Derwent London Plc · LSE:DLN
Derwent London — H1 2018 Earnings Presentation
85 slides from Derwent London's earnings presentation, Aug 9, 2018
Slide 1: Interim Results 2018 - Derwent London plc
INTERIM RESULTS 2018 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 Developing a product 25 Summary 39 Appendices 41 Disclaimer 83 Derwent London plc Interim Results 2018
Slide 3: Introduction and Overview
Introduction and Overview JOHN BURNS Derwent London plc Interim Results 2018 1
Slide 4: Highlights
HIGHLIGHTS OPERATIONAL ■■ £8.4m1 pa of lettings, 8.2% above Dec 2017 ERV ■■ Major pre-let to Sony Pictures at Brunel Building W2 ■■ EPRA vacancy rate of 4.2% at 30 Jun 2018 ■■ Progressing our schemes at Soho Place W1 and The Featherstone Building EC1 FINANCIAL ■■ EPRA earnings per share +47.3% ■■ Un
Slide 5: A stable market against an uncertain background
A STABLE MARKET AGAINST AN UNCERTAIN BACKGROUND CENTRAL LONDON OFFICE RENTAL GROWTH ■■ The market has plateaued for two years MSCI IPD Central London Office rental growth (Monthly Index, Dec 1999=100) 150 140 ■■ Substantial take-up by flexible workspace providers 130 120 ■■ Derwent London business m
Slide 6: An effective business model
AN EFFECTIVE BUSINESS MODEL ACTIVITY SINCE JUNE 2016 CAPTURING REVERSION (LIKE-FOR-LIKE1) £m £m 800 400 £713m H1 2018 Vacancy and lease reversion 700 H2 2016 to H2 2017 Development vacancy 350 600 Net rent, uplifts and pre-lets 500 300 £365m 43 400 250 £266m 103 300 200 200 £65m 150 100 234 0 New le
Slide 7: Central London office outlook
CENTRAL LONDON OFFICE OUTLOOK CENTRAL LONDON OFFICE DEMAND CENTRAL LONDON OFFICE INVESTMENT Demand (million sq ft) Value of investment transactions (£bn) 30 20 Potential demand West End Active demand 18 Rest of central London 25 16 14 20 12 Central London average 15 10 8 10 6 4 5 2 0 2000 2002 2004
Slide 8: Creating opportunities in a stable market
CREATING OPPORTUNITIES IN A STABLE MARKET DEVELOPMENT COMPLETIONS TO 2022 IMPACT OF TWO NEW DEVELOPMENTS Commercial floorspace (million sq ft) £m 0.40 300 H2 2018 H1 2019 H1 2020 2022 0.35 New projects 99.0 17% Impact on 0.30 250 reported 70.5 rent 0.25 0.20 200 68% 83% 100% 0.15 150 0.10 100% 100%
Slide 9: Case study - Fitzrovia W1
ET EUSTO CASE STUDY - FITZROVIA W1 N RO TRE AD ER S WAR REN STRE WARREN SOV ET STREET EET BOL STR Long term investors in Fitzrovia Investing for the future: FITZROVIA D FIEL ET 88-94 Tottenham Court Road FITZROY TRE ITCH SQUARE ■■ Largest Derwent London village DS AT T GRAFTON WAY LAN ■■ Exchanged c
Slide 10: Results and Financial Review
Results and Financial Review DAMIAN WISNIEWSKI Derwent London plc Interim Results 2018 8
Slide 11: Headline numbers
HEADLINE NUMBERS Jun 2018 % change Dec 2017 Jun 2017 Net asset value £4,197.1m 0.1* £4,193.2m £4,043.0m EPRA net asset value per share 1,2 3,713p (0.1)* 3,716p 3,582p EPRA triple NAV per share1,2 3,626p 0.2* 3,617p 3,491p EPRA total return 3.1% n/a 7.7% 3.4% Gross property income £107.1m 25.4 £172.2
Slide 12: Net assets, debt and gearing
NET ASSETS, DEBT AND GEARING ■■ Equity shareholders’ funds increased by 0.1% to £4,134m ■■ EPRA NAV per share was 3,713p from 3,716p at 31 December 2017 ■■ LTV ratio of 15.2% at 30 June 2018 NET ASSETS, DEBT AND GEARING £m % 4,500 Net assets1 45 Net debt 4,128 4,134 4,000 3,923 3,932 40 LTV ratio 3,
Slide 13: EPRA NAV movement
EPRA NAV MOVEMENT ■■ Revaluation surplus: EPRA NAV PER SHARE Investment properties £54.0m Pence Owner-occupied property £0.5m 3,900 Trading property adjustment1 (£0.4m) 67 (42) Share of JV revaluation surplus £0.1m 3,800 1 48 £54.2m 48p (75) 3,716 (2) 3,713 3,700 ■■ The revaluation surplus includes
Slide 14: EPRA earnings
EPRA EARNINGS1 ■■ EPRA earnings were up £24m, or 47%, to £74.6m. MOVEMENTS IN EPRA EARNINGS On an underlying basis, earnings were £57.7m, £m 14% higher than in H1 2017 80 1.4 0.5 (2.4) 2.8 74.6 ■■ Gross property income analysed on slide 13 16.9 EPRA 70 16.9 ■■ After a fall in 2017, admin costs were
Slide 15: Gross property income
GROSS PROPERTY INCOME ■■ Gross property income increased by £21.7m to MOVEMENTS IN GROSS PROPERTY INCOME £107.1m in H1 2018 £m 110 17.7 107.1 ■■ Sale of 8 Fitzroy Street W1 in 2017 reduced income 100 0.7 by £4.2m in the period 1.0 7.4 (4.5) 2.5 90 (3.1) ■■ Lettings and reviews include: 85.4 £9.1m 20
Slide 16: Like-for-like income
LIKE-FOR-LIKE INCOME ■■ EPRA like-for-like income1 has been distorted by the unusually high non-rental income and surrender premiums received Properties owned throughout the period Total Adjustments2 EPRA Adjustments3 Underlying £m £m £m £m £m H1 2018 Gross rental income 86.9 (7.8) 79.1 1.3 80.4 Pro
Slide 17: Cash flow
CASH FLOW ■■ Increase in net debt of £163.6m to £821.5m ■■ Cash from operations in H1 2018 benefitted from £15.8m rights of access and £1.4m rights of light receipts, as well as £4.9m of surrender premiums received NET CASH FLOW MOVEMENTS FORECAST CAPITAL EXPENDITURE1 H1 2018 H1 2017 On-site project
Slide 18: Proforma impact of major projects and disposals
PROFORMA IMPACT OF MAJOR PROJECTS AND DISPOSALS ■■ Assumes no further lettings other than those already contracted ■■ Shows impact of estimated capital expenditure and schemes commencing PROFORMA IMPACT OF ON-SITE PROJECTS PROFORMA IMPACT OF SOHO PLACE & THE FEATHERSTONE BUILDING Capex and contracte
Slide 19: Debt summary
DEBT SUMMARY ■■ £41.9m of the increase in net debt is due to the Jun 2018 Dec 2017 inclusion of the discounted headlease payments in Total facilities £1,166m £1,166m relation to Soho Place W1 Unutilised facilities and cash £403m £523m ■■ The conversion price of the £150m unsecured Percentage of debt
Slide 20: Debt facilities
DEBT FACILITIES Jun 2018 Dec 2017 MATURITY PROFILE OF DEBT FACILITIES £m Average spot interest rate 0 50 100 150 200 250 300 350 400 450 500 550 600 3.56% 3.80% (cash basis) 2018 Average spot interest rate 2019 150 3.86% 4.11% (IFRS basis) 2020 Marginal interest rate 1.25%1 1.25% 2021 2022 171.5 381
Slide 21: Valuation and Portfolio Analysis
Valuation and Portfolio Analysis NIGEL GEORGE Derwent London plc Interim Results 2018 19
Slide 22: Valuation
VALUATION Investment portfolio valued at £5.0bn Developments outperformed ■■ Underlying growth 1.3% H2 2017: 2.5%: ■■ Valued at £499m, uplift of 9.4% in H1 2018: ■■ West End 0.8% H2 2017: 1.1% ■■ 80 Charlotte Street W1 (73% pre-let 2017) 3.0% ■■ City Borders 2.3% H2 2017: 5.0% ■■ Brunel Building W2
Slide 23: Property return
PROPERTY RETURN Total property returns in H1 2018 CUMULATIVE TOTAL PROPERTY RETURN ■■ Derwent London 3.3% Index (31 Dec 2007=100) 300 Derwent London ■■ MSCI IPD Central London Offices1 2.7% MSCI IPD Central London Offices MSCI IPD UK All Property 158% ■■ MSCI IPD UK All Property1 3.7% 250 125% 200 7
Slide 24: Movement in yields
MOVEMENT IN YIELDS EPRA yields TRUE EQUIVALENT YIELD MOVEMENT1 ■■ Net initial yield 3.4% (Dec 2017: 3.4%): True equivalent yield (%) 7.5 ■■ ‘Topped-up’ net initial yield 4.3% 15bp 97bp (Dec 2017: 4.4%) 7.0 83bp 6.5 ■■ True equivalent yield 4.70% (Dec 2017: 4.73%): 43bp ■■ 3 basis points tightening i
Slide 25: Rental value growth
RENTAL VALUE GROWTH ■■ Underlying rental growth of 0.5%: RENTAL VALUE GROWTH Half-yearly rental value growth (%) Cumulative rental growth index ■■ City Borders 0.6% 20 80 Derwent London (%) ■■ West End 0.4% MSCI IPD Central London Offices (%) 15 Derwent London index 60 56% MSCI IPD Central London Of
Slide 26: Build-up of portfolio ERV
BUILD-UP OF PORTFOLIO ERV ■■ Net income of £156.9m BUILD-UP OF ERV £m 300 ■■ Significant potential reversion £114.5m1: Annualised rent on straightline 15.2 271.4 basis £172.1m4 9.1 1.8 14.9 ■■ 64% (£73.5m) contracted, including: 250 27.1 2.4 ■■ White Collar Factory EC1 £10.0m 200 44.0 ■■ Angel Build
Slide 27: Developing a Product
Developing a Product SIMON SILVER Derwent London plc Interim Results 2018 25
Slide 28: Project update
PROJECT UPDATE ■■ One major refurbishment completed in Q3 2018: ■■ The White Chapel Building E1 (Phase 2) – 89,000 sq ft (100% pre-let) ■■ Two major schemes on site: ■■ Brunel Building W2 – 243,000 sq ft (32% pre-let) ■■ 80 Charlotte Street W1 – 380,000 sq ft (73% pre-let) ■■ Two major schemes being
Slide 29: The White Chapel Building E1: 2018 refurbishment
THE WHITE CHAPEL BUILDING E1: 2018 REFURBISHMENT ■■ 89,000 sq ft redevelopment (Phase 2) ■■ Pre-let to Fotografiska as The London Museum of Photography at £2.4m pa ■■ A major new cultural landmark, opening 2019 Derwent London plc Interim Results 2018 27
Slide 30: Brunel Building W2: 2019 delivery
BRUNEL BUILDING W2: 2019 DELIVERY ■■ 243,000 sq ft canalside offices ■■ 32% pre-let to Sony Pictures ■■ Striking external diagrid structure ■■ 17,000 sq ft column-free floors ■■ 3.5m floor to ceiling heights ■■ Roof terraces and restaurant ■■ Opposite Paddington station Derwent London plc Interim Re
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Slide 33: 80 Charlotte Street W1: 2020 delivery
80 CHARLOTTE STREET W1: 2020 DELIVERY ■■ Mixed-use scheme of 380,000 sq ft ■■ Large 40,000 sq ft flexible floorplates on the island site ■■ Extensive rooftop terraces with panoramic views ■■ Offices predominately pre-let to Arup and The Boston Consulting Group at £21.8m pa Derwent London plc Interim
Slide 34: Al | ij Ve . / I j ; : ' HT / |
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Slide 35: Soho Place W1: our next major project
SOHO PLACE W1: OUR NEXT MAJOR PROJECT ■■ 285,000 sq ft scheme: ■■ 209,000 sq ft offices ■■ 36,000 sq ft retail ■■ 40,000 sq ft theatre ■■ New public space linking to Soho Square ■■ Significant Oxford Street regeneration ■■ Construction due to start early next year Derwent London plc Interim Results
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Slide 38: The Featherstone Building EC1: 2019 start
THE FEATHERSTONE BUILDING EC1: 2019 START ■■ Planning permission for a 125,000 sq ft scheme: ■■ Offices, workspaces and retail ■■ Adjacent to White Collar Factory ■■ Replaces two buildings totalling 69,000 sq ft: ■■ 81% uplift in floor area ■■ Vacant possession in Dec 2018 ■■ Demolition due to comme
Slide 39: THE FEATHERSTONE BUILDING EC1: 2019 START
THE FEATHERSTONE BUILDING EC1: 2019 START Derwent London plc Interim Results 2018 37
Slide 40: Further planning consents
FURTHER PLANNING CONSENTS ■■ 443,000 sq ft of further planning consents (resolution to grant), reflecting an 88% uplift in existing floor area 54 - 68 Oxford Street, London 10th February 2017 19-35 Baker Street W1 Holden House W1 ■■ 293,000 sq ft ■■ 150,000 sq ft ■■ 70% offices, 18% residential and
Slide 41: Summary
Summary JOHN BURNS Derwent London plc Interim Results 2018 39
Slide 42: Summary
SUMMARY ■■ Economic and political uncertainty ■■ Good occupier and investment demand OUR MARKET ■■ ERV guidance improved: +2% to -1% in 2018 ■■ Investment yields expected to remain firm in 2018 ■■ Good demand for our space ■■ Soho Place and The Featherstone Building add to growth potential DERWENT L
Slide 43: Appendices
APPENDICES Derwent London plc Interim Results 2018 41
Slide 44: Appendices
APPENDICES 01. Group balance sheet 43 21. Major tenants 63 02. Net asset value per share 44 22. Central London office rental values 64 03. Group income statement 45 23. Lease expiries, breaks and vacancy rates 65 04. IFRS profit and EPRA/underlying earnings 46 24. Lease expiry profile and lease leng
Slide 45: Appendix 1 - Group balance sheet
APPENDIX 1 - GROUP BALANCE SHEET Jun 2018 Dec 2017 Jun 2017 £m £m £m Investment property 4,857.0 4,670.7 4,509.6 Owner-occupied property 47.0 46.5 44.7 Investment in joint ventures 41.6 39.7 38.5 Other non-current assets 115.2 110.9 106.4 5,060.8 4,867.8 4,699.2 Non-current assets held for sale - -
Slide 46: Appendix 2 - Net asset value per share
APPENDIX 2 - NET ASSET VALUE PER SHARE Jun 2018 Dec 2017 Diluted Diluted £m p £m p Net assets attributable to equity shareholders 4,133.8 3,693 4,128.3 3,694 Revaluation of trading properties net of tax 0.9 1.0 Fair value of secured bonds (34.9) (37.7) Fair value of unsecured convertible bonds (9.4)
Slide 47: Appendix 3 - Group income statement
APPENDIX 3 - GROUP INCOME STATEMENT Half year ended Year ended Half year ended Jun 2018 Dec 2017 Jun 2017 £m £m £m Gross property income 107.1 172.2 85.4 (Write-down)/reversal of write-down of trading properties (0.2) 1.0 1.0 Other income less other costs 1.2 2.7 1.2 Property outgoings (4.7) (11.1)
Slide 48: Appendix 4 - IFRS profit and EPRA/underlying earnings
APPENDIX 4 - IFRS PROFIT AND EPRA/UNDERLYING EARNINGS Half year Year Half year ended ended ended Jun 2018 Dec 2017 Jun 2017 £m £m £m IFRS profit for the year attributable to shareholders 134.0 314.0 146.4 Revaluation surplus (54.0) (147.9) (66.7) Joint venture revaluation surplus (0.1) (3.9) (3.4) P
Slide 49: Appendix 5 - Explanation of EPRA adjustments
APPENDIX 5 - EXPLANATION OF EPRA ADJUSTMENTS Adjustments H1 2018 H1 2017 H1 2018 A B C EPRA EPRA IFRS basis basis £m £m £m £m £m £m Net property and other income 103.4 0.2 103.6 80.5 Administrative expenses (15.2) (15.2) (12.8) Revaluation surplus 54.0 (54.0) - - Profit on disposal of investment pro
Slide 50: Appendix 6 - EPRA like-for-like income
APPENDIX 6 - EPRA LIKE-FOR-LIKE INCOME Properties owned Development Acquisitions & throughout Like-for-like movement on: Total property disposals the year H1 2017 H2 2017 £m £m £m £m % % H1 2018 Gross rental income 86.9 (7.8) - 79.1 3.3 0.1 Property expenditure (6.3) 1.9 - (4.4) Net rental income 80
Slide 51: Appendix 7 - Debt facilities
APPENDIX 7 - DEBT FACILITIES Drawn Undrawn Total Maturity £m £m £m 6.5% secured bonds 175.0 - 175.0 March 2026 3.99% secured loan 83.0 - 83.0 October 2024 1.125% unsecured convertible bonds 150.0 - 150.0 July 2019 4.41% unsecured private placement notes 25.0 - 25.0 January 2029 4.68% unsecured priva
Slide 52: Appendix 8 - Net debt
APPENDIX 8 - NET DEBT Jun 2018 Dec 2017 £m £m Borrowings 786.9 730.8 Acquired fair value of secured bonds less amortisation (12.4) (12.9) Equity component of unsecured bonds 12.6 12.6 Unwinding of discount of unsecured bonds (10.2) (9.1) Unamortised issue and arrangement costs 7.6 8.6 Facilities - d
Slide 53: Appendix 9 - Fixed rates and hedging
APPENDIX 9 - FIXED RATES AND HEDGING Jun 2018 Dec 2017 Proportion of drawn facilities at fixed rates or hedged 82% 88% Weighted average duration of swaps1 1.7 years 1.2 years Mark-to-market cost of swaps and forward-start swaps £4.7m £7.9m Weighted average duration of fixed rate instruments 7.7 year
Slide 54: Appendix 10 - Valuation performance by village
APPENDIX 10 - VALUATION PERFORMANCE BY VILLAGE Valuation Valuation Weighting movement Jun 2018 Jun 2018 H1 20181 £m % % West End Central Fitzrovia2 1,472.6 29 (0.3) Victoria 530.6 11 (1.9) Paddington 190.9 4 21.5 Baker Street/Marylebone 172.9 4 (3.8) Mayfair 92.5 2 1.4 Soho/Covent Garden 69.0 1 4.0
Slide 55: Appendix 11 - Rental value growth
APPENDIX 11 - RENTAL VALUE GROWTH RENTAL VALUE GROWTH1 2016 H1 2017 H2 2017 2017 H1 2018 % % % % % West End 5.5 0.7 0.0 0.7 0.4 City Borders 4.4 1.7 1.3 3.0 0.6 Central London 5.1 1.1 0.6 1.7 0.5 Provincial 4.5 1.2 1.2 2.4 0.1 Underlying 5.1 1.1 0.6 1.7 0.5 1 On EPRA portfolio Derwent London plc Int
Slide 56: 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 City Borders 3.1 4.3 6 Central London 3.3 4.2 5 Provincial 6.5 6.7 EPRA portfolio 3.4 4.3 4 Reversionary yield 3 True equivalent yield Initia
Slide 57: Appendix 13 - Context to yield movement
APPENDIX 13 - CONTEXT TO YIELD MOVEMENT ■■ 337bp spread between true equivalent yield VALUATION YIELDS1 and 10-year Gilt: Yield % or Gap between Derwent London True Equivalent Yield (TEY) and 10-year Gilt 9 Derwent London TEY 10-year Gilt ■■ Gilt yield low and stable at 1.3% on 30 Jun 2018 Derwent L
Slide 58: Appendix 14 - Portfolio statistics by village
APPENDIX 14 - PORTFOLIO STATISTICS BY VILLAGE Net Vacant Floor Vacant contracted Average space Estimated area1 floor area rental rental rental Lease Total rental Valuation Weighting ‘000 ‘000 income income value reversion4 reversion value £m % sq ft sq ft £m pa £ psf £m pa £m pa £m pa £m pa West End
Slide 59: 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 156.9 Contractual rental uplifts White Collar Factory EC1 10.0 Angel Building EC1 8.0 40 Chancery Lane WC2 2.8 60 Whitfield Street W1 2.4 Other 20.8 44.0 Pre-let refurbishments The W
Slide 60: 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 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018 Derwent London plc Interim Re
Slide 61: Appendix 17 - Timing of the reversion
APPENDIX 17 - TIMING OF THE REVERSION ■■ £73.5m of the reversion contracted: ■■ £15.2m of the reversion from reviews and expiries ■■ Fixed rental uplifts £44.0m ■■ Pre-let refurbishments £2.4m REVIEWS AND EXPIRIES ■■ Pre-let developments £27.1m £m 10 Expiries CONTRACTUAL UPLIFTS AND PRE-LETS Reviews
Slide 62: 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 net 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) Johnson Building EC1 58 - 58 3.2 - 3.2 - 3.2
Slide 63: Appendix 19 - Portfolio summary
APPENDIX 19 - PORTFOLIO SUMMARY Floor area: 1.14m sq ft Rental income: £29.6m Income: 19% WAULT: 6.4 yrs Rent2: £35.07 ERV: £40.89 Future a ppraisal Potential projects Floor area: 0.22m sq ft 21% Floor area: 1.67m sq ft Rental income: £7.5m Rental income: £48.9m Income: 5% Income: 31% WAULT: 2.0 yrs
Slide 64: 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 9% 12% Financial Media, TV, marketing 4% and advertising £60+ ps f Government and 30% 30% public admin £30-£40 ps f 5% 10% Retail & leisure 12% £40-£50 ps f 21
Slide 65: Appendix 21 - Major tenants
APPENDIX 21 - MAJOR TENANTS ‘Topped-up’ income1 % Existing Pre-let 01 Expedia 7.4 - 02 Burberry 5.1 - 03 Arup 0.1 4.8 04 Publicis Groupe 4.6 - 05 The Boston Consulting Group - 4.5 06 Government 3.5 - 07 The Office Group 3.1 - 08 WPP Group 2.6 - 09 Sony Pictures - 2.4 10 FremantleMedia Group 2.0 - 11
Slide 66: Appendix 22 - Central London office rental values
APPENDIX 22 - CENTRAL LONDON OFFICE RENTAL VALUES 86% of portfolio income from central London offices ■■ Average ‘topped-up’ office rent £50.23 psf CENTRAL LONDON OFFICE RENT PROFILE £ psf 20171 H1 20181 60 Average office rent ‘Topped-up’ rents % % Average ‘topped-up’ office rent 55 <£30 psf 13 12 A
Slide 67: Appendix 23 - Lease expiries, breaks and vacancy rates
APPENDIX 23 - LEASE EXPIRIES, BREAKS AND VACANCY RATES ■■ £4.0m of income subject to breaks/expiries in H1 2018: ■■ EPRA vacancy rate of 4.2%2 at the half year – up from 1.3% at the start of 2018: ■■ 83% retained or re-let ■■ Group’s 10-year average of 2.7% LEASE EXPIRY AND BREAK ANALYSIS1 EPRA VACA
Slide 68: Appendix 24 - Lease expiry profile and lease length
APPENDIX 24 - LEASE EXPIRY PROFILE AND LEASE LENGTH EXPIRIES AND BREAKS AS A PERCENTAGE OF PORTFOLIO INCOME1 West City End Borders Provincial H2 2018 2019 2020 2021 2022 Total Expiries 2 2 1 5 2 8 11 4 30 Rolling breaks 1 0 0 1 1 2 2 0 6 Single breaks 1 0 0 1 4 4 10 4 23 4 2 1 7 7 14 23 8 59 PROFILE
Slide 69: Appendix 25 - Central London office demand
APPENDIX 25 - CENTRAL LONDON OFFICE DEMAND Market statistics OFFICE TAKE-UP ■■ Central London take-up of 6.4m sq ft in H1 2018: Take-up (million sq ft) 20 ■■ In line with the half-year average Central London 18 ■■ 7% above H1 2017, 14% below H2 2017 16 ■■ 26% Business Services, 18% Creative Industri
Slide 70: Appendix 26 - Central London office supply
APPENDIX 26 - CENTRAL LONDON OFFICE SUPPLY OFFICE DEVELOPMENT PIPELINE Market statistics Floor area (million sq ft) Vacancy rate (%) ■■ Vacancy rate of 4.6%, up from 4.3% at the start of the year: 12 Central London Completed Completed average 12 Under construction Vacancy rate ■■ Below the long term
Slide 71: Appendix 27 - Central London office requirements
APPENDIX 27 - CENTRAL LONDON OFFICE REQUIREMENTS ■■ 6.4m sq ft of take-up in H1 2018 ■■ Current large space requirements still dominate: ■■ 10.2m sq ft of active demand at 30 Jun 2018: ■■ 3.7m sq ft in the West End CENTRAL LONDON OFFICE DEMAND Demand (million sq ft) 30 Potential demand Active demand
Slide 72: Appendix 28 - Central London office vacancy
APPENDIX 28 - 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 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: CBRE Derwent London plc Interim Results 2018 70
Slide 73: Appendix 29 - Central London office rental growth
APPENDIX 29 - CENTRAL LONDON OFFICE RENTAL GROWTH Rental growth (% pa) 40 West End City 30 Central London 20 10 0 (10) (20) (30) (40) 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: CBRE Derwent London plc Interim Results 2018 71
Slide 74: Appendix 30 - Central London office investment market
APPENDIX 30 - CENTRAL LONDON OFFICE INVESTMENT MARKET Market statistics CENTRAL LONDON OFFICE INVESTMENT ■■ £7.9bn of central London transactions in H1 2018: Value of investment transactions (£bn) 20 ■■ 32% above the half-year average 18 16 ■■ 4% lower than both H1 & H2 2017 14 ■■ Overseas investors
Slide 75: Appendix 31 - Acquisition of 88-94 Tottenham Court Road W1
APPENDIX 31 - ACQUISITION OF 88-94 TOTTENHAM COURT ROAD W1 HUNTLEY STREET ■■ Acquisition of leasehold interest in our heartland, 88-94 Tottenham Court Road in August 2018: ■■ 37,400 sq ft offices and 8,500 sq ft retail ■■ 36 years remaining on lease at nominal ground rent URT ROAD HOWLAND STREET ■■
Slide 76: Appendix 32 - Brunel Building W2
APPENDIX 32 - BRUNEL BUILDING W2 ■■ 243,000 sq ft office scheme which is 32% pre-let: Sony Pictures ■■ 77,200 sq ft pre-let on part 9th floor and 10-13th floors ■■ Options on a further 23,500 sq ft ■■ 15-year lease, break in year 12 ■■ Scheme due to complete in H1 2019 SONY PICTURES SONY PICTURES OP
Slide 77: Appendix 33 - 80 Charlotte Street W1
APPENDIX 33 - 80 CHARLOTTE STREET W1 ARUP THE BOSTON CONSULTING GROUP ■■ 153,400 sq ft pre-let in 2017 ■■ 123,500 sq ft pre-let in Q3 2017 (133,600 sq ft in Q1, 19,800 sq ft in Q3) ■■ £10.6m pa ■■ £11.2m pa with annual increases of 2.25% ■■ Average rent of £85.50 psf for the first 15 years ■■ 15-yea
Slide 78: Appendix 34 - Soho Place W1
APPENDIX 34 - SOHO PLACE W1 ■■ 285,000 sq ft scheme ■■ Ground rent of 5% and development profit share of 16%, payable to Crossrail ■■ Additional costs £291m ■■ Deferred site payment of c.£48m payable on completion ■■ From June 2018, future headlease payment treated as a liability at a discounted val
Slide 79: Appendix 35 - On-site developments: profit on cost
APPENDIX 35 - ON-SITE DEVELOPMENTS: PROFIT ON COST Brunel Building W2 80 Charlotte Street W1 t t le le e- e- pr pr 32 % 73 % Summary £m End value 976 Less: Total cost1 749 Project surplus 227 Less: Booked to Jun 18 85 Surplus to come 142 Profit on total cost 30% Profit to come on total cost 19% Yiel
Slide 80: Appendix 36 - Project pipeline
APPENDIX 36 - PROJECT PIPELINE On-site On-site Consented Under Potential developments 0.62m sq ft + refurbishments 0.09m sq ft + projects + appraisal 0.31m sq ft = pipeline 0.72m sq ft 1.74m sq ft Soho Place W1 The Featherstone Building EC1 ed ed nt nt se se 0.71m sq ft 1.03m sq ft Co n Co n 1 +81%
Slide 81: Appendix 37 - Project summary: current
APPENDIX 37 - PROJECT SUMMARY: CURRENT Current Pre Total net scheme Proposed H2 2018 2019 2020+ 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 developments Brunel Building W2 (0.1) 78 243 35 8 1 44
Slide 82: Appendix 38 - Project summary: future
APPENDIX 38 - 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 19-35 Baker Street W11 5.2 146 293 2021 Joint venture - The Portman Estate Holden House W1 6.2 90 150 2021 Eastern end of Oxford Str
Slide 83: Appendix 39 - Portfolio map
APPENDIX 39 - PORTFOLIO MAP Highbury & Islington Chalk Farm Caledonian Road Camden Road Essex Road Camden Town Primrose Hill Islington Carnegie St TEC H BEL Wharfdale Rd Angel Kings Cross T Albany Regent’s Park S t Pancras Hoxton St International Th Maida Vale am es lin k Euston Old Street Up pe rW
Slide 84: Appendix 40 - Executive committee and senior management
APPENDIX 40 - EXECUTIVE COMMITTEE AND SENIOR MANAGEMENT John Burns* Chief Executive Damian Wisniewski* Finance Director Simon Silver* Property Director Nigel George* Property Director Paul Williams* Property Director David Silverman* Property Director David Lawler* Company Secretary Richard Baldwin*
Slide 85: 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