Helical Plc · LSE:HLCL
Helical — Helical Bar — FY2014 Earnings Presentation
59 slides from Helical's earnings presentation, May 29, 2014
Slide 1: Full Year Results for the Year to 31 March 2014
Helical Bar plc THURSDAY 29TH MAY 2014 FULL YEAR RESULTS FOR THE YEAR TO 31 MARCH 2014 Helical Bar plc
Slide 2: Introduction
INTRODUCTION Fantastic results – maiden century – NOT OUT!!! The ‘Helical Model’ is alive and well Key drivers 200 Aldersgate, White City: £61m Investment gains £45m Strong pipeline – The Bower, Old Street; Clifton Street; Maple House; Barts Square; Creechurch Place; Hammersmith Town Hall
Slide 3: Financial
FINANCIAL FINANCIAL 3 Helical Bar plc
Slide 4: Headline Numbers
HEADLINE NUMBERS INCOME STATEMENT Mar 2012 Mar 2013 Mar 2014 Profit before tax £7.4m £5.0m £101.7m EPRA earnings £4.0m £2.8m £38.9m EPRA earnings per share 3.4p 2.4p 32.5p Final dividend per share 3.40p 3.70p 4.75p Up 28% BALANCE SHEET Mar 2012 Mar 2013 Mar 2014 Group’s share of property portfolio a
Slide 5: Income Statement
INCOME STATEMENT £m 150 £45.0m £140.1m 140 130 £8.8m 120 110 £17.8m £0.6m £101.7m 100 £65.3m £12.4m 90 80 70 60 50 40 £29.8m 30 20 10 0 Net rental Development Gain on sale and Total property Administration Performance Net finance costs Other net Profit before tax income and trading reval. of inv. re
Slide 6: EPRA Net Assets
EPRA NET ASSETS p 350 5.2p 18.6p 340 37.3p 330 2.0p 5.5p 320 310 300 32.5p 290 280 270 260 250 240 263.8p 312.7p 230 220 210 200 EPRA NAV at EPRA EPS Gain on sale and Derivative Development Other EPRA NAV Dividends EPRA NAV at 31 March 2013 revaluation of financial surplus realised adjustments 31 Ma
Slide 7: Helical – Loan to Value
HELICAL – LOAN TO VALUE 1000 100.0% Value £000’s LTV 900 90.0% 800 80.0% 700 70.0% Low of 28% 600 60.0% 500 50.0% 400 40.0% 300 30.0% 200 20.0% 100 10.0% 0 0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Value of property portfolio Loan to value 7 Helical Bar plc
Slide 8: Helical – Loan Expiry in Parent and Subsidiaries
HELICAL – LOAN EXPIRY IN PARENT AND SUBSIDIARIES £m Loan expiry analysis at 31 March 2014 (excludes JVs) • £80m 6% Retail Bond issued June 2013 120 • £75m four year revolving credit facility £100.8 £99.4 agreed with Barclays June 2013 consolidating 100 three existing facilities £87.1 £80.0 • £100m f
Slide 9: Helical – Loan Expiry in Joint Ventures
HELICAL – LOAN EXPIRY IN JOINT VENTURES Joint Venture loan expiry analysis at £m 31 March 2014 120 • £88m four year development facility 100 agreed with Deutsche Bank for first phase of the refurbishment of The 80 Bower, 207 Old Street • Conversion of €72m development 60 facility at Europa Centralna
Slide 10: Helical – Interest Rate Protection
HELICAL – INTEREST RATE PROTECTION 10 Helical Bar plc
Slide 11: Helical – Firepower
HELICAL – FIREPOWER At 31 March 2014 Unutilised bank facilities £106.8m Cash £79.0m Uncharged Properties (at fair value) £82.1m 11 Helical Bar plc
Slide 12: Performance Related Awards
PERFORMANCE RELATED AWARDS 2013 2014 £m £m Directors ‐ Share Awards Charge 2.4 7.7 ‐ Deferred Payments 0.8 2.9 ‐ Cash Payments 2.5 4.7 Senior management / staff 0.3 0.4 Payroll taxes 0.8 2.1 Total charge in the year £6.8 £17.8 12 Helical Bar plc
Slide 13: Development
DEVELOPMENT DEVELOPMENT 13 Helical Bar plc
Slide 14: Development Strategy
DEVELOPMENT STRATEGY Aim to be ‘Equity Lean’ ‐ To use equity aggressively and to maximise returns by: • Participation in profit share situations where no equity is required. We will minimise our fee to maximise profit share e.g. 200 Aldersgate • Reducing upfront equity required by entering into cond
Slide 15: Development – 200 Aldersgate, London EC1 Result
DEVELOPMENT – 200 ALDERSGATE, LONDON EC1 RESULT • Building refurbished in 2010 • Launched January 2011 • By June 2013 342,000 sq ft of offices fully let to 19 office tenants, Virgin Active, Giant and Pret a Manger • Building sold in September 2013 to clients of Ashby Capital LLP • Helical profit sha
Slide 16: Development – White City, London W12 Result
DEVELOPMENT – WHITE CITY, LONDON W12 RESULT • Joint venture with Aviva Investors • Planning obtained for 1.5m sq ft residential led mixed use scheme • Site sold in September 2013 to neighbouring landowner Imperial College for campus expansion and enabling development • Helical profit share on c £1.5
Slide 17: Development – The Bower, 207 Old Street, London EC1
DEVELOPMENT – THE BOWER, 207 OLD STREET, LONDON EC1 • Acquired in December 2012 jointly with Crosstree Real Estate Partners for £60.75m. Crosstree Real Estate Partners two thirds and Helical Bar Plc one third. Additional “waterfall” to Helical above IRR parameters • Existing income from: Office 207
Slide 18: Development – The Bower, 207 Old Street, London EC1
DEVELOPMENT – THE BOWER, 207 OLD STREET, LONDON EC1 • Complete Phase 1 April 2015 • Phase 2 The Tower 171,900 sq ft. Start summer 2015 16 month programme • Retail parade ‐ asset management ‐ basement let to Gym Box • Potential profit £20m + 18 Helical Bar plc
Slide 19: Development - Maple House, London EC1
DEVELOPMENT - MAPLE HOUSE, LONDON EC1 • Contemporary re‐invention of the façade • Cutback to create a better relationship with Wesley’s House • Planning permission granted February 2014 • Start on site May 2014. Completion June 2015 • Fixed price construction contract 19 Helical Bar plc
Slide 20: Development - Maple House, London EC1: Our Approach
DEVELOPMENT - MAPLE HOUSE, LONDON EC1 Our Approach • Work with existing façade but increase window sizes and full height glazing to ground floor • Cut back ground floor to allow light to basement • Add an additional floor of offices on top, increasing net internal area in total to circa 62,000 sq ft
Slide 21: Development – Creechurch Place, London EC3
DEVELOPMENT – CREECHURCH PLACE, LONDON EC3 • Revised planning for entrance to be on Creechurch Place and loading bay / servicing in Mitre Street • 271,386 sq ft NIA office on 17 floors and 2,227 sq ft retail • Demolition to ground completed. Building contract with Skanska with practical completion S
Slide 22: Development – Creechurch Place, London EC3
DEVELOPMENT – CREECHURCH PLACE, LONDON EC3 • Joint venture signed with HOOPP. Project funded 90:10 HOOPP / Helical • Helical act as Development Manager for promote payment • Potential profit of between £10‐15m depending on rent levels and void period 22 Helical Bar plc
Slide 23: Development – Barts Square, London EC1
DEVELOPMENT – BARTS SQUARE, LONDON EC1 Acquired jointly with Baupost in March 2011. Baupost two thirds and Helical one third interest Planning consent granted for 19 buildings Two office building of 202,000 sq ft and 23,500 sq ft 215 residential apartments 21,800 sq ft retail and restauran
Slide 24: Development – Barts Square, London EC1
DEVELOPMENT – BARTS SQUARE, LONDON EC1 Phase 1 to comprise 94 residential units to commence January 2015. Marketing launch in September / October 2014 Phased vacant possession. Commence Phase 1 January 2015. Subsequent phases February and November 2016 Total development value of c. £540m Pot
Slide 25: Development - King Street, Hammersmith, London W6
DEVELOPMENT - KING STREET, HAMMERSMITH, LONDON W6 • Development agreement with Hammersmith & Fulham Borough Council and in a joint venture (50/50) with Grainger plc • Planning permission received 14th April 2014 for 196 homes, 40,000 sq ft council offices, 3 screen cinema together with retail / resi
Slide 26: Development – King Street, Hammersmith, London W6
DEVELOPMENT – KING STREET, HAMMERSMITH, LONDON W6 Two phase scheme with completion expected in 2017 and 2019 Profit potential c £10m to Helical 26 Helical Bar plc
Slide 27: Development - Scottish Power HQ, St. Vincent Street, Glasgow
DEVELOPMENT - SCOTTISH POWER HQ, ST. VINCENT STREET, GLASGOW Development Management Role on behalf of Scottish Power / Iberdrola New 220,000 sq ft (net) office HQ Construction under way with completion in 2015 25 year lease to Scottish Power, forward funded with M&G Fee based on % of const
Slide 28: Development – Helical Retail
DEVELOPMENT – HELICAL RETAIL Parkgate, Shirley Cortonwood • Residential sites sold • Planning consent secured at appeal for • 80,000 sq ft foodstore pre‐sold to Asda 80,000 sq ft open A1 non food retail park • 82,000 sq ft retail – 66% pre‐let • Start H1 2015 • Investment to be sold when fully let •
Slide 29: Development - Europa Centralna, Poland
DEVELOPMENT - EUROPA CENTRALNA, POLAND • Completed March 2013 Total area 66,275 sq m Let 56,759 sq m Gallery 95% Let Retail Park 77% Let • Helical exit in March 2015 29 Helical Bar plc
Slide 30: Development Scheme Review
DEVELOPMENT SCHEME REVIEW Property Partner HB Share Status Start on Site Area Cost Anticipated Potential exit Profit to come The Bower, Crosstree 33.3% Phase 1 Jan 2014 334,000 sq ft £180m 2016‐2017 £20m + 207 Old Street underway NIA office and retail Maple House None 100% Planning Commenced 61,000
Slide 31: Milestones: Targets to March 2014
MILESTONES: TARGETS TO MARCH 2014 Property March 2013 September 2013 March 2014 March 2015 200 Aldersgate Secure profit share Done Done White City Secure profit share Done Done The Bower, 207 Old Obtain planning consent Planning obtained start Done Completed Phase 1 Street Start on site on site Janu
Slide 32: Development – The Future
DEVELOPMENT – THE FUTURE • Heavily geared to ongoing growth and success of London • London population growing by 1 million over next 10 years • Forecast of 300,000 new jobs by 2020 – need over 4 million sq ft of office p.a. • Residential prices ‐ planning system ‐ safe haven ‐ pause for breath • No
Slide 33: Investment
INVESTMENT INVESTMENT 33 Helical Bar plc
Slide 34: Investment - Summary
INVESTMENT - SUMMARY • 8.1% capital growth (including sales and purchases) • 4th percentile in IPD (23.8 % p.a v 13.4% p.a) • 6.2% initial yield, 7.1% on letting voids, 7.5% reversionary yield (excluding Barts & Old Street) • £189m of acquisitions plus £21m forward commitment (2015) in Shoreditch an
Slide 35: Investment - Purchases and Sales Mar'13 to Mar'14
INVESTMENT - PURCHASES AND SALES MAR’13 TO MAR’14 HUDDERSFIELD £17.0m NEW LOOM HOUSE ENTERPRISE HOUSE £34.1m £30.8m PURCHASES MAPLE HOUSE £17.55 QUARTZ PORTFOLIO CHURCHGATE HOUSE ARTILLERY LANE £48.6m £34.0m 2 £6.8m 2 0 0 1 1 3 4 SALES BATTERSEA NOTTINGHAM £35.0m £7.4m ASDA, CLYDEBANK TK MAXX, CARDI
Slide 36: Investment - New Purchases: Churchgate and Lee House, Manchester
INVESTMENT - NEW PURCHASES: CHURCHGATE AND LEE HOUSE, MANCHESTER • Acquired off market for £34m, 5.9%, £136 psf • Reversion 10.4% when fully let • Rents £14.50 psf Lee House, £16.50 psf Churchgate House • 35% vacant on acquisition. 34,000 sq ft let since purchase • Running yield now 7.5% upon expiry
Slide 37: Investment - New Purchases: The Constellation Portfolio
INVESTMENT - NEW PURCHASES: THE CONSTELLATION PORTFOLIO • Acquired for £40.2m (post year end) • 8.3% net initial yield • Cash on cash 15% + • 10 assets – 7 industrial, 3 office • Opportunity to create value through managing breaks / expiries • Potential to trade selectively 37 Helical Bar plc
Slide 38: Investment - London Office Portfolio
INVESTMENT - LONDON OFFICE PORTFOLIO Property Net Rent March ERV Valuation Increase Key Events in the year ‘14 (including purchase costs) Shepherds Building, W14 £3.47m £5.26m 22% • £1.5m refurbishment completed • Open market letting completed at £37.50 psf (current average rent £25.00 psf) Enterpri
Slide 39: Investment - Retail Portfolio
INVESTMENT - RETAIL PORTFOLIO Property Cash on cash Key Events in the year returns Cardiff 7.3% • TK Maxx sold for £14.8m, 5.75% • Rent reviews with Molton Brown and White Stuff concluded at £175 ITZA • Phase 1 of Creative Quarter refurbishment completed and fully let. Phase 2 on site Corby 12.7% •
Slide 40: Retirement Villages
RETIREMENT VILLAGES No. Units Phase 1 Sold/ Start Complete Forecast Profit Profit Period Reserved Construction Construction to come Liphook 151 (of which N/A N/A Q1 ‘08 2012 £1.0m 2009‐2014 136 sold) Faygate, 171 (of which 5 48 22 Q2 ‘12 2017 £13.5m 2013‐2018 Horsham sold) Exeter 164 49 17 Q4 ‘13 20
Slide 41: Investment – The Future
INVESTMENT – THE FUTURE London for Capital Growth • Consistent tenant demand. Strong rental growth coming through • Yields already low • Upside often priced in • Discernment required to find value in deals Regions for Income • Occupational market getting stronger • Supply beginning to get soaked up
Slide 42: Conclusion
CONCLUSION • Great year ‐ want more – sit right in the sweet spot – exactly where we planned to be • Firepower for deals where we see value • Plenty to do within the existing portfolio • Development programme financially well structured and exciting • We remain highly focused, highly incentivised an
Slide 43: Appendix
APPENDIX APPENDIX 43 Helical Bar plc
Slide 44: Portfolio Split by Fair Value (HB Share)
PORTFOLIO SPLIT BY FAIR VALUE (HB SHARE) 44 Helical Bar plc
Slide 45: Portfolio Size
PORTFOLIO SIZE 45 Helical Bar plc
Slide 46: Investment Portfolio Changes. Helical Share of Book Value
INVESTMENT PORTFOLIO CHANGES. HELICAL SHARE OF BOOK VALUE 46 Helical Bar plc
Slide 47: Development Portfolio Changes. Helical Share of Book Value
DEVELOPMENT PORTFOLIO CHANGES. HELICAL SHARE OF BOOK VALUE Excludes Directors Surplus 47 Helical Bar plc
Slide 48: Portfolio Geography by Helical Equity
PORTFOLIO GEOGRAPHY BY HELICAL EQUITY 52% of Helical’s equity is deployed in London and the South East 48 Helical Bar plc
Slide 49: Investment Portfolio (Helical's Share)
INVESTMENT PORTFOLIO (HELICAL’S SHARE) Value (m) Equity (m) % by Value London office £259.2 £134.2 43.2 % Regional office £76.1 £33.5 12.7 % Industrial £12.4 £6.4 2.1 % In town retail £206.9 £86.3 34.4 % Out of town retail £38.7 £15.1 6.4 % Retirement village £7.4 £7.4 1.2 % Total £600.7 £282.9 100
Slide 50: Investment Portfolio Changes
INVESTMENT PORTFOLIO CHANGES Investment Mar 12 Mar 13 Mar 14 Change since Mar Portfolio 13 London Office 30.2% 35.9% 43.2% 7.3% Retail 61.0% 56.0% 40.8% ‐15.2% Industrial 5.3% 2.9% 2.1% ‐0.8% Regional Office 2.1% 3.7% 12.7% 9% Other 1.3% 1.5% 1.2% ‐0.3% Total 100% 100% 100% +£194m (£374m) (£407m) (£
Slide 51: Investment Portfolio
INVESTMENT PORTFOLIO Valuation increase of 8.1% in year to March, including capex, sales and purchase Equivalent Equivalent % of Portfolio Valuation Reversionary Initial Yield Yield Yield (HB Share) Change Yield (AiA) (True QiA) Industrial 2.1% 5.3% 8.7% 10.8% 9.0% 9.6% London Offices 43.2% 18.6% 4.
Slide 52: Trading & Development Portfolio (Helical's Share)
TRADING & DEVELOPMENT PORTFOLIO (HELICAL’S SHARE) Surplus Over Book Book Value Fair Value (m) Value % Value (Fair) (m) (m) Office £15.4 £21.3 £6.0 10.6 % Industrial £0.3 £0.4 £0.1 0.2 % Retail £25.1 £27.2 £2.0 13.5 % Retirement Village £64.6 £80.5 £15.9 40.1 % Change of Use £4.9 £8.3 £3.4 4.1 % Mixe
Slide 53: IPD
IPD 1 yr 3yrs 5yrs 10yrs 20yrs Helical 23.8 12.4 9.6 11.6 14.5 IPD 13.4 7.8 10.4 6.2 8.4 Helical’s Percentile 4 4 59 2 1 Rank 53 Helical Bar plc
Slide 54: Investment Portfolio Capital Value psf
INVESTMENT PORTFOLIO Average Capital Value Vacancy Rate Unexpired Lease psf (floor area) Term (years) Industrial £51 1.0% 10.2 London Offices £332 0.6% 6.1 Regional Offices £146 17.8% 7.4 Retail £129 3.5% 7.6 Total £185 4.6% 7.2 Note: Excludes London offices held vacant for refurbishment / redevelop
Slide 55: Helical – A Long Term Profit Generator (Net Rental Income)
HELICAL – A LONG TERM PROFIT GENERATOR (NET RENTAL INCOME) Passing Rents 40 Net Rental Income £37.7m £m In subsidiaries 35 In joint ventures £29.8m 30 25 £24.5m £22.9m £24.4m £23.0m 20 £17.9m £20.4m £17.9m £16.6m £19.6m £17.7m £14.9m £17.9m 15 £16.5m £16.4m £14.2m £14.8m £14.2m 10 5 0 2004 2005 2006
Slide 56: Investment Portfolio – Changes to Rental Values
INVESTMENT PORTFOLIO – CHANGES TO RENTAL VALUES Year to March 14 Year to March 2013 Industrial 0.0% ‐0.4% London Offices 7.3% 5.9% Regional Offices 0.0% 0.0% All Offices 5.0% 5.1% In Town Retail ‐0.5% ‐1.3% Out of Town Retail 0.0% 0.0% All Retail ‐0.5% ‐1.2% Total 2.1% 0.4% 56 Helical Bar plc
Slide 57: Investment Portfolio – Lease Expiries
INVESTMENT PORTFOLIO – LEASE EXPIRIES Lease expiries and tenant break options in: 2014 2015 2016 2017 2018 Percentage of rent 9.9% 9.6% 13.9% 11.8% 9.8% roll Number of leases 117 91 101 71 79 Average rent per £32,600 £40,400 £52,800 £63,900 £47,500 lease 57 Helical Bar plc
Slide 58: Asset Management Overview
ASSET MANAGEMENT OVERVIEW Rent % of rent roll Rent lost at break/expiry ‐£1.4m 3.7% Net rent lost through administration ‐£0.35m 0.9% New lettings and changes at lease renewal £2.0m 8.1% Rent reviews and RPI uplifts £0.1m 0.4% Net increase £0.35m 58 Helical Bar plc
Slide 59: Top Tenants (Helical Share of Rent)
TOP TENANTS (HELICAL SHARE OF RENT) Rank Tenant Tenant Industry % Rent Roll 1 Network Rail Infrastructure Ltd Infrastructure 5.4% 2 Endemol UK Media 4.1% 3 Barts and the London NHS Trust Government 3.2% 5 Nicholl Food Packaging Manufacturing 2.0% 4 Capita Life and Pensions Professional Services 2.0%