Shaftesbury Capital Plc · LSE:SHC
Shaftesbury Capital — H1 2023 Earnings Presentation
43 slides from Shaftesbury Capital's earnings presentation, Aug 3, 2023
Slide 1: 2023 Interim Results
2023 Interim Results Shaftesbury Capital PLC 3 August 2023
Slide 2: The leading central London mixed-use REIT
The leading Strong Excellent Positive central London financial operating outlook mixed-use profile performance REIT
Slide 3: The leading central London mixed-use REIT
The leading central London mixed-use REIT
Slide 4: Excellent momentum post-merger
Excellent momentum post-merger Leading central London mixed-use REIT • Completion of merger on 6 March 2023 • Excellent progress on integration Positive operating metrics across the business • High footfall, customer sales 15% ahead of 2019 levels • Low vacancy; 2.5% of ERV available to let • Valuat
Slide 5: Impossible to replicate portfolio in the heart of London's West End
Impossible to replicate portfolio in the heart of London’s West End £4.9bn Portfolio value 2.9m sq. ft. Lettable space c.2,000 Lettable units1 c.670 Buildings Wholly-owned portfolio Joint venture portfolio 1. Excludes long-leasehold Note: this map is for indicative purposes only residential interest
Slide 6: Well balanced, diverse mixed-use portfolio
Well balanced, diverse mixed-use portfolio 14% 34% Residential Retail 710 410 Apartments Shops £4.9bn Portfolio valuation 2022: £4.9bn (+0.1% L-f-L) 18% 34% Hospitality Offices 382 & leisure Offices 405 Units Percentage of portfolio valuation 6 2023 Interim Results
Slide 7: The West End's appeal and resilience
The West End’s appeal and resilience Unique long-term features • Wide variety of retail, hospitality and leisure experiences • Unrivalled concentration of entertainment and cultural attractions Global destination attracting visitors • c.200m visits per annum to the West End • Large working populatio
Slide 8: Strategy to deliver long-term income and value growth from our unique portfolio
Strategy to deliver long-term income and value growth from our unique portfolio Benefitting all stakeholders and contributing to the success of the West End Place our customers • Deliver best in class service to all customers at the heart of • Leverage our deep knowledge of the West End, consumers a
Slide 9: Commitment to the environment and stakeholders
Commitment to the environment and stakeholders Commitment to become net zero carbon by 2030 • Combined pathway to be published later this year Become a UK leader in sustainability for heritage properties Re-use, re-purpose and improve heritage properties • 68% of units have an EPC grade of A-C Impro
Slide 10: Group financial headlines
Group financial headlines Delivering growth in annualised rents and ERV Annualised gross income ERV Property valuation EPRA NTA per share £188m £235m £4.9bn 194p +5.6% +3.3% L-f-L +0.1% L-f-L +12p vs Dec 22: 182p 2022: £178m (2019: £187m) 2022: £227m (2019: £258m) Yield: 4.2% (+10 bps) Pro forma1: 1
Slide 11: Strong financial profile
Strong financial of @ a = Ries > mp B
Slide 12: Underlying earnings
Underlying earnings Restated H1 2023 H1 2022 £m1 £m2 Net rental income 63.4 26.9 Other income3 2.6 3.9 Administration costs (17.9) (12.8) Net finance costs (21.5) (14.3) Share of joint venture profit 0.9 - Taxation - (0.5) Underlying earnings 27.5 3.2 Underlying earnings per share (pence) 1.9p 0.4p
Slide 13: Significant reversionary potential
Significant reversionary potential Active asset management and leasing activity delivering rental growth £m Net 25% under/(over) rented Under EPRA vacancy refurbishment Of which £7.6m Realised on L-f-L is under completion and Contracted offer, resulting in letting of schemes +3.3% Realised on availa
Slide 14: Progress on merger benefits
Progress on merger benefits Progressing towards an effective and efficient organisational structure and cost base Cost savings ahead of phasing set out in the merger documentation Actions taken to date to result in c.£9m of annualised cost savings • Increased expectation of total savings from £12m t
Slide 15: EPRA balance sheet
EPRA balance sheet Pro forma 30 Jun 2023 31 Dec 20221 31 Dec 2022 £m £m £m Investment property 4,865 4,829 1,715 Investment in joint ventures 84 87 - Financial assets at fair value2 - – 357 Net debt3 (1,554) (1,488) (634) Other 159 98 124 Net assets 3,554 3,526 1,562 EPRA net tangible assets 3,541 3
Slide 16: Valuation unchanged in H1 2023
Valuation unchanged in H1 2023 ERV growth of +3.3% offset by +10 bps yield expansion £m 0.1% increase in capital value Other ERV ERV growth Yield across all uses, +10 bps overall now £235 million yield expansion to 4.2% Pro forma reflects 31 December 2022 valuation metrics reported in respective tra
Slide 17: Access to significant liquidity
Access to significant liquidity Total liquidity £457.3m £m 21.8 -14.5 -24.8 Cash -57.4 118.1 acquired on merger 300 -2.4 234.6 241.9 217.1 159.7 157.3 157.3 116.5 Opening Underlying Dividend Capex and Non-underlying Financing Closing Undrawn facilty cash operating cash payments acquisition costs cas
Slide 18: Strong financial position
Strong financial position Net debt EPRA LTV Liquidity Weighted average Weighted average cost of debt debt maturity £1.6bn 31% >£450m 3.4%1 4 yrs Access to substantial liquidity Significant headroom on all covenants Income and values can fall by over 40% before breach Diversified sources of funding I
Slide 19: Excellent operating performance
Excellent operating performance
Slide 20: +3.3% first half ERV growth across our portfolio
+3.3% first half ERV growth across our portfolio The map is for indicative purposes only FITZROVIA Valuation: -6.8% ERV: +0.7% CARNABY|SOHO Valuation: +0.4% ERV: +2.3% COVENT GARDEN Valuation: +0.2% ERV: +4.3% % of portfolio ERV CHINATOWN Covent Garden 52% Valuation: +0.5% Carnaby | Soho 32% ERV: +2
Slide 21: Retail £78m
Retail £78m 33% 410 ERV of total Shops +2.8% L-f-L ERV 0.8m sq. ft. A strong retail leasing market • Customer sales on average 15% ahead of 2019 Selection of 2023 openings and signings levels Demand continues to gravitate towards vibrant, thriving high footfall locations • Broad range of unit sizes
Slide 22: Hospitality & leisure £79m
Hospitality & leisure £79m 34% 405 ERV of total Units +3.9% L-f-L ERV 1m sq. ft. Diverse range of food concepts, from accessible casual to premium Strong trading prospects • Our offer continues to evolve 18 new lettings and renewals: £1.7m; +4.3% vs Dec- 22 ERV • Rent reviews: £5.5m; +7.8% vs previo
Slide 23: Offices £51m
Offices £51m 22% 382 ERV of total Offices + 2.7% L-f-L ERV 0.7m sq. ft. Good demand for high quality office space in vibrant locations • High amenity value and excellent environmental credentials Flight to quality • Strong market for fully-fitted office space 34 new lettings and renewals: £3.7m; +6.
Slide 24: Residential £26m
Residential £26m 11% 710 ERV of total Apartments +4.3% L-f-L ERV 0.4m sq. ft. Sustained demand across our West End portfolio • Apartments typically go under offer within days 131 new lettings and renewals completed • £4.6m new contracted income in the period • Rents achieved +12.5% vs previous rents
Slide 25: Investing in our portfolio
Investing in our portfolio Adapting and repurposing our buildings • Opportunities to enhance value and sustainability credentials • 229k sq. ft. (6.7% of ERV) under refurbishment • c.1% of portfolio value expected to be invested p.a. Disciplined capital allocation 5-7 Carnaby Street 72 Broadwick Str
Slide 26: Positive outlook
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Slide 27: Excellent start for Shaftesbury Capital
Excellent start for Shaftesbury Capital Positive trading conditions across our portfolio Strong pipeline of demand for the second half Significant revenue growth potential Capital and cost discipline Long-term responsible stewardship and ongoing community engagement Despite the challenging macroecon
Slide 28: Q&A
Q&A
Slide 29: Portfolio summary by use
Portfolio summary by use Retail Hospitality & Offices Residential Total leisure 34% 34% 18% 14% 100%1 Valuation (£m) 1,651.1 1,650.8 897.7 696.9 4,896.5 Annualised gross income (£m) 64.3 71.4 30.1 22.5 188.3 ERV (£m) 78.2 79.3 51.3 25.9 234.7 ERV per sq. ft. (£) 103 79 73 58 80 Net initial yield 3.4
Slide 30: Portfolio valuation summary by location
Portfolio valuation summary by location Covent Garden Carnaby | Soho Chinatown Fitzrovia Total 53% 31% 14% 2% 100%1 Valuation (£m) 2,572.4 1,514.4 691.6 118.1 4,896.5 Annualised gross income (£m) 96.8 56.4 30.1 5.0 188.3 ERV (£m) 122.3 75.1 31.5 5.8 234.7 Net initial yield 3.3% 3.2% 3.8% 3.5% 3.3% T
Slide 31: Available to let, under offer, under refurbishment
Available to let Hospitality Retail & leisure Offices Residential Total ERV (£m) 2.4 0.6 2.2 0.1 5.3 % of portfolio 1.1% 0.3% 1.0% 0.1% 2.5% Area (‘000 sq. ft.) 26 9 29 2 66 1. Includes 11 units let on a temporary basis (ERV £1.3m) Under offer Hospitality Retail & leisure Offices Residential Total E
Slide 32: Retail ITZA rental tones by street
Retail ITZA rental tones by street Significant opportunity to grow rents ITZA £psf 2,500 2,250 2,000 1,750 1,500 1,250 1,000 750 500 250 0 Bond St* James St King St Regent St* Oxford St* Covent Carnaby St Royal Long Acre Fouberts Floral St Monmouth Earlham St Neal St Fouberts Newburgh Berwick St Gar
Slide 33: A sustainable and responsible business
A sustainable and responsible business Benchmarks1 EPRA sustainability Standing Investments Assessment Recognised as a climate 68/100 with 2 Green Stars. reporting awards leader 2022 by the Gold Financial Times FTSE4Good Carbon Disclosure ISS ESG Corporate Rating: S&P Global CSA 68th percentile Proj
Slide 34: Our Environment, Sustainability and Community ('ESC') strategy
Our Environment, Sustainability and Community (‘ESC’) strategy Four key pillars Tackle climate change • Commitment to become net zero carbon by 2030 Drive innovation and collaboration • Support our customers to increase sustainability in their operations Support local communities and our people • Su
Slide 35: Primary accounting implications of merger
Primary accounting implications of merger Accounting implications: Impact: Fair value of property resulting in -£42m (NTA neutral) derecognition of Shaftesbury PLC tenant lease NTA reflects market value rather than carrying value. incentives Results in lower amortisation through underlying income, w
Slide 36: EPRA NTA per share movement
EPRA NTA per share movement Pence Merger impact Driven by full consolidation and share discount at point of merger completion Revaluation reflects the movement from 1 Jan 23 – 30 Jun 23 Underlying earnings 1.5 pence based on 1.8 billion shares or 1.9 pence based on weighted average number of shares
Slide 37: Per share metrics
Per share metrics Number of shares Per share metric No. of shares (million) H1 23 Underlying earnings (June 2023) Weighted average number of shares 1,473 FY 23 Underlying earnings (Dec 2023) Estimated weighted average number of shares 1,653 Dividends Total ordinary shares in issue1 1,822 EPRA NTA, N
Slide 38: Diversified sources of funding
Diversified sources of funding Drawn debt maturity profile £m 1800 Exchangeable £385m bond 1600 Implied conversion price of 214p 2029-2035 1400 £275m 1200 2026 £475m 1000 2024-2037 800 £576m 600 400 2024 200 0 Loan facility Unsecured private placements Exchangeable bond Secured term loans Loan Facil
Slide 39: Debt covenants
Debt covenants Nominal Average Test ICR LTV Value interest rate Frequency Measure Measure Secured term loans £385m 3.8% Quarterly 1.4x – 1.5x 60% - 70% Private placements £475m 2.7% Half yearly 1.2x 60% RCF £300m Undrawn Half yearly 1.2x 60% Exchangeable bond1 £275m 2.0% N/A N/A N/A Loan Facility2,3
Slide 40: Taxation summary
Taxation summary Tax on income and gains The total tax charge for the period is nil. The Group is a UK Real Estate Investment Trust (REIT) and therefore is exempt from UK corporation tax on income and gains arising from its qualifying property rental business provided that certain REIT conditions ar
Slide 41: Joint ventures
Joint ventures We own 50 per cent of the Lillie Square and Longmartin joint ventures, all figures represent our 50 per cent share Lillie Square Continuing to progress sales • 3 units sold during the period representing £2.7m Valuation1 • 3% decline (like-for-like) to £74m Funding Lillie Square Lilli
Slide 42: Important notices
Important notices This presentation contains “forward-looking statements” regarding the belief or current expectations of Shaftesbury Capital PLC, its Directors and other members of its senior management about Shaftesbury Capital PLC’s businesses, financial performance and results of operations. The
Slide 43: Shaftesbury Capital PLC
Shaftesbury Capital PLC Regal House, 14 James Street London, WC2E 8BU T 020 3214 9150 shaftesburycapital.com