Shaftesbury Capital PLC · LSE:SHC
Shaftesbury Capital — H1 2015 Earnings Presentation
57 slides from Shaftesbury Capital's earnings presentation, May 2015
Slide 1: Investor and Analyst Presentation: Six months ended 31 March 2015
INVESTOR AND ANALYST PRESENTATION Six months ended 31 March 2015 INVESTOR AND ANALYST PRESENTATION Six months ended 31 March 2015
Slide 2: Agenda
2 Agenda Introduction Brian Bickell Results and finance Chris Ward Portfolio review Brian Bickell Summary and outlook Brian Bickell Q&A Brian Bickell Chris Ward Simon Quayle Tom Welton
Slide 3: Introduction
3 Introduction BRIAN BICKELL
Slide 4: Delivering our strategy
4 Delivering our strategy DELIVERING SHAREHOLDER VALUE 6 months 12 months Portfolio value growth1,2 +8.0% +24.0% EPRA NAV: £7.75 +8.7% +30.0% NAV return before dividends +9.6% +32.2% TSR3 - Shaftesbury +22.9% +28.5% - FTSE 350 Real Estate Index +20.2% +22.8% 1. Including our 50% share of Longmartin
Slide 5: Delivering our strategy
5 Delivering our strategy EXTENSIVE ASSET MANAGEMENT ACTIVITY, GROWING INCOME AND VALUE CREATION Activity across the portfolio • Buoyant local economy – strong demand for space, high occupancy and growth in rental income and values • £11.5m of leasing transactions1 • Available vacancy < 1% throughou
Slide 6: Results and finance
6 Results and finance CHRIS WARD
Slide 7: Summary financials
7 Summary financials GROWTH IN VALUE, EARNINGS AND DIVIDEND EPRA NAV PER SHARE PORTFOLIO VALUATION1 EPRA EARNINGS INTERIM DIVIDEND £7.75 £2.86bn £17.9m 6.825p +8.7% (6m) +8.0%2 (6m) +11.2% +5.0% +30.0% (12m) +24.0%2 (12m) (vs H1 2014) CHANGE BALANCE SHEET March 2015 Sept 2014 % Portfolio value – Who
Slide 8: Valuation
8 Valuation INCREASE THROUGH RENTAL GROWTH AND YIELD COMPRESSION Portfolio valuation1 l-f-l capital value growth1 l-f-l ERV growth1 Portfolio reversion1 £2.86bn +8.0% (6m) +3.4% (6m) £27.8m +24.0% (12m) +7.4% (12m) Continued capital value growth Tenant demand remains strong • H1: 8.0% (Y-o-Y: 24.0%)
Slide 9: Portfolio reversion
9 Portfolio reversion1 CONTINUED GROWTH IN ACTUAL AND PROSPECTIVE RENTS Current annualised income2 ERV2 Portfolio reversion2 £95.8m £123.6m 29% +£2.3m vs Sept 14 +£5m vs Sept 14 Above current income CAGR £m Current income 7.1% 29% 26% ERV 7.8% 24% 22% 21% 25% 35% 17% 23% 124 22% 22% 114 97 103 91 96
Slide 10: Net asset value
10 Net asset value VALUATION UPLIFT DELIVERING NAV GROWTH PORTFOLIO VALUE (£M)1 26 14 205 L-f-L +8.0% (6m) 2,850 2,605 2,605 2,631 2,645 +24.0% (12m) Sep-14 Acquisitions Capex Revaluation Mar-15 EPRA NAV (PENCE PER SHARE) 6 7 73 10 NAV +8.7% (6m) 775 775 +30% (12m) 713 713 712 712 Sep-14 Underlying
Slide 11: Rental income
11 Rental income CONTINUING INCOME GROWTH AS REVERSION IS CRYSTALLISED RENTS RECEIVABLE GROWTH OVER H1 2014 LIKE-FOR-LIKE INCREASE +£3.0m +7.2% +3.6% RENTAL INCOME (£M) 1.5 1.5 43.3 44.8 41.8 41.8 H1 2014 Acquisitions Underlying growth H1 2015
Slide 12: EPRA earnings
12 EPRA earnings GROWING NET PROPERTY INCOME NET PROPERTY INCOME EPRA EARNINGS EPRA EPS +£2.3m +£17.9m +6.4p +6.3% (vs H1 2014) +11.2% (vs H1 2014) +1.6% (vs H1 2014) EPRA EARNINGS (£M) 2.3 0.5 0.2 0.4 0.2 17.9 17.9 17.7 17.7 17.9 16.1 16.1 H1 2014 Net property income Admin costs Equity settled Inte
Slide 13: Debt summary
13 Debt summary CONSERVATIVE GEARING AND LOWER COST OF DEBT COMMITTED UNDRAWN FACILITIES LOAN-TO-VALUE1 WEIGHTED AVERAGE MATURITY1 £99.6m 24% 8.7 years BANK FACILITIES (£M) DEBT SUMMARY1 March 2015 Sept 2014 Total facilities £785.8m £755.8m Undrawn committed facilities £99.6m £139.4m 99.6 LTV 24.0%
Slide 14: Debt maturity profile
14 Debt maturity profile1 EXTENDED WEIGHTED AVERAGE MATURITY DEBT MATURITY PROFILE (£M) New term loan (3.2%) replaced £100m 2016 facility Undrawn facility to be refinanced 150 135 130 125 75 61 60 50 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Wholly-owned Longmar
Slide 15: Portfolio review
15 Portfolio review BRIAN BICKELL
Slide 16: Demand and occupancy
16 Demand and occupancy CONTINUED STRONG DEMAND ACROSS THE PORTFOLIO COMMERCIAL LETTINGS,RENEWALS & REVIEWS1 AVAILABLE TO LET VACANCY SCHEMES IN PROGRESS £8.9m 0.7% 5.0% +2.8% (vs 9/14 ERV) (of ERV) (of ERV) +10.0% (vs 3/14 ERV) • Demand remains strong across each village and for all uses • £11.2m l
Slide 17: Shops
17 Shops DEMAND REMAINS HEALTHY Overview • Strong demand from domestic and international retailers (European & North American) 328 • Interest from UK brands opening new concept stores/flagships • Existing tenants upsizing/relocating (particularly in Carnaby)/taking second sites within our villages L
Slide 18: Retail rental tone – prime Zone A vs Shaftesbury
18 Retail rental tone – prime Zone A vs Shaftesbury RELATIVE VALUE VS NEARBY STREETS 1,400 £825* £390 £650* £210 £200 £325 £135 £190 £1,400* £485 £610 950 £950 £275 825 £500 Foubert’s Place 650 Carnaby Street 610 Newburgh Street 500 485 Berwick Street 390 325 Earlham Street 275 210 200 190 Monmouth
Slide 19: A selection of retail lettings
19 A selection of retail lettings American Apparel1 Billionaire Boys Club Toms Oi Polloi Natural Selection MAC1 Filson Shinola The Kooples & Kooples Sport1 Larsson & Jennings Finisterre Palace Skates 1. Tenants that have expanded within our villages
Slide 20: Restaurants, cafés, and leisure
20 Restaurants, cafés, and leisure INCREASINGLY A DESTINATION AND DRIVER OF FOOTFALL Overview • Occupier demand continues at historically high level • Supply of space remains restricted - Long-term restrictive planning policies • - Tenant reluctance to relinquish profitable/valuable sites Numerous c
Slide 21: A selection of new restaurants, cafés, pubs and clubs
21 A selection of new restaurants, cafés, pubs and clubs Cahoots Crumbs and Doilies 26 Grains On the Bab Dishoom Oka Jinjuu NY Fold Café Murano The Cornwall Project Brindisa Morada Mr Foggs Free Range People Beyond Bread Shackfuyu
Slide 22: Offices
22 Offices SUPPLY CONSTRAINTS DRIVE RENTAL GROWTH Overview 16% • Strong demand for smaller office suites and constrained supply of our current - Rental growth income1 - Reduction in incentives • Tenants are renewing/expanding within our villages • Interest from media, creative and tech companies, as
Slide 23: Residential
23 Residential GOOD CASH FLOW AND LOW OBSOLESCENCE Overview • West End remains a popular place to live 12% of our current • Demand to rent our reasonably-priced apartments remains strong income1 • Continuing to unlock space for conversion on upper floors and upgrading existing apartments Leasing act
Slide 24: Acquisitions
24 Acquisitions H1 acquisitions: £25.8m • Seven properties in Soho, Charlotte Street, Carnaby and Covent Garden • Complement our existing, extensive ownerships • Potential for good rental and capital value creation • Availability of suitable properties restricted H2 contracted: 19-25 Broadwick Stree
Slide 25: Schemes
25 Schemes CREATING VALUE THROUGH IMPROVING OUR PORTFOLIO SCHEMES IN THE PERIOD ACROSS H1 CAPITAL EXPENDITURE ERV UNDER DEVELOPMENT 121,000 sq.ft. £14.3m £6.2m 6.9% of floor space1 at 31 March 2015 Schemes across the portfolio • Schemes in the period across 121,000 sq.ft., 6.9% of wholly-owned floor
Slide 26: Foubert's Place/Kingly Street
26 Foubert’s Place/Kingly Street • Mixed-use scheme – recently completed - 7,500 sq. ft. retail (under offer) - 6,500 sq. ft. restaurant (let) - 10,500 sq. ft. office (3,500 sq. ft. let, 7,000 sq. ft. under offer) - Twelve apartments (marketing recently Before commenced) After • Cost: £14.8m • March
Slide 27: Charing Cross Road/Chinatown
27 Charing Cross Road/Chinatown • Planning application submitted; reconfigured building will provide: - 32,000 sq.ft. retail space on Charing Cross Road (330 ft. frontage) - 13,500 sq.ft. restaurant space, principally fronting Newport Place - much improved space for occupiers CGIs of proposed scheme
Slide 28: Charing Cross Road/Chinatown ground floor plan
28 Charing Cross Road/Chinatown GROUND FLOOR PLAN
Slide 29: 57-59 Broadwick Street
29 57-59 Broadwick Street • Pre-planning discussions with Westminster and public consultation completed • Planning application to be made shortly – expect to commence works in early 2016 • Proposals now include: Before - Retail over lower floors - Extend/reconfigure office space After - Create new r
Slide 30: Cambridge Circus proposals
30 Cambridge Circus proposals • Important and busy gateway to Soho and Seven Dials • Plans to widen pavements and introduce diagonal crossing • Remove barriers and islands • Repaving/resurfacing and improved lighting • Better connectivity for pedestrians • Plans to start in Autumn/Winter 2015 • Plan
Slide 31: Summary and outlook
31 Summary and outlook BRIAN BICKELL
Slide 32: Outlook
32 Outlook CONTINUED PORTFOLIO ACTIVITY London and the West End • Destination for visitors and businesses from across the world • Buoyant trading conditions • Regeneration stimulated by Crossrail Unique and growing • Demand remains strong across the portfolio portfolio • Occupancy remains high and v
Slide 33: Summary
33 Summary The best city + The best locations + Innovative, proven long-term strategy + Experienced team + Prudent financial management CONTINUE TO DELIVER LONG-TERM SHAREHOLDER VALUE
Slide 34: Appendices
34 Appendices 1. Unique portfolio in the heart of the West 8. L-f-l Increase in capital values End 9. Yields 2. Delivering our strategy 10. Income and costs 3. EPRA earnings and NAV reconciliations 11. Finance analysis 4. Valuation by village 12. Impact of change in accounting policy 5. Our portfoli
Slide 35: Unique portfolio in the heart of the West End
Shaftesbury Appendix 1 UNIQUE PORTFOLIO IN THE HEART OF THE WEST END PANO SEN Se : N\ % se <r SS Z yy Les as ES U rie ws 0 CARNABY
Slide 36: Delivering our strategy
36 Appendix 2 DELIVERING OUR STRATEGY
Slide 37: EPRA earnings and NAV reconciliations
37 Appendix 3 EPRA EARNINGS AND NAV RECONCILIATIONS Mar 15 Mar 141 Sept 141 Mar 15 Mar 141 Sept 141 Earnings £m £m £m NAV £m £m £m Reported profit after tax 180.2 118.3 440.4 Reported net assets 2,056.1 1,587.7 1,893.2 Adjust for fair value movements: Adjust for: Investment properties (183.2) (91.0)
Slide 38: Valuation by village
38 Appendix 4 VALUATION: £2.86BN (AT 31 MARCH 2015) Charlotte Street £84m Carnaby Soho £199m £994m Covent Garden1 £947m Chinatown £633m 1. Including our 50% share of Longmartin
Slide 39: Our portfolio
39 Appendix 5 OUR PORTFOLIO Shops Restaurants, cafés Offices Residential and leisure Wholly owned Wholly owned Wholly owned Wholly owned 328 255 509 464,000 sq. ft. 557,000 sq. ft. 422,000 sq. ft. 299,000 sq. ft. Longmartin joint venture Longmartin joint venture Longmartin joint venture Longmartin j
Slide 40: Mix of uses (wholly-owned portfolio)
40 Appendix 5 (cont.) MIX OF USES (WHOLLY-OWNED PORTFOLIO) % OF CURRENT RENT 7 Residential 12 22 Offices 16 29 Restaurants, cafés and leisure 36 Shops 42 36 2008 2015
Slide 41: Portfolio summary
41 Appendix 5 (cont.) PORTFOLIO SUMMARY Fair value % of Current rent ERV £m portfolio £m £m Wholly-owned portfolio Carnaby 994.2 35% 30.7 44.0 Covent Garden 748.4 26% 24.8 31.5 Chinatown 632.7 22% 22.6 27.0 Soho 199.2 7% 7.1 8.6 Charlotte Street 84.4 3% 2.9 3.5 2,658.9 93% 88.1 114.6 Longmartin join
Slide 42: Portfolio reversion by use
42 Appendix 6 PORTFOLIO REVERSION BY USE Restaurants, Retail cafés, leisure Office Residential Longmartin Total £m £m £m £m £m £m % of ERV Current income 31.5 31.5 14.0 11.1 7.7 95.8 77.5% Vacancy - Available 2.1 0.3 0.6 0.3 - 3.3 2.6% - Schemes 1.2 1.0 2.1 1.9 - 6.2 5.0% 3.3 1.3 2.7 2.2 - 9.5 7.6%
Slide 43: Vacancy
43 Appendix 7 VACANCY Restaurant, cafés, Shops leisure Offices Residential Longmartin Total £m £m £m £m £m £m % of ERV Foubert’s Place/Kingly St 0.5 0.5 0.8 0.4 - 2.2 1.8% Other schemes 0.7 0.5 1.3 1.5 - 4.0 3.2% Total held for or under refurbishment 1.2 1.0 2.1 1.9 - 6.2 5.0% Available to let 0.7 -
Slide 44: Wholly-owned vacant commercial space
44 Appendix 7 (cont.) WHOLLY-OWNED VACANT COMMERCIAL SPACE % OF WHOLLY- OWNED ERV 9% 8% 7% Carnaby schemes 1.8% 6% 5% Held for or under 3.2% 4% refurbishment 3% 2% EPRA vacancy 2.6% 1% 0% Sept 2010 Sept 2011 Sept 2012 Sept 2013 Sept 2014 Mar 2015
Slide 45: Like-for-like increase in capital values
45 Appendix 8 LIKE-FOR-LIKE INCREASE IN CAPITAL VALUES 3 Year % of portfolio H1 2015 Year to March 2015 CAGR Total 100% 8.0% 24.0% 14.1% Carnaby 35% 8.6% 29.0% 16.8% Covent Garden 26% 6.6% 21.4% 12.3% Chinatown 22% 7.8% 21.0% 12.2% Soho 7% 6.3% 15.9% 13.2% Charlotte St 3% 11.7% 26.2% 12.4% Longmarti
Slide 46: Yields
46 Appendix 9 YIELDS Equivalent yield (%) 4.56 4.34 4.39 4.35 4.43 4.38 4.24 4.07 4.04 4.02 4.10 3.94 3.91 3.90 4.00 3.87 3.85 3.84 3.84 3.86 3.69 Carnaby Covent Garden Chinatown Soho Charlotte Street Wholly-owned Longmartin Topped-up initial yield (%) 4.01 4.05 3.88 3.78 3.86 3.83 3.53 3.66 3.54 3.
Slide 47: Income and costs
47 Appendix 10 INCOME AND COSTS H1 15 H1 141 FY 141 EPRA EARNINGS £m £m £m Rental income 48.4 45.1 91.2 Property costs (9.7) (8.7) (17.1) Net property income 38.7 36.4 74.1 Admin expenses (6.5) (6.2) (13.8) 32.2 30.2 60.3 Net finance costs (15.2) (14.8) (29.5) Share of Longmartin JV profit before ta
Slide 48: Finance analysis
48 Appendix 11 FINANCE ANALYSIS Mar 2015 Sept 2014 Proportionate Proportionate IFRS Longmartin consolidation IFRS Longmartin consolidation £m £m £m Rate £m £m £m Rate Debenture 1 63.2 - 63.2 7.93% 63.3 - 63.3 7.93% Term loans – wholly owned 264.8 - 264.8 3.85% 134.8 - 134.8 4.47% Term loan – Longmar
Slide 49: Impact of change in accounting policy
49 Appendix 12 IMPACT OF CHANGE IN ACCOUNTING POLICY BALANCE SHEET Mar 2015 Sept 2014 Proportionate Proportionate IFRS Longmartin JV consolidation IFRS Longmartin JV consolidation £m £m £m £m £m £m Investment properties 2,648.8 200.8 2,849.6 2,425.5 179.6 2,605.1 Investment in Longmartin 118.2 (118.
Slide 50: Village summaries
50 Appendix 13 VILLAGE SUMMARIES Village Page Carnaby 51 Covent Garden 52 Chinatown 53 Soho 54 Charlotte Street 55
Slide 51: Carnaby
51 Carnaby 35% OF OUR PORTFOLIO Footfall > 40m pa Mar 2015 Sept 2014 Valuation £994.2m £906.2m Acquisitions £3.2m £32.3m Capital expenditure £6.9m £11.5m Capital value return (l-f-l) 8.6% 25.8% Equivalent yield 3.94% 4.07% Reversion £13.3m £10.7m REVERSION (£M) 6% 29% % of 44.0 41.7 current income 4
Slide 52: Covent Garden
52 Covent Garden Footfall > 30m pa 33% OF OUR PORTFOLIO1 (Seven Dials) Mar 2015 Sept 2014 Valuation1 £947.1m £873.5m Acquisitions £5.8m £2.2m Capital expenditure £3.9m £7.1m Capital value return – wholly-owned 6.6% 19.3% – Longmartin 11.4% 22.2% Equivalent yield – wholly-owned 3.69% 3.87% – Longmart
Slide 53: Chinatown
53 Chinatown 22% OF OUR PORTFOLIO Footfall > 50m pa Mar 2015 Sept 2014 Valuation £632.7m £584.0m Acquisitions Nil £61.6m Capital expenditure £3.3m £3.8m Capital value return (l-f-l) 7.8% 17.8% Equivalent yield 3.85% 4.04% Reversion £4.4m £4.5m REVERSION (£m) 9% 5% 27% 27.0 26.3 % of 22.6 21.8 curren
Slide 54: Soho
54 Soho 7% OF OUR PORTFOLIO Mar 2015 Sept 2014 Valuation £199.2m £181.0m Acquisitions £7.7m £8.1m Capital expenditure £0.1m £1.6m Capital value return 6.3% 16.2% Equivalent yield 3.84% 4.02% Reversion £1.5m £1.1m REVERSION (£M) 21% 26% % of 8.6 current income 8.1 7.1 7.0 15% £7.1m shops restaurants/
Slide 55: Charlotte Street
55 Charlotte Street 3% OF OUR PORTFOLIO Mar 2015 Sept 2014 Valuation £84.4m £67.8m Acquisitions £9.1m £3.7m Capital expenditure £0.1m £0.2m Capital value return 11.7% 15.8% Equivalent yield 3.91% 3.90% Reversion £0.6m £0.4m REVERSION (£m) 11% 27% 3.5 % of 3.1 current income 2.9 2.7 £2.9m 8% 54% shop
Slide 56: Key risks
56 Appendix 14 KEY RISKS Sustained fall in visitor numbers Economic risks and/or spending which affects: • Uncertainty and reduced confidence • The West End - Lower consumer spending - External threats eg security, public safety, health concerns - Reduced tenant profitability - Disruption to the tra
Slide 57: Disclaimer
57 Disclaimer This presentation may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or