Land Securities Group PLC · LSE:LAND
Land Securities — Landsec — FY2021 Earnings Presentation
41 slides from Land Securities's earnings presentation, May 18, 2021
Slide 1: Annual results
Annual results 18 May 2021
Slide 2: Agenda
Landsec — Annual results 2021 2 Agenda Overview Mark Allan Financial update Martin Greenslade Operational update Mark Allan Outlook Mark Allan Q&A
Slide 3: Key themes
Landsec — Annual results 2021 3 Ensuring the business Poised for recovery emerges from the with a strategy that pandemic in as strong positions the business a position as possible for long-term growth Key themes Further progress on Central London office Accelerated opportunity our 2030 net zero carb
Slide 4: Emerging from the pandemic as strong as possible
Landsec — Annual results 2021 4 Emerging from the pandemic as strong as possible Safety was our top priority throughout Supporting our: Working collaboratively Maintaining financial with our partners strength and stability — Minimised impact of Covid-19 — Strong balance sheet in our assets and our p
Slide 5: Landsec is poised for recovery with a strategy for long-term growth
Landsec — Annual results 2021 5 Landsec is poised for recovery with a strategy that will position the business for long-term growth OPTIMISE REIMAGINE GROW REALISE our Central London our Regional retail through Urban capital from portfolio portfolio opportunities Subscale sectors White Rose, Leeds
Slide 6: Culture is as important as strategy
Landsec — Annual results 2021 6 Culture is as important as strategy — Empowerment, accountability, agility and pace — Existing capability needs augmenting in certain areas — Organisational changes made in Q4 2020, more focus from June with return to the workplace 80-100 Victoria Street, SW1
Slide 7: Our markets – London office remains resilient
Landsec — Annual results 2021 7 Our markets – London office remains resilient London office market availability – grade-A vs second hand space Proportion of total 80% 77% Occupational market – bifurcation 70% 60% — Take-up in last twelve months lowest for 30 years 50% 50% but early signs of demand r
Slide 8: Our markets – potential for a strong consumer-led recovery
Landsec — Annual results 2021 8 Our markets – potential for a strong consumer-led recovery Household savings Savings ratio % First lockdown — Covid-19 has had a significant impact 27.5 implemented on retail, leisure and hotels 25.0 — Sales(1) -58% 22.5 — Footfall(1) -62% 20.0 — Rent collection 85% 1
Slide 9: Covid-19 has accelerated structural retail trends
Landsec — Annual results 2021 9 Covid-19 has accelerated structural retail trends but also brought forward the opportunity for a “reset” Online sales as a share of Total Retail Sales % 35 — Online now the primary growth channel 30 CAGR 25 2008 – 2020 13% p.a. 20 — Physical retail needs to evolve to
Slide 10: Further progress on our 2030 net zero carbon strategy
Landsec — Annual results 2021 10 Further progress on our 2030 net zero carbon strategy — 2030 net zero carbon target established in 2019 — 55% reduction in carbon emissions (tCO2e) compared Reduce operational energy use with 2013/14 baseline — 43% reduction in energy intensity (kWh/m2) compared Inve
Slide 11: Financial update
Financial update
Slide 12: Financial summary
Landsec — Annual results 2021 12 Financial summary 31 March 2020 31 March 2021 % change £414m Revenue profit(1) £251m -39.4% £(1,179)m Valuation deficit(1) £(1,646)m -13.7%(2) £(837)m Loss before tax £(1,393)m 55.9p Adjusted diluted earnings per share(1) 33.9p -39.4% 1,192p EPRA net tangible assets
Slide 13: Revenue profit
Landsec — Annual results 2021 13 Revenue profit £m Net rental income movement £(178)m 600 500 400 300 200 100 0 Revenue profit Gross rental Net service Net direct Bad debt Net indirect Net finance Revenue profit year ended income charge property expense expenses expense year ended 31 March 2020 expe
Slide 14: Rent collection impacted by Covid-19 but offices resilient
Landsec — Annual results 2021 14 Rent collection impacted by 25 March 2020 25 March 2021 Covid-19 but offices resilient to 24 March 2021 quarter day Amounts Amounts received to date received to date — Collected 86% of net rent amounts due for the period 25 March 2020 Offices 100% 98% to 24 March 202
Slide 15: Analysis of bad debt provisions
Landsec — Annual results 2021 15 Analysis of bad debt provisions By activity £m By segment £m Provisions related to customer support fund concessions 42 Central London 17 Other provisions for rents receivable 58 Regional retail 69 Provisions for service charge receivables 14 Urban opportunities 10 T
Slide 16: Combined Portfolio valuation
Landsec — Annual results 2021 16 Combined Portfolio valuation 3.7% Retail parks £10.8bn portfolio Valuation declined 13.7% or £1.6bn — Valuer’s assumptions relating to Covid-19. Where there is no agreed rent concessions Regional £10.8bn Offices the following adjustments have been made: shopping cent
Slide 17: Combined Portfolio valuation – Central London
Landsec — Annual results 2021 17 Combined Portfolio valuation Central London 3.7% Retail parks £7.3bn portfolio Valuation declined 68% of Combined 6.5% or £484m Portfolio Offices -4.1% — Like-for-like rental values down 1.9% Regional £7.3bn Offices shopping centres 58.1% and shops portfolio — +3bps
Slide 18: Combined Portfolio valuation – Regional retail
Landsec — Annual results 2021 18 Combined Portfolio valuation Regional retail 3.7% Retail parks £1.8bn portfolio Valuation declined 16% of Combined 31.4% or £799m Portfolio Regional shopping centres -38.2% — Like-for-like rental values down -21.5% Regional £1.8bn Offices shopping centres 58.1% and s
Slide 19: Combined Portfolio valuation – Urban opportunities
Landsec — Annual results 2021 19 Combined Portfolio valuation Urban opportunities 3.7% Retail parks £0.4bn portfolio Valuation declined 3% of Combined 23.3% or £112m Portfolio Like-for-like rental +73bps like-for-like values down 11% equivalent yield shift Regional £0.4bn Offices shopping centres 58
Slide 20: Combined Portfolio valuation – Subscale sectors
Landsec — Annual results 2021 20 Combined Portfolio valuation Subscale sectors 3.7% Retail parks £1.3bn portfolio Valuation declined 12% of Combined 16.4% or £251m Portfolio Leisure -23.0% — Like-for-like rental values down -7.1% Regional £1.3bn Offices shopping centres 58.1% and shops portfolio — +
Slide 21: Committed capital expenditure
Landsec — Annual results 2021 21 Committed capex by scheme Committed capital expenditure Financial year to March £m 400 350 — £558m committed capex across 300 the six schemes in development programme 250 — £44m pre-construction works for 200 Portland House and Timber Square 150 — Disposals to fund c
Slide 22: Financing position
Landsec — Annual results 2021 22 Financing position A strong position with available resources — Group LTV 32.2% 31 March 2021 — Weighted average cost of net debt 2.2% £m Bond debt 2,340 — Next bond debt maturity: £10m in September 2023 Bank debt 209 — Cash and available facilities £1.6bn Commercial
Slide 23: Looking ahead
Landsec — Annual results 2021 23 Level of provisions Re-opening End of the rent versus outstanding of the economy moratorium debt received Looking ahead Recovery of activity Maintaining a strong Capital recycling related income balance sheet 12 April re-opening, Westgate Oxford
Slide 24: Operational update
Operational update
Slide 25: Optimise: a resilient central London portfolio
Landsec — Annual results 2021 25 High liquidity Optimise The Landsec London portfolio has disposed of £3.7bn over last 10 years reflecting an average churn of 5% of the portfolio value per annum A resilient central London portfolio Gross proceeds £m 949.5 with the ingredients to thrive 685.8 625.6 6
Slide 26: Our Optimise strategy is focused on creating value
Landsec — Annual results 2021 26 Our Optimise strategy is focused on creating value Creating value: Through By building Through relentless development resilience customer focus — Further progress on delivering our near-term pipeline — Using data and insight to focus our — Ensuring our products and p
Slide 27: Creating value through development
Landsec — Annual results 2021 27 Creating value through development Pre-development — £1.2bn of committed development schemes, opportunities 57% pre-let. Average yield on cost 5.5% Committed – pre-let — We minimised the effect of Covid-19 on our development programme £2.3bn — We preserved optionalit
Slide 28: Creating value through development: maintained flexibility
Landsec — Annual results 2021 28 Creating value through development Maintained flexibility Office developments TDC Status Earliest completion Net zero carbon The Forge, SE1 £139m Speculative June 2022 21 Moorfields, EC2 £577m 100% pre-let July 2022 Lucent, W1 £240m Speculative December 2022 n2, SW1
Slide 29: Creating value through development: focus for next 12-18 months
Landsec — Annual results 2021 29 Creating value through development Focus for the next 12-18 months — Timely completion of committed projects — Pre-letting progress — Progress planning at Red Lion Court — Decisions on timing — Portland House — Timber Square — Targeting a small number of further acqu
Slide 30: Building resilience and relentless customer focus
Landsec — Annual results 2021 30 Building resilience and relentless customer focus Existing portfolio — Live discussions with our customers to right-size their requirements across 1 million sq ft of space — Active discussions with seven occupiers across five buildings in Victoria ESG leadership — Bu
Slide 31: Workplace of the future
Landsec — Annual results 2021 31 Workplace of the future — Workplaces will evolve to support a hybrid workforce network — Tailoring support for different types of occupier is critical — Scale and range of locations and products across London a key Landsec advantage Up till now Tomorrow: hybrid workf
Slide 32: Covid-19 had a severe impact on Regional retail portfolio
Landsec — Annual results 2021 32 Regional retail portfolio Covid-19 on our Regional retail Valuation –18.5% +91bps like-for-like Valuation –38.2%, +140bps like-for-like portfolio had a severe impact equivalent yield shift to 6.8% equivalent yield shift to 7.6% Outlets £1.8bn portfolio — Three lockdo
Slide 33: An encouraging re-opening since easing of restrictions
Landsec — Annual results 2021 33 An encouraging re-opening since the easing of Covid-19 restrictions — Non-essential retail re-opened in England and Wales on 12 April 2021, and in Scotland on 26 April 2021 12 April 2021 re-opening, Westgate Oxford — From 17 May 2021: — Bars, pubs and restaurants are
Slide 34: Opportunity for a fundamental reset of retail
Landsec — Annual results 2021 34 Rapid acceleration of trends has brought forward opportunity for a fundamental reset of retail To be relevant in an omnichannel world, physical retail either needs to be complementary to online or offer something that is not easily replicated online Flight to prime R
Slide 35: Our Reimagine strategy is focused on creating value in three ways
Landsec — Annual results 2021 35 Looking forward, our Reimagine strategy is focused on creating value in three ways Creating value through: Deep brand partner Tailored guest Asset management relationships experiences expertise Developing deeper relationships — Integrating seamlessly Ensuring our int
Slide 36: Grow through Urban opportunities
Landsec — Annual results 2021 36 Grow through An attractive source of growth Urban opportunities — Urban opportunities are mixed-use, Place making Multi-phase Compelling multi-phase regeneration projects potential development blend of returns throughout rooted in a need to redevelop parts Sustainabl
Slide 37: O2, Finchley Road
Landsec — Annual results 2021 37 O2, Finchley Road — Current site 310,000 sq ft of retail and leisure with 530 space surface car park — Potential for c.1,900 homes plus c.150,000 sq ft of commercial space — Local consultations have taken place and master planning and design continues — Planning subm
Slide 38: Realise capital from our Subscale sectors
Landsec — Annual results 2021 38 Realise capital from £1.3bn Subscale sectors our Subscale sectors — Comprises £1.3bn of hotels, leisure parks and retail parks which we intend to divest over the medium term Retail parks £397m Leisure — Leisure operators experienced only eight weeks 30% £506m of unre
Slide 39: Looking forward
Landsec — Annual results 2021 39 Ongoing capital recycling Working with our customers Looking forward What you can expect from Landsec over the next 12 to 18 months Embedding our culture – Progress on our ESG and empowerment, accountability, net zero carbon targets pace and agility CGI of The Forge,
Slide 40: Landsec
Landsec
Slide 41: Annual results
Landsec — Annual results 18 May 2021