Slide 1: Investor and Analyst Presentation: Results 2014, Driving Value
WORKSPACE INVESTOR AND ANALYST PRESENTATION 4 JUNE 2014 RESULTS 2014 DRIVING VALUE
Slide 2: How We Make Money
WORKSPACE HOW WE MAKE MONEY WHAT THE RIGHT WE DO STRATEGY TAILORED BUSINESS MARKET ENVIRONMENTS KNOWLEDGE THE RIGHT INCOME PROPERTIES GROWTH CUSTOMER NEW AND RELATIONSHIPS GROWING THE RIGHT CAPITAL COMPANIES SERVICES GROWTH OPERATIONAL CAPABILITY LONDON UNDERSTANDING CREATING DEMAND SUPPLY 2
Slide 3: Agenda
AGENDA WORKSPACE Jamie Hopkins Chief Executive Officer PERFORMANCE Graham Clemett Chief Financial Officer DIRECTION Jamie Hopkins Chief Executive Officer QUESTIONS 3
Slide 4: Results
WORKSPACE RESULTS March 2014 March 2013 Change Strong Growth Rent Roll (lfl) £47.4m £43.7m +9% Property Valuation £1,078m £830m +27%* Total Property return 35% 14% Up 21% EPRA NAV (per share) £4.96 £3.48 +43% Dividend (per share) 10.63p 9.67p +10% Operational Momentum Enquiries (per month) 1,063 1,0
Slide 5: Performance Highlights
PERFORMANCE HIGHLIGHTS March 2014 March 2013 Change Income Statement Net Rental income £50.3m £47.1m +7% Adjusted Trading Profit After Interest £20.5m £17.9m +15% Profit Before Tax £252.5m £76.4m +230% Underlying Earnings (per share) 13.87p 12.20p +14% Dividend (per share) 10.63p 9.67p +10% Balance
Slide 6: Trading Profit After Interest
PERFORMANCE TRADING PROFIT AFTER INTEREST 25 £1.6m £(0.8)m £(1.2)m £0.3m £3.3m £(1.4)m £0.8m £20.5m 20 £17.9m 15 10 5 0 March Like for like Completed Refurbishment / Acquisitions Disposals Admin Interest March 2013 Income Projects Redevelopment Expenses Costs 2014 6
Slide 7: Like-for-Like Income
PERFORMANCE LIKE-FOR-LIKE INCOME RENT ROLL RENT PER SQ.FT £48.0m £47.4m £15.5 £15.28 £15.0 +9% £14.5 £46.0m +9% £14.08 £14.0 +7% £13.5 £13.17 £13.0 £44.0m £43.7m £12.5 £12.0 March 2012 March 2013 March 2014 +10% £42.0m OCCUPANCY 100.0% £39.9m £40.0m 95.0% 89.8% 90.0% 90.0% 87.5% 85.0% £38.0m 80.0% 7
Slide 8: Completed Projects
PERFORMANCE COMPLETED PROJECTS • 7 refurbishments completed PILL BOX at cost of £27m BETHNAL GREEN E2 • 210,000 sq. ft of new and upgraded space £8.0m £7.2m £7.0m £5.9m £6.0m £5.0m Rent Roll £4.0m £3.3m £3.0m £2.0m £1.0m £0.0m March 2013 March 2014 ----------------- Estimated Future Rent • £9m refur
Slide 9: Current Refurbishments
PERFORMANCE CURRENT REFURBISHMENTS • 8 projects at a total cost of £74m METAL BOX FACTORY • 373,000 sq. ft of new and SOUTHBANK SE1 upgraded space £16.0m £14.8m £14.0m £12.0m £10.0m £8.1m Rent Roll £7.7m £8.0m £6.0m £4.0m £2.0m £0.0m March 2013 March 2014 ----------------- Estimated Future Rent • Co
Slide 10: Redevelopments
PERFORMANCE REDEVELOPMENTS • 8 redevelopment schemes SCREENWORKS contracted for sale ISLINGTON N5 – £95m cash plus overage – 5 new business centres • Strong pipeline £6.0m £5.4m £5.0m £4.0m Rent Roll £3.0m £2.5m £1.8m £2.0m £1.0m £0.0m March 2013 March 2014 ----------------- Estimated Future Rent •
Slide 11: Future Income
PERFORMANCE FUTURE INCOME PROJECTS LIKE-FOR-LIKE £50.0m £50.0m £47.4m £43.7m £39.8m £40.0m £40.0m £30.0m £27.4m £30.0m Rent Roll Rent Roll +£11.6m £20.0m £20.0m £15.8m £13.5m £10.0m £10.0m £0.0m £0.0m March 2013 March 2014 ----------------- Estimated March 2013 March 2014 March 2014 Restated Future
Slide 12: Cash Flow
PERFORMANCE CASH FLOW £m Trading Net cash from operations 26 12 Dividends paid (14) Investment Capital Expenditure (30) Property Acquisitions (19) (18) Disposals/Capital Receipts 29 Investment in joint ventures 2 Financing Cancellation of hedging contracts (9) Release of secured bank facility funds
Slide 13: Balance Sheet
PERFORMANCE BALANCE SHEET March 2014 March 2013 Investment Property Valuation £1,078m £830m Investment in Joint Ventures £23m £21m Net Debt (£338m) (£327m) Non Controlling Interest (£11m) £0m Other (£26m) (£24m) Net Assets £726m £500m EPRA NAV per Share £4.96 £3.48 Loan to Value 31% 40% Facility Hea
Slide 14: Glebe Proceeds Share
PERFORMANCE GLEBE PROCEEDS SHARE March 2014 March 2013 Glebe Portfolio Valuation £217m £164m Comprising: Commercial properties – no plans to sell £110m £81m Properties with residential sales potential £107m £83m Proceeds Share Calculation: Proceeds from sales to date £14m £nil Potential proceeds fro
Slide 15: Property Valuation
PERFORMANCE PROPERTY VALUATION £1,200m £1,078m £132m £1,100m £1,000m £96m £900m £(31)m £830m £19m £32m £800m £700m £600m £500m March Disposals / Capital Acquisitions H1 Revaluation H2 Revaluation March 2013 Receipts Expenditure Surplus Surplus 2014 15
Slide 16: Revaluation Uplift
PERFORMANCE REVALUATION UPLIFT No. of Uplift properties Like-for-Like 62 £130m 40% PRICING 60% YIELD 70% FROM Redevelopments 9 £73m CONTRACTED SCHEMES £20M OF CAPEX Refurbishments 8 £25m IN YEAR Other 4 £0m Total 83 £228m 16
Slide 17: EPRA NAV per Share
PERFORMANCE EPRA NAV PER SHARE £6.00 £0.14 £(0.10) £(0.07) £1.50 £0.01 £4.96 £5.00 £4.00 £3.48 £3.00 £2.00 £1.00 £0.00 March Property Valuation Trading Profit after Dividends Glebe Proceeds Other March 2013 Surplus interest paid in year Share 2014 17
Slide 18: Debt Analysis
PERFORMANCE DEBT ANALYSIS March 2014 March 2013 Net Debt £338m £327m Total Facilities £410m £383m Secured Facilities 0% 85% Average Borrowing Cost 5.3% (5.1% exit) 5.0% FACILITIES BY TYPE MATURITY PROFILE £250m £200m £171m Private Bank Debt £150m Placement 37% £150m 38% £100m £58m UK Retail £50m Fun
Slide 19: London Is Changing
DIRECTION LONDON IS CHANGING The 'London Is Changing' film was presented at the 2014 Knight Frank Central London Breakfast on 5th February. Now in its 21st year, the event, showcasing Knight Frank's Capital Markets, Leasing and Research capabilities and providing insight into the Central London mark
Slide 20: London Is Changing
DIRECTION LONDON IS CHANGING PLEASE SCAN THIS QR CODE TO SEE THE KNIGHT FRANK “LONDON IS CHANGING” VIDEO ALTERNATIVELY CLICK HERE TO SEE THE VIDEO ON YOUTUBE 20
Slide 21: London Is Changing
DIRECTION LONDON IS CHANGING W o rk sp a c e P ro p erty 21
Slide 22: The Right Strategy
DIRECTION THE RIGHT STRATEGY INTENSIVE MANAGEMENT AND DIRECT MARKETING RENTAL CAPITAL NEW INCOME ALTERNATIVE ACQUISITIONS GROWTH GROWTH INCOME ORGANIC NEW POSITIONED FOR GROWTH 22
Slide 23: Rental Growth
DIRECTION RENTAL GROWTH OFFICES INDUSTRIAL £20 100% £15 100% £19 £14 £18 £13 90% 90% £17 £12 £16 £11 £15 80% £10 80% £14 £9 £13 £8 70% 70% £12 £7 £11 £6 £10 60% £5 60% Mar-12 Mar-13 Mar-14 Mar-12 Mar-13 Mar-14 Rent per sq. ft Occupancy Rent per sq. ft Occupancy OFFICES INDUSTRIAL £m £m £40 £
Slide 24: Rental Growth: Clerkenwell Workshops
DIRECTION RENTAL GROWTH CLERKENWELL WORKSHOPS Area: 53,000 Rent Roll Growth: 16.3% Rent per sq. ft: £57.19 W o rk sp a c e P ro p erty 24
Slide 25: Rental Growth: Leathermarket
DIRECTION RENTAL GROWTH CLERKENWELL WORKSHOPS Area: 53,000 Rent Roll Growth: 16.3% Rent per sq. ft: £57.19 THE LEATHERMARKET Area: 126,000 Rent Roll Growth: 8.7% Rent per sq. ft: £29.78 W o rk sp a c e P ro p erty 25
Slide 26: Capital Growth
DIRECTION CAPITAL GROWTH W o rk sp a c e P ro p erty 26
Slide 27: Capital Growth
DIRECTION CAPITAL GROWTH March 2014 March 2013 Change Like-for-like Property Valuation Valuation £692m £556m +23% Net Initial Yield 6.4% 7.3% Down 0.9% Rent per sq. ft £15.28 £14.08 +9% ERV per sq. ft £16.13 £14.37 +12% Capital Value per sq. ft £205 £164 +25% 27
Slide 28: Capital Growth
DIRECTION CAPITAL GROWTH W o rk sp a c e P ro p erty 28
Slide 29: Capital Growth
DIRECTION CAPITAL GROWTH W o rk sp a c e P ro p erty 29
Slide 30: Capital Growth: Enterprise House
DIRECTION CAPITAL GROWTH ENTERPRISE HOUSE Valuation: £43.0m Net Initial Yield: 5.4% Rent per sq. ft: £36.53 Value per sq. ft: £590 W o rk sp a c e P ro p erty 30
Slide 31: Capital Growth: Southbank House
DIRECTION CAPITAL GROWTH ENTERPRISE HOUSE Valuation: £43.0m Net Initial Yield: 5.4% Rent per sq. ft: £36.53 Value per sq. ft: £590 SOUTHBANK HOUSE Valuation: £23.6m Net Initial Yield: 6.1% Rent per sq. ft: £26.75 Value per sq. ft: £375 W o rk sp a c e P ro p erty 31
Slide 32: Acquisitions
DIRECTION ACQUISITIONS W o rk sp a c e P ro p erty 32
Slide 33: Acquisitions: Grays Inn Road
DIRECTION ACQUISITIONS 60 GRAYS INN ROAD Net Initial Yield: 4.3% Rent per sq. ft: £26 •! Development potential over car park •! 4 other holdings within walking distance W o rk sp a c e P ro p erty 33
Slide 34: Acquisitions: 12-13 Greville Street
DIRECTION ACQUISITIONS 12-13 GREVILLE STREET Net Initial Yield: 4.4% Rent per sq. ft: £26 •! Re-development opportunity with adjacent holding •! 200 metres from Farringdon Crossrail station W o rk sp a c e P ro p erty 34
Slide 35: Acquisitions: Vestry Street Studios
DIRECTION ACQUISITIONS VESTRY STREET STUDIOS Net Initial Yield: 4.1% Rent per sq. ft: £23 •! 300 metres from Old Street Roundabout •! 4 core holdings within walking distance W o rk sp a c e P ro p erty 35
Slide 36: The Right Strategy
DIRECTION THE RIGHT STRATEGY INTENSIVE MANAGEMENT AND DIRECT MARKETING RENTAL CAPITAL NEW INCOME ALTERNATIVE ACQUISITIONS GROWTH GROWTH INCOME ORGANIC NEW POSITIONED FOR GROWTH 36
Slide 37: The Right Strategy
DIRECTION THE RIGHT STRATEGY W o rk sp a c e P ro p erty A c q uisitio ns 37
Slide 38: The Right Strategy
DIRECTION THE RIGHT STRATEGY W o rk sp a c e P ro p erty A c q uisitio ns Red ev el o p ments 38
Slide 39: The Right Strategy
DIRECTION THE RIGHT STRATEGY W o rk sp a c e P ro p erty A c q uisitio ns Red ev el o p ments Refurbishments 39
Slide 40: Enquiries Split Across London
DIRECTION THE RIGHT STRATEGY ENQUIRIES SPLIT ACROSS LONDON W o rk sp a c e P ro p erty 40
Slide 41: Outlook
~)) DIRECTION 'WORKSPACE* RIGHT BRAND Increasing recognition and reputation. RIGHT PEOPLE Driving performance. RIGHT MARKET London is growing and changing WORKSPACE UNDERSTANDS WORK SPACE RIGHT PROPERTIES Creating modern growth environments. RIGHT CUSTOMERS New and growing companies 41
Slide 42: Questions
QUESTIONS QUESTIONS 42
Slide 43: Supplementary Information
SUPPLEMENTARY INFORMATION WORKSPACE*
Slide 44: Appendix I: Refurbishment Projects
APPENDIX I REFURBISHMENT PROJECTS Project Stage March 2014 Total Cost to Estimated Unaffected Upgraded New Estimated Estimated March 2014 Valuation Cost Complete Completion area area space ERV Rent at 90% Rent Roll * (Average) occupancy * Completed Canalot Studios £17m £5m - Sept 2012 - 32,702 16,26
Slide 45: Appendix II: Redevelopment Projects
APPENDIX II REDEVELOPMENT PROJECTS Project Stage Development March 2014 March 2014 Expected Residential Commercial space Other proceeds partner Valuation Rent Roll completion units No. Area Estimated Rent* Cash Overage ** ERV Contracted for sale The Filaments (phase 1) Mount Anvil £18m - Nov 2014 20
Slide 46: Disclaimer
DISCLAIMER This presentation contains forward looking statements. Although the Group believes that the estimates and assumptions on which such statements are based are reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond the Group’s control. The G