Derwent London Plc · LSE:DLN
Derwent London — FY2020 Earnings Presentation
98 slides from Derwent London's earnings presentation, March 2021
Slide 1: Annual Results 2020
Annual Results 2020
Slide 2: Contents
CONTENTS Presenters Contents Paul Williams Introduction and overview 01 Damian Wisniewski Results and financial review 12 Nigel George Property review 24 David Silverman Asset management and investment activity 30 Simon Silver Projects 37 Summary 50 Appendices 52 Disclaimer 96 Derwent London plc - A
Slide 3: Introduction and Overview
INTRODUCTION AND OVERVIEW PAUL WILLIAMS 1
Slide 4: 2020 Headlines
2020 HEADLINES • Results: • Total return -1.8% • EPRA earnings per share 99.2p (-3.8%) • EPRA NTA1 per share 3,812p (-3.7%) • Dividend per share 74.45p (+2.8%) • Good progress in the underlying business: • Reducing 2021 lease expiries • Completing first Net Zero Carbon (NZC) project • 410,000 sq ft
Slide 5: Our Response to the Pandemic
OUR RESPONSE TO THE PANDEMIC Occupiers Suppliers Communities Our people Service charge waivers Average payment term was Sponsorship and donations All employees below Director Rent deferrals and waivers 20 days including to the NHS level received full pay and £162m capital expenditure raised 179% to
Slide 6: The Pandemic's Impact on Central London Office Market
THE PANDEMIC’S IMPACT ON CENTRAL LONDON OFFICE MARKET • Most occupiers adopted a ‘wait-and-see’ approach CENTRAL LONDON OFFICE TAKE-UP AND AVAILABILITY Monthly take-up (million sq ft) Availability (million sq ft) 2.4 24 Take-up (monthly) Availability • Office property market was weak but the headlin
Slide 7: Property Recovery Will Take Time
PROPERTY RECOVERY WILL TAKE TIME • Vacancy expected to increase in 2021: Available space (million sq ft) CENTRAL LONDON OFFICE AVAILABILITY % 25 Tenant controlled % 100 • Location: City West End Secondhand % Docklands, Midtown & Southbank • West End – vacancy rate 5.8% 20 80 • City – vacancy rate 10
Slide 8: Drivers of London's Recovery
DRIVERS OF LONDON’S RECOVERY • Economy expected to recover this year and next • Vaccination programme will reduce concerns • London is a great global city with a history of adaptability • Large, diversified and relatively young talent pool • Significant occupier demand with 7.7m sq ft of active requ
Slide 9: What Our Occupiers Are Saying
WHAT OUR OCCUPIERS ARE SAYING1 ‘New agile working models are not the same as working from home’ What are they missing? • Collaboration, social interaction and employee wellbeing • Productivity and mentoring have become increasingly missed since summer 2020 survey Brunel Building W2 What are their in
Slide 10: How Are We Responding?
& E N H AN C I N G O U R P R OD U C T & O F F ER CI N G O& UREN PHRAN O DCUIC NTG&OUORF FPRO ER D U C T & O F F ER HOW ARE WE RESPONDING? iving the right initiatives to make Derwent London a more valuable overall offer for the customer, which will set iatives art from Our makeDriving toothers. Derwe
Slide 11: Progress on Our Net Zero Carbon Pathway
PROGRESS ON OUR NET ZERO CARBON PATHWAY • Committed to becoming a Net Zero Carbon (NZC) business by 2030. In July 2020 we published our net zero carbon pathway, the first UK REIT to do so What we did in 2020 • All existing and future projects will be NZC buildings: • Delivered our first NZC developm
Slide 12: Market Dynamics and Outlook
MARKET DYNAMICS AND OUTLOOK • Continued flight to quality will widen the two-tier market: Modern, adaptable buildings will continue to appeal to large occupiers Older unadaptable space and small office suites may prove vulnerable • Economic recovery is key • Our portfolio of adaptable buildings and
Slide 13: Derwent London Is Well Placed
DERWENT LONDON IS WELL PLACED • A portfolio of high quality offices • Well located properties close to transport hubs • Long-standing customer relationships • Innovative design-led developments: • Extensive pipeline, 43% of portfolio • Longer-term growth from: • Improving economy • Development compl
Slide 14: Results and Financial Review
RESULTS AND FINANCIAL REVIEW DAMIAN WISNIEWSKI 12
Slide 15: Financial Highlights
FINANCIAL HIGHLIGHTS EPRA NTA per share1, 2 EPRA earnings per share2 Cash and undrawn facilities 3,812p 99.19p £476m 2019: 3,957p 2019: 103.09p Jun 2020: £502m -3.7% -3.8% Dec 2019: £511m Gross rental income Net rental income Interest cover ratio (ICR) £202.9m £174.3m 446% 2019: £191.7m 2019: £178.0
Slide 16: EPRA NTA Movement
EPRA NTA MOVEMENT Pence EPRA NTA PER SHARE 4,000 Investment property disposal £1.7m 1p Trading property disposal1 £4.0m 4p 3,957 Total EPRA profit on disposal £5.7m 5p 3,900 99 (73) 0 -3.7% 5 (176) 3,812 3,800 Investment properties (£196.1m) (175p) Trading properties (£1.5m) (1p) Owner-occupied prop
Slide 17: EPRA Earnings
EPRA EARNINGS1 £m EPRA EARNINGS 250 Slide Slide (£78m) 16 18 5.3 200 202.9 (14.2) (14.4) (37.8) 150 (30.1) 0.6 -3.6% (1.3) 111.0 99.19p 100 per share 50 0 Gross Waivers Premiums Other Admin Net Tax credit/ Other EPRA rental & & other property expenses finance (charge) earnings income impairments inc
Slide 18: Gross Rental Income
GROSS RENTAL INCOME £m MOVEMENT IN GROSS RENTAL INCOME 250 3.6 +5.8% 20.6 200 (6.0) (7.0) 202.9 191.7 80 Charlotte Street W1 £12.2m 40 Chancery Lane WC2 (£4.5m) 150 Brunel Building W2 £8.4m The Buckley Building EC1 (£3.0m) Total £20.6m Blue Star House SW9 £0.7m Other (£0.2m) Total (£7.0m) 100 50 0 3
Slide 19: Rent Collection
RENT COLLECTION • 92% of 2020 rental income (i.e. Dec 2019 to Sep 2020 quarter days) received plus 5% due on payment plans1 • 91% of Dec 2020 quarter day rents received (i.e. quarter ending Mar 2021) plus 5% due on payment plans1 • £1.8m of rent deposits drawn with £18.8m remaining • c.80% of rent-f
Slide 20: Impact of Waivers and Impairments
IMPACT OF WAIVERS AND IMPAIRMENTS • £4.4m impact on gross rental income: 2020 2019 Variance • £0.9m reduction as £4.7m of rent waivers spread £m £m £m over remaining lease terms Gross rental income 202.9 191.7 11.2 • £3.5m due to 2 month Covid-19 related delay at Property costs (14.4) (13.7) (0.7) 8
Slide 21: Cash Flow Movement
CASH FLOW MOVEMENT £m MOVEMENT IN NET FACILITIES DRAWN 200 164.6 (19.1) 150 Acquisitions (£43.8m) (35.5) Capex (£174.6m) Total (£218.4m) 100 (24.6) Investment properties £125.6m Trading properties £31.7m Total £157.3m 50 (81.8) Cash from 0 operations Net facilities drawn Opening (£930.0m) £85.4m (60
Slide 22: Committed Capital Expenditure
COMMITTED CAPITAL EXPENDITURE £m 0 50 100 150 200 250 300 2020 165 10 Actual spend Forecast spend 2021 74 32 16 49 13 Soho Place W1 The Featherstone Building EC1 19-35 Baker Street W1 2022 78 5 43 16 4 Other Capitalised interest 2023+ 206 5 15 • 19-35 Baker Street W1 now committed with capital expen
Slide 23: Proforma Impact of Major Projects, Acquisitions and Disposals
PROFORMA IMPACT OF MAJOR PROJECTS, ACQUISITIONS AND DISPOSALS • Assumes no further lettings other than those already contracted • Shows impact of estimated remaining capital expenditure on completed, on-site and committed projects PROFORMA IMPACT OF COMPLETED PROFORMA IMPACT OF ON-SITE PROJECTS AND
Slide 24: Financing Update
FINANCING UPDATE Revolving credit facilities (RCF) refinanced or extended Unutilised facilities • A new 5-year £100m unsecured RCF arranged with Wells Fargo; and cash replaces £75m RCF with the same lender • Extended the Group’s £450m unsecured revolving bank facility £476m by 12 months to October 2
Slide 25: Debt Summary
DEBT SUMMARY Dec 2020 Dec 2019 MATURITY PROFILE OF DEBT FACILITIES £m 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 Drawn facilities £1,041m £985m 2021 Unutilised facilities £425m £456m 2022 28 Total facilities £1,466m £1,441m 2023 2024 83 2025 125 175 425 Unutilised facilities and ca
Slide 26: Property Review
PROPERTY REVIEW NIGEL GEORGE Derwent London plc - Annual Results 2020 24
Slide 27: Valuation
VALUATION Investment portfolio valued at £5.4bn On-site developments • Underlying valuation -3.0% 2019: 3.9%: • Valued at £0.85bn, uplift of 5.3%: • West End -3.3% 2019: 4.8% • 80 Charlotte Street W1 (completed) 6.1% • City Borders -2.1% 2019: 2.9% • Soho Place W1 (87% pre-let) 4.3% • The Feathersto
Slide 28: Property Return
PROPERTY RETURN 2020 total property returns Total property return (%) TOTAL PROPERTY RETURN PERFORMANCE 12 Derwent London MSCI IPD Central London Offices 1 MSCI IPD UK All Property1 • Derwent London +0.3% 10 10.2 • MSCI IPD Central London Offices1 -2.4% • MSCI IPD UK All Property1 -2.3% 8 8.0 7.4 7.
Slide 29: Rental Value and Yields
RENTAL VALUE AND YIELDS Rental values Half-yearly rental value growth (%) RENTAL VALUE GROWTH 12 • Rental values declined 2.8% in 2020: 9 • Offices: 91% of portfolio1 -1.2% 6 4.8 5.2 6.6 4.1 3.8 4.2 4.1 3 1.0 1.1 0.6 • Retail & Hospitality: 9% of portfolio -18.3% 1 2.6 2.8 2.1 2.8 2.6 3.0 0.5 0.6 0.
Slide 30: Reversion Activity 2020
REVERSION ACTIVITY 2020 • Net rental income increased by £20.1m (11.9%), to £189.2m in 2020: REVERSION ACTIVITY £12.4m/5.3% increase • £30.0m of contracted uplifts now in net - 25.1 (0.6) (7.5) (5.5) 0.9 rents: £m 300 234.8 • Angel Building EC1 +£9.0m 6.0 0.0 247.2 (30.0) 20.2 (0.8) (3.1) 250 • Brun
Slide 31: Build-up of Portfolio ERV
BUILD-UP OF PORTFOLIO ERV • Portfolio reversion of £102.0m1: £m BUILD-UP OF ERV2 • £58.0m (57%) contracted, including: 350 • 80 Charlotte Street W1 £20.2m 300 5.0 2.7 3.1 18.4 303.4 291.2 (6.2) 16.2 • Brunel Building W2 £7.7m 250 17.0 58.0 • Horseferry House SW1 £5.2m £33.2m 200 on-site 189.2 develo
Slide 32: Asset Management and Investment Activity
ASSET MANAGEMENT AND INVESTMENT ACTIVITY DAVID SILVERMAN 30
Slide 33: Strong Customer Engagement
STRONG CUSTOMER ENGAGEMENT OPQRSOPTUV • Asset Management and Property Management is a keyWXRVÿZVÿZ[ÿSZVTPÿ\ point of contact with our customers ÿ )ÿ ÿ ÿ ÿÿÿ ÿ • Focus on Health & Safety: • Covid-19 procedures • Reducing service charges: • 25% reduction for 6 months • Additional cost savings ÿÿÿÿ ÿÿ!
Slide 34: 2021 Income Expiry De-risked
2021 INCOME EXPIRY DE-RISKED • Our potential lease expiry at 31 Dec 2019: LEASE EXPIRY AND BREAK ANALYSIS % £8.7m £6.4m £14.6m £10.4m £12.5m • 10% (£16.1m) in 2020 100 11 8 10 10 13 90 • 26% (£44.5m) in 2021 14 7 80 26 22 35 70 • For the 2020 breaks and expiries, tenant retention remains strong: 60
Slide 35: 2021 Expiry in Detail
2021 EXPIRY IN DETAIL EXPIRIES AND BREAKS AS A PERCENTAGE OF PORTFOLIO INCOME1 2020 2021 2022 2023 2024 2025 2026+ Total Rental income £m - 33.3 20.4 18.3 16.7 20.7 79.8 189.2 Expiries - 9 4 3 2 10 35 63 Rolling breaks - 4 1 0 0 0 1 6 Single breaks - 4 6 6 7 1 7 31 Rental income 2020 - 17 11 9 9 11
Slide 36: Active Year for Asset Management
ACTIVE YEAR FOR ASSET MANAGEMENT Activity covered c.20% of the portfolio income • During the year 724,300 sq ft of rent reviews, renewals and regears completed: • Income up 7.6%, from £36.1m to £38.9m pa • 4.4% below Dec 2019 ERV 2020 lettings totalled £6.7m on 135,400 sq ft • Overall 0.8% below Dec
Slide 37: Investment Activity 2020
INVESTMENT ACTIVITY 2020 • Acquisition of Blue Star House, Brixton SW9 for £38.1m before costs • Three property disposals announced during the year: Gross Gross Net yield to Area proceeds proceeds purchaser Rent Date sq ft1 £m £ psf % £m1 2020 completion 40 Chancery Lane WC2 Q1 103,700 121.3 1,170 4
Slide 38: Sale of First Generation Scheme
SALE OF FIRST GENERATION SCHEME Johnson Building EC1 • Exchanged in Dec 2020 and completed Jan 2021: • Headline price £170m • Net initial yield 4.1% • 40% of income expiring 2021, reducing yield to 2.5% • First generation Derwent London scheme • Recycling capital Johnson Building EC1 Derwent London
Slide 39: Projects
PROJECTS SIMON SILVER 37
Slide 40: Projects Overview
PROJECTS OVERVIEW • Good progress across our projects in 2020 • 80 Charlotte Street W1 completed in June – 92% let or sold • 7% of our portfolio on site at two major schemes, both on target to complete as planned in H1 2022: • Soho Place W1 – 285,000 sq ft – 87% pre-let or pre-sold • The Featherston
Slide 41: Soho Place W1
SOHO PLACE W1 • 285,000 sq ft office and retail scheme • 87% pre-let/pre-sold • 36,000 sq ft retail available • ERV £20.5m with office ERV £92.50 psf • Completion H1 2022 • Capex to complete £152m Derwent London plc - Annual Results 2020 • Appendices 38 and 40 39
Slide 42: Soho Place W1
Soho Place W1 40
Slide 43: 2 & 4 Soho Place W1
2 & 4 Soho Place W1 41
Slide 44: The Featherstone Building EC1
THE FEATHERSTONE BUILDING EC1 • 125,000 sq ft office and retail scheme • ERV £8.1m with office ERV £70 psf • Completion H1 2022 • Capex to complete £37m Derwent London plc - Annual Results 2020 • Appendices 38 and 40 42
Slide 45: The Featherstone Building EC1
The Featherstone Building EC1 43
Slide 46: 19-35 Baker Street W1 - Our Next Major Development
19-35 BAKER STREET W1 - OUR NEXT MAJOR DEVELOPMENT • 297,000 sq ft consented scheme: • 217,000 sq ft offices • 52,000 sq ft residential • 28,000 sq ft retail • +108% uplift in existing floorspace • On site Oct 2021 • Completion H1 2025 Derwent London plc - Annual Results 2020 • Appendices 38 and 40
Slide 47: 19-35 Baker Street W1
19-35 Baker Street W1 45
Slide 48: 19-35 Baker Street W1
Derwent London Internal Presentation 3rd February 2021 19-35 BAKER STREET W1 • ERV £18.4m • Office ERV £90 psf • Total capex £265m 1 2 4 4 nt OH KEY 3 sidential 1. Office sidential Plant 2. Market residential 3. Intermediate residential ate Residential 4. Retail nt Derwent London plc - Annual Result
Slide 49: Network Building W1 - Planning Application Submitted
NETWORK BUILDING W1 - PLANNING APPLICATION SUBMITTED • Two planning options: • Life Sciences and groundfloor retail (100,000 sq ft) • Offices and groundfloor retail (130,000 sq ft) • Potential 86% uplift in existing floorspace • Planning application submitted Nov 2020 with determination due May 2021
Slide 50: Future Pipeline - Blue Star House SW9
FUTURE PIPELINE - BLUE STAR HOUSE SW9 • Existing: 54,000 sq ft • Proposed: 110,000 sq ft: • Doubling the existing floorspace • Replacing a tired 1960s building • Architects: Carmody Groarke Blue Star House Derwent London plc - Annual Results 2020 • Appendix 39 48 40
Slide 51: Future Pipeline - The White Chapel Building E1
FUTURE PIPELINE - THE WHITE CHAPEL BUILDING E1 • Existing: 273,000 sq ft • Potential to increase floorspace by c.150,000 sq ft: • Additional 8 storeys • Full remodelling and refurbishment of existing building • Architects: Fletcher Priest Derwent London plc - Annual Results 2020 49 17
Slide 52: Summary
SUMMARY PAUL WILLIAMS 50
Slide 53: Summary
SUMMARY OUR • Pathway and vaccination programme will speed recovery • Economic effects of the pandemic will take some time to resolve MARKET • Average rents expected to move 0 to -5%, and yields to remain firm in 2021 • The pace of recovery is the key driver to occupier demand • Creating top tier su
Slide 54: Appendices
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Slide 55: Appendices
APPENDICES 01. Headline numbers 54 22. Timing of the reversion 75 02. Group balance sheet 55 23. Portfolio summary 76 03. EPRA net asset value metrics 56 24. Rent and tenant banding 77 04. Group income statement 57 25. Major tenants 78 05. IFRS loss and EPRA earnings 58 26. Derwent London rent profi
Slide 56: Appendix 1 - Headline Numbers
APPENDIX 1 - HEADLINE NUMBERS Dec 2020 Dec 2019 % change Net asset value (NAV) £4,315.1m £4,476.9m (3.6) EPRA net tangible assets per share 1,2 3,812p 3,957p (3.7) EPRA net disposal value per share1,2 3,682p 3,847p (4.3) Total return (1.8%) 6.6% n/a Gross rental income £202.9m £191.7m 5.8 Net rental
Slide 57: Appendix 2 - Group Balance Sheet
APPENDIX 2 - GROUP BALANCE SHEET Dec 2020 Dec 2019 £m £m Investment property 5,029.1 5,174.3 Owner-occupied property 45.6 45.3 Investment in joint ventures 0.9 1.3 Other non-current assets 151.0 139.8 5,226.6 5,360.7 Non-current assets held for sale 165.0 118.6 Other current assets and liabilities (
Slide 58: Appendix 3 - EPRA Net Asset Value Metrics
APPENDIX 3 - EPRA NET ASSET VALUE METRICS Dec 2020 Dec 2019 EPRA NTA1 EPRA NDV2 EPRA NRV3 EPRA NTA1 EPRA NDV2 EPRA NRV3 £m £m £m £m £m £m Net assets attributable to equity shareholders 4,263.2 4,263.2 4,263.2 4,421.2 4,421.2 4,421.2 Revaluation of trading property 1.4 1.4 1.4 2.3 2.3 2.3 Deferred ta
Slide 59: Appendix 4 - Group Income Statement
APPENDIX 4 - GROUP INCOME STATEMENT Year ended Year ended Dec 2020 Dec 2019 £m £m Gross property income 204.7 192.7 Profit on disposal of trading property 5.2 - Write-down of trading property (1.8) - Other income 3.5 3.6 Waivers and impairment (14.2) - Other property outgoings (14.4) (13.7) Net prop
Slide 60: Appendix 5 - IFRS Loss and EPRA Earnings
APPENDIX 5 - IFRS LOSS AND EPRA EARNINGS Year ended Year ended Dec 2020 Dec 2019 £m £m IFRS (loss)/profit for the year attributable to shareholders (77.6) 283.4 Revaluation deficit/(surplus) 196.1 (156.4) Profit on disposal of investment property (1.7) (13.8) Profit on disposal of share of associate
Slide 61: Appendix 6 - Explanation of EPRA Adjustments
APPENDIX 6 - EXPLANATION OF EPRA ADJUSTMENTS Adjustments 2020 2019 2020 EPRA EPRA A B C IFRS basis basis £m £m £m £m £m £m Net property and other income 183.0 (5.2) 1.8 179.6 182.6 Administrative expenses (37.8) (37.8) (37.0) Revaluation deficit (196.1) 196.1 - - Profit on disposal of investment pro
Slide 62: Appendix 7 - Cash Flow
APPENDIX 7 - CASH FLOW Year ended Year ended Dec 2020 Dec 2019 £m £m Property income 164.6 171.5 Property expenses (19.1) (18.6) Other income 3.5 3.6 Administrative expenses (35.5) (34.3) Finance costs (28.1) (21.6) Tax paid in respect of operating activities - (3.5) Net cash from operating activiti
Slide 63: Appendix 8 - Rent Collection
APPENDIX 8 - RENT COLLECTION1 • Dec 2019 to Sep 2020 quarters represent income recognised in 2020 Dec 2019 quarter Mar 2020 quarter Jun 2020 quarter Sep 2020 quarter Retail/ Retail/ Retail/ Retail/ Office hospitality Total Office hospitality Total Office hospitality Total Office hospitality Total %
Slide 64: Appendix 9 - Reconciliation of Like-for-like Income to IFRS Income
APPENDIX 9 - RECONCILIATION OF LIKE-FOR-LIKE INCOME TO IFRS INCOME Like-for-like Development Acquisitions portfolio property & disposals Total £m £m £m £m 2020 Gross rental income 172.4 28.8 1.7 202.9 Other property expenditure (12.3) (1.7) (0.4) (14.4) Write-off/impairment of receivables (9.5) (0.4
Slide 65: Appendix 10 - Debt Facilities
APPENDIX 10 - DEBT FACILITIES Drawn Undrawn Total Maturity £m £m £m 6.5% secured bonds 175.0 - 175.0 March 2026 3.99% secured loan 83.0 - 83.0 October 2024 1.5% unsecured convertible bonds 175.0 - 175.0 June 2025 2.68% unsecured private placement notes 55.0 - 55.0 January 2026 3.46% unsecured privat
Slide 66: Appendix 11 - Net Debt
APPENDIX 11 - NET DEBT Dec 2020 Dec 2019 £m £m Borrowings 1,033.2 976.6 Acquired fair value of secured bonds less amortisation (9.3) (10.6) Equity component of convertible bonds 7.7 7.7 Unwinding of discount of convertible bonds (1.9) (0.7) Unamortised issue and arrangement costs 11.3 11.5 Facilitie
Slide 67: Appendix 12 - Fixed Rates and Hedging
APPENDIX 12 - FIXED RATES AND HEDGING Dec 2020 Dec 2019 Proportion of drawn facilities at fixed rates or hedged 85% 93% Weighted average duration of swaps1 - 0.2 years Mark-to-market cost of swaps and forward-start swaps £5.6m £3.7m Weighted average duration of fixed rate instruments 7.2 years 8.2 y
Slide 68: Appendix 13 - Valuation Performance by Village
APPENDIX 13 - VALUATION PERFORMANCE BY VILLAGE Valuation Valuation Weighting movement Dec 2020 Dec 2020 20201 £m % % West End Central Fitzrovia2 1,674.9 32 (5.7) Victoria 467.9 8 (1.3) Paddington 360.4 6 5.7 Soho/Covent Garden 261.8 5 3.9 Baker Street/Marylebone 151.5 3 (7.2) Mayfair 97.1 2 0.0 3,01
Slide 69: Appendix 14 - Rental Value Growth and Average Rents
APPENDIX 14 - RENTAL VALUE GROWTH AND AVERAGE RENTS RENTAL VALUE GROWTH1 2019 H1 2020 H2 2020 2020 % % % % West End 0.4 (0.5) (2.8) (3.3) City Borders 2.7 (0.8) (1.0) (1.8) Central London 1.4 (0.6) (2.1) (2.7) Provincial 0.0 (3.0) (4.8) (7.8) Underlying 1.4 (0.7) (2.1) (2.8) AVERAGE RENTS - CENTRAL
Slide 70: Appendix 15 - Valuation Yields
APPENDIX 15 - VALUATION YIELDS YIELD PROFILE1 EPRA INITIAL YIELDS Yield (%) Net initial ‘Topped-up’ 8 Pre-EPRA EPRA yield initial yield % % 7 West End 3.3 4.7 6 City Borders 4.1 4.8 Central London 3.6 4.7 5 Provincial 8.6 9.2 EPRA portfolio 3.7 4.8 4 Reversionary yield 3 True equivalent yield Initia
Slide 71: Appendix 16 - Context to Yield Movement
APPENDIX 16 - CONTEXT TO YIELD MOVEMENT • UK 10-year Gilt yield declined from 0.83% to VALUATION YIELDS1 0.24% during the year with the latter up from Yield % or Gap between Derwent London True Equivalent Yield (TEY) and 10-year Gilt 0.12% at the half year 9 Derwent London TEY 10-year Gilt Derwent L
Slide 72: Appendix 17 - Evolution of Portfolio ERV
APPENDIX 17 - EVOLUTION OF PORTFOLIO ERV £m £m 400 ERV to capture 350 Rent reviews and lease renewals Contractual pre-lets Under refurbishment/development Contractual rental uplifts (excl. pre-lets) Available to occupy 350 300 Contractual rent Contractual rental uplifts (including pre-lets) £291.2m
Slide 73: Appendix 18 - Portfolio Statistics by Village
APPENDIX 18 - PORTFOLIO STATISTICS BY VILLAGE Net Vacant Floor Vacant contracted Average space Estimated area1 floor area rental rental rental Lease Total rental Valuation Weighting ‘000 ‘000 income income value reversion5 reversion value £m % sq ft sq ft £m pa £ psf £m pa £m pa £m pa £m pa West End
Slide 74: Appendix 19 - Build-up of Portfolio ERV
APPENDIX 19 - BUILD-UP OF PORTFOLIO ERV Rent uplift pa Rent pa £m £m £m Contracted rental income, net of ground rents 189.2 Contractual rental uplifts 80 Charlotte Street W1 20.2 Brunel Building W2 7.7 Horseferry House SW1 5.2 Tea Building E1 3.4 60 Whitfield Street W1 2.7 White Collar Factory EC1 2
Slide 75: Appendix 20 - Available Space and Projects
APPENDIX 20 - AVAILABLE SPACE AND PROJECTS Vacant Pre-let Total Gross Net Pre-let area area area vacant Ground vacant net rent Total net ‘000 ‘000 ‘000 ERV rent ERV ERV ERV sq ft sq ft sq ft £m pa £m pa £m pa £m pa £m pa Comment Available to occupy The White Chapel Building E1 89 - 89 1.5 - 1.5 - 1.
Slide 76: Appendix 21 - Derwent London Lettings and Vacancy Rate
APPENDIX 21 - DERWENT LONDON LETTINGS AND VACANCY RATE LETTINGS 2020 EPRA VACANCY RATES Rental income (£m pa) Vacancy rate (%) 45 Non pre-lets 9 CBRE Central London (by floorspace) Pre-lets Derwent London (by floorspace) 40 8 Average Derwent London (by rental value) 35 7 30 6 25 5 20 4 15 3 10 2 5 1
Slide 77: Appendix 22 - Timing of the Reversion
13.1 25 APPENDIX 22 - TIMING OF THE REVERSION 20 15 15.3 13.5 0.1 3.8 • £75.0m of the reversion contracted: • £3.1m 10 of the reversion from 9.1 reviews and10.0 expiries 8.3 • Contracted uplifts £58.0m 5 1.8 • Pre-let developments £17.0m 0 2021 2022 2023 2024 2025 >2025 REVIEWS AND EXPIRIES £m CONTR
Slide 78: Appendix 23 - Portfolio Summary
APPENDIX 23 - PORTFOLIO SUMMARY Floor area: 1.26m sq ft Rental income: £42.1m WAULT: 5.8 yrs Rent4: £48.14 ERV: £50.37 Future appraisal Potential projects 23% Floor area: 0.42m sq ft Floor area: 1.91m sq ft Rental income: £12.6m Rental income: £62.5m WAULT: 1.5 yrs WAULT: 4.4 yrs Rent4: £31.17 Rent4
Slide 79: Appendix 24 - Rent and Tenant Banding
APPENDIX 24 - RENT AND TENANT BANDING CENTRAL LONDON ‘TOPPED-UP’ PROFILE OF TENANTS’ OFFICE RENT BANDING1 BUSINESS SECTOR2 £0-£30 ps f Other Fintech 7% 4% Financial 3% £30-£40 ps f 5% 5% £70+ ps f Flexible office Media 24% 26% providers 6% £40-£50 ps f Government & public admin 17% 6% Technology 7%
Slide 80: Appendix 25 - Major Tenants
APPENDIX 25 - MAJOR TENANTS ‘Topped-up’ income % Existing Pre-let 01 Expedia 7.0 - 02 Burberry 5.5 - 03 Boston Consulting Group 5.2 - 04 G-Research 0.4 3.6 05 Government 4.0 - 06 Arup 3.7 - 07 Apollo - 3.0 08 The Office Group 2.7 - 09 Sony Pictures 1.8 - 10 FremantleMedia Group 1.7 - 11 Publicis Gro
Slide 81: Appendix 26 - Rent Profile and Portfolio Breakdown
APPENDIX 26 - DERWENT LONDON RENT PROFILE AND PORTFOLIO BREAKDOWN CENTRAL LONDON OFFICE RENT PROFILE PORTFOLIO BREAKDOWN NO of Weighting £ psf Valuation properties % 65 > £200m 7 44 Average office rent £100m - £200m 10 26 Average topped-up office rent 60 £50m - £100m 13 17 Average office ERV1 < £50m
Slide 82: Appendix 27 - Lease Expiry Profile and Lease Length
APPENDIX 27 - LEASE EXPIRY PROFILE AND LEASE LENGTH West City EXPIRIES AND BREAKS AS A PERCENTAGE OF PORTFOLIO INCOME1 End Borders Provincial 2021 2022 2023 2024 2025 Total Expiries 5 3 1 9 4 3 2 10 28 Rolling breaks 3 1 0 4 1 0 0 0 5 Single breaks 1 3 0 4 6 6 7 1 24 9 7 1 17 11 9 9 11 57 PROFILE OF
Slide 83: Appendix 28 - Central London Office Demand
APPENDIX 28 - CENTRAL LONDON OFFICE DEMAND Market statistics Take-up (million sq ft) OFFICE TAKE-UP • Central London office take-up totalled 5.6m sq ft in 2020: 20 Central London 18 • 55% below the Long Term Average (LTA) 16 • 57% lower than 2019 14 Annual average 12 • Two thirds of take-up occurred
Slide 84: Appendix 29 - Central London Office Vacancy Rates
APPENDIX 29 - CENTRAL LONDON OFFICE VACANCY RATES Vacancy rate (%) 16 West End City 14 Central London West End average 12 City average 10 8 6 4 2 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Source: CBRE Derwent London plc - Annual Results 2020 82
Slide 85: Appendix 30 - The Rise of Secondhand Space
APPENDIX 30 - THE RISE OF SECONDHAND SPACE Availability (million sq ft) 25 Secondhand New completed New under construction 20 15 Average 10 5 0 Q4 2010 Q2 2011 Q4 2011 Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 2018 Q4 2018 Q2 2019 Q4 2019 Q2 2
Slide 86: Appendix 31 - Central London Office Development Pipeline
APPENDIX 31 - CENTRAL LONDON OFFICE DEVELOPMENT PIPELINE Existing supply OFFICE DEVELOPMENT PIPELINE • Central London vacancy rate of 8.1% at year end: Floor area (million sq ft) Vacancy rate (%) 12 Central London 12 Completed Completed average • 3.9% at the start of the year, 5.2% at the half year
Slide 87: Appendix 32 - Central London Office Construction Starts
APPENDIX 32 - CENTRAL LONDON OFFICE CONSTRUCTION STARTS Construction starts (million sq ft) 3.0 2.5 2.0 4-quarter rolling average 1.5 1.0 0.5 0.0 2020 Q2 2010 Q4 2011 Q2 2011 Q4 2012 Q2 2012 Q4 2013 Q2 2013 Q4 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2017 Q2 2017 Q4 2018 Q2 2018 Q4 2019 Q2 20
Slide 88: Appendix 33 - Central London Office Rental Growth
APPENDIX 33 - CENTRAL LONDON OFFICE RENTAL GROWTH • CBRE reported prime office rental growth of -7.6% in 2020: Rental growth (% pa) CENTRAL LONDON OFFICE RENTAL GROWTH 40 West End • West End: -9.7% (+4.2% in 2019) City 30 Central London • City: -4.4% (+3.6% in 2019) 20 10 • Prime rents now stand at:
Slide 89: Appendix 34 - Central London Office Investment Market
APPENDIX 34 - CENTRAL LONDON OFFICE INVESTMENT MARKET 2020 activity Investment transactions (£bn) CENTRAL LONDON OFFICE INVESTMENT 22 • £7.6bn of central London transactions (CBRE): 20 • 33% lower than 2019 and 37% below the LTA 18 16 • 57% of transactions in the final quarter 14 Average 12 • 33% of
Slide 90: Appendix 35 - Central London Office Yields
3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 Q2 2004 7.0 Q4 2004 Source: CBRE Q2 2005 Q4 2005 Q2 2006 Prime office yield (%) Derwent London plc - Annual Results 2020 Q4 2006 Q2 2007 Q4 2007 Q2 2008 Q4 2008 Q2 2009 Q4 2009 Q2 2010 Q4 2010 Q2 2011 Q4 2011 Q2 2012 APPENDIX 35 - CENTRAL LONDON OFFICE YIELDS Q4 2012
Slide 91: Property Yields Remain Attractive
APPENDIX 36 - PROPERTY YIELDS REMAIN ATTRACTIVE • London office yields remain attractive compared to other global cities Yield (%) 6.0 Cyclical low 5.5 Current yield 5.0 4.5 4.0 3.5 3.0 2.5 2.0 Madrid Milan Barcelona Amsterdam Dublin Berlin West End Frankfurt Paris City Rome Source: CBRE Derwent Lon
Slide 92: Appendix 37 - Major On-site Refurbishments
APPENDIX 37 - MAJOR ON-SITE REFURBISHMENTS Proposed Reception view - Option 4 6-8 Greencoat Place SW1 Francis House SW1 Design proposals C1 Rev A RCO 03/02/21 Francis House 28 • 32,000 sq ft office refurbishment • 38,000 sq ft office refurbishment • ERV of £2.1m or c.£70 psf • ERV of £2.5m or £65 ps
Slide 93: Appendix 38 - Project Summary: Current Projects
APPENDIX 38 - PROJECT SUMMARY: CURRENT PROJECTS Current Pre Total Current net scheme Proposed 2021 2022 2023+ capex to office income area area capex capex capex complete Delivery c.ERV Property £m pa ‘000 sq ft ‘000 sq ft £m £m £m £m date psf On-site projects Soho Place W11 - 107 285 74 78 - 152 H1
Slide 94: Appendix 39 - Project Summary: Future Projects
APPENDIX 39 - PROJECT SUMMARY: FUTURE PROJECTS Current Pre- net scheme Proposed Earliest income area area possession Property £m pa ‘000 sq ft ‘000 sq ft year Comment Consented Holden House W1 4.4 90 150 2025 4.4 90 150 Under appraisal 1 Angel Square EC1 5.0 126 140 2021 Refurbishment Network Buildi
Slide 95: Appendix 40 - On-site Developments: Profit on Cost
APPENDIX 40 - ON-SITE DEVELOPMENTS: PROFIT ON COST 19-35 Baker Street W1 le e- d t/ Summary £m pr sol % e- 87 pr End value 1,153 Less: Total cost1 993 Project surplus 160 Less: Booked to Dec 20 29 Surplus to come 131 Profit on total cost 16% Profit to come on total cost 13% Yield on cost 5.7% Comple
Slide 96: Appendix 41 - Portfolio Map
Camden Road APPENDIX 41 - PORTFOLIO MAP Essex Road Lond Field Camden Town Primrose Hill Carnegie St Islington TEC Wharfdale Rd Angel H BEL Kings Cross T Alban Regent’s Park y St St Pancras Hoxton International Th am es lin k Euston Old Street Up pe rW ob Old Street Clerkenwell urn Pl Shoreditch Grea
Slide 97: Appendix 42 - Executive Committee and Senior Management
APPENDIX 42 - EXECUTIVE COMMITTEE AND SENIOR MANAGEMENT Executive Committee Senior Management Paul Williams Chief Executive Vasiliki Arvaniti Head of Asset Management Damian Wisniewski Chief Financial Officer Lesley Bufton Head of Property Marketing Nigel George Executive Director Matt Cook Head of
Slide 98: Disclaimer
DISCLAIMER This presentation has been prepared by Derwent London plc (the apparent. Past performance is not indicative of future results “Company”). No representation or warranty (express or implied) of and forward-looking statements are not guarantees of future any nature is given nor is any respon