Year End Results 2014/15 Full Year Results 2014/15 Maxwell James - - PowerPoint PPT Presentation

Year End Results 2014/15

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Full Year Results 2014/15

Quintain Full Year Results 2014/15 2

Maxwell James Chief Executive Daniel Greenslade Financial Controller Nigel J Kempner Investment Director

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Creating Shareholder Value

Quintain Full Year Results 2014/15 3

Three complementary businesses

Target returns

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Highlights

Quintain Full Year Results 2014/15 4

Good performance from investment and development assets Financial

Operating profit £41.4m (2014: £12.5m) Adjusted PBT: £6.2m (2014: £4.2m) NAV p.s. 122p (2014:115p) £375m of debt in place: earliest maturity 2018

£366.0m GAV £13.4m rental income

Maturing Wembley Park assets Net rent £9.3m (2014: £4.3m) Growing London Portfolio of 8 assets Net rent £4.1m (2014: £0.1m) New Professional Market Rental business seeded 250+ units in pipeline

£395.7m GAV

Emerald Gardens £599psf (2014: £570psf) £96.4m of joint venture sales Alto planning: 70 sales, £656psf £29.6m of joint venture sales Preparing new 43-acre masterplan Investment Development

Finance Review

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A Solid Platform for Growth

New income streams, with potential for growth, have replaced discontinued activities Strong financial platform enhanced by refinancing

• f bank facilities

Creating value from our residential and commercial assets

6 Quintain Full Year Results 2014/15

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Financial Review

Quintain Full Year Results 2014/15 7

Headlines

(1) Adjusted profit excludes disposals, valuation and mark-to-market adjustments and amortisation of intangibles but includes discontinued operations

Earnings March 2015 March 2014 Profit after tax £37.9m £52.9m Operating profit £41.4m £12.5m Adjusted profit before tax(1) £6.2m £4.2m EPRA diluted EPS 1.0p 1.1p Net Asset Value per share March 2015 March 2014 Basic NAV p.s. 122p 115p EPRA NAV p.s. 122p 114p Financing March 2015 March 2014 Net debt £200.8m £208.9m Gearing 32% 35% Look-through LTV 27% 38%

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Income Statement

Quintain Full Year Results 2014/15 8

Acquisitions and growth replacing discontinued operations

(1) A reconciliation to the statutory income statement is given in the Appendix (2) Includes £3.0m (2014: £nil) net surrender premium income

Adjusted profit basis March 2015(1) £m March 2014(1) £m Net rent (2) 15.8 3.8 Fees from asset and development management 1.3 3.1 Other income 1.9 2.2 Gross profit – continuing operations 19.0 9.1 Gross profit – discontinued operations 0.3 5.8 Administrative expenses (17.0) (17.4) Adjusted operating profit (loss) 2.3 (2.5) Joint ventures and associates 2.6 9.4 Net finance income (costs) 1.3 (2.7) Pre-tax adjusted profit 6.2 4.2

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Net Asset Bridge

595.4 611.6 639.4 3.3 14.2 (1.3) 2.9 28.1 (3.2)

570 580 590 600 610 620 630 640 650

March 2014 NAV Adjusted profit Revaluation

• f property

Other capital movements September 2014 NAV Adjusted profit Revaluation

• f property

Other capital movements March 2015 NAV

Net asset value creation

Quintain Full Year Results 2014/15 9

£m 115p 117p 122p

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Property Portfolio

(1)

Quintain Full Year Results 2014/15 10

13.8% increase in value of development land over last year

% of Group Valuation at March 2015 £m Valuation at March 2014 £m Movement since March 2014 LFL % Wembley Park 33% Investment assets (2) 272.9 254.2 4.6% 5% In development (4) 44.6 334.9 n/a 42% Development land 351.1 13.8% London Portfolio 11% Investment assets 93.1 23.9 3.3% Quercus(5) 5% Long-term healthcare 43.5 57.8 (5.8)% Non-core 4% Secondary property 29.4 33.3 1.5% Continuing 100% 834.6 704.1 7.1% iQ Student accommodation

• 216.0
• Total

834.6 920.1 7.1%

(1) Investment and trading properties (Quintain’s interest only) (2) Inclusive of rent incentives held in debtors on the Balance Sheet (3) Like for like movement net of capital expenditure and excluding capitalised interest (4) Emerald Gardens and Alto (5) Held as an associate investment with NAV £28.6m

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Balance Sheet

Quintain Full Year Results 2014/15 11

Strong financial position

March 2015 Other movements iQ and Keystone transactions March 2014 £m £m £m £m

Investment properties

686.4 110.8 5.6 570.0

Joint ventures and associates

91.1 (5.9) 15.0 82.0

Other non-current assets

28.1 8.2

• 19.9

805.6 113.1 20.6 671.9

Trading properties

23.4 17.6 (22.7) 28.5

Assets held for sale

• (106.2)

106.2

Net debt

(200.8) (103.5) 111.6 (208.9)

Other assets and liabilities

11.2 17.9 (4.4) (2.3)

Net assets

639.4 45.1 (1.1) 595.4

Net asset value per share

122p 115p

Gearing

32% 35%

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Debt Financing

Quintain Full Year Results 2014/15 12

£260m bank facilities refinanced

Covenant March 2015 March 2014 Net debt £200.8m £208.9m Gearing, per bank covenants 110% 32% 35% Loan to value ratio 25% 27% Look through loan to value 27% 38% Facility levels £375.2m £443.0m Committed but undrawn debt £167.2m £225.5m Cash balance included in net debt £7.2m £10.3m Average maturity – on full facility 4.2 years 3.1 years Average cost of debt 5.2% 4.2% Cost of bank debt 3.2% 3.9% Hedging:

• fixed
• caps

79.3% 20.7% 75.3% 24.7% Interest cover, per bank covenants 1.25x n/a 20.5x

(1) Includes impact of realised (historic) cost profits and losses on disposals (e.g. iQ, Greenwich interests and SeQuel) (2) Includes 364 day rolling overdraft facility of £20m (3) (2) (3) Includes impact of facilities cancelled after the year end (4) Net interest receivable, per banking covenant definition (4) (1)

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Corporate Debt Maturities

50 100 150 200 250 300 350 400 2015 2016 2017 2018 2019 2020

Quintain Full Year Results 2014/15 13

At May 2015: £260m facilities refinanced

2020 Bond

(1) 364 day rolling overdraft facility

£m

(1)

Total facilities in place at 31 March 2015

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A Solid Platform for Growth

New income streams, with potential for growth, have replaced discontinued activities Strong financial platform enhanced by refinancing

• f bank facilities

Creating value from our residential and commercial assets

14 Quintain Full Year Results 2014/15

Wembley Park

Creating a world-class residential, entertainment and sporting district

London Designer Outlet, Wembley Park

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Wembley Park

2005

Quintain Full Year Results 2014/15 16

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Residential Sales

Accelerating the Pace

Alto courtyard, Wembley Park

Residential Sales

Accelerating the Pace

Alto courtyard, Wembley Park

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Outstanding Wembley Park Opportunity

Substantial undeveloped existing consents

Quintain Full Year Results 2014/15 26

1m sq ft

COMPLETE

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North West Village, Wembley Park

Public squares and private gardens

Quintain Full Year Results 2014/15 28

North West Village Entertainment quarter

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10 20 30 40 50 60 70 80 90 Q1 Q2 Q3 Q4

Emerald Gardens

284 private homes:

− 257 (90%) exchanged/reserved to date

− average price £375,000 − ASP range: £250,000 - £730,000 − average £599psf

− JV sales c. £96.4m − £13.0m future JV profit to Quintain(1)

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Exceeding volume and pricing expectations

Quintain Full Year Results 2014/15

Number of homes sold per quarter & cumulative av. £psf

£576 £581 £588 £597

23 34 47 81

(1) Excluding interest and tax

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Alto

Quintain Full Year Results 2014/15 30

Accelerating development

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Alto

2nd 50/50 JV with Keystone

− 362 homes: 211 private sale − private courtyard garden − 120 homes: Quintain PMR

Schedule:

− April 2015: marketing launch − July 2015: pre-construction starts − September 2015: marketing suite opens − May 2017: first completions

Quintain Full Year Results 2014/15 31

New joint venture

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Alto

211 private homes: − launched April 2015 − 70 (33%) exchanged or reserved

− average price £422,500 − ASP range: £320,000 - £577,000 − average £656psf

− Alto JV sales to 20 May: £29.6m

Quintain Full Year Results 2014/15 32

Strong initial sales

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Accelerating Development

Status: − in design − faces Alto over Elvin Square Gardens −

• c. 400 homes

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Plots NW07+NW08: next phase of North West Village

Quintain Full Year Results 2014/15

Anticipated timetable: ‒ October 2015: planning application ‒ Spring 2016: marketing launch ‒ Autumn 2018: first completions

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2014

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Emerald Gardens

2016

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2017

Emerald Gardens Alto Elvin Square Gardens

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2018

Emerald Gardens Alto Elvin Square Gardens NW07 & NW08

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Emerald Gardens Alto Elvin Square Gardens NW07 & NW08 Wembley Theatre

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North West Village

200 400 600 800 1,000 1,200

2015 2016 2017 2018

475

Quintain Full Year Results 2014/15 39

Anticipated timetable for sales and investment

835 c.1,200 homes

Homes in planning Homes under construction Homes completed (STP) Homes 141 261 361 Residential investment

Residential Investment

Increasing Absorption

Alto courtyard, Wembley Park

Residential Investment

Increasing Absorption

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UK Residential Performance

(20.0) (15.0) (10.0) (5.0) 0.0 5.0 10.0 15.0 20.0 25.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 3 year 5 year 10 year

Income return Capital growth

Strong long-term returns

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Total return %

Source: MSCI / IPD

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Demographic Trends

London renters span the income and age spectrums

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• 100

200 300 400 500 600 700 800 900 Lowest 20% Quintile 2 Quintile 3 Quintile 4 Highest 20% Thousands of people Private renters Social renters Owners

• 50

100 150 200 250 300 350 400 Age 16-24 Age 25-34 Age 35-49 Age 50-64 Age 65+ Thousands of people

Sources: Census Information Scheme, GLA, DCLG 356k 292k >75%

Tenure by income profile in London Age profile of renters in London

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Quintain Rental Evidence

44 600 700 800 900 1,000 1,100 1,200 1,300 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 600 700 800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14

• No. of lettings (rhs)

Average rent agreed (lfs) Linear (average rent agreed)

Two-bed Current average rent £1,550pm CAGR 3.1% One-bed Current average rent £1,250pm CAGR 4.5%

Consistent rental growth over 7 year period

£ Rent pcm £ Rent pcm

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500 Homes Operational by 2019

Quintain Full Year Results 2014/15 45

A new source of recurring income

Further Development

Maximising the Opportunity

Alto courtyard, Wembley Park

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Outstanding Wembley Park Opportunity

Substantial undeveloped existing consents

Quintain Full Year Results 2014/15 47

1m sq ft

COMPLETE

South West Lands

A Revitalised Southern Approach

Revise redline

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South West Lands

Status: − hybrid planning application: consideration this autumn − < 900,000 sq ft of development

Quintain Full Year Results 2014/15 49

850 new homes

The Eastern Lands

Maximising the Opportunity

The Eastern Lands

Maximising the Opportunity

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Indicative image Indicative image

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Eastern Lands

Quintain Full Year Results 2014/15 53

Bringing the park back to Wembley Park Objectives: − introduce a significant public park − increase the quantity of homes − design for swift delivery − create an appropriate setting for the Stadium Statistics: − 24.5 acres for Eastern Lands + 18.5 acres across Western Lands − 43 acres combined − seeking c. 20 - 30% increase in cross-tenure residential development − would result in future development area of >6m sq ft

Commercial Investment

Building Recurring Income

Alto courtyard, Wembley Park

Commercial Investment

Nigel J Kempner

Kingsbourne House, WC1

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Investment Portfolio

Provides income balance to the business £366.0m portfolio producing £13.5m income (2014: £4.4m)

− London Portfolio: £93.1m portfolio, £4.1m rental income − WELPUT: £12.0m (equity investment), £0.1m of income − Wembley Park: £272.9m portfolio, £9.3m rental income

Property interests in 10 of London’s boroughs

Quintain Full Year Results 2014/15 56

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WELPUT

‒ £12.0m units held at 31 March 2015 (2014: £5.3m): total return: 21.3% ‒ £2.6m asset management income (2014: £3.0m) ‒ modernisation of Fund provides longevity, diversity and structure as a partial open ended fund ‒ sales of £374m

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Co-investor and strategic adviser to £1.2bn-asset Fund

New Cavendish St, W1 £86m, 104,000 sq ft North West House, NW1 £38m, 43,000 sq ft

Quintain Full Year Results 2014/15

Acquisitions: £236m

Regent’s Wharf, Kings Cross £50m, 67,000 sq ft 20 St James, SW1 £62m, 62,000 sq ft

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London Portfolio

Building the portfolio ‒ lot sizes up to £40m with income + asset management / development angles ‒ deploying spectrum of Quintain’s existing skills ‒ £66.1m of acquisitions during 2014/15

Quintain Full Year Results 2014/15 58

Contribution increased from £0.1m to £4.1m

Aldermary House, EC4 £40.0m, 60,000 sq ft 10 Gate Street, WC1 £3.4m, 4,000 sq ft First National House, HA1(1) £8.6m, 44,000 sq ft

(1) Acquired after the year end

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Wembley Park Investment Assets

Drivers of further growth: − accelerating residential development: +3,000 local residents within 5 years − improvement of LDO retail offer and growth of awareness − growth in reputation of Wembley Park as a London destination

Quintain Full Year Results 2014/15 59

Contribution increased from £4.3m to £9.3m YoY

London Designer Outlet £113.8m GAV, 280,000 sq ft The SSE Arena, Wembley £38.9m GAV, 12,500-seat Hilton London Wembley Capital recycling: c. £6m profit

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Substantial Rental Growth

2 4 6 8 10 12 14 2013/14 2014/15 London Portfolio Wembley Park

Quintain Full Year Results 2014/15 60

31% increase in GAV: 300% increase in rental income

GAV: £278.1m GAV: £366.0m £ million rent

Outlook

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Creating Shareholder Value

Quintain Full Year Results 2014/15 62

Balanced model for growth

Target returns

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Outlook

Investment ‒ expand PMR portfolio ‒ drive rental growth from LDO ‒ selectively acquire for London Portfolio Development ‒ planning permission for NW07/8 ‒ planning permission for SWL ‒ submit masterplan application Clear priorities for delivering value 2015/16

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Financial Continue capital recycling Gearing below 50% Adjust balance between investment and development with the cycle

Quintain Full Year Results 2014/15

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Appendices

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Net Rent

Quintain Full Year Results 2014/15 66

Significant growth in continuing portfolio

March 2015 Joint Venture £m March 2015 Wholly owned £m March 2015 Combined £m March 2014 Joint Venture £m March 2014 Wholly owned £m March 2014 Combined £m Wembley Park (1) 1.5 10.8 12.3 1.5 2.8 4.3 London Portfolio

• 4.1

4.1

• 0.1

0.1 Quercus 3.9

• 3.9

4.8

• 4.8

Non-core 0.4 0.9 1.3 0.1 0.9 1.0 Continuing 5.8 15.8 21.6 6.4 3.8 10.2 Greenwich/Sequel

• 0.2

3.4 3.6 iQ 1.9

• 1.9

13.3

• 13.3

Total 7.7 15.8 23.5 19.9 7.2 27.1

(1) Includes £3.0m (2014: £nil) net surrender premium income

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Income Statement

Quintain Full Year Results 2014/15 67

Reconciliation between adjusted and statutory profit

March 2015 £m March 2014 £m Pre-tax adjusted profit 6.2 4.2 Amortisation of intangible asset (0.8) (0.8) Revaluation surplus (deficit) Continuing operations 41.2 22.4 Discontinued operations

• 4.7

Joint ventures and associates 1.1 (4.9) (Loss) profit on disposal Continuing operations (0.2) 1.7 Discontinued operations (1.1) 32.5 Joint ventures and associates (3.4) (1.5) Mark to market adjustments Continuing operations (2.0) (3.9) Discontinued operations

• 0.5

Joint ventures and associates

• Tax (charge) credit

Continuing operations (2.6) 6.3 Discontinued operations (0.3) (8.3) Joint ventures and associates (0.2)

• Profit after tax

37.9 52.9

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Income Statement

Quintain Full Year Results 2014/15 68

Statutory format

March 2015 £m March 2014 £m Net rent 15.8 3.8 Fees from asset and development management 1.3 3.1 Other income 1.9 2.2 Amortisation of intangible asset (0.8) (0.8) Gross profit 18.2 8.3 Administrative expenses (17.0) (17.4) Joint ventures and associates (including revaluation movements) (0.8) (2.5) (Loss) profit from sale of non-current assets (0.2) 1.7 Surplus on revaluation of investment property 41.2 22.4 Operating profit 41.4 12.5 Net finance costs (0.7) (7.8) Pre-tax profit 40.7 4.7 Tax (charge) credit (2.6) 6.3 Discontinued operations (0.2) 41.9 Profit after tax 37.9 52.9

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Divisional Income Analysis

Quintain Full Year Results 2014/15 69

Proportional accounting of joint ventures

Adjusted profit: Wembley £m London £m Quercus £m Non-core £m Continuing £m Discontinued £m Central Total £m Operating profit 13.7 5.7 2.2 1.4 23.0 2.0 (17.0) 8.0 Net finance costs (1.5)

• (1.3)

0.5 (2.3) (0.8) 1.3 (1.8) Net profit before disposals and revaluation 12.2 5.7 0.9 1.9 20.7 1.2 (15.7) 6.2 Capital movements: Profit (loss) from disposals 0.6

• (3.4)

(0.8) (3.6) (1.1)

• (4.7)

Hedging adjustments

• (2.0)

(2.0) Amortisation

• (0.8)
• (0.8)
• (0.8)

Revaluation movements 41.6 3.0 (2.7) 0.4 42.3

• 42.3

Tax (1.3)

• 1.3

(0.2) (0.2)

• (2.9)

(3.1) Profit after tax 53.1 7.9 (3.9) 1.3 58.4 0.1 (20.6) 37.9

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Joint Venture Debt

Quintain Full Year Results 2014/15 70

Quintain Keystone Quercus Net debt, at share £6.0m £19.3m Facility levels, at share £35.0m £24.1m Average maturity – on full facility 2.0 years 2.1 years Average cost of debt 4.0% 4.8% % of debt at fixed/capped interest rates

• 78%

Loan to value ratio 8% 50% Loan to value covenant 50% 60% Loan to cost ratio 27% n/a Loan to cost covenant 65% n/a Interest cover n/a 2.9x Interest cover covenant n/a 1.5x

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Wembley Park Investment Asset Values

£273m of asset value, 33% of portfolio

Quintain Full Year Results 2014/15 71 (1) Gross base rent included after expiry of any current rent free period (2) GCR is operating income generated at the MSCP (3) GCR represents 50% of the net operating income from the Hilton 6.0 0.5 2.5 1.8 1.1 2.9 0.7 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 20 40 60 80 100 120 LDO (1) MSCP (2) Arena WRP York House Hilton (3) Other Wembley Gross Contracted rent £'m Value £'m

Valuation and gross contracted rent

Mar-15 Valuation Sep-14 Valuation Mar-15 GCR Sep-14 GCR

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London Portfolio Asset Values

£93m of asset value, 11% of portfolio

Quintain Full Year Results 2014/15 72 (1) September 2014 valuation or purchase price, excluding acquisition costs, if acquired in second half 1.6 0.6 2.4 0.5 0.7 0.0 0.5 1.0 1.5 2.0 2.5 3.0 5 10 15 20 25 30 35 40 45 50 Kingsbourne Hs Silvertown Aldermary Hs Collingham Hs Other London Gross Contracted rent £'m Value £'m

Valuation and gross contracted rent

Mar-15 Valuation Sep-14 Valuation Mar-15 GCR Sep-14 GCR

(1)

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Non-Core Asset Values

£73m of asset value, 9% of portfolio

Quintain Full Year Results 2014/15 73 (1) Fall in value and GCR since September 2014 reflects disposals out of the Fund 3.8 0.5 0.9 0.6 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 10 20 30 40 50 60 Quercus City Park Gate Quantum Other Non-core Gross Contracted rent £'m Value £'m

Valuation and gross contracted rent

Mar-15 Valuation Sep-14 Valuation Mar-15 GCR Sep-14 GCR

(1)

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London Housing Market Strata

2,000 4,000 6,000 8,000 10,000 12,000 14,000

Lower Mainstream (£375-450 psf) Mid Mainstream (£450-700 psf) Upper Mainstream (£700-1,000 psf) New Prime (>£1,000 psf)

Significant shortfall in target tier

Quintain Full Year Results 2014/15 74

Projected annual average supply Occupier demand

• c. 3,500 p.a.

Source: Savills using Mollior, CACI and Oxford Economics

Annual net completions

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Affordability in London Open Sale Market

Annual income of £50,000 - £100,000

Quintain Full Year Results 2014/15 75

Households Annual household income Mid-mainstream £450-700 psf

Lower mainstream Up to £450 psf Prime £1,000 psf and above Upper mainstream £700-£1,000psf

Private rented households Owner/occupier households

Source: Savills, CACI

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Wembley Park Development Land

Comparative value case study – non Quintain owned

1 2 3

1) September 2014: £15.4m Current use: 1 acre with 74,000 sq ft office Purchaser: Network Stadium Housing to

• ccupy / potential for re-development

2) August 2013: £7.4m Current use: 1 acre, used as car park Purchaser: Unite, to develop 684-bed PBSA 3) September 2014: £15.25m Current use: 1 acre, used as car park Purchaser: Barratt to develop as: 188,000 sq ft residential (GIA) 10,000 sq ft retail (GIA)

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Wembley Park Development Land

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£351.1m of asset value, 42% of portfolio

Valuation outputs March 2015 Value of Wembley development land £351.1m Like for like property movement 13.8% Value per acre(1) (current state / bare land only) £8.9m / £6.5m Value psf NIA(2) £87 - £159 Key valuer assumptions (IFRS 13 disclosures) March 2015 Private residential sales (psf NIA) £620 - 698 Average private residential sales inflation rate 3.9% Private residential direct build cost (psf NIA) £250 - 355 Average private residential build cost inflation 4.3% Future site-wide (S106, infrastructure etc.) £141.7m Discount rate 14%

(1) Based on gross developable acreage on Stage 1, North West and South West Lands (2) £159 assumes full value of development land allocated to private residential /£87psf if allocated evenly over all use classes Quintain Full Year Results 2014/15