Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — Investor Day (June 2017)
69 slides from Crest Nicholson's investor day presentation, June 2017
Slide 1: Crest Nicholson Capital Markets Day
Crest Nicholson Capital Markets Day Welcome. 1
Slide 2: Today's Agenda
Today’s Agenda • Welcome 10.30 • Introduction to WBC, backbone site update & OSM update 10.45 • Visit to new School, Show Homes and OSM prototypes 11.30 • Lunch 13.00 • Building for the future – presentation 13.30 • Travel to Longcross: show homes & project update 14.00 • Finish – transfer to Virgin
Slide 3: Levering increased delivery and value from our larger site portfolio
Levering increased delivery and value from our larger site portfolio June 2017 Chris Tinker Chairman Major Projects and Strategic Partnerships 3
Slide 4: At our last Capital Market day
At our last Capital Market day: We looked at the benefits our larger backbone sites brought to the business Visited Bolnore, Kilnwood Vale and Longcross This morning we aim to: Provide an update on progress Illustrate again how we maximise delivery on our 250+ unit sites Explain the Group’s OSM and
Slide 5: Planning – more consents, average site size growing
Planning – more consents, average site size growing Annualised permissions for new homes, 2006-2016 320,000 300,000 280,000 Help to Buy 260,000 240,000 NPPF 220,000 200,000 180,000 Annualised indexed planning permissions in England, sites and units, 2006/7 to 2016 (2006/7=100) 160,000 120 140,000 12
Slide 6: Gives LPA's ability to secure infrastructure
Gives LPA’s ability to secure infrastructure 6
Slide 7: Plays well to Crest's strengths
Plays well to Crest’s strengths 7
Slide 8: Larger sites underpin enhanced delivery rates
Larger sites underpin enhanced delivery rates Higher delivery levels achieved through: Up front focus on place making Delivery of multiple housing phases – double and triple out-letting Complementary typologies and styles With delivery across all forms of tenure (OM, affordable & BTR)
Slide 9: Park Central, Birmingham
Park Central, Birmingham Partnership with BCC Average delivery 140 dpa Mixed tenure & typology 1,750 dwellings 1,000 OM, 339 BTR, 411 Affordable Circa 250 houses & 1,500 apartments Emphasis on Place-making No land value Circa £30m works in lieu 9
Slide 10: Ongoing BTR delivery at Park Central
Ongoing BTR delivery at Park Central Park Central, BTR 339 Units in 5 blocks Pre-sold to BBS Capital FY17 to 19 completions 10
Slide 11: Centenary Quay, Southampton
Centenary Quay, Southampton Partnership with HCA Average delivery 130 dpa Mixed tenure & typology OJEU award 1,660 dwellings 1,060 OM, 200 BTR, 400 Affordable Circa 150 houses & 1,510 apartments Emphasis on Place-making £30m District centre Public sector subsidises ongoing delivery 11
Slide 12: Bath Riverside, Bath
Bath Riverside, Bath Owned outright (+option) Partnership with B&NES Average delivery 120 dpa Mixed tenure & typology 2,250 dwellings £800m GDV Circa 460 units left with GDV of circa £180m £7m public funding of infrastructure 97 BTR units with M&G 12
Slide 13: Oakgrove Village, Milton Keynes
Oakgrove Village, Milton Keynes Partnership with HCA Average delivery 180 dpa Mixed tenure & typology District Centre 1,000 Dwellings £300m GDV New village for MK • £18m District centre • Schools and community uses Tranche valuations, deferred land payments Sharing of surplus proceeds 13
Slide 14: Arborfield Garden Village
Arborfield Garden Village Partnership with DIO Ave’ future delivery: 150 dpa Mixed tenure & typology Multi-outletting by division 2,000 dwellings Development Manager to DIO • Develop 50% of Homes • CN GDV circa £350m GDV • Also deliver up to 400 PRS units • To develop the £30m district centre • Mana
Slide 15: Large-site social & physical infrastructure
Large-site social & physical infrastructure Total Infrastructure Investment Education: £25m Affordable Housing – Offsite contribution (15%) - £24m Offsite highways - £24.2m Other S106 contributions - £5m On site works: open space, utilities & highways - £23.4m Servicing & enabling land for disposal
Slide 16: All seed further partnership schemes
All seed further partnership schemes Partnership with MKDC Anticipated delivery 100 dpa Mixed tenure & typology Campbell Park Circa 400 Dwellings 325 apartments & 55 houses Marina and mixed uses Phase valuation Shared surplus proceeds
Slide 17: Highly land Evolved Garden Village
Highly land Strategic Evolved Garden supports Village Garden Model Village model • Crest’s ‘Garden Village’ model/brand now well established • Welcomed by Government, LPA’s and local communities alike • Well timed for the DCLG “Locally led Garden Village” initiative
Slide 18: Tadpole Garden Village, Swindon
Tadpole Garden Village, Swindon Owned outright Ave’ CN delivery 130 dpa Mixed tenure & typology 1,695 homes Consented Sept 2012 179 ha of green space Traditional & Contemporary £50m Community infrastructure: – nature park – primary school – shops – playing fields – community buildings – doctors/vets
Slide 19: Tadpole GV: Dual out-letting by design
Tadpole GV: Dual out-letting by design Traditional arts and crafts housing Contemporary lifestyle housing 19
Slide 20: Monksmoor Park: Daventry Garden Village
Monksmoor Park: Daventry Garden Village Partnership with Trust Ave’ CN delivery 130 dpa Mixed tenure & typology Traditional & Contemporary 1,000 dwellings GDV of £230m 820 OM & 180 Affordable Private trust, tranche valuations 20
Slide 21: Monksmoor Park: Further dual out-letting by design
Monksmoor Park: Further dual out-letting by design 21
Slide 22: Other multi-outlet backbone sites
Other multi-outlet backbone sites: Finberry, Ashford (1,100dw) Backbone Sites Partnership (CC) Ave’ CN delivery 100 dpa Mixed tenure & typology Kilnwood Vale, West Sussex (2,400dw) Owned outright/phased option Ave’ CN delivery 100 dpa Mixed tenure & typology 22
Slide 23: BTR at Kilnwood Vale
BTR at Kilnwood Vale 227 BTR units Pre-sold to M&G Circa £36m First 43 completed Further 50 due in FY17 Balance in FY18 23
Slide 24: Garden Village designation at Longcross
Garden Village designation at Longcross 24
Slide 25: Five more imminent backbone sites
Five more imminent backbone sites Rowden Park, Chippenham: 414 dwellings Ipswich: 1,100 dwellings East of Harry Stoke: 1,428 dwellings Cheshunt: 309 dwellings Bury Farm, Whiteley – 520 dwellings 25
Slide 26: Further near term BTR opportunities
Further near term BTR opportunities Longcross Ph3: up to 200 units Harry Stoke: Up to 400 units Arborfield: Up to 400 units Bath future phases: Further 100 units 26
Slide 27: Value creation through upfront investment in place
Value creation through upfront investment in place 27
Slide 28: And a focus on creating communities
And a focus on creating communities 28
Slide 29: Specialist experience & resources are required
Specialist experience & resources are required These projects require: Partnership/community focussed teams Strategic planning experience Master-planning skills Ability to overlap outline & detailed Branding Experience in servicing land and creating places (specialist project management) An ability
Slide 30: Thank you
Thank you Se he —— ee ies
Slide 31: Building for the future
Crest NICHOLSON Building for the future
Slide 32: Investing for growth
Investing for growth • 2016 target achieved; re-iterating commitment to 2019 targets of 4,000 homes and £1.4bn Sales • Having largely repositioned ASPs, growth now primarily volume driven as newer divisions reach capacity and PRS numbers increase Templates • In addition, a further division is planne
Slide 33: Arithmetic of growth
Arithmetic of growth 2016 2019 SPOW 0.81 0.80 Outlets 47 68 Templates Legal Completions OM (inc. net 121 FS in 2016) 2,101 2,829 PRS 191 300 Affordable 578 943 2,870 4,072 • Growth through to 2019 primarily volume related, having now reached £400k+ OM ASPs. Lower London ASP offset by product & locat
Slide 34: Supply chain, land and people
Key constituents Materials Skills Approaches Attraction & Supply People retention chain Security of Placemaking Supply Land Product & Legacy New Core Breadth Ranges
Slide 35: People & Resources
People & Resources
Slide 36: Talent Management
Talent Management • Developing management and site skills in the business a high priority • Action on a number of fronts, to grow and develop our own staff and support the supply- chain in delivering growth • Opportunities for learning and career progression in a growing Crest business aid attractio
Slide 37: Graduate scheme
Graduate scheme • 35 recruits since 2014 with a further 17 planned for September 2017 • 90% retention rate in a competitive market • JobCrowd winner in 2017: Templates - 1st place (out of 40) in Property • - 4th place (out of 100) across all sectors • Structured, rotational programme with personal m
Slide 38: Apprentices
Apprentices • Huge skills replenishment task in construction industry – over 200,000 jobs to fill by 2019 • Crest Nicholson target is for 10% of all employees to be apprentices – currently at 9% Templates • Will have created 200 apprenticeships by 2020 • Programme covers multiple trades and has now
Slide 39: Site Management Academy
Site Management Academy • 32 recruits since 2015; 12 more planned for 2017 – 200 applications • 88% retention rate Templates • Last year, 1/3rd intake were former apprentices and 1/4 were female • Scheme consists of 2 and 4 year programmes: Industry-leading scheme backed by - blend of site & classro
Slide 40: Land bank structured to support growth and manage risk
Land bank structured to support growth and manage risk 27th June 2017
Slide 41: Typical graduate exercise
Typical graduate exercise If a typical division can deliver 650 dwellings a If a division is to reliably year (assuming say 25% affordable housing) deliver 650 dwellings per annum Reserved 370 OM plots, 46 ahead Legally Completed 222 units, 25 ahead Sales of £56.9m, £1.5m behind
Slide 42: Typical graduate exercise
Typical graduate exercise If a typical division can deliver 650 dwellings a If a division is to reliably year (assuming say 25% affordable housing) deliver 650 dwellings per annum Reserved 370 OM plots, 46 ahead Legally Completed 222 units, 25 ahead Sales of £56.9m, £1.5m behind Outlet numbers will
Slide 43: Typical graduate exercise
Typical graduate exercise If a typical division can deliver 650 dwellings a If a division is to reliably year (assuming say 25% affordable housing) deliver 650 dwellings per annum Reserved 370 OM plots, 46 ahead Legally Completed 222 units, 25 ahead Length of land bank needs to consider: Sales of £5
Slide 44: Crest's contracted land pipeline
Crest’s contracted land pipeline Apr 2017 Apr 2016 Inc/(Dec) % Units GDV £m Units GDV £m Units GDV £m Short-term housing 17,056 5,661 15,377 5,143 11% 10% Short-term - 222 - 248 (10)% commercial Total short-term 17,056 5,883 15,377 5,391 11% 9% Strategic land 16,902 5,229 17,820 5,191 (5)% 7% Total
Slide 45: With increased operational capacity
With increased operational capacity Crest Nicholson Operations Crest Nicholson Crest Nicholson Crest Nicholson Crest Nicholson Crest Nicholson Crest Nicholson Crest Nicholson Crest Strategic Eastern Midlands South South West London Chiltern Regeneration Projects
Slide 46: Formula to deliver 4,000 units by 2019
Formula to deliver 4,000 units by 2019 INDICATIVE FY19 UNIT DELIVERY BTR 300 LONDON 300 MIDLAND 300 CHILTERN 600 SOUTH WEST 650 REGENERATION 650 SOUTH 650 EASTERN 650 0 100 200 300 400 500 600 700
Slide 47: Site growth underpins outlet trajectory
Site growth underpins outlet trajectory 95% of FY18 land and 78% of FY19 land secured, in line with historical experience Outlet numbers c.75% of site numbers at any time
Slide 48: In part supported by Strategic land bank
In part supported by Strategic land bank • 2,140 plots on 5 strategic sites pulled through to short term land bank in last 9 months providing increased short term outlet breadth. • 5 sites for a further 2,279 plots subject to existing planning applications • 7 further applications for 4,477 plots to
Slide 49: Our land sources
Our land sources • Reputation • Planning track record Strategic • Delivery and place making track record land • Research base • Agency network • Experience at OJEU bidding • Good partnership • Off- market deals credentials • Agency led selected short • Design and Public Land Private lists sustainabi
Slide 50: Short term Land Bank composition
Short term Land Bank composition PORTFOLIO COMPOSITION (% • Strategically sourced land PLOTS) JV's now 44% of the short term 2% land bank (7,480 plots) • Public sector sourced land Private 14.9% of portfolio (2,537 Strategic Sector Land plots). 39% 44% • 6,701 plots (39%) were sourced from private v
Slide 51: Growing contribution of unit delivery by source
Growing contribution of unit delivery by source Plot delivery by land source 2500 2000 1500 1000 500 0 Strategic land Public sector land Private vendor land FY2017 FY2019
Slide 52: Short term Land Bank composition
Short term Land Bank composition PORTFOLIO COMPOSITION Plots on (% PLOTS) • Increased stability and delivery rates Sites < arising from larger average site size 250 units 26% • London and newer divisions have smaller average site size • Strategic land team re-focussed to support newer divisions and
Slide 53: Driving our major projects (>250 dw) hard
Driving our major projects (>250 dw) hard Multiple Out- letting Mixed uses 74% of and Build to community our land rent building pipeline Place making and land sales 23
Slide 54: Managing risk and reward - partnership
Managing risk and reward - partnership Proportion of portfolio subject to partnership Typical Partnership Characteristics Partnership working • Shared risk and reward 24% • Increased up-front investment in place-making • OMV established as land drawn down • Deferred land payments • Lower GM% v incre
Slide 55: Managing risk & reward – Basis of valuation
Managing risk & reward – Basis of valuation Hedged 45% Insulating the Land Bank from Macro- economic risk • 7,677 plots (45%) are subject to valuation at date of draw down Fixed terms 55% • Typically options on ex- Break down of hedged units Strategic land sites Phase Single valuations Option with M
Slide 56: Back to our Divisional portfolios
Back to our Divisional portfolios…… Land Portfolio April 17: • 15 Sites/phases • 1,468 units Chiltern Unit Completion • Ave site size: 98 units • £558m GDV Forecast • ASP £380k Further support: 646 • Daventry balance: 413 units 508 • Allocated strategic sites at MK 309 (1,400), Warwick (529), 272 •
Slide 57: Typical Home Counties Division
Typical Home Counties Division Land Portfolio April 17: • 20 Sites/phases • 1,458 units • Ave site/phase size: 73 units South Unit Completion • £773m GDV Forecast • ASP £404k 700 720 Further support: 600 • Kilnwood balance: 1,350 units 493 • Bury Farm: 520 units • Horley: 107 units • Bishops Waltham
Slide 58: South Backbone Site Delivery
South Backbone Site Delivery Division Forecast 5 Year Unit Completion From Backbone Sites Remaining 2017 2018 2019 2020 2021 South Status Units Bolnore Village Owned 105 48 48 9 Wokingham Part Option 311 60 65 70 70 70 Kilnwood Vale Part Option 1,600 130 200 100 100 100 Horley Owned 350 50 60 70 70
Slide 59: Our Regeneration Division
Our Regeneration Division Land Portfolio April 17: • 14 Sites/phases • 2,993 units • Ave site/phase size: 214 units Regeneration Unit • £913m GDV Completion Forecast inc’ PRS • ASP £305k Further secured support: 850 • Longcross Nth: 92 units 590 590 660 • Longcross Sth: 1,500 units Scott Black • Bar
Slide 60: Conclusions
Conclusions
Slide 61: Land pipeline supports managed growth
Land pipeline supports managed growth At 5.7 yrs supply, we have a sustainable land pipeline supported by a quality strategic land bank of equal size. Combined with increased operational capacity – we have the resources to deliver FY19 targets Templates Our growth in sites/outlets is coming from str
Slide 62: Q&A
Q&A
Slide 63: Disclaimer
Disclaimer You should note that the financial projections and other statements regarding Crest Nicholson's intentions, beliefs or current expectations referred to in this document are forward looking and do not relate solely to historical or current facts. These statements are provided on a confiden
Slide 64: Arborfield Green Garden Village
A PARTNERSHIP WITH THE DEFENCE INFRASTRUCTURE ORGANISATION: ARBORFIELD GREEN GARDEN VILLAGE BERKSHIRE A new backbone site Arborfield Green is a brand new Garden Village for Berkshire on the former 412 acre Arborfield Garrison site, located just to the south of Wokingham in leafy Berkshire. Previousl
Slide 65: The Bigger Picture Acquisition
ACQUISITION THE BIGGER Site size: 167ha (412 acres) Total GDV: circa £700m Primary School PICTURE The Development Management Agreement In addition Crest Nicholson also has the (DMA) signed with the DIO in 2013 enables opportunity to deliver up to 400 build to Playing Crest Nicholson to identify half
Slide 66: Waterman's View
WATERMAN’S VIEW Comprising 113 dwellings in a mix of 1 bed apartments to 5 bed houses, Waterman’s View commenced delivery in early 2016 and has achieved an open market sales rate of approximately 7 dwellings per month in 2017. The homes on Waterman’s View are set The prices at Waterman’s View are: T
Slide 67: Longcross Garden Village
A JOINT VENTURE WITH AVIVA INVESTORS: LONGCROSS GARDEN VILLAGE SURREY A new backbone site Longcross is the 300 acre former Defence Evaluation and Research Agency site abutting Wentworth Golf Course and straddling the M3 near Chobham. The site, which sits in the greenbelt neighbouring Chobham Common,
Slide 68: Longcross Acquisition, Planning and Vision
ACQUISITION Site size: 122ha (300 acres) Total GDV: circa £1bn he Group entered into a 50/50 joint venture with Aviva in 2003 and purchased the T freehold of the site in 2005 on deferred terms with a two year leaseback to DERA. The JV has no further planning or financial obligations to DERA. The sit
Slide 69: Upper Longcross and Longcross Park
UPPER LONGCROSS Launched in May 2017, the first phase of Upper Longcross comprises 108 dwellings ranging from 1 to 5 bedroom homes. The houses are designed to a very high specification with contemporary open plan internal layouts. The elevations are a modern take on a traditional Surrey vernacular a