2013 Interim Results: 25 November 2013 Agenda 1 Overview Maxwell - - PowerPoint PPT Presentation

Quintain Estates & Development PLC 2013 Interim Results: 25 November 2013

Quintain Estates and Development PLC

Agenda

2

1 Overview Maxwell James 2 Finance Review Richard S tearn 3 London Development Maxwell James 4 Asset Management Nigel Kempner 5 Outlook Maxwell James

Quintain Estates and Development PLC

Delivery of 2012/ 13 priorities

S tated May 2013

3

Maximise value from Wembley and Greenwich Reduce Group net debt to below £400m Grow sustainable income streams To be a leading

London investment and development specialist

To be a leading

London investment and development specialist

Quintain Estates and Development PLC

Quintain Transformed

Re-positioning completed

4

Creating a leading

London investment and development specialist

Creating a leading

London investment and development specialist

Dispose De-lever Deliver £0.5bn

capital recycled

£175m*

net debt, reduced from £535m

Wembley

Phase 1 completed

Greenwich

value crystallised

* Pro-forma net debt as at 30 S ept ember 2013 reflect ing S equel and GPRL disposals

Hilton joint venture

£30.1 million realised and upside retained

5

Planning consents at Greenwich Peninsula

Masterplan re-positioning, enabling construction and maximising value

6

£115m Bond Issue

Diversifying debt sources and extending maturities

7

AEG appointed as Wembley Arena operator

Access to global music portfolio, positive for LDO and Hilton

8

Regional investment portfolio sold

£39 million disposal, increasing focus on London

9

London Designer Outlet opened

350,000 visitors since opening and 83% let

10

Disposal of GPRL to Knight Dragon

£230m of aggregate proceeds realising £31m profit

11

Quintain Estates and Development PLC

Group Re-S et

Enabling value-creation and growth

12

Focused

• n

London Focused

• n

London A solid financial base A solid financial base Ability to create value Ability to create value

Finance Review Richard S tearn, Finance Director

Quintain Estates and Development PLC

Building Financial S trength

Focused obj ectives

14

Balance Sheet Management

£115m debt refinanced with issue of seven year bond Net debt reduced through the recycling of £450m over 18 months to £175m¹

Balance Sheet Management

£115m debt refinanced with issue of seven year bond Net debt reduced through the recycling of £450m over 18 months to £175m¹

Rebalancing Income Profile

New income streams:

• London Designer Outlet
• Wembley Arena
• iQ S

horeditch

• London Portfolio
• Hilton Wembley

Rebalancing Income Profile

New income streams:

• London Designer Outlet
• Wembley Arena
• iQ S

horeditch

• London Portfolio
• Hilton Wembley

(1) Pro-forma net debt as at 30 S ept ember 2013, reflect ing S equel and GPRL disposals

Quintain Estates and Development PLC

15

Financial Review

Headlines

Earnings 6 months to September 2013 £m 6 months to September 2012 £m Adj usted profit (before capital movements) before tax 3.1 4.6 Profit (loss) after tax 7.1 (22.5) EPRA diluted EPS 1.2p 0.1p Balance sheet Pro-forma(1) £m 30 Sept 2013 £m 31 March 2013 £m Net debt 175.3 452.8 443.6 Bank gearing 30% 76% 76% Net Asset Value per share pence pence pence Basic 112 106 104 Diluted 112 106 104 EPRA diluted 113 107 105

(1) Pro-forma balance sheet as at 30 S ept ember 2013 reflect ing S equel and GPRL disposals

Quintain Estates and Development PLC

16

Income S tatement

Rebalancing profile

A reconciliat ion t o t he st at ut ory income st at ement is given in t he appendix

Adjusted profit basis (including discontinued operations) 6 months to September 2013 £m 6 months to September 2012 £m Net rent 4.1 6.9 Fees from asset and development management 4.0 3.8 Other income 2.1 4.9 Gross profit 10.2 15.6 Administrative expenses (9.6) (11.6) Operating profit 0.6 4.0 Joint ventures and associates 4.1 2.9 Net finance costs (1.6) (2.3) Pre-tax adj usted profit 3.1 4.6

Quintain Estates and Development PLC

%

• f

Group by GAV Valuation at Sept 2013 £m Change since March 2013 £m Movement since March 2013 % Wembley 21.1 Investment assets 232.3 8.3 3.7% 28.3 Development land 312.0 0.1

• Greenwich Peninsula

1.7 Investment assets 18.8

• S

ilvertown 0.8 Development land 9.2 0.7 7.8% iQ 19.3 S tudent accommodation 212.9 4.2 2.0% Quercus 5.7 Long-term healthcare 62.3 (2.3) (3.6)% Other regional assets 3.9 S econdary property, land 43.5 (1.6) (3.5)% Continuing portfolio 80.8 891.0 9.4 1.1% Assets held for sale 4.9 S econdary property 53.9 (1.5) (2.7)% 14.3 Greenwich development land 157.6

• Total

100.0 1,102.5 7.9 0.7% Portfolio split 56.3 Held in Group 620.3 6.0 1.0% 43.7 Held in j oint ventures 482.2 1.9 0.4%

17

Property Portfolio

£9.4m increase over six months

Quintain Estates and Development PLC

Pro-forma post Sequel and GPRL sale September 2013 £m Change during six months £m March 2013 £m Investment properties 556.8 556.8 (5.7) 562.5 Joint ventures 204.9 204.9 (151.9) 356.8 Other non-current assets 15.0 15.0 (49.4) 64.4 776.7 776.7 (207.0) 983.7 Trading properties 9.6 9.6 (0.6) 10.2 Assets held for sale

• 256.5

256.5)

• Net debt

(175.3) (452.8) (9.2) (443.6) Other assets and liabilities (27.3) (40.0) (28.1) (11.9) Net assets 583.7 550.0 11.6) 538.4 Net asset value per share 112p 106p 2p 104p

18

Balance S heet

Platform for growth

Quintain Estates and Development PLC

538 550 584

10.2 7.9 0.6 33.7 4.1 9.6 1.6

500 510 520 530 540 550 560 570 580 590 Mar‐13 Reported NAV Adjusted gross profit, inc JVs Admin expenses Adjusted finance costs Revaluation of property Other capital movements Sep 13 Reported NAV NAV accretion GPRL sale Pro‐forma NAV

£m

Net Asset Bridge

Net asset value accretion

19

(1) Income st at ement figures are on an adj ust ed basis

Following S equel and GPRL transactions

(1)

104p 106p 112p

Quintain Estates and Development PLC

17 52 86 31* 186 44 230

50 100 150 200 250 Original share of PQ Share of infrastructure Valuation gains to Sept 13 Premium (20%) Proceeds for 40% interest Settlement of deferred loan Total proceeds

£m

Greenwich Disposal

20% premium achieved in 16 months

20

* Compares t o a £26m premium implied by S avills updat ed 30 S ept ember 2013 valuat ion

Carrying value

Quintain Estates and Development PLC

(4.0) 1.6 1.2 4.5 3.3

(4.0) (3.5) (3.0) (2.5) (2.0) (1.5) (1.0) (0.5) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 DM/PM fees Share of JV pre‐ development costs Team costs Net interest saving Annual earnings benefit

£m

Greenwich Disposal

Earnings enhancing

21

Income and cost figures are on an annualised illust rat ive basis

Quintain Estates and Development PLC

Covenant Pro-forma¹ 30 September 2013 31 March 2013 Net debt £175m £453m £444m Gearing, per banking covenants 110% 30% 76% 76% Loan-to-value ratio 24% 45% 46% Look-through LTV 35% 51% 53% Committed but un-drawn debt £148m £70m Cash balance (included in net debt) £27m £45m Average cost of debt 3.7% 3.2% Weighted average debt maturity (core debt) 3.4 yrs 2.7 yrs Hedging:

• fixed
• caps

65.7% 34.3% 65.1% 34.9% Interest cover – per banking covenants 1.25x 2.2x 8.5x

22

Debt Financing

Bank financing reducing

(1) Pro-forma net debt as at 30 S ept ember 2013 reflect ing S equel and GPRL disposals

Quintain Estates and Development PLC

Corporate Debt Maturities

New seven year bond extends maturity profile to 2020

23

£m

Quintain Estates and Development PLC

£535m £453m £(193)m £111m £68m £(288)m 100 200 300 400 500 600

LDO, MSCP 24

De-leveraging

Long-term target delivered well ahead of schedule

March 2012 September 2013

Capital recycling Hilton, LDO, iQ Contracted disposals LDO, Wembley

Last 18 months Next 6 months

Target <£400m

Net debt position Capex Disposals

<£300m

£m

Quintain Estates and Development PLC

Building Financial S trength

Focus on leverage and income

Balance Sheet Management

Obj ective: Retain capital structure appropriate to underlying asset base

Balance Sheet Management

Obj ective: Retain capital structure appropriate to underlying asset base

Driving Income

Obj ective: Create sustainable income streams with potential for growth

Driving Income

Obj ective: Create sustainable income streams with potential for growth

25

Insert text about image here

Quintain Estates and Development PLC

27

Wembley Park

A maj or consented site

Quintain Estates and Development PLC

Wembley Park

Big experience + human scale

28

Quintain Estates and Development PLC

First Phase Complete

Wembley Park Boulevard

• 1.8 million sq ft completed
• Centre of Wembley Park opened
• West-End standard facilities
• Forecast annual footfall of c.8m people

29

Quintain Estates and Development PLC

Wembley Arena

World-class operator completes re-vitalisation

• Acquired in 2002
• Re-opened post-renovation in 2007
• Introduced Barclaycard as sponsor in 2010
• S

ecured AEG as operator in 2013

30

Quintain Estates and Development PLC

Hilton London Wembley Hotel

Building income

• Opened July 2012
• 50%

sale to Oaktree Capital Management in April 2013 for £30m

• Performance strong and improving

31

Quintain Estates and Development PLC

Brent Civic Centre

Consolidated offices on site

• Land sale to Brent Council in 2008
• Doors opened in 2013
• Quintain has a long lease on five

retail units on ground floor

32

Quintain Estates and Development PLC

London Designer Outlet

Maj or new retail and leisure centre

• Planning permission secured in 2008
• Anchors secured in 2011
• Opened 24 October 2013
• Now 83%

let

• 350,000 visitors since opening

33

Quintain Estates and Development PLC

34

London Designer Outlet

350,000 visitors in first month

Quintain Estates and Development PLC

Consumers within one hour: 10.4 million people Consumers within one hour: 10.4 million people Consumers within one hour: 10.4 million people Wembley event goers: 4 million people Wembley event goers: 4 million people

Local consumers: 0.7 million people Local consumers: 0.7 million people

International London Tourists: 15 million people International London Tourists: 15 million people International London Tourists: 15 million people

London Designer Outlet Target Customers

S taged marketing strategy

35

Quintain Estates and Development PLC

36

Residential Quarter Residential Quarter

Quintain Estates and Development PLC

Residential Quarter

1,300 homes next to Wembley Park S tation

• Planning application submitted for

475 homes

– seven buildings around an acre of green space – 5-16 storeys – 90% private homes

• Planning decision in December
• Construction starting H1 2014/ 15

37

Quintain Estates and Development PLC

38

Wedding Gardens Wembley S tadium Wembley Arena 15 cafes & restaurants 9-screen cinema Neighbourhood S quare 70 shops at LDO Hilton Hotel

All j ust 20 minutes from Bond S treet, 30 minutes from Heathrow

Asset Management

Quintain Estates and Development PLC

• Progressively re-balancing portfolio to focus on London:
• S

eQuel disposal completed after period end

Asset Management Portfolio

Focus on income

40

London Portfolio:

£1.2bn AUM

Other vehicles:

£0.9bn AUM

London Portfolio Quantum WELPUT Quercus iQ S tudent Accommodation

Quintain Estates and Development PLC

iQ

Leading student accommodation provider

• Growing, strong-yielding income stream
• Top 10 UK provider

– 47% in London by value

• Value growth:

– 2011: 6.5% – 2012: 6.2% – 2013: 7.0%

• 99.6%

let

• 2.7%

increase in avg. rent (Y

• Y)
• £3.5m contribution over period

41

Quintain Estates and Development PLC

WELPUT

£962m central London portfolio

• Top performing UK office fund
• ver the last 3 and 5 years

annualised¹

• S

trategy to adopt overweight position to leasing market

• October 2013 Trust performance

per annum:

– 12 months: 20.6 % – 3 years: 16.6 % p.a. – 5 years: 11.1 % p.a.

• £1.1m contribution over period

42 ¹Top performing UK office fund in respect of t he AREF/ IPD UK Pooled Propert y Fund Index, S ept ember 2013

Quintain Estates and Development PLC

• Vertically-integrated London team
• S

tarting to secure mandates beyond WELPUT

• Ability to allocate capital following GPRL disposal

London Portfolio

43

Item London Portfolio Criteria Geographical reach London-wide Finance Quintain and/ or 3rd party capital or Quintain co-investment Partners UK institutions and overseas investors Objective Create institutional-grade assets through considerable value-add in planning and asset management Expertise S ite acquisition; planning; development, proj ect and asset management; leasing; and financing

Outlook

Quintain Estates and Development PLC

Portfolio

Business model

45

Wembley Park Asset Management London Portfolio

Focused on creating outperformance for shareholders

Quintain Estates and Development PLC

• Accelerate delivery of Wembley Park

– next phase of residential development – incremental retail and leisure

• Facilitate growth in iQ student accommodation

– invest for expansion

• Leverage our skills and experience in London

– invest in and develop a growing London Portfolio

Next S teps

Moving to growth

46

Quintain Estates and Development PLC

Group Re-S et

Enabling value-creation and growth

47

Focused

• n

London Focused

• n

London A solid financial base A solid financial base Ability to create value Ability to create value

Quintain Estates and Development PLC

48

The London Development and Investment S pecialist The London Development and Investment S pecialist

Quintain Estates and Development PLC

Appendix

49

Quintain Estates and Development PLC

50

Income S tatement

S tatutory format

6 months to September 2013 £m 6 months to September 2012 £m Net rent 1.4 3.7 Fees from asset and development management 4.0 3.8 Other income 2.1 4.9 Amortisation of intangibles (0.4) (0.3) Gross profit 7.1 12.1 Administrative expenses (9.6) (11.6) Joint ventures and associates (including revaluation movements) 5.4 6.8 Profit (loss) from sale of non-current assets 0.5 (9.7) S urplus (deficit) on revaluation of investment property 7.5 (17.7) Operating profit (loss) 10.9 (20.1) Net finance costs (2.9) (5.1) Pre-tax profit (loss) 8.0 (25.2) Tax (charge) credit (0.2) 5.6 Discontinued operations (0.7) (2.9) Profit (loss) after tax 7.1 (22.5)

Quintain Estates and Development PLC

6 months to September 2013 £m 6 months to September 2012 £m Pre-tax adjusted profit 3.1 4.6 Amortisation of intangible asset (0.4) (0.3) Revaluation surplus (deficit) – continuing operations 7.5 (17.7) – discontinued operations (1.5) (6.9) – j oint ventures 1.9 5.6 Profit (loss) on disposal – continuing operations 0.5 (9.7) – discontinued operations (1.2)

• – j oint ventures

(1.2)

• Mark to market adj ustments

– continuing operations (0.9) (2.9)

• j oint ventures

0.8 (0.1) Tax charge – continuing operations (0.2) 5.6 – discontinued operations (0.4) 1.0 – j oint ventures (0.9) (1.7) Profit (loss) after tax 7.1 (22.5)

51

Income S tatement

Reconciliation between adj usted and statutory profit

Quintain Estates and Development PLC

London Development Asset Management Other Wembley £m G’ wich £m Other £m Total £m Quercus £m iQ £m S eQuel £m Other £m Total £m £m Total £m Underlying movements Operating profit 3.2 0.8 0.4 4.4 3.0 5.9 2.7 2.7 14.3 (9.6) 9.1 Net finance expenses (0.7) (0.6)

• (1.3)

(0.9) (2.4) (0.8) 0.2 (3.9) (0.8) (6.0) Net profit before disposal and revaluations 2.5 0.2 0.4 3.1 2.1 3.5 1.9 2.9 10.4 (10.4) 3.1 Capital movements Profit from disposals 2.0

• (1.5)

0.5 (1.2)

• (1.2)
• (2.4)
• (1.9)

Hedging adj ustments

• 0.8
• 0.8

(0.9) (0.1) Amortisation and impairments

• (0.4)

(0.4)

• (0.4)

Revaluation movements 7.6

• (0.4)

7.2 (2.3) 4.2 (1.5) 0.3 0.7

• 7.9

Tax

• (0.2)
• (0.2)
• (0.5)
• (0.2)

(0.7) (0.6) (1.5) Profit after tax 12.1

• (1.5)

10.6 (1.4) 8.0 (0.8) 2.6 8.4 (11.9) 7.1 52

Divisional Income Analysis

Proportional accounting of j oint ventures

Quintain Estates and Development PLC

Asset Management

Income generation

Net fee income Net fee income Share of profit² Share of profit² AUM AUM QED net invested QED net invested Sept 2013 £m Sept 2012 £m Sept 2013 £m Sept 2012 £m 30 Sept 2013 £m 31 March 2013 £m 30 Sept 2013 £m 31 March 2013 £m iQ 1.0 1.3 2.5 1.3 426 417 104.1 100.2 Quercus 0.8 1.0 1.3 1.6 636 689 36.1 38.8 Welput 1.1 0.8

• 962

902 6.3¹ 6.7¹ 2.9 3.1 3.8 2.9 2,024 2,008 146.5 145.7 Non-core assets

• 0.2

1.8 0.4 90 100 48.9 49.1 Discontinued operations

• 2.7

3.2 54 55 60.7 55.3 Total 2.9 3.3 8.3 6.5 2,168 2,163 256.1 250.1

1. Quint ain’ s invest ment in Graft on Advisors, propert y adviser t o WELPUT 2. Before capit al movement s

53

Quintain Estates and Development PLC

GPRL Transaction

Net Asset Value Accretion – updated to 30 S ept 2013

54

£m Deal value 230.0 S ettlement of PQ deferred payment (44.2) Proceeds excl. settlement of PQ 185.8 Book Value (155.0) Premium to Book Value 30.8 Release deferred tax liabilities 6.9 Gross NAV accretion 37.7 Cost and expenses (4.0) NAV accretion 33.7 NAV accretion per share (pence)1 6.5 NAV accretion2 6.1%

• 1. NAV accretion per share calculated using 522.0m shares outstanding as of 30 S

ept 2013 (including dilutive impact of share based payment schemes)

• 2. NAV accretion based on reported NAV of £550.1m as at 30 S

ept 2013 (excluding minority interests and including dilutive impact of share based payment schemes)

Quintain Estates and Development PLC

GPRL Transaction: Key S tatistics

Another transformational deal

Key statistics £ million % Proceeds for 40 per cent. interest in GPRL (1) 185.8 S ettlement of deferred loan 44.2 Aggregate cash to be received 230.0 Pre-tax premium before expenses (3) 30.8 20% Profit on cost / premium 117.3 170% Net asset value accretion 33.7 6.1% Reduction in net debt from Transaction (3) 226.0 50% Pro-forma net debt post Transaction (4) 226.8 Reduction in gross assets from Transaction (4) 199.4 18%

(1) The carrying value of Quintain’ s 40 per cent. interest in GPRL at 30 S eptember was £155.0 million (2) The £30.6 million premium compares to a £26.0 million premium implicit in a property valuation carried out for the transaction (3) Net of transaction expenses (4) Pro-forma figures are as at 30 S eptember 2013 and exclude the S equel disposal

55

Quintain Estates and Development PLC

£m Net debt at 1 April 2012 535.0 Cash receipts: Keystone S tudent 52.7 Plaza Hotel 13.5 Wembley Hilton (50% ) 27.9 Knight Dragon JV 22.5 iQ S horeditch refinancing 55.6 Greenwich retail units 4.9 Guernsey 6.9 Other disposals 9.0 193.0 Expenditure: Wembley (88.4) iQ S horeditch (25.0) Other, including working capital 2.6 Movement in net debt 82.2 Net debt at 30 S eptember 2013 452.8 Pro-forma net debt excluding discontinued operations 175.3

56

Repatriated Capital

18 months to S eptember 2013

Quintain Estates and Development PLC

57

Joint Venture Debt

£m numbers are QED share (1) iQ covenant limit s and calculat ions differ bet ween lenders

As at 30 September 2013 Quercus iQ¹ Net debt £28.3m £104.6m Weighted average debt maturity 3.1 years 3.5 years Weighted average interest rate 4.9% 3.5% %

• f debt at fixed / capped interest rates

67% 100% Interest cover 2.8x 2.3x / 2.5x Interest cover covenant 1.5x 1.25x / 1.4x Loan-to-value 51% 61% / 53% Loan to value covenant 60% 75% / 68%

Quintain Estates and Development PLC

Regional Assets

58

Quantum: Bristol & Bath Science Park

• Opened S

eptember 2011

• Actively leasing: Innovation Centre 89%

let; Grow-on centre 75% let

• National Composites Centre, funded by Rolls Royce, Airbus and GKN Aerospace, opened 2011
• Contribution: £1.3m

Quercus

• Programme of disposals to reduce debt and protect covenants
• Reliable performance from the core ‘ Hold’ portfolio with minor valuation reduction of (0.03%

) in last quarter and rental growth of 1.14%

• ver same period.
• Contribution: £2.1m