Shaftesbury Capital Plc · LSE:SHC
Shaftesbury Capital — Capital & Counties Properties — FY2020 Earnings Presentation
46 slides from Shaftesbury Capital's earnings presentation, 2021
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
Slide 5: Significant impact from COVID-19
SIGNIFICANT IMPACT FROM COVID-19 − Operations, valuations and near-term income PRIORITISING THE HEALTH AND SAFETY OF OUR PEOPLE, CUSTOMERS AND VISITORS DECISIVE ACTION TAKEN POSITIONING COVENT GARDEN FOR RECOVERY − Supporting our customers − Enhancing public realm − Strategic marketing, estate anima
Slide 6: Income and valuations impacted significantly
INCOME AND VALUATIONS IMPACTED SIGNIFICANTLY SIGNIFICANT INVESTMENT AND FINANCING ACTIVITIES STRONG FINANCIAL POSITION, ACCESS TO SUBSTANTIAL LIQUIDITY DIVIDEND PAYMENTS TO RESUME WHEN APPROPRIATE
Slide 7: Covent Garden valuation movement
£m 2,500 £77m Wellington Block Equivalent yield 3.91% 2,000 Initial yield 3.10% £520m £147m £27m -22% lfl 1,500 +28 bps lfl 6 - 12 months on Valuation ERV retail & lfl lfl £2,596m £2,519m F&B Retail -34% -29% £1,825m 1,000 £1,852m £1,825m F&B -30% -25% Offices -13% -7% 500 Residential -7% -8% Leisur
Slide 8: Prime West End location, heritage and global recognition
CUSTOMER AT HEART OF THE BUSINESS STRONG CAPITAL STRUCTURE CREATIVE ASSET MANAGEMENT STRATEGIC INVESTMENT RESPONSIBLE AND CAPITAL STEWARDSHIP ALLOCATION COMMITMENT TO SUSTAINABILITY STRATEGIC PARTNERSHIPS PRIME WEST END LOCATION, HERITAGE AND GLOBAL RECOGNITION
Slide 9: Commitment to achieve net zero carbon by 2030
COMMITMENT TO ACHIEVE NET ZERO CARBON BY 2030 − Net Zero Carbon Pathway to be published in 2021 NEW BOARD COMMITTEE FOCUSING ON ENVIRONMENT, SUSTAINABILITY AND COMMUNITY IMPROVING AIR QUALITY THROUGH PUBLIC REALM AND BIO- DIVERSE GREENING PROGRAMME RESPONSIBLE AND SUSTAINABLE DEVELOPMENT PROMOTING T
Slide 10: 25.2% ownership of Shaftesbury PLC
25.2% OWNERSHIP OF SHAFTESBURY PLC − £501m investment − Average price of 517p per share following further investment of £65 million at 400p per share in October UNIQUE OPPORTUNITY TO ACQUIRE A SIGNIFICANT STAKE − An exceptional mixed-use real estate portfolio of c.600 buildings across the West End C
Slide 11: Covent Garden's global recognition
COVENT GARDEN’S GLOBAL RECOGNITION − Key to brands when selecting locations SUPPORTING OUR CUSTOMERS − Maintaining vibrant customer line-up NEW LEASING ACTIVITY − Focus on selected categories and brands − Underlining the unique offer of Covent Garden EXTENSIVE MULTI-CHANNEL MARKETING PROGRAMME STRON
Slide 12: Financial Review
Slide 13: Financial results
1. Before £27.8m of non-underlying, non-cash costs 2. Before £6.5m of non-underlying transaction costs Note: All numbers shown at Group share
Slide 14: Net rental income
After £14.0m bad £27.8 million non-underlying items £m debt expense 50 Main movements: 45 1. Lower gross income 2. Provisions against receivables 40 3. Non-cash incentive write-offs £11.1m 35 30 25 £16.7m £43.6m 20 £32.5m 15 10 £15.8m 5 0 Underlying NRI December 2020 Impairment of tenant incentives
Slide 15: Net asset value
1 Carrying value shown includes adjustment for tenant lease incentives and head leases (£31.4m). The market value of investment, development & trading property is £1,942m (31 December 2019: £2,774m) 2 Capco’s investment in Shaftesbury PLC held at fair value (569 pence per share at 31 December 2020)
Slide 16: Cash and undrawn facilities movement
£275m exchangeable bond, £125m secured loan and other movements 1200 Investment in Shaftesbury PLC Wellington £77m shares Lillie Square £58m £1,010m Earls Court £195m 1000 £895m Post-year end, secured £489m loan proceeds used to reduce RCF drawn position by £110 million 800 £634m 600 £725m £330m £50
Slide 17: Shaftesbury PLC share price
Pence 1,000 £275m exchangeable bond issued 900 97 million shares acquired across three tranches Shaftesbury PLC share price 800 Capital raise at Initial acquisitions Exchangeable 400p at 540p bond at 719p 700 £125m loan secured on Shaftesbury shares 600 500 Average investment price 517p 400 Jan-20 F
Slide 18: Access to substantial liquidity
ACCESS TO SUBSTANTIAL LIQUIDITY AVERAGE COST OF DEBT 2.6% AND WEIGHTED AVERAGE MATURITY OF OVER 5 YEARS ON DRAWN DEBT NO MATERIAL NEAR-TERM MATURITIES ON DRAWN DEBT SIGNIFICANT LTV HEADROOM AND ICR COVENANTS WAIVED ON COVENT GARDEN DEBT 1. Taking into account net debt across the Group and fair value
Slide 19: Group net debt: gross assets 28%
GROUP NET DEBT : GROSS ASSETS 28% COVENT GARDEN SHAFTESBURY INVESTMENT VALUATION OF £1,825 MILLION YEAR END FAIR VALUE OF £552 MILLION NET DEBT OF £352 MILLION* (JUNE 2020: £782 MILLION) £275 MILLION EXCHANGEABLE BOND WITH PLEDGE OVER C.10% OF SHAFTESBURY PLC SHARES 2% PER ANNUM COUPON, MARCH 2026 M
Slide 20: Financial review summary
DISRUPTION TO NEAR-TERM INCOME Ongoing customer support and other initiatives to position for recovery CONTINUED REDUCTION OF UNDERLYING ADMINISTRATION COSTS On track to achieve £20m in 2021 ROBUST FINANCIAL POSITION Actions have enhanced flexibility and liquidity Covent Garden leverage reduced sign
Slide 21: Covent Garden
Slide 22: Proactive approach to our customers
PROACTIVE APPROACH TO OUR CUSTOMERS − Continued pressure on retail and hospitality businesses ENCOURAGING LEVELS OF LEASING ACTIVITY − 65 leasing transactions completed − £6.2m contracted income SALE OF THE WELLINGTON BLOCK FOR £76.5M ENCOURAGING INDICATORS ON FOOTFALL AND SALES ON REOPENING IN H2 2
Slide 23: ERV by street
ITZA psf (£) 1,600 ERV 1,400 lfl Retail -29% 1,200 F&B -25% Offices -7% 1,000 Residential -8% 800 Leisure/other 0% Total -22% 600 400 200 0 Central Covent James St Market Bldg King St Long Acre Royal Opera Henrietta St - Floral St - Floral St - Henrietta St - Bedford St London Garden House East East
Slide 24: Supporting our customers experiencing cashflow disruption
SUPPORTING OUR CUSTOMERS EXPERIENCING CASHFLOW DISRUPTION CASE-BY-CASE SOLUTIONS AGREED THROUGH DIRECT CUSTOMER NEGOTIATIONS − Including monthly rents, rental deferrals, turnover linked arrangements, rent free periods − In exchange for lease enhancements such as extensions and insertion of landlord’
Slide 25: Health and safety protocols and reopened estate
INDUSTRY LEADING HEALTH AND SAFETY PROTOCOLS IN PLACE − Encouraging business and consumer confidence FULLY REOPENED AND ANIMATED ESTATE − Vast majority of customers re-opened following easing of restrictions − Small number of failures (£4 million passing rent) ACTIVATED PUBLIC REALM MAXIMISING AL FR
Slide 26: Prime West End location rich in heritage, culture and the arts
PRIME WEST END LOCATION RICH IN HERITAGE, CULTURE AND THE ARTS Difficult to replicate, strong footfall drivers, diverse consumer mix GLOBAL BRAND RECOGNITION Flagship destination, customer acquisition, brand value MIXED USE ECOSYSTEM Targeted range of uses, categories and experiences EXPERIENTIAL, A
Slide 27: New signings and new openings
New signings JEWELLERY DINING FITNESS & WELLBEING FASHION New openings GIFTING ACCESSORIES
Slide 28: Investing in the Covent Garden brand and experience
Covent Garden x Digme Covent Garden x Royal Opera House open air Piazza cinema “Covent Garden is one of the most beloved and well-known retail locations, not just in London, but the world over. It’s a place where so many people hold memories of special moments in their lives and in keeping with the
Slide 29: Disposal of the Wellington Block for £76.5m
DISPOSAL OF THE WELLINGTON BLOCK FOR £76.5M − In line with June 2020 valuation − Vacant development site (£1,100psf) − Owner occupier to redevelop new lifestyle hotel DELIVERY ON REFURBISHMENT ACTIVITY − 3 Henrietta Street F&B townhouse complete and under offer Wellington Block CGI − 29-30 Maiden La
Slide 30: Proactive customer management
PROACTIVE CUSTOMER MANAGEMENT INVESTING IN THE COVENT GARDEN BRAND AND EXPERIENCE CREATIVE ASSET MANGEMENT MONITORING INVESTMENT OPPORTUNITIES POSITIONING COVENT GARDEN TO RETURN TO GROWTH AND PROSPERITY OVER TIME
Slide 31: Looking Ahead
Slide 32: Covent Garden is well-positioned for recovery
CHALLENGING CONDITIONS REMAIN; COVENT GARDEN IS WELL-POSITIONED FOR RECOVERY CLEAR ROADMAP FOR OUR CUSTOMERS TO BUILD TRADE OVER THE COURSE OF THIS YEAR AND NEXT DELIVER ECONOMIC, ENVIRONMENTAL AND SOCIAL VALUE FOR OUR STAKEHOLDERS MAINTAIN A STRONG BALANCE SHEET AND SEEK EFFICIENCIES ACROSS THE BUS
Slide 33: Q&A
Slide 34: Memberships and sustainability ratings
EPRA SUSTAINABILITY GLOBAL REAL ESTATE REPORTING AWARDS BALANCE SUSTAINABILITY BENCHMARK 2020: Gold 2020: 59/100 CARBON DISCLOSURE PROJECT FTSE4GOOD 2020: C 2019: 90th percentile1 MEMBERSHIPS 1. FTSE4Good – Capco remains a constituent of the index but reporting deferred to 2020 Annual Report therefo
Slide 35: Covent Garden COVID-19 response
- Open air environment - Supporting stores reopening during - Investing in safer, cleaner and - Optimised estate in line with period of significant disruption greener environment government guidelines - Bespoke solutions reflecting the - Additional security presence across - Extensive cleaning regim
Slide 36: Covent Garden estate overview
1. Residential includes units sold on long lease interests covering approximately 154,000 square feet
Slide 37: Lease expiry profile and gross income
LEASE EXPIRY PROFILE1 ANNUAL GROSS INCOME 2021: 21% Retail: 47% 2022: 10% F&B: 22% WALE 8.2yrs 2023: 13% £65.3m Offices: 20% 2024: 7% Residential: 6% 2025+: 49% Leisure: 5% 1. Lease expiry profile based on the earlier of lease break and lease expiry PROPERTY VALUE TOTAL FLOOR AREA Retail: 50% Retail
Slide 38: Zone A map December 2019 and December 2020
December 2019 Zone A Map December 2020 Zone A Map
Slide 39: Gross income to net ERV bridge
90 £5.2m £2.7m £1.2m 80 £3.4m £4.0m £7.0m 70 60 50 £76.9m £80.8m £65.3m 40 30 20 10 0 Dec-20 Gross Rent-frees and Turnover and other Contracted and Total contracted Vacancy Development and Net Over-Rented Dec-20 Income stepped rents income under offer and under offer Refurbishment ERV
Slide 40: Note: All numbers shown at Group share
Note: All numbers shown at Group share
Slide 41: Rent collection
80 £67.8m 70 3% 60 35% 50 £34.7m £33.1m 40 2% 3% 30 23% 48% 20 62% 75% 10 49% 0 H1 2020 Gross Rent H2 2020 Gross Rent FY 2020 Gross Rent Collected Alternative arrangements Outstanding Alternative arrangements in Q2 2020 were predominantly rent deferrals and in H2 2020 rent-free periods with turnover
Slide 42: Summary balance sheet
1. Primarily Lillie Square 2. Investment in Shaftesbury PLC
Slide 43: EPRA NTA movement per share
Pence 300 280 260 240 292.9p 220 6.0p 0.7p 79.3p 1.3p 4.1p 1.4p 200 217.6p 213.6p 212.3p 212.3p 213.5p 212.1p 180 Dec-19 Covent Garden Lillie Square Shaftesbury fair Underlying loss Non-underlying Dividend & Other Dec-20 revaluation revaluation value movement costs
Slide 44: Debt maturity profile
500 450 400 Subsequent to year end the proceeds from the secured loan 350 were used to repay £110 million of RCF. Current drawn position £30 million 300 250 200 150 100 50 0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030-2037 RCF (Drawn) Lillie Square (Drawn) USPP Series 1 USPP Series 2 USPP Seri
Slide 45: Tax on income and gains
TAX ON INCOME AND GAINS The total tax credit for the year, made up of both underlying tax and non-underlying tax, is £1.0 million. The Group is a UK Real Estate Investment Trust (REIT) and therefore is exempt from UK corporation tax on income and gains arising from its qualifying property rental bus
Slide 46: Lillie Square: Phase 2 handovers, valuation and funding
CONTINUING TO PROGRESS PHASE 2 HANDOVERS − 94 units handed over representing £116m of net proceeds (£58m Capco share) − 6 pre-sales contracts have been rescinded − Pre-sales and deposits for 60 units in place, should they all complete this would generate approximately £70m of further proceeds (£35m
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