Helical Plc · LSE:HLCL
Helical — H1 2021 Earnings Presentation
58 slides from Helical's earnings presentation, Nov 25, 2020
Slide 1: Half Year Results to 30 September 2020
HALF YEAR RESULTS TO 30 SEPTEMBER 2020 25 NOVEMBER 2020
Slide 2: Agenda
AGENDA RESULTS HIGHLIGHTS 3 ONE GERALD KAYE FINANCIALS 14 TWO TIM MURPHY PORTFOLIO HIGHLIGHTS 22 THREE MATTHEW BONNING-SNOOK FOUR SUMMARY 32 GERALD KAYE FIVE Q&A 34 APPENDICES ADDITIONAL ANALYSIS 35 Farfetch, The Tower, EC1 @helicalplc l Helical plc l helical.co.uk 2
Slide 3: Results Highlights
RESULTS HIGHLIGHTS GERALD KAYE Kaleidoscope, EC1 @helicalplc l Helical plc l helical.co.uk 3
Slide 4: Results Highlights
RESULTS HIGHLIGHTS LOSS BEFORE TAX EPRA NTA PER SHARE £12.7m 505p -3.6% (2019: Profit of £13.1m) (31 March 2020: 524p) TOTAL DIVIDEND PER EPRA LOSS PER SHARE SHARE 2.70p 1.0p (2019: 2.70p) (2019: Earnings of 5.4p) TOTAL ACCOUNTING NET RENTAL INCOME RETURN -2.0% £11.9m -8.7% (2019: 2.7%) (2019: £13.0
Slide 5: Operational Highlights – Lettings in Period
OPERATIONAL HIGHLIGHTS – LETTINGS IN PERIOD Sq ft 000s Sq ft Total area let at 31.3.2020 000s 855 Total area let at 845 LONDON 31.3.2019 New lettings in period 6 The Warehouse Net letting in year -8 Vacant 198 The Tower Vacancy 197 25 Charterhouse Square Under development 205 Under development 205 K
Slide 6: Capturing the Reversion
Contracted rent uplift Current developments CAPTURING THE REVERSION FY 2021 FY 2022 £3.3m £2.3m 33 Charterhouse Street Total £8.6m £8.6m FY 2023 £0.0m FY 2024 £0.2m Available space Total £5.8m Kaleidoscope £7.3m Reversionary rent Trinity £1.6m Fourways £0.4m The Bower £2.4m 55 Bartholomew £0.2m The
Slide 7: Rental Collection
RENTAL COLLECTION • 94.8% collected for the March quarter 2.9% subject to ongoing discussions with tenants • 91.7% collected for the June quarter 3.7% subject to ongoing discussion with tenants • 86.8% of the September quarter rents collected to date. Anticipate total collection will be between 91%
Slide 8: A New Grade A Portfolio
A NEW GRADE A PORTFOLIO • 96% of the office units have either been recently developed or refurbished 250,000 To be refurbished SQ FT Under development New or newly refurbished 200,000 150,000 100,000 50,000 0 The Warehouse The Studio The Tower The Loom 55 Bartholomew 33 Charterhouse 25 Charterhouse
Slide 9: Lease Expiries or Tenant Break Options
LEASE EXPIRIES OR TENANT BREAK OPTIONS Year to 2021 Year to 2022 Year to 2023 Year to 2024 Year to 2025 After 2025 Rent Roll (%) 4.6 16.2 14.0 11.5 7.3 46.4 Number of Leases 14 33 22 22 13 44 Average Rent per Lease (£) 120,246 180,835 233,431 191,791 206,359 383,915 Kaleidoscope & 25 Charterhouse Sq
Slide 10: Investment Case – Future Upside
INVESTMENT CASE – FUTURE UPSIDE STATUS PERFORMANCE TO DATE FUTURE POTENTIAL The Bower, EC1 • Completed • £113.1m valuation gain • £23.7m ERV vs £21.3m contracted rents • £23.7m development profit • Potential surplus of £10m+ 33 Charterhouse Street, EC1 • Purchased in 50:50 joint venture • £6.2m valu
Slide 11: Future of the Office – Continued
FUTURE OF THE OFFICE – CONTINUED WFH Government Minister: “There is a concern that if people are doing their • Inadequate ergonomics, lighting, screen job from home you might as well have someone doing the job from home in a foreign country where labour costs much cheaper” • Mental health issues Kev
Slide 12: Market Comment
MARKET COMMENT • Investment market - strong at prime end • Re-pricing of older buildings with shorter leases requiring extensive capex • Ongoing demand for immediate development/ refurbishment opportunities • Letting market weaker • Availability increasing, particularly second hand space. 21m sq ft,
Slide 13: Strategy
STRATEGY A highly experienced platform to: • Let remaining space • Dispose of select assets • Capitalise on any market dislocation to acquire a combination of development / refurbishment opportunities and income producing assets • Maintain discipline in what we buy • Location • Public realm • Amenit
Slide 14: Financials
FINANCIALS TIM MURPHY Kaleidoscope, EC1 @helicalplc l Helical plc l helical.co.uk 14
Slide 15: Financial Highlights
FINANCIAL HIGHLIGHTS Pro forma¹ SEE-THROUGH INCOME STATEMENT September 2020 September 2020 September 2019 Total property return - Net rental income £11.9m -8.7% £13.0m - Development property (losses)/profits (£0.5m) £5.7m - (Deficit)/gain on revaluation of investment properties (£4.0m) £9.9m - Loss
Slide 16: EPRA and IFRS Loss
EPRA AND IFRS LOSS 20.0 15.0 £11.9m (£0.5m) 10.0 5.0 (£5.5m) - £m £0.7m £0.1m (£1.2m) (£7.9m) -5.0 (£4.5m) -10.0 (£5.3m) (£1.2m) (£0.5m) (£12.7m) -15.0 Net Rents Development Administration Net finance EPRA Tax Other EPRA Net (loss)/gain Financial Tax Other IFRS (losses)/profits costs costs adjustmen
Slide 17: EPRA Net Tangible Assets per Share
EPRA NET TANGIBLE ASSETS PER SHARE 524p 525 (1.0p) 0.9p (3.8p) 515 (6.0p) (2.1p) 505p 505 (5.4p) (1.6p) Pence 495 485 475 NTA - 31 March EPS Investment Tax Dividends Real estate Deferred tax Other NTA - 30 Sept 2020 (Losses)/Gains transfer tax 2020 2019 494.0p 5.4p 8.2p (1.3p) (7.5p) 2.0p - (3.8p) 4
Slide 18: Loan to Value and Gearing
PRO FORMA LOAN TO VALUE AND GEARING Million £1,400 1,240 1,205 £1,200 1,021 £1,000 949 910 918 876 802 805 £800 PORTFOLIO VALUE 682 626 620 598 579 579 573 567 £600 532 532 534 517 481 SHAREHOLDERS’ FUNDS 404 £400 365 363 280 283 299 295 255 269 341 181 £200 242 254 254 NET DEBT £0 2011 2012 2013 20
Slide 19: Debt Summary
• A £69.9m facility (our share) was arranged in the period to finance DEBT SUMMARY the development of 33 Charterhouse Street. It is a four year facility with a one year extension option. September March • The £400m RCF due for repayment in July 2024 has two one year 2020 2020 extension options, taki
Slide 20: EPRA Earnings and Dividends
EPRA EARNINGS AND DIVIDENDS EPRA EARNINGS 40 Pence 33.3 30 20 17.1 10 7.6 3.4 2.4 2.4 0.5 0 -0.1 -1.0 -10 -6.4 -7.0 -8.4 -20 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 H1 2021 15 DIVIDENDS Pence 10.10 9.50 10 8.60 8.70 8.17 7.25 6.75 5.55 4.75 4.90 5.15 5 2.70 0 2010 2011 2012 2013 2014
Slide 21: Summary
SUMMARY • The Company has performed well since the last financial year with: • 93% of rents collected • Finance and administration costs reduced • A robust portfolio valuation, with increased vacancy and void costs resulting in a small net revaluation deficit. • We have recycled equity with: • The s
Slide 22: Portfolio Highlights
PORTFOLIO HIGHLIGHTS MATTHEW BONNING-SNOOK Barts Square, EC1 @helicalplc l Helical plc l helical.co.uk 22
Slide 23: London Portfolio – City & Tech Belt
LONDON PORTFOLIO – CITY & TECH BELT 25 CHARTERHOUSE SQUARE, EC1 KALEIDOSCOPE, EC1 THE BOWER, EC1 33 CHARTERHOUSE STREET, EC1 THE LOOM, E1 BARTS SQUARE, EC1 @helicalplc l Helical plc l helical.co.uk 23
Slide 24: Charterhouse Square, Kaleidoscope, Charterhouse Street
25 Charterhouse Square, EC1 Kaleidoscope, EC1 33 Charterhouse Street, EC1 Barts Square, EC1 @helicalplc l Helical plc l helical.co.uk 24
Slide 25: 33 Charterhouse Street, EC1
33 CHARTERHOUSE STREET, EC1 • Major development site acquired in a 50:50 joint venture £m (Our Share) with AshbyCapital in May 2019 Capital expenditure to date 49.0 Capital expenditure to come 55.6 • Prominent corner site opposite future Museum of London Total capital costs 104.6 and adjacent to Far
Slide 26: Kaleidoscope, EC1
KALEIDOSCOPE, EC1 • 88,581 sq ft offices with ground floor restaurant / café £m and kiosk unit Capital costs incurred to date 82.5 • 5 floors of c. 14,000 – 19,500 sq ft Capital expenditure to come 4.2 Total capital costs 86.7 • Roof terrace – 5,000 sq ft with views of St. Paul’s Total development f
Slide 27: Sales
SALES 90 BARTHOLOMEW CLOSE, EC1 BARTS SQUARE, RESIDENTIAL Sold to La Francaise Real Estate Partners International in April 2020 for £48.5m, reflecting a 3.92% net initial yield and £1,594 psf TOTAL SOLD SOLD IN THE PERIOD TOTAL AVAILABLE PHASE 1 143 3 1 PHASE 2 59 7 33 (3 UNDER OFFER) TOTAL 202 10 3
Slide 28: Manchester Sale Metrics
MANCHESTER SALE METRICS 35 DALE STREET FOURWAYS THE TOOTAL BUILDINGS PORTFOLIO TOTAL Key Metrics £m £m £m £m Acquisition cost 7.8 17.6 35.9 61.3 Capital expenditure 6.5 4.9 12.7 24.1 Net disposal proceeds 19.7 20.1 75.0 114.8 Capital profit 5.4 (2.4) 26.4 29.4 Capital value (psf) £361 £369 £311 Capi
Slide 29: Trinity, Manchester
TRINITY, MANCHESTER • 54,651 sq ft offices, 4,300 sq ft retail / restaurant • Acquired in May 2017 for £12.9m FINANCIAL - UNDER OFFER TOSCA DEBT CAPITAL • 2,690 sq ft let to Tosca Debt Capital LEGAL - UNDER OFFER • 3 office units, representing 20,002 sq ft, under offer LEGAL - UNDER OFFER PLUG & PLA
Slide 30: Capital Recycling
CAPITAL RECYCLING • Following the strategic sale of the Manchester assets • A number of opportunities are currently being the portfolio is now focused upon the London market assessed Manchester 3% • We remain focused on: • Redeveloping assets, particularly where complexity exists • Refurbishing and
Slide 31: Sustainability - Key Highlights
SUSTAINABILITY - KEY HIGHLIGHTS • Built for the Future – this strategy sets out our long term vision and targets as we move towards a net zero carbon world • 33 Charterhouse Street, UK’s first BREEAM 2018 New Construction ‘Outstanding’ rating • Soon to launch our ‘Designing for Net Zero’ guidance to
Slide 32: Summary: 2020 / 2021 Milestones
SUMMARY 2020 / 2021 MILESTONES LET KALEIDOSCOPE UNDER OFFER LET TRINITY, MANCHESTER 2,690 SQFT LET, 24,302 SQFT UNDER OFFER SELL RESIDENTIAL AT BARTS SQUARE 10 SOLD (since 1/4/2020) 3 UNDER OFFER AND 31 REMAINING MAINTAIN RENT ROLL SEPTEMBER RENT COLLECTION 86.8%. AIMING FOR 91-94% FURTHER ACQUISITI
Slide 33: Summary
SUMMARY Helical has a new Grade A portfolio in London We seek to protect our value and to grow the business by • Redeveloping • Refurbishing • Repositioning when opportunities arise The Bower, EC1 @helicalplc l Helical plc l helical.co.uk 33
Slide 34: Q & A
Q & A Barts Square, EC1 @helicalplc l Helical plc l helical.co.uk 34
Slide 35: Appendices
APPENDICES Trinity, Manchester @helicalplc l Helical plc l helical.co.uk 35
Slide 36: Appendices
APPENDICES ONE INVESTING WITH HELICAL 37 TWO PORTFOLIO 38 THREE SUSTAINABILITY 43 FOUR 33 CHARTERHOUSE STREET - 44 SUSTAINABILITY AND TECHNOLOGY FIVE EPRA PERFORMANCE MEASURES 45 SIX FINANCIAL APPENDICES 46 SEVEN PORTFOLIO METRICS 51 Barts Square, EC1 @helicalplc l Helical plc l helical.co.uk 36
Slide 37: Investing with Helical
INVESTING WITH HELICAL We create buildings for today’s occupiers who demand more inspiring space with distinctive architectural detail, carefully curated public realm, market leading amenities, high quality management and our flexible approach to leasing. Applying this philosophy we seek to maximise
Slide 38: Barts Square, EC1
BARTS SQUARE, EC1 PHASE 1 – RESIDENTIAL / RETAIL PHASE 2 – RESIDENTIAL / RETAIL 55 BARTHOLOMEW • 144 apartments and 3,194 sq ft retail • 91 apartments and 11,577 sq ft retail / • Major refurbishment of a Victorian warehouse restaurants to provide 10,976 sq ft of offices. Completion • 143 apartments
Slide 39: The Warehouse and The Studio, The Bower, EC1
THE WAREHOUSE AND THE STUDIO, THE BOWER, EC1 • 141,141 sq ft offices and 10,298 sq ft restaurants • Fully let prior to practical completion November 2015 • First rent reviews for office tenants have now commenced • Office tenants: CBS Stripe Farfetch Allegis Pivotal John Brown Media • BREEAM Excelle
Slide 40: The Tower, The Bower, EC1
THE TOWER, THE BOWER, EC1 • 171,434 sq ft offices – fully let: Finablr 11,329 sq ft 17 floor Incubeta 11,306 sq ft 16 floor Snowflake 9,568 sq ft 14 floor OpenPayd 10,046 sq ft 13 floor Brilliant Basics 40,479 sq ft 10-12, 15 floor Farfetch 29,671 sq ft 7-9 floor WeWork 59,035 sq ft 1-6 floor • Aver
Slide 41: 25 Charterhouse Square, EC1
25 CHARTERHOUSE SQUARE, EC1 • 43,343 sq ft over ground plus six floors • Ground floor and 1st floor available now either for office or retail use • Completed March 2017 and fully let within 9 months • 155 year leasehold interest with 10% ground rent • BREEAM Excellent and Wiredscore Gold Key rental
Slide 42: The Loom, E1
THE LOOM, E1 • 108,635 sq ft office listed former Victorian Wool Warehouse • 86% let at present • One unit under offer, 13,910 sq ft available across 5 units • Achieving rents of £55.00 psf • 95% of all units have now been extensively refurbished • RIBA London and National Award, AJ Retrofit Award a
Slide 43: Sustainability
SUSTAINABILITY BENCHMARK FTSE4Good 3.9/5 95st Percentile GRESB 76/100 3 Star EPRA Sustainability Best Practice Silver MSCI ESG AA CDP C @helicalplc l Helical plc l helical.co.uk 43
Slide 44: 33 Charterhouse Street – Sustainability and Technology
33 CHARTERHOUSE STREET, EC1 – SUSTAINABILITY AND TECHNOLOGY TECHNOLOGY SUSTAINABILITY • Fully Smart enabled - making it amongst • Achieved UK’s first BREEAM 2018 New London’s most technologically advanced and Construction “Outstanding” rating for design sustainable buildings stage • Tenants will ben
Slide 45: EPRA Performance Measures
EPRA PERFORMANCE MEASURES At At 30 Sept 2020 31 March 2020 EPRA net tangible assets* £617.0m £640.4m EPRA net reinstatement value per share* 550p 562p EPRA net tangible assets per share* 505p 524p EPRA net disposal value per share* 465p 480p EPRA NAV per share 500p 511p EPRA net initial yield 3.3% 3
Slide 46: See-Through Balance Sheet
SEE-THROUGH BALANCE SHEET 30 SEPTEMBER 2020 31 MARCH 2020 Group Joint Ventures Total NAV per share NAV per share £m £m £m p £m p Investment properties 832.4 66.0 898.4 913.7 Land and development stock (fair value) 0.6 19.2 19.8 35.6 Property portfolio 833.0 85.2 918.2 949.3 Net debt (295.3) (298.5)
Slide 47: See-Through Income Statement
SEE-THROUGH INCOME STATEMENT 30 SEPTEMBER 2020 30 SEPTEMBER 2019 Group Joint Ventures Total £m £m £m £m Net rental income 11.9 - 11.9 13.0 Development property (loss)/profit - (0.5) (0.5) 5.7 11.9 (0.5) 11.4 18.7 Administration expenditure (5.2) (0.3) (5.5) (7.4) Net finance costs (7.2) (0.7) (7.9)
Slide 48: Net Cash Flow Movements
NET CASH FLOW MOVEMENTS FORECAST CAPITAL EXPENDITURE £m 35.0 September March 2020 2020 £m £m 30.0 Cash generated from operations 0.8 12.3 25.0 Capex (12.9) (44.2) Joint ventures 3.3 (42.7) 20.0 Net disposal proceeds - 40.3 15.0 Increase/(reduction) in net borrowing 5.8 (75.9) Other cash flow movemen
Slide 49: Covenant Summary
COVENANT SUMMARY RCF Covenant Reported Threshold September 2020 Loan to Contracted Rental Value <12:1 10.1:1 Actual Interest Cover >200% 325% Projected Interest Cover >150% 345% We have rent deposits and bank guarantees of £9.6m from tenants in buildings secured to the RCF Aviva Covenant Reported Th
Slide 50: Impact of Forecast Capital Expenditure and Capital Receipts
IMPACT OF FORECAST CAPITAL EXPENDITURE AND CAPITAL RECEIPTS Forecast Contracted Capex to Sales to Pro forma1 31 March 31 March 31 March 30 September 2020 2021 2021 2021 Portfolio fair value £918.2m £25.1m (£116.6m) £826.7m Net debt £295.3m £25.1m (£116.6m) £203.8m Pro forma Loan to Value 32.2% 3.4%
Slide 51: Portfolio Metrics (1)
PORTFOLIO METRICS (1) September Valuation Change Fair Capital Vacancy 2020 Excluding Sales Value Value psf Rate WAULT and Purchases Investment Portfolio £m % £ % Years % London Offices: - Completed, let and available to let 707.3 78.7 1,157 19.7 6.2 -0.8 - Being redeveloped 53.0 5.9 516 n/a n/a 3.4
Slide 52: Portfolio Metrics (2)
PORTFOLIO METRICS (2) EPRA True Passing Contracted Change in Topped Up Equivalent Reversionary Rent Rent ERV ERV LfL NIY Yield Yield Investment Portfolio £m £m £m % % % % London Offices: - Completed, let and available to let 25.0 29.9 41.3 0.2 3.8 5.1 5.3 - Being redeveloped - - 8.6 1.2 n/a 4.9 5.7
Slide 53: Rental Income and Rental Reversion
RENTAL INCOME AND RENTAL REVERSION NET RENTAL INCOME 50 47.0 £m 43.4 45 38.6 40 36.1 35 29.8 28.5 30 25.2 24.5 25 22.9 20 17.9 14.9 15 11.9 10 5 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 H1 2021 RENTAL REVERSION £m 100 90 81.0 80 71.6 70 59.5 60.3 60.0 59.3 60 56.0 51.5 48.4 50 45.1 3
Slide 54: Investment Portfolio Key Statistics
INVESTMENT PORTFOLIO KEY STATISTICS Total Portfolio Contracted Rent £m Total contracted rental change from disposal of London Offices (0.9) Rent lost at break/expiry (0.4) Rent reviews and uplifts on lease renewals 0.2 New lettings: – London 0.1 – Manchester 0.1 Total movement in the period from ass
Slide 55: Tenant Make-Up
TENANT MAKE-UP Science/pharma, <1% Travel, 2% Consumer services, 1% Consumer goods, 4% Online retailing - Fashion, 12% Law, 2% Human Resources, 4% Financial Products, 9% Flexible offices, 11% IT Consultancy, 10% Software and Computer Services, 13% Government/Charity, 6% Other, 1% Food & Beverage, 3%
Slide 56: Top 10 Tenants
TOP 10 TENANTS Rank Tenant Tenant Industry Contracted Rent, £m Rent Roll 1 Farfetch Online retail 3.9 10.7% 2 WeWork Flexible offices 3.8 10.4% 3 Brilliant Basics Technology 3.2 8.6% 4 Pivotal Technology 2.0 5.5% 5 Capita Business services 1.8 4.9% 6 Anomaly Marketing 1.4 3.8% 7 CBS Media 1.0 2.8% 8
Slide 57: Disclaimer
DISCLAIMER Whilst we have taken all reasonable care to ensure that the information and material contained in this presentation is accurate at the time of its distribution, no representation or warranty, express or implied, is made as to its accuracy or completeness. The presentation should not be co
Slide 58: 5 Hanover Square London W1S 1HQ
5 Hanover Square London W1S 1HQ 0207 629 0113 www.helical.co.uk @helicalplc reception@helical.co.uk @helicalplc l Helical plc l helical.co.uk 58