Land Securities Group PLC · LSE:LAND
Land Securities — Landsec — Investor Day (March 2025)
49 slides from Land Securities's investor day presentation, March 2025
Slide 1: Capital Markets Update
CAPITAL MARKETS UPDATE
Slide 2: Overview
OVERVIEW Mark Allan CHIEF EXECUTIVE OFFICER
Slide 3: Shaping places that stand the test of time
BEST-IN-CLASS OFFICE-LED PORTFOLIO LEADING UK RETAIL-LED PLATFORM £3BN+ RESIDENTIAL-LED PIPELINE SHAPING PLACES THAT STAND THE TEST OF TIME
Slide 4: Driving long-term value creation through sustainable income/EPS growth
REBALANCE PORTFOLIO MIX LOWER RISK PROFILE & CYCLICALITY C. 20% UPSIDE POTENTIAL IN EPS FY25 FY30 DRIVING LONG-TERM VALUE CREATION THROUGH DELIVERING SUSTAINABLE INCOME / EPS GROWTH
Slide 5: Delivering sustainable income and EPS growth
Landsec Capital Markets Update Our primary focus Delivering sustainable income and EPS growth pturing reversion, cost efficiencies and sing capital from pre-development assets Capital rotation to enhance conti Mar-25 Mar-26 Mar-27 Mar-28 Mar-29 Mar-30 + | Strong copite base ND/EBITDA below 8x and LT
Slide 6: Next 1-3 years, next 2-5 years
• NEXT • 1-3 • YEARS • • • NEXT • 2-5 YEARS • •
Slide 7: Our Opportunity
OUR OPPORTUNITY Mark Allan CHIEF EXECUTIVE OFFICER
Slide 8: Key macro trends and our view on impact
KEY MACRO TRENDS OUR VIEW ON IMPACT OUR STRATEGY GEOPOLITICAL RISK & CLIMATE CHANGE NORMALISATION IN INTEREST RATES DEMOGRAPHIC CHANGE TECHNOLOGICAL CHANGE
Slide 9: Office-led £6.5bn, Retail-led £3.0bn, Residential-led £3bn+ potential
OFFICE-LED — £6.5BN RETAIL-LED — £3.0BN RESIDENTIAL-LED — £3BN+ POTENTIAL1
Slide 10: Residential growth opportunity
Landsec Capital Markets Update Residential growth opportunity Structural growth sector with attractive income fundamentals UK population growth forecast! Planning approvals and housing completions? x +6m people 4 2006 2008 2010 2012 2014 2016 2018 2020 2022 @3- 2024 2022 2035 | Completions. —=Planni
Slide 11: Renting increasingly attractive part of housing market
Landsec Capital Markets Update Residential growth opportunity Renting increasingly attractive part of overall housing market If given the choice, proportion that would choose Cumulative increase in number of PRS households! to rent vs buy, by generation? 000s 700 Silent Ge ratic 600 erage 8097) (Gen
Slide 12: Significant expertise in UK residential
• SIGNIFICANT EXPERTISE IN UK RESIDENTIAL • • • • •
Slide 13: Further grow our leading retail platform
Landsec Capital Markets Update Further grow our leading retail platform Attractive 7-8% income returns with growing rents Shopping destinations ranked by spend! Landsec occupancy vs overall UK retail market? 100% som» Wefefhippngststnctons ee > 25% Q%ofallApplestores nn 86% of all Inditex stores 20%
Slide 14: Capitalise on strong customer demand for best-in-class offices
Landsec Capital Markets Update Capitalise on strong customer demand for our best-in-class offices Reduce capital employed over time to fund growth in residential Central London take-up relative to 20-year average UK real estate investment volume? -last 12 months! £80bn £60bn oe eed. Ga £40bn 2 a ia
Slide 15: People and technology
PEOPLE TECHNOLOGY • • • • • • • • • • • • • • • • • • • • • • • •
Slide 16: Achieved since late 2020; key objectives FY25-FY30
ACHIEVED SINCE LATE 2020 KEY OBJECTIVES FY25-FY30 INVEST IN GROWTH REALISE VALUE DELIVER STRONG OPERATIONAL RESULTS PREPARE BUSINESS FOR GROWTH
Slide 17: Capital Allocation
CAPITAL ALLOCATION Remco Simon CHIEF STRATEGY & INVESTMENT OFFICER
Slide 18: Focus on sustainable income/EPS growth
LITTLE CORRELATION BETWEEN PROPERTY YIELDS AND NOMINAL RATES1 REAL PROPERTY YIELDS ATTRACTIVE VS REAL INTEREST RATES1 • • • • FOCUS ON SUSTAINABLE INCOME/EPS GROWTH
Slide 19: Unlevered return expectations vs risk – IRR by segment
UNLEVERED RETURN EXPECTATIONS VS RISK – IRR BY SEGMENT
Slide 20: Next 1-3 years, next 2-5 years
• NEXT • 1-3 • YEARS • • NEXT • 2-5 • YEARS • •
Slide 21: Capital employed: residential-led, office-led, other opportunities
NEXT 1-3 YEARS RESIDENTIAL-LED OFFICE-LED OTHER OPPORTUNITIES C. £240M C. £360M C. £100M1 CAPITAL EMPLOYED CAPITAL EMPLOYED CAPITAL EMPLOYED • • • •
Slide 22: Selective high-return opportunities
NEXT 1-3 YEARS SELECTIVE HIGH-RETURN OPPORTUNITIES ACQUISITION OF LIVERPOOL ONE IN DEC-24 INCREASE ACCRETIVE, HIGH-YIELDING CAPEX • • • • • • • • • • • •
Slide 23: Expected investment in current schemes
NEXT 2-5 YEARS EXPECTED INVESTMENT IN CURRENT SCHEMES SUPPLEMENTING PIPELINE BY SELECTIVE ACQUISITIONS • • • • • • • •
Slide 24: Near term project - Finchley Road
Landsec Capital Markets Update Near term project - Finchley Road Up to 1,800 homes surrounded by five London tube and train stations Status Full outline consent Detailed consent phase 1 VP secured phase 1 Waterloo = Victoria Soho Bond Street = Demolition complete phase 1 ‘Camden Town Boker Street Ne
Slide 25: Near term project - Mayfield
Landsec Capital Markets Update Near term project - Mayfield 1,700 homes next to Manchester’s main train station and new 6-acre park i onion Northern | Quaitety Maichester Oxforaiteca Manchester SS Piccadilly “Indicative only, subject to change depending on final scope, planning and design Status + F
Slide 26: Near term project - Lewisham
Landsec Capital Markets Update Near term project -Lewisham Up to 2,800 homes in South London next to DLR terminal Status = City of London * Outline/detailed planning application submitted London Bridge South Bermondsey. + VP flexibility secured phase 1 Next key milestones Blackheath ‘Common * Decisi
Slide 27: MediaCity Phase 2, St David's, Cardiff City Centre
NEXT 2-5 YEARS MEDIACITY PHASE 2, GREATER MANCHESTER ST DAVID’S, CARDIFF CITY CENTRE
Slide 28: On-site office developments and future development exposure
NEXT 2-5 YEARS ON-SITE OFFICE DEVELOPMENTS FUTURE DEVELOPMENT EXPOSURE COMMITTED TOTAL DEVELOPMENT COST THIRTY HIGH TIMBER SQUARE • • • •
Slide 29: Reduce office exposure by net £2bn; exit non-core assets
REDUCE OFFICE EXPOSURE BY NET £2BN EXIT RESIDUAL NON-CORE ASSETS • • • • • • • •
Slide 30: Capital recycling
Landsec Capital Markets Update Capital recycling Reallocation of capital to enhance income and income growth Pre-development macats Retail/leisure parks Office-led Total Sources Capital employed £0.3bn £0.8bn £2bn £3bn+ of capital Effective income yield! c.1% c. 7.5% c. 4.5-5% c.5.1% Capital employe
Slide 31: Driving long-term value creation through sustainable income/EPS growth
REBALANCE PORTFOLIO MAINTAIN CLEAR VIEW ON RISK MOVE TO LOWER RISK TO ENHANCE INCOME GROWTH / RETURN PROSPECTS / CYCLICALITY OVER TIME FY25 FY30 DRIVING LONG-TERM VALUE CREATION THROUGH DELIVERING SUSTAINABLE INCOME/EPS GROWTH
Slide 32: Growing Returns
GROWING RETURNS Vanessa Simms CHIEF FINANCIAL OFFICER
Slide 33: Mar-25 EPS expected slightly ahead of last year's 50.1p
STRONG CHRISTMAS TRADING QUARTER IN RETAIL STRONG GROWTH IN OFFICE UTILISATION ACCRETIVE INVESTMENT ACTIVITY MAR-25 EPS EXPECTED TO BE SLIGHTLY AHEAD OF LAST YEAR’S 50.1P
Slide 34: Next 1-3 years, next 2-5 years
• NEXT • 1-3 • YEARS • • NEXT • 2-5 • YEARS • •
Slide 35: Growing uplifts on re-lettings/renewals
NEXT 1-3 YEARS • GROWING UPLIFTS ON RE-LETTINGS/RENEWALS – NEW VS PREVIOUS PASSING RENT • • • IMPROVEMENT IN LFL OPERATING EFFICIENCY – GROSS TO NET MARGIN1 • •
Slide 36: Further upside from reduction in admin expenses
NEXT 1-3 YEARS FURTHER UPSIDE FROM REDUCTION IN ADMIN EXPENSES
Slide 37: Net effective income yields – offices vs residential
• NET EFFECTIVE INCOME YIELDS – LANDSEC OFFICES (SEP-24) VS RESIDENTIAL • • • •
Slide 38: Lease length vs operational cost
NEXT 2-5 YEARS • LEASE LENGTH VS OPERATIONAL COST • • • • •
Slide 39: c. 20% EPS growth potential despite headwinds
C. 20% EPS GROWTH POTENTIAL, DESPITE HEADWINDS FROM QAM AND INCREASE IN FINANCE COSTS DIVIDEND TO GROW IN LINE WITH TARGET 1.2-1.3X COVER, PAID SEMI-ANNUALLY IN LINE WITH EPS REPORTING
Slide 40: Existing income return plus growth to drive return on equity
5.8% EXISTING INCOME RETURN + SUSTAINABLE INCOME GROWTH TO DRIVE ATTRACTIVE RETURN ON EQUITY • • • • • •
Slide 41: Move to lower risk profile through capital recycling
AVERAGE DEBT MATURITY OF 10 YEARS TARGET ND/EBITDA OF LESS THAN 8X OVER TIME TARGET MID 30’S LTV IN NEAR FUTURE MOVE TO LOWER RISK PROFILE DUE TO RECYCLING OF CAPITAL FROM OFFICES TO RESIDENTIAL
Slide 42: Continued momentum to underpin near-term growth
CONTINUED MOMENTUM TO UNDERPIN NEAR-TERM GROWTH ATTRACTIVE MEDIUM-TERM OUTLOOK • • • • • • •
Slide 43: Outlook
OUTLOOK Mark Allan CHIEF EXECUTIVE OFFICER
Slide 44: Next 1-3 years, next 2-5 years
NEXT 1-3 YEARS NEXT 2-5 YEARS FY25 FY30 • • • • • •
Slide 45: Well-placed; clear upside as we move to next phase of strategy
WELL-PLACED DUE TO SUCCESSFUL CLEAR UPSIDE AS WE MOVE TO NEXT PHASE FOCUS ON SUSTAINABLE INCOME EXECUTION OF 2020 STRATEGY OF STRATEGY /EPS GROWTH TO DRIVE ROE
Slide 46: Appendices
APPENDICES
Slide 47: Successful delivery of 2020 strategy provides strong foundation for growth
OUR KEY STRATEGIC CALLS A DIFFERENT WORLD TOTAL SHAREHOLDER RETURN FOUR YEARS AGO – UK INFLATION VS 10Y INTEREST RATES SINCE OCTOBER 2020 SUCCESSFUL DELIVERY OF 2020 STRATEGY PROVIDES STRONG FOUNDATION FOR GROWTH
Slide 48: Current capital allocation
Landsec Capital Markets Update Current capital allocation Mf Retail-led Il Shopping centres £2.0bn © Outlets £0.6bn Digital advertising £0.4bn i Residential-led Developments £0.2bn i Non-core Retail/leisure parks £0.8bn ll Other Trading properties £0.1bn = £10.6BN' ‘Portfolio value as of Sep-24 adju
Slide 49: Important notice
Landsec Capital Markets Update Important notice This presentation may contain 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