Development Securities PLC Interim results for six months ended 31st - - PowerPoint PPT Presentation
IMAGE TO BE CHANGED The MVMNT, Greenwich Development Securities PLC Interim results for six months ended 31st August 2013 Contents Slide number Overview and highlights 3 10 Financial results 11 15 Operating review 16 - 28 -
The MVMNT, Greenwich
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£m £m £m
Rock portfolio 0.3 2.7 4.3 PaddingtonCentral 6.4
2.0
Wick Site, Littlehampton
2.5 Westminster Palace Gardens, London
1.9 Project Management Fees/Net Rental Income 1.5 1.2 2.5 Gains arising from additional trading asset realisations 3.2 1.6 12.7 Other (0.1) 2.5 3.3 Gross contribution 13.3 11.9 28.1
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£ millions
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FY 2014 FY 2015 FY 2016+ MAJOR DEVELOPMENTS PORTFOLIO Cambridge Science Park X X 10 Hammersmith Grove X 12 Hammersmith Grove X X PaddingtonCentral X Southwark X X INVESTMENT PORTFOLIO Manchester Arena X Wick Lane Wharf X X FY 2014 FY 2015 FY 2016+ DEVELOPMENT AND TRADING PORTFOLIO Hale Barns X X Marsh Mills X Romford* X Barnstable X Beyond Green - Norwich X X Beyond Green - Pincents Hill, Tilehurst X Launceston X Luneside East X Sandbanks X Tranmere - HDD X Lawley - HDD X Buckshaw - HDD X X Newport - HDD X Llanelli - HDD X HDD - other X X Abbey Wood X X 399 Edgware Road X Dartmouth X Rock Portfolio X Rembrandt House, Watford X X Woking X Wind Farms X X Shepherds Bush X The MVMNT, Greenwich X Kensington Church Street X Real estate loan portfolios X The Old Vinyl Factory, Hayes X X X Morden Wharf X Axis, Manchester X Essex foodstore* X Dublin mixed-use scheme* X Atlantic Park X *New acquisitions made since 28th February 2013
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£m
£m
£m Profit before revaluations, interest & taxation 12.7 9.5 23.8 Net finance costs (5.8) (4.9) (9.3) Profit before revaluations and taxation 6.9 4.6 14.5 Swap mark-to-market valuations 0.7 (0.9) (0.8) Property revaluation gains/(loss) (including joint ventures) 0.5 (4.4) (12.9) Profit/(Loss) before tax 8.1 (0.7) 0.8 Profit/(Loss) per share 5.9p (1.4)p 2.0p Dividend per share 2.4p 2.4p 4.8p
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£m
£m
£m Net assets attributable to Shareholders at 28th February 2013 306.6 Contribution from investment property 6.5 6.5
0.5
Contribution from development and trading portfolio 13.3 13.3
(6.5) (6.5)
(5.8) (5.8)
2.9
Other (0.6) (0.6)
10.3 6.9 3.4 Taxation (1.4) (1.4)
(2.9) (2.9)
6.0 2.6 3.4 Net assets attributable to Shareholders at 31st August 2013 312.6
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Pence per share 255 (5.8) (4.8) (1.1) (2.4) 5.3 10.9 0.4 2.3 251 250 252 254 256 258 260 262 264 266 268
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£m
£m Gross debt 212.0 206.0 Cash (69.0) (59.2) Net debt 143.0 146.8 Gearing 45.7% 47.9% Share of net debt in joint ventures 33.7 49.3 Net debt including joint ventures 176.7 196.1 Gearing including joint ventures 56.5% 63.9% Analysis of gross debt Fixed rate 46.1% 48.0% Capped / SWAP 43.9% 42.1% Floating rate 10.0% 9.9% Weighted average interest rate 5.7% 5.9% Weighted average maturity 7.6 years 8.3 years
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Objective To create value through the regeneration of redundant or undervalued real estate, creating a product that can be sold into the prime or near-prime market
Objective To realise gains through the acquisition of loan portfolios secured against underlying real estate assets, from banks and financial services providers
Objective To deliver prime developments that achieve maximum returns with reduced risk exposure
Objective To sustain and grow a stable income stream from higher yielding investment assets with enhancement potential
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c.£30 million cash to be released from legacy assets over next few years Broughton, Flintshire
residential site to a housebuilder (at book value)
399 Edgware Road, London NW9
use scheme on seven-acre development site.
scheme
54,000 sq. ft. of additional retail space and 580 car parking spaces
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Asset realisations continue to generate solid gains
PaddingtonCentral termination (net of associated costs)
Three new real estate opportunities secured
foodstore brand
Further planning successes secured since year end to date
*Details of residential portfolio given on slide 30-31 in Appendix
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Concluding agreement at PaddingtonCentral
Nascent economic recovery and growing demand for office accommodation in fringe Central London locations – renewed focus on
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Growing investor confidence in secondary market
good quality, higher yielding secondary real estate – assets which form the core of our investment portfolio
value
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Portfolio valuations have stabilised and are set to recapture value
(28th February 2013: £220.1 million)
development to follow at neighbouring Atlantic Park
Proactive asset management continues to extract maximum value from our assets
Top 5 occupiers as at 31st August 2013 Annual rent £m % of contracted rent 1 Waitrose 2.1 13.4% 2 Primark Stores Limited 0.5 3.2% 3 Sports World 0.5 3.1% 4 Martin McColl Ltd 0.5 3.1% 5 Brausch & Co 0.4 2.7%
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Portfolio value £208.0m £220.1m Number of assets 25 25 Contracted rent £15.4m £15.5m Valuation yield 7.5% 7.5% Equivalent yield 7.8% 7.9% Voids 6.3% 9.7%
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£m
£m
£m
Revenue 7.7 8.0 16.1 Direct costs (1.2) (1.6) (4.0) 6.5 6.4 12.1 (Loss)/gains on disposals (0.6)
Asset management fees and joint venture net income 0.6 1.2 (0.2) Contribution prior to revaluation 6.5 7.6 12.8 Revaluation (loss)/gain
(1.0) 1.5 (7.3) 2.9 (16.3) 3.5 Contribution 7.0 3.2 0.0
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Sector Capital value (£m) % of portfolio by capital value Void rates (%) Net initial yield (%) Weighted average lease length (years) London/SE weighting (%) Valuation movement (%) Foodstore anchored 64.2 33.3 3.4 5.5 13.8 33.3 1.1 Foodstore anchored (outside DS ownership) 37.7 19.6 2.2 9.2 5.8 5.7 1.5 Other Retail 46.6 24.2 12.6 8.0 9.7 8.8 (3.0) Commercial 21.3 11.1 6.7 9.3 7.8 7.0 (1.4) Mixed-use 22.8 11.8 0.9 7.6 10.5 2.1 (0.3) Total 192.6 100.0 6.3 7.5 8.6 56.1 (0.2) *Analysis covers core investment assets – direct investment portfolio excluding developable land and site assembly
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approximately 50 per cent of the units represent a long-term strategy of delivery
already showing some upside
reappraising our strategy of unlocking value from our residential land
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Scheme Name Number of Units
Constructed / Completed Wick Lane Wharf, London* 112 328 Sandbanks Road, Dorset* 5 The Collection, Lawley Village* 12 Hebble Wharf , Wakefield* 22 The MVMNT, Greenwich* 181 Nokoto Court, Bridgwater* 16 The Collection (Duplexes/Townhouses), Lawley Village* 27 Wallis Court, Buckshaw Village 30 405 Under Construction Market Place, Romford 22 Hale Barns 24 46 Planning Permission Granted Cross Quarter, Abbey Wood 216 Rembrandt House ,Watford 107 Shepherds Bush Market 212 The Old Vinyl Factory ,Hayes* 685 Anchorwood Bank, Barnstaple 350 Launceston 275 399 Edgware Road 183 North Sprowston and Old Catton, Norwich 3,500 Valentines House, Ilford 110 5638 Plannning submitted/pending Didcot 24 24 Design Phase Morden Wharf, Greenwich 700 Kensington Church Street 40 Tilehurst 250 990 TOTAL 7103 *Residential sales achieved
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The following principles, consistently followed over 15 years, underpin our strategy and our approach to risk-management:
We consider large-scale development projects to be generally a late economic cycle activity driven by an expanding economy and strengthening demand. We have never believed it appropriate for a company of our size to accept sole development risk in relation to our substantial development projects and consequently, we share the majority of development project risk with financial institutions and partners who are the more appropriate long-term investors.
We maintain a predominant focus on securing planning consents and redeveloping commercial property although the emphasis of
different stages of the property cycle. Since July 2009, we have broadened the scope of our real estate activities to include mixed-use projects that include residential, hotel and student accommodation.
Our investment portfolio provides a steady and predictable flow of funds, contributing significantly towards central overheads and mitigating the more uneven profits and cash flow arising from the major development and trading portfolio. The investment portfolio accounts for a significant element of invested equity and represents a diverse portfolio of assets across the UK, comprising carefully selected retail and office properties. 5. We invest predominantly in the UK Extended in 2013 by an initial investment in Ireland
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Lending to Commercial Property Net new lending negative for 8 consecutive quarters Initial Yield (%) Arbitrage opportunities still strong
Source: Capital Economics
All-property initial yield minus 10 year gilt yield Real estate market fairly priced All-property initial yield minus FTSE All Share dividend yield Real estate market fairly priced
Source: Capital Economics Source: Capital Economics Source: Capital Economics
50 100 150 200 250 300 350 400 2 3 4 5 6 7 8 9 10 04 05 06 07 08 09 10 11 12 13
Non-prime to prime spread, bps (RHS) IPD low yield/prime, % (LHS) IPD mid. & high yield/non-prime, % (LHS)
2 4 6 8 10 12 14 4 5 6 7 8 9 10 11 12 13 87 89 91 93 95 97 99 01 03 05 07 09 11 13
Lending to property as a % of total loan book (LHS) Net new lending to property, £bn (RHS)
1 2 3 4 5 6 1 2 3 4 5 6 90 92 94 96 98 00 02 04 06 08 10 12 14 16
IPD all property initial yields less FTSE All-Share dividend yield, % Property looks expensive CE forecast
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2 4 6 90 92 94 96 98 00 02 04 06 08 10 12 14 16
IPD all property initial yields less yields on 10-year gilts, % Property looks expensive CE forecast
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