Shaftesbury Capital Plc · LSE:SHC
Shaftesbury Capital — Capital & Counties Properties — FY2019 Earnings Presentation
42 slides from Shaftesbury Capital's earnings presentation, 2020
Slide 1: Capital & Counties Properties PLC
Capital & Counties Properties PLC CAPITAL & COUNTIES PROPERTIES PLC
Slide 2: Important Notices
IMPORTANT NOTICES This presentation contains “forward-looking statements” regarding the belief or current expectations of Capital & Counties Properties PLC, its Directors and other members of its senior management about Capital & Counties Properties PLC’s businesses, financial performance and result
Slide 3: Agenda
1. INTRODUCTION Ian Hawksworth 2. FINANCIAL REVIEW Situl Jobanputra 3. COVENT GARDEN Michelle McGrath 4. LOOKING AHEAD Ian Hawksworth 5. Q&A
Slide 4: Introduction
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Slide 5: Separation of our two central London estates achieved
SEPARATION OF OUR TWO CENTRAL LONDON ESTATES ACHIEVED STRATEGIC FOCUS ON THE WEST END − Build on the success of Covent Garden STRONG BALANCE SHEET − Significant financial flexibility SIMPLIFICATION OF THE GROUP − Reduced operating cost base TARGET SUPERIOR LONG-TERM TOTAL RETURNS − Continued growth
Slide 6: Disposal of Earls Court for £425 million
DISPOSAL OF EARLS COURT FOR £425 MILLION IN LINE WITH LONG-TERM STRATEGY − Monetisation of investments over time − Focus on growing central London property investment business ENHANCED FINANCIAL FLEXIBILITY TO CAPITALISE ON FURTHER OPPORTUNITIES − Access to £900 million1 liquidity − Low LTV of 16%1
Slide 7: Thriving West End economy, world-class estate, resilient performance
THRIVING WEST END ECONOMY − One of the world’s most popular business, leisure and visitor destinations − Attracting talent and investment from around the world WORLD-CLASS ESTATE − Concentrated ownership and scale − High quality footfall location − Global recognition RESILIENT PERFORMANCE − Active l
Slide 8: - Reduce carbon operational emissions from our directly managed buildings
- Reduce carbon operational - Extensive pedestrianisation - Reduce waste from buildings and emissions from our directly managed - No idling campaign operations in our control buildings - Bio-diverse greening programme - 100% of Market Building non- - Installation of energy-efficient LED - Introducti
Slide 9: Long-term ERV growth, value creation
LONG-TERM ERV GROWTH VALUE CREATION +8%¹ 1.On like-for-like CAGR basis
Slide 10: Disciplined approach to investment, returns and capital efficiency
Investment in owned assets Acquisitions on or near Covent Garden estate Development, repositioning and asset management opportunities Other central London opportunities DISCIPLINED APPROACH TO INVESTMENT, RETURNS AND CAPITAL EFFICIENCY Dividend growth in line with progression in underlying earnings
Slide 11: Total return driven primarily by Earls Court, strong balance sheet
TOTAL RETURN DRIVEN PRIMARILY BY EARLS COURT STRONG BALANCE SHEET TOTAL PROPERTY VALUE £2.8 BILLION, A DECREASE OF 1.8% LFL GROW DIVIDEND DISTRIBUTIONS IN LINE WITH PROGRESSION IN UNDERLYING EARNINGS TOTAL SHAREHOLDER RETURN 14%
Slide 12: Continuing to focus on driving NRI growth
CONTINUING TO FOCUS ON DRIVING NRI GROWTH POSITIVE TRADING PERFORMANCE RELATIVE TO CHALLENGING BACKDROP 92 LEASING TRANSACTIONS 1.3% AHEAD OF DECEMBER 2018 ERV CONTINUING TO ATTRACT HIGH QUALITY BRANDS AND CONCEPTS INVESTMENT DRIVING EXPANSION AND CHANGE
Slide 13: Financial Review
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Slide 14: Note: All numbers shown at Group share
Note: All numbers shown at Group share
Slide 15: Gross income to contracted rent and ERV
120 100 80 60 40 20 0 Dec-19 Gross Rent-frees and Turnover and Contracted and Total contracted Vacancy Development Reversion Dec-19 Income stepped rents other income under offer and under offer and ERV Refurbishment
Slide 16: EPRA NNNAV: 292 pence per share
1 The market value of investment, development & trading property is £2,774m (2018: £3,268m) EPRA NNNAV: 292 pence per share New EPRA net asset value metrics: • NRV (net realisable value): 313 pence per share • NTA (net tangible assets): 293 pence per share • NDV (net disposal value): 292 pence per s
Slide 17: EPRA NNNAV bridge Dec-18 to Dec-19
Pence 335 325 315 305 22.4p 1.0p 295 325.7p 4.8p 1.8p 1.1p 1.1p 1.5p 1.1p 285 303.3p 298.5p 296.7p 295.6p 294.5p 295.5p 294.p 292.9p 292.9p 275 265 Dec-18 Earls Court Covent Impairment of Lillie Square Non- Underlying Dividend Other Dec-19 revaluation Garden Innova revaluation underlying profit and
Slide 18: Significant financial flexibility
SIGNIFICANT FINANCIAL FLEXIBILITY DIVERSIFIED MATURITY PROFILE SIGNIFICANT HEADROOM AGAINST DEBT COVENANTS ACCESS TO LIQUIDITY, LOW MARGINAL COST OF FUNDING
Slide 19: Cash and undrawn facilities movement
£1,000m £895m £900m £854m £800m £700m £600m £725m £500m £804m £400m £245m £300m £26m £200m £127m £24m £100m £170m £50m - Dec-18 Disposals Investment Financing Operating cash flow, Dec-19 Dividend & Other CASH UNDRAWN FACILITIES Note: All numbers shown at Group share
Slide 20: Continued growth in net rental income, progressive dividend policy
CONTINUED GROWTH IN NET RENTAL INCOME Target of underlying administration costs of £20m for 2021 PROGRESSIVE DIVIDEND POLICY Growth in line with underlying earnings, first PID in 2020 FLEXIBLE UNSECURED DEBT STRUCTURE Robust credit metrics No significant near term maturities and low capital commitme
Slide 21: Covent Garden
* 21 I. Annual Resiis'2019
Slide 22: Average retail and restaurant sales continue to trend upwards
AVERAGE RETAIL AND RESTAURANT SALES CONTINUE TO TREND UPWARDS PROACTIVE LEASING STRATEGY − Attracting the best brands to meet consumer demand GLOBAL RECOGNITION AND APPEAL − High quality footfall location − Offering a differentiated consumer experience
Slide 23: 2019 leasing transactions
FASHION DINING JEWELLERY & WATCHES LIFESTYLE ba&sh Dominique Ansel Treehouse Bucherer Peloton ACCESSORIES & LEATHER GOODS LEISURE COSMETICS DIGITALLY NATIVE Hawkers Henrietta Hotel Glossier UNTUCKit 2019 leasing transactions
Slide 24: Retail portfolio
RETAIL PORTFOLIO GOOD DEMAND FOR THE MARKET BUILDING − Strathberry, L’Occitane and Hawkers REPOSITIONING OF FLORAL STREET − A.P.C., American Vintage, Ganni and Glossier NEW ADDITIONS TO KING STREET − Polo Ralph Lauren and Lulu Guinness EXPANSION AND INVESTMENT FROM GLOBAL BRANDS − Upsizing of Bucher
Slide 25: ITZA psf Dec 2019
ITZA psf (£) – 31 Dec 2019 1600 1400 1200 1000 800 600 400 200 0 * Based on 30ft Zone A, includes Old Bond Street, Oxford Street West and Regent Street (Covent Garden based on 20ft Zone A) ** Covent Garden average based on all streets, including Market Building
Slide 26: Food and beverage portfolio
FOOD AND BEVERAGE PORTFOLIO DIFFERENTIATED OFFER AT VARIOUS PRICE POINTS 5 NEW DINING CONCEPTS INTRODUCED − Big Mamma Group − Dominique Ansel Treehouse − Santa Nata − VyTA − Wahlburgers OPPORTUNITY TO EXPAND EVENING ECONOMY 100% OCCUPANCY
Slide 27: Continued momentum across the estate
27 CONTINUED MOMENTUM ACROSS THE ESTATE . ° DOMINIQUE ANSEL ba&sh eaten UADREN BISTRO+BAKERY eee Gx i Ie Se ee feet Glossier — ® FOR ART'S SAKE = UNTUCKit& GANNI ( ot ) STRATHBERRY _ - Aomenisan Veiags 4 - LOCCITANE & BIG MAMMA _—LULU GUINNESS LONDON EN PROVENCE SANTA NATA Hany Socks A. P. C. wework
Slide 28: Office portfolio
OFFICE PORTFOLIO EXCELLENT CONNECTIVITY − Underpinned by appeal of overall estate HIGH OCCUPANCY RATES − Undersupply in the district − Technology, financial services, creative industries and SMEs GOOD LEASING DEMAND − Recent lettings include WeWork and Peloton 97% OCCUPANCY
Slide 29: Residential portfolio
RESIDENTIAL PORTFOLIO STRONG LEASING DEMAND − High occupancy and rate of renewals SUCCESSFUL COMPLETION OF RESIDENTIAL SALES AT FLORAL COURT − All 29 units sold ahead of schedule − £100 million cumulative sales proceeds received − Average sales pricing achieved £2,500 psf 96% OCCUPANCY
Slide 30: Acquisitions
− Purchase price £35.0m − Purchase price £12.4m − Purchase price £17.8m − Area 14,300 sq ft − Area 11,100 sq ft − Area 13,300 sq ft − Din Tai Fung restaurant − Important entry point to estate − F&B, office and residential − 4 floors of office − F&B opportunity space Acquisition prices exclude purcha
Slide 31: Looking Ahead
LOOKING AHEAD
Slide 32: Strategic focus on the West End and Covent Garden
STRATEGIC FOCUS ON THE WEST END AND WORLD-CLASS ESTATE AT COVENT GARDEN DISCIPLINED APPROACH TO INVESTMENT, RETURNS AND CAPITAL EFFICIENCY CREATIVE ASSET MANAGEMENT, INVESTMENT AND SPECIALISATION IN CENTRAL LONDON FOCUSED ON GROWING VALUE AND INCOME, AND REDUCING COSTS GENERATE LONG-TERM SUPERIOR TO
Slide 33: Appendix
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Slide 34: Creating and capturing rental growth
34 Annual Results 2019 CREATING AND CAPTURING RENTAL GROWTH SIGNIFICANT OPPORTUNITIES ACROSS THE ESTATE
Slide 35: Covent Garden estate overview
1. Residential includes units sold on long lease interests covering approximately 158,000 square feet
Slide 36: Lease expiry profile and annual gross income
LEASE EXPIRY PROFILE1 ANNUAL GROSS INCOME 2020: 15% Retail: 48% F&B: 25% 2021: 12% WALE Offices: 16% 8.6yrs 2022: 8% £68.5m Leisure: 4% 2023: 9% Residential: 7% 2024+: 56% 1. Lease expiry profile based on the earlier of lease break and lease expiry PORTFOLIO VALUE TOTAL FLOOR AREA Retail: 53% Retail
Slide 37: Note: All numbers shown at Group share
Note: All numbers shown at Group share
Slide 38: Summary balance sheet
SUMMARY BALANCE SHEET GROUP SHARE TO IFRS AS AT 31 DECEMBER 2019 less: Group share Joint ventures! IFRS Sm Sm £m Investment, development & trading Property 2,707 (161) 2,546 Net Debt (442) 38 (404) Other assets and liabilities 222 114 336 NAV 2,487 (9) 2,478 1. Primarily Lillie Square. 38 | Annual R
Slide 39: Debt loans
1.The loan values are the nominal values at 31 December 2019 shown on a Group share basis. The balance sheet value of the loans includes any unamortised fees.
Slide 40: Debt maturity profile
800 700 600 500 400 300 200 100 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030-2037 RCF (Undrawn) Lillie Square USPP Series 1 USPP Series 2 USPP Series 3
Slide 41: Tax on income and capital gains
TAX ON INCOME The total tax charge for the year, made up of both underlying tax and non-underlying tax, is £1.0 million. The Group elected to convert to a UK Real Estate Investment Trust (REIT), with effect from 9 December 2019. Moving forward the Group will therefore no longer pay UK corporation ta
Slide 42: Lillie Square
POSITIVE SALES RECORD − 389/420 sales across Phases 1 and 2 PHASE 1 − Residents of over 220 homes now in occupation − Limited remaining inventory PHASE 2 − Construction progressing on schedule − First completions and handovers expected in H1 2020 − Approx. £100m proceeds expected in 2020 (Capco shar
Capital & Counties Properties — FY2019 Earnings Presentation on 6ix