Shaftesbury Capital Plc · LSE:SHC
Shaftesbury Capital — Capital & Counties Properties — FY2014 Earnings Presentation
49 slides from Shaftesbury Capital's earnings presentation, Feb 26, 2015
Slide 1: Capital & Counties Properties PLC Annual Results 2014
Capital & Counties Properties PLC Annual Results 2014 26 February 2015 www.capitalandcounties.com
Slide 2: Important Notices
IMPORTANT NOTICES This presentation includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Capital & Counties Properties PLC to be materiall
Slide 3: Agenda
AGENDA Introduction 1. INTRODUCTION Financial Review Ian Hawksworth 2. FINANCIAL REVIEW Soumen Das Operating Update 3. COVENT GARDEN UPDATE Soumen Das 4. EARLS COURT PROPERTIES UPDATE Looking Ahead Gary Yardley 5. LOOKING AHEAD Ian Hawksworth 6. Q&A Q&A 3 Capco Annual Results 2014 www.capitalandcoun
Slide 4: Introduction
Introduction Financial Review Operating Update INTRODUCTION Ian Hawksworth, Chief Executive Looking Ahead Q&A 4 Capco Annual Results 2014 www.capitalandcounties.com
Slide 5: Highlights: Excellent results
HIGHLIGHTS Excellent results Total property value Total return NAV per share Total dividend £3.0bn 25% 311p 1.5p per share +22% like-for-like +25% STRONG VALUATION PERFORMANCE AT COVENT GARDEN POSITIVE MOMENTUM AT EARLS COURT PROPERTIES Most active year of leasing and investment EC1 & EC2 venture wi
Slide 6: Highlights: Excellent results
HIGHLIGHTS Excellent results Total property value Total return NAV per share Total dividend £3.0bn 25% 311p 1.5p per share +22% like-for-like +25% POSITIVE OPERATIONAL PROGRESS AT VENUES ROBUST FINANCIAL POSITION Successful transition of business to Olympia Conservative 12% LTV and £655m liquidity L
Slide 7: Valuation
VALUATION Accelerated performance LFL VALUATION GROWTH (H1/H2) 30% 28% £1.6bn £1.2bn Covent Garden Earls Court 25% 25% Properties Initial yield: 2.5% Total property value 20% Equivalent: 18% £3bn yield 3.7% 15% +22% lfl 10% 5% £0.2bn Venues 0% Covent Earls Court Venues Garden Properties H1 H2 7 Capc
Slide 8: A Central London Focused Property Company
A CENTRAL LONDON FOCUSED PROPERTY COMPANY A global and dynamic capital city Positive economic prospects, high population growth Focused on 2 major London estates £3bn total property value 8 Capco Annual Results 2014 www.capitalandcounties.com
Slide 9: A Return-Focused Business
A RETURN-FOCUSED BUSINESS Delivering through clear and focused objectives Granular asset management Tactical acquisitions Strategic development Creativity Planning Land assembly Land enablement Selective development 9 Capco Annual Results 2014 www.capitalandcounties.com
Slide 10: Significant Value Creation
SIGNIFICANT VALUE CREATION Delivering £1.9 billion of shareholder value 1 NAV PER SHARE PROGRESSION p 350 311p Capital invested £0.9bn 300 Capital recycled £0.5bn Valuation gain £1.3bn 249p 250 203p 200 167p 148p 150 127p 100 2009 2010 2011 2012 2013 2014 1. Change in market capitalisation to 31 Dec
Slide 11: Outperformance Since Establishment
OUTPERFORMANCE SINCE ESTABLISHMENT Delivering high returns off low leverage TOTAL RETURN VS AVERAGE LEVERAGE – SINCE 2010 25% High returns Capco 20% TOTAL RETURN 15% 10% 5% Low leverage 0% 0% 10% 20% 30% 40% 50% 60% 70% LTV Source: UBS Constituents of FTSE 350 Real Estate Index 11 Capco Annual Resul
Slide 12: Financial Review
Introduction Financial Review Operating Update FINANCIAL REVIEW Soumen Das Looking Ahead Q&A 12 Capco Annual Results 2014 www.capitalandcounties.com
Slide 13: Underlying Earnings
UNDERLYING EARNINGS 2014 2013 Var £m £m £m Net rental income 70.1 64.8 5.3 Admin costs (43.2) (33.8) (9.4) Net finance costs (15.1) (20.9) 5.8 Other 1.5 (0.5) 2.0 Tax on underlying earnings (0.2) (2.3) 2.1 Underlying earnings 13.1 7.3 5.8 Underlying earnings per share 1.6p 1.0p 0.6p Total dividend p
Slide 14: Net Rental Income
NET RENTAL INCOME £m £1.8m £3.5m £70.1m 70 £1.2m £1.2m £64.8m Other £1.2m Venues £15.3m 60 Venues £13.5m 50 Earls Court Earls Court Properties £18.0m Properties £14.5m 40 30 20 Covent Garden Covent Garden £35.6m £36.8m 10 0 2013 Covent Garden Earls Court Properties Venues Other 2014 14 Capco Annual
Slide 15: Adjusted Balance Sheet
ADJUSTED BALANCE SHEET Dec-14 Dec-13 Var £m £m £m Investment & Trading Property 2,905 2,166 739 Unrecognised surplus on trading properties 96 69 27 Net debt (345) (329) (16) Other (26) 6 (32) EPRA adjusted NAV 2,630 1,912 718 Number of shares in issue 836m 758m 78m TfL transaction not yet fully refl
Slide 16: EPRA Adjusted Diluted Net Assets Per Share
EPRA ADJUSTED DILUTED NET ASSETS PER SHARE NAV +25% to 311 pence 37p 320p 5p 2p 7p 300p 25p 280p 7p 19p 3p 260p 311p 240p 272p 220p 249p 200p 180p Dec-13 H1 Valuation & Impact of capital H1 Other Jun-14 Covent Garden Earls Court Venues H2 - Other Dec-14 sale of property raise Properties H1 valuation
Slide 17: Debt & Gearing
DEBT & GEARING Active debt management £665m unsecured revolving facility for Covent Dec-14 Dec-13 Garden Net Debt £345m £329m LTV 12% 15% £150m US private placement of 10 and 12 year senior unsecured notes Group interest cover 188% 148% Cash and available facilities £655m £287m £130m development fac
Slide 18: Cash Utilisation
CASH UTILISATION Successful deployment of capital £m £655m 600 500 £87m 400 £543m £258m 300 £287m 200 £195m £242m £64m 100 £26m £11m £1m £19m £112m £45m 0 Dec-13 Operating cash Capital raise Net Borrowings Acquisitions Capex Non-recurring Dividend Other Dec-14 flow Drawn finance costs Cash Undrawn F
Slide 19: Covent Garden Update
Introduction Financial Review Operating Update COVENT GARDEN UPDATE Soumen Das Looking Ahead Q&A 19 Capco Annual Results 2014 www.capitalandcounties.com
Slide 20: Covent Garden
COVENT GARDEN 20 Capco Annual Results 2014 www.capitalandcounties.com
Slide 21: Strategy for Covent Garden
STRATEGY FOR COVENT GARDEN A platform for rental growth Granular asset management Tactical acquisitions Target Return Strategic development 10–12% Creativity Planning Land assembly Target Return Land enablement 12–15% Selective development 21 Capco Annual Results 2014 www.capitalandcounties.com
Slide 22: Covent Garden Highlights
COVENT GARDEN HIGHLIGHTS The most active year of leasing Portfolio value New lettings & renewals ERV £1.6bn +12% +14% (lfl) +25% like-for-like Ahead of Dec-13 ERV £75.1m Strong valuation performance reflecting active year for leasing and positive central London retail market Strongest year of ERV gr
Slide 23: Accelerating Value Creation
ACCELERATING VALUE CREATION New ERV guidance of £100m by December 2017 £m ERV PROGRESSION AT COVENT GARDEN Operational confidence in estate 120 Revised ERV guidance of £100m by 100 2017 Circa 10% underlying rental growth 80 sustainable in medium-term 60 40 20 0 2009 2010 2011 2012 2013 2014 Guidance
Slide 24: Opportunities for Rental Growth
OPPORTUNITIES FOR RENTAL GROWTH A plan for every street ITZA (£) – December 2014 1,200 1,000 800 600 400 200 0 * Based on 30 ft Zone A, average of Old Bond St, Oxford St West and Regent St. (Covent Garden based on 20 ft Zone A) ** Covent Garden average based on all streets, including Market Building
Slide 25: Supporting Rental Growth
SUPPORTING RENTAL GROWTH A plan for every street ITZA (£) – December 2014 1,200 1,000 EDWIN 800 600 400 200 0 * Based on 30 ft Zone A, average of Old Bond St, Oxford St West and Regent St. (Covent Garden based on 20 ft Zone A) ** Covent Garden average based on all streets, including Market Building
Slide 26: Zone A Distribution 2009
ZONE A DISTRIBUTION 2009 Dec 2009 Zone A Map £601 - £1,000 £451 - £600 £301 - £450 £201 - £300 £0 - £200 Acquisitions since Dec 2009 26 Capco Annual Results 2014 www.capitalandcounties.com
Slide 27: Zone A Distribution 2014
ZONE A DISTRIBUTION 2014 Dec 2014 Zone A Map £601 - £1,000 £451 - £600 £301 - £450 £201 - £300 £0 - £200 Acquisitions since Dec 2009 27 Capco Annual Results 2014 www.capitalandcounties.com
Slide 28: Acquisitions
ACQUISITIONS Investing in our estate £167m of acquisitions 8 new properties acquired for £167m deploying proceeds from equity raise – £31m invested since the year-end In-fill acquisitions enhancing ownership on existing Capco streets Strategic move on to Bedford Street Acquisitions 2014/2015 28 Capc
Slide 29: Larger Scale Developments
LARGER SCALE DEVELOPMENTS Capital initiatives supporting rental growth 29 Capco Annual Results 2014 www.capitalandcounties.com
Slide 30: Kings Court and Carriage Hall
KINGS COURT AND CARRIAGE HALL A new vision for Floral Street An opportunity to unlock rental potential through placemaking on Floral Street – Current Zone A rental level of £300 on Floral Street Works underway with completion expected in 2017 100,000 sq ft of space, including over 20,000 sq ft of ne
Slide 31: Earls Court Properties Update
Introduction Financial Review Operating Update EARLS COURT PROPERTIES UPDATE Gary Yardley Looking Ahead Q&A 31 Capco Annual Results 2014 www.capitalandcounties.com
Slide 32: Earls Court Properties
EARLS COURT PROPERTIES An opportunity to create one of London’s finest addresses 32 Capco Annual Results 2014 www.capitalandcounties.com
Slide 33: A GLA 'Opportunity Area' in Central London
A GLA ‘OPPORTUNITY AREA’ IN CENTRAL LONDON A strategic scheme for London London’s forecast housing requirement1 – An additional 2 million people living in London in 20 years – Over 45,000 new homes required per annum Increased Earls Court designation in ‘New Draft London Plan’ – Minimum of 7,500 new
Slide 34: Our Interests
OUR INTERESTS A formally consented scheme in a GLA ‘Opportunity Area’ EC1 & EC2 (Earls Court Partnership Limited) – Earls Court Partnership with TfL – 63% Capco owned; business and development manager Empress State Building – 100% owned by Capco Lillie Square – 50:50 JV with KFI Land subject to CLSA
Slide 35: Strategy for Earls Court
STRATEGY FOR EARLS COURT Driving value creation Granular asset management Tactical acquisitions Strategic development Creativity Planning Land assembly Land enablement Selective development 35 Capco Annual Results 2014 www.capitalandcounties.com
Slide 36: Valuation
VALUATION EC1 & EC2 CLSA Lillie Empress Other Total Square State 63% 100% 50% 100% 100% Gross External Development Area (m sq ft) Residential 2.7 3.2 1.0 0.8 - 7.7 Commercial 0.7 0.4 - 0.3 - 1.4 Total GEA 3.4 3.6 1.0 1.1 1 - 9.1 Dec-14 £609m n/a £182m £278m £105m £1,174m Uplift (LfL) 28% n/a 10% 5%
Slide 37: Earls Court Properties Highlights
EARLS COURT PROPERTIES HIGHLIGHTS Continued momentum Portfolio value Land assembly Planning Acquisitions £1.2bn 63% 2 £51m +18% like-for-like Controlling interest at Detailed consents Masterplan area EC1 & EC2 Earls Court Village – Detailed planning consent for 16 acres and over 1,200 new homes Empr
Slide 38: Lillie Square Highlights
LILLIE SQUARE HIGHLIGHTS Strong demand for a premium location Valuation Phase 1 at Lillie Square Individual premium units up to £182m £1,400 - £1,500 £2,200psf +10% like-for-like Average psf In Phase 1 Positive pricing achieved at Lillie Square Phase 1 predominantly sold Construction of Lillie Squar
Slide 39: Looking Ahead
Introduction Financial Review Operating Update LOOKING AHEAD Ian Hawksworth Looking Ahead Q&A 39 Capco Annual Results 2014 www.capitalandcounties.com
Slide 40: Looking Ahead
LOOKING AHEAD Confident in the strength of our estates Covent Garden – a world-class retail and dining destination – New ERV guidance of £100m by December 2017 – Continued investment through acquisitions and developments – Construction of Kings Court & Carriage Hall Earls Court – an opportunity to c
Slide 41: Q&A
Q&A 41 Capco Annual Results 2014 www.capitalandcounties.com
Slide 42: Appendix
APPENDIX Covent Garden Earls Court Balance Sheet Tax 42 Capco Annual Results 2014 www.capitalandcounties.com
Slide 43: Covent Garden: 71 Properties and 416 Lettable Units
COVENT GARDEN 71 properties and 416 lettable units LEASE EXPIRY PROFILE ANNUAL GROSS INCOME 2014 2% Retail: 57% 2015 17% F + B: 25% WALE Annual gross income 2016 9% Leisure: 2% 7.4yrs 2017 12% £43m Offices: 13% 2018 19% Residential: 3% 2019+ 41% PORTFOLIO VALUE FLOOR AREA Retail: 30% Retail: 52% F +
Slide 44: Covent Garden
COVENT GARDEN £m GROSS INCOME TO ERV £13.7m 70 £12.4m 60 50 £1.5m £4.1m £0.4m £0.4m £75.1m 40 30 £47.5m £42.6m 20 10 Dec-14 Gross Rent-frees / Turnover Under Income contracted Vacancies Development Under-rented Dec-14 ERV income Stepped rent lease contract/offer & under offer ERV £m VALUE UPLIFT AND
Slide 45: Covent Garden Zoning Plan
COVENT GARDEN Zoning plan 45 Capco Annual Results 2014 www.capitalandcounties.com
Slide 46: The Earls Court Masterplan
THE EARLS COURT MASTERPLAN Earls Court Masterplan consent – 10.1m sq ft (GEA) – 7,500 new homes (including Lillie Square) – Including 1,500 affordable homes – 10,000 new jobs – Over £450m community benefits Empress State Building consent – 610k sq ft (GEA) – Over 440 new homes – Including over 100 a
Slide 47: Summary Balance Sheet
SUMMARY BALANCE SHEET IFRS to adjusted disclosures 31 December 2014 Unrecognised Adjustments surplus on for Joint trading Other Adjusted IFRS Ventures properties Adjustments (EPRA NAV) (1) (2) (3) £m £m £m £m £m Investment & Trading Property 2,806 98 96 1 3,001 Net debt (355) 10 (345) Other assets a
Slide 48: Evolution of Financing Strategy
EVOLUTION OF FINANCING STRATEGY £665m Covent Garden RCF and £150m US private placement Primarily unsecured revolving debt structure - LTV 12% Granular asset management Weighted average cost of debt 3.4% Tactical acquisitions Net Debt £345m Strategic development Undrawn committed facilities £655m Cre
Slide 49: Taxation
TAXATION Summary Tax on income – When excluding prior year adjustments, the underlying tax rate is 20.5% which is broadly in line with the statutory corporation tax rate for 2014 of 21.5% – As announced in the March 2013 budget the main rate of corporation tax will fall to 20% from 1 April 2015 – Ex
Capital & Counties Properties — FY2014 Earnings Presentation on 6ix