Land Securities Group Plc · LSE:LAND
Land Securities — Landsec — H1 2020/21 Earnings Presentation
54 slides from Land Securities's earnings presentation, November 2020
Slide 1: Note: Photographic content has been commissioned post-impact of Covid-19
Note: Photographic content has been commissioned post-impact of Covid-19
Slide 2: Agenda
Landsec – Half-yearly results 2020/21 2 Overview Mark Allan Financial review Martin Greenslade Portfolio review Colette O’Shea Outlook Mark Allan
Slide 3: An extraordinary six months but…
Landsec – Half-yearly results 2020/21 3 An extraordinary six months but… — Managing the impact of Covid-19 proactively and responsibly — Business fundamentals remain strong — London remains attractive — Reinstating dividend alongside interim results — Looking beyond Covid-19 to medium and longer-ter
Slide 4: Managing the impact of Covid-19 proactively and responsibly
Landsec – Half-yearly results 2020/21 4 Managing the impact of Covid-19 proactively and responsibly — Safety is our number one priority — Strengthened customer relationships through collaborative dialogue — Measured approach to development — Neutral debt position over the period — Financially pruden
Slide 5: Business fundamentals remain strong
Landsec – Half-yearly results 2020/21 5 Business fundamentals remain strong — Low LTV — Good portfolio liquidity — London, in particular, defined by quality, resilience and liquidity — Long held focus on sustainability creating value — Significant medium-term regeneration potential within urban oppo
Slide 6: Looking beyond Covid-19 to medium and longer-term opportunities
Landsec – Half-yearly results 2020/21 6 Looking beyond Covid-19 to medium and longer-term opportunities — How offices are used will change — Expect increased obsolescence of older office stock in London to provide development opportunities — Urban mixed-use/regeneration to deliver the change the bui
Slide 7: Bifurcation of the central London occupational market continues
Landsec – Half-yearly results 2020/21 7 Central London office market m sq ft % Bifurcation of the central London 18 16 14 12 36 32 28 24 occupational market continues 10 8 6 4 Forecast 20 16 12 8 2 4 0 0 -2 -4 — Take-up was 2.2m sq ft, 67% below the -4 -8 -6 -12 -8 -16 -10 -20 long-term average -12
Slide 8: Central London investment market robust despite short-term Covid-19 pressures
Landsec – Half-yearly results 2020/21 8 Central London investment market robust despite short-term Covid-19 pressures Investment market — Investment activity in calendar Q2 significantly below the long-term average but began to recover in Q3 and Q4 has started strongly — Low rate environment and yie
Slide 9: Structural trends in retail accelerating, but outlets remain resilient
Landsec – Half-yearly results 2020/21 9 Structural trends in retail accelerating, but outlets remain resilient — Covid-19 has accelerated structural trends, but affecting different assets in different ways Bluewater, Kent — Outlets remain resilient — Retailers likely to have fewer full price stores
Slide 10: Landsec
Landsec
Slide 11: Financial summary
Landsec – Half-yearly results 2020/21 11 Financial summary 30 Sept 2019 30 Sept 2020 % change £225m Revenue profit(1) £115m -48.9 £(368)m Valuation deficit(1) £(945)m -7.7(2) £(147)m Loss before tax £(835)m 30.4p Adjusted diluted earnings per share(1) 15.5p -49.0 1,192p(3) EPRA net tangible assets p
Slide 12: Revenue profit
Landsec – Half-yearly results 2020/21 12 Revenue profit £m Net rental income movement £(118)m - 225 115 Revenue profit Gross rental Net Bad debt Net direct property Net indirect Net finance Revenue profit six months ended income service charge expense expenditure expenses expense six months ended 30
Slide 13: Analysis of bad debt provisions
Landsec – Half-yearly results 2020/21 13 Analysis of bad debt provisions By activity £m By segment £m Provisions related to customer support fund concessions 20 Central London 8 Other provisions for rents receivable 45 Regional retail 44 Provisions for service charge receivables 12 Urban opportuniti
Slide 14: Rent collection by activity
Landsec – Half-yearly results 2020/21 14 Rent collection by activity Period ended 29 September 30 Sept 2020(1) quarter day Amounts received to date Amounts received to date Offices 99% 96% Rest of Central London 74% 50% Regional retail 51% 50% Urban opportunities 54% 60% Subscale sectors 69% 47% Tot
Slide 15: Combined Portfolio valuation
Landsec – Half-yearly results 2020/21 15 Combined Portfolio valuation Subscale Central sectors London Urban Retail parks opportunities Leisure 3% 5% Hotels £11.8bn portfolio 4% 3% Regional Outlets retail 7% Regional £11.8bn Offices Valuation declined 7.7% or £945m shopping centres and shops portfoli
Slide 16: Combined Portfolio valuation: Central London
Landsec – Half-yearly results 2020/21 16 Combined Portfolio valuation Central London Central London £7.9bn portfolio, Valuation declined Retail parks Leisure 67% of Combined Portfolio 3.8% 5% 3% Hotels 4% 3% Offices (-2.3%) Outlets 7% — Like-for-like rental values down 1.0% — +2bps like-for-like equ
Slide 17: Combined Portfolio valuation: Regional retail
Landsec – Half-yearly results 2020/21 17 Combined Portfolio valuation Regional retail £2.1bn portfolio, Valuation declined Retail parks Leisure 18% of Combined Portfolio 16.4% 5% 3% Hotels 4% 3% Regional Outlets Like-for-like rental values retail 7% down 10.1% Regional Offices shopping centres 57% a
Slide 18: Combined Portfolio valuation: Urban opportunities
Landsec – Half-yearly results 2020/21 18 Combined Portfolio valuation Urban opportunities Urban Retail parks opportunities Leisure 3% 5% Hotels £0.4bn portfolio, Valuation declined 4% 3% 4% of Combined 9.8% Outlets 7% Portfolio Regional Offices shopping centres 57% and shops 11% Like-for-like +15bps
Slide 19: Combined Portfolio valuation: Subscale sectors
Landsec – Half-yearly results 2020/21 19 Combined Portfolio valuation Subscale sectors Subscale sectors Retail £1.4bn portfolio, Valuation declined parks Leisure 11% of Combined Portfolio 12.4% 5% 3% Hotels 4% 3% Outlets Leisure (-15.3%) 7% — Like-for-like rental values down 3.9% Regional Offices 57
Slide 20: Financing position
Landsec – Half-yearly results 2020/21 20 Financing position A strong position with available 30 September 2020 resources £m — Group LTV 33.2% Bond debt 2,350 — Weighted average cost of net debt 2.1% Bank debt 476 — Next bond expected debt maturity: Commercial paper 1,079 £10m in September 2023 — Cas
Slide 21: Reinstating the dividend
Landsec – Half-yearly results 2020/21 21 Reinstating the dividend — Reinstating the dividend at 12p per share representing two quarterly dividends — Retaining quarterly payments — Dividend will be c.1.2x-1.3x covered by underlying earnings Cardinal Place, SW1
Slide 22: Looking ahead
Landsec – Half-yearly results 2020/21 22 Looking ahead — Retail and leisure sectors remain challenging — Disciplined approach to capital investment — Resilient balance sheet with firepower CGI of Timber Square, SE1
Slide 23: Landsec
Landsec
Slide 24: Central London portfolio
Landsec – Half-yearly results 2020/21 24 Central London portfolio A resilient portfolio with the ingredients to thrive — 98% let — £1.4m of lettings, with a further £6.2m in solicitors’ hands — £7.2m office rent reviews at 1.2% above passing rent — £3.2m of income renegotiated in response to Covid-1
Slide 25: Regional retail portfolio
Landsec – Half-yearly results 2020/21 25 Regional retail portfolio Managing ongoing restrictions — 93% let — £2.2m of lettings, with a further £9.9m in solicitors’ hands — Responding to capacity issues and changing local restrictions — July to September footfall -39.2% year-on-year, in line with Sho
Slide 26: Subscale portfolio
Landsec – Half-yearly results 2020/21 26 Subscale portfolio Supporting our customers to resume trading — 95% let — £1.2m of lettings, with a further £2.4m in solicitors’ hands — All leisure and retail parks reopened, but now operating under new restrictions — 21 hotels reopened and two remained clos
Slide 27: Urban opportunities portfolio
Landsec – Half-yearly results 2020/21 27 Urban opportunities portfolio Working with customers to responsibly manage trading — 94% let — £0.2m of lettings, with a further £1.2m in solicitors’ hands — Suburban London assets fully re-opened when initial restrictions lifted — Assets benefitted from work
Slide 28: Supporting our customers during Covid-19
Landsec – Half-yearly results 2020/21 28 Supporting our customers during Covid-19 — Safety number one priority — More signage — More security — More cleaning — More communication — Proactive leadership has strengthened customer relationships Gunwharf Quays, Portsmouth
Slide 29: Actively engaging with our customers
Landsec – Half-yearly results 2020/21 29 Actively engaging with our customers Pro-active conversations Top 30 / strategic 44% — Approximately 600 retail, leisure and partners 81% F&B customers across the portfolio — Engaged with customers systemically, starting with the top 30/strategic partners 31
Slide 30: Optimising for growth
Landsec – Half-yearly results 2020/21 30 Optimising for growth Attractive and resilient — 98% let — Mutually beneficial opportunities — Re-negotiated six leases — 58,000 sq ft — Extended terms by average of nine months — £3.2m income secured — Lower letting activity, little available space — 25,000
Slide 31: Impact from Covid-19: office occupancy
Landsec – Half-yearly results 2020/21 31 Impact from Covid-19 Average weekly occupancy rate by property Office occupancy varied 30% 25% — October average office occupancy of 15% 20% — Banking, financial and professional % Average services higher than creative, tech, 15% media and government sectors
Slide 32: Longer-term office trends
Landsec – Half-yearly results 2020/21 32 Longer-term office trends Giving customers access Blank Canvas – Self-contained offices completed to to our expertise a Cat A or Shell condition with traditional pricing and lease Blank Canvas — Realisation of wider impact of working from home — Hybrid model
Slide 33: Dashwood
Landsec – Half-yearly results 2020/21 Dashwood Active management to provide all three products — Floors 9 to 12 original proposed Myo — Floors 9 to 11 customer needed to extend lease — Floor 8 customer marketing — Floors 6 to 9 new Myo — Landsec Lounge on ground floor Dashwood, EC2
Slide 34: Changing the future of office ground floors
Landsec – Half-yearly results 2020/21 34 Changing the future of office ground floors — Hardest hit with the low office and tourist footfall in the streets of London — 6% of capital value — Essential to London’s living and working ecosystem — Reimagining the ground floor Cardinal Place, SW1
Slide 35: Taking advantage of the optionality in the development pipeline
Landsec – Half-yearly results 2020/21 35 Taking advantage of the optionality in the development pipeline CGI of Lucent, W1 CGI of n2, SW1 — Pre-pandemic 1.4m sq ft development pipeline across five office schemes — Continuing with 564,000 sq ft pre-let scheme at 21 Moorfields, with a TDC of £576m CGI
Slide 36: 21 Moorfields
Landsec – Half-yearly results 2020/21 36 21 Moorfields Pre-let to Deutsche Bank — Operating at around 75% capacity since August — Completion scheduled in June 2022 — Only four months behind programme — £576m TDC, 6.5% yield 21 Moorfields, EC2
Slide 37: Adapting development to a Covid-19 world
Landsec – Half-yearly results 2020/21 37 Adapting development to a Covid-19 world Thinking and planning has evolved — Procuring contracts with optionality — Focus on wellbeing within our designs — Touchless access — More collaboration and creative spaces as well as private work areas — Lower densifi
Slide 38: Lucent
Landsec – Half-yearly results 2020/21 38 Lucent One of the most iconic views in the world — 144,000 sq ft — Floorplates range from 3,000 sq ft to 25,000 sq ft with flexibility to be divided — Landsec Lounge, event and collaboration space — 20 balconies and terraces — Completed significant parts of b
Slide 39: The Forge
Landsec – Half-yearly results 2020/21 39 The Forge Unique product for its location — 140,000 sq ft — Floor plate 3,000 sq ft to 15,000 sq ft — Sub-structure works complete by December — New ‘kit of parts’ approach — Delivery June 2022 — £140m TDC, 6.8% yield CGIs of The Forge, SE1
Slide 40: Castle Lane
Landsec – Half-yearly results 2020/21 40 Castle Lane De-risked and progressing — Scheme will provide 88 residential units of affordable housing — Pre-sold to Notting Hill Genesis and de-risked — Delivery April 2023 — £46m TDC Castle Lane, SW1
Slide 41: Development pipeline
Landsec – Half-yearly results 2020/21 41 Development pipeline Jul 2021 Apr 2023 Castle Lane Castle Lane, SW1 55k sq ft On site Jun 2022 The Forge The Forge, SE1 140k sq ft Lucent On site Dec 2022 144k sq ft Lucent, W1 (including Wardour Street, W1) Wardour St 5k sq ft On site Jun 2022 21 Moorfields
Slide 42: Development pipeline
Landsec – Half-yearly results 2020/21 42 Development pipeline n2 On site Jan 2024 n2 166k sq ft n2, SW1 (including Nova Place, SW1) Nova Place 41k sq ft Jul 2021 Apr 2023 Castle Lane — Completion of the coreCastle Lane,bySW1 anticipated Spring 55k sq ft —site On Continuing procurement Jun 2022 The F
Slide 43: Development pipeline
Landsec – Half-yearly results 2020/21 43 Development pipeline Apr 2021 Nov 2024 Portland House Portland House, SW1 400k sq ft n2 On site Jan 2024 n2 166k sq ft n2, SW1 (including Nova Place, SW1) Nova Place 41k sq ft — Secured planning consent Jul 2021 Apr 2023 Castle Lane — Castle Continuing vacant
Slide 44: Development pipeline
Landsec – Half-yearly results 2020/21 44 Development pipeline Mar 2021 Nov 2023 Timber Square Timber Square, SE1 380k sq ft Apr 2021 Nov 2024 Portland House Portland House, SW1 400k sq ft — Currently occupied n2 On site — Planning application submitted Jan 2024 n2 166k sq ft n2, SW1 (including Nova
Slide 45: Development pipeline
Landsec – Half-yearly results 2020/21 45 Development pipeline Oct 2021 Sept 2024 Red Lion Court Finchley Red LionRoad, Court,NW3 SE1 237k sq ft Mar 2021 Nov 2023 Timber Square Timber Square, — Currently SE1 occupied 380k sq ft — Planning application to be submitted Apr 2021 Nov 2024 Portland House P
Slide 46: Development pipeline
Landsec – Half-yearly results 2020/21 46 Development pipeline Oct 2021 Sept 2024 Red Lion Court Finchley Red LionRoad, Court,NW3 SE1 237k sq ft Mar 2021 Nov 2023 Timber Square Timber Square, SE1 380k sq ft Apr 2021 Nov 2024 Portland House — 21Portland House, Moorfields SW1 and Castle Lane progressin
Slide 47: Investment activity
Landsec – Half-yearly results 2020/21 47 £bn Investment volumes Investment activity 25 Good demand for quality assets 20 15 — 7 Soho Square sold for £78m at a yield 10 of 4%, 4.3% above March book value 5 Q3 Q2 — Investment volumes 0 Q1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 — Q1 £1.
Slide 48: Regional retail portfolio: varied performance
Landsec – Half-yearly results 2020/21 48 Regional retail portfolio Sales and Footfall Varied performance % decline vs. last year 0 -10 — Footfall in line with benchmark at -39% year-on-year -20 — Same centre sales (excluding automotive) -30 -26.3%, compared to the benchmark of -12.3% -40 — Outlets -
Slide 49: Five Reimagine retail objectives
Landsec – Half-yearly results 2020/21 49 Five Reimagine retail objectives Determine Elevate the consumer Create operational Maximise our Repurpose space sustainable rents experience excellence and vibrant outlets to reduce the retail efficiency and new footprint and enhance leasing models the mix 1
Slide 50: Summary
Landsec – Half-yearly results 2020/21 50 Summary Gunwharf Quays, Portsmouth Piccadilly Lights, W1 — Extraordinary times impacted our like-for-like performance One New Change, EC4 — Central London office portfolio is full, ground floors will change — Adjusted development pipeline to manage committed
Slide 51: Summary and outlook
Summary and outlook
Slide 52: Our new strategy positions Landsec for growth
Landsec – Half-yearly results 2020/21 52 Our new strategy positions Landsec for growth Focus on total return and value creation Our central London Our retail business Capital from Through business (shopping centres and outlets) subscale sectors urban opportunities High-quality, resilient An understa
Slide 53: What you can expect from Landsec over the next 12 months
Landsec – Half-yearly results 2020/21 53 What you can expect from Landsec over the next 12 months — Preserving our financial strength: low leverage and portfolio liquidity — Capital recycling in central London portfolio to realise significant value creation — Balanced progress on central London deve
Slide 54: An extraordinary six months but… reasons to be positive
Landsec – Half-yearly results 2020/21 54 An extraordinary six months but… reasons to be positive — Managing the impact of Covid-19 proactively and responsibly — Business fundamentals remain strong — London remains attractive — Looking beyond Covid-19 to medium and longer-term opportunities — New str