Land Securities Group PLC · LSE:LAND
Land Securities — Landsec — H1 2019/20 Earnings Presentation
61 slides from Land Securities's earnings presentation, November 2019
Slide 1: Half-yearly results
Half-yearly results For the six months ended 30 September 2019 @LandsecGroup Landsec.com L. Landsec
Slide 2: Introduction
Introduction Robert Noel Chief Executive
Slide 3: Balance of business shifting more to London
Landsec ─ Half-yearly results 2019/20 3 H1 2019/20 Balance of business shifting more to London Portfolio split by segment Portfolio split by geography West End West End Office City City Mid-town Mid-town Regional Retail Southwark and other Office 38% Southwark and other 33% London retail 50% London
Slide 4: Resilient results in mixed markets
Landsec ─ Half-yearly results 2019/20 4 H1 2019/20 Resilient results in mixed markets Office Specialist Retail Healthy market conditions Leisure and hotels virtually full Nuanced markets Portfolio virtually full Good demand from consumers Outlets and London steady and operators despite headwinds Myo
Slide 5: Progress on sustainability
Landsec ─ Half-yearly results 2019/20 5 H1 2019/20 Progress on sustainability Ranked #1 in UK and Europe for mixed office and retail space European real estate leader Science based carbon reduction targets being raised for 1.5°C of warming Commitment to be a net zero carbon business by 2030 First ne
Slide 6: Agenda for the day
Landsec 6 Agenda for the day Financial results Martin Greenslade Portfolio review Colette O’Shea Outlook Robert Noel Q&A
Slide 7: Financial results
Financial results Martin Greenslade Chief Financial Officer
Slide 8: Financial summary
Landsec ─ Half-yearly results 2019/20 8 Financial summary Resilient performance in a challenging market 30 Sept 2018 30 Sept 2019 Change % £224m Revenue profit(1) £225m 0.4 £(188)m Valuation deficit(1) £(368)m -2.8(2) £42m Profit / (loss) before tax £(147)m 30.3p Adjusted diluted earnings per share(
Slide 9: Revenue profit
Landsec ─ Half-yearly results 2019/20 9 Revenue profit £m – – 224 225
Slide 10: Net rental income analysis
Landsec ─ Half-yearly results 2019/20 10 Net rental income analysis Maintaining net rental income £m Like-for-like net rental income 308 309 Six months Office Retail Specialist Developments Acquisitions Other Six months ended and sales ended 30 Sept 2018 30 Sept 2019
Slide 11: Like-for-like net rental income analysis: Office
Landsec ─ Half-yearly results 2019/20 11 Like-for-like net rental income analysis Office £m Like-for-like £m net rental income 2 1 308 125 309 122 Six months Office Retail Specialist Developments Acquisitions Other Six months ended and sales ended 30 Sept 2018 30 Sept 2019
Slide 12: Like-for-like net rental income analysis: Retail
Landsec ─ Half-yearly results 2019/20 12 Like-for-like net rental income analysis Retail £m Like-for-like net rental income 308 309 Six months Office Retail Specialist Developments Acquisitions Other Six months ended and sales ended 30 Sept 2018 30 Sept 2019
Slide 13: Like-for-like net rental income analysis: Retail
Landsec ─ Half-yearly results 2019/20 13 Like-for-like net rental income analysis Retail £m Like-for-like £m net rental income 1 - (3) 130 308 128309 Six months Office Retail Specialist Developments Acquisitions Other Six months ended and sales ended 30 Sept 2018 30 Sept 2019
Slide 14: Like-for-like net rental income analysis: Specialist
Landsec ─ Half-yearly results 2019/20 14 Like-for-like net rental income analysis Specialist £m Like-for-like net rental income 308 309 Six months Office Retail Specialist Developments Acquisitions Other Six months ended and sales ended 30 Sept 2018 30 Sept 2019
Slide 15: Like-for-like net rental income analysis: Specialist
Landsec ─ Half-yearly results 2019/20 15 Like-for-like net rental income analysis Specialist £m Like-for-like £m net rental income 2 1 42 308 39 309 Six months Office Retail Specialist Developments Acquisitions Other Six months ended and sales ended 30 Sept 2018 30 Sept 2019
Slide 16: Net rental income analysis
Landsec ─ Half-yearly results 2019/20 16 Net rental income analysis Maintaining net rental income £m 308 309 Six months Office Retail Specialist Developments Acquisitions Other Six months ended and sales ended 30 Sept 2018 30 Sept 2019
Slide 17: Combined Portfolio valuation
Landsec ─ Half-yearly results 2019/20 17 Combined Portfolio valuation Other 0.4% Leisure and hotels £13.4bn portfolio Retail parks -3.0% -11.1% Valuation declined 2.8% Outlets 0.6% Office 0.0% Regional retail -9.4% London retail -3.5% Chart segments represent portfolio valuation. Segment labels indi
Slide 18: Combined Portfolio valuation: Office
Landsec ─ Half-yearly results 2019/20 18 Combined Portfolio valuation Office Other 0.4% Leisure and hotels Like-for-like rental values up 1.9% Retail parks -3.0% -11.1% +5bps like-for-like equivalent yield shift Outlets to 4.6% 0.6% Office Like-for-like assets up 0.3% 0.0% Regional retail -9.4% Deve
Slide 19: Combined Portfolio valuation: London retail
Landsec ─ Half-yearly results 2019/20 19 Combined Portfolio valuation London retail Other 0.4% Leisure and hotels Like-for-like rental values down 2.7% Retail parks -3.0% -11.1% +4bps like-for-like equivalent yield shift Outlets to 4.3% 0.6% London retail Office 0.0% Regional retail -3.5% -9.4%
Slide 20: Combined Portfolio valuation: Regional retail
Landsec ─ Half-yearly results 2019/20 20 Combined Portfolio valuation Regional retail Other 0.4% Leisure and hotels Like-for-like rental values down 3.7% Retail parks -3.0% -11.1% +36bps like-for-like equivalent yield shift Outlets to 5.5% 0.6% Regional retail Office 0.0% -9.4% London retail -3.5%
Slide 21: Combined Portfolio valuation: Outlets
Landsec ─ Half-yearly results 2019/20 21 Combined Portfolio valuation Outlets Other 0.4% Leisure and hotels Like-for-like rental values up 1.0% Retail parks -3.0% -11.1% +2bps like-for-like equivalent yield shift to 5.4% Outlets Office 0.0% Regional 0.6% retail -9.4% London retail -3.5%
Slide 22: Combined Portfolio valuation: Retail parks
Landsec ─ Half-yearly results 2019/20 22 Combined Portfolio valuation Retail parks Other 0.4% Leisure and hotels Like-for-like rental values down 2.0% -3.0% +58bps like-for-like equivalent yield shift Outlets to 6.7% 0.6% Retail parks Office 0.0% Regional retail -11.1% -9.4% London retail -3.5%
Slide 23: Combined Portfolio valuation: Leisure and hotels
Landsec ─ Half-yearly results 2019/20 23 Combined Portfolio valuation Leisure and hotels Other 0.4% Hotel values unchanged Retail parks -11.1% Casual dining sector impacted Outlets leisure assets 0.6% Leisure and hotels Office +9bps like-for-like equivalent yield shift 0.0% Regional -3.0% to 5.6% re
Slide 24: Piccadilly Lights rental values unchanged
Landsec ─ Half-yearly results 2019/20 24 Combined Portfolio valuation Other Leisure and hotels Piccadilly Lights rental values Retail parks -3.0% -11.1% unchanged Outlets 0.6% Other Office Regional 0.4% 0.0% retail -9.4% London retail -3.5%
Slide 25: Development expenditure
Landsec ─ Half-yearly results 2019/20 25 Development expenditure Estimated future spend Potential cash spend Impact on Sept 19 £m Group LTV(2) 600 Development programme £520m 30.7% 500 400 Proposed developments £290m 32.1% 300 In feasibility – office-led £440m 34.2% 200 100 In feasibility – mixed us
Slide 26: Strong financing position
Landsec ─ Half-yearly results 2019 26 Strong financing position Adjusted net debt (LHS) Group LTV(1) (RHS) WACD (LHS) ICR (RHS) Adjusted net debt to EBITDA (RHS) £bn % % Multiple 5.0 45 10 10 £3,798m 9 9 4.5 40 8 6.9x 8 4.0 28.1% 7 7 35 6 6 3.5 5 5 30 4 4.9x 4 3.0 3 3 25 2 2 2.5 1 2.6% 1 2.0 20 0 0
Slide 27: Financial summary
Landsec ─ Half-yearly results 2019/20 27 Financial summary Resilient income Strong balance sheet Significant firepower for development expenditure and other opportunities
Slide 28: Portfolio review
Portfolio review Colette O’Shea Managing Director
Slide 29: Strengthening portfolio
Landsec ─ Half-yearly results 2019/20 2019 29 Strengthening portfolio Portfolio split by segment West End Office Introducing new products City Mid-town Retail Southwark and other Office 38% Keeping ahead of market trends London retail 50% Specialist Retail Regional retail 12% New and better ways of
Slide 30: A resilient performance across the portfolio
Landsec ─ Half-yearly results 2019/20 30 A resilient performance across the portfolio £13.4bn portfolio 98% occupancy £14m of investment lettings with £17m in solicitors’ hands £16m of office rent reviews at 10% ahead of previous passing rent Office WAULT 8.7 years Retail net rental income down £2m,
Slide 31: Office: London continues to be a highly desirable location
Landsec ─ Half-yearly results 2019/20 31 Office ─ London continues to be a highly desirable location Take-up up 11% on last quarter Central London vacancy rate down to 4.0% m sq ft Vacancy rate 4 10-year quarterly average 4.6% 3 4.4% 4.2% 10-year quarterly average 2 3.1 3.4 4.0% 1 3.8% 0 3.6% Q2 201
Slide 32: Office: A robust performance across all three products
Landsec ─ Half-yearly results 2019/20 32 Office ─ A robust performance across all three products HQ Fitted Myo 99% occupied Launched with 2 floors 17,200 sq ft Launched 36,000 sq ft in May 2019 in May 2019 £16m of rent reviews, 10% ahead Now 61% occupied, ahead of of previous passing rent Now fully
Slide 33: Specialist: Leisure
Landsec ─ Half-yearly results 2019/20 33 Specialist ─ Leisure Popular destinations through the cycle 17 leisure parks offering range of activities 97% occupancy Cinemas are 26% of leisure rent; cinema admissions up 9% nationally Casual dining is 17% of leisure rent; challenges in this sector continu
Slide 34: Specialist: Hotels
Landsec ─ Half-yearly results 2019/20 34 Specialist ─ Hotels Great opportunity 23 standalone hotels 27% income growth over 10 years Potential in the underlying site values well ahead of book values Novotel, Greenwich
Slide 35: Specialist: Piccadilly Lights
Landsec ─ Half-yearly results 2019/20 35 Specialist ─ Piccadilly Lights Activity is gaining momentum Short term leasing activity ahead of expectations Leasing strategy taking advantage of the flexibility offered by the new digital screen To date over 90% of the yearly target income secured Recent br
Slide 36: Retail: Tackling the retail reality
Landsec ─ Half-yearly results 2019/20 36 Retail Tackling the retail reality Like-for-like retail net rental income down £2m; — 2% of Retail — Less than 1% of Group Occupancy rate unchanged since March 2019 at 97% Same centre sales up 0.7%, down 0.7% excluding automotive sales. Considerably ahead of
Slide 37: Retail: Tackling the retail reality
Landsec ─ Half-yearly results 2019/20 37 Retail Tackling the retail reality Only 14% of units affected by CVAs have closed 53% of units closed due to administrations and CVAs now re-let The Ivy Victoria, SW1 Note: Numbers refer to both Retail and Specialist segments.
Slide 38: Retail: Tackling the retail reality
Landsec ─ Half-yearly results 2019/20 38 Retail Tackling the retail reality Short term Activity in the last six months Medium term Maximising our performance in the medium term Long term Longer term trends and how we are staying ahead of the curve
Slide 39: Short term activity: Retail parks
Landsec ─ Half-yearly results 2019/20 39 Short term activity Retail parks Occupancy at 96% Valuation down 11%, driven by 58bps outward yield movement Sold Poole Retail Park for £45m, around 12% below March 2019 book value – in line with subsequent market declines The Bishop Centre, Taplow
Slide 40: Outlets – effective tenant mix
Landsec ─ Half-yearly results 2019/20 40 Short term activity Outlets – effective tenant mix £2m of lettings, 20 new target brands across the outlets 70% of consumers give retail mix as a top reason to visit Gunwharf Quays, Portsmouth
Slide 41: Outlets – attracting new brands
Landsec ─ Half-yearly results 2019/20 41 Short term activity Outlets – attracting new brands Since Polo Ralph Lauren opened in Braintree Village last November — Footfall up 6% in three months after opening — Total sales up 15% in the same period — Total sales up 3.7% in the last six months — Magnet
Slide 42: Retail: compelling retail mix
Landsec ─ Half-yearly results 2019/20 42 Short term Retail ─ compelling retail mix Regional shopping destinations challenged Working to attract brands that resonate with changing consumer demands Bluewater, Kent Westgate, Oxford Helping brands establish a physical presence Westgate, Oxford Bluewater
Slide 43: Retail: supported by great events
Landsec ─ Half-yearly results 2019/20 43 Short term Retail ─ supported by great events The Beach at Bluewater, Kent Summer Vibes at Westgate, Oxford Dinosaur Trail at Trinity, Leeds Student Night at St David’s, Cardiff
Slide 44: Regional retail – maintained occupancy levels and rental income
Landsec ─ Half-yearly results 2019/20 44 Short term – last six months Regional retail – maintained occupancy levels and rental income Working to secure the best retail mix at the right size Bluewater: — Footfall up 2.5% year-on-year — Same store sales up 1.2% year-on-year (excluding automotive) Cust
Slide 45: Medium term: proactively addressing the challenges
Landsec ─ Half-yearly results 2019/20 45 Retail Medium term ─ proactively addressing the challenges Short term Medium term Convenience + great destinations = Outperformance in retail Long term
Slide 46: Retail: compelling retail mix
Landsec ─ Half-yearly results 2019/20 46 Medium term Retail ─ compelling retail mix Key anchors drawing shoppers and driving spend Upsizing Zara at Bluewater from 19,000 sq ft to 37,000 sq ft Bringing Zara into 36,000 sq ft at St. David’s Upsizing H&M at Trinity Leeds from 25,000 sq ft to 39,000 sq
Slide 47: Retail: a partnership approach
Landsec ─ Half-yearly results 2019/20 47 Medium term Retail ─ a partnership approach Working closely with customers to keep businesses sustainable Reducing service charges to protect rental income Improving affordability Looking at innovative new ways of partnering with brands Westgate Oxford
Slide 48: Long term – addressing the challenges of an over supplied market
Landsec ─ Half-yearly results 2019/20 48 Retail Long term – addressing the challenges of an over supplied market Short term Medium term Long term Re-imagining retail space
Slide 49: Long term – re-imagining destinations
Landsec ─ Half-yearly results 2019/20 49 Retail Long term – re-imagining destinations O2, Finchley Road W12, Shepherd’s Bush Lewisham shopping centre Southside, Wandsworth
Slide 50: Long term – re-imagining destinations
Landsec ─ Half-yearly results 2019/20 50 Retail Long term – re-imagining destinations O2, Finchley Road and W12, Shepherd’s Bush — Anticipating a shift from 100% retail and leisure to only 11% retail — Opportunity for 1,700 homes Proposed development, O2, Finchley Road helping to underpin values Lew
Slide 51: Further progress on our London-centric opportunities
Landsec ─ Half-yearly results 2019/20 51 Further progress on our London-centric opportunities 1.4m sq ft on site by April 2020 Oct 2021 Shepherd’s Bush Shepherd’s Bush, W12 ~696k sq ft Total Oct 2021 Finchley Road ~3.5m sq ft Finchley Road, NW3 ~681k sq ft July 2022 Sept 2025 Red Lion Court Red Lion
Slide 52: Further progress on our London-centric opportunities
Landsec ─ Half-yearly results 2019/20 52 Further progress on our London-centric opportunities 1.4m sq ft on site by April 2020 Oct 2021 Shepherd’s Bush Shepherd’s Bush, W12 ~696k sq ft Total Oct 2021 Finchley Road ~3.5m sq ft Finchley Road, NW3 ~681k sq ft July 2022 Sept 2025 Red Lion Court Red Lion
Slide 53: Further progress on our London-centric opportunities
Landsec ─ Half-yearly results 2019/20 53 Further progress on our London-centric opportunities 1.4m sq ft on site by April 2020 Oct 2021 Shepherd’s Bush Shepherd’s Bush, W12 ~696k sq ft Total Oct 2021 Finchley Road ~3.5m sq ft Finchley Road, NW3 ~681k sq ft July 2022 Sept 2025 Red Lion Court Red Lion
Slide 54: Further progress on our London-centric opportunities
Landsec ─ Half-yearly results 2019/20 54 Further progress on our London-centric opportunities 1.4m sq ft on site by April 2020 Oct 2021 Shepherd’s Bush Submitted revised planning Shepherd’s Bush, W12 ~696k sq ft Total application Oct 2021 Finchley Road ~3.5m sq ft Demolition started Finchley Road, N
Slide 55: Further progress on our London-centric opportunities
Landsec ─ Half-yearly results 2019/20 55 Further progress on our London-centric opportunities 1.4m sq ft on site by April 2020 Oct 2021 Shepherd’s Bush Shepherd’s Bush, W12 ~696k sq ft Total Oct 2021 Finchley Road ~3.5m sq ft Finchley Road, NW3 ~681k sq ft July 2022 Sept 2025 Red Lion Court Red Lion
Slide 56: Further progress on our London-centric opportunities
Landsec ─ Half-yearly results 2019/20 56 Further progress on our London-centric opportunities 1.4m sq ft on site by April 2020 Oct 2021 Shepherd’s Bush Shepherd’s Bush, W12 ~696k sq ft Total Oct 2021 Finchley Road ~3.5m sqContinue ft to workFinchley up Road, NW3 ~681k sq ft plans for potential July
Slide 57: Creating destinations and products of choice
Landsec ─ Half-yearly results 2019/20 57 Creating destinations and products of choice Office portfolio is full Fitted and Myo ahead of business plans Piccadilly Lights exceeding expectations Retail is challenged, but we are outperforming on sales and footfall Using customer data to inform our decisi
Slide 58: Outlook
Outlook Robert Noel Chief Executive
Slide 59: Looking ahead
Landsec ─ Half-yearly results 2019/20 59 Looking ahead Strong position Direction of travel clear Market dynamics in London remain healthy — Entire development pipeline located in London — Excellent track record in delivery — Sustainability leader Retail outlook remains mixed — Outlets continue to gr
Slide 60: Landsec
Landsec
Slide 61: Half-yearly results
Half-yearly results For the six months ended 30 September 2019 @LandsecGroup Landsec.com L. Landsec