Derwent London Plc · LSE:DLN
Derwent London — H1 2017 Earnings Presentation
86 slides from Derwent London's earnings presentation, 2017
Slide 1: Interim Results 2017
INTERIM RESULTS 2017 DERWENT LONDON PLC
Slide 2: Contents
CONTENTS Presenters: Contents: John Burns Introduction and overview 01 Simon Silver Results and financial review 08 Damian Wisniewski Valuation and portfolio analysis 19 Nigel George Projects 26 Summary 38 Appendices 40 Disclaimer 86 Derwent London plc Interim Results 2017
Slide 3: Introduction and Overview
INTRODUCTION AND OVERVIEW John Burns Derwent London plc Interim Results 2017 1
Slide 4: Highlights First Half 2017
HIGHLIGHTS FIRST HALF 2017 OPERATIONAL OPPORTUNITIES FINANCIAL ■■ £23.4m1 pa of new lettings in H1, ■■ £60m of estimated reversion to collect ■■ Interim dividend +25% 0.5% above December ERV from developments, vacant space, ■■ EPRA earnings per share +22.3% ■■ 281,000 sq ft of lease extensions to re
Slide 5: Space Attracting Occupiers: Record Six Months of Letting Activity
DERWENT LONDON’S SPACE ATTRACTING OCCUPIERS RECORD SIX MONTHS OF LETTING ACTIVITY Rental income (£m pa) Product 35 Pre-lets Non pre-lets 30 25 Middle Market Rents 20 15 Flexibility 10 5 Locations 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 H1 2017 Occupier Relationships 439,200 sq ft let at
Slide 6: Maintaining Portfolio Activity
DERWENT LONDON MAINTAINING PORTFOLIO ACTIVITY SECURING ANCHORS RECORD YEAR FOR DISPOSALS £m 500 Disposals Capital expenditure 400 Acquisitions 300 Net investment 200 100 0 (100) (200) (300) (400) (500) (600) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 H1 2017 £492m of sales and forward sales a
Slide 7: Central London Office Outlook
CENTRAL LONDON OFFICE OUTLOOK Portfolio estimates 2017 Market factors ■■ Political uncertainty and slowing economic growth ■■ Vacancy rate rose to 4.6% but short-term supply peaking in ERV +2% to -3% 2017 Rents (Feb 2017 0% to -5%) ■■ Take-up holding up at 5.8m sq ft in first six months ■■ Supply co
Slide 8: Occupier Demand Remains Key Driver
OCCUPIER DEMAND REMAINS KEY DRIVER ■■ Total occupier demand of 14.1m sq ft at the end of CENTRAL LONDON OFFICE DEMAND H1 2017: Demand (million sq ft) ■■ In line with the 10-year average 30 Potential demand Active demand ■■ Of this demand, 67% or 9.5m sq ft was active: 25 ■■ 12% above the 10-year ave
Slide 9: Maintaining a Growth Profile
DERWENT LONDON MAINTAINING A GROWTH PROFILE 1. Capture £60m ERV upside: CAPTURING REVERSION ■■ Deliver developments with £324m of capex £m ■■ Asset management initiatives 350 2. Commence Soho Place W1: 300 22.0 ■■ ERV £22m (net) 82.2 60.4 250 59.6 +£94.2m ■■ Additional capex c.£260m contributes to 1
Slide 10: Results and Financial Review
RESULTS AND FINANCIAL REVIEW Damian Wisniewski Derwent London plc Interim Results 2017 8
Slide 11: Headline Numbers
HEADLINE NUMBERS Jun 2017 % change Dec 2016 Jun 2016 Total portfolio at fair value 1 £4,797.8m n/a £4,942.7m £5,128.3m Net asset value £4,043.0m 1.1* £3,999.4m £4,062.3m EPRA net asset value per share2,3 3,582p 0.9* 3,551p 3,598p EPRA triple NAV per share 2,3 3,491p 1.2* 3,450p 3,486p Gross property
Slide 12: Net Assets, Debt and Gearing
NET ASSETS, DEBT AND GEARING ■■ Equity shareholders’ funds increased to £3,977m NET ASSETS, DEBT AND GEARING £m % ■■ EPRA NAV per share up 0.9% to 3,582p 4,000 Net assets1 NAV gearing 3,923 3,932 3,977 80 from 3,551p Net debt LTV ratio 3,500 70 ■■ Net debt decreased to £733.7m from £904.8m: 3,000 3,
Slide 13: EPRA Earnings and Dividend Growth
EPRA EARNINGS AND DIVIDEND GROWTH EARNINGS AND DIVIDEND ■■ Consistent growth in EPRA EPS over recent EPRA EPS (p) 76.99 years, H1 up 75% since 2013 80 H1 H2 71.34 39.86 70 37.37 ■■ Strong dividend growth, interim dividend up 25% 60 53.87 57.08 27.93 +75% compared to H1 2016 27.92 in 4 years 50 45.42
Slide 14: EPRA NAV Movement
EPRA NAV MOVEMENT ■■ Revaluation surplus: EPRA NAV PER SHARE Investment properties £66.7m Pence (p) 3,800 Reversal of trading property write-down1 £1.0m 17 3,700 Share of JV revaluation surplus £3.4m 45 2 For EPRA NAV movement £71.1m 64p 3,600 64 (90) (7) 3,582 3,551 3,500 ■■ Profit on disposal: 132
Slide 15: EPRA Earnings
EPRA EARNINGS1 ■■ EPRA earnings £50.6m, up 22.5% from £41.3m EPRA EARNINGS in H1 2016 £m 100 ■■ Property income analysis on page 14 1.2 85.4 (6.1) 80 ■■ Admin costs fell by 16.3% to £12.8m, or 5.6% (12.8) after adjusting for impact of prior year bonus 60 (14.3) 0.3 accruals (1.8) (1.3) 50.6 40 ■■ EP
Slide 16: Gross Property Income
GROSS PROPERTY INCOME ■■ Disposals include: MOVEMENTS IN GROSS PROPERTY INCOME 120-132 Tottenham Court Road W1 £1.4m £m Tower House WC2 £1.2m 100 75 Wells Street W1 £0.8m 90 ■■ Lettings and reviews include: 8.8 (1.0) 0.1 2016 (2.2) 85.4 2017 2017 lettings & 1.2 lettings reviews reviews 80 5.8 White
Slide 17: Cash Flow
CASH FLOW ■■ Decrease in net debt of £171.1m to £733.7m ■■ Cash from operations up 26%, benefiting from an increase in cash receipts from tenants and a decrease in variable remuneration NET CASH FLOW MOVEMENTS FORECAST CAPITAL EXPENDITURE1 On-site projects Other projects Soho Place Capitalised inter
Slide 18: Proforma Impact of Major Projects & Disposals
PROFORMA IMPACT OF MAJOR PROJECTS & DISPOSALS ■■ Assumes no disposals and no further lettings other than those already contracted ■■ Shows impact of estimated capital expenditure and schemes commencing PROFORMA IMPACT OF MAJOR PROJECTS & DISPOSALS PROFORMA IMPACT OF SOHO PLACE Capex and contracted i
Slide 19: Debt Summary
DEBT SUMMARY ■■ Total facilities decreased after cancellation of £100m of Jun 2017 Dec 2016 the main revolving bank facility Total facilities £1,166m £1,266m Net debt £734m £905m ■■ £75m Wells Fargo revolving facility extended by one Unutilised facilities and cash £446m £383m year to July 2022 Perce
Slide 20: Debt Facilities
DEBT FACILITIES Jun 2017 Dec 2016 MATURITY PROFILE OF DEBT FACILITIES Average spot interest rate £m 3.71% 3.65% 0 50 100 150 200 250 300 350 400 450 500 550 (cash basis) 2017 Average spot interest rate 3.99% 3.90% 2018 28 Extended to 2022 in July 2017 (IFRS basis) Percentage of drawn facilities at 2
Slide 21: Valuation and Portfolio Analysis
VALUATION AND PORTFOLIO ANALYSIS Nigel George Derwent London plc Interim Results 2017 19
Slide 22: Valuation
VALUATION Investment portfolio valued at £4.8bn Developments outperformed ■■ Underlying growth 1.9% H2 2016: (1.7)%: ■■ Valued at £785m, uplift of 9.5% in H1 2017: ■■ West End 1.6% H2 2016: (2.5)% ■■ White Collar Factory EC1 (completed H1 2017) 4.1% ■■ City Borders 2.4% H2 2016: (0.3)% ■■ The Copyri
Slide 23: Property Return
PROPERTY RETURN Total property returns in H1: PORTFOLIO PERFORMANCE ■■ Derwent London 3.6% Total return index (Dec 2011 = 100) 220 ■■ IPD Central London Offices 1 3.3% Derwent London 111% IPD Central London Offices1 ■■ IPD All Property1 4.6% 98% 200 IPD All Property1 VALUATION PERFORMANCE 180 Capita
Slide 24: Rental Value Growth
RENTAL VALUE GROWTH ■■ Underlying rental growth of 1.1% in H1 2017, driven by: ■■ Asset management - regears and reviews RENTAL VALUE GROWTH ■■ Refurbishments Half-yearly rental value growth (%) ■■ New lettings 15 12 ■■ City Borders 1.7%, West End 0.7% 9 8.1 6 5.2 6.6 4.6 4.8 ■■ Examples of rental g
Slide 25: Movement in Yields
MOVEMENT IN YIELDS EPRA yields TRUE EQUIVALENT YIELD MOVEMENT1 ■■ Net initial yield 3.2% (Dec 2016: 3.4%): True equivalent yield (%) 7.5 ■■ ‘Topped-up’ net initial yield 4.4% 15bp 97bp (Dec 2016: 4.1%) 7.0 83bp 6.5 ■■ True equivalent yield 4.79% (Dec 2016: 4.83%): 43bp ■■ 4 basis points tightening i
Slide 26: Build-up of Portfolio ERV
BUILD-UP OF PORTFOLIO ERV ■■ Net income of £145.8m: BUILD-UP OF INCOME POTENTIAL £m ■■ £4.4m captured in H1 2017 300 £3.1m £0.6m Annualised rent on straightline u/o or let u/o or let basis £170m in Q3 in Q3 19.5 275.9 ■■ Significant potential reversion £130.1m : 1 250 5.0 31.7 4.2 ■■ 54% (£69.7m) lo
Slide 27: Central London Office Rental Values
CENTRAL LONDON OFFICE RENTAL VALUES 87% of portfolio income from central London offices: ■■ Potential to drive rents - average ‘topped-up’ office rent CENTRAL LONDON OFFICE RENT PROFILE only £47.92 psf £ psf 60 Average office rent H1 20172 20162 Average topped-up office rent 55 ‘Topped-up’ rents % %
Slide 28: Projects
PROJECTS Simon Silver Derwent London plc Interim Results 2017 26
Slide 29: Delivery of Current Pipeline
DELIVERY OF CURRENT PIPELINE ■■ White Collar Factory completed in H1 2017: DEVELOPMENT COMPLETIONS ■■ 293,000 sq ft, 87% let Floorspace (million sq ft) 0.40 H1 2017 H2 2017 2018 2019 ■■ On-site projects of 727,150 sq ft, 32% pre-let: 0.35 ■■ 107,150 sq ft due to complete in H2 2017 ■■ 240,000 sq ft
Slide 30: 2017 Completion: White Collar Factory EC1
2017 COMPLETION: WHITE COLLAR FACTORY EC1 ■■ 293,000 sq ft scheme completed in H1 2017 ■■ 87% let overall with office tower 92% let ■■ Rental income £16.1m pa ■■ ERV of current vacant space £1.3m Derwent London plc Interim Results 2017 29
Slide 31: 2017 Completion: The Copyright Building W1
2017 COMPLETION: THE COPYRIGHT BUILDING W1 ■■ 107,150 sq ft scheme due to complete in H2 2017 t le re- ■■ 87,150 sq ft of offices pre-let to Capita in Q1 2016 p % ■■ Two out of three retail units let or under offer 81 ■■ Exchanged contracts to sell the long leasehold interest in this property for £1
Slide 32: 2019 Completion: Brunel Building W2
2019 COMPLETION: BRUNEL BUILDING W2 ■■ Exciting new Paddington development ■■ 240,000 sq ft of offices ■■ ERV £14.8m (net) - c.£62.50 psf ■■ Capex to complete £85m Derwent London plc Interim Results 2017 31
Slide 33: 2019 Completion: Brunel Building W2
2019 COMPLETION: BRUNEL BUILDING W2 Derwent London plc Interim Results 2017 32
Slide 34: 2019 Completion: 80 Charlotte Street W1
2019 COMPLETION: 80 CHARLOTTE STREET W1 ■■ 380,000 sq ft development on site: ■■ 321,000 sq ft offices – 42% pre-let ■■ 45,000 sq ft residential ■■ 14,000 sq ft retail ■■ ERV £25.8m – Offices c.£80 psf ■■ Capex to complete £194m Derwent London plc Interim Results 2017 33
Slide 35: Refurbishment: The White Chapel Building E1 Phase 2
REFURBISHMENT: THE WHITE CHAPEL BUILDING E1 – PHASE 2 ■■ 89,000 sq ft development ■■ Pre-let to Fotografiska: ■■ Rent of £2.4m pa ■■ 15-year lease, break in year 12 ■■ Capex £17m ■■ Scheme completes H2 2018 Derwent London plc Interim Results 2017 34
Slide 36: 2018 Start - Soho Place W1
2018 START - SOHO PLACE W1 ■■ Previously 1 Oxford Street ■■ Positioned above Tottenham RATHBONE Court Road station - STUDIOS Elizabeth Line opens 2018 1-2 STEPHEN HOLDEN ■■ Detailed design in hand HOUSE CHARLOTTE STREET BUILDING ■■ Engaging with contractors HANWAY STREET SOHO PLACE Derwent London pl
Slide 37: 2018 Start - Soho Place W1
2018 START - SOHO PLACE W1 ■■ 285,000 sq ft scheme: ■■ 209,000 sq ft offices ■■ 36,000 sq ft retail ■■ 40,000 sq ft theatre ■■ Ground rent of 5% and development profit share of 16%, payable to Crossrail ■■ Capex c.£260m ■■ £55m site payment at scheme completion ■■ Expected start H2 2018 ■■ Scheme ER
Slide 38: Future Pipeline
FUTURE PIPELINE ■■ A further three schemes being progressed with a potential floor area of 568,000 sq ft: ■■ 86% floorspace uplift 54 - 68 Oxford Street, London 10th February 201 d g g te nin ion nin ion sen lan icat lan icat n P pl P pl Co Ap Ap Monmouth House EC1 19-35 Baker Street W12 Holden Hous
Slide 39: Summary
SUMMARY John Burns Derwent London plc Interim Results 2017 38
Slide 40: Summary
SUMMARY ■■ Economic and political uncertainty likely to be prolonged Our ■■ London’s office demand has proved resilient market ■■ ERV guidance raised to +2% to -3% in 2017 ■■ Investment yields expected to be flat in 2017 ■■ Product and locations attracting occupier demand Derwent ■■ Ongoing growth p
Slide 41: Appendices
APPENDICES Derwent London plc Interim Results 2017 40
Slide 42: Appendices
APPENDICES 01. Group balance sheet 43 23. Lease expiry profile and lease length 65 02. Net asset value per share 44 24. Central London office demand 66 03. Group income statement 45 25. Central London office supply 67 04. Reconciliation of IFRS profit and EPRA earnings 46 26. Central London office v
Slide 43: Appendix 1 - Group Balance Sheet
APPENDIX 1 - GROUP BALANCE SHEET Jun 2017 Dec 2016 Jun 2016 £m £m £m Investment property 4,509.6 4,803.8 4,997.0 Owner-occupied property 44.7 34.2 36.6 Investments in joint ventures 38.5 36.0 32.9 Other non-current assets 106.4 113.0 104.8 4,699.2 4,987.0 5,171.3 Non-current assets and held for sale
Slide 44: Appendix 2 - Net Asset Value per Share
APPENDIX 2 - NET ASSET VALUE PER SHARE Jun 2017 Dec 2016 Diluted Diluted £m p £m p Net assets attributable to equity shareholders 3,977.1 3,558 3,932.3 3,521 Fair value of secured bonds (37.0) (36.6) Fair value of unsecured convertible bonds (5.7) (8.0) Fair value of fixed rate secured loan (5.1) (5
Slide 45: Appendix 3 - Group Income Statement
APPENDIX 3 - GROUP INCOME STATEMENT Half year ended Year ended Half year ended Jun 2017 Dec 2016 Jun 2016 £m £m £m Gross property income 85.4 156.0 76.7 Profit on disposal of trading properties - 1.9 1.9 Reversal of write-down/(write-down) of trading property 1.0 (1.6) (1.4) Other income less other
Slide 46: Appendix 4 - Reconciliation of IFRS Profit and EPRA Earnings
APPENDIX 4 - RECONCILIATION OF IFRS PROFIT AND EPRA EARNINGS Half year Year Half year ended ended ended Jun 2017 Dec 2016 Jun 2016 £m £m £m IFRS profit attributable to shareholders 146.4 58.7 98.5 Revaluation (surplus)/deficit (66.7) 37.1 (64.5) Joint venture revaluation surplus (3.4) (1.8) (0.2) Pr
Slide 47: Appendix 5 - Explanation of EPRA Adjustments
APPENDIX 5 - EXPLANATION OF EPRA ADJUSTMENTS Adjustments 2017 A B C H1 2017 H1 2016 IFRS EPRA basis EPRA basis £m £m £m £m £m £m Net property and other income 81.5 (1.0) 80.5 73.7 Administrative expenses (12.8) (12.8) (15.3) Revaluation surplus 66.7 (66.7) - - Profit on disposal of investment proper
Slide 48: Appendix 6 - EPRA Like-for-Like Rental Income
APPENDIX 6 - EPRA LIKE-FOR-LIKE RENTAL INCOME Like-for-like increase on: Properties owned throughout Development H1 2016 H2 2016 the year Acquisitions Disposals property Total % % £m £m £m £m £m H1 2017 Gross rental income 5.5 2.2 70.9 - 4.5 10.0 85.4 Property expenditure (2.9) - - (3.2) (6.1) Net r
Slide 49: Appendix 7 - Debt Facilities
APPENDIX 7 - DEBT FACILITIES £m £m Maturity 6.5% secured bonds 175 March 2026 3.99% secured loan 83 October 2024 1.125% unsecured convertible bonds 150 July 2019 4.41% unsecured private placement notes 25 January 2029 4.68% unsecured private placement notes 75 January 2034 3.46% unsecured private pl
Slide 50: Appendix 8 - Net Debt
APPENDIX 8 - NET DEBT Jun 2017 Dec 2016 £m £m Financial liabilities - current 28.0 - Financial liabilities - due after more than 1 year 808.5 922.5 Acquired fair value of secured bonds less amortisation (13.5) (14.0) Equity component of unsecured bonds 12.6 12.6 Unwinding of discount of unsecured bo
Slide 51: Appendix 9 - Fixed Rates and Hedging
APPENDIX 9 - FIXED RATES AND HEDGING Jun 2017 Dec 2016 Proportion of drawn facilities at fixed rates or hedged 99% 95% Weighted average duration of swaps 1 4.0 years 4.6 years Mark-to-market cost of swaps £11.0m £17.3m Weighted average duration of fixed rate instruments 8.7 years 9.2 years HEDGING P
Slide 52: Appendix 10 - Valuation Performance by Village
APPENDIX 10 - VALUATION PERFORMANCE BY VILLAGE Valuation Valuation Weighting movement Jun 2017 Jun 2017 H1 20171 £m % % West End Central Fitzrovia2 1,535.0 32 2.6 Victoria 540.4 11 (2.3) Baker Street/Marylebone 181.7 4 (3.8) Paddington 108.1 2 7.9 Mayfair 86.4 2 (2.5) Soho/Covent Garden 47.7 1 2.6 2
Slide 53: Appendix 11 - Rental Value Growth
APPENDIX 11 - RENTAL VALUE GROWTH RENTAL VALUE GROWTH1 H1 2016 H2 2016 2016 H1 2017 % % % % West End 4.4 1.1 5.5 0.7 City Borders 3.8 0.6 4.4 1.7 Central London 4.2 0.9 5.1 1.1 Provincial 2.3 2.2 4.5 1.2 Underlying 4.1 1.0 5.1 1.1 1 On EPRA portfolio Derwent London plc Interim Results 2017 53
Slide 54: Appendix 12 - Valuation Yields
APPENDIX 12 - VALUATION YIELDS YIELD PROFILE1 EPRA INITIAL YIELDS Yield (%) Net initial ‘Topped-up’ 8 Pre-EPRA EPRA yield initial yield % % 7 West End 3.5 4.2 6 City Borders 2.7 4.5 Central London 3.2 4.4 5 Provincial 6.4 6.5 EPRA portfolio 3.2 4.4 4 Reversionary yield 3 True equivalent yield Initia
Slide 55: Appendix 13 - Context to Yield Movement
APPENDIX 13 - CONTEXT TO YIELD MOVEMENT ■■ Spread between true equivalent yield and VALUATION YIELDS1 10-year Gilt of 360bp: Yield % or Gap between DL TEY and 10-year Gilt ■■ Gilt yield remains low 9 Derwent London True Equivalent Yield 10-year Gilt Derwent London Initial Yield Gap between DL TEY an
Slide 56: Appendix 14 - Portfolio Statistics by Village
APPENDIX 14 - PORTFOLIO STATISTICS BY VILLAGE Rent Net Vacant review/ Floor Vacant contracted Average space lease Estimated area1 floor area rental rental rental renewal Total rental Valuation Weighting ‘000 ‘000 income income value reversion reversion value £m % sq ft sq ft £m pa £ psf £m pa £m pa
Slide 57: Appendix 15 - Build-up of Portfolio ERV
APPENDIX 15 - BUILD-UP OF PORTFOLIO ERV Rent uplift pa Rent pa £m £m £m Contracted rental income, net of ground rents 145.8 Contractual rental uplifts White Collar Factory EC1 12.5 Angel Building EC1 8.0 The White Chapel Building E1 (Phase 1) 7.4 1-2 Stephen Street W1 3.0 Other 19.7 50.6 Pre-let ref
Slide 58: Appendix 16 - Evolution of Portfolio ERV
APPENDIX 16 - EVOLUTION OF PORTFOLIO ERV £m 300 Rent reviews and lease renewals Under refurbishment / development Available to occupy 250 Contractual rental uplifts (including pre-lets) Contractual rent 200 150 100 50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 H1 2017 Derwent London plc Int
Slide 59: Appendix 17 - Timing of the Reversion and Lease Expiries
APPENDIX 17 - TIMING OF THE REVERSION AND LEASE EXPIRIES ■■ £69.7m of the reversion locked in: ■■ £19.5m of the reversion from reviews and expiries: ■■ Contractual rental uplifts £50.6m ■■ 62% £m due over the next 18 months CONTRACTUAL UPLIFTS & PRE-LETS: £69.7m 20 0.1 Pre-let developments ■■ Pre-le
Slide 60: Appendix 18 - Available Space and Projects
APPENDIX 18 - AVAILABLE SPACE AND PROJECTS Vacant Pre-let Total Gross Net Pre-let Total area area area vacant Ground vacant rent net ‘000 ‘000 ‘000 ERV rent ERV ERV ERV sq ft sq ft sq ft £m pa £m pa £m pa £m pa £m pa Comment Available to occupy (EPRA) 34,400 sq ft let or under offer in Q3 at White C
Slide 61: Appendix 19 - Portfolio Summary
APPENDIX 19 - PORTFOLIO SUMMARY WAULT NO of Weighting including pre-lets Valuation properties % 9.5 yrs > £200m 5 28 Rental income: £(0.5)m £100m - £200m 13 38 Income: - Pre-let income: £16.2m3 £50m - £100m 13 19 Rental income: £99.3m < £50m 58 15 WAULT: 20.0 yrs Income: 68% Rent2: £77.763 89 100 WA
Slide 62: Appendix 20 - Rent and Tenant Banding
APPENDIX 20 - RENT AND TENANT BANDING CENTRAL LONDON ‘TOPPED-UP’ PROFILE OF TENANTS’ OFFICE RENT BANDING1 BUSINESS SECTOR2 Other £0-£30 ps f Government and 8% 15% public admin £60+ps f 3% Financial Media, TV, marketing 25% 5% and advertising 34% £30-£40 ps f Retail sales 12% 11% Retail head offices
Slide 63: Appendix 21 - Major Tenants
APPENDIX 21 – MAJOR TENANTS ‘Topped-up’ income1 % 01 Expedia 7.7 02 Burberry 5.4 03 Publicis Groupe 4.9 04 Arup 4.5 05 Capita 3.4 06 Government 3.3 07 The Office Group 3.0 08 WPP Group 2.9 09 MWB Business Exchange 1.8 10 FremantleMedia Group 1.7 11 TelecityGroup UK 1.5 12 Mother 1.4 13 VCCP 1.3 14 A
Slide 64: Appendix 22 - Lease Expiries and Breaks / Vacancy Rates
APPENDIX 22 - LEASE EXPIRIES AND BREAKS / VACANCY RATES ■■ £5.0m of income subject to breaks / expiries in H1 2017: ■■ EPRA vacancy rate of 1.9%2 at the half year – down from 2.6% at the start of 2017 ■■ £1.6m taken into projects or sold ■■ 93% of remainder retained or re-let ■■ Average lease length
Slide 65: Appendix 23 - Lease Expiry Profile and Lease Length
APPENDIX 23 - LEASE EXPIRY PROFILE AND LEASE LENGTH EXPIRIES AND BREAKS AS A PERCENTAGE OF PORTFOLIO INCOME1 West City End Borders H2 2017 2018 2019 2020 2021 Total Expiries 1 1 2 6 5 9 12 34 Rolling breaks 1 - 1 - - 1 1 3 Single breaks - - - 5 5 4 5 19 2 1 3 11 10 14 18 56 PROFILE OF RENTAL INCOME
Slide 66: Appendix 24 - Central London Office Demand
APPENDIX 24 - CENTRAL LONDON OFFICE DEMAND Market statistics OFFICE TAKE-UP ■■ Central London take-up of 5.8m sq ft in H1 (43% Q1: 57% Q2): Take-up (million sq ft) 20 Central London ■■ 3% below the long-term average but 5% higher than H1 2016 18 16 ■■ 29% Business Services, 24% Creative Industries,
Slide 67: Appendix 25 - Central London Office Supply
APPENDIX 25 - CENTRAL LONDON OFFICE SUPPLY Market statistics OFFICE DEVELOPMENT PIPELINE ■■ Central London vacancy rate increased from 4.2% to 4.6% in H1: Floor area (million sq ft) Vacancy rate (%) 12 12 Central London ■■ Above the 10-year average (4.4%) but below the 15-year Completed Completed av
Slide 68: Appendix 26 - Central London Office Vacancy
APPENDIX 26 - CENTRAL LONDON OFFICE VACANCY Vacancy rate (%) 16 West End City 14 Central London West End average 12 City average 10 8 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: CBRE Derwent London plc Interim Results 2017 68
Slide 69: Appendix 27 - Central London Office Rental Growth
APPENDIX 27 - CENTRAL LONDON OFFICE RENTAL GROWTH Rental growth (% pa) 40 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (10) (20) West End (30) City Central London (40) Source: CBRE Derwent London plc Interim Results 2017 69
Slide 70: Appendix 28 - Central London Office Investment Market
APPENDIX 28 - CENTRAL LONDON OFFICE INVESTMENT MARKET Market statistics CENTRAL LONDON OFFICE INVESTMENT ■■ £8.2bn of central London transactions in H1 2017: Value of investment transactions (£bn) 20 ■■ 40% above average and 13% above H1 2016 18 16 ■■ Overseas investors accounted for 76% 14 12 Avera
Slide 71: Appendix 29 - White Collar Factory EC1
APPENDIX 29 - WHITE COLLAR FACTORY EC1 ■■ 255,000 sq ft let at £16.1m pa (now 87% let): ■■ 218,200 sq ft (£14.0m pa) in the tower ■■ 29,100 sq ft (£1.8m pa) let in the low rise campus offices Rent Min uplift ■■ Two restaurants let (£0.3m pa) Q2 2017 Box.com £2.14m pa 28,500 sq ft £75.00 psf - Q1 201
Slide 72: Appendix 30 - The White Chapel Building E1
APPENDIX 30 - THE WHITE CHAPEL BUILDING E1 ■■ Phase 1 (184,000 sq ft) fully let within seven months of practical completion ■■ £9.04m pa of rental income (£45 to £55 psf) ■■ Phase 2 (89,000 sq ft) pre-let at £2.4m pa to Fotografiska PHASE 1 Rent Rent Min uplift 7 Q3 2016 GDS 54,700 sq ft £2.85m pa £
Slide 73: Appendix 31 - Asset Management: Expedia - Angel Building EC1
APPENDIX 31 - ASSET MANAGEMENT: EXPEDIA - ANGEL BUILDING EC1 Regear and assignment: ■■ Expedia’s occupation increases from 93,400 sq ft to 231,400 sq ft in 2019 and potentially 248,500 sq ft from 2021 ■■ Lease expiry moved from 2021 to 2030, no breaks ■■ Incentives equivalent to 21 months rent ■■ To
Slide 74: Appendix 32 - Asset Management: Mother - Tea Building E1
APPENDIX 32 - ASSET MANAGEMENT: MOTHER - TEA BUILDING E1 ■■ Renewed lease on 49,650 sq ft of office space ■■ Lease was due to expire in 2018 ■■ Reversionary lease agreed from 2018 to 2028 ■■ Incentives equivalent to an 8 month rent-free period ■■ Current average rent of £1.66m pa or £33.40 psf, risi
Slide 75: Appendix 33 - Changes to Business Rates
APPENDIX 33 - CHANGES TO BUSINESS RATES Primrose Hill Islington LONDON PORTFOLIO AVERAGE Carnegie St Rates: Up from £16.60 to £21.40 psf (+29%) Wharfdale Rd Angel TOC: Up from £49 to £54 psf (+10%) Kings Cross TECH BELT Haggerston Park Rates: Up from £11.70 to £17.70 psf (+51%) Albany Regent’s Park
Slide 76: Appendix 34 - 2017 Disposals
APPENDIX 34 - 2017 DISPOSALS Three major disposals in the year to date: Q1 Q4 Q2 132-142 Hampstead Road NW1 8 Fitzroy Street W1 The Copyright Building W1 ■■ £130.1m gross proceeds ■■ £197.0m gross proceeds ■■ £165.0m gross proceeds ■■ Net yield to purchaser of 1.2% ■■ Net yield to purchaser of 3.4%
Slide 77: Appendix 35 - Planning Consents - Monmouth House EC1
APPENDIX 35 - PLANNING CONSENTS - MONMOUTH HOUSE EC1 ■■ 125,000 sq ft office-led development ■■ Immediately to the south of White Collar Factory ■■ Replaces two tired properties totalling 69,000 sq ft: ■■ Both fully-let on a short-term basis ■■ Scheme could commence in 2020 Derwent London plc Interi
Slide 78: Appendix 36 - Planning Application - 19-35 Baker Street W1
APPENDIX 36 - PLANNING APPLICATION - 19-35 BAKER STREET W1 ■■ Planning application submitted for a 293,000 sq ft scheme: ■■ 206,000 sq ft offices with roof terraces ■■ 52,000 sq ft residential ■■ 35,000 sq ft retail ■■ Open courtyard with through-route under the office buildings between Baker Street
Slide 79: Appendix 37 - Planning Application - Holden House W1
APPENDIX 37 - PLANNING APPLICATION - HOLDEN HOUSE W1 54 - 68 Oxford Street, London 10th February 2017 ■■ Planning application submitted for a 150,000 sq ft scheme: ■■ Potential for a single Oxford Street flagship store ■■ Or a retail-led scheme with offices ■■ Refurbishment and extension of the exis
Slide 80: Appendix 38 - Current Projects - Profit on Cost
APPENDIX 38 - CURRENT PROJECTS - PROFIT ON COST White Collar Factory Copyright Building Brunel Building 80 Charlotte Street ed al et os sit e sit e pl sp m i On On Co D Completion H1 2017 H2 2017 H1 2019 H2 2019 Commercial area (sq ft) 967,000 285,000 107,000 575,000 240,000 335,000 Residential area
Slide 81: Appendix 39 - Project Summary - Current
APPENDIX 39 - PROJECT SUMMARY - CURRENT Current Pre Total net scheme Proposed H2 2017 2018 2019+ capex to Current income area area capex capex capex complete Delivery office Property £m pa ‘000 sq ft ‘000 sq ft £m £m £m £m date c.ERV psf On-site projects The Copyright Building W1 (0.4) 86 107 7 - -
Slide 82: Appendix 40 - Project Summary - Future
APPENDIX 40 - PROJECT SUMMARY - FUTURE Current Pre- net scheme Proposed Earliest income area area possession Property £m pa ‘000 sq ft ‘000 sq ft year Comment Consented Monmouth House EC11 0.2 69 125 2019 2016 consent - Opposite White Collar Factory 0.2 69 125 Appraisals and planning applications2 1
Slide 83: Appendix 41 - Project Pipeline
APPENDIX 41 - PROJECT PIPELINE On-site On-site Consented Potential developments 0.73m sq ft + refurbishments 0.09m sq ft + projects + Appraisals 0.62m sq ft = pipeline 0.41m sq ft 1.85m sq ft Soho Place W1 Monmouth House EC13 te d ed en nt s se 0.82m sq ft 1.03m sq ft Co n Co n 1 +70% 2 +127% The Co
Slide 84: Appendix 42 - Portfolio Map
APPENDIX 42 - PORTFOLIO MAP Primrose Hill Islington Carnegie St TEC H BEL Wharfdale Rd Angel Haggerston Kings Cross Park T Alban Regent’s Park y St S t Pancras Hoxton International Th am es lin k Euston Old Street Up pe rW St Mat Old Street ob Clerkenwell urn Pl thew’s Great Bloomsbury Shoreditch Ro
Slide 85: Appendix 43 - Executive Committee and Senior Management
APPENDIX 43 - EXECUTIVE COMMITTEE AND SENIOR MANAGEMENT John Burns* Chief Executive Officer Damian Wisniewski* Finance Director Simon Silver* Property Director Nigel George* Property Director Paul Williams* Property Director David Silverman* Property Director Tim Kite* Company Secretary Richard Bald
Slide 86: Disclaimer
DISCLAIMER This presentation has been prepared by Derwent London plc (the may become apparent. Past performance is not indicative of future “Company”). No representation or warranty (express or implied) of results and forward-looking statements are not guarantees of future any nature is given nor is