Intu (SGS) Finance plc Investor Presentation February 2013 - PowerPoint PPT Presentation

Intu (SGS) Finance plc Investor Presentation February 2013

Presenters Matthew Roberts Finance Director • Appointed Finance Director in June 2010 • Previously Finance Director of Debenhams plc (1996 - 2003) and Chief Financial Officer of Gala (subsequently Gala Coral Group) (2004 – 2008) • Managed Debenhams’ 1998 IPO and closely involved in the £3bn debt raising to finance Gala’s acquisition of Coral Mike Butterworth Chief Operating Officer • Appointed in October 2011 • Joined the Group as Chairman of CSC Trafford in 2011 • Formerly Property Director of Peel Holdings and Managing Director of The Trafford Centre Limited Daniel Shepherd Group Treasurer • Joined in September 2008 • Treasury career commenced in 2000 with Enterprise Oil followed by roles at PA Consulting Group and easyJet Hugh Ford General Corporate Counsel • Appointed General Corporate Counsel in 2003 • Previously General Manager Legal at Virgin Atlantic Airways and, prior to that, commercial lawyer at British Airways Plc • Qualified as a solicitor in 1992 with Freshfields

Intu (SGS) Finance plc Agenda 1. Introduction 2. Intu as Sponsor 3. Intu as Property Administrator 4. Initial portfolio of Security Group 5. Structural features and key creditor protections 6. Proposed bond issue 7. Conclusion Appendix

1.Introduction

Intu and its centres • FTSE 100 REIT – UK’s 4th biggest (1) • UK’s largest shopping centre operator – 15 centres – 10 of the UK’s top 25: more than any other operator – Exchanged on Midsummer Place shopping centre • Total asset value of £7.1bn (2) • Formerly Capital Shopping Centres Group plc • High quality portfolio – Two thirds of UK population within 45 minutes’ drive of an Intu shopping centre – 320 million annual customer visits – 16.6 million sq ft of prime retail – 96% occupancy (2) ____________________ (1) By market capitalisation. (2) As at 31 Dec 2012.

Transaction overview • Secured issuer-borrower structure Security Group Obligor Security Property and Obligor Administration • FinCo will be able to raise Floating Charge Agreement Obligor Property PropCos and other Security Administrators Obligors debt from multiple sources, Trustee including day one – Up to c.£700m comprising Issuer Cash Manager benchmark bond and Issuer Cash Proceeds Obligor Cash Management of ICL committed bridge facility Management Agreement Obligor Agreement – c. £450m 5 year term facility Cash Manager • All secured debt ranks Notes ICL FinCo Issuer Noteholders senior and pari passu, with the same covenants and security package Issuer Security Liquidity Private Bridge Facility Hedge Facility (1) (Including Placements and Term Facility Agreements Obligor Security ) • Investors benefit from Issuer Trustee – full first-ranking security – ability to appoint Liquidity Private Authorised administrative receiver Hedge Facility Placement Facility Counterparties Provider Notecholders Providers – robust common security and covenant package – ringfencing of the Security Group from insolvency Secured, long-term, stable funding platform balancing portfolio and operational flexibility with robust creditor protections. This represents Intu’s funding vehicle of choice for raising financing in the future ____________________ (1) To be entered into to the extent that there is no debt service reserve and if the LTV > 63.75% or Historical ICR < 1.50x

High quality, well known properties selected for the initial portfolio of the Security Group • High quality and large scale shopping centres, diversified across geography and location (out-of-town and town centre) • Wide, affluent catchment areas with strong transport links • Anchored by leading UK and international brands • 3 of the 4 centres previously financed through rated CMBS • Representative of Intu’s properties, with initial portfolio of Security Group accounting for c. 33% of the total value and net rental income Value PMA Shopping centre / location £m (1) Rating (2) Description • Flagship UK shopping centre with 4 department stores and over 250 shops • Super prime, out-of-town regional shopping centre Thurrock • 1,093 7 (M25) 100% owned, freehold • One of Scotland’s leading retail and leisure destinations, 15 minutes from Glasgow city centre • Glasgow (3) Prime, out-of-town 582 22 • 100% owned, freehold • Premium location in affluent home county of Hertfordshire • Prime, regional centre Watford 324 19 • 100% leasehold interest, 999 year lease • Nottingham’s number 1 retail destination • Nottingham (3) Prime, major city centre 307 38 • 100% owned, freehold Total 2,306 ____________________ (1) Note: DTZ valuation as of 31 Dec 2012 (2) Source: PMA. Top shopping centres on basis of PMA Retail Score (2012) (3) Valuations differ from those in Intu’s 2012 annual results as certain adjacent properties are excluded from the Security Group

Transaction key messages • Superior quality of SG initial portfolio – Large-scale, geographically diversified portfolio selected for the Security Group (“SG Initial Portfolio” on the Issue Date and “SG Portfolio” thereafter), including 3 of the UK’s top 25 shopping centres (1) – Representative of Intu’s wider portfolio of shopping centres (“Intu Properties”) • High occupancy rates, solid tenant mix and diversified income stream – Predictable, highly granular rental income stream from more than 350 tenants – Top 10 tenants represent approximately 30% of gross contracted rent and no single tenant more than 5% – Current occupancy 95% • Strong, experienced property administrator – UK’s largest shopping centre operator with total asset value of £7.1bn – Operating 10 of the UK’s top 25 shopping centres (1) and 15 in total • Low cost and maintenance requirements – Service charge allows maintenance capex and operating costs to be fully passed through to tenants • Simple, robust financial structure with comprehensive covenant package – Simple, single-tranche debt with opening LTV of 50% – Tiered covenant regime with incremental restrictions imposed as performance deteriorates – Limitations focused on portfolio changes and developments with additional liquidity and hedging requirements ____________________ (1) Source: PMA 2012 Retail Score.

2. Intu as Sponsor

Intu - UK market leader Ownership of major UK shopping centres (1) (3) (2) ____________________ (1) Number of shopping centres > 400,000 sq.ft. in 50 highest rented locations where owner has at least a 33% share (excludes The Potteries and Broadmarsh). Source: PMA (2) As at 31 Dec 2012. (3) Excludes Broadmarsh

Intu’s historic occupancy rates and top 20 tenants Top 20 tenant groups total Historic occupancy rates Rank Tenant group Number of units Secured rent % • Occupancy remained broadly steady in H2 2012 1 Arcadia (1) 59 6% • Compares favourably with the UK average shop 2 Next 22 3% vacancy of 14% 3 Boots 24 3% • 4 H&M 15 2% Successfully re-let the vast majority of units let to 5 Debenhams 9 2% tenants who entered administration during 2012 6 JD Sports (2) 34 2% • 4% of rent is currently attributable to tenants in 7 Sportsdirect (3) 21 2% 8 New Look 12 2% administration, of which 3% is being traded 9 Monsoon 26 2% 10 Dixons Retail 12 1% 11 Primark 7 1% 12 River Island 14 1% 13 A S Watson (4) 31 1% 100% 14 Signet Group (5) 32 1% 15 W H Smith 13 1% 98% 16 Clinton’s 21 1% 17 Republic (7) 14 1% 96% 18 House of Fraser 4 1% 19 Aurora (6) 26 1% 94% 20 HMV (7) 12 1% Top 20 tenant 408 35% 92% groups Total ____________________ (1) Includes BHS, Topshop, Topman, Burtons, Dorothy Perkins, 90% Miss Selfridge, Wallis and Evans (2) Includes Bank, Blacks, Cecil Gee and Scotts Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (3) Includes USC (4) Includes Superdrug and The Perfume Shop 2008 2009 2010 2011 2012 (5) Includes H Samuel and Ernest Jones (6) Includes Oasis, Warehouse and Coast (7) HMV entered administration in January 2013, Republic in February 2013. In respect of these two tenants, at 25 February 2013 25 units (2 per cent of secured rent) were being traded by the administrators

Intu – financial highlights 31 December 31 December £m Full Year 2011 Full Year 2012 £m 2011 2012 Net Rental Income 364.0 362.6 Total properties £6,960m £7,073m Net external debt (1) £(3,374)m £(3,504)m Administration expenses (24.1) (26.7) Net debt to assets 48.5% 49.5% Net finance cost (underlying) (206.0) (204.0) Dividend from US investment 8.3 6.3 Cash and undrawn committed corporate facilities £421m £563m Other (2) (3.6) (0.5) Net assets £2,946m £3,006m Underlying earnings 138.6 137.7 NAV per share (diluted, adjusted) 391p 392p Underlying earnings per share 16.5p 16.1p Weighted average cost of gross debt 5.6% 5.2% Weighted average maturity of gross debt 7.0 years 6.1 years Interest cover 1.71x 1.69x The Security Group represents 33% of Intu by value and net rental income ____________________ (1) Net external debt adjusted for Metrocentre compound financial instrument (2) Includes (2012 £5.8 million; 2011 £5.3 million) convertible bond interest charged directly to reserves in financial statements but included in the calculation of underlying earnings.

3. Intu as Property Administrator