Shaftesbury Capital Plc · LSE:SHC
Shaftesbury Capital — Capital & Counties Properties — FY2016 Earnings Presentation
45 slides from Shaftesbury Capital's earnings presentation, Feb 22, 2017
Slide 1: Capital & Counties Properties PLC Annual Results 2016
Capital & Counties Properties PLC Annual Results 2016 22 February 2017 www.capitalandcounties.com
Slide 2: Important Notices
IMPORTANT NOTICES This presentation includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Capital & Counties Properties PLC to be materiall
Slide 3: Agenda
Introduction AGENDA 1. INTRODUCTION Financial Review Ian Hawksworth 2. FINANCIAL REVIEW Situl Jobanputra Operating Update 3. COVENT GARDEN Ian Hawksworth Looking Ahead 4. EARLS COURT PROPERTIES Gary Yardley 5. LOOKING AHEAD Q&A Ian Hawksworth 6. Q&A 3 Capco Annual Results 2016 www.capitalandcounties
Slide 4: Introduction
Introduction Financial Review Operating Update INTRODUCTION Ian Hawksworth Looking Ahead Q&A 4 Capco Annual Results 2016 www.capitalandcounties.com
Slide 5: Two Prime Central London Estates
TWO PRIME CENTRAL LONDON ESTATES Covent Garden Clear and focused strategy Covent Garden – Transformed into a globally recognised retail and dining destination, driving rental growth through creative asset management Earls Court – Driving value through planning, land assembly, land enablement and sel
Slide 6: Headline Financials
HEADLINE FINANCIALS Covent Earls Court Like-for-like valuation (%) Garden Properties H1 H2 £2.3bn £1.1bn1 Covent Garden 3.0% 3.4% +6.4% lfl -20.4% lfl Earls Court Properties -14.3% -6.1% Total property value Venues -0.2% -1.1% Initial yield: 2.1% £3.7bn 1 Total property value Total Property -3.8% -0
Slide 7: Implementing Our Strategy
IMPLEMENTING OUR STRATEGY High quality assets, strong balance sheet Excellent momentum at Covent Garden – Record year of leasing activity across the estate – 95 new leases and renewals, 9% above December 2015 ERV – 8% lfl increase in ERV to £96m – New ERV target of £125m to be achieved by December 2
Slide 8: Financial Review
Introduction Financial Review Operating Update FINANCIAL REVIEW Situl Jobanputra Looking Ahead Q&A 8 Capco Annual Results 2016 www.capitalandcounties.com
Slide 9: Underlying Earnings
UNDERLYING EARNINGS 2016 2015 Var £m £m £m Net rental income 81.5 74.9 6.6 Administration costs (50.5) (52.5) 2.0 Net finance costs (19.5) (20.1) 0.6 Other 2.7 2.5 0.2 Tax on underlying earnings (2.4) 3.0 (5.4) Underlying earnings 11.8 7.8 4.0 Underlying earnings per share 1.4 0.9 0.5 Total dividend
Slide 10: Net Rental Income
NET RENTAL INCOME £m 90 £4.3m £0.1m £81.5m £2.7m 80 £74.9m £0.5m Venues & Other 70 £23.2m Venues & Other £18.8m 60 Earls Court 50 Earls Court Properties Properties £16.8m £17.3m 40 30 Covent Garden Covent Garden 20 £41.5m £38.8m 10 0 Dec-15 Covent Garden Earls Court Properties Venues Other Dec-16 No
Slide 11: EPRA Balance Sheet
EPRA BALANCE SHEET 2016 2015 Var £m £m £m Investment & Trading Property 3,620 3,530 90 Unrecognised surplus on trading property 48 100 (52) Net debt (847) (579) (268) Other 57 8 49 EPRA NAV 2,878 3,059 (181) Number of shares in issue (diluted) 848m 848m - EPRA NAV per share 340p 361p (21p) EPRA NNNA
Slide 12: Cash Utilisation
CASH UTILISATION Robust financial position £m 600 £556m 500 £412m 400 300 £230m £491m £321m 200 100 £91m £222m £3m £31m £65m 0 Dec-15 Operating cash flow Financing activities Investing activities Dividend & Other Dec-16 Cash Undrawn Facilities Note: All numbers shown at Group share 12 Capco Annual R
Slide 13: Strong Financial Position
STRONG FINANCIAL POSITION 2016 2015 Strong balance sheet Net Debt £847m £579m – Significant liquidity LTV 23% 16% – Low average cost of debt Interest cover 173% 124% – Longer maturities; modest short term loan Cash and available facilities £556m £412m repayments Weighted average cost of debt 2.7% 3.
Slide 14: Covent Garden
Introduction Financial Review Operating Update COVENT GARDEN Ian Hawksworth Looking Ahead Q&A 14 Capco Annual Results 2016 www.capitalandcounties.com
Slide 15: Covent Garden
COVENT GARDEN 15 Capco Annual Results 2016 www.capitalandcounties.com
Slide 16: Strategy for Covent Garden
STRATEGY FOR COVENT GARDEN A leading global destination for brands and visitors Asset management Tactical acquisitions Target Return Strategic development 10–12% Creativity Planning Land assembly Target Return Land enablement 12–15% Selective development 16 Capco Annual Results 2016 www.capitalandco
Slide 17: Covent Garden Highlights
COVENT GARDEN HIGHLIGHTS A world class environment for global brands Portfolio value ERV New lettings & renewals Acquisitions £2.3bn +8% (lfl) +9% £85m +6.4% like-for-like £96m Ahead of Dec-15 ERV Brand offer strengthened significantly Record year of leasing activity – 95 new leases and renewals – £
Slide 18: Driving Rental Growth
DRIVING RENTAL GROWTH Average Zone A rents significantly below central London ITZA psf (£) – December 2016 18 Capco Annual Results 2016 www.capitalandcounties.com
Slide 19: Zone A Distribution 2009
ZONE A DISTRIBUTION 2009 £600 - £999 £450 - £599 £300 - £449 £200 - £299 £0 - £199 Acquisitions Since Dec 2009 19 Capco Annual Results 2016 www.capitalandcounties.com
Slide 20: Zone A Distribution 2016
ZONE A DISTRIBUTION 2016 £1,000+ £600 - £999 £450 - £599 £300 - £449 £200 - £299 £0 - £199 Acquisitions Since Dec 2009 20 Capco Annual Results 2016 www.capitalandcounties.com
Slide 21: Covent Garden Driving Income Growth
COVENT GARDEN Driving income growth • Additional £8m of rent captured since Dec-15 £m • A further £4m contracted since Dec-16 100 £16.3m 90 £10.5m 80 70 £3.1m £9.5m 60 £0.9m £3.6m £96.0m 50 40 £66.1m 30 £52.1m 20 10 Dec-16 Gross Income Rent-frees & Stepped Turnover & Other Contracted & Under Total C
Slide 22: Implementing Our Strategy: Strengthening Core Categories
IMPLEMENTING OUR STRATEGY Strengthening our core categories Luxury accessories and gifting introduced – Store openings by Mulberry and The Watch Gallery – Latest signings include British heritage brands Tom Davies and N.PEAL Strong demand for The Market Building – New Zone A rental level of £675 per
Slide 23: Floral Court Progressing Well
FLORAL COURT PROGRESSING WELL Significant pre-let to Petersham Nurseries at Floral Court (formerly Kings Court) – Lifestyle brand to create bespoke retail and dining concepts – 16,000 square feet (NIA); 60% of the commercial space An opportunity to unlock rental potential through placemaking on Flor
Slide 24: Excellent Brands Introduced
EXCELLENT BRANDS INTRODUCED Strengthening the retail and dining offer Note: Estee Lauder trading as Tom Ford 24 Capco Annual Results 2016 www.capitalandcounties.com
Slide 25: Earls Court Properties
Introduction Financial Review Operating Update EARLS COURT PROPERTIES Gary Yardley Looking Ahead Q&A 25 Capco Annual Results 2016 www.capitalandcounties.com
Slide 26: The Earls Court Masterplan
THE EARLS COURT MASTERPLAN Over 70 acres of strategic land in central London 26 Capco Annual Results 2016 www.capitalandcounties.com
Slide 27: Strategy for Earls Court
STRATEGY FOR EARLS COURT A unique opportunity to create London’s next great estate Asset management Tactical acquisitions Strategic development Creativity Planning Land assembly Land enablement Selective development 27 Capco Annual Results 2016 www.capitalandcounties.com
Slide 28: Valuations
VALUATIONS Empress Lillie ECPL CLSA Other Total State Square Ownership 63% 100% 100% 100% 50% Dec-16 £644m £230m n/a £45m £223m £1,142m FY Variance (lfl) (23)% (20)% n/a (4)% (17)% (20)% H1 Variance (lfl) (14%) (16%) n/a (2%) (14%) (14%) H2 Variance (lfl) (9%) (4%) n/a (2%) (3%) (6%) Note: All numbe
Slide 29: Enabling the Land for Future Development
ENABLING THE LAND FOR FUTURE DEVELOPMENT 29 Capco Annual Results 2016 www.capitalandcounties.com
Slide 30: Significant Progress on Site
SIGNIFICANT PROGRESS ON SITE 30 Capco Annual Results 2016 www.capitalandcounties.com
Slide 31: Lillie Square
LILLIE SQUARE First residents have moved in and Phase 2 sales continue at a premium to Phase 1 Approximately 50% of entire scheme reserved or exchanged off plan – Over £300m of sales (Group share £150m) Completion of first units at Phase 1 – First residents have moved in – Circa £250m (Group share £
Slide 32: Empress Place
EMPRESS PLACE New planning application expected to be submitted for Empress Place in spring 2017 – Creates new entrance to the Earls Court Masterplan – Aligns with ability to deliver greater density Detailed planning consent achieved for Exhibition Square – Part of existing Masterplan creating publi
Slide 33: A Central London GLA Opportunity Area
A CENTRAL LONDON GLA OPPORTUNITY AREA Representations submitted to GLA Consented, large scale scheme with a high transport accessibility rating Representations have been submitted to the Greater London Authority (GLA) in preparation for the new London Plan – Outlines Earls Court’s ability to deliver
Slide 34: Looking Ahead
Introduction Financial Review Operating Update LOOKING AHEAD Ian Hawksworth Looking Ahead Q&A 34 Capco Annual Results 2016 www.capitalandcounties.com
Slide 35: Looking Ahead
LOOKING AHEAD Focused on London; high quality assets; strong balance sheet Two unique prime central London assets backed by a strong balance sheet – Macro-economic uncertainty in the short-term – Low LTV, high liquidity and modest capital commitments Significant financial flexibility and well positi
Slide 36: Q&A
Q&A 36 Capco Annual Results 2016 www.capitalandcounties.com
Slide 37: Appendix
APPENDIX 1. FINANCIALS 2. COVENT GARDEN 3. EARLS COURT PROPERTIES 37 Capco Annual Results 2016 www.capitalandcounties.com
Slide 38: Summary Balance Sheet
SUMMARY BALANCE SHEET IFRS to Group Share as at 31 December 2016 Add back: Less: Joint Non-controlling IFRS Ventures1 interest2 Group share £m £m £m £m Investment & Trading Property 3,823 176 (379) 3,620 Net Debt (815) (40) 8 (847) Other assets and liabilities 165 (136) 3 32 Non-controlling interest
Slide 39: EPRA Net Assets per Share
EPRA NET ASSETS PER SHARE Pps 380 11.0p 360 1.4p 2.9p 340 34.7p 0.4p 331.5p.6 320 360.9 300 339.6 280 260 Dec-15 Covent Garden Earls Court Venues Underlying Profits Dividend Other Dec-16 revaluation Properties revaluation revaluation EPRA NNNAV 335 pence per share 39 Capco Annual Results 2016 www.ca
Slide 40: Debt Covenants
DEBT COVENANTS Maturity Loan LTV Interest cover outstanding1 covenant covenant Covent Garden2 2020 - 2028 £675m 60% 120% ECPL 2026 £20m 40% n/a Lillie Square3 2017- 2018 £78m 75% n/a Empress State 2018 £85m 60% 300% Olympia London 2020 £50m 50% 250% Total £908m 1. The loan values are the nominal val
Slide 41: Modest Capital Commitments
MODEST CAPITAL COMMITMENTS £m Current committed capex timeline Modest capital commitments of £157m 140 120 – Covent Garden £75m 100 – Earls Court £64m 80 60 – Lillie Square £18m 40 Proforma LTV of 28% taking account of 20 all current commitments 0 2017 2018 2019 Covent Garden Earls Court Lillie Squa
Slide 42: Taxation
TAXATION Summary 1. Tax on income The underlying tax rate is 20% which is in line with the statutory corporation tax rate for 2016. This rate will fall to 19% from April 2017. The Chancellor confirmed in the November 2016 Autumn Statement that the UK government remains committed to cutting the main
Slide 43: Covent Garden: 73 Properties, 463 Lettable Units
COVENT GARDEN 73 properties, 463 lettable units LEASE EXPIRY PROFILE ANNUAL GROSS INCOME 2016: 2% Retail: 52% 2017: 16% F&B: 24% WALE 2018: 7% 6.5yrs 2019: 4% £52m Leisure: 2% Offices: 17% 2020: 7% 2021+: 64% Residential: 5% PORTFOLIO VALUE TOTAL FLOOR AREA Retail: 52% Retail: 29% F&B: 19% F&B: 17%
Slide 44: Covent Garden Valuation
COVENT GARDEN VALUATION £m VALUE CREATION £m ERV PROGRESSION 2,500 140 £1,063m £125.0m 120 2,000 100 £96.0m 1,500 £225m £86.2m £525m 80 £75.1m £2,275m £86m 1,000 £58.0m 60 £51.9m £45.8m 500 £37.5m 40 £33.7m £548m 0 20 Dec-09 Acquisitions Capex Disposals Valuation Dec-16 2009 2010 2011 2012 2013 2014
Slide 45: The Earls Court Masterplan
THE EARLS COURT MASTERPLAN Earls Court Partnership Limited; Investment vehicle with TfL – Capco share 63% Empress State Building – 100% owned by Capco Lillie Square – 50:50 JV with KFI Land subject to CLSA – Option exercised and binding agreement in place Lillie Bridge Depot – 100% owned by TfL Earl
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