Shaftesbury Capital Plc · LSE:SHC
Shaftesbury Capital — Capital & Counties Properties — H1 2019 Earnings Presentation
42 slides from Shaftesbury Capital's earnings presentation, Jul 25, 2019
Slide 1: Capital & Counties Properties PLC Interim Results 2019
Capital & Counties Properties PLC Interim Results 2019 25 July 2019 www.capitalandcounties.com
Slide 2: Forward-looking statements
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 results of operations. T
Slide 3: Introduction
Introduction 1. INTRODUCTION Financial Review Ian Hawksworth 2. FINANCIAL REVIEW Situl Jobanputra Operating Update 3. COVENT GARDEN Ian Hawksworth Looking Ahead 4. EARLS COURT PROPERTIES Mike Hood 5. LOOKING AHEAD Q&A Ian Hawksworth 6. Q&A Capco Interim Results 2019 www.capitalandcounties.com
Slide 4: Introduction
Introduction Financial Review Operating Update Ian Hawksworth Looking Ahead Q&A Capco Interim Results 2019 www.capitalandcounties.com
Slide 5: Board considered the structure of the Group; demerger
The Board has considered the structure of the Group – Scale and attractive income profile of Covent Garden – ECPL land available for development Broad range of interest in Earls Court, however no certainty this will result in a sale transaction Decision to proceed with the demerger, which has a numb
Slide 6: Central London focused REIT and land enablement company
Chairman Chief Executive Chief Financial Officer Executive Director Chairman Chief Executive Chief Financial Officer Executive Director Henry Staunton Ian Hawksworth Situl Jobanputra Michelle McGrath Gerry Murphy Mike Hood Terry O’Beirne Alison Fisher Central London focused REIT Key metrics1 Land en
Slide 7: Introduction
Introduction Financial Review Operating Update Ian Hawksworth Looking Ahead Q&A Capco Interim Results 2019 www.capitalandcounties.com
Slide 8: Interim results headline figures
COVENT GARDEN £2,611m Initial yield: 2.5% Equivalent yield: 3.6% Total property value 81% +0.5% lfl £3.2bn Earls Court £599m -11.5% lfl ECPL & other £426m 14% Lillie Square £173m 5% EPRA NAV 315p per share, a decrease of 3.3% Total return -3.0% Underlying earnings 0.5 pence Interim dividend per shar
Slide 9: Income growth, Earls Court investments, strong balance sheet
Continued income growth at Covent Garden – 10% increase in NRI (7% growth lfl) – 40 new leases and renewals, 2% above December 2018 ERV – 1% lfl increase in ERV to £108m – Positive trading environment, increase in footfall and sales – Attracting high quality brands and concepts – Healthy demand for
Slide 10: Financial Review
Introduction Financial Review Operating Update Situl Jobanputra Looking Ahead Q&A Capco Interim Results 2019 www.capitalandcounties.com
Slide 11: Group net rental income, administration costs, net finance costs
Jun-19 Jun-18 Var £m £m £m Net rental income - Recurring 32.1 29.2 2.9 Net rental income - Empress State – 3.9 (3.9) Group net rental income 32.1 33.1 (1.0) Administration costs (17.2) (19.2) 2.0 Net finance costs (10.4) (9.4) (1.0) Other 0.5 0.9 (0.4) Tax (0.5) (1.1) 0.6 Underlying earnings 4.5 4.3
Slide 12: Covent Garden ERV bridge
£m 115 £10.6m 100 £8.1m £3.0m £7.1m 85 £8.1m £1.6m 70 £107.9m 55 £86.2m 40 £69.4m 25 10 Jun-19 Gross Rent-frees & Turnover & Other Contracted & Total Contracted & Vacancies Development Reversion Jun-19 ERV Income Stepped rents income Under Offer Under Offer Note: Developments includes remaining Flor
Slide 13: Net rental income by segment
£m £2.8m 35 £33.1m £32.1m Earls Court Properties £3.8m 30 £4.8m Earls Court Properties £1.0m 25 20 15 Covent Garden Covent Garden £28.3m £31.1m 10 5 0 H1 18 Covent Garden Earls Court Properties H1 19 Note: All numbers shown at Group share The decline in Earls Court Properties net rental income princ
Slide 14: EPRA NAV
Jun-19 Dec-18 Var £m £m £m Investment & trading property 3,133 3,198 (65) Unrecognised surplus on trading property 23 26 (3) Net debt (588) (573) (15) Other 122 126 (4) EPRA NAV 2,690 2,777 (87) Number of shares in issue (diluted) 854m 853m 1m EPRA NAV per share 315p 326p (11)p EPRA NNNAV 312 pence
Slide 15: Liquidity and cash flow
£m 900 £854m £845m 800 700 600 500 £762m £804m 400 300 200 £51m £42m 100 £43m £17m £83m £50m 0 Dec-18 Disposals Investment Financing Operating cash flow, Jun-19 Cash Dividend & Other Undrawn Facilities Note: All numbers shown at Group share Capco Interim Results 2019 www.capitalandcounties.com
Slide 16: Debt structure and credit metrics
Flexible, predominantly unsecured debt structure with access to substantial liquidity Strong credit metrics, with significant covenant headroom No significant near term maturities Modest capital commitments of £49m Jun-19 Dec-18 Capco Interim Results 2019 www.capitalandcounties.com
Slide 17: Operating Update
Introduction Financial Review Operating Update Ian Hawksworth Looking Ahead Q&A Capco Interim Results 2019 www.capitalandcounties.com
Slide 18: Capco Interim Results 2019 www.capitalandcounties.com
Capco Interim Results 2019 www.capitalandcounties.com
Slide 19: Covent Garden key metrics
Portfolio value ERV NRI (vs June 2018) Acquisitions £2.6bn £108m +7% £13m +0.5% like-for-like +1.0% like-for-like like-for-like Capturing portfolio reversion Positive leasing activity across all uses Continuing to attract high quality brands Positive trading environment Healthy demand for office and
Slide 20: Covent Garden 2009 vs 2019
Covent Garden December 2009 Covent Garden June 2019 £548m valuation £2.6bn valuation 750k sq ft, 44 buildings, 300 units 1.2m sq ft, 79 buildings, 526 units ERV £33m ERV £108m Gross income £29m Gross income £69m Capco Interim Results 2019 www.capitalandcounties.com
Slide 21: Attracting and retaining high quality brands
Retail Attracting and retaining high quality brands – Polo by Ralph Lauren, Lacoste, Untuckit, HappySocks – Apple extended occupation – Upsizing of Bucherer Dining One of London’s best dining destinations Introductions include: – Vyta, Walhburgers, Santa Nata, Dominique Ansel & Mlkcake Capco Interim
Slide 22: Covent Garden office and residential
Office Covent Garden office portfolio – Underpinned by appeal of overall district – Letting of 22 Long Acre to WeWork Residential Covent Garden residential – Highly desirable address – Positive demand with high rate of renewals – Successful sales programme at Floral Court – £69m of proceeds received
Slide 23: Targeted acquisitions at key entry points
Targeted acquisitions at key entry points – 39 - 40 Bedford Street – £13.2m (including costs) – Medium term asset management opportunities Opportunities for additional value creation through development – The Wellington block – Southern side of estate Capco Interim Results 2019 www.capitalandcountie
Slide 24: Earls Court Properties
Introduction Financial Review Operating Update Mike Hood Looking Ahead Q&A Capco Interim Results 2019 www.capitalandcounties.com
Slide 25: Our principal investment: ECPL
Our principal investment: ECPL – Over 26 acres of consented land – Located amongst London’s most desirable residential districts – Limited competing supply – Excellent connectivity and amenities – Planning consent implemented – Land available for development Earls Court Masterplan – Ability to evolv
Slide 26: Earls Court ownership and valuation
June Dec Variance 2019 2018 lfl Ownership £m £m % ECPL 63% £389m £461m (15.9)% OTHER LSQ 50% £173m £159m (1.5)% 3 LSQ OTHER 100% £37m £38m (4.4)% LBD £599m £658m (11.5)% In addition, Capco has paid £90 million of the £105 million cash consideration payable to OTHER LBHF under the CLSA with the final
Slide 27: ECPL agreed objective and operational progress
ECPL agreed objective – To maximise economic value by enabling development of the Masterplan Ongoing operational progress – Various planning initiatives – Track suppression works on schedule Development to be brought forward through the introduction of third-party capital – Interest from potential i
Slide 28: Lillie Square progress
Established address – Residents of over 220 homes now in occupation Over 80% of Phase 2 reserved or exchanged Phase 2 construction progressing on schedule – First completions and hand overs expected in H1 2020 Capco Interim Results 2019 www.capitalandcounties.com
Slide 29: Artist's impression of the High Street
Artist’s impression of the High Street Capco Interim Results 2019 www.capitalandcounties.com
Slide 30: Looking Ahead
Introduction Financial Review Operating Update Ian Hawksworth Looking Ahead Q&A Capco Interim Results 2019 www.capitalandcounties.com
Slide 31: Two estates and intention to proceed with demerger
Capco has created two strongly-positioned central London estates – Scale and income profile of Covent Garden – ECPL land available for development Intention to proceed with demerger – Two strongly positioned independent businesses – Focus on delivering long-term value for shareholders Covent Garden
Slide 32: Capco Interim Results 2019 www.capitalandcounties.com
Capco Interim Results 2019 www.capitalandcounties.com
Slide 33: Appendix: Financials, Covent Garden, Earls Court Properties
1. FINANCIALS 2. COVENT GARDEN 3. EARLS COURT PROPERTIES Capco Interim Results 2019 www.capitalandcounties.com
Slide 34: Reconciliation of Group share to IFRS
Less: Joint Add back: Ventures1,2 Non-controlling Group Share interest2 IFRS £m £m £m £m Investment & Trading Property 3,133 (150) 229 3,212 Net Debt (588) 25 (23) (586) Other assets and liabilities 113 111 (1) 223 Non-controlling interest – – (205) (205) NAV 2,658 (14) – 2,644 1. This consists of t
Slide 35: EPRA NNNAV bridge
Pps 335 330 1.3p 325 320 0.5p 9.1p 315 325.7p 1.8p 1.0p 0.6p 310 315.0p 305 Dec-18 Covent Garden Earls Court Impairment of Underlying Profits Dividend Other Jun-19 revaluation Properties Innova investment revaluation EPRA NNNAV 312 pence per share Capco Interim Results 2019 www.capitalandcounties.co
Slide 36: Debt maturity and covenants
Maturity Loan LTV Interest cover outstanding1 covenant covenant Covent Garden2 2022 – 2037 £575m 60% 120% ECPL 2026 £45m 40% n/a Lillie Square3 2021 £45m 75% n/a Total £665m 1. The loan values are the nominal values at 30 June 2019 shown on a Group share basis. The balance sheet value of the loans i
Slide 37: Tax on income and capital gains
1. Tax on income The total tax charge for the first half of the year, made up of both underlying tax and non-underlying tax, is £1.3 million. 2. Tax on capital gains The contingent tax position on investment property held as at period ended 30 June 2019 is £nil after utilisation of available group l
Slide 38: ITZA rents psf
ITZA psf (£) – 30 June 2019 * 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 Capco Interim Results 2019 www.capitalandcounties.com
Slide 39: Capco Interim Results 2019 www.capitalandcounties.com
Capco Interim Results 2019 www.capitalandcounties.com
Slide 40: Lease expiry profile, gross income, portfolio composition
LEASE EXPIRY PROFILE1 ANNUAL GROSS INCOME 2019: 14% Retail: 51% F&B: 23% 2020: 11% WALE Offices: 15% 8.3yrs 2021: 8% £69m Leisure: 4% 2022: 8% Residential: 7% 2023+: 59% 1. Lease expiry profile based on the earlier of lease break and lease expiry PORTFOLIO VALUE TOTAL FLOOR AREA Retail: 55% Retail:
Slide 41: Value creation and ERV progression
£m VALUE CREATION £m ERV PROGRESSION 3,000 140 £1,220m 2,500 120 £107.7m £107.9m £104.8m 2,000 100 £96.0m £86.2m £353m 1,500 80 £75.1m £654m £164m £2,611m £58.0m 1,000 60 £51.9m £45.8m £37.5m 500 40 £33.7m £548m 0 20 Dec-09 Acquisitions Capex Disposals Valuation Jun-19 2009 2010 2011 2012 2013 2014
Slide 42: Earls Court Partnership Limited and Masterplan key areas
Earls Court Partnership Limited; Investment vehicle with TfL – Capco share 63% Lillie Square – 50:50 JV with KFI Land subject to CLSA – Option exercised and binding agreement in place Lillie Bridge Depot – 100% owned by TfL Earls Court Masterplan – key areas ECPL1 CLSA2 LBD3 Total sqft (m) sqft (m)
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