Land Securities Group PLC · LSE:LAND
Land Securities — Landsec — FY2020 Earnings Presentation
34 slides from Land Securities's earnings presentation, May 2020
Slide 1: Our annual results
Our annual results For the year ended 31 March 2020 @LandsecGroup Landsec.com
Slide 2: Introduction
Introduction Mark Allan Chief Executive
Slide 3: Reflections on Landsec
Landsec 3 Introduction Reflections on Landsec Strength and resilience — Our people’s quick response to the pandemic — Working proactively and collaboratively together and for our customers — Quality of our portfolio and financial resources Leadership in sustainability — Commitment to tackling climat
Slide 4: Financial results
Financial results Martin Greenslade Chief Financial Officer
Slide 5: Our year in context
Landsec 5 Our year in context Continuation of the trends in H1…. until March Office Specialist Retail April 19 to Healthy market conditions Leisure and hotels virtually full Nuanced markets mid-March 2020 Portfolio virtually full Good demand from consumers Outlets and London steady and operators des
Slide 6: Financial summary
Landsec 6 Financial summary 31 March 2019 31 March 2020 % change £442m Revenue profit(1) £414m -6.3 £(557)m Valuation deficit(1) £(1,179)m -8.8(2) £(123)m Loss before tax £(837)m 59.7p Adjusted diluted earnings per share(1) 55.9p -6.4 1,348p EPRA net tangible assets per share 1,192p -11.6 45.55p Div
Slide 7: Revenue profit
Landsec 7 Revenue profit £m 3 (12) 4 (23) 442 437 414 Revenue profit Net rental income Net indirect Net finance Revenue profit Provisions related Revenue profit year ended expenses expense before provisions to 2020/21 rent year ended 31 March 2019 related to 31 March 2020 2020/21 rent
Slide 8: Net rental income analysis
Landsec 8 Net rental income analysis £m Like-for-like net rental income 618 583
Slide 9: How has Covid-19 impacted valuations?
Landsec 9 How has Covid-19 impacted valuations? Reduced portfolio valuation by c.£380m ERVs Capital Equivalent Extended Delayed unchanged deductions yields voids development on Retail and pushed out completion Specialist Loss of income 3 months’ rent +15-35 bps on outlets +3 months on all 6-month as
Slide 10: Combined Portfolio valuation
Landsec 10 Combined Portfolio valuation £12.8bn portfolio, valuation declined 8.8% One third of the decline attributable to Covid-19 +1.8% +1.1% +1.3% -10.3% -10.9% -15.0% Retail parks £0.4bn -25.5% -27.6% Leisure and hotels £1.2bn Regional retail £1.7bn London retail £1.4bn Outlets £0.9bn Office £6
Slide 11: Year end financing position
Landsec 11 Year end financing position A strong position with available resources Year end cash balance to cover commercial 31 March 2020 paper and provide liquidity buffer £m Average cost of debt 1.8% (2.4% cost of net debt) Bond debt 2,350 Group LTV 30.7% Bank debt 1,944 Next bond expected debt ma
Slide 12: Looking ahead
Landsec 12 Looking ahead Huge impact in business from Covid-19 over last 2 months — Increased valuation deficit by around £380m — Reduced income by £5m — Provided £23m in respect of next year’s rent Very difficult to predict level of rent payment in June Turnover rent accounted for c.£38m of income
Slide 13: Portfolio review
Portfolio review Colette O’Shea Managing Director
Slide 14: Supporting our people, partners and communities
Landsec 14 Supporting our people, partners and communities Our staff are on full pay Invested in technology to enable flexible working Supporting our critical service providers Work continues on site with additional safety measures Daily contact with our customers Increasing our contributions to cha
Slide 15: A summary of our year to March 2020
Landsec 15 A summary of our year to 31 March 2020 98% let £39m of investment lettings — £23m office rent reviews, 7% above passing rent Group like-for-like net rental income down 1% (excluding £23m provision for next year’s rent) Our office WAULT is 8.1 years Outperforming sales and footfall benchma
Slide 16: Office markets mixed in H2
Landsec 16 Office markets mixed in H2 Vacancy up, but speculative developments are pre-letting well Take-up 7% down on long-term trends in the second half Central London vacancy rate up to 4.5% London 12-month rolling quarterly take-up (£ per sq ft) Vacancy rate 16 5.0% 14 10-year quarterly average
Slide 17: Office: current position and immediate plans
Landsec 17 Office Our current position and immediate plans Offices 99% let All of our buildings open Usage only 10% Fitted at 123 Victoria Street, SW1 Facilities management reduced to a minimum Like-for-like net rental income up £7m 89% of the rent due at the year end received Fitted and Myo flexibl
Slide 18: Office: Resilient portfolio
Landsec 18 Office Resilient portfolio Portfolio constructed with change in mind — Need for healthy buildings with plenty of fresh air and good lifting capacity — Lower occupation densities — Flexibility that allows for layout changes — Supporting more flexible working practices HQ occupiers’ demand
Slide 19: Retail: Sales and footfall outperforming benchmarks
Landsec 19 Retail Sales and footfall outperforming benchmarks Our performance pre-Covid-19 11 months to February 2020 vs same period last year 1.0% 0.5% 0.9% Sales 4.1% above benchmark 0.1% 0.0% Footfall 2.5% above benchmark -0.5% -1.2% -1.0% 94 units/31 customers in CVA/Administration +4.1% -1.5% -
Slide 20: Retail: Impact of Covid-19
Landsec 20 Retail Impact of Covid-19 Only sites with essential operators are trading — Chemists and supermarkets remain open — 38% of rent due at year-end received Talking with over 500 retailers Covid-19 has accelerated structural issues Working in partnership with our customers Gunwharf Quays, Por
Slide 21: Retail: Continuing to progress re-purposing
Landsec 21 Retail Continuing to progress re-purposing Potential for new homes expanded over 75% to c.7,000 homes across four London sites — O2, Finchley Road — W12, Shepherd’s Bush Proposed development, W12, Shepherd’s Bush — Lewisham Shopping Centre — Southside, Wandsworth Masterplanning for introd
Slide 22: Specialist: Leisure, Hotels and Piccadilly Lights
Landsec 22 Specialist Leisure, Hotels and Piccadilly Lights Xscape, Milton Keynes Novotel, Hammersmith Piccadilly Lights, W1 Leisure Hotels Piccadilly Lights Like-for-like net rental income 18 out of 23 hotels closed Shorter-term leasing activity has down £1m diminished. Bookings in place for later
Slide 23: Supporting our occupiers through the crisis
Landsec 23 Supporting our occupiers through the crisis £80m rent support fund helping our customers Reviewed on a case-by-case basis Focusing first on independent businesses and F&B providers
Slide 24: Development: Progressing with optionality
Landsec 24 Development Progressing with optionality 1.0m sq ft on site Flexible programme with optionality to stop Had expected to commit another £700m of TDC by March – now deferred Unspent committed development capex now only £340m Main commitment of £273m at 21 Moorfields which is pre-let — Compl
Slide 25: Development: Progressing with optionality
Landsec 25 Development Progressing with optionality CGI of Lucent, W1 CGI of Nova East, SW1 Lucent, Nova East and Sumner Street — All building to grade — Optionality over further commitment — Continuing under current safety requirements Portland House offices vacant as planned — Stripping out and de
Slide 26: Before the world changed…
Landsec 26 A business with strength and resilience Before the world changed… Office portfolio is full with strong occupier profile Fitted and Myo ahead of business plans Shopping centres were outperforming the market Good progress re-purposing our retail assets in city locations 1.0m sq ft of develo
Slide 27: A business with strength and resilience: Looking ahead
Landsec Landsec 27 A business with strength and resilience Looking ahead Office portfolio has resilient buildings and customer base Ability to adapt to changing occupier needs Partnering with customers to find solutions Accelerating work to re-purpose retail Progressing the development programme whi
Slide 28: Mark Allan, Chief Executive
Mark Allan Chief Executive Landsec
Slide 29: Covid-19: mixed but significant impact across the portfolio
Landsec 29 Covid-19 Facing a mixed but significant impact across the portfolio from a position of strength CGI of 21 Moorfields, EC2 Bluewater, Kent Westgate, Oxford Office Retail Specialist Resilient with a powerful Quality portfolio outperforming sales Higher exposure to leisure, combination of se
Slide 30: Our short-term focus
Landsec 30 Our short-term focus Working collaboratively towards the new normal Our portfolio will be affected by ongoing social distancing restrictions Working collaboratively with customers to find solutions, provide support and protect our income June collection rates expected to be lower than Mar
Slide 31: Longer-term: Responding proactively to long-term impacts
Landsec 31 Longer-term Responding proactively to long-term impacts Retail Pre-existing structural trends may now be accelerated to less than a year Planning for more business failures, higher vacancy rates and downward pressure on rents Office Accelerated trend towards flexible working and healthier
Slide 32: Summary
Landsec 32 Summary Considering our long-term strategic direction Positioning the business to benefit from long-term trends whilst building on heritage and existing Landsec capabilities Expect to share outcomes of this work later in the year Our collaborative approach to working with our customers an
Slide 33: Landsec
Landsec
Slide 34: Our annual results
Our annual results For the year ended 31 March 2020 @LandsecGroup Landsec.com