Shaftesbury Capital PLC · LSE:SHC
Shaftesbury Capital — FY2015 Earnings Presentation
63 slides from Shaftesbury Capital's earnings presentation, November 2015
Slide 1: Investor and analyst presentation
INVESTOR AND ANALYST PRESENTATION Investor and analyst presentation YearYear ended ended 3030 September2015 September 2015
Slide 2: Agenda
2 Agenda Introduction Brian Bickell Results and finance Chris Ward Portfolio review Brian Bickell Summary and outlook Brian Bickell Q&A Brian Bickell Chris Ward Simon Quayle Tom Welton
Slide 3: Brian Bickell
3 BRIAN BICKELL
Slide 4: Our business
4 Our business Exceptional Resilient portfolio long-term outperformance Focused Proven investment strategy management strategy Experienced Robust team balance sheet
Slide 5: Delivering shareholder value
5 Delivering shareholder value GROWTH IN VALUE & DIVIDENDS 2015 2014 Portfolio value growth1,2 +18.0% +21.0% EPRA NAV: £8.69 (2014: £7.13) +21.9% +25.7% NAV return before dividends +23.8% +28.0% TSR3 - Shaftesbury +36.7% +17.8% - FTSE 350 Real Estate Index +24.3% +16.4% 1. Including our 50% share of
Slide 6: Delivering our strategy
6 Delivering our strategy EXTENSIVE ASSET MANAGEMENT ACTIVITY, GROWING INCOME AND VALUE CREATION Activity across the portfolio • Buoyant local economy – strong demand for space, high occupancy and growth in rental income and values • EPRA vacancy averaged 2.1% throughout the year • Rental value of l
Slide 7: Results and finance
Results and finance
Slide 8: Summary financials
8 Summary financials GROWTH IN VALUE, EARNINGS AND DIVIDEND EPRA NAV PER SHARE PORTFOLIO VALUATION1 EPRA EARNINGS TOTAL DIVIDEND £8.69 £3.13bn £36.1m 13.75p +21.9% +18.0%2 +10.7% +5.0% CHANGE BALANCE SHEET 2015 2014 % Portfolio value – Wholly-owned3 £2,908m £2,426m +17.9%2 Portfolio value – Includin
Slide 9: Net asset value
9 Net asset value VALUATION UPLIFT DELIVERING NAV GROWTH PORTFOLIO VALUE (£M)1,2 467 26 25 L-f-L 3,123 +18% 2,605 2,605 2,631 2,656 2014 Acquisitions Capex Revaluation 2015 EPRA NAV (PENCE PER SHARE) 10 167 NAV 13 14 growth: 21.9% 869 869 NAV 713 713 712 712 return3: 23.8% 2014 EPRA earnings Dividen
Slide 10: Valuation
10 Valuation STRONG GROWTH UNDERPINNED BY SUSTAINED DEMAND Portfolio valuation1 l-f-l capital value growth1 3 year CAGR1 Portfolio reversion1 £3.13bn +18.0% +16.0% £25.2m Further capital growth DTZ continue to advise potential • Continuing strong occupier demand and low additional value in this uniq
Slide 11: Portfolio reversion
11 Portfolio reversion CONVERTING THE REVERSION IN TO CASH FLOW AND ESTABLISHING NEW RENTAL TONES Current annualised income2 ERV2 Portfolio reversion2 £102.6m £127.8m 24.6% +9.1%3 vs Sept 14 +7.0%3 vs Sept 14 Above current income 10 year CAGR1 £m Current income 7.5% 25% 27% ERV 7.7% 23% 23% 19% 24%
Slide 12: Components of the portfolio reversion
12 Components of the portfolio reversion SECURITY OF THE REVERSION COMPONENTS OF THE REVERSION (£M)1 9.5 1.3 5.2 2.1 7.1 63% attributable to 127.8 retail, restaurant, café and pub uses 117 118.3 (long history of 109.7 111.8 sustained, non- cyclical demand) 102.6 102.6 Current rent Contracted Availab
Slide 13: Rental income
13 Rental income CRYSTALLISATION OF REVERSION RENTS RECEIVABLE GROWTH OVER 2015 LIKE-FOR-LIKE INCREASE +£6.5m +7.6% +5.5% RENTAL INCOME (£M)1 4.6 1.9 91.8 85.3 85.3 87.2 2014 Acquisitions Underlying growth 2015 Note: Y axis not to scale 1. Net of recharge of recoverable property expenses
Slide 14: EPRA earnings
14 EPRA earnings GROWING NET PROPERTY INCOME NET PROPERTY INCOME EPRA EARNINGS EPRA EPS +£4.7m +£36.1m +13.0p +6.3% +10.7% +6.6% EPRA EARNINGS (£M) 40 38 4.7 0.4 0.2 1.2 0.2 36 34 32 30 28 36.9 36.9 35.9 35.9 36.1 26 32.6 32.6 24 22 20 2014 Net property income Admin costs Equity settled Interest Sha
Slide 15: Debt summary
15 Debt summary CAPITAL TO INVEST IN OUR PORTFOLIO COMMITTED UNDRAWN FACILITIES LOAN-TO-VALUE1 WEIGHTED AVERAGE MATURITY1 £150.3m 22.5% 10.2 years BANK FACILITIES (£M) DEBT SUMMARY1 2015 2014 Total facilities £855.8m £755.8m Undrawn committed facilities £150.3m £139.4m LTV 22.5% 23.6% 150.3 Gearing
Slide 16: Debt maturity profile
16 Debt maturity profile REFINANCING OF 2016 DEBT MATURITIES COMPLETE DEBT MATURITY PROFILE1 (£M) New term loans replaced £150m 2016 facilities 150 135 130 125 120 75 61 60 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Wholly-owned - variable rat
Slide 17: Portfolio review
Portfolio review
Slide 18: Exceptional portfolio
18 Exceptional portfolio Situated entirely in the heart of the West End • 14 acres (wholly-owned) • plus 50% interest in 1.9 acres (Longmartin joint venture) Mostly clustered in iconic areas • Concentration in renowned areas with high footfall; estimated 315m visits p.a. to the West End • Comprehens
Slide 19: Exceptional portfolio in the heart of the West End
19 Exceptional portfolio in the heart of the West End
Slide 20: Demand and occupancy
20 Demand and occupancy CONTINUING STRONG DEMAND, HIGH OCCUPANCY & RENTAL GROWTH COMMERCIAL LETTINGS,RENEWALS & REVIEWS1 EPRA VACANCY1 SCHEMES IN PROGRESS1 £21.6m 1.6% 4.3% +8.1% (vs 9/14 ERV) (of ERV) (of ERV) • Demand remains strong across each village and for all uses • £27.3m leasing and rent re
Slide 21: Shops
21 Shops SUSTAINED BROAD-BASED DEMAND Overview • Wide range of shop sizes and rental tones 313 • High footfall locations but rental levels remain competitive • Sustained broad-based demand from domestic and international retailers Leasing activity • Lettings/renewals/reviews: £8.9m (equivalent to 27
Slide 22: Retail rental tone – prime Zone A vs Shaftesbury
22 Retail rental tone – prime Zone A vs Shaftesbury COMPETITIVE RENTAL LEVELS VS NEARBY STREETS 1,500 £900* £400 £650* £210 1,250 £200 £330 £137 £190 £1,500* £485 £630 £1,250 900 £275 £500 Foubert’s Place 650 630 Carnaby Street Newburgh Street 500 485 Berwick Street 400 330 Earlham Street 275 210 20
Slide 23: Selection of retail openings/lettings in H2
23 Selection of retail openings/lettings in H2 Billionaire Boys Club MAC Cubitts KX Club Monaco Oi Polloi Natural Selection New Era Descente Our Legacy Nixon Tabio Fresh Cosmetics Slam City Skates Skinny Dip Moscot
Slide 24: Restaurants, cafés, and leisure
24 Restaurants, cafés, and leisure HISTORICALLY HIGH DEMAND, YET LOW AVAILABILITY OF SPACE Overview • Variety and quality of restaurants, cafés and pubs is an important footfall driver • Supply of space remains restricted - Long-term restrictive planning policies - Tenant reluctance to relinquish pr
Slide 25: Selection of new restaurant, café and pub lettings/openings in H2
25 Selection of new restaurant, café and pub lettings/openings in H2 Fogg’s Tavern Juice and Public 26 Grains Shotgun Fabrique Pho & Bun Roots Viet Food The Bowler Vico Happy Lemon Dirty Bones Sesame Duck & Rice Dishoom
Slide 26: Offices
26 Offices SUPPLY CONSTRAINTS DRIVE RENTAL GROWTH Overview 17% • One of largest providers of small office space in the core West End of our current • Supply of smaller office suites has become more restricted income1 - Office to residential conversions - Redevelopment of small multi-let buildings •
Slide 27: Residential
27 Residential RELIABLE AND GROWING CASH FLOW Overview • West End remains a popular place to live 13% of our current • Reliable and growing income stream income1 • Sustained demand to rent our reasonably-priced apartments • Continuing to unlock space for conversion on upper floors and upgrading exis
Slide 28: Acquisitions
28 Acquisitions Acquisitions during the year: £25.8m Acquisitions since year end: £22.1m • Seven properties in Soho, Charlotte Street, • Two properties in Seven Dials 13% Carnaby and Covent Garden - Two shops - Two shops - 2,850 sq. ft. of offices - Two restaurants - One apartment - Two cafés • Adja
Slide 29: 19-25 Broadwick Street
29 19-25 Broadwick Street • Forward purchase of 6,500 sq. ft. restaurant and retail space (not yet 13% accounted for under IFRS) • Handover December 2015 • Cost £6.6m (incl. purchase costs) • New commercial space in this busy and improving street connecting Soho and Carnaby
Slide 30: Schemes
30 Schemes ADDING VALUE THROUGH IMPROVING OUR PORTFOLIO SCHEMES IN THE YEAR ACROSS CAPITAL EXPENDITURE1 ERV UNDER DEVELOPMENT1 181,000 sq.ft. £24.7m £5.0m 10.4% of floor space1 Continued high level of asset management and refurbishment activity • Schemes in the period across 181,000 sq. ft., 10.4% o
Slide 31: Charing Cross Road/Chinatown
31 Charing Cross Road/Chinatown • Planning granted for reconfigured building to provide: - 32,000 sq.ft. retail space on Charing Cross Road (330 ft. frontage) - 13,500 sq.ft. restaurant space, principally fronting Newport Place - much improved space for occupiers CGIs of proposed scheme - vibrant ne
Slide 32: Charing Cross Road/Chinatown ground floor plan
32 Charing Cross Road/Chinatown GROUND FLOOR PLAN
Slide 33: 57 Broadwick Street
33 57 Broadwick Street • Planning application submitted to provide: - Flagship retail over lower floors (11,000 sq. ft.) - Extended and reconfigured office space (20,000 sq. ft.) - New residential (2,000 sq. ft.) Before - Increase in lettable space c. 8,000 sq. ft. After • Expect to commence works i
Slide 34: Thomas Neal's Warehouse
34 Thomas Neal’s Warehouse • Started to secure vacant possession • Planned reconfiguration of 21,000 sq. ft. • Reduce current 16 units to fewer, larger units or Ground single unit suitable for retailers seeking flagship space in Seven Dials After • Works to commence early in 2016 • Completion mid-20
Slide 35: Earlham Street proposals
35 Earlham Street proposals • Important gateway to Seven Dials from CGI of Camden’s proposed scheme Cambridge Circus • Rental tone has lagged nearby streets for some time (Zone A: £190 psf) • Discussions with Camden to materially improve the streetscape; public consultation in spring 2016 • Street e
Slide 36: Summary and outlook
Summary and outlook
Slide 37: Outlook
37 Outlook CONTINUED PORTFOLIO ACTIVITY London and the West End • Destination for visitors and businesses from across the world • Buoyant trading conditions • Significant investment by others across the West End • Crossrail arrives in 2018 Sustained broad-based • Strong, broad-based demand across th
Slide 38: Delivering long-term shareholder value
38 Delivering long-term shareholder value SUSTAINED RENTAL GROWTH UNDERPINNING LONG-TERM CAPITAL VALUES Exceptional Resilient portfolio long-term outperformance Focused Proven investment strategy management strategy Experienced Robust team balance sheet
Slide 39: Appendices
Appendices
Slide 40: Appendix 1: Delivering our strategy
40 Appendix 1 DELIVERING OUR STRATEGY
Slide 41: Appendix 2: London and the West End
41 Appendix 2 LONDON AND THE WEST END London – an unrivalled visitor and business Exceptional/improving transport links destination • Six underground stations closest to our villages • One of the world’s principal global cities handled 245m passengers in 2014 • Current population: 8.6m • Major inves
Slide 42: Appendix 3: Valuation £3.1bn
42 42 Appendix 3 VALUATION: £3.1 BN Charlotte Street £91m Carnaby Soho Covent Garden1 £1,110m £216m £1,021m Chinatown £694m 1. Including our 50% share of Longmartin
Slide 43: Appendix 4: Our portfolio
43 Appendix 4 OUR PORTFOLIO Shops Restaurants, cafés Offices Residential and leisure Wholly owned Wholly owned Wholly owned Wholly owned 313 257 528 456,000 sq. ft. 559,000 sq. ft. 418,000 sq. ft. 308,000 sq. ft. Longmartin joint venture Longmartin joint venture Longmartin joint venture Longmartin j
Slide 44: Appendix 4 (cont.): Mix of uses
44 Appendix 4 (cont.) MIX OF USES (WHOLLY-OWNED PORTFOLIO) % OF CURRENT RENT 6 Residential 13 28 Offices 17 Restaurants, cafés and leisure 27 35 Shops 39 35 2005 2015
Slide 45: Appendix 4 (cont.): Portfolio summary
45 Appendix 4 (cont.) PORTFOLIO SUMMARY Fair value % of Current rent ERV £m portfolio £m £m Wholly-owned portfolio Carnaby 1,109.9 35% 34.6 45.7 Covent Garden 808.6 26% 26.7 32.8 Chinatown 693.8 22% 23.3 27.3 Soho 215.8 7% 7.3 8.8 Charlotte Street 91.4 3% 2.8 3.9 2,919.5 93% 94.7 118.5 Longmartin jo
Slide 46: Appendix 5: Portfolio reversion by use
46 Appendix 5 PORTFOLIO REVERSION BY USE Restaurants, Retail cafés, leisure Office Residential Longmartin Total £m £m £m £m £m £m % of ERV Current income 32.9 34.0 15.4 12.4 7.9 102.6 80.3% Vacancy - Available 1.0 0.2 0.2 0.5 0.2 2.1 1.6% - Schemes 1.6 1.0 1.0 1.4 0.2 5.2 4.1% 2.6 1.2 1.2 1.9 0.4 7.
Slide 47: Appendix 6: Vacancy
47 Appendix 6 VACANCY Restaurant, cafés, Shops leisure Offices Residential Longmartin Total £m £m £m £m £m £m % of ERV Charing Cross Road/Chinatown 1.0 0.6 - - - 1.6 1.2% Other schemes 0.6 0.4 1.0 1.4 0.2 3.6 2.9% Total held for or under refurbishment 1.6 1.0 1.0 1.4 0.2 5.2 4.1% Available to let 0.
Slide 48: Appendix 6 (cont.): Wholly-owned vacant commercial space
48 Appendix 6 (cont.) WHOLLY-OWNED VACANT COMMERCIAL SPACE % of Wholly-owned ERV 9% 8% 1.9% 7% 2.0% 6% 1.4% 0.9% 5% 3.9% 4% 3.6% 1.6% 1.5% 1.9% 0.8% 1.2% 3% 2.9% 0.7% 2.3% 2% 3.4% 2.9% 2.9% 2.6% 2.8% 2.7% 2.3% 2.3% 1% 1.6% 1.4% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 EPRA vacancy Held f
Slide 49: Appendix 7: Like-for-like increase in capital values
49 Appendix 7 LIKE-FOR-LIKE INCREASE IN CAPITAL VALUES % of 3 Year H1 H2 FY 2015 portfolio CAGR Total 100% 8.0% 9.3% 18.0% 16.0% Carnaby 35% 8.6% 11.4% 21.0% 18.9% Covent Garden 26% 6.6% 7.8% 14.8% 14.0% Chinatown 22% 7.8% 8.9% 17.3% 14.1% Soho 7% 6.3% 8.2% 15.0% 14.8% Charlotte St 3% 11.7% 7.6% 20.
Slide 50: Appendix 8: Yields
50 Appendix 8 YIELDS Equivalent yield (%) 4.07 4.04 4.10 4.02 4.00 3.94 3.87 3.91 3.90 3.85 3.84 3.84 3.86 3.69 3.69 3.75 3.55 3.56 3.62 3.61 3.52 Carnaby Covent Garden Chinatown Soho Charlotte Street Wholly-owned Longmartin Topped-up initial yield (%) 3.53 3.49 3.5 3.4 3.54 3.26 3.25 3.3 3.36 3.25
Slide 51: Appendix 9: EPRA earnings and NAV reconciliations
51 Appendix 9 EPRA EARNINGS AND NAV RECONCILIATIONS 2015 20141 2015 20141 Earnings £m £m NAV £m £m Reported profit after tax 467.3 440.4 Reported net assets 2,325.4 1,893.2 Adjust for fair value movements: Adjust for: Investment properties (432.0) (394.0) Fair value of financial derivatives 79.2 78.
Slide 52: Appendix 10: Income and costs
52 Appendix 10 INCOME AND COSTS 2015 20141 EPRA EARNINGS £m £m Rental income 98.7 91.2 Property costs (19.9) (17.1) Net property income 78.8 74.1 Admin expenses (14.0) (13.8) 64.8 60.3 Net finance costs (30.7) (29.5) Share of Longmartin JV profit before tax2 2.3 2.1 Recurring profit before tax 36.4
Slide 53: Appendix 11: Finance analysis
53 Appendix 11 FINANCE ANALYSIS 2015 2014 Proportional Proportional IFRS Longmartin consolidation IFRS Longmartin consolidation £m £m £m Rate £m £m £m Rate Debenture 1 63.2 - 63.2 7.93% 63.3 - 63.3 7.93% Term loans – wholly-owned 384.8 - 384.8 3.85% 134.8 - 134.8 4.47% Term loan – Longmartin JV - 60
Slide 54: Appendix 12: Impact of change in accounting policy
54 Appendix 12 IMPACT OF CHANGE IN ACCOUNTING POLICY BALANCE SHEET 2015 2014 Proportionate Proportionate IFRS Longmartin JV consolidation IFRS Longmartin JV consolidation £m £m £m £m £m £m Investment properties 2,908.0 215.0 3,123.0 2,425.5 179.6 2,605.1 Investment in Longmartin 129.6 (129.6) - 101.
Slide 55: Appendix 13: TSR to September 2015
55 Appendix 13 TSR TO 30 SEPTEMBER 2015 Shaftesbury 282% 10 years Shaftesbury 135% 5 years FTSE 350 RE 42% FTSE 350 RE 117% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Shaftesbury 82% 3 years Shaftesbury 37% 1 year FTSE 350 RE 80% FTSE 350 RE 24% 2012 2013 20
Slide 56: Appendix 14: Village summaries
56 Appendix 14 VILLAGE SUMMARIES Village Page Carnaby 57 Covent Garden 58 Chinatown 59 Soho 60 Charlotte Street 61
Slide 57: Carnaby
57 Carnaby Footfall > 40m pa 35% of our portfolio Sept 2015 Sept 2014 Valuation £1,109.9m £906.2m Acquisitions £3.2m £32.3m Capital expenditure £9.5m £11.5m Capital value return (l-f-l) 21.0% 25.8% Equivalent yield 3.69% 4.07% Reversion £11.1m £10.7m Reversion (£m) 32.1% 7% 34.5% 29% % of current in
Slide 58: Covent Garden (Seven Dials)
30m pa 58 Footfall > Covent Garden (Seven Dials) 33% of our portfolio* Sept 2015 Sept 2014 Valuation1 £1,021.1m £873.5m Acquisitions £5.8m £2.2m Capital expenditure1 £6.5m £7.1m Capital value return – wholly-owned 14.8% 19.3% – Longmartin 19.0% 22.2% Equivalent yield – wholly-owned 3.55% 3.87% – Lon
Slide 59: Chinatown
59 Chinatown Footfall > 50m pa 22% of our portfolio Sept 2015 Sept 2014 Valuation £693.8m £584.0m Acquisitions Nil £61.6m Capital expenditure £8.0m £3.8m Capital value return (l-f-l) 17.3% 17.8% Equivalent yield 3.56% 4.04% Reversion £4.0m £4.5m Reversion (£m) 17.2% 20.6% 10% 5% 25% 27.3 26.3 % of 2
Slide 60: Soho
60 Soho 7% of our portfolio Sept 2015 Sept 2014 Valuation £215.8m £181.0m Acquisitions £7.7m £8.1m Capital expenditure £0.9m £1.6m Capital value return 15.0% 16.2% Equivalent yield 3.62% 4.02% Reversion £1.5m £1.1m Reversion (£m) 20.5% 19% 15.7% 27% % of 8.8 current income 8.1 16% 7.3 7.0 £7.3m shop
Slide 61: Charlotte Street
61 Charlotte Street 3% of our portfolio Sept 2015 Sept 2014 Valuation £91.4m £67.8m Acquisitions £9.1m £3.7m Capital expenditure £0.6m £0.2m Capital value return 20.3% 15.8% Equivalent yield 3.52% 3.90% Reversion £1.1m £0.4m Reversion (£m) 9% 19% 39.3% % of 3.9 14.8% 10% current income £2.8m 3.1 2.8
Slide 62: Appendix 15: Key risks
62 Appendix 15 KEY RISKS Geographic Concentration Risk Economic risks Sustained fall in visitor numbers and/or spending could affect the Periods of economic uncertainty/lower confidence could reduce West End and our villages, leading to reduced occupier demand, consumer spending, tenant profitabilit
Slide 63: Disclaimer
63 Disclaimer This presentation may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or