SEGRO plc · LSE:SGRO
SEGRO — Slough Estates — Investor Presentation (2004)
36 slides from SEGRO's investor presentation, 2004
Slide 1: Slough Estates Investor Presentation Autumn / Winter 2004
Slough Estates Investor Presentation Autumn / Winter 2004 www.sloughestates.com 1
Slide 2: Key Facts
Key Facts • Over 1,700 customers worldwide • 3 million sq.m. (33m sq.ft.) of space on 1,000 hectares (2,500 acres) of land • £223 million net rental income – December 2003 • £135.7 million core property income – December 2003 (Core property income = investment and JV property income less administrat
Slide 3: Five Year Return
Compound p.a. mid ‘00 – mid ‘04 Five Year Return Compound Growth p.a. • Core property income 7.9% • Pre-tax adjusted 5.7% • EPS adjusted 6.5% • NAPS – diluted 6.2% • Dividend 6.0% 3
Slide 4: Investment Portfolio by value, by sector
By value, by sector Before Land Securities asset swap UK Investment Portfolio Worldwide Retail 22% Retail 16% 3% 17% 51% 15% 60% 16% Business Space 84% Business Space 78% After Land Securities asset swap Worldwide UK Retail 8% Retail 9% 3% 13% 15% 16% 63% 73% Business Space 92% Business Space 91% In
Slide 5: Investment Portfolio by value, by location
By value, by location UK Continental Europe Midlands & The North Investment Portfolio Slough Belgium France 9.2% Other South 40.4% 60.9% 39.1% 22.3% Thames Valley 28.1% Worldwide USA 13.6% UK Europe 79.1% 7.3% Includes share of joint ventures Excludes land and construction in progress and trading pr
Slide 6: Investment Portfolio by Value
by Value £ million Industrial Office R&D Retail Total Land & Built WIP Investment Portfolio UK Slough 743 197 62 117 1,119 11 Thames Valley 642 113 5 19 779 12 Other South 518 54 8 40 620 102 Midlands & North 120 50 5 80 255 36 2,023 414 80 256 2,773 161 Overseas San Diego - - 90 - 90 20 San Francis
Slide 7: Worldwide Security of Income
Worst case scenario Before Breaks 91% of income secured for 5 years 300 64% of income secured for 10 years Worldwide Security of Income Worst Case 73% of income secured for 5 years 50% of income secured for 10 years 250 200 £m 150 100 50 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total
Slide 8: Quality of Income & Covenant
Diverse customer base Quality of Income & Covenant • Over 1,700 customers across the portfolio, operating in multiple sectors • Unexpired lease length 11.5 years (as at December 31 2003) Top 10 customers Annual Rent Annual Rent £m £m 1 Amgen USA 12.0 6 O2 UK 3.6 2 Mars UK UK 6.8 7 Celltech UK 2.7 3
Slide 9: Strategic Review 2003
Focus on business space Strategic Review 2003 • Focus on flexible business space – in existing areas – exploring other opportunities in Continental Europe • Develop a more open and performance driven culture • Identify and exploit niche property situations overseas • Focus on increasing occupancy le
Slide 10: Strategy Update 1
Focus on flexible business space • Internal re-organisation and incentivisation Strategy Update 1 • Start of asset sales – Quail West – Retail portfolio – North American portfolio except Californian health science property business • Decision to stay in the Californian health science property busine
Slide 11: Strategy Update 2
Focus on flexible business space Strategy Update 2 • Sharper focus on European portfolio – strengthening of European team – expand well established operations in Belgium, France and Germany – continue to hold in most tax efficient structure possible • Acquisition and development opportunities – Over
Slide 12: Acquisitions
Total Cost £30.9m Acquisitions • 2.86 ha Parcelforce site at Winnersh Triangle including building of 10,708 sq.m. • 10,131 sq.m. on a 2.83 ha site in Belgium adjacent to Pegasus Park • 19.5 ha site at Parkway, Poway, San Diego Winnersh Triangle Poway, San Diego Architect’s impression 12
Slide 13: HelioSlough
Large scale distribution parks 50/50 joint venture with Helios Properties with £150 million to invest HelioSlough Nimbus Park, Thorne, S. Yorks • 23.5 ha of development land • Outline planning permission for a single distribution/manufacturing unit Sheffield of 98,228 sq.m., subject to completion •
Slide 14: Current Developments
Current Developments sloughestates ™ 14
Slide 15: Current Developments
Development cost approx £1bn • Total future development cost: £1bn approx Current Developments • Total incremental rents: £100m – £120m approx Six Major Size Spend to Estimated Anticipated Schemes sq.m. date development completion £m cost to come date £m Farnborough 153,000 109 317 2013 Cambridge 40
Slide 16: Developments
Increased starts for 2004 Completed in Under Possible Starts Developments H1 2004 Construction as in H2 2004 at 30 June 2004 sq.m sq.m sq.m UK 3,372 18,772 25,066 Belgium - 22,240 16,100 France 16,496 2,310 - Germany - 22,638 11,500 USA 18,821 - 45,428 Total sq. m. 38,689 65,960 98,094 % let, commit
Slide 17: Three Regions
Business Space UK Business Space Three Regions 22 1. Slough 2. Cambridge 44 11 55 3. Farnborough 33 4. Reading 5. West London Continental Europe Californian Health Science Business Space 17 Property
Slide 18: United Kingdom
Major Slough Estates Holdings 1. SLOUGH United Kingdom 2. CAMBRIDGE 3. FARNBOROUGH 4. READING 5. WEST LONDON 22 44 11 5 66 5 33 18
Slide 19: Farnborough
Business Park Farnborough Computer graphic • Total consented space: 155,000 sq.m. gross offices / R&D • 11,500 sq.m. completed and 45% let • Approximate cost on completion: £426m • Rent roll on completion: £37m p.a. www.innovatelocate.com 19
Slide 20: Brussels Airport
Pegasus Park Brussels Airport • Prime Brussels Ring airport location • Total consented space: 276,000 sq.m. • Completed 106,000 sq.m., 95% let • Total further cost: £147m • Additional Rent roll on completion: £21.4m p.a. 20
Slide 21: South San Francisco
Health science cluster • Existing health science cluster South San Francisco around Genentech • Existing Floorspace: 133,000 sq.m. • Four sites: Oyster Point, East Grand, Pointe Grand 2 and 333 Oyster Point • Total consented space: 101,000 sq.m. • In planning: 29,000 sq.m. • Total cost: £297.6m • Ad
Slide 22: Le Blanc Mesnil, Paris
Flexible business space Le Blanc Mesnil, Paris • Acquired in June 2003 • Total consented new space: 34,000 sq.m. • Under construction: 2,310 sq.m., 100% pre-let • 7,472 sq.m. completed in first half of 2004 • Total further costs: £10.7m • Rent roll on completion: £2.2m p.a. 22
Slide 23: Slough Trading Estate
Post 1990 developments Slough Trading Estate 23
Slide 24: Interim Results
Interim Results sloughestates ™ 24
Slide 25: Interim Results Summary
Summary 2004 Half 2003 Half 2003 Full % change Interim Results year year year Core property income £73.8m £71.9m £135.7m +2.6 Profit before tax £76.1m £71.1m £140.1m +7.0 Earnings per share 14.1p 13.9p 27.6p +1.4 Dividends per share 6.15p 5.8p 15.0p +6.0 Net assets per share - diluted 532p 514p 505p
Slide 26: Rental Income
Net rental income of £119.7m Rents Net Half Half Half Half Rental Income 2004 2003 2004 2003 £m £m £m £m UK 89.4 81.9 80.3 74.8 Overseas - Canada 0.9 1.0 0.8 1.5 - USA 30.4 24.6 28.5 24.4 - Europe 10.4 10.8 10.1 10.7 Total Overseas 41.7 36.4 39.4 36.6 Total 131.1 118.3 119.7 111.4 Share of Property
Slide 27: Cashflow / Net Borrowings
Strong cash generation Cashflow / Net Borrowings 2004 2003 Half year Half year Restated £m £m Cash generation 119.7 109.8 Interest and dividends (net) (94.1) (92.8) Tax paid (net) (5.9) (3.6) 19.7 13.4 Investment property expenditures (42.0) (62.1) Investment property sales 3.6 58.3 Others (1.3) (18
Slide 28: Balance Sheet
Strong balance sheet June Dec 2004 2003 restated Balance Sheet Total assets (excluding cash) £4,232m £4,101m Net borrowings £1,516m £1,508m - Average interest rate of 6.67% - Gross Interest cover of 2.2 times (2003 2.0 times) Shareholders’ funds £2,497m £2,369m Gearing: Net borrowings 61% 64% Equity
Slide 29: Net Asset Value
Increase per share 5.3% Net Asset Value Diluted £m Pence/share End 2003 net asset value 2,369.2 505 Retail valuation surplus 39.3 8 Industrial valuation surplus 61.0 13 Office valuation surplus 6.3 1 Development land valuation deficit (0.4) - Retained earnings 33.2 7 Other (11.6) (2) Mid 2004 net as
Slide 30: Occupancy
Exceeds 90% Occupancy 2004 Excluding Including Completed Construction in Construction in Area Progress Progress 30.06.04 31.12.03 30.06.04 31.12.03 000’s sq m Based on area % % % % 1,956.3 UK 89.2 89.4 88.7 89.4 71.2 Canada 90.5 79.9 90.5 79.9 435.9 USA 92.3 87.3 92.3 87.8 502.9 Europe 92.2 92.8 86.
Slide 31: Summary
Summary • Group occupancy improving • Increased focus on flexible business space • Long term attractions of targeting the most dynamic business regions • Expertise in Californian health science sector • Active recycling of capital to finance the development programme 31
Slide 32: Appendices
Appendices sloughestates ™ 32
Slide 33: Cambridge Research Park
Research Park Cambridge • Total consented space: 63,200 sq.m. office / R&D, plus hotel • 19,200 sq.m. completed and 57% let • Cost on completion: circa £93m • Rent on completion: circa £8m www.cambridgeresearchpark.com 33
Slide 34: San Diego Torrey Pines Science Centre
Torrey Pines Science Centre San Diego Total floor area: 71,367 sq.m. AAA covenant Leased for 13 years Total cost, circa: £96.6m Rent roll on completion: £12.9m p.a. 34
Slide 35: Kapellen, Germany Distribution Park
Distribution Park Kapellen, Germany • Distribution park located outside Düsseldorf • Phase I: 6,799 sq.m. light industrial accommodation sold to Aareal Property Services • Phase II: 22,748 sq.m. logistics space, let to DHL Solutions and sold to Aareal Property Services • Phase III: 4.6 ha. Planning
Slide 36: Slough Trading Estate
Heart of the portfolio Slough Trading Estate • 200 hectares (500 acres) • 700,000 sq.m. (7.5m sq.ft.) • 388 customers 36