Slide 1: The Workspace Advantage
THE WORKSPACE ADVANTAGE Investor and Analyst Presentation 8 November 2017 01 Investor and Analyst Presentation 8 November 2017
Slide 2: Agenda
AGENDA WORKSPACE QUESTIONS Jamie Hopkins Chief Executive Officer PERFORMANCE SUPPLEMENTARY Graham Clemett Chief Financial Officer INFORMATION DIRECTION Jamie Hopkins Chief Executive Officer 02 Investor and Analyst Presentation 8 November 2017
Slide 3: Workspace
WORKSPACE 03 Investor and Analyst Presentation 8 November 2017
Slide 4: The Workspace Advantage
WORKSPACE The Workspace Advantage TWO DISTINCT PARTS THAT COME TOGETHER TO DRIVE GROWTH AND ADD VALUE ASSET CUSTOMER OWNERSHIP RELATIONSHIPS Asset ownership ensures Direct marketing provides control and ability to adapt customer relationships and properties insight 04 Investor and Analyst Presentati
Slide 5: Our Differentiated Position
WORKSPACE Our Differentiated Position THE WORKSPACE ADVANTAGE WE OWN OUR ASSETS WE DEAL DIRECT • The right locations across • Managing all of our marketing, • Established provider with a London lettings and operations proven track record • The best in digital connectivity • Building direct relations
Slide 6: Demand
WORKSPACE Demand 1,400 1,200 1,000 800 600 400 200 0 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Monthly Enquiries Rolling 3 months 06 Investor and Analyst Presentation 8 November 2017
Slide 7: Results
WORKSPACE Results September March Active Management 2017 2017 Change Rent Roll (lfl) £63.5m £61.0m 4.1% Rent per sq. ft. (lfl) £33.56 £32.69 2.7% Enquiries (per month) 1,047 1,060 1.2% Occupancy (lfl) 92.4% 90.9% 1.5% Property Valuation £2,139m £1,844m 3.5%* Capital Value per sq. ft. (lfl) £534 £501
Slide 8: Portfolio Evolution
WORKSPACE Portfolio Evolution Mar 2012 Sep 2017 £760m £2.1bn RENTAL GROWTH PROJECTS ACQUISITIONS AND DISPOSALS Core portfolio Core portfolio Industrial/non-core KEY STATISTICS KEY STATISTICS Number of sites 92 Number of sites 68 Trading Profit £16m Trading Profit* £51m Loan to Value 41% Loan to Valu
Slide 9: Portfolio Recycling: Zennor Road Industrial Estate
WORKSPACE Portfolio Recycling ZENNOR ROAD INDUSTRIAL ESTATE BALHAM • Sold in September 2017 • 67,000 sq. ft. • £30m • 2.9% net initial yield • 84% premium 09 Investor and Analyst Presentation 8 November 2017
Slide 10: Portfolio Recycling: Stratford Office Village
WORKSPACE Portfolio Recycling STRATFORD OFFICE VILLAGE STRATFORD • Exchanged September 2017 • 52,000 sq. ft. • Planning consent obtained for 101 residential units and 13,000 sq. ft. new commercial space • £14m 10 Investor and Analyst Presentation 8 November 2017
Slide 11: Portfolio Recycling: The Salisbury
WORKSPACE Portfolio Recycling THE SALISBURY FINSBURY CIRCUS 11 Investor and Analyst Presentation 8 November 2017
Slide 12: Portfolio Recycling: The Salisbury
WORKSPACE Portfolio Recycling THE SALISBURY FINSBURY CIRCUS • Acquired June 2017 • 235,000 sq. ft. • Multi-let with 105 customers • 90% occupancy • Average passing rent of £41.50 per sq. ft. • £158.7 million • 5% net initial yield 12 Investor and Analyst Presentation 8 November 2017
Slide 13: Portfolio Categories
WORKSPACE Portfolio Categories LIKE-FOR-LIKE PROJECTS ACQUISITIONS (COMPLETED) £63.5m Rent roll £13.2m Rent roll £16.6m Rent roll £33.56 Rent per sq. ft. £43.07 Rent per sq. ft. £45.84 Rent per sq. ft. 13 Investor and Analyst Presentation 8 November 2017
Slide 14: Performance
PERFORMANCE 14 Investor and Analyst Presentation 8 November 2017
Slide 15: Income Statement
PERFORMANCE Income Statement September September £m 2017 2016 Change Net Rental Income 46.1 38.0 +21% Joint Venture Income – 0.3 Administrative Expenses (8.0) (7.4) +8% Net Finance Costs (8.7) (7.3) +19% Trading Profit after Interest 29.4 23.6 +25% Investment Property Surplus 71.2 (14.6) Profit on S
Slide 16: Net Rental Income
PERFORMANCE Net Rental Income Net rental income (£m) Net Rental Income (£m) 50 4.3 46.1 45 (0.4) 1.2 3.7 (0.7) 40 38.0 35 30 Sep 16 Like-for-like Completed Current Acquisitions Disposals Sep 17 Properties Projects Projects 16 Investor and Analyst Presentation 8 November 2017
Slide 17: Like-for-like Properties
PERFORMANCE Like-for-like Properties Rent Roll Rent Roll Growth Growth Occupancy Occupancy 12% 100% 10.5% 10% 9.2% 95% 8% 7.1% 6.6% 6.2% 6% 5.6% 5.6% 90% 4% 3.4% 3.9% 4.4% 4.1% 85% 2% 0% 80% Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Sep 12 Mar 13 Sep 13 Mar 14 Sep
Slide 18: Completed Projects
PERFORMANCE Completed Projects Rent Roll (£m) 20 • Represents 13% of total rent roll +£3.3m 16.5 • 3 refurbishments and 3 new buildings 15 13.2 • 385,000 sq. ft. of new and upgraded space 10 5 0 Sep 17 Future Refurbishments Redevelopments Future rents based on the assumptions set out in Appendices 6
Slide 19: Projects Underway
PERFORMANCE Projects Underway Rent Roll (£m) 30 29.7 • Represents 8% of total rent roll +£21.6m • 12 refurbishments underway at a total cost of £149m (£115m to come) 20 • 4 new buildings to be delivered from contracted redevelopments 10 8.1 • 776,000 sq. ft. of new and upgraded space • Excludes proj
Slide 20: Acquisitions
PERFORMANCE Acquisitions Rent Roll (£m) 25 • Represents 16% of total rent roll 22.0 20 16.6 +£5.4m • 383,000 sq. ft. of lettable space 15 • Fitzroy Street and Alexandra House let to single occupiers until 2020 and 2021 respectively 10 5 0 Sep 17 Future The Salisbury Other Future rents are based on C
Slide 21: Future Rent Roll Growth
PERFORMANCE Future Rent Roll Growth Future Rent Roll Growth (£m) -for-Like Like uplift 170 0.3m uplift Pricing £3 150 Occupancy 5.4 135.1 21.6 130 3.3 104.8 110 90 70 50 Sep 17 Completed Projects Acquisitions Future Rent Roll Like-for-Like Future Projects Underway ex Like-for-Like assumptions Rent R
Slide 22: Cash Flow
PERFORMANCE Cash Flow £m Total Trading Net Cash from Operations after Interest 33 11 Dividends Paid (22) Investment Capital Expenditure (35) Purchase of Investment Properties (256) Property Disposals 80 (191) Capital Receipts 23 Other (3) Net Movement (180) Net Debt at March 2017 (242) Net Debt at S
Slide 23: Balance Sheet
PERFORMANCE Balance Sheet September March £m 2017 2017 Investment Property Valuation 2,139 1,844 Net Debt (422) (242) Other (37) (23) Net Assets 1,680 1,579 EPRA NAV per Share £10.14 £9.53 Loan to Value 20% 13% 23 Investor and Analyst Presentation 8 November 2017
Slide 24: Property Valuation
PERFORMANCE Property Valuation Property Valuation (£m) 2,300 268 2,200 2,139 (57) 2,100 (23) 2,000 35 72 1,900 1,844 1,800 1,700 1,600 1,500 Mar 17 Revaluation Capital Acquisitions Disposals Capital Sep 17 uplift Expenditure Receipts 24 Investor and Analyst Presentation 8 November 2017
Slide 25: Revaluation
PERFORMANCE Revaluation Valuation Uplift/(Deficit) Main drivers ERV per sq. ft. up 4.5% £47m Like-for-like £1,094m £58m Equivalent Yield in 0.1% £11m The Record Hall £8m Completed Projects £283m £20m The Leather Market £6m The Light Box £5m Refurbishments £282m £7m The Chocolate Factory £2m Redevelo
Slide 26: Debt
PERFORMANCE Debt September March 2017 2017 Net Debt £422m £242m Average Interest Cost 4.8% 5.2% Undrawn Facilities £243m £123m Marginal Cost (undrawn facilities) over LIBOR 1.4% 1.4% Average Period to Maturity 6.0 years 5.2 years Facilities By Type (%) Maturity Profile (£m) £250m £200m £150m Bank De
Slide 27: Direction
DIRECTION 27 Investor and Analyst Presentation 8 November 2017
Slide 28: Future Growth
DIRECTION Future Growth Strong demand Extensive pipeline Well positioned LIKE-FOR-LIKE PROJECTS ACQUISITIONS 28 Investor and Analyst Presentation 8 November 2017
Slide 29: Like-for-like
DIRECTION Like-for-like Rent per sq. ft. (£) Rent per sq. ft. (£) 80 The Print Rooms, Southwark 70 60 50 40 The Shaftesbury Centre, Ladbroke Grove 30 20 10 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Recent refurbishment or redevelopment Average ren
Slide 30: Projects Underway and Completed
30 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 The Record Hall Cannon Wharf DIRECTION Completed projects Barley Mow Centre 2017 The Leather Market Fleet Street Investor and Analyst Presentation 8 November 2017 Projects underway Southbank House Projects Underway and Completed (sq. ft.) The
Slide 31: Projects: Pall Mall Deposit
DIRECTION Projects PALL MALL DEPOSIT • 49,000 sq. ft. • £24.64 rent per sq. ft • Planning permission obtained in October 2016 • 13,000 sq. ft. extension 31 Investor and Analyst Presentation 8 November 2017
Slide 32: Projects: Pall Mall Deposit
DIRECTION Projects PALL MALL DEPOSIT • Full refurbishment including new reception, café and gym • 63,000 sq. ft. total • £34 per sq. ft. ERV • Part of Ladbroke Grove cluster 32 Investor and Analyst Presentation 8 November 2017
Slide 33: Projects
DIRECTION Projects ISLINGTON SHOREDITCH KING’S CROSS LADBROKE GROVE STRATFORD BETHNAL GREEN OLD STREET FARRINGDON PADDINGTON WEST END THE CITY PALL MALL LONDON DEPOSIT BRIDGE CANARY WHARF WATERLOO CHISWICK VICTORIA HAMMERSMITH EARLS COURT KENNINGTON BATTERSEA 33 Investor and Analyst Presentation 8 N
Slide 34: Projects: Canalot Studios and Westbourne Studios
DIRECTION Projects CANALOT WESTBOURNE STUDIOS STUDIOS • 50,000 sq. ft. • 59,000 sq. ft. • £5m project completed • Repositioning completed in 2012 in 2015 • Full refurbishment plus 17,000 • £1m upgrade with new cafe, sq. ft. roof extension meeting rooms and Club Workspace 34 Investor and Analyst Pres
Slide 35: Projects: Grand Union Studios and The Shaftesbury Centre
DIRECTION Projects GRAND UNION THE SHAFTESBURY STUDIOS CENTRE • Mixed-use redevelopment • 13,000 sq. ft. • 65,000 sq. ft. new business • Fully occupied centre and 145 residential units • £24 rent per sq. ft. • Business centre opened March • Potential to create new 45,000 2016 sq. ft. business centre
Slide 36: Projects
DIRECTION Projects ISLINGTON CANALOT GRAND UNION STUDIOS STUDIOS SHOREDITCH KING’S CROSS LADBROKE GROVE STRATFORD BETHNAL GREEN OLD STREET FARRINGDON PADDINGTON SHAFTESBURY WESTBOURNE CENTRE STUDIOS WEST END THE CITY PALL MALL LONDON DEPOSIT BRIDGE CANARY WHARF WATERLOO CHISWICK VICTORIA HAMMERSMITH
Slide 37: Project Pipeline
37 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 The Record Hall Cannon Wharf Barley Mow Centre 2017 DIRECTION Completed projects The Leather Market Project Pipeline (sq. ft.) Fleet Street Project Pipeline Southbank House The Fuel Tank The Biscuit Factory Projects underway Investor and Analy
Slide 38: Outlook
DIRECTION Outlook Strong Extensive Well demand pipeline positioned LIKE-FOR-LIKE PROJECTS ACQUISITIONS Underpinned by Asset ownership Customer relationships THE WORKSPACE ADVANTAGE 38 Investor and Analyst Presentation 8 November 2017
Slide 39: Questions
QUESTIONS 39 Investor and Analyst Presentation 8 November 2017
Slide 40: Supplementary Information
SUPPLEMENTARY INFORMATION 40 Investor and Analyst Presentation 8 November 2017
Slide 41: Business Overview
Appendix 1 Business Overview • FTSE 250 Real Estate Investment Trust (REIT) • Provide inspiring, flexible work spaces with super-fast technology in dynamic locations • Established in 1987 with 18 multi-tenanted industrial estates and listed on the London Stock Exchange since • Home to some 4,000 bus
Slide 42: The Workspace Advantage
Appendix 2 The Workspace Advantage Our Strategy Our Investment Case Right Right Market: We continue to believe that • Strong and consistent property and market London is growing London is the right market with growing financial returns. and changing. demand from all types of businesses. • Completed
Slide 43: Property Portfolio
Appendix 3 Property Portfolio ISLINGTON SHOREDITCH KING’S CROSS LADBROKE GROVE STRATFORD BETHNAL GREEN OLD STREET FARRINGDON PADDINGTON WEST END THE CITY LONDON BRIDGE CANARY WHARF WATERLOO CHISWICK VICTORIA HAMMERSMITH EARLS COURT KENNINGTON BATTERSEA Like-for-like Redevelopments Crossrail Acquisit
Slide 44: Customer Mix: Business Categories
Appendix 4 Customer Mix % Net rent % Net rent 1 Marketing 6.14 31 Leisure 1.16 2 Fashion 5.28 32 Talent Management 1.00 4% 3 Finance 5.26 33 Web Design 0.95 5% 4 5 Business Consultancy Not For Profit 4.54 4.34 34 35 Technology Design Events 0.93 0.92 6 Architect 3.95 36 Energy 0.83 9% 7 8 Software D
Slide 45: Diversified Customer Base
Appendix 5 Diversified Customer Base Rent Roll By Customer Size (no. of customers) 13% 20% <£5,000 £5,000 – £9,999 £10,000 – £19,999 11% £20,000 – £29,999 £30,000 – £49,999 >£50,000 16% • Top 10 customers: 11% of total rent roll 14% 26% 45 Investor and Analyst Presentation 8 November 2017
Slide 46: Refurbishment Projects
Appendix 6 Refurbishment Projects Actual/ Estimated Estimated Estimated Cost to Estimated Unaffected Upgraded New ERV Rent at 90% September 2017 At September 2017 Valuation cost Complete Completion area area space (Average) occupancy** Rent Roll Completed The Record Hall £59m £24m – May 2017 – – 57,
Slide 47: Redevelopment Projects
Appendix 7 Redevelopment Projects Commercial space returned Other proceeds Commercial September Space Development 2017 Rent estimated Residential New Estimated Estimated Cash Cash to Overage to At September 2017 partner Valuation Roll completion units no. Space ERV Rent* received come come Completed
Slide 48: 13-17 Fitzroy Street, Fitzrovia
Appendix 8 13-17 Fitzroy Street, Fitzrovia 48 Investor and Analyst Presentation 8 November 2017
Slide 49: 13-17 Fitzroy Street, Fitzrovia
Appendix 9 13-17 Fitzroy Street, Fitzrovia Existing Ground Floor Layout 13-17 FITZROY STREET FITZROVIA • Acquired April 2017 • 92,700 sq. ft. • 3 year lease to break Indicative Ground Floor Layout for Workspace • £52.50 per sq. ft. • £98.5 million • 4.6% net initial yield 49 Investor and Analyst Pre
Slide 50: Disclaimer
Disclaimer The information in this document may include forward- As a result, you are cautioned not to place reliance on such looking statements, which are based on current expectations forward looking statements as a prediction of actual results and projections about future events. These forward‑lo