Great Portland Estates plc · LSE:GPE
Great Portland Estates — FY2002 Earnings Presentation
35 slides from Great Portland Estates's earnings presentation, Jun 6, 2002
Slide 1: Great Portland Estates Preliminary Results 2002
GREAT PORTLAND ESTATES P.L.C. PRELIMINARY RESULTS 2002 1
Slide 2: Agenda
Agenda Toby Courtauld Introduction John Whiteley Business Highlights Financial Results Toby Courtauld Reshaped GPE Portfolio Analysis Asset Strategy Themes People and Process Outlook Toby Courtauld Good morning everyone and welcome to Great Portland’s Annual Results Presentation – and my first in th
Slide 3: John Whiteley, Finance Director
John Whiteley Finance Director John Whiteley Thank you Toby. Good morning everyone. What I would like to do over the next few minutes is to run through the major events of the year ended 31 March 2002 and then to look at the way in which they have affected the results for the year and the balance sh
Slide 4: Business Highlights
Business Highlights • Adjusted earnings up 7.6% to 12.7p per share (2001: 11.8p) • Dividend up 2.6% to 10.0p per share (2001: 9.75p) • Like-for-like rent up 6.5% to £71.4m (2001: £67.0m) • Adjusted diluted net assets down 11.9% to 349p (2001: 396p) • West End planning permissions • Repositioning of
Slide 5: Repositioning of GPE: Three Year Activity
Repositioning of GPE Three Year Activity Since 2000 2001 2002 31.3.02 Total Year to 31st March (£m) (£m) (£m) (£m) (£m) Disposals 99.3 402.7 360.4 - 862.4 Return of capital - 285.4 - - 285.4 Share buybacks 38.4 0.4 30.3 - 69.1 Retirement of - 57.9 129.2 197.0 384.1 expensive debt Since 1 April 1999
Slide 6: Profit & Loss Account – Underlying Revenue
Profit & Loss Account – Underlying Revenue Year ended 31st March 2002 2001 £m £m Rent receivable 85.3’ 106.8’ Ground rents (1.7) (1.9) Net rental income 83.6’ 104.9’ Property & admin (7.5) (8.0) Net interest (40.3) (52.8) Trading profits 0.4’ - Profits before tax 36.2’ 44.1’ Tax (9.8) (11.3) Profit
Slide 7: Rent Receivable: Movement in the Year
Rent Receivable Movement in the year £m Year ended 31st March 2001 106.8 Disposals (26.9) Expiries (0.9) Lettings & renewals 3.0 Rent reviews 3.3 Year ended 31st March 2002 85.3 Clearly, the main reason for the fall in rent receivable has been the disposal of properties both this year and last. Expi
Slide 8: Rent Receivable: Rent Roll and Reversion
Rent Receivable 5 year At 31st March 2002 Rent roll reversion Reversion £m £m % North of Oxford St Offices 18.1 5.2 29 Rest of West End Offices 14.0 1.8 13 West End Retail 11.5 1.7 15 West End 43.6 8.7 20 City & Holborn 17.5 4.2 24 Central London 61.1 12.9 21 South East Offices 8.8 0.2 2 Other 1.5 0
Slide 9: Profit & Loss Account
Profit & Loss Account Year ended Underlying Exceptional Capital Deferred 31st March 2002 £m revenue items loss tax Total Rent receivable 85.3 ’ 85.3 ’ Ground rents (1.7) (1.7) Net rental income 83.6 ’ 83.6 ’ Property & admin (7.5) (0.3) (7.8) Net interest (40.3) (30.3) (70.6) Trading profits 0.4’ 0.
Slide 10: Balance Sheet
Balance Sheet As at 31st March 2002 2001 £m £m Property assets 1,076.1 1,502.6 Net debt (334.0) (597.5) Other liabilities (40.3) (57.7) Net assets 701.8 847.4 Deferred tax 14.9 17.7 Adjusted net assets 716.7 865.1 Adjusted net assets per share 353p 404p Adjusted diluted net assets per share 349p 396
Slide 11: Movement in Adjusted Diluted NAV
Movement in Adjusted Diluted NAV Pence per share NAV FRS 13 CGT At 31st March 2001 396’ (29) (23) Share buy-backs 6’ (2) (1) Revaluation (45) - 11’ Profit before 12’ - - exceptionals Exceptionals (10) 9’ - Dividend (9) - - Loss on disposals (1) - - At 31st March 2002 349’ (22) (13) Since 1st April 2
Slide 12: The Valuation
The Valuation Value Change Effect on NAV As at 31st March 2002 £m % pence North of Oxford St Offices 332.6 (11.0) (19) Rest of West End Offices 210.2 (8.0) (8) West End Retail 172.7 (7.4) (6) West End Total 715.5 (9.3) (33) City & Holborn 248.8 (2.5) (3) Central London 964.3 (7.6) (36) South East Of
Slide 13: Reshaped GPE
Reshaped GPE 31st March Pro 1999 Forma Weighted average cost of debt 8.3% 6.6% Interest cover 2.1x 2.3x FRS13 liability - net 31p 2p Balance sheet gearing 55% 60% As a consequence of the actions undertaken in the past twelve months, and following the purchase of our 10.75% Debenture 2021, we now hav
Slide 14: Toby Courtauld, Chief Executive
Toby Courtauld Chief Executive 14
Slide 15: Agenda
Agenda Toby Courtauld Introduction John Whiteley Business Highlights Financial Results Toby Courtauld Reshaped GPE Portfolio Analysis Asset Strategy Themes People and Process Outlook Toby Courtauld My first task during the eight weeks since I joined Great Portland has been to understand our business
Slide 16: Reshaped GPE
Reshaped GPE 31st March Pro 1999 Forma Weighted average cost of debt 8.3% 6.6% Interest cover 2.1x 2.3x FRS13 liability - net 31p 2p Balance sheet gearing 55% 60% Number of properties 157 70 Number of tenants 1,005 343 Average lot size £10.9m £15.4m % portfolio unsecured 53% 64% Looking at our busin
Slide 17: Reshaped GPE: Portfolio by Value
Reshaped GPE Portfolio by value % 90 80 70 60 50 London 40 Other 30 20 10 0 1999 2000 2001 2002 As you know, we are now a central London property company – 90% by value being in the Capital. The remaining 10% is made up of South East offices and our leisure development in Northampton. 17
Slide 18: Portfolio Analysis: By Value
Portfolio Analysis By Value 2% N. of Oxford St Offices 8% Rest of West End Offices 31% West End Retail 23% City & Holborn South East Offices Other 16% 20% Of the £964m in Central London, £715m is in the West End, with the remainder in the City and Holborn. We have a broad exposure across London, but
Slide 19: Portfolio Analysis: Weighted Average Rental Values
Portfolio Analysis Weighted Average Rental Values (£ psf) £ psf Average ERV 50 Average Rent 45 Previous year 40 ERV 35 30 25 20 15 10 5 0 North of Res t of West West End City & South East Other Oxford St End Of fices Retail Holborn Offices Offices We have a low average rent per sq ft. Looking at ave
Slide 20: Portfolio Analysis: Rental Values and Outlook
Portfolio Analysis Weighted Average Rental Values (£ psf) £ psf Average ERV 50 Average Rent 45 Previous year 40 ERV 35 30 25 20 15 10 5 0 North of Res t of West West End City & South East Other Oxford St End Of fices Retail Holborn Offices Offices What about the outlook for rents? 〈 We see West End
Slide 21: Portfolio Analysis: ERV Analysis
Portfolio Analysis ERV Analysis Rent passing £71.4m Current voids £1.0m Current refurbishments £1.5m Lease renewals £4.2m Rent reviews £9.0m £87.1m ERV rates relate to 5 year period So returning to our own portfolio, where does the rental uplift come from? As you can see, the majority is lease renew
Slide 22: Portfolio Analysis: Expiry Profile
Portfolio Analysis Expiry Profile (by rent) 15+ yrs 3.2% 10 - 15 yrs 0 - 5 yrs 26.8% 33.9% 5 - 10 yrs 36.1% Weighted average length of lease 7.6 years (2001: 8.9 years) I’ve already mentioned our weighted average lease length. This pie chart shows two important points. First, exactly 70% of our inco
Slide 23: Portfolio Analysis: Occupier Profile
Portfolio Analysis Occupier Profile Retailers Banking & Finance 21.1% 19.7% Government Media & Marketing 9.8% 15.8% Corporates 6.7% Professional IT & 19.4% Telecoms 7.5% Great Portland has a well diversified tenant base. I, for one, hadn’t appreciated the extent of our diversity before carrying out
Slide 24: Portfolio Analysis: Yield Profile
Portfolio Analysis Yield Profile Basis point Initial Yield Equivalent movement since % Yield % 31.03.01 North of Oxford St Offices 5.3 7.3 +58 Rest of West End Offices 6.3 7.2 +32 West End Retail 5.9 6.6 +56 West End 5.7 7.2 +52 City & Holborn 6.8 7.4 -19 Central London 6.0 7.2 +36 South East Office
Slide 25: Portfolio Observations
Portfolio Observations • 36% weighting North of Oxford Street • Low average rents ... … but limited reversionary upside • Consistently low void rates … … despite short average lease lengths • Well diversified tenant base So, some observations at this statistical look at our portfolio, 〈 We are 36% w
Slide 26: Critical Mass
Critical Mass GREAT PORTLAND ST TITCHMOR BISHOPSGATE BARNARDS INN KNIGHTON HOUSE MARKET PLACE I’d like now to move on from the statistical make up of our portfolio and look at some of the specific asset characteristics within our portfolio. I use the expression “Critical Mass” to define an important
Slide 27: Great Portland Street Estate
Great Portland Street Estate • 32 properties • 700,000 sq. ft. • 131 tenants • Offers a range of type, size & quality of space Stretching to 32 properties with 131 tenants over 700,000 sq ft of space, this estate is, in many ways, analogous to a shopping centre – we gain a degree of commercial power
Slide 28: 190 Great Portland Street
190 Great Portland Street 190 G REAT PORTLAND ST • 87,000 sq. ft. • Adjoins redeveloped 160 Great Portland St • Planning permission granted (118,000 sq. ft.) For example, 190 Great Portland Street – 83,000 sq ft of existing space represented by the dark blue area on this slide, adjoining our develop
Slide 29: Titchmor Block
Titchmor B lock • 143,000 sq. ft. • Rolling refurbishment at successful Elsley House • From modern offices to ‘studio’ space • Medium term significant development • Planning permission granted (193,000 sq. ft.) Similarly, at the junction of Mortimer Street, Great Titchfield and Wells Street, we gain
Slide 30: Bishopsgate Block
Bishopsgate Block • 160,000 sq. ft. • Prime city location • Medium term, significant development opportunity • Full development review initiated Moving to the City, our properties in Bishopsgate represent another such holding with critical mass. Here we have 160,000 sq ft in a prime City location pr
Slide 31: Tower Cluster
“Tower Cluster” 1. Stock Exchange BISHOPSGATE BLOCK. Tower 2. Tower 42 3. 99 Bishopsgate 4. 6-8 & 22-24 5 Bishopsgate 3 5. Heron Tower 6. Swiss Re 2 7. CGNU Tower 9 8. 122 Leadenhall 1 6 7 9. St Botolophs 4 8 Source: Knight Frank Research & Consultancy As you can see we sit bang in the centre of the
Slide 32: Portfolio Observations
Portfolio Observations • 36% weighting North of Oxford Street • Low average rents ... … but limited reversionary upside • Consistently low void rates … … despite short average lease lengths • Well diversified tenant base • Quality blocks and clusters with critical mass - 50% of portfolio by value •
Slide 33: Asset Strategy Themes
Asset Strategy Themes • Central London • Critical mass • More developments and major refurbishments • Higher churn rates, beginning with sale of prospective non-performers • Asset management a priority • Growing income profile I hope from my look at our portfolio - and from some of my comments - tha
Slide 34: People & Process
People & Process • Skills audit – Asset management – Development – Corporate finance / tax • Property business planning and management information review • Development reviews • Decision making / monitoring As I hope is apparent, we are going to have a pretty full agenda ahead of us at GPE. To get i
Slide 35: Outlook
Outlook • Strong, flexible balance sheet • Core markets: strong presence, looking to expand • Building teams • Changing culture We face some significant challenges, both within GPE and in our markets. And its for exactly these reasons that I took the job – And, as a result of the action already take
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