Great Portland Estates plc · LSE:GPE
Great Portland Estates — FY2012 Earnings Presentation
41 slides from Great Portland Estates's earnings presentation, May 2012
Slide 1: Preliminary Results Presentation 2012
Preliminary Results Presentation 2012! 6OMPDLJOH QPUFOUJBM
Slide 2: Agenda; Strong Performance
Agenda! Introduction !Toby Courtauld! !Chief Executive! Financial Results !Nick Sanderson, Finance Director! Market !Toby Courtauld, Chief Executive ! Acquisitions & Disposals! Asset Management !Neil Thompson, Portfolio Director! Development! Portfolio Positioning !Toby Courtauld, Chief Executive! O
Slide 3: A significant opportunity; Headline Results
A significant opportunity! Supportive market! - 100% central London! - 79% West End! - 83%1 within 800m of a Crossrail station! Exceptional development - Near term profits in undersupplied market! programme! - Medium / longer term potential! Revenue growth! - Developments - Low portfolio rents - Por
Slide 4: Total Property Return vs IPD Central London Index
Total Property Return vs IPD Central London Index! Years to 31 March! 40.0! To March 2012! GPE! IPD! Relative! GPE! 30.0! Capital return! 9.2%! 7.5%! +1.7%! IPD central London! 20.0! Relative! 10.0! 0.0! -10.0! -20.0! -30.0! 2002! 2003! 2004! 2005! 2006! 2007! 2008! 2009! 2010! 2011! 2012! Source: I
Slide 5: Financial Highlights; EPRA NAV per share
Financial Highlights! Balance Sheet March 12 March 11 Change Portfolio value1 £2,008m £1,655m 9.2%2 EPRA NAV per share 403p 360p 11.9% EPRA NNNAV per share 395p 362p 9.1% Loan-to-property value1 34.2% 31.1% 3.1pps Income Statement March 12 March 11 Change (%) EPRA PBT £17.4m £50.4m -65.5% EPRA EPS 5
Slide 6: EPRA Profit Before Tax; Income Statement Update
EPRA Profit Before Tax1 Year to March 2012! £m 60.0! 50.0! 40.0! -16.2! 30.0! -1.1! -2.3! 50.4! 1.5! 20.0! -8.7! -2.6! -3.6! 10.0! 17.4! 0.0! Mar-11! Surrender Rental income! Property costs! Adjusted JV Joint Venture Admin costs! Net interest! Mar-12! premium! profits! fees! 1. Adjusted per EPRA gui
Slide 7: Potential additional rent roll; Debt Analysis
Potential additional rent roll1 from Committed Developments £m, CBRE rental estimates March 2012! 28! Unlet 25.4 24! Pre-let Walmar House, W1 3.2! 20! 79/97 Wigmore St, W1 3.7! 11.1! 240 Blackfriars Rd, SE1 2.8! 16! 1.4! City Tower, EC2 2.5! 240 Blackfriars Rd, SE1 12! 8! 7.0! 33 Margaret St, W1 14.
Slide 8: Significant financing activity
Significant financing activity Extending debt maturity profile! £m! 400! As at 31 March 2011! 350 350! 300! 250! 200 200! 150! 143 1131 100! 50! 401 281 0! 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2029 1. JV facilities amount shown at GPE share 14! Significant financing activity Extend
Slide 9: Financial and Operational Strength; Key Financial Messages
Financial and Operational Strength! Diversified Debt Funding Sources1 Secured Committed capital expenditure of £117.2m ! 2013! £67.5m! Pro forma gearing 2014! £43.4m! post capex 49.7%2! 2015+! £6.3m! Debenture Bonds JV Bank Debt Financing development pipeline! 20% 26% – Significant undrawn facilitie
Slide 10: Agenda; Market Messages
Agenda! Introduction !Toby Courtauld, Chief Executive! Financial Results !Nick Sanderson, Finance Director! Market !Toby Courtauld Acquisitions & Disposals !Chief Executive! Asset Management !Neil Thompson, Portfolio Director! Development! Portfolio Positioning !Toby Courtauld, Chief Executive! Outl
Slide 11: Investment Market Balance
Investment Market Balance! Prime West End yield gap over 10 year gilts1! London Asset Supply and Equity Demand! 6! Nov 2011! May 2012! Nominal Yield Gap! Real Yield Gap! Asset Supply2! 4! City! £3.8bn! £2.4bn! 2! West End! £1.2bn! £1.3bn! £5.0bn! £3.7bn! 0! Equity Demand3! £16.8bn! £18.5bn! %! -2! 3
Slide 12: Development; Demand
Development Central London Office Potential Completions! Million sq ft 16 CBRE May 2011! CBRE May 2012! GPE May 2012! Grade A vacancy rates! 14 West End! 1.5%! 12 City! 4.6%! 10 8 6 4 2 0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Source: CB Richard Ellis / GPE 2
Slide 13: Active Demand; Rent Forecasts
Active Demand Central London Offices Software company locations in Europe in 20111! West End Active Demand2! Govt. 5%! 0! 5,000! 10,000! 15,000! 20,000! 25,000! Professional Svs. 5%! Financial Svs. ! London! 23,740! 18%! TMT 43%! Paris! 15,510! Manufacturing & ! Corporates 8%! Madrid! 8,387! Misc. 2
Slide 14: Agenda; Recycling Capital
Agenda! Introduction !Toby Courtauld, Chief Executive! Financial Results !Nick Sanderson, Finance Director! Market !Toby Courtauld! Acquisitions & Disposals!Chief Executive! Asset Management !Neil Thompson, Portfolio Director! Development! Portfolio Positioning !Toby Courtauld, Chief Executive! Outl
Slide 15: Acquisitions
Acquisitions 200 & 214 Grayʼs Inn Road, WC1! Rathbone Place, W1! - £66m1! - £120m, £300 psf! - 35% discount to replacement cost! - £4.6m rent! - 6.4% NIY at £31 psf! - Significant opportunity! - 8.4% cash on cash yield! Since half year! Broadwick St, W1! Kingsland House & Carrington Walmar House, Ho
Slide 16: Acquisitions; Agenda
Acquisitions Kingsland House / Carrington House, Regent St, W1! – £48.7m, NIY 4.7%, LLH! – £41.75 psf average office rents ! – £253 ZA average retail rent The Opportunity! – Refurb / redev ! – Area gain up to 50% ! – Grade A offices! – Reconfigure retail to capture reversion ! – Improving pitch: Bur
Slide 17: Asset Management
Asset Management Activity 12 months to March 2012! - Enhance income! - Record leasing year (88 transactions)! - £25.2m of rent, GPE share £20.9m! - WAULT 5.7 years (8 years with pre-let income)! - Capture reversions! - Portfolio 13.5% reversionary! - Tenant retention! - 97% retained / relet / refurb
Slide 18: Asset Management: Jermyn Street Estate; Agenda
Asset Management Jermyn Street Estate, W1 ! Interims November 2011! – Revised strategy (relet / refurbish) ! – VP timing and cost excessive! – Lower risk / lower capex! – Completion June 2012! Sept 2011! March 2012! Avg passing office £48.00! £56.50! +17.7%! rent (psf)! Avg office ERV £52.00! £57.00
Slide 19: Development: Completed projects
Development Completed projects New Income building Cost2 secured Office Profit on Completion area1 £m £m avg £psf cost3 % let4 184/190 Oxford St, W1 Sold 26,400 - - n/a 24.7% 100% 24/25 Britton Street, EC1 Nov 2011 51,300 - 1.6 31.25 47.6% 100% 23/24 Newman Street Oct 2011 24,900 - 0.2 n/a 4.3% - (r
Slide 20: Development: Committed projects; Pre-Letting Activity
Development Committed projects Profit sensitivity to shifts in yield and rent1! Yield £m +0.50% +0.25% Current -0.25% -0.50% -£5.00 88.1 91.3 95.3 100.3 106.3 -£2.50 94.8 98.0 102.2 107.4 113.6 Rent psf1 Current 101.4 104.8 109.1 114.4 120.8 +£2.50 108.1 111.5 116.0 121.4 128.0 +£5.00 114.8 118.3 12
Slide 21: Committed Project: Wigmore St; Walmar House
Committed Project 95 Wigmore St, W1 - On site - Completion June 2013 - Early tenant interest - Prime location - 111,400 sq ft prime office / retail space - 12,500 sq ft floor plates - £78.25 psf1 ERV March 2012 - Low supply West End market GPE profit on cost 35.8% Ungeared IRR 17.6% Yield on cost 6.
Slide 22: Committed Project: City Tower; Near Term and Pipeline
Committed Project City Tower, EC21 - Grade A refurbishment - Completion June 2013 - Core City location - £44.00 psf ERV March 2012 - <10,000 sq ft tenant market is most active GPE profit on cost 20.2% Ungeared IRR 17.0% Yield on cost 7.6% 1. Owned in Great Star Partnership 42! Development Near Term
Slide 23: Development: Near Term and Pipeline
Development Near Term and Pipeline! Planning New build Start Ownership Status area (sq ft) Near Term 12/14 Fetter Lane, EC4 Consented 139,200 2012 100% 20 St James’s St, SW1 Design 51,100 2012 100% Rathbone Place, W1 Design 383,400 2013 100% Pipeline 100 Bishopsgate, EC2 Consented 948,600 Pre-let on
Slide 24: Near Term: St James's St; Rathbone Place
Near Term 20 St Jamesʼs St, SW1 - Possible start date Q4 2012 - 51,100 sq ft (43.7% vacant) - 6,000 sq ft floor plate - Super prime West End location - Completion Sept 2013 - Office ERV £90.25 psf1 - Low capex £7.3m Low risk / higher reward! 1. CBRE anticipated ERV post refurbishment works 46! Near
Slide 25: Total Development Programme
- One of West End’s most exciting prospects - Crossrail works on programme - GPE possession Q4 2015 - Planning consent / development agreement - GPE’s best performing asset up 37% y/e March 2012 - Varied, value creation opportunities - Rare, high quality mixed use product 48! Total Development Progr
Slide 26: Agenda; Portfolio Positioning
Agenda! Introduction !Toby Courtauld, Chief Executive! Financial Results !Nick Sanderson, Finance Director! Market !Toby Courtauld, Chief Executive! Portfolio !! Acquisitions & disposals! Asset Management !Neil Thompson, Portfolio Director! Development! Portfolio Positioning !Toby Courtauld ! Outloo
Slide 27: Outlook
Outlook! Portfolio positioning is excellent Growth opportunity is material Financial strength Market conditions supportive! - Stable investment market! - Tight occupational supply! - Demand for GPE space good! - Leasing market favourable Confident outlook! 52! Preliminary Results Presentation 2012!
Slide 28: Disclaimer
Disclaimer! This presentation contains 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 impl
Slide 29: Income Statement; Use of Joint Ventures
Income Statement Proportionally Consolidated for Joint Ventures! £m Group JVs Total Mar 11 Rental income 46.4 24.4 70.8 93.3 Fees from Joint Ventures 5.6 - 5.6 4.1 Property and Administration costs (26.2) (4.9) (31.1) (25.0) Finance costs (17.8) (15.5) (33.3) (25.8) Profit before surplus on investme
Slide 30: Tenant Delinquencies; Equity Demand
Tenant Delinquencies Six month periods! Number of delinquencies 10! Retail! Media! Professional Services! 8! 6! 1.13%1 0.34%1 4! 0.85%1 2! 0.09%1 0! H1 2010/11! H2 2010/11! H1 2011/12! H2 2011/12! 1. Value of delinquencies as % of Rent Roll (including 100% of JV properties) 58! Equity Demand! £bn! M
Slide 31: Central London Prime Yields; City Active Requirements
Central London Prime Yields! Central London Prime Yields (%)! 7.0 6.0 5.0 4.0 West End City 3.0 2012! 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Source: CBRE! 60! City Active Requirements >10,000 sq ft! Change Nov May Nov May Nov May 12 1st 6 2nd 6 000 sq ft 2009 2010 2010
Slide 32: West End Active Requirements; City Take-Up
West End Active Requirements >10,000 sq ft! Change Nov May Nov May Nov May 12 1st 6 2nd 6 000 sq ft 2009 2010 2010 2011 2011 2012 months months months Professional Services! 85! 77! 100! 100! 165! 100! - 65% -39% Financial Services! 272! 402! 283! 198! 331! 358! 81% 67% 8% Manufacturing & 260! 124!
Slide 33: West End Take-Up; City Office Under Offer
0.0 0.5 1.0 1.5 2.0 0.0 0.5 1.0 1.5 2.0 3.8 Q3 2001 Q3 2001 Million sq ft Million sq ft Source: CBRE! Source: CBRE! Q1 2002 Q1 2002 3.3 1.0m sq ft Q3 2002 Q3 2002 1.1m sq ft Q1 2003 Q1 2003 10-year average: 10-year average: 3.7 Q3 2003 Q3 2003 Pre-let Q1 2004 Q1 2004 4.4 Q3 2004 Q3 2004 West End Tak
Slide 34: West End Office Under Offer; Potential Completions
West End Office Under Offer ! Million sq ft 1.4 1.2 1.0 10-year average: 0.8 0.8m sq ft 0.6 0.4 0.2 0.0 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Source: CBRE! 66! De
Slide 35: Void Rate; The Valuation
Void Rate: Ready to Occupy Space! % 18.0 City West End 15.0 12.0 9.0 6.0 3.0 0.0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Q3 2011 Q1 2012 Source: CBRE! 68! The Valuation Including share of Joint Ventures! Quarterly Valuation Movement for Total Portfolio! Movement %! To 31 Mar
Slide 36: The Valuation: Drivers of Valuation Movement
The Valuation1 Drivers of Valuation Movement2! % movement! Residual! Yield shift! Rental value movement! 3 months! 6 months! 12 months! -4.0%! -2.0%! 0.0%! 2.0%! 4.0%! 6.0%! 8.0%! 10.0%! 1. Including share of Joint Ventures 2. Excludes development properties! 70! The Valuation Including share of Joi
Slide 37: The Valuation
The Valuation Including share of Joint Ventures! 12 months to Value Mar 2012 Change 3 months 6 months £m £m % % % North of Oxford St 625.1 26.9 4.5% 2.5% 3.8% Rest of West End 422.2 64.0 17.9% 4.3% 6.8% Total West End 1,047.3 90.9 9.5% 3.2% 5.0% City, Midtown and Southwark 273.3 8.8 3.3% 1.3% 1.7% I
Slide 38: The Valuation: Joint Ventures; ERV and Reversionary Potential
The Valuation Joint Ventures! 12 months to Value Mar 2012 Change 3 months 6 months £m £m % % % North of Oxford St 281.4 40.7 16.9% 11.1% 13.7% Rest of West End 283.2 23.2 8.9% 1.8% 3.9% Total West End 564.6 63.9 12.8% 6.2% 8.5% City, Midtown and Southwark 139.3 (3.2) (2.2%) 2.1% (2.6%) Investment po
Slide 39: Asset Management: Movement in Reversions; Void rate
Asset Management Movement in Reversions1! 6 months to! 31 March 2012! 30 Sept 2011! At beginning of period! £7.5m! £6.7m! Asset management! (£1.2m)! (£0.4m)! Disposals / acquisitions! £1.0m! (£0.4m)! ERV movement! £2.4m! £1.6m! At end of period! £9.7m! £7.5m! 1. Includes share of Joint Ventures! 76!
Slide 40: GPE Tenants; Tenant retention
GPE Tenants By Sector at 31 March 2012 Government ! 4%! Professional Services ! 8%! TMT! 25%! Financial Services ! 19%! Retailers & Leisure! 29%! Corporates ! 15%! 78! Asset Management Tenant retention, 12 months to March 2012! Area (000 sq ft) 400! 350! 361 300! 61% 250! 200! 150! 100! 23% 50! 13%
Slide 41: Vacant possession profile; Key Disposals
Asset Management Vacant possession / expiry profile1! % by total rental income subject to lease expiry or break 50.0! Investment Income! Income to be developed! 40.0! 1.2! 30.0! 20.0! 36.5! 4.1! 0.3! 3.4! 5.7! 10.0! 2.6! 13.2! 8.8! 8.4! 10.2! 5.5! 0.0! 2013! 2014! 2015! 2016! 2017! 2018+! Year to Ma
Great Portland Estates — FY2012 Earnings Presentation on 6ix