Helical Plc · LSE:HLCL
Helical — Helical Bar — H1 2014 Earnings Presentation
47 slides from Helical's earnings presentation, Nov 28, 2013
Slide 1: Half Year Results
Helical Bar plc THURSDAY 28th NOVEMBER 2013 HALF YEAR RESULTS Helical Bar plc
Slide 2: Introduction
INTRODUCTION • Fantastic half year • Strategy is delivering • Great success at 200 Aldersgate and White City • £155m of acquisitions • £80m retail bond • Invest in regions for cashflow. Investment portfolio rent roll up to £39.8m from £28.7m Invest in Central London for capital growth De-risk develo
Slide 3: Financial
FINANCIAL FINANCIAL 3 Helical Bar plc
Slide 4: Headline Numbers
HEADLINE NUMBERS INCOME STATEMENT Sept 2012 Sept 2013 % change Group’s share of net rental income1 £12.2m £14.1m +16% Development profits1 £4.7m £63.5m +13x Profit before tax £5.2m £68.9m +13x EPRA earnings before tax £5.2m £40.9m +8x Adjusted EPRA earnings per share 5.2p 40.5p +8x Interim dividend
Slide 5: Income Statement
INCOME STATEMENT £m 100 95 90 £10.9m £88.5m 85 80 £63.5m £6.7m 75 £4.4m £68.9m 70 65 £7.5m £1.0m 60 55 50 45 40 35 30 25 20 15 £14.1m 10 5 0 Net rental Development Gain on sale and Total property Net finance costs Administration Performance Other net costs Profit before tax income profits reval. of
Slide 6: EPRA Net Assets
EPRA NET ASSETS p 320 315 310 9.0p 305 300 34.2p 295 290 285 20.5p 282.3p 280 1.0p 275 3.7p 270 265 264.3p 260 255 250 245 240 235 230 225 220 215 210 205 200 EPRA NAV at EPRA EPS Gain on sale and Development Other EPRA NAV Dividends EPRA NAV at 31 March 2013 revaluation of surplus realised adjustme
Slide 7: Helical - A Strong and Stable Balance Sheet
HELICAL - A STRONG AND STABLE BALANCE SHEET March March Sept Pro-forma1 2012 2013 2013 Sept 2013 See-through net debt and LTV See-through assets at fair value £m 573 626 684 770 See-through net debt £m (280) (286) (274) (360) See-through loan-to-value % 49 46 40 47 See-through net gearing % 110 113
Slide 8: Helical - Loan Facilities
HELICAL - LOAN FACILITIES Group loan expiry analysis at 30 Joint Venture loan expiry analysis at 30 £m September 2013 (excludes JVs) £m September 2013 140 140 120 £117.8m 120 100 100 £80.0m 80 80 £68.7m 60 60 40 40 £30.1m1 £30.0m 20 £16.0m £16.3m 20 £10.3m1 £1.5m £1.3m1 0 0 <1 1-2 2-3 3-4 4-5 5-6 6
Slide 9: Looking Forward
LOOKING FORWARD Income • Annualised net rents of £32.2m, growing to £38.6m after completion of purchases • Annualised interest cost of £18.1m, growing to £20.7m after completion of purchases (average rate of 4.6%) • Creating a growing surplus protected by c. £325m of interest rate swaps and caps Bal
Slide 10: Development
HELICAL HALF YEAR RESULTS DEVELOPMENT 10 Helical Bar plc
Slide 11: Development Strategy
DEVELOPMENT STRATEGY Aim to be ‘Equity Lean’ - To use equity aggressively and to maximise returns by: • Participation in profit share situations where no equity is required. We will minimise our fee to maximise profit share e.g. Fulham Wharf and 200 Aldersgate • Reducing upfront equity required by e
Slide 12: Development – 200 Aldersgate, London EC1
DEVELOPMENT – 200 ALDERSGATE, LONDON EC1 Result • Building refurbished in 2010 • Launched January 2011 • By June 2013 342,000 sq ft of offices fully let to 19 office tenants and Virgin Active, Giant and Pret a Manger • Building sold in September 2013 to clients of Ashby Capital LLP • Helical profit
Slide 13: Development – White City, London W12
DEVELOPMENT – WHITE CITY, LONDON W12 • Joint venture with Aviva Investors • Planning obtained for 1.5m sq ft residential led mixed use scheme • Site sold in September 2013 to neighbouring landowner Imperial College for campus expansion and enabling development • Helical profit share on c £1.5m equit
Slide 14: Development – Mitre Square, London EC3
DEVELOPMENT – MITRE SQUARE, LONDON EC3 • Planning consent granted for prime office development of 273,000 sq ft NIA with 3,000 sq ft retail/restaurant • All pre-development issues cleared • 1 Mitre Square purchased • Demolition completed • Discussions with financial partners ongoing • Potential prof
Slide 15: Development – Barts Square, London EC1
DEVELOPMENT – BARTS SQUARE, LONDON EC1 Acquired jointly with Baupost in March 2011 Baupost two thirds and Helical one third interest Planning consent granted – S106 signed 226,000 sq ft offices in two buildings 215 residential apartments (202,000 sq ft) 23,000 sq ft retail and restaurant
Slide 16: Development - 207 Old Street, London EC1
DEVELOPMENT - 207 OLD STREET, LONDON EC1 • Acquired in December 2012 jointly with Crosstree Real Estate Partners for £60.75m • Crosstree Real Estate Partners two thirds and Helical Bar Plc one third. Additional “waterfall” to Helical above IRR parameters • Existing buildings comprising: Rent Offices
Slide 17: Development – Maple House, London EC1
DEVELOPMENT – MAPLE HOUSE, LONDON EC1 • Purchased for c £17.5m in June 2013 • Existing building c 50,000 sq ft (net) • Following refurbishment, reconfiguration / extensions c 61,000 sq ft (net) • Planning application submitted and committee date expected in January 2014 • Completion expected in Spri
Slide 18: Development – Hammersmith, London W6
DEVELOPMENT – HAMMERSMITH, LONDON W6 • Development agreement with Hammersmith & Fulham Borough Council and in a joint venture (50/50) with Grainger plc • Resolution to grant planning consent achieved for 196 homes, 40,000 sq ft council offices, 3 screen cinema together with retail/ residential space
Slide 19: Development – Scottish Power, Glasgow
DEVELOPMENT – SCOTTISH POWER, GLASGOW • Development management role to deliver new 220,000 sq ft (net) office headquarters for Scottish Power funded by M&G Real Estate • Completion expected July 2015 or Dec 2015 if Cat B works added to contract • Three surplus Scottish Power sites to be acquired in
Slide 20: Development Scheme Review
DEVELOPMENT SCHEME REVIEW Property Partner HB Share Status Start on Site Area Cost Anticipated Potential exit Profit Mitre Square TBA TBA Demolition 2014 273,000 £160m 2016 £10m + completed Sq ft NIA office 3,000 sq ft retail and restaurant Barts Square Baupost 33.3% Planning Jan 2015 226,000 sq ft
Slide 21: Milestones: Targets to March 2014
MILESTONES: TARGETS TO MARCH 2014 Property Milestone September 2013 200 Aldersgate Secure profit share Done White City Secure profit share Done Barts Square Progress pre- Ongoing development activity Mitre Square Pre-let or financial Ongoing partner Demolition completed 207 Old Street Obtain plannin
Slide 22: Development – Going Forward
DEVELOPMENT – GOING FORWARD • Development portfolio provides excellent upside exposure to both office and residential markets in favoured locations in London • Concentrating on London:- - Refurbishment where possible to minimise engagement with planning process - Difficult to find value in a crowded
Slide 23: Investment
HELICAL HALF YEAR RESULTS INVESTMENT 23 Helical Bar plc
Slide 24: Investment - Summary
INVESTMENT - SUMMARY • 3.5% like for like capital growth (2.3% including sales and purchases) • 6.6% initial yield, 7.6% on letting voids, 7.8% reversionary yield • £155m of acquisitions (including £86.2m since half year) plus £21m forward commitment (2015) in Shoreditch • £89.4m in London at a yiel
Slide 25: Investment – Like for Like Income Changes
INVESTMENT – LIKE FOR LIKE INCOME CHANGES • 88 leases with a lease event in the period Rent Lost at Break/Expiry - £372,000 Rent Lost through administrations £0 Rent Reviews £60,000 New lettings and change from lease renewals £806,000 Net change £494,000 • Retail and London offices contributed c £20
Slide 26: Investment – New Loom House, Whitechapel
INVESTMENT – NEW LOOM HOUSE, WHITECHAPEL, LONDON E1 • Price £34,200,000 • Capital value psf £305 • Yield 4.9% • 112,000 sq ft (14,000 sq ft vacant) • Average passing rent only £18.50 psf • Refurbish common parts, introduce bar/café, restaurants (2014/15) • Rolling refurbishment of tenant space • ERV
Slide 27: Investment – Enterprise House, Paddington
INVESTMENT – ENTERPRISE HOUSE, PADDINGTON, LONDON W2 • Price £30.75m • Capital value psf £683 • Yield 5.65% • Valuation £35.75m (4.85% NIY) • Cash on cash 9.5% • Plan – hold until 2018 rent review. Minimum uplift to £45.00 psf (current £40.00 psf) • Hope for better than £45.00 psf at rent review whi
Slide 28: Investment – Artillery Lane, Bishopsgate
INVESTMENT – ARTILLERY LANE, BISHOPSGATE, LONDON E1 • Price £6.8m • Capital value psf £386 • Yield 4.3% • Average passing rents £21.00 psf • ERV once refurbished £50.00 psf • Plan – refurbish, potential to add an additional floor, A3 on ground floor 28 Helical Bar plc
Slide 29: Investment – Clifton Street, Shoreditch
INVESTMENT – CLIFTON STREET, SHOREDITCH, LONDON EC2 • Price £21m • Capital value psf £467 • June 2015 completion • £1m deposit • Exposure to growth market on favourable deal terms where large floor plates are scarce • Potential profit £6m assuming ERV of £42.00psf and exit yield of 5.5% • Potential
Slide 30: Investment - London Office Portfolio
INVESTMENT - LONDON OFFICE PORTFOLIO Property Net Rent Net Rent Sept ERV Valuation Key Events in the 6 months March ‘13 13 Increase (like for like) £1.05m £1.33m £2.37m 2.0% • Bike store and showers completed Battersea Studios • Continued letting 1 King Street, £0.80m £1.06m £1.49m 10.1% • Office no
Slide 31: Investment – Quartz Portfolio
INVESTMENT – QUARTZ PORTFOLIO JD Wetherspoon - Redditch Clydesdale Bank - Lancaster Secretary of State – Oldham • Price £48.6m Nicholl Packaging – Cannock Homebase - Cardiff Thames Water - Reading • Yield 8.2% Co-op – Doncaster • AWULT 12 years Co-op - Birkenhead Invensys Plc - Crawley • Subsale pot
Slide 32: Investment – Huddersfield Retail Park
INVESTMENT – HUDDERSFIELD RETAIL PARK • Price £17m • Yield 7.2% • 96,977 sq ft open A1 planning • Let to Matalan, Dunelm, Aldi, B&M (AWULT 10 years to breaks) • Low rents of £13 psf set during recession, fixed increases • 13% cash on cash return • Good cash flow, future growth prospects 32 Helical B
Slide 33: Investment - Retail Portfolio
INVESTMENT - RETAIL PORTFOLIO Property Net Rent Net Rent Change Key Events in the 6 months March 13 Sept 13 £3.26m £3.31m +£0.07m • Continued lettings in the Arcades Cardiff • Rent reviews with Molton Brown and White Stuff close to conclusion (expect +£80k) • Works nearing completion for Creative Qu
Slide 34: Investment - Leisure Plaza, Milton Keynes
INVESTMENT - LEISURE PLAZA, MILTON KEYNES • 80,000 sq ft supermarket pre-let to Morrisons • Pre-sold to Aviva for 4.25% • 50:50 JV with Abbeygate Developments • £0.8m land profit, £3.5m development profit (Helical share) • 50% of development profit recognised to date • Completion August 2014 • Retai
Slide 35: Investment – The Market
INVESTMENT – THE MARKET • Continued strong tenant demand in London with restricted supply and rising rents • A deep pool of investor demand for anything in London but still value to be found if selective • Regional investment demand picking up – UK funds being forced out of London • Occupational mar
Slide 36: Helical's London Portfolio September 2013
HELICAL’S LONDON PORTFOLIO SEPTEMBER 2013 Old Street Maple House Barts Square Enterprise House Shepherds Building Clifton Street The Power House, Chiswick New Loom House Hammersmith Artillery Lane Mitre Square One King Street Battersea Studios Post March 2013 57.4% of Helical’s equity is now deploye
Slide 37: Summary
SUMMARY • A fantastic half year • Market moving in our direction - Strong rental growth in Central London – Square mile? - Investors move up the risk curve - Secondary assets / retail - Trade out portfolios • Long in Central London and secondary retail • Would like to buy more, £150m firepower still
Slide 38: Appendix
APPENDIX APPENDIX 38 Helical Bar plc
Slide 39: The Portfolio - Helical's Share of Book Value
THE PORTFOLIO - HELICAL’S SHARE OF BOOK VALUE Total Portfolio March March September Current (Helical share of book 2012 2013 2013 value) Investment £374m £407m £484m £576m Trading and Development £144m £169m £174m £174m Total Portfolio £518m £576m £658m £750m 39 Helical Bar plc
Slide 40: Investment Portfolio – Helical's Share of Book Value
. INVESTMENT PORTFOLIO – HELICAL’S SHARE OF BOOK VALUE Investment Portfolio March March September Current (Helical share) 2012 2013 2013 London Office £113m £146m £210m £253m 30.2% 35.9% 43.4% 43.9% Retail £228m £228m £240m £258m 61.1% 56.0% 49.6% 44.9% Industrial £20m £12m £13m £21m 5.3% 2.9% 2.7%
Slide 41: Development Portfolio – Helical's Share of Book Value
DEVELOPMENT PORTFOLIO – HELICAL’S SHARE OF BOOK VALUE Development and Trading Portfolio March March September (Helical share of book value) 2012 2013 2013 Current Office £13m £16m £22m £22m 9.0% 9.5% 12.6% 12.6% Retail £14m £22m £23m £23m 9.7% 13.0% 13.2% 13.2% Industrial £6m £1m £1m £1m 4.2% 0.6% 0
Slide 42: Development Portfolio – Helical's Share
DEVELOPMENT PORTFOLIO – HELICAL’S SHARE % of development Development and Trading Portfolio Fair portfolio (Helical share) Book value valuation Surplus (fair value) Office £21.9m £26.4m £4.5m 13.2% Retail £23.5m £25.4m £1.9m 12.7% Industrial £1.4m £1.4m - 0.7% Mixed Use £2.8m £2.8m - 1.4% Change of U
Slide 43: Investment Portfolio – Key Statistics
INVESTMENT PORTFOLIO – KEY STATISTICS % of Valuation Valuation Initial yield Reversion- Average Vacancy ERV Capital investment increase/ increase/ ary yield un- rate (floor change value psf portfolio decrease decrease expired area) since (like for (inc lease March like) purchases term 2013 and sales
Slide 44: Investment Portfolio – Lease Expires
INVESTMENT PORTFOLIO – LEASE EXPIRES Year 2014 2015 2016 2017 2018 % of rent roll 10.9% 13.7% 11.6% 15.9% 7.1% Average rent/lease £32,200 £34,800 £63,700 £63,700 £36,400 44 Helical Bar plc
Slide 45: Top Tenants – Helical's Share of Rent
TOP TENANTS – HELICAL’S SHARE OF RENT Top tenants in the portfolio are: Rank Tenant Tenant industry Rent (Helical) % Rent Roll 1 Endemol UK Ltd Media £1,523,203 4.56% 2 Barts and the London NHS Trust Government £1,208,254 3.62% 3 TK Maxx Retail £1,160,000 3.47% 4 Quotient Bioscience Ltd Biotech £664
Slide 46: Retirement Village Developments
RETIREMENT VILLAGE DEVELOPMENTS No. Units Start Complete Forecast Profit Period Construction Construction Profit Faygate , nr 171 May ‘12 2016 £14m 2013-2017 Horsham Exeter 164 Oct ‘13 2017 £7m 2014-2018 Great Alne, nr 132 Oct ‘13 2017 £17m 2014-2017 Stratford-upon- Avon Liphook units to sell 19 Jan
Slide 47: Helical Bar plc
47 Helical Bar plc