially advertising agencies ◦◦ Shoreditch (8.6m sq ft) - digital-media and creative digital cluster ◦◦ Aldgate
Slide 42: Growth in Values Look Set to Continue
GROWTH IN VALUES LOOK SET TO CONTINUE • CBRE prime office yields close to historical lows but in line with other assets: ◦◦ West End 3.75% (4.00% Jun 2013) ◦◦ City 4.50% (4.75% Jun 2013) Central London office investment • Good medium-term rental growth prospects 20 18 Value of investment transaction
Slide 43: Outlook for Derwent London
OUTLOOK FOR DERWENT LONDON John Burns 42
Slide 44: Outlook
OUTLOOK • Rental growth has increased in 2014 Estimated to rise by around 6-8% (from 5-7%) in 2014 Our • Limited investment supply and higher domestic demand market Firm yields in H2 2014 • London’s economic outlook remains good Points to continued rental growth over the medium term • Well placed •
Slide 45: Appendices
DERWENT LONDON APPENDICES 44
Slide 46: Appendices
APPENDICES Page Page 1. Group balance sheet 46 16. Lease expiry profile and lease length 61 2. Net asset value per share 47 17. Portfolio statistics by village 62 3. Group income statement 48 18. Rent and tenant banding 63 4. Reconciliation of IFRS and EPRA profit 49 19. Profitable recycling 64 5. E
Slide 47: Appendix 1 - Group Balance Sheet
APPENDIX 1 - GROUP BALANCE SHEET Jun 2014 Dec 2013 Jun 2013 £m £m £m Investment property 3,581.4 3,242.9 2,888.5 Owner-occupied property 23.1 19.7 18.1 Other non-current assets 84.8 80.5 77.2 3,689.3 3,343.1 2,983.8 Non-current assets held for sale 35.5 4.8 130.2 Other current assets and liabilities
Slide 48: Appendix 2 - Net Asset Value per Share
APPENDIX 2 - NET ASSET VALUE PER SHARE Jun 2014 Dec 2013 Diluted Diluted £m p £m p Net assets attributable to equity shareholders 2,648.5 2,304.0 Conversion of 2.75% unsecured convertible bonds 2016 169.1 167.7 Net assets for diluted NAV 2,817.6 2,537 2,471.7 2,230 Revaluation of trading properties
Slide 49: Appendix 3 - Group Income Statement
APPENDIX 3 - GROUP INCOME STATEMENT Half year ended Year ended Half year ended Jun 2014 Dec 2013 Jun 2013 £m £m £m Gross property income 69.3 131.6 64.0 Other income 1.1 2.0 1.1 Property outgoings (4.5) (9.3) (5.6) Net property income 65.9 124.3 59.5 Admin expenses (13.1) (26.4) (11.8) Total adminis
Slide 50: Appendix 4 - Reconciliation of IFRS and EPRA Profit
APPENDIX 4 - RECONCILIATION OF IFRS AND EPRA PROFIT Half year Year Half year ended ended ended Jun 2014 Dec 2013 Jun 2013 £m £m £m IFRS profit before tax 371.4 467.9 219.8 Revaluation surplus (330.8) (335.6) (175.3) Joint venture revaluation surplus (0.2) 0.3 0.3 Profit on disposal of properties and
Slide 51: Appendix 5 - Explanation of EPRA Adjustments
APPENDIX 5 - EXPLANATION OF EPRA ADJUSTMENTS H1 2014 Adjustments H1 2014 H1 2013 IFRS A B C EPRA EPRA £m £m £m £m £m £m Net property and other income 65.9 65.9 59.5 Total administrative expenses (13.2) 0.1 (13.1) (11.8) Revaluation surplus 330.8 (330.8) - - Profit on disposal of investment property
Slide 52: Appendix 6 - EPRA Like-for-Like Rental Income
APPENDIX 6 - EPRA LIKE-FOR-LIKE RENTAL INCOME Properties Like-for-like increase on owned throughout Development H1 2013 H2 2013 the period Acquisitions Disposals property Total % % £m £m £m £m £m H1 2014 Rental income 3.4 0.0 54.8 3.0 0.3 9.8 67.9 Property expenditure (1.9) - - (2.3) (4.2) Net renta
Slide 53: 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 2.75% unsecured convertible bonds 175 July 2016 1.125% unsecured convertible bonds 150 July 2019 4.41% unsecured private placement notes 25 January 2029 4.68% unsecured private placement
Slide 54: Appendix 8 - Net Debt
APPENDIX 8 - NET DEBT Jun 2014 Dec 2013 £m £m Financial liabilities - due after more than 1 year 982.8 961.7 Acquired fair value of secured bonds less amortisation (15.2) (15.6) Unamortised loan arrangement costs 8.0 7.8 Leasehold liabilities (8.2) (8.2) Unamortised issue costs on unsecured bonds 4.
Slide 55: Appendix 9 - Fixed Rates and Hedging
APPENDIX 9 - FIXED RATES AND HEDGING Jun 2014 Dec 2013 Proportion of drawn facilities at fixed rates or hedged 98% 83% Weighted average duration of swaps 1 4.5 years 4.8 years Mark-to-market cost of swaps £15.9m £15.9m Weighted average duration of fixed rate instruments 8.6 years 7.4 years Hedging p
Slide 56: Appendix 10 - Valuation Performance by Village
APPENDIX 10 - VALUATION PERFORMANCE BY VILLAGE Valuation Valuation Weighting movement Jun 2014 Jun 2014 H1 20141 £m % % West End Central Fitzrovia2 1,381.6 37 10.3 Victoria 447.7 12 7.0 Baker Street/Marylebone 162.6 4 4.9 Soho/Covent Garden 126.2 3 6.3 Mayfair 77.5 2 16.1 Paddington 70.2 2 4.5 2,265
Slide 57: Valuation Drivers & Rental Value Growth
APPENDIX 11 - VALUATION DRIVERS & RENTAL VALUE GROWTH True equivalent yield movement1 • H1 2014 true equivalent yield 5.02%1 7.5 • Yield compression of 26bp in H1 and 50bp 15bp in 12 months 7.0 97bp • True equivalent yield is 33bp below June 2007 True equivalent yield (%) 6.5 83bp 43bp 6.0 55bp 12bp
Slide 58: Appendix 12 - Valuation Yields
APPENDIX 12 - VALUATION YIELDS Yields’ profile1 EPRA initial yields 8.0 Pre-EPRA EPRA 7.5 Net initial ‘Topped-up’ yield initial yield 7.0 % % 6.5 West End 3.5 4.3 6.0 Yield (%) City Borders 4.0 4.6 5.5 Central London 3.7 4.4 5.0 4.5 Provincial 6.1 6.2 4.0 EPRA portfolio 3.7 4.4 3.5 Initial yield Tru
Slide 59: Appendix 13 - Portfolio Reversion
APPENDIX 13 - PORTFOLIO REVERSION Rent uplift pa Rent pa £m £m £m Contracted rental income, net of ground rents 123.0 Contractual rental uplifts 1 Page Street SW1 3.0 The Buckley Building EC1 2.1 4 & 10 Pentonville Road N1 2.0 Angel Building EC1 2.0 Other 18.5 27.6 Pre-let projects 40 Chancery Lane
Slide 60: Appendix 14 - Vacant Space - Available and Projects
APPENDIX 14 - VACANT SPACE - AVAILABLE AND PROJECTS Vacant Pre-let Total Total Total area area area Vacant Pre-let gross Ground net ‘000 ‘000 ‘000 ERV ERV ERV rent ERV sq ft sq ft sq ft £m pa £m pa £m pa £m pa £m pa Comment Available to occupy (EPRA) Morelands EC1 17 - 17 0.7 - 0.7 - 0.7 15,400 sq f
Slide 61: Lease Expiries, Breaks and Vacancy Rates
APPENDIX 15 - LEASE EXPIRIES, BREAKS AND VACANCY RATES • EPRA vacancy rate 1.4% (1.0% at Dec 2013): • Portfolio average lease length 7.1 years ◦◦ Available space to occupy 48,000 sq ft • On-site minor refurbishments 98,000 sq ft • On-site major projects 626,000 sq ft Lease expiry and break analysis1
Slide 62: Lease Expiry Profile and Lease Length
APPENDIX 16 - LEASE EXPIRY PROFILE AND LEASE LENGTH Expiries and breaks as percentage of portfolio income1 West City H2 End Borders 2014 2015 2016 2017 2018 Total Expiries 2 - 2 5 5 4 12 28 Holding over - - - - - - - - Rolling breaks 3 - 3 2 - - 1 6 Single breaks 1 1 2 1 4 3 3 13 6 1 7 8 9 7 16 47 P
Slide 63: Appendix 17 - Portfolio Statistics by Village
APPENDIX 17 - PORTFOLIO STATISTICS BY VILLAGE Rent Vacant Net Vacant review / Floor floor contracted Average space lease Estimated area 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 64: Appendix 18 - Rent and Tenant Banding
APPENDIX 18 - RENT AND TENANT BANDING Central London ‘topped-up’ office rent banding1 Profile of tenants’ business sector 2 £60+ psf £0 - £20 psf Other 9% 5% Financial 6% 4% £20 - 30 psf Charities 14% 4% Media, TV, marketing and advertising Government and 29% £50 - £60 psf public admin 17% 6% Retail
Slide 65: Appendix 19 - Profitable Recycling
APPENDIX 19 - PROFITABLE RECYCLING Sale of smaller non-core assets into strong demand with further sales being considered First half sales include: • Jaeger House W1 £30.7m1 2.7% net initial yield • Prague Fashion Arena £6.8m Second half sales to date £37.4m1 at 4.0% net initial yield: • 186 City Ro
Slide 66: Central London Office Vacancy
APPENDIX 20 - CENTRAL LONDON OFFICE VACANCY 16 West End 14 City Central London 12 West End average City average Vacancy rate (%) 10 8 6 4 2 0 Q1 00 Q1 02 Q1 04 Q1 06 Q1 08 Q1 10 Q1 12 Q1 14 Source: CBRE 65
Slide 67: Central London Office Rental Growth
APPENDIX 21 - CENTRAL LONDON OFFICE RENTAL GROWTH 40 30 20 Rental growth (% pa) 10 0 Q1 00 Q1 02 Q1 04 Q1 06 Q1 08 Q1 10 Q1 12 Q1 14 -10 -20 West End -30 City Central London -40 Source: CBRE 66
Slide 68: Appendix 22 - Construction Costs
APPENDIX 22 - CONSTRUCTION COSTS General Market • London tender prices are forecast by EC Harris to rise by: ◦◦ 4.0% in 2014 ◦◦ 6.1% in 2015 ◦◦ 5.0% in 2016 Tender price indices 180 • Build cost inflation driven by the growing economy London TPI National TPI Forecast and an increase in construction
Slide 69: Profit on Cost of Developments
APPENDIX 23 - PROFIT ON COST OF DEVELOPMENTS White Collar Factory 73 Charlotte Street 40 Chancery Lane Turnmill Queens Completion Q3 2014 Q4 2014 Q4 2014 Q3 2015 Q3 2016 Commercial area (sq ft) 461,900 70,500 101,800 2,700 1,900 285,000 Residential area (sq ft) 40,300 - - 18,700 13,600 8,000 Est. fu
Slide 70: Impact of 2015/16 Projects
APPENDIX 24 - IMPACT OF 2015/16 PROJECTS • Two projects comprise the majority of the next potential Impact of two developments on ERV development phase: 80 Charlotte Street W1 and 30 55-65 North Wharf Road W2 Current rental income 25 Current reversion 35 Proforma ERV £m Development ERV Portfolio ERV
Slide 71: Potential Project Delivery
APPENDIX 25 - POTENTIAL PROJECT DELIVERY 800 Under construction 700 Potential starts Estimated completions (’000 sq ft) 600 500 400 Baker Street 300 W1 Turnmill 80 200 EC1 White Charlotte Collar Street 55-65 Stephen Factory W1 North 1 Oxford Street W1 Wharf Street 100 EC1 40 Road Monmouth W1 Chancer
Slide 72: Project Pipeline
APPENDIX 26 - PROJECT PIPELINE On-site 2015-6 Other consented projects1 0.6m + starts 0.6m + projects 0.4m + Appraisals 1.1m = Potential pipeline 2.7m sq ft Turnmill EC1 40 Chancery Lane WC2 Wedge House SE1 1 Oxford Street W1 ed d -si te -si te nt nte 1.2m sq ft 1.5m sq ft se se On On n n Co Co 2 2
Slide 73: Appendix 27 - Project Summary 2014-16
APPENDIX 27 - PROJECT SUMMARY 2014-16 Current Total Current net Pre scheme Proposed H2 2014 2015 2016+ capex to office Property income area area capex capex capex complete Delivery ERV £m pa ‘000 sq ft ‘000 sq ft £m £m £m £m date £psf On-site projects1 Turnmill EC1 - 41 70 4 - - 4 Q3 2014 55.00 40 C
Slide 74: Appendix 28 - Project Summary 2015+
APPENDIX 28 - PROJECT SUMMARY 2015+ Current Pre scheme Proposed Earliest Property net income area area possession Comment £m pa ‘000 sq ft ‘000 sq ft year Consented Wedge House SE1 0.2 39 80 2014 Rolling break from 2014. Offices 1 Oxford Street W1 - - 275 c2017 Option site. Offices, retail & theatre
Slide 75: Appendix 29 - Management Structure - Executive Team
APPENDIX 29 - 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 76: Disclaimer
DISCLAIMER This presentation has been prepared by Derwent London plc (the apparent. Past performance is not indicative of future results and “Company”). No representation or warranty (express or implied) of forward-looking statements are not guarantees of future performance. any nature is given nor