Shaftesbury Capital Plc · LSE:SHC
Shaftesbury Capital — Capital & Counties Properties — H1 2017 Earnings Presentation
43 slides from Shaftesbury Capital's earnings presentation, Jul 21, 2017
Slide 1: Capital & Counties Properties PLC Interim Results 2017
Capital & Counties Properties PLC Interim Results 2017 21 July 2017 www.capitalandcounties.com
Slide 2: Forward-looking statements
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 materially different from a
Slide 3: Introduction
Introduction 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 Ian Hawksworth Q&A 6. Q&A Capco Interim Results 2017 www.capitalandcounties.com
Slide 4: Introduction
Introduction Financial Review Operating Update Ian Hawksworth Looking Ahead Q&A Capco Interim Results 2017 www.capitalandcounties.com
Slide 5: Clear and focused strategy
Covent Garden Clear and focused strategy Covent Garden – 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 selective Earls Court development Strong balance shee
Slide 6: Covent Garden and Earls Court at a glance
Earls Court Covent Garden Properties £2.4bn £1.1bn1 +1.5% lfl -2.4% lfl Total property value Initial yield: £3.5bn 1 ECPL £647m, -1.6% lfl 2.0% +0.2% lfl Equivalent yield: 3.6% Reversionary yield: 4.0% Empress State: £226m, -2.0% lfl Lillie Square: £197m, -5.4% lfl Other: £43m, -2.8% lfl EPRA NAV 33
Slide 7: Interim results highlights
Continued growth at Covent Garden – 43 new leases and renewals, 4% above December 2016 ERV – 3% lfl increase in ERV to £99m – Positive progress towards ERV target of £125m by December 2020 – 7% lfl growth in NRI (versus June 2016) Positive progress at Earls Court – Lillie Square handovers on track,
Slide 8: Financial Review
Introduction Financial Review Operating Update Situl Jobanputra Looking Ahead Q&A Capco Interim Results 2017 www.capitalandcounties.com
Slide 9: Income statement summary
Jun-17 Jun-16 Var £m £m £m Continuing operations: Net rental income 31.8 28.2 3.6 Administration costs (21.4) (21.0) (0.4) Net finance costs (10.1) (9.6) (0.5) Other 1.3 1.4 (0.1) Tax (0.3) (1.0) 0.7 Underlying earnings from continuing operations 1.3 (2.0) 3.3 Including Venues: Underlying earnings 4
Slide 10: Continuing net rental income up from £28.2m to £31.8m
£m 50 45 £3.2m £0.4m £40.5m 40 £39.0m £5.1m Venues 35 Venues £7.2m £12.3m 30 Earls Court Properties Continuing net rental income & Other 25 Earls Court Properties up from £28.2m to £31.8m £8.4m & Other £8.0m 20 15 Covent Garden Covent Garden £23.4m 10 £20.2m 5 0 H1 16 Covent Garden Earls Court Prope
Slide 11: ERV bridge
£m 100 £14.3m £13.3m 85 £2.9m 70 £4.3m £0.7m £10.5m 55 £98.8m 40 £68.3m £52.8m 25 10 Jun-17 Gross Rent-frees & Turnover & Other Contracted & Total Contracted & Planned Vacancy Development & Reversion Jun-17 ERV Income Stepped rents income Under Offer Under Offer Refurbishment Capco Interim Results 2
Slide 12: Net debt and EPRA NAV
Jun-17 Dec-16 Var £m £m £m Investment & Trading Property 3,390 3,620 (230) Unrecognised surplus on trading property 35 48 (13) Net debt (622) (847) 225 Other 80 57 23 EPRA NAV 2,883 2,878 5 Number of shares in issue (diluted) 850m 848m 2m EPRA NAV per share 339.1p 339.6p (0.5p) EPRA NNNAV 337 pence
Slide 13: Cash and facilities movement
£m £801m 800 700 £224m 600 £556m 500 400 £270m £526m 300 £491m £90m 200 100 £65m £185m £9m £51m 0 Dec-16 Disposals Investment Financing Operating cash flow, Jun-17 Cash Dividend & Other Undrawn Facilities US Private Placement pro forma adjusted for costs Note: All numbers shown at Group share Capco
Slide 14: Financing activities and strong balance sheet
Jun-17 Dec-16 Financing activities Net debt £622m £847m – Sale of Venues for £230m net cash LTV 18% 23% – Repayment of £86m Empress State debt Interest cover 156% 173% – New £225m US Private Placement signed Cash and available facilities £577m £556m for Covent Garden Weighted average cost of debt 3.
Slide 15: Operating Update
Introduction Financial Review Operating Update Ian Hawksworth Looking Ahead Q&A Capco Interim Results 2017 www.capitalandcounties.com
Slide 16: Capco Interim Results 2017 www.capitalandcounties.com
Capco Interim Results 2017 www.capitalandcounties.com
Slide 17: Covent Garden strategy and target returns
Asset management Tactical acquisitions Target Return Strategic development 10–12% Creativity Planning Land assembly Target Return Land enablement 12–15% Selective development Capco Interim Results 2017 www.capitalandcounties.com
Slide 18: Covent Garden portfolio value, ERV and lettings
Portfolio value ERV New lettings & renewals NRI (vs June 2016) £2.4bn +3% (lfl) +4% +7% +1.5% like-for-like £99m Ahead of Dec-16 ERV like-for-like Positive operational momentum – 43 new leases and renewals – £7m of rent contracted in the period – Capturing income growth Excellent brands introduced E
Slide 19: ITZA psf June 2017
ITZA psf (£) – June 2017 Capco Interim Results 2017 www.capitalandcounties.com
Slide 20: Kent & Curwen introduced to Floral Street
Kent & Curwen introduced to Floral Street Luxury accessories category strengthened – Linda Farrow – Daniel Wellington Bose signed on King Street Capco Interim Results 2017 www.capitalandcounties.com
Slide 21: A newly established retail street
A newly established retail street Excellent new brands introduced over the period Opening of The Henrietta Hotel Capco Interim Results 2017 www.capitalandcounties.com
Slide 22: Floral Court on track to complete by end of year
Floral Court on track to complete by the end of the year 11-12 Floral Street – 12 Floral Street pre-let to Kent & Curwen – Completion Q4 2017 Opera Terrace complete – Let to SushiSamba, opening Q4 2017 26-27 Southampton Street – Completion and launch of 10 residential apartments Capco Interim Result
Slide 23: Earls Court Properties
Introduction Financial Review Operating Update Gary Yardley Looking Ahead Q&A Capco Interim Results 2017 www.capitalandcounties.com
Slide 24: Earls Court strategy
Asset management Tactical acquisitions Strategic development Creativity Planning Land assembly Land enablement Selective development Capco Interim Results 2017 www.capitalandcounties.com
Slide 25: Earls Court Properties 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 Jun-17 £647m £226m n/a £43m £197m £1,113m Variance (lfl) (1.6)% (2.0)% n/a (2.8)% (5.4)% (2.4)% Note: All numbers shown at Group share Capco Interim Results 2017 www.capitalan
Slide 26: Lillie Square sales and handovers
Over 50% of all private units across the scheme sold off plan Phase 1 completions on track – 78 apartments handed over – £75m of sales proceeds received (Group share £37m) – Circa £250m (Group share £125m) of sales proceeds expected by the end of 2017 Phase 2 sales continue – 86 units reserved or ex
Slide 27: Capco Interim Results 2017 www.capitalandcounties.com
Capco Interim Results 2017 www.capitalandcounties.com
Slide 28: Enhanced Masterplan and Empress Place
ECPL to submit new planning application for Empress Place shortly – Creates new entrance to the Earls Court Masterplan – Aligns with ability to deliver greater density Positive engagement with relevant stakeholders on the enhanced Masterplan Capco Interim Results 2017 www.capitalandcounties.com
Slide 29: Sale of Venues for £296m, consistent with strategy
Sale of Venues for £296m, consistent with strategy Gain on investment £226m £m 400 £383m 350 300 Capex 250 £296m 200 Acquisition cost £157m 150 Sale price £49m 100 Net Income 2007- 50 £108m 2017 £87m 0 Investment Proceeds Capco Interim Results 2017 www.capitalandcounties.com
Slide 30: Looking Ahead
Introduction Financial Review Operating Update Ian Hawksworth Looking Ahead Q&A Capco Interim Results 2017 www.capitalandcounties.com
Slide 31: Two unique prime central London assets backed by strong balance sheet
Two unique prime central London assets backed by a strong balance sheet – Low LTV, high liquidity and modest capital commitments Covent Garden – Introduce best in class global brands and enhanced customer experiences – Completion of Floral Court – Continued investment on the estate – ERV target of £
Slide 32: Capco Interim Results 2017 www.capitalandcounties.com
Capco Interim Results 2017 www.capitalandcounties.com
Slide 33: Appendix contents
1. FINANCIALS 2. COVENT GARDEN 3. EARLS COURT PROPERTIES Capco Interim Results 2017 www.capitalandcounties.com
Slide 34: IFRS to Group share reconciliation
Add back: Less: Joint Non-controlling IFRS Ventures1 interest2 Group share £m £m £m £m Investment & Trading Property 3,609 161 (380) 3,390 Net Debt (613) (24) 15 (622) Other assets and liabilities 203 (137) 3 69 Non-controlling interest (362) - 362 - NAV 2,837 - - 2,837 1. This consists of the Lilli
Slide 35: EPRA NNNAV bridge
Pps 350 345 4.2p 0.5p 340 3.2p 0.5p 1.5p 335 330 340.6 340.6 340.6 339.6 339.6 339.1 325 320 Dec-16 Covent Garden Earls Court Underlying Profits Dividend Other Jun-17 revaluation Properties revaluation EPRA NNNAV 337 pence per share Capco Interim Results 2017 www.capitalandcounties.com
Slide 36: Debt maturity and covenants
Maturity Loan LTV Interest cover outstanding1 covenant covenant Covent Garden2 2020-2028 £585m 60% 120% ECPL 2026 £30m 40% n/a Lillie Square 2019 £59m 75% n/a Total £674m 1.The loan values are the nominal values at 30 June 2017 shown on a Group share basis. The balance sheet value of the loans inclu
Slide 37: Modest capital commitments of £107m
£m Capital Commitments Timeline Modest capital commitments of £107m 80 – Covent Garden £45m 60 – Earls Court £56m – Lillie Square £6m 40 20 0 2017 2018 2019 Covent Garden Earls Court Lillie Square Key commitments Project Commitment ERV Completion date Floral Court £33m £7.6m Q4 2017 11-12 Floral Str
Slide 38: Tax on income and capital gains
1. Tax on income The underlying tax rate including discontinued operations is 19.7% which is in line with the statutory corporation tax rate for 2017. The Chancellor reconfirmed the UK Government's commitment to cut the main rate of corporation tax to 17% from April 2020. Medium-term underlying tax
Slide 39: Covent Garden lease expiry and portfolio breakdown
LEASE EXPIRY PROFILE ANNUAL GROSS INCOME 2017: 6% Retail: 53% 2018: 9% F&B: 23% WALE 2019: 5% 7.9yrs 2020: 5% £53m Leisure: 2% Offices: 17% 2021: 3% 2022+: 72% Residential: 5% PORTFOLIO VALUE TOTAL FLOOR AREA Retail: 53% Retail: 29% F&B: 19% F&B: 17% Leisure: 3% Leisure: 10% £2.4bn Offices: 12% 1.1m
Slide 40: Capco Interim Results 2017 www.capitalandcounties.com
Capco Interim Results 2017 www.capitalandcounties.com
Slide 41: Capco Interim Results 2017 www.capitalandcounties.com
Capco Interim Results 2017 www.capitalandcounties.com
Slide 42: Value creation and ERV progression
£m VALUE CREATION £m ERV PROGRESSION 2,500 140 £1,098m £125.0m 120 2,000 £98.8m 100 £96.0m 1,500 £268m £86.2m £531m 80 £75.1m £90m £2,355m 1,000 £58.0m 60 £51.9m £45.8m 500 £37.5m 40 £33.7m £548m 0 20 Dec-09 Acquisitions Capex Disposals Valuation Jun-17 2009 2010 2011 2012 2013 2014 2015 2016 Jun-17
Slide 43: Earls Court Masterplan and Empress State Building key areas
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 Earls Court Masterplan and Empr
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