Land Securities Group PLC · LSE:LAND

Land Securities — Nomura Global Real Estate Forum – Tokyo 2009

28 slides from Land Securities's conference presentation, Sep 4, 2009

  1. Slide 1: UK property, the listed property sector and Land Securities

    Nomura Global Real Estate Forum – Tokyo 4 September 2009 UK property, the listed property sector and Land Securities Francis Salway Martin Greenslade Chief Executive Finance Director

  2. Slide 2: Agenda

    Agenda ƒ Structure of the UK direct property market ƒ Trends in the UK direct property market ƒ UK listed property sector ƒ Land Securities ƒ Questions & answers Page 2

  3. Slide 3: UK property market - I

    UK property market - I Physical, legal and regulatory environment Physical supply constraints, planning constraints and lease contracts Page 3

  4. Slide 4: UK property market – II: interest rates

    interest rate, end year, % 0 4 8 12 16 20 1974 1975 1976 on gilt yields) 1977 Source: Bank of England. 1978 1979 1980 Low interest rates 1981 1982 1983 1984 1985 1986 1987 1988 UK property market – II 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Addi

  5. Slide 5: UK property market – III: Currency

    UK property market – III Currency 300 2.2 Pound to Yen 280 Pound to Euro 2 260 Pound to Dollar Pound to Dollar and Euro 240 1.8 Pound to Yen 220 200 1.6 180 1.4 160 140 1.2 120 100 1 12/31/1999 12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 Source:

  6. Slide 6: UK property market - IV

    UK property market - IV Impact of London as a global financial centre Financial services sector drives international competitiveness of UK Page 6

  7. Slide 7: Recent trends in listed and direct real estate markets in the UK

    Recent trends in listed and direct real estate markets in the UK Listed market FTSE Real Estate • 80.9% off peak (Jan 2007) to low point (March 2009) Index • 64.7% off peak to now • 84.9% up from low point to now Direct market Capital values • 44% off peak (June 2007) Rental values • 8% off peak (Ap

  8. Slide 8: Issues underlying downturn in UK direct commercial property markets

    Issues underlying downturn in UK direct commercial property markets 1. Investment property pricing bubble 2. Economic downturn 3. Lack of availability of credit Page 8

  9. Slide 9: Issues underlying downturn in UK direct commercial property markets

    Issues underlying downturn in UK direct commercial property markets 1. Investment property pricing bubble (25)% 2. Economic downturn (20) – (25)% 3. Lack of availability of credit (5) – (10)% (43) – (50)% How much will be recovered? Page 9

  10. Slide 10: UK real estate market trends – I

    UK real estate market trends – I Real growth in rental values 30 20 10 0 percent -10 -20 All property ERV growth - real -30 All retail ERV growth - real London office ERV growth - real -40 H1 2009 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 200

  11. Slide 11: UK real estate market trends – II

    UK real estate market trends – II London office vacancy rates 25 20 15 percent 10 5 City West End 0 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: PMA London office vacancy rates currently below levels in 1991 and 2003 Page

  12. Slide 12: UK real estate market trends – III

    UK real estate market trends – III Retail market investment portfolio voids 10 8 6 percent 4 2 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: IPD Retail void levels higher than in early 1990s Page 12

  13. Slide 13: UK real estate market trends – IV

    UK real estate market trends – IV Retail sales growth 12 Like-for-like Total 9 6 percent 3 0 -3 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Source: BRC Retail sales more resilient than expected in downturn Page 13

  14. Slide 14: UK real estate market trends – V

    UK real estate market trends – V Rental and capital values 30 ERV growth Capital growth 20 10 percent 0 -10 -20 -30 H1 2009 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: IPD Divergence between renta

  15. Slide 15: UK real estate market trends – VI

    UK real estate market trends – VI Yield gap 12 12 Gap Gap 10 year gilt yield 5 year swap rate 10 10 Equivalent yield Initial yield 8 8 6 6 percent percent 4 4 2 2 0 0 -2 -2 Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-94 Jun-95 J

  16. Slide 16: UK real estate market trends – VII

    UK real estate market trends – VII Comparison to early 1990s Early 1990s Current cycle (to date) All property Capital values -27.1 -44.2 Rental values -21.7 -8.0 Retail Capital values -19.0 -45.7 Rental values -7.0 -5.7 Void rate 6.0 7.1 London offices Capital values -51.2 -47.0 Rental values -56.9

  17. Slide 17: UK listed real estate sector has doubled in value since March to £21bn

    UK listed real estate sector has doubled in value since 9 March to £21bn (£5bn fresh equity) Page 17

  18. Slide 18: Land Securities – key facts

    Land Securities – key facts ƒ Founded 1944 ƒ Largest listed real estate company in UK (by market capitalisation) ƒ £4.7bn market capitalisation ƒ £9.4bn portfolio ƒ Focus on London offices and retail Piccadilly Lights, W1 A leading multi-focus company Page 18

  19. Slide 19: Land Securities – portfolio composition

    Land Securities – portfolio composition By capital value - £9.4bn 8.6% 11.9% 42.1% 27.5% 9.9% London offices London retail Shopping centres Retail warehouses Other Focus on London office and retail Page 19

  20. Slide 20: Land Securities – key assets

    Land Securities – key assets London Portfolio Piccadilly Circus Cardinal Place Lights New Street Square Queen Anne’s Gate One New Change 44% of London office portfolio in the West End Page 20

  21. Slide 21: Land Securities – key assets

    Land Securities – key assets Retail Portfolio Team Valley, Newcastle Buchanan Galleries, Glasgow White Rose, Leeds Bullring, Birmingham Westwood Cross, Thanet St David’s 2, Cardiff N1, Islington, London Cabot Circus, Bristol 26 shopping centres and 24 retail warehouse parks Page 21

  22. Slide 22: Land Securities – property yields

    Land Securities – property yields (1) Range of Gross Income Equivalent equivalent Yield(2) Yield(3) yields(4) % % % Shopping centres and shops 9.0 8.0 6.9-10.3 Retail warehouses and foodstores 8.3 7.9 6.9-10.7 London retail 5.6 5.8 5.0 - 7.7 London office 8.1 7.3 6.3-10.5 Total portfolio 8.1 7.5 5.0

  23. Slide 23: Land Securities – balance sheet management

    Land Securities – balance sheet management ƒ Approximately £4.0bn of disposals since April 2007 ƒ Rights issue to raise £755.7m (net) in March 2009 Devonshire House, W1 ƒ Group LTV at 31 March 2007 of Sold in 2007 at 3.9% yield 38.0% ƒ Group LTV at 31 March 2009 of 52.0% Whitefriars, Canterbury Sold

  24. Slide 24: Land Securities – liquidity management

    Land Securities – liquidity management ƒ £4.4bn adjusted net debt with average Expected debt maturities (nominal) duration of 8.7 years £m 2500 ƒ Cash holdings of £2.2bn 2000 (as at 31 July 2009) 1500 1000 ƒ Weighted average cost of gross debt of 4.4% 500 0 ƒ No event of financial default under 2010

  25. Slide 25: London offices: adding value through development

    London offices Adding value through development London office development 1800 completions 1600 1400 Square feet (‘000s) 1200 1000 Park House, W1 800 600 38% pre-let 400 200 0 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14+ - year to 31 March - Selborne House, SW1 A good track record on timing of Londo

  26. Slide 26: Retail: adding value through asset management and tenant mix

    Retail Adding value through asset management and tenant mix Turnover rent per square foot £60 £50 £40 £30 £20 £10 £- 2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 Outgoing Incoming Gunwharf Quays, Portsmouth Understanding retailer performance to optimise shopping centre values Page 26

  27. Slide 27: Land Securities - conclusion

    Land Securities - conclusion 1st stage of Capital values increase Attractive level of gearing recovery Occupier demand Attractive development opportunities 2nd stage of improves / rental values – especially in London West End recovery increase office market Through the cycle Impact of cost base Cost

  28. Slide 28: Nomura Global Real Estate Forum – Tokyo

    Nomura Global Real Estate Forum – Tokyo 4 September 2009

Land Securities Group — Nomura Global Real Estate Forum – Tokyo 2009 on 6ix