Land Securities Group Plc · LSE:LAND
Land Securities — Q2 2024 Earnings Presentation
29 slides from Land Securities's earnings presentation, Nov 14, 2023
Slide 1: Half year results 2023
Half year results 2023 Mark Allan CHIEF EXECUTIVE OFFICER
Slide 2: A clear strategic focus
Landsec — Half year results 2023/24 3 A clear strategic focus Built on a clear market view and focused execution What we have said since late 2020 Where we are now Capital 2020: interest rates and property yields at / near all-time lows Adjustment to new reality ongoing markets 2022: new higher rate
Slide 3: Successful delivery of our strategy
Landsec — Half year results 2023/24 4 Successful delivery of our strategy Well-placed for growth given decisive positioning for new reality Best-in-class space Decisive capital allocation Future growth potential Growing resilient returns Nova, SW1 SOLD 21 Moorfields, EC2 Timber Square, SE1 Trinity,
Slide 4: Creating value through our competitive advantages
Landsec — Half year results 2023/24 5 Creating value through our competitive advantages High-quality portfolio and strong customer relationships underpin growth Central London Major retail destinations Mixed-use urban £10.1bn portfolio Portfolio split 12% Lucent, W1 Bluewater, Kent Finchley Road, NW
Slide 5: Reiterating full year guidance
Landsec — Half year results 2023/24 6 Reiterating full year guidance Resilience in earnings supported by strong capital base 30 September 2023 30 September 2022 % change EPRA earnings £198m £197m +0.5% EPRA EPS 26.7p 26.6p +0.4% Dividend per share 18.2p 17.6p +3.4% Total return on equity -2.4% -2.9%
Slide 6: Delivering sustainably
Landsec — Half year results 2023/24 7 Delivering sustainably Significant progress on SBTi-endorsed targets to reach net-zero by 2040 Reduction in emissions to net zero by 2040 aligned to SBTi Net Zero Standard Direct / indirect emissions -26% vs 2019/20 baseline tCO2e Scope 1 Scope 2 Scope 3 Energy
Slide 7: Operational review
Operational review Mark Allan CHIEF EXECUTIVE OFFICER
Slide 8: Central London: Bifurcation in demand drives continued polarisation
Landsec — Half year results 2023/24 9 Central London Bifurcation in demand drives continued polarisation Clear polarisation — total London office market vacancy by number of buildings1 Customers firmly focused on best-in-class space % c. 40% of vacancy to attract and retain key talent 40 is in 1% of
Slide 9: Central London: Significant portfolio repositioning
Landsec — Half year results 2023/24 10 Central London Significant portfolio repositioning to drive higher future returns Central London portfolio — changes over last three years Sold £2.2bn of offices since late 2020 City, Canary Wharf City & Midtown — 83% HQ buildings let to single customers & Midt
Slide 10: Central London: Strong customer demand
Landsec — Half year results 2023/24 11 Central London Strong customer demand underpinned by high-quality portfolio Central London — operational performance Strong customer relationships reflected in demand 30 September 31 March — 27 of 35 leases signed in last 12 months involved 2023 2023 customers
Slide 11: Central London: Investing in our high-quality portfolio
Landsec — Half year results 2023/24 12 Central London Investing in our high-quality portfolio at accretive returns Developments completed in H1 2023 Newly committed in H1 2023 for completion in H2 2025 n2, SW1 Lucent, W1 Timber Square, SE1 Thirty High, SW1 165,000 sq ft 144,000 sq ft 376,000 sq ft 2
Slide 12: Major retail destinations: Benefit from focus of brands
Landsec — Half year results 2023/24 13 Major retail destinations Continuing to benefit from focus of brands on best destinations Landsec destinations outperform for key brands Brands focused on omni-channel vs online / offline Growth in brands’ overall retail sales vs sales growth in Landsec stores(
Slide 13: Major retail destinations: Growth in sales underpins occupancy and rents
Landsec — Half year results 2023/24 14 Major retail destinations Growth in sales underpins further growth in occupancy and rents 93.2% 91.5% Major retail destinations occupancy — continued growth over last three years Total retail sales up 4.0% YoY, with LFL sales 5.4% 100% above pre-pandemic levels
Slide 14: Major retail destinations: High single / low double-digit returns
Landsec — Half year results 2023/24 15 Major retail destinations Potential to deliver high single / low double-digit returns Movement in shopping centre sales, valuation and rents — March 2017 = 100 Resilient returns driven by high c. 8% income yield 110 Net rental income Asset values Total sales 10
Slide 15: Mixed-use urban neighbourhoods
Landsec — Half year results 2023/24 16 Mixed-use urban neighbourhoods Potential to create sustainable, thriving urban places NATIONAL RAIL 24 acres Strategy built on structural trend of demographic growth, urbanisation and changing city life 2.5m sq ft 1,500 homes Driving long-term growth through cr
Slide 16: Mixed-use: Optionality for first two schemes
Landsec — Half year results 2023/24 17 Mixed-use urban neighbourhoods Creating optionality for potential start of first two schemes next year Mayfield, Manchester — Secured detailed planning for first 330,000 sq ft of offices, with expected TDC of c. £180m — Target BREEAM Outstanding, WELL Platinum
Slide 17: Financial review
Financial review Vanessa Simms CHIEF FINANCIAL OFFICER
Slide 18: Financial summary
Landsec — Half year results 2023/24 19 Financial summary Strong capital base underpins resilience of earnings 30 September 2023 30 September 2022 % change Gross rental income(1) £323m £325m 0.6% EPRA earnings(1) £198m £197m 0.5% EPRA earnings per share(1) 26.7p 26.6p 0.4% Dividend per share 18.2p 17
Slide 19: EPRA EPS up 0.4%
Landsec — Half year results 2023/24 20 EPRA EPS up 0.4% Stable earnings despite deleveraging, in line with full-year guidance 30 September 2023 30 September 2022 Rental income broadly stable despite deleveraging £m £m Efficiency improvements offset high inflation Gross rental income 323 325 — Direct
Slide 20: Like-for-like net rental income up 2.8%
Landsec — Half year results 2023/24 21 Like-for-like net rental income up 2.8% Growth driven by net income growth in major retail Movement in net rental income (£m) Central London offices +0.8%, offset by reduction +£6m in variable income in retail / other Like-for-like growth +2.8% Major retail +9.
Slide 21: Strong demand for best space drives 2.5% ERV growth
Landsec — Half year results 2023/24 22 Strong demand for best space drives 2.5% ERV growth Valuation yields up 29bps as interest rates rise Valuation as at Surplus / Equivalent LFL equivalent yield LFL ERV Valuation surplus / (deficit) % — H1 23/24 30 September 2023 (deficit) yield movement movement
Slide 22: Total return on equity improved to -2.4%
Landsec — Half year results 2023/24 23 Total return on equity improved to -2.4% Rise in valuation yields offsets positive underlying returns Total return on equity Movement in EPRA NTA per share (pps) Half year to Full year to Half year to Full year to Half year to Sept-21 Mar-22 Sept-22 Mar-23 Sept
Slide 23: Remaining decisive in capital allocation
Landsec — Half year results 2023/24 24 Remaining decisive in capital allocation Actions based on clear view on risk / return expectations Examples of recent activity Manage balance sheet through the cycle SOLD ACQUIRED COMPLETED Sold £85m of smaller retail / non-core assets to date, on average 6% ab
Slide 24: Balance sheet remains sector-leading
Landsec — Half year results 2023/24 25 Balance sheet remains sector-leading Low net debt / EBITDA and long average debt maturity No need to refinance any debt until 2026 — debt maturity by calendar year(1) 30 September 2023 31 March 2023 £m 2,000 Bond debt Drawn bank debt/Commercial paper Undrawn ba
Slide 25: Growing return on equity and earnings yield
Landsec — Half year results 2023/24 26 Growing return on equity and earnings yield Portfolio and capital base positioned for growth Well placed for future growth following repositioning over last three years Maintain guidance of low to mid-single digit ERV growth in Central London / Major retail Rei
Slide 26: Overview
Overview Mark Allan CHIEF EXECUTIVE OFFICER
Slide 27: Well-positioned for new market reality
Landsec — Half year results 2023/24 28 Well-positioned for new market reality Actively building on key competitive advantages Long-term view — property yields vs 10-year gilt yields Focus on driving performance and potential future % All property equivalent yield 10-year gilt yield 18 opportunities
Slide 28: Our focus for the next 12 months
Landsec — Half year results 2023/24 29 Our focus for the next 12 months Capitalising on future growth potential Build further on strong operational momentum and improving growth prospects Monetise assets where we cannot add further value Capitalise on new opportunities Enhance optionality in future
Slide 29: Thank you for attending this meeting
Thank you for attending this meeting and have a safe onward journey. @LandsecGroup Landsec.com
Land Securities Group — Q2 2024 Earnings Presentation on 6ix