Workspace Group Plc · LSE:WKP
Workspace — H1 2019 Earnings Presentation
42 slides from Workspace's earnings presentation, Nov 14, 2018
Slide 1: The Workspace Advantage – Interim Results Investor & Analyst Presentation
The Workspace Oo Adva ntage WORKSPACE * eo. » ae XA BOSS ¢win aa Bas faltll,2) wae stor e technologies Huse BOSS gi PURSUIT >) Bult nutmeg (ane ewayfair aEQ (B) Citymapper BLUEBELLA® RPivrery Prince's Trust Giih) tine, FE vou AI Interim Results — Investor ROCOCO rotein & Analyst Presentation Chaosat
Slide 2: Agenda
AGENDA WORKSPACE QUESTIONS Jamie Hopkins Chief Executive Officer PERFORMANCE SUPPLEMENTARY Graham Clemett Chief Financial Officer INFORMATION DIRECTION Jamie Hopkins Chief Executive Officer 2 Investor and Analyst Presentation 14 November 2018
Slide 3: Workspace
WORKSPACE CM Delta Grand Union Studios, Ladbroke Grove
Slide 4: Performance and Growth
WORKSPACE Performance and Growth LIKE-FOR-LIKE PROJECTS ACQUISITIONS Strong demand Extensive pipeline Well positioned 4 Investor and Analyst Presentation 14 November 2018
Slide 5: Results
WORKSPACE Results Active Management September 2018 March 2018 Change Rent Roll (lfl) £76.8m £74.8m 2.7% Rent per sq. ft. (lfl) £38.88 £37.82 2.8% Enquiries (per month) 1,020 1,016 0.4% Occupancy (lfl) 91.8% 92.0% 0.2% Property Valuation £2,435m £2,280m 2.6%* Capital Value per sq. ft. (lfl) £592 £573
Slide 6: Customer Data
WORKSPACE Customer Data WORKSPACE CRM WORKSPACE STORES DATA ALLOWS SYSTEM CAPTURES DATA AND CONTROLS THE DATA WORKSPACE TO ANALYSE TRENDS AND ACT WITH INSIGHT 6 Investor and Analyst Presentation 14 November 2018
Slide 7: Sector Diversity
WORKSPACE Sector Diversity Professional, Technical and Consultancy Services Arts, Entertainment & Recreation Engineering Film/Video Production Business Consultancy Photography Architecture Television Programme Production 12% Public Relations & Communications Music 18% Information, Communication & Te
Slide 8: Income Diversity
WORKSPACE Income Diversity Banding of leases by rent (number) 15% 18% <£5,000 • Average rent: £33,000 p.a. £5,000 – £9,999 £10,000 – £19,999 • Average space: 900 sq. ft. 15% 18% £20,000 – £29,999 • Top 10 customers: 13% of total 11% £30,000 – £49,999 <£5,000 rent roll >£50,000 £5,000 – £9,999 £10,00
Slide 9: Lease Diversity
WORKSPACE Lease Diversity Lease maturity by Rent (%) • As at 30 September 2018 100% • Majority of customers on 2 and 3 year leases 90% 80% • Flexible approach 76 70% 60% All leases from commencement by Rent (%) 50% 100% 40% 80% 30% 60% 60 20% 40% 13 10% 20% 16 19 6 5 5 0% 0% 0-3 years 4-6 years 7-9
Slide 10: Customer Retention
WORKSPACE Customer Retention Existing customers New customers 73% retention rate 523 372 352 262 126 Renewals Expansions Contractions LFL space New space • Total leasing activity for year ended 31 March 2018 • 1,635 deals in total • c.70% average retention rate over last three years 10 Investor and
Slide 11: Performance
PERFORMANCE Output Group The Record Hall, Farringdon
Slide 12: Income Statement
PERFORMANCE Income Statement September September £m 2018 2017 Change Net Rental Income 54.1 46.1 +17% Administrative Expenses (8.4) (8.0) +5% Net Finance Costs (10.3) (8.7) +18% Adjusted Trading Profit after Interest 35.4 29.4 +20% Investment Property Surplus 60.6 71.2 Profit on Sale of Investment P
Slide 13: Net Rental Income
PERFORMANCE Net Rental Income Net rental income (£m) 60 5.5 55 54.1 (1.1) 1.7 50 2.6 (0.7) 46.1 45 40 6 months Like-for-like Completed Current Acquisitions Disposals 6 months to Sep 17 Properties Projects Projects to Sep 18 13 Investor and Analyst Presentation 14 November 2018
Slide 14: Like-for-like Properties
PERFORMANCE Like-for-like Properties Rent Roll Growth Occupancy 12% 100% 10.5% 10% 9.2% 95% 8% 6.6% 7.1% 6% 6.2% 90% 5.6% 4% 3.9% 4.4% 4.1% 4.3% 2.7% 85% 2% 0% 80% Sep 13 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Sep 13 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep
Slide 15: Completed Projects +£8.9m
PERFORMANCE Completed Projects Rent Roll (£m) • Represents 14% of total rentroll • 5 projects completed in H1 30 • 18% increase in rent roll over the six months 25.4 25 +£8.9m 20 16.5 15 China Works – refurbishment completed June 2018 10 5 0 Sep 18 Future Notes: • Future rents based on the assumptio
Slide 16: Projects Underway +£15.6m
PERFORMANCE Projects Underway Rent Roll (£m) • Represents 4% of total rent roll • 13 projects underway delivering 560,000 sq. ft. of new and upgraded space 30 • 5 projects completing during H2 25 +£15.6m 20.6 20 15 The Light Box – completing December 2018 10 5 5.0 0 Sep 18 Future Opening in 2018 Ope
Slide 17: Recent Acquisitions +£4.5m
PERFORMANCE Recent Acquisitions Rent Roll (£m) • Represents 6% of total rent roll • Centro Buildings to be progressively repositioned as a business centre location 15 • Long Lane acquisition opening in H2 +£4.5m 11.0 10 6.5 Centro Buildings – acquired Feb and April 2018 5 0 Sep 18 Future Note: • Fut
Slide 18: Future Rent Roll Growth
PERFORMANCE Future Rent Roll Growth Rent Roll (£m) 190 170 + £29.0m 150 + LFL Growth 4.5 144.0 15.6 130 8.9 115.0 110 90 70 50 Sep 18 Completed Projects Recent Future Rent Roll Like-for-like Future Projects Underway Acquisitions ex Like-for-like Assumptions Rent Roll Notes: • Not a profit forecast,
Slide 19: Cash Flow
PERFORMANCE Cash Flow £m September 2018 September 2017 Trading Net Cash from Operations after Interest 24 33 (8) 11 Dividends Paid (32) (22) Investment Capital Expenditure (49) (35) Purchase of Investment Properties (100) (256) Property Disposals 52 80 75 (191) Capital Receipts 4 23 Share Placement
Slide 20: Balance Sheet
PERFORMANCE Balance Sheet September March £m 2018 2018 Investment Property Valuation 2,435 2,280 Net Debt (450) (517) Other (26) (50) Net Assets 1,959 1,713 Equivalent Yield (LFL) 6.3% 6.5% Net Initial Yield (LFL) 5.3% 5.4% EPRA NAV per Share £10.75 £10.37 Loan to Value 18% 23% 20 Investor and Analy
Slide 21: Property Valuation
PERFORMANCE Property Valuation Property Valuation (£m) 2,500 88 2,450 2,435 (43) (4) 2,400 52 2,350 62 2,300 2,280 2,250 2,200 2,150 2,100 2,050 2,000 Mar 18 Revaluation Capital Acquisitions Disposals Capital Sep 18 H1 Expenditure Receipts 21 Investor and Analyst Presentation 14 November 2018
Slide 22: Revaluation
PERFORMANCE Revaluation Valuation Uplift/(Deficit) Main components ERV per sq. ft. up 0.3% £4m Like-for-like £1,274m £35m Equivalent Yield in 0.2% £31m The Frames, Shoreditch £14m Completed Projects £420m £18m China Works, Vauxhall £3m Current Refurbishments £378m £4m Vox Studios (phase 2), Vauxhall
Slide 23: Debt
PERFORMANCE Debt September 2018 March 2018 Net Debt £450m £517m Average Interest Cost 3.8% 4.3% Undrawn Revolver Facilities and Cash £158m £148m Marginal Cost (Undrawn Facilities) over LIBOR 1.5% 1.5% Average Period to Maturity 5.4 years 5.5 years Facilities By Type (%) Maturity Profile (£m) £250m £
Slide 24: Debt update
PERFORMANCE Debt update • The Shepherds Building acquired for £125m (plus costs) in October 2018 • Additional £100m 364-day revolver facility put in place • Workspace has been assigned a BBB (stable) rating by S&P Proforma Impact September 2018 Proforma Net Debt £450m £570m Total Facilities and Cash
Slide 25: Direction
DIRECTION Smartology Metal Box Factory, Southwark
Slide 26: Future Growth
DIRECTION Future Growth LIKE-FOR-LIKE PROJECTS ACQUISITIONS Strong demand Extensive pipeline Well positioned 26 Investor and Analyst Presentation 14 November 2018
Slide 27: Demand
DIRECTION Demand 1,400 1,200 1,000 800 600 400 200 0 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 Mar 18 Jun 18 Sep 18 Monthly Enquiries Rolling 3 months 27 Investor and Analyst Presentation 14 November 2018
Slide 28: Project Pipeline (sq. ft.)
28 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 China Works The Biscuit Factory – Cocoa Studios Projects The Fuel Tank DIRECTION Projects complete The Frames Project Pipeline (sq. ft.) Edinburgh House 2018 Goswell Road Vox Studios (Phase 2) Gray’s Inn Road Projects u
Slide 29: Projects
DIRECTION Projects The Frames, Shoreditch • Formerly 22,000 sq. ft. low grade office building • Granted planning consent in 2015 for new 49,000 sq. ft. business centre • £25m capital expenditure • Launched in September 2018 • 27% occupancy at 9 November 2018 Edinburgh House, Vauxhall • Acquired in J
Slide 30: Acquisitions
DIRECTION Acquisitions • Acquired for £125m • £835 capital value per sq. ft. • 150,000 sq. ft. of office space • Net initial yield of 4.8% • 32 customers with an average passing rent of £45.60 THE SHEPHERDS BUILDING 30 Investor and Analyst Presentation 14 November 2018
Slide 31: Acquisitions – The Shepherds Building
DIRECTION Acquisitions THE SHEPHERDS BUILDING 31 Investor and Analyst Presentation 14 November 2018
Slide 32: Outlook
DIRECTION Outlook Strong Extensive Well demand pipeline positioned Underpinned by Asset ownership Customer relationships THE WORKSPACE ADVANTAGE 32 Investor and Analyst Presentation 14 November 2018
Slide 33: Questions
QUESTIONS KSW Studio Q West, Brentford
Slide 34: Supplementary Information
SUPPLEMENTARY INFORMATION Nutmeg Vox Studios, Vauxhall
Slide 35: Appendix 1 Refurbishment Projects
Appendix 1 Refurbishment Projects Actual/ Estimated Estimated Estimated Cost to Estimated Unaffected Upgraded New Space ERV Rent at 90% September 2018 At September 2018 Valuation cost Complete Completion area (sq. ft.) area (sq. ft.) (sq. ft.) (Average) occupancy* Rent Roll Completed The Record Hall
Slide 36: Appendix 2 Redevelopment Projects
Appendix 2 Redevelopment Projects Commercial space returned Other proceeds Commercial September Space Development 2018Rent estimated Residential New Space Estimated Estimated Cash Cash to Overage to At September 2018 partner Valuation Roll completion units no. (sq. ft.) ERV Rent* received come come
Slide 37: Appendix 3 Business Overview
Appendix 3 Business Overview • FTSE 250 Real Estate Investment Trust (REIT) • Provide inspiring, flexible work spaces withsuper- fast technology in dynamic locations • Established in 1987 and listed on the London Stock Exchange since 1993 • Home to thousands of businesses, from early stage start-ups
Slide 38: Appendix 4 The Workspace Advantage
Appendix 4 The Workspace Advantage Our Strategy Our Investment Case Right Market: We continue to believe that • Strong and consistent property London is the right market with growing and financial returns. demand from all types of businesses. • Completed projects driving rental Right Properties: We
Slide 39: Appendix 5 Competitive landscape
Appendix 5 Competitive landscape 39 Investor and Analyst Presentation 14 November 2018
Slide 40: Appendix 6 Like-for-like Properties
Appendix 6 Like-for-like Properties Rent per sq. ft.(£) 90 80 70 60 50 40 30 20 10 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Like-for-like average rent per sq. ft. 40 Investor and Analyst Presentation 14 November 2018
Slide 41: Appendix 7 Property Portfolio
Appendix 7 Property Portfolio 41 Investor and Analyst Presentation 14 November 2018
Slide 42: Disclaimer
Disclaimer The information in this document may include forward-looking statements, As a result, you are cautioned not to place reliance on such forward- which are based on current expectations and projections about future events. looking statements as a prediction of actual results or otherwise. Th