Land Securities Group Plc · LSE:LAND
Land Securities — Landsec — FY2022 Earnings Presentation
33 slides from Land Securities's earnings presentation, May 2022
Slide 1: Our annual results 2022
Our annual results 2022 For the year end 31 March 2022 @LandsecGroup Landsec.com
Slide 2: Annual results 2022
Annual results 2022 Mark Allan CHIEF EXECUTIVE OFFICER
Slide 3: Clear progress – Well positioned for future growth
Landsec — Annual results 2022 3 Clear progress – Well positioned for future growth OUR PURPOSE: SUSTAINABLE PLACES. CONNECTING COMMUNITIES. REALISING POTENTIAL High-quality portfolio Recycling capital Growth potential Driving returns Nova, SW1 1 & 2 New Ludgate, EC4 Mayfield, Manchester MediaCity, G
Slide 4: Strong operational results and strategic progress across all segments
Landsec — Annual results 2022 4 Strong operational results and strategic progress across all segments £12.0bn portfolio Central London Retail Mixed-use urban Portfolio split 12% 7% Nova, SW1 Gunwharf Quays, Portsmouth MediaCity, Greater Manchester March 2022 65% 16% Record office leasing, with £63m
Slide 5: Strong total return and recovery in earnings
Landsec — Annual results 2022 5 Strong total return and recovery in earnings 31 March 2022 31 March 2021 % change Strong financial returns, underpinned by our actions and operational performance EPRA NTA per share 1063p 985p 8% Total accounting return up to 10.5% EPRA earnings £355m £251m 41% EPRA N
Slide 6: Focused on delivering sustainably
Landsec — Annual results 2022 6 Focused on delivering sustainably Sustainability embedded throughout our business OUR VISION: We design, develop and manage places that enhance the health of our environment and improve quality of life for our people, customers and communities, now and for future gene
Slide 7: Operational review
Operational review Mark Allan CHIEF EXECUTIVE OFFICER
Slide 8: Central London: Continued demand for prime space
Landsec — Annual results 2022 8 Central London office - vacant space m sq ft Vacancy rate 25 15% Central London 20 New Second hand City West End Central London 10% Continued demand for prime space 15 10 5% 5 0 0% 2012 Q1 2014 Q1 2016 Q1 2018 Q1 2020 Q1 2022 Q1 Central London footfall continues to re
Slide 9: Central London: High-quality portfolio underpins record leasing activity
Landsec — Annual results 2022 9 Central London High-quality portfolio underpins record leasing activity Landsec operational performance Portfolio quality well ahead of overall market 31 March 2022 YoY change — 49% built or redeveloped over last ten years, compared Number of lettings/renewal complete
Slide 10: Central London: Total pipeline of 2.8m sq ft provides optionality
Landsec — Annual results 2022 10 Central London Total pipeline of 2.8m sq ft provides optionality for future growth Expected 1.0m sq ft of committed office projects CURRENT PROGRAMME Proposed sq ft completion date TDC Gross yield on cost — 56% of ERV(1) pre-let (000) £m % 21 Moorfields, EC2 564 Oct
Slide 11: Central London: Increasing flexible space across the portfolio
Landsec — Annual results 2022 11 Central London Increasing flexible space across the portfolio Four new Myo locations to open in the next two years Continuing to evolve the three products we offer, Blank Canvas, Customised and Myo Planned sq ft Focus on growing Myo flexible, fully serviced offer The
Slide 12: Major retail destinations: Increasing signs of stabilisation
Landsec — Annual results 2022 12 Strong recovery in retail investment and divergence in yields Investment volumes Yield £bn Major retail destinations 8% 12 10 Increasing signs of stabilisation 7% 8 6% 6 4 5% Online and physical channels fully inter-connected 2 for many leading brands 4% 2017 2018 20
Slide 13: Major retail destinations: Improving operational performance
Landsec — Annual results 2022 13 Major retail destinations Improving operational performance driving growth in best locations Major retail destinations – Operational performance Restructured retail team to focus more on brand relationships and guest experience 31 March 2022 YoY change Number of lett
Slide 14: Major retail destinations: Growing stability of income
Landsec — Annual results 2022 14 Major retail destinations Growing stability of income and opportunities for attractive returns Movement in shopping centre sales, valuation & rents – March 2017 = 100 Confidence in sustainability of income building, despite near-term economic challenges 110 100 Evolv
Slide 15: Mixed-use urban: Sustainable places, attractive returns
Landsec — Annual results 2022 15 Manchester’s economic growth in line with London – Dec 2009 = 100 140 Mixed-use urban 130 Sustainable places, attractive returns 120 110 Supported by long-term trends of demographic 100 growth, urbanisation and changing cities 90 2009 2010 2011 2012 2013 2014 2015 20
Slide 16: Mixed-use urban: Building the opportunity
Landsec — Annual results 2022 16 Potential to grow Mixed-use urban to 20-25% of total portfolio(1) £m Mixed-use urban 3,000 Other 2,500 Building the opportunity 2,000 Residential 1,500 1,000 Doubled pipeline, creating visibility on potential Office 500 to grow to mixed-use to 20-25% of portfolio Med
Slide 17: Mixed-use urban: Significant near-term potential
Landsec — Annual results 2022 17 Indicative mixed-use capex and returns (cumulative) Capex Profit Mixed-use urban £m 1,500 £m 600 Significant near-term potential 1,250 500 1,000 400 750 300 500 200 Potential pipeline to deliver c. 7,000 homes and 250 100 c. 3m sq ft of commercial space in long term
Slide 18: Financial review
Financial review Vanessa Simms CHIEF FINANCIAL OFFICER
Slide 19: Financial summary
Landsec — Annual results 2022 19 Financial summary Strong recovery in earnings and maintained balance sheet strength 31 March 2022 31 March 2021 % change Gross rental income(1) £586m £569m 3% EPRA earnings(1) £355m £251m 41% EPRA earnings per share(1) 48.0p 33.9p 42% Dividend per share 37.0p 27.0p 3
Slide 20: EPRA earnings up 41%
Landsec — Annual results 2022 20 EPRA earnings up 41% Strong recovery from the pandemic 31 March 2022 31 March 2021 £m £m Gross rental income(1) 586 569 Strong recovery from the pandemic with gross rental income up £17m and net rental income up £105m Net service charge (12) (5) Net direct property e
Slide 21: LFL gross rental income up 4.1%
Landsec — Annual results 2022 21 LFL gross rental income up 4.1% Positive growth across all segments Overall LFL gross rental income up 4.1%, with positive growth across every segment Westgate Oxford Major retail destinations up 4.5%, driven by turnover- related leases and increased car park income
Slide 22: Portfolio valuation up 3.6%
Landsec — Annual results 2022 22 Portfolio valuation up 3.6% Combination of our actions and market growth drive £409m surplus Valuation LFL equivalent as at Surplus / yield LFL ERV Valuation surplus / (deficit) % – H1 vs H2 31 March 2022 (deficit) YoY movement movement £m % bps % H1 H2 West End offi
Slide 23: Total accounting return up to 10.5%
Landsec — Annual results 2022 23 Total accounting return up to 10.5% Strong recovery in dividend and 7.9% growth in EPRA NTA Movement in EPRA NTA and NTA per share Total accounting return increased to 10.5%, Diluted 985 47 55 (25) 1 1,063 pps driven by growth in earnings and valuations £m Drivers of
Slide 24: Continued capital recycling
Landsec — Annual results 2022 24 Continued capital recycling Further progress in repositioning our portfolio towards future growth TOTAL £1.1BN TOTAL £1.4BN £1.1bn sold since September 2020, well on track Disposals since September 2020 Investments since September 2020 vs target to sell c. £4bn over
Slide 25: Balance sheet remains strong
Landsec — Annual results 2022 25 Balance sheet remains strong Modest 34% LTV and significant financial flexibility Debt maturity(1) 31 March 2022 31 March 2021 £m Adjusted net debt £4,179m £3,489m 1,200 Group LTV 34.4% 32.2% 800 Adjusted net debt: EBITDA ratio 8.8 10.5 400 Interest cover ratio 4.9 3
Slide 26: Progressing our £135m net zero transition investment programme
Landsec — Annual results 2022 26 Progressing our £135m net zero transition investment programme Four areas of focus with clear targets for the year Optimising Building Management Systems Decarbonising heating (air source heat pumps) Targets for 2022/23 Target for 2022/23 Implement Building Managemen
Slide 27: Delivery of strategy to drive growth in return on equity and income
Landsec — Annual results 2022 27 Delivery of strategy to drive growth in return on equity and income Potential to grow income by c. £120m Potential growth in income (excluding any future rental growth) Delivering on strategy to drive meaningful increase Net Net investment +c. £90m in earnings, whils
Slide 28: Outlook
Outlook Mark Allan CHIEF EXECUTIVE OFFICER
Slide 29: A clear focus on driving growth in three key areas
Landsec — Annual results 2022 29 A clear focus on driving growth in three key areas More decisive capital allocation and fully leveraging our expertise Central London offices Major retail destinations Mixed-use urban Leverage strong development expertise, Build on positive momentum with new, Deliver
Slide 30: Inflationary environment: Focused on resilience
Landsec — Annual results 2022 30 Risk premium – spread between prime yield and 5-year real interest rates bps Inflationary environment 1,200 Prime shopping centre Prime West End office 1,000 Focused on resilience 800 600 ERV growth in London to offset build cost inflation 400 200 — Rent on average <
Slide 31: Strong progress – Well positioned for future growth
Landsec — Annual results 2022 31 Strong progress – Well positioned for future growth Grow income and return on equity through more pro-active capital allocation and leveraging our expertise Recycle further c. £3bn of capital out of mature assets and Subscale sectors Significant London office and Mix
Slide 32: Landsec
Landsec
Slide 33: Our annual results 2022
Our annual results 2022 For the year end 31 March 2022 @LandsecGroup Landsec.com