Land Securities Group Plc · LSE:LAND
Land Securities — Landsec — FY2019 Earnings Presentation
53 slides from Land Securities's earnings presentation, May 2019
Slide 1: Our annual results
Our annual results For the year ended 31 March 2019 @LandsecGroup Landsec.com
Slide 2: Agenda
Landsec — Annual results 2019 2 Agenda Looking forwards Rob Noel Financial results Martin Greenslade Regional retail and leisure Robert Noel London Colette O’Shea Outlook Robert Noel
Slide 3: Looking forwards
Looking forwards Robert Noel Chief Executive
Slide 4: Our evolving strategy addressing key trends
Landsec — Annual results 2019 4 Our evolving strategy addressing key trends Digital — Disrupting traditional models — Enabling better products, solutions and services Capital allocation Our goal Demographics and risk taking Creating sustainable — Growing, ageing population shareholder — Millennials
Slide 5: Balance of business shifting more to London
Landsec — Annual results 2019 5 Balance of business shifting more to London Today —Connected locations —Fewer assets going forward —Flexible buildings and range of offers —Great destinations —Bringing innovation 65% 35% in growing catchments Outside to construction and London London operations —Redu
Slide 6: Robust performance against a mixed backdrop
Landsec — Annual results 2019 6 Robust performance against a mixed backdrop Market backdrop Our year — Macroeconomic and political contrasts — High occupancy levels — Gridlocked politics — Economic growth still positive — New products and services — Record employment, but consumer caution — Growing
Slide 7: Financial results
Financial results Martin Greenslade Chief Financial Officer
Slide 8: Financial summary
Landsec — Annual results 2019 8 Financial summary 31 March 2018(1) 31 March 2019 Change % £406m Revenue profit(2) £442m 8.9 £(91)m Valuation deficit(2) £(557)m (4.1)(3) £(43)m Loss before tax £(123)m 53.1p Adjusted diluted earnings per share(2) 59.7p 12.4 1,403p EPRA net assets per share 1,339p (4.6
Slide 9: Net rental income analysis
Landsec — Annual results 2019 9 Net rental income analysis £m 650 4 2 - - 600 (10) (7) (3) 550 500 322 308 450 400 350 10 1 300 20 - (1) (7) (2) 250 200 150 289 310 100 50 0 Year ended 31 Like-for-like Proposed Development Completed Acquisitions Sales since Non-property Year ended 31 March 2018 deve
Slide 10: Like-for-like net rental income analysis Retail Portfolio
Landsec — Annual results 2019 10 Like-for-like net rental income analysis Retail Portfolio £m £m 650 4 2 - 300 - 600 (10) (7) (3) 550 290 500 322 280 - 308 450 (3) 400 270 (5) (2) 350 281 10 1 300 20 - (1) 260 (7) (2) 271 250 200 250 31 March 2018 Rent reviews / Administrations / Bad debts / Other 3
Slide 11: Like-for-like net rental income analysis London Portfolio
Landsec — Annual results 2019 11 Like-for-like net rental income analysis London Portfolio £m £m 650 280 4 2 - - 600 (10) (7) (3) 550 270 5 500 2 322 308 450 8 260 400 5 273 350 10 1 300 20 250 - (1) - (7) (2) 253 250 200 240 31 March 2018 Rent reviews New lettings Administrations / Piccadilly Light
Slide 12: Combined Portfolio valuation
Landsec — Annual results 2019 12 Combined Portfolio valuation Central —£13.8bn portfolio London retail London — Assets located in London down 0.8% shopping centres — Assets outside London down 9.4% Regional shopping — Valuation declined 4.1% Offices Combined centres Portfolio — London Portfolio down
Slide 13: Combined Portfolio valuation
Landsec — Annual results 2019 13 Combined Portfolio valuation Equivalent Valuation ERV yield shift £m Surplus/deficit % Change % bps Offices 6,560 0.4 2.3 3 Central London retail 1,417 (3.9) (0.9) 7 London shopping centres 537 (5.4) (4.6) (4) Regional shopping centres 2,291 (13.2) (5.9) 30 Retail pa
Slide 14: Development expenditure
Landsec — Annual results 2019 14 Development expenditure Estimated future spend Impact Estimated future spend £m Potential cash spend on March 19 600 Group LTV(2) 500 Development programme £385m 29.1% 400 Proposed developments £320m 30.6% 300 200 In feasibility – office-led £670m 33.7% 100 0 In feas
Slide 15: Financing
Landsec — Annual results 2019 15 Financing —Group LTV(1) at 27.1% up from 25.8% at 31 March 2018 Debt and gearing 31 Mar 19 31 Mar 18 —Weighted average cost of debt broadly Adjusted net debt(1) £3,737m £3,652m unchanged at 2.7% —Flexible debt and considerable balance Weighted average maturity 12.3 y
Slide 16: Financial summary
Landsec — Annual results 2019 16 Financial summary — Another year of earnings growth — Resilience from diverse income streams — Strong balance sheet — Significant firepower for current investment phase
Slide 17: Regional retail and leisure
Regional retail and leisure Robert Noel Chief Executive
Slide 18: Continued shift to experience
Landsec — Annual results 2019 18 Regional retail and leisure Continued shift to experience — Retail market remains challenging — Widening use of CVAs — Strategy driven by key drivers — Growth of e-Commerce — Population and spending growth in the South East — Change in spending habits — Importance of
Slide 19: A decade of repositioning
Landsec — Annual results 2019 19 Regional retail and leisure A decade of repositioning Number of Landsec regional retail and leisure assets Location of Landsec regional retail and leisure assets by value 2009 2019 2009 2019 Retail parks Scotland & Northern Ireland 32 11 16% 8% Shopping centres The M
Slide 20: Now dominated by destinations
Landsec — Annual results 2019 20 Regional retail and leisure Now dominated by destinations — 97% occupied Retail parks — £17m lettings in 173 transactions 5% Leisure — 147m visits(1) 5% — Footfall +40 bps vs. benchmark(2) 65% 34% Outlets 7% — Like-for-like sales +10 bps vs. benchmark — Same centre s
Slide 21: Retail parks
Landsec — Annual results 2019 21 Retail parks Weighted towards convenience — Livingston and Selly Oak sold during year — 11 retail parks — 5% of portfolio, £0.6bn — Open A1 planning use — Occupancy 95% — Average rent £20 psf Top 10 occupiers
Slide 22: Regional shopping centres
Landsec — Annual results 2019 22 Regional shopping centres Dominant in their catchments — 6 shopping centres — 17% of portfolio, £2.3bn Buchanan Galleries — 97% occupancy — Good activity with 65 lease events — Continued pressure on rental markets Trinity Leeds White Rose Westgate Oxford Bluewater St
Slide 23: Leisure parks
Landsec — Annual results 2019 23 Leisure parks Leisure spend continuing to grow — 17 leisure parks — 5% of portfolio, £0.8bn — Occupancy 98% — Acquired 2012 to 2014 — Cater for experience segment of consumer spend — Record year for cinema attendance Brighton Marina
Slide 24: Outlets
Landsec — Annual results 2019 24 Outlets A great day out — 5 outlets — 7% of portfolio, £1.0bn — Ability to capture growth annually — Short performance related agreements allows curation of brands — Good progress on recently acquired outlets — Polo Ralph Lauren introduced to Braintree Village — Plan
Slide 25: Regional Retail and Leisure Summary
Landsec — Annual results 2019 25 Regional Retail and Leisure Summary — A tough year for the retail sector — Best destinations remain in demand — Our portfolio will continue to evolve — Experience-led destinations appealing across generations — Supportive and growing catchments — Will reduce as a pro
Slide 26: London
London Colette O’Shea Managing Director
Slide 27: Meeting customers' business needs
Landsec — Annual results 2019 27 Maintaining the strength of our office-led portfolio Meeting customers’ business needs — 98% occupancy — Office WAULT of 9 years — Reversionary potential of £16m or 5% of passing rent over the next 5 years — Completed £23m of rent reviews, increasing passing rent by
Slide 28: Broadening our pool of customers
Landsec — Annual results 2019 28 Meeting customers’ business needs Broadening our pool of customers 9% Financial services 10% Services 2% Retail trade 40% 3% Office-led 2% Public administration portfolio 3% Manufacturing Transport, communications Wholesale trade 31% Other Above shows contracted rent
Slide 29: Property as a service
Landsec — Annual results 2019 29 Property as a service Expanding our customer offer Business priorities: HQ Fitted Myo 10+ year leases 5 - 10 year leases 1 - 3 year leases Talent Furnished Furnished Blank canvas and connected and fully serviced 100+ people 50 - 150 people 10 - 100 people Productivit
Slide 30: Headquarters
Landsec — Annual results 2019 30 Headquarters Delivering great space and long-term partnerships
Slide 31: Landsec Fitted
Landsec — Annual results 2019 31 Landsec Fitted Hassle-free and ready-to-go Fully fitted Premium of Potential and 5 - 15% to to scale to connected net effective 10% of office rent and space reduced voids
Slide 32: Myo
Landsec — Annual results 2019 32 Myo Potential scale up opportunity Freedom to make your mark Sq ft 600,000 Red Lion Court — Marketing started in January 2019 7 Soho Square 500,000 — Average lease term of 1 to 3 years Lavington Street — Targeting 20% premium to net effective rent Portland House 400,
Slide 33: Landsec Lounge
Landsec — Annual results 2019 33 Landsec Lounge Delivering amenity and service — Adds to the popularity of our buildings — New Landsec Lounges underway at 62 Buckingham Gate and Dashwood House — New Street Square and One New Change to follow 62 Buckingham Gate, SW1 Dashwood House, EC2 — Offers provi
Slide 34: Hotels
Landsec — Annual results 2019 34 Hotels Hotels in UK Great long-term opportunity by valuation 2019 — £0.5bn portfolio — 60% by value in London — The rest in major UK cities or airport locations — Low capital value of £249 per sq ft — Income based on a percentage of turnover — WAULT of 12 years — Toe
Slide 35: Hotels
Landsec — Annual results 2019 35 Hotels Great long-term opportunity — £0.5bn portfolio — 60% by value in London Novotel London West, Hammersmith W6 — The rest in major UK cities or airport locations — Low capital value of £249 per sq ft — Income based on a percentage of turnover — WAULT of 12 years
Slide 36: Progressing our drivers of growth
Landsec — Annual results 2019 36 Progressing our drivers of growth Oct 2021 Shepherd’s Bush Total Shepherd’s Bush, W12 ~610k sq ft 3.6m Oct 2021 Finchley Road sq ft Finchley Road, NW3 ~750k sq ft Jul 2020 Jan 2023 Lavington Street Lavington Street, SE1 370k sq ft Jul 2020 Dec 2023 Red Lion Court Red
Slide 37: Driving income and capital value growth
Landsec — Annual results 2019 37 Driving income and capital value growth ERV £140m Jul 2020 Jan 2023 Lavington Street Total Lavington Street, SE1 370k sq ft 2.2m Jul 2020 Dec 2023 Red Lion Court Red Lion Court, SE1 324k sq ft sq ft Apr 2020 Oct 2022 Portland House Portland House, SW1 Including Castl
Slide 38: 21 Moorfields
Landsec — Annual results 2019 38 21 Moorfields Partner of choice — Deutsche Bank will occupy whole building 564,000 sq ft; 25-year FRI lease — Piling finished 6 weeks early — Installation of steel frame has started — Within projected TDC of £576m — Handover to Deutsche Bank 2021
Slide 39: Nova East
Landsec — Annual results 2019 39 Nova East Next generation Victoria — 167,000 sq ft, which will complete the Nova pedestrian connections — Scheme amendments with the planners due to be determined in June — Range of amenities including terraces on every floor — Onsite with enabling works ready to sta
Slide 40: Portland House
Landsec — Annual results 2019 40 Portland House West End landmark — Proposed 401,000 sq ft — New 14 storey building will be attached to existing Portland House — Floor area will increase by 30% with range of floor plates 11,000 to 17,000 sq ft — Range of amenities including cafés and wellness facili
Slide 41: One Sherwood Street
Landsec — Annual results 2019 41 One Sherwood Street Behind the Lights — Location known around the world — 144,000 sq ft behind Piccadilly Lights — Range of amenities, including winter garden and roof top restaurant — Delivering affordable housing at Wardour Street — Demolition started in April 2019
Slide 42: Southwark
Landsec — Annual results 2019 42 Southwark Expanding our presence 14-22 Southwark Bridge Road, SE1 Blackfriars (South entrance) Red Lion Court, SE1 105 Sumner Street, SE1 London Bridge Lavington Street, SE1 24 Southwark Bridge Road, SE1 Southwark
Slide 43: Sumner Street
Landsec — Annual results 2019 43 Sumner Street Delivering new product — Consent for 131,000 sq ft in 2 buildings — Range of amenities including terraces on different levels, all focused around an internal courtyard — Anticipated start on site October 2019, completion January 2022 Landsec Landsec Myo
Slide 44: Lavington Street
Landsec — Annual results 2019 44 Lavington Street A new destination — Acquired in December 2018 — Two buildings — Mix of refurbishment and redevelopment providing approx. 370,000 sq ft of space — Planning application to be submitted December 2019 — Earliest start on site July 2020, completion 2023 L
Slide 45: Red Lion Court
Landsec — Annual results 2019 45 Red Lion Court Prime river front scheme — Enhancing Thames path — 324,000 sq ft scheme — Large public space of 14,000 sq ft — Planning application to be submitted December 2019 — Earliest start on site July 2020, completion 2023 Landsec Landsec Myo Fitted Lounge Red
Slide 46: Residential
Landsec — Annual results 2019 46 Residential Large scale residential potential — Finchley Road and Shepherd’s Bush Finchley Road — Planning applications to be submitted this financial year — Over 1,700 homes / 1.4m sq ft — Total development cost £1.0bn — Delivering in 2026 and beyond Shepherd’s Bush
Slide 47: Leading in manufacturing and assembly
Landsec — Annual results 2019 47 Leading in manufacturing and assembly m2 ££ Reusable Lower carbon platform emissions, allowing less material Increased net Increased Increased economies Lower cost & Shorter Fewer lettable area safety collaboration of scale capital cost reduced waste programme operat
Slide 48: Investment in London
Landsec — Annual results 2019 48 Investment in London — Focus on assets which will: — Add to our development programme — Support new products and services — Thrive in exciting new locations — Competitive for the right assets — Ability to move quickly
Slide 49: London is evolving and so are we
Landsec — Annual results 2019 49 London is evolving and so are we — Office portfolio full — New products and services creating wider customer appeal — Innovation focus: designing and constructing buildings better, faster and for less — Ambition to lead in sustainable development — 3.6m sq ft pipelin
Slide 50: Outlook
Outlook Robert Noel Chief Executive
Slide 51: Looking forwards from a strong position
Landsec — Annual results 2019 51 Outlook Looking forwards from a strong position — London has strong long-term fundamentals — Market dynamics remain healthy — Retail outlook mixed — Leisure and outlets performing well — Shopping centres and retail parks weaker
Slide 52: A clear strategic path
Landsec — Annual results 2019 52 Outlook A clear strategic path — High quality portfolio and strong financial position — Shifting our emphasis to London and increasing development activity — Widening range of offers drives Capital allocation Our goal and risk taking Creating customer appeal sustaina
Slide 53: Our annual results
Our annual results For the year ended 31 March 2019 @LandsecGroup Landsec.com