Landsec ─ Appendices | 1 |
Contents
Page | ||
Sustainability | ||
Sustainability leadership | 2 | |
Our sustainability programme | 3-4 | |
Our portfolio - sustainability performance of our assets | 5 |
Page | ||
Reversionary potential - like-for-like portfolio | 17 | |
Reconciliation of cash rents and P&L rents to ERV | 18 | |
Combined Portfolio - lease maturities | 19 | |
Page | ||
Financing | 30 | |
The Security Group - summary | 31 | |
The Security Group - portfolio concentration limits | 32 | |
Our net zero strategy | 6 | |
Asset performance | ||
Top 10 assets by value - as at 30 September 2020 | 7 | |
Valuation movements - as at 30 September 2020 | 8 | |
Yield movements - like-for-like portfolio | 9 | |
Rental and capital value trends - like-for-like portfolio | 10 | |
Rental and capital value trends - Central London | 11 | |
like-for-like portfolio | ||
Rental and capital value trends - Regional retail | 12 | |
and Urban opportunities like-for-like portfolios | ||
Rental and lease analysis expiries and breaks | ||
Central London portfolio | 13 | |
Regional retail portfolio | 14 | |
Urban opportunities portfolio | 15 | |
Subscale sectors portfolio | 16 | |
Retail analysis | ||
Retail sales and footfall | 20 | |
Top retail and leisure occupiers by percentage | 21 | |
of Group rent | ||
Company voluntary arrangements (CVA) | 22 | |
CVA/Administration exposure by occupier | 23 | |
CVA/Administration analysis by annualised | 24 | |
rental income | ||
Voids and units in administration | 25 | |
Financial data and performance | ||
Financial history - adjusted diluted earnings per share | 26 | |
and dividend per share | ||
Cash flow and adjusted net debt | 27 | |
Financial history - adjusted diluted net assets per share | 28 | |
and Group LTV | ||
Expected debt maturities (nominal) | 29 | |
Development and market analysis | ||
Office-led development programme returns | 33 | |
Pipeline of office-led development opportunities | 34 | |
Pipeline of Urban opportunities | 35 | |
Committed capital expenditure | 36 | |
Property/gilt yield spread | 37 | |
Central London investment market | 38 | |
Central London quarterly take-up | 39 | |
Central London rolling 12-monthtake-up | 40 | |
Central London availability and vacancy rate | 41 | |
Central London secondhand supply vs rental value growth | 42 | |
London Office market availability - grade A vs. | 43 | |
secondhand space | ||
Central London supply as at 30 September 2020 | 44-45 | |
Central London office market | 46 | |
Portfolio segmental split aligned to strategic priorities | 47 | |
Landsec ─ Appendices | 2 |
Sustainability leadership
Demonstrated by our performance across all key ESG benchmarks
Benchmark | Latest performance |
GRESB 2019
5 star rated entity, score 90%.
Sector leader, ranking 1st in Europe and UK diversified office/retail (mixed)
CDP 2019
A-list (top 2%) for the third year running.
The only A-list UK REIT
DJSI 2019
Score 82/top 98th percentile.
European Real Estate leader, ranking 4th globally
Benchmark | Latest performance |
Ecoact 2020 | |
Ranked 3rd amongst FTSE 100 companies | |
for our sustainability reporting and climate-related | |
strategy (ranked 5th in 2019) | |
EPRA 2020 | |
Received our 7th Gold Award for best practice | |
sustainability reporting | |
FTSE4Good 2020 | |
94th percentile. We continue to retain our | |
established position in the FTSE4Good Index | |
ISS ESG 2020 | |
Prime status. Rating C+ | |
Decile rank 1/transparency level: very high | |
MSCI ESG Rating 2020 | |
A rating |
Sustainalytics ESG Risk Rating 2020
10.9 (low risk) / ranking 32 out of 951 companies in the real estate industry
The 2020 results for some ESG benchmarks haven't been released in time for the half-yearly results announcement. In these instances, we have included the 2019 results.
Landsec ─ Appendices | 3 |
Our sustainability programme
Ambitious commitments split into three core areas
Creating jobs and opportunities
Community employment
Create £25m of social value through our community programmes by 2025
Fairness
By 2020, ensure everyone working on our behalf, in an environment we control, is given equal opportunities, protected from discrimination and paid at least the Real Living Wage
Efficient use of natural resources
Carbon
Reduce carbon emissions by 70% by 2030 compared with a 2013/14 baseline, for property under our management for at least two years
Renewables
Ensure 100% of our electricity supplies through our corporate contract are from REGO-backed renewable sources and achieve 3 MW of renewable electricity capacity by 2030
Sustainable design and innovation
Resilience
Assess and mitigate physical and financial climate change adaptation risks that are material across our portfolio
Materials
Source core construction products and materials from ethical and sustainable sources
Diversity
Make measurable improvements to the profile - in terms of gender, ethnicity and disability - of our employee mix
Energy
Reduce energy intensity by 40% by 2030 compared with a 2013/14 baseline, for property under our management for at least two years
Biodiversity
Maximise the biodiversity potential of all our development sites and achieve a 25% biodiversity net gain across our five sites with the greatest potential by 2030
Health, safety and security
Maintain an exceptional standard of health, safety and security in all the working environments we control
Waste
Send zero waste to landfill and at least 75% waste recycled across all our operational activities by 2020
Wellbeing
Ensure our buildings are designed and managed to maximise wellbeing and productivity
Landsec ─ Appendices
Our sustainability programme
Delivering significant results across all areas
4
Creating jobs and opportunities
Social Value
Created more than £3.6m of social value through our community programmes in the first six months of the year
Fairness
Continue to be an accredited Real Living Wage employer. To ensure fair treatment of workers in our supply chain, we surveyed 91 people working on our sites on issues such as modern slavery and discrimination
Efficient use of natural resources
Carbon
Reduced carbon emissions by 46% since 2013/14 against our updated science-based carbon reduction target
Renewables
Continued to procure 100% renewable electricity across our portfolio through our corporate contract. Our current on site renewable electricity capacity has reached 1.5 MW
Sustainable design and innovation
Resilience
Updated our assessment of physical and transition risks, ensuring our alignment with the TCFD recommendations
Materials
Created a prohibited materials list to guide our supply partners and mitigate human rights risks.
99.9% of key construction materials responsibly sourced
Diversity
Across the whole organisation 52% of our employees are female, exceeding our 2025 target of 50%. In the representation of women at leader level, we increased to 24% in 2019-20
Health and safety
Migrated to ISO 45001 and launched a new mandatory health and safety training for all employees. We have ensured that all our assets are Covid-19risk-assessed and secure
Energy
Reduced energy intensity by 32% since 2013/14 against our 2030 target
Waste
Continued to divert 100% from landfill and we're recycling 71% of operational waste
Biodiversity
Continue to partner with The Wildlife Trusts to enhance biodiversity net gain at our five operational sites. On track to deliver significant net gain on our developments
Wellbeing
Pursuing WELL Portfolio rating programme across our office portfolio.
All live developments successfully pre-assessed against WELL Core rating
Landsec ─ Appendices | 5 |
Our portfolio
Sustainability performance of our assets
- 46% reduction in carbon emissions (tCO2e) compared to 2013/14 baseline
- 32% reduction in energy intensity (kWh/m2) compared to 2013/14 baseline
- Zero waste sent to landfill with 71% of waste recycled
- 40% BREEAM certified by portfolio floor area
- 0.2% - Outstanding
3% - | ||||
1% | 48% | 44% | 7% | |
Very | ||||
- 2.8% - Goo | ||||
CGI of n2, SW1 | ||||
Landsec ─ Appendices | 6 |
Our net zero strategy
Reduce operational | Invest in | Use an internal price | Reduce construction | Offset remaining |
energy use | renewable energy | of carbon | impacts | carbon |
Reduce operational | Invest in renewable energy | Use an internal shadow | Reduce construction | Offset remaining |
energy use in support | through REGO-backed | price of carbon to clearly | impacts through asset | emissions through |
of our updated science- | contracts and Power | communicate climate- | retention, efficient | carefully selected |
based carbon reduction | Purchase Agreements | related risks and | design and responsible | projects which actively |
target, aligned with a | and implement on-site | opportunities in | sourcing | take carbon out of |
1.5°C scenario | renewable across our assets | investment decisions | the atmosphere |
Progress on key areas in HY 2020-21
Reduction of operational carbon emissions: Delivered a 46% reduction in carbon emissions compared with 2013/14 baseline, keeping us on track to achieve our science- based target aligned with a 1.5oC scenario to reduce emissions by 70% by 2030
Reduction of construction carbon emissions: Low-carbon design and construction method led to a further 10% reduction of embodied carbon intensity at Lavington Street,
on a design already c.50% lower than a typical new build. Our procured developments are making progress reducing embodied carbon against developed design baseline: 21% reduction at The Forge and 18% reduction at Lucent. Prioritising the refurbishment of assets, such as Portland House, led to an embodied carbon intensity c.65% lower than
a new build
Internal carbon pricing: Modelling of the internal shadow price of carbon with our investment teams included in Investment Committee papers to prepare the business for a potential future real carbon price
Landsec ─ Appendices | 7 |
Top 10 assets by value
As at 30 September 2020
Name
New Street Square, EC4
Cardinal Place, SW1
One New Change, EC4
1 & 2 New Ludgate, EC4
21 Moorfields, EC2
Gunwharf Quays, Portsmouth
Queen Anne's Gate, SW1
Nova, SW1
62 Buckingham Gate, SW1
Piccadilly Lights, SW1
Ownership | Floor | Rental | Let | Weighted | |||||
interest | area | income(1) | by income | average unexpired | |||||
lease term | |||||||||
% | Sq ft (000) | £m | % | Years | |||||
100 | Office: | 932 | 54 | 100 | 8.3 | ||||
Retail: | 22 | ||||||||
100 | Office: | 459 | 32 | 99 | 3.9 | ||||
Retail: | 57 | ||||||||
100 | Office: | 348 | 28 | 99 | 4.7 | ||||
Retail: | 210 | ||||||||
100 | Office: | 369 | 23 | 100 | 12.2 | ||||
Retail: | 27 | ||||||||
100 | Office: | 564(2) | Development in progress | 100(3) | 25.0 | ||||
100 | Retail: | 552 | 23 | 98 | 3.9 | ||||
100 | Office: | 354 | 35 | 100 | 6.2 | ||||
50 | Office: | 480 | 15 | 100 | 9.8 | ||||
Retail: | 76 | ||||||||
100 | Office: | 261 | 19 | 100 | 4.5 | ||||
Retail: | 17 | ||||||||
100 | - | 11 | 100 | 5.7 |
Aggregate value of top 10 assets: £5.5bn (46% of Combined Portfolio)
- Landsec share. Annualised net rent is annual cash rent, after the deduction of rent payable, as at the balance sheet date
- Development area
- Pre-letto Deutsche Bank
Landsec ─ Appendices | 8 |
Valuation movements
As at 30 September 2020
Market value | Valuation | Rental value | Net initial | ||||||||||||||
30 September 2020 | change | change(1) | yield | ||||||||||||||
£m | % | % | % | ||||||||||||||
Offices | 5,817 | -1.9 | -1.0 | 4.4 | |||||||||||||
London retail | 728 | -16.8 | -16.5 | 4.4 | |||||||||||||
Other central London | 426 | - | - | 2.7 | |||||||||||||
Regional shopping centres and shops | 1,339 | -20.4 | -14.4 | 7.0 | |||||||||||||
Outlets | 805 | -8.8 | -1.3 | 4.8 | |||||||||||||
Urban opportunities | 423 | -9.8 | -5.8 | 5.0 | |||||||||||||
Leisure | 528 | -15.3 | -3.9 | 6.3 | |||||||||||||
Hotels | 408 | -13.1 | -13.2 | 3.5 | |||||||||||||
Retail parks | 411 | -7.3 | -6.1 | 7.4 | |||||||||||||
Total like-for-like portfolio | 10,885 | -8.0 | -5.7 | 4.9 | |||||||||||||
Proposed developments | 276 | -9.4 | n/a | - | |||||||||||||
Development programme | 630 | -1.2 | n/a | - | |||||||||||||
Acquisitions | 52 | -17.0 | n/a | 4.1 | |||||||||||||
Total Combined Portfolio | 11,843 | -7.7 | -5.7 | 4.5 | |||||||||||||
Offices | 6,721 | -2.3 | 3.8 | ||||||||||||||
London retail | 744 | -16.7 | 4.4 | ||||||||||||||
Other central London | 426 | 0.2 | 2.7 | ||||||||||||||
Regional shopping centres and shops | 1,339 | -20.4 | 7.0 | ||||||||||||||
Outlets | 805 | -8.8 | 4.8 | ||||||||||||||
Urban opportunities | 436 | -9.8 | 4.9 | ||||||||||||||
Leisure | 553 | -15.3 | 6.3 | ||||||||||||||
Hotels | 408 | -13.1 | 3.5 | ||||||||||||||
Retail parks | 411 | -7.3 | 7.4 | ||||||||||||||
Total Combined Portfolio | 11,843 | -7.7 | 4.5 | ||||||||||||||
Equivalent | Movement in |
yield | equivalent yield |
% | bps |
4.6 | 2 |
4.4 | 12 |
4.3 | - |
6.6 | 42 |
6.3 | 38 |
5.3 | 15 |
7.1 | 70 |
5.4 | 27 |
7.6 | 16 |
5.2 | 11 |
n/a | n/a |
4.3 | n/a |
4.6 | n/a |
5.2 | 11 |
(1) Rental value change figures exclude units materially altered during the period and other non like-for-like movements
Landsec ─ Appendices | 9 |
Yield movements
Like-for-like portfolio
30 September 2020 | 31 March 2020 | |||||||||
Net initial | Equivalent | Topped-up net | Net initial | Equivalent | ||||||
yield | yield | initial yield(1) | yield | yield | ||||||
% | % | % | % | % | ||||||
Offices | 4.4 | 4.6 | 4.6 | 4.3 | 4.6 | |||||
London retail | 4.4 | 4.4 | 4.5 | 4.4 | 4.2 | |||||
Other central London | 2.7 | 4.3 | 2.7 | 3.4 | 4.3 | |||||
Regional shopping centres and shops | 7.0 | 6.6 | 7.3 | 6.4 | 6.2 | |||||
Outlets | 4.8 | 6.3 | 5.2 | 5.6 | 5.9 | |||||
Urban opportunities | 5.0 | 5.3 | 5.1 | 4.9 | 5.2 | |||||
Leisure | 6.3 | 7.1 | 6.6 | 5.8 | 6.4 | |||||
Hotels | 3.5 | 5.4 | 3.5 | 2.3 | 5.2 | |||||
Retail parks | 7.4 | 7.6 | 7.8 | 7.6 | 7.4 | |||||
TOTAL LIKE-FOR-LIKE PORTFOLIO | 4.9 | 5.2 | 5.1 | 4.8 | 5.1 | |||||
(1) Topped-up net initial yield adjusted to reflect the annualised cash rent that will apply at the expiry of current lease incentives
Landsec ─ Appendices | 10 |
Rental and capital value trends
Like-for-like portfolio
Like-for-like portfolio value at 30 September 2020: £10,885m
Rental value change | Valuation change | |
Central London
Regional retail
Urban opportunities
Subscale sectors
TOTAL LFL PORTFOLIO
Central London - offices
Retail(1)
Six months ended 30.09.19 | Six months ended 31.03.20 | Six months ended 30.09.20 | ||||||
% | % | % | ||||||
1.3 | 2.0 | -2.7 | ||||||
-0.2 | -0.2 | -3.7 | ||||||
-2.1 | -3.9 | -10.1 | ||||||
-6.4 | -15.9 | -16.4 | ||||||
-3.6 | -1.7 | -5.8 | ||||||
-5.8 | -13.1 | -9.8 | ||||||
-1.5 | -2.5 | -7.2 | ||||||
-5.6 | -10.2 | -12.3 | ||||||
-0.4 | -0.7 | -5.7 | ||||||
-2.9 | -6.4 | -8.0 | ||||||
1.9 | 2.7 | -1.0 | ||||||
0.3 | 1.6 | -1.9 | ||||||
-2.3 | -3.9 | -10.2 | ||||||
-6.3 | -14.5 | -14.9 | ||||||
(1) Retail is London retail, shopping centres and shops, outlets, Urban opportunities (excluding North Leisure Retail Park) and retail parks
Landsec ─ Appendices | 11 |
Rental and capital value trends
Central London like-for-like portfolio
Central London like-for-like portfolio value at 30 September 2020: £6,971m
Rental value change | Valuation change | |||||||||
Six months ended 30.09.19 | Six months ended 31.03.20 | Six months ended 30.09.20 | ||||||||
% | % | % | ||||||||
1.9 | 2.7 | -1.0 | ||||||||
Offices | ||||||||||
0.3 | 1.6 | -1.9 |
-2.0 | -3.7 | -16.5 |
London retail | ||
-3.5 | -10.4 | -16.8 |
- | 4.5 | - |
Other central London | ||
0.4 | 1.3 | - |
1.3 | 2.0 | -2.7 | |
CENTRAL LONDON | |||
-0.2 | -0.2 | -3.7 | |
(1) Rental value change figures exclude units materially altered during the period and other non like-for-like movements
Landsec ─ Appendices | 12 |
Rental and capital value trends
Regional retail and Urban opportunities like-for-like portfolios
Regional retail and Urban opportunities like-for-like portfolio value at 30 September 2020: £2,567m
Rental value change | Valuation change | |||||||||
Six months ended 30.09.19 | Six months ended 31.03.20 | Six months ended 30.09.20 | ||||||||
% | % | % | ||||||||
-3.6 | -6.4 | -14.4 | ||||||||
Regional shopping centres and shops | ||||||||||
-9.3 | -18.1 | -20.4 |
1.3 | 1.8 | -1.3 |
Outlets | ||
0.6 | -10.8 | -8.8 |
-2.1 | -3.9 | -10.1 |
REGIONAL RETAIL | ||
-6.4 | -15.9 | -16.4 |
-3.6 | -1.7 | -5.8 | |
URBAN OPPORTUNITIES | |||
-5.8 | -13.1 | -9.8 | |
(1) Rental value change figures exclude units materially altered during the period and other non like-for-like movements
Landsec ─ Appendices | 13 |
Rent reviews and lease expiries and breaks(1)
Central London excluding developments
Outstanding | 2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 | |
£m | £m | £m | £m | £m | £m | |
Rents passing from leases subject to review | 52 | 31 | 43 | 34 | 23 | 2 |
Adjusted ERV(2) | 51 | 30 | 42 | 34 | 24 | 3 |
Over-renting(3) | (2) | (1) | (1) | - | - | - |
Gross reversion under lease provisions | 1 | - | - | - | 1 | 1 |
2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 | ||
£m | £m | £m | £m | £m | ||
Rents passing from leases subject to expiries or breaks | 10 | 11 | 32 | 25 | 14 | |
ERV | 12 | 11 | 35 | 26 | 14 | |
Potential rent change | 2 | 0 | 3 | 1 | - | |
Total reversion from rent reviews and expiries or breaks | ||||||
Voids and tenants in administration(4) | ||||||
Total | ||||||
- This is not a forecast and takes no account of increases or decreases in ERV before the relevant review dates
- Adjusted ERV reflects ERV when reversion is expected at next rent review, or passing rent where the reversion to ERV is expected after 2025
- Not crystallised at rent review because of upward only rent review provisions
- Excludes tenants in administration where the administrator continues to pay rent
Total to 2025
£m
185
184
(4)
3
Total to 2025
£m
92
98
6
9
7
16
Landsec ─ Appendices | 14 |
Rent reviews and lease expiries and breaks(1)
Regional retail excluding developments
Outstanding | 2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 | |
£m | £m | £m | £m | £m | £m | |
Rents passing from leases subject to review(4) | 33 | 22 | 18 | 11 | 5 | 1 |
Adjusted ERV(2) | 30 | 24 | 15 | 10 | 4 | 1 |
Over-renting(3) | (7) | (1) | (4) | (2) | (1) | - |
Gross reversion under lease provisions | 4 | 3 | 1 | 1 | - | - |
2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 | ||
£m | £m | £m | £m | £m | ||
Rents passing from leases subject to expiries or breaks(4) | 17 | 17 | 26 | 21 | 14 | |
ERV | 20 | 15 | 21 | 16 | 13 | |
Potential rent change | 3 | (2) | (5) | (5) | (1) | |
Total reversion from rent reviews and expiries or breaks | ||||||
Voids and tenants in administration(4) | ||||||
Total | ||||||
- This is not a forecast and takes no account of increases or decreases in ERV before the relevant review dates
- Adjusted ERV reflects ERV when reversion is expected at next rent review, or passing rent where the reversion to ERV is expected after 2025
- Not crystallised at rent review because of upward only rent review provisions
- Annualised rents have been reduced to reflect the impact of Covid-19 on turnover, this has driven an increase in revisionary potential across Retail
Total to 2025
£m
90
84
(15)
9
Total to 2025
£m
95
85
(10)
(1)
15
14
Landsec ─ Appendices | 15 |
Rent reviews and lease expiries and breaks(1)
Urban opportunities excluding developments
Outstanding | 2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 | |
£m | £m | £m | £m | £m | £m | |
Rents passing from leases subject to review | 6 | 1 | 1 | 2 | 3 | - |
Adjusted ERV(2) | 5 | 1 | 1 | 1 | 3 | - |
Over-renting(3) | (2) | - | - | (1) | - | - |
Gross reversion under lease provisions | 1 | - | - | - | - | - |
2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 | ||
£m | £m | £m | £m | £m | ||
Rents passing from leases subject to expiries or breaks | 1 | 4 | 2 | 4 | 1 | |
ERV | 2 | 3 | 1 | 4 | 1 | |
Potential rent change | 1 | (1) | (1) | - | - | |
Total reversion from rent reviews and expiries or breaks | ||||||
Voids and tenants in administration(4) | ||||||
Total | ||||||
- This is not a forecast and takes no account of increases or decreases in ERV before the relevant review dates
- Adjusted ERV reflects ERV when reversion is expected at next rent review, or passing rent where the reversion to ERV is expected after 2025
- Not crystallised at rent review because of upward only rent review provisions
- Excludes tenants in administration where the administrator continues to pay rent
Total to 2025
£m
13
11
(3)
1
Total to 2025
£m
12
11
(1)
-
2
2
Landsec ─ Appendices | 16 |
Rent reviews and lease expiries and breaks(1)
Subscale sectors excluding developments
Outstanding | 2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 | |
£m | £m | £m | £m | £m | £m | |
Rents passing from leases subject to review | 26 | 7 | 5 | 5 | 8 | 5 |
Adjusted ERV(2) | 24 | 7 | 4 | 4 | 7 | 5 |
Over-renting(3) | (4) | - | (1) | (1) | (1) | (1) |
Gross reversion under lease provisions | 2 | - | - | - | - | 1 |
2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 | ||
£m | £m | £m | £m | £m | ||
Rents passing from leases subject to expiries or breaks | 1 | 4 | 5 | 7 | 13 | |
ERV | 1 | 3 | 5 | 5 | 11 | |
Potential rent change | - | (1) | - | (2) | (2) | |
Total reversion from rent reviews and expiries or breaks | ||||||
Voids and tenants in administration(4) | ||||||
Total | ||||||
- This is not a forecast and takes no account of increases or decreases in ERV before the relevant review dates
- Adjusted ERV reflects ERV when reversion is expected at next rent review, or passing rent where the reversion to ERV is expected after 2025
- Not crystallised at rent review because of upward only rent review provisions
- Excludes tenants in administration where the administrator continues to pay rent
Total to 2025
£m
56
51
(8)
3
Total to 2025
£m
30
25
(5)
(2)
4
2
Landsec ─ Appendices | 17 |
Reversionary potential
Like-for-like portfolio
Net reversionary potential(1)
% | % |
Reversionary potential(1) at 30 September 2020
% |
7.9 |
1.4 | -3.3 | |
September 2019 | -3.1 | |
-1.3 | -5.5 |
-1.3
3.8 | -3.9 | ||||
March 2020 | -4.5 | ||||
-0.9 | -6.5 | ||||
-0.9 | |||||
-0.7 | |||||
0.9 | -4.6 | ||||
September 2020 | -7.0 | -2.8 | |||
-2.6 | -6.0 | ||||
-2.6 | |||||
Central London - offices | Central London | ||||
Urban opportunities | |||||
Retail(3) | |||||
Total Portfolio | Total Portfolio | ||||
1.1
1.1
2.5
2.7
Regional retail Subscale sectors
Offices(2)
London retail
Regional shopping centres and shops
Outlets
Urban opportunities
Leisure
Retail parks
TOTAL PORTFOLIO(2)
Central London - offices
Retail(3)
-7.0 | 0.9 | ||||||
-21.3 | 8.2 | ||||||
-13.1 | |||||||
-26.0 | 10.8 | ||||||
-15.2 | |||||||
-2.9 | |||||||
-16.3 | 13.5 | ||||||
-2.8 | |||||||
-12.8 | 13.3 | ||||||
0.5 | |||||||
-21.0 | 7.3 | ||||||
-13.6 | |||||||
-12.7 | 10.2 | ||||||
-2.6 | |||||||
-7.0 | 7.9 | ||||||
0.9 | |||||||
-19.8 | 12.7 | ||||||
-7.0 | |||||||
Gross reversionary potential | |||||||
Over-renting | |||||||
Net reversionary potential | |||||||
25.1
22.2
(1) Excludes voids and rent free periods
- As at 30 September 2020, Queen Anne's Gate (QAG), SW1 accounted for 93% of the Offices like-for-likeover-renting. Excluding QAG, the Offices segment and Combined Portfolio would be 7.4% and 0.5% net reversionary, respectively
- Retail is London retail, shopping centres and shops, outlets, Urban opportunities (excluding North Leisure Retail Park) and retail parks
Landsec ─ Appendices | 18 |
Reconciliation of cash rents and P&L rents to ERV
Central London | Regional retail | Urban opportunities | Subscale sectors | Total | |||
£m | £m | £m | £m | £m | |||
Annualised rental income (accounting basis) | 309 | 158 | 25 | 81 | 573 | ||
Ground rent and SIC 15 adjustments | 20 | (3) | - | - | 17 | ||
Annualised net rent (cash basis) | 329 | 155 | 25 | 81 | 590 | ||
Additional cash rent from unexpired rent free periods | 5 | 2 | 1 | 3 | 11 | ||
Gross reversion from rent reviews in next five years | 3 | 9 | 1 | 3 | 16 | ||
Net reversion on breaks and expiries in the next five years | 6 | (10) | (1) | (5) | (10) | ||
Net reversion from rent reviews, breaks and expiries outside of the next five years | (15) | (10) | (1) | (4) | (30) | ||
Development programme | 74 | - | - | - | 74 | ||
Proposed developments (1) | - | - | - | - | - | ||
Voids and tenants in administration (2) | 7 | 15 | 2 | 4 | 28 | ||
Short-term income | 9 | 6 | 1 | 21 | 37 | ||
Other | 4 | (1) | - | - | 3 | ||
Net ERV | 422 | 166 | 28 | 103 | 719 | ||
Ground rents payable | 6 | 8 | - | 1 | 15 | ||
Gross ERV | 428 | 174 | 28 | 104 | 734 | ||
- Proposed development ERVs represent the existing value in use rather than the proposed scheme ERV
- Excludes tenants in administration where the administrator continues to pay rent
Landsec ─ Appendices | 19 |
Combined Portfolio - lease maturities (expiries and break clauses)
Excluding development programme
As at 30 September 2020 | |||||
% of portfolio rental income | Central London | Regional retail | |||
Urban opportunities | Subscale sectors | ||||
12 | 11.2 | ||||
10.5 | |||||
10 | 9.9 | ||||
8 | 7.2 | 7.2 |
6.7 |
6
4
2
0 | ||||||||
Holding over/2021 | 2022 | 2023 | 2024 | 2025 | 2026 | |||
Central | ||||||||
London | 1.5 | 2.4 | 5.0 | 3.6 | 1.7 | 5.4 |
- offices
Retail(1) | 5.1 | 4.5 | 5.6 | 6.1 | 4.6 | 4.2 |
(1) Retail is London retail, shopping centres and shops, outlets, Urban opportunities (excluding North Leisure Retail Park) and retail parks
Landsec ─ Appendices | 20 |
Retail sales and footfall
Footfall and sales growth/decline (26 weeks to 4th October 20 vs 26 weeks to 6th October 2019)
YTD | July - | YTD | July - | 6-month | ||
April - | September | April - | September | relative | ||
Landsec | September | (post re-opening) | Benchmarks | September | (post re-opening) | performance |
Footfall | -62.6% | -39.2% | UK footfall(1) | -59.2% | -39.9% | |
Same centre sales(2) | -56.7% | -28.3% | BRC non-food | |||
-29.6% | -12.3% | -271bps | ||||
Same centre sales excluding Tesla | -56.0% | -26.3% | in-store total(3) | |||
Same store sales(5) | -24.8% | -22.9% | ||||
BRC non-foodin-store LFL(3) | -10.4% | -9.5% | -144bps | |||
Same centre stores excluding Tesla | -23.0% | -20.8% | ||||
BRC non-food all retail(4) | -5.9% | 3.2% | ||||
Source: Landsec, unless specified below, data is exclusive of VAT and for the 26/13 week figures above, based on over 1,800 tenancies where the occupiers provide Landsec with turnover data (1a) ShopperTrak UK national benchmark, (1b) ShopperTrak Malls and Outlets index based on more than 300 UK Malls
- Landsec same centre total sales. Based on all store sales and takes into account new stores, new space and lost sales through lockdown.
- BRC - KPMG Retail Sales Monitor (RSM). Based on an average of quarterly non-food retail sales growth for physical i.e. bricks and mortar stores only (does not include online sales)
- BRC - KPMG Retail Sales Monitor (RSM). Based on an average of quarterly non-food retail sales growth including online sales
- Landsec same store/same tenant like-for-like sales only includes sales for tenants that were open and trading throughout the period
Landsec ─ Appendices | 21 |
Top retail and leisure occupiers by percentage of Group rent
Brand | Status | Number | Group | |||
of units | rent | |||||
Cineworld | 13 | 1.9% | ||||
Boots | 21 | 1.7% | ||||
Sainsbury's | 14 | 1.5% | ||||
Next | 15 | 1.1% | ||||
M&S(1) | 14 | 1.1% | ||||
H&M | 17 | 1.0% | ||||
Vue | 6 | 1.0% | ||||
Tesco | 9 | 0.8% | ||||
Primark | 7 | 0.8% | ||||
Nando's | 29 | 0.6% | ||||
Superdrug/Perfume Shop | 22 | 0.5% | ||||
The Restaurant Group(2) | CVA & Admin. | 50 | 0.5% | |||
Curry's/PC World | 8 | 0.5% | ||||
John Lewis Partnership(3) | 7 | 0.5% | ||||
River Island | 7 | 0.5% | ||||
Brand | Status | Number | Group | |||
of units | rent | |||||
J C Decaux | 20 | 0.4% | ||||
Clarks | 12 | 0.4% | ||||
Odeon | 6 | 0.4% | ||||
Arcadia | CVA | 10 | 0.4% | |||
Victoria's Secret | Administration | 6 | 0.4% | |||
VF Corporation | 19 | 0.4% | ||||
Gap | 13 | 0.4% | ||||
Superdry | 7 | 0.4% | ||||
Signet Group | 18 | 0.4% | ||||
Snozone | 3 | 0.3% | ||||
Morrison's | 3 | 0.3% | ||||
Costa Coffee | 25 | 0.3% | ||||
JD Sports | 9 | 0.3% | ||||
B & M Retail | 6 | 0.3% | ||||
EE Limited | 12 | 0.3% | ||||
- Includes M&S Simply Food store
- Includes Wagamama who are not party to the current CVA. Chiquitos, part of The Restaurant Group, is in administration
- Includes Waitrose & Partners Stores
Landsec ─ Appendices | 22 |
Company voluntary arrangements (CVA)
Voting rights | Landlord lease categories | |
- Creditors are entitled to vote for the full amount of their outstanding debt as at the date of the creditors meeting
- A landlord's claim will comprise of amounts due for:
- Arrears of rent, service charges and insurance - admitted at 100% of the outstanding value
- Future rent, service charge and insurance up to the earlier of the first lease break or contractual end of the lease; and
- An amount in respect of dilapidations
- As the future occupational costs and dilapidations are an unliquidated claim and cannot be substantiated by the chairman of the creditors meeting, to enable them to be admitted for a "meaningful" vote, these are generally subject to a 75% discount
- The company proposing the CVA will employ a property agent to assist it in grouping the leases into different categories which form the basis of the varying degrees of rental compromises across its leasehold portfolio
- A typical CVA will have four categories, these being the following:
- Category 1 - The most profitable stores (and their core portfolio) which require no rental reduction
- Category 2 - Marginal stores that only require a small rental reduction (normally 25% of current passing rent) for them to return to profit
- Category 3 - Stores that with a larger reduction in rent (normally 50% of current passing rent) will return to profitability
- Category 4 - Stores that even with a large rent reduction will not return to profitability and therefore will close
- Following the end of the compromise period those leases that have been subject to a rental reduction under the terms of the CVA will have their annual rent reset to the higher of the compromise rent or the market rent at that time
Landsec ─ Appendices | 23 |
CVA/Administration exposure by occupier
As at 30 September 2020
Brand | Status | Number of | Group | ||||
units trading | rent | ||||||
Arcadia Group | CVA | 10 | 0.4% | ||||
Victoria's Secret UK | Administration | 6 | 0.4% | ||||
Debenhams | Administration | 4 | 0.2% | ||||
New Look | CVA | 9 | 0.2% | ||||
Azzurri | Administration | 10 | 0.2% | ||||
Casual Dining Group | Administration | 23 | 0.2% | ||||
The Restaurant Group | CVA/Administration(1) | 26 | 0.2% | ||||
Carpetright | CVA | 4 | 0.1% | ||||
Pizza Express | CVA | 16 | 0.1% | ||||
Homebase Ltd | CVA | 1 | 0.1% | ||||
Travelodge | CVA | 3 | 0.1% | ||||
Monsoon Accessorize | Administration | 7 | 0.1% | ||||
Brand | Status | Number of | Group | |||
units trading | rent | |||||
All Saints | CVA | 5 | 0.1% | |||
Carluccio's | Administration | 3 | 0.1% | |||
Paperchase | CVA | 8 | 0.1% | |||
Quiz | Administration | 5 | 0.1% | |||
Côte | Administration | 3 | <0.1% | |||
Gala Bingo | CVA | 2 | <0.1% | |||
Yo! Sushi | CVA | 4 | <0.1% | |||
Regis | Administration | 5 | <0.1% | |||
BMB Clothing | CVA | 6 | <0.1% | |||
Clintons | Administration | 3 | <0.1% | |||
Others | CVA/Administration | 69 | 0.3% | |||
Units trading in | 232 | 3.3% | ||||
CVA/Administration | ||||||
(1) Excludes Wagamama who are not party to the current CVA. Chiquitos, part of The Restaurant Group, is in administration
Landsec ─ Appendices | 24 |
Summary of retail and leisure units in CVA/administration
Analysis by annualised rental income
New events in period
Administration
CVA
Six months ended 30 September 2020 | |||||
ARI entering | Reduction in ARI from | ARI after impact of | |||
CVA/administration | % of Group ARI | CVA/administrations | CVA/administrations | Number of units | Number of units trading |
in the period | as at 31.03.20 | in the period | in the period | impacted | as at 30.09.20 |
15.6 | 2.4% | (8.0) | 7.6 | 138 | 73 |
15.5 | 2.4% | (10.3) | 5.2 | 143 | 106 |
31.1 | 4.8% | (18.3) | 12.8 | 281 | 179 |
Total CVAs/administrations
Administration
CVA
As at 30.09.20
Number of lettings agreed | |||
Total ARI | on units previously in | ||
in CVA/administration | Units | % of Group rent | CVA/administration |
8.8 | 94 | 1.5% | 12 |
9.8 | 138 | 1.7% | 2 |
18.7 | 232 | 3.3% | 14 |
Landsec ─ Appendices | 25 |
Voids and units in administration
Like-for-like portfolio
Voids
% | ||||||||||||||
6.7 | 6.6 | 31 Mar 2020 | ||||||||||||
7 | 6.1 | |||||||||||||
6 | 30 Sep 2020 | |||||||||||||
4.8 | 4.4 | 4.8 | ||||||||||||
5 | ||||||||||||||
4 | 3.2 | 3.4 | ||||||||||||
3 | 1.8 | 2.4 | 2.0 | 2.4 | 2.5 | |||||||||
2 | ||||||||||||||
1.1 | ||||||||||||||
1 | 0.5 | |||||||||||||
- | ||||||||||||||
0 | ||||||||||||||
Offices | London | Other | Regional | Outlets | Urban | Subscale | TOTAL | |||||||
retail | central London | shopping centres | opportunities | sectors | PORTFOLIO | |||||||||
and shops | ||||||||||||||
Units in administration | ||||||||||||||
% | ||||||||||||||
31 Mar 2020 | ||||||||||||||
7 | 6.3 | |||||||||||||
30 Sep 2020 | ||||||||||||||
6 | ||||||||||||||
5 | 3.5 | |||||||||||||
4 | 3.0 | 2.9 | ||||||||||||
3 | 2.5 | |||||||||||||
2.0 | ||||||||||||||
2 | ||||||||||||||
0.9 | 0.9 | 0.8 | ||||||||||||
1 | - | - | 0.1 | - | - | 0.4 | 0.4 | |||||||
0 | ||||||||||||||
Offices | London | Other | Regional | Outlets | Urban | Subscale | TOTAL | |||||||
retail | central London | shopping centres | opportunities | sectors | PORTFOLIO | |||||||||
and shops |
Like-for-like occupancy in the portfolio was 96.1% at 30 September 2020, 97.5% at 31 March 2020
Landsec ─ Appendices | 26 |
Financial history
Adjusted diluted earnings per share and dividend per share
Pence | ||
60.0 | 59.7 | |
55.9
53.1 | ||||||||
50.0 | ||||||||
48.3 | ||||||||
45.7 | 45.6 | |||||||
44.2 | ||||||||
40.5 | 41.5 | |||||||
40.0 | 36.3 | 38.5 | 36.8 | 38.6 | ||||
35.0 | ||||||||
34.1 | ||||||||
31.9 | ||||||||
29.8 | 30.7 | |||||||
30.0 | 29.0 | |||||||
28.0 | 28.2 | |||||||
23.2
20.0
Mar 2010 | Mar 2011 | Mar 2012 | Mar 2013 | Mar 2014 | Mar 2015 | Mar 2016 | Mar 2017 | Mar 2018 | Mar 2019 | Mar 2020 | ||
Adjusted diluted EPS | Dividend per share | |||||||||||
Landsec ─ Appendices | 27 |
Cash flow and adjusted net debt(1)
£m
(3,926) | (3,940) |
452
65
Opening adjusted | Net cash | Development/ | Acquisitions | Disposals | Other | Adjusted |
net debt | generated from | other capital | net debt at | |||
31 March 2020 | operations | expenditure | 30 September 2020 |
(1) On a proportionate basis
Landsec ─ Appendices | 28 |
Financial history
Adjusted diluted net assets per share and Group LTV
Pence | % | ||||||||||||||||||||||
1,550 | 45 | ||||||||||||||||||||||
1,400 | 1,434 | 1,408 | 1,417 | 1,432 | 1,422 | 1,411 | |||||||||||||||||
1,250 | 1,293 | 1,367 | 1,348 | 1,305 | 40 | ||||||||||||||||||
1,100 | 1,129 | 1,192 | 1,079 | ||||||||||||||||||||
950 | 1,013 | 35 | |||||||||||||||||||||
937 | |||||||||||||||||||||||
800 | 826 | 863 | 863 | 864 | 903 | 30 | |||||||||||||||||
737 | |||||||||||||||||||||||
650 | 691 | ||||||||||||||||||||||
500 | 25 | ||||||||||||||||||||||
350 | |||||||||||||||||||||||
200 | 20 | ||||||||||||||||||||||
Mar | Sept | Mar | Sept | Mar | Sept | Mar | Sept | Mar | Sept | Mar | Sept | Mar | Sept | Mar | Sept | Mar | Sept | Mar | Sept | Mar | Sept | ||
2010 | 2010 | 2011 | 2011 | 2012 | 2012 | 2013 | 2013 | 2014 | 2014 | 2015 | 2015 | 2016 | 2016 | 2017 | 2017 | 2018 | 2018 | 2019 | 2019 | 2020 | 2020 |
Adjusted diluted net assets per share (LHS)(1) | Group LTV (RHS)(2) | |
- March 2018 onwards represents EPRA net tangible assets
- On a proportionate basis
Landsec ─ Appendices | 29 |
Expected debt maturities (nominal)
Year(s) ending 31 March
£m 3,000
2,500
2,000
1,555
1,500
1,000
500 | 1,035 | 1,000 | ||||||
810 | ||||||||
427 | 131 | |||||||
0 | 125 | |||||||
2021 | 2022 | 2023 | 2024 | 2025-29 | 2030-34 | 2035+ |
Undrawn bank facilities | Drawn bank debt/Commercial Paper (1) | Bond debt | ||
(1) Commercial Paper maturity date refers to the maturity date of bank facility which is reserved against it
Landsec ─ Appendices | 30 |
Financing
Significant headroom and a favourable debt structure
- Security Group has a tiered covenant structure. We can borrow with limited operating restrictions up to 65% LTV and whilst ICR is greater than 1.45x
- To allow for a shock to either metric, we can continue to borrow up to 80% LTV (if ICR remains above 1.45x) and we can continue to borrow whilst ICR is greater than 1.2x (if LTV remains below 65%)
- Using September 2020 valuation numbers, we can withstand a valuation fall of 56% or a Security Group EDITDA reduction of £307m before our LTV or ICR covenants enter Final Tier 3 and prevent further bank drawings
Tiered covenant
LTV % | ICR X | |
Tier 1 | ≤55 | ≥1.85 |
Tier 2 | 56-65 | ≥1.45 |
Initial Tier 3 | 66-80 | ≥1.2 |
Operating environment - key points
Few operational restrictions
Liquidity facility required for senior interest payments
Debt to be amortised
Property manager appointed to make property recommendations below ICR 1.25x
Final Tier 3 | >80 | ≥1.0 | Property manager recommendations to be followed in all material respects | |
Administrative receiver could be appointed purely to sell assets (>85% LTV) | ||||
Default | >100 | <1.0 | Default which allows the secured creditors to instruct the Trustee to enforce security | |
and if appropriate accelerate | ||||
Landsec ─ Appendices | 31 |
The Security Group
Summary
Our Security Group funding arrangements provide flexibility to buy and sell assets, develop a significant pipeline and raise debt via a wide range of sources. This is subject to covenant tiering which progressively increases operational restrictions in response to higher gearing levels or lower interest cover.
Covenant tiering
Valuation | Incremental | ||
tolerance | debt from | ||
Operating | Key | from current | current position |
Tier | restrictions | position | £bn |
Tier 1 | Minimal restrictions | Current | Current |
Tier 2 | Additional liquidity | -36% | +2.2 |
facilities | |||
Initial Tier 3 | Payment restrictions | -46% | +3.4 |
Debt amortisation | |||
Final Tier 3 | Disposals to pay down | -56% | +5.1 |
debt | |||
Potential appointment | |||
of property manager | |||
Control framework
- There are covenants to protect security effectiveness, limit portfolio concentration risk and control churn of the portfolio
- The structure, which is overseen by a Trustee, is designed to flex with the business and broadly the covenants can be altered in three ways(1)
- Trustee discretion - if the change is not materially prejudicial to the interests of the most senior class of debt holders
- Rating affirmation - that the change will not lead to a credit rating downgrade
- Lender consent
- An example of how sector and regional concentration limits have changed to reflect the shape of the business is shown on the next slide
(1) Please refer to our most recent Base Prospectus (which is on our website) for full details of the Security Group's terms and conditions
Landsec ─ Appendices
The Security Group
Portfolio concentration limits
32
30 September 2012
Sector concentration (% of collateral value)
Office
Shopping centres and shops
Retail warehouses
Industrial
Residential
Leisure and hotels
Other
Regional concentration (% of collateral value)
London
Rest of South East and Eastern
Midlands
North
Wales and South West
Scotland and Northern Ireland
Non-UK
£bn |
3.9
3.0
1.1
-
0.1
-
0.8
£bn |
5.5 |
1.0 |
0.2 |
1.2 |
0.5 |
0.5 |
- |
% | Maximum permitted |
% | |
44 | 60 | |
33 | 60 | |
13 | 55 | |
1 | 35 | |
1 | 35 | |
- | - | |
8 | 15 |
% | Maximum permitted |
% | |
62 | 75 |
11 | 40 |
3 | 40 |
13 | 40 |
5 | 40 |
6 | 40 |
- | 5 |
30 September 2020
Sector concentration | £bn | % | Maximum permitted | Acquisition headroom | ||||
(% of collateral value) | % | £bn | ||||||
Office | 6.2 | 56 | 85 | 22 | ||||
Shopping centres and shops | 3.6 | 32 | 100 | n/a | ||||
Retail warehouses | 0.4 | 4 | 55 | 13 | ||||
Industrial | - | - | 20 | 3 | ||||
Residential | - | - | 20 | 3 | ||||
Leisure and hotels | 1.0 | 8 | 25 | 2 | ||||
Other | - | - | 15 | 2 | ||||
Regional concentration | £bn | % | Maximum permitted | Acquisition headroom | ||||
(% of collateral value) | % | £bn | ||||||
London | 8.1 | 72 | 100 | n/a | ||||
Rest of South East and Eastern | 1.6 | 15 | 70 | 21 | ||||
Midlands | 0.1 | 1 | 40 | 7 | ||||
North | 0.8 | 7 | 40 | 6 | ||||
Wales and South West | 0.3 | 3 | 40 | 7 | ||||
Scotland and Northern Ireland | 0.3 | 2 | 40 | 7 | ||||
Non-UK | - | - | 5 | 1 | ||||
Portfolio concentration limits have been amended over time to reflect the changing shape of the business.
Landsec ─ Appendices
Office-led development programme returns
33
Status | |
Estimated completion date | |
Description of use | |
Landsec ownership | % |
Size | Sq ft |
(000) | |
Letting status | % |
Market value | £m |
Net income/ERV | £m |
Total development cost (TDC) | £m |
to date | |
Forecast TDC | £m |
Gross yield on cost(1) | % |
Valuation surplus/(deficit) to date | £m |
Market value + outstanding TDC | £m |
Gross yield on market value | % |
+ outstanding TDC | |
(1) Based on ERV to the nearest £0.1m |
21 Moorfields, EC2
Fully committed; pre-let
June 2022
Office - 100%
100
564
100
471
38
326
576
6.5
141
721
5.2
The Forge, SE1
Fully committed; speculative
June 2022
Office - 100%
100
140
-
51
10
48
140
6.8
4
143
6.6
Lucent, W1
Fully committed; speculative
December 2022
Office - 77%
Retail - 21%
Residential - 2%
100
144
-
89
14
115
241
5.6
(26)
215
6.3
n2, SW1
Completing the core;
speculative; main contract
works paused
January 2024
Office - 100%
100
166
-
26
13
40
206
6.3
(13)
192
6.7
Landsec ─ Appendices
Pipeline of office-led development opportunities
34
Status | |
Earliest start date | |
Earliest completion date | |
Description of use | |
Landsec ownership | % |
Current annualised rental income | £m |
Current size | Sq ft |
(000) | |
Proposed size | Sq ft |
(000) | |
Market value at 30 September 2020 | |
Outstanding total development costs | |
Indicative total development cost | |
Portland House, SW1
Planning consent granted
April 2021
November 2024
Office - 90%
Retail - 10%
100
-
310
400
£m
192
238
430
Timber Square, SE1
Planning application submitted
March 2021
November 2023
Office - 96%
Retail - 4%
100
-
141
380
£m
85
295
380
Red Lion Court, SE1
Progressing design
October 2021
September 2024
Office - 97%
Retail - 3%
100
5
128
237
Landsec ─ Appendices | 35 |
Pipeline of Urban opportunities
Status
Shepherd's Bush, W12 | Stage 2 design |
Finchley Road, NW3 | Masterplanning |
The Lewisham Centre, SE13 | Site assembly and |
masterplanning | |
Southside, SW18 | Masterplanning |
Great North Leisure Park, N12 | Feasibility study |
Current use | Indicative use | Earliest completion | ||||||||||
Retail, leisure, | ||||||||||||
Landsec | Retail | hotels and | Earliest | |||||||||
ownership | and leisure | Number | Office | other | start | |||||||
% | Sq ft (000) | of homes | Sq ft (000) | Sq ft (000) | on site | Phase 1 | Masterplan | |||||
100 | 302 | 650 | 100 | 355 | 2023 | 2025 | 2027 | |||||
100 | 310 | 1,800 | 50 | 100 | 2023 | 2026 | 2036 | |||||
100 | 330 | 1,799 | 225 | 112 | 2024 | 2026 | 2037 | |||||
50 | 600 | 2,035 | - | 354 | 2024 | 2026 | 2036 | |||||
100 | 90 | 830 | - | 53 | 2024 | 2026 | 2029 | |||||
Landsec ─ Appendices | 36 |
Committed capital expenditure
- £512m committed capex across six schemes plus Portland House
- Disposals to fund capex
Committed development capex by scheme
£m 300
250 | |||||||
200 | |||||||
150 | |||||||
100 | |||||||
50 | |||||||
0 | |||||||
H2 21 | 2022 | 2023 | 2024 | 2025 | |||
21 Moorfields | Lucent | n2 - uncommitted | n2 - committed(1) | The Forge | Castle Lane | Wardour Street | Portland House |
(1) £21m of committed capex at n2 to complete the core
Landsec ─ Appendices | 37 |
Property/gilt yield spread
The yield spread is at record high in the current low-gilt environment
%
14
12
10
8
6
4
2
0
-2
-4
-6
Spread | Property EY | 10-year gilt | ||||
Sep 20
Mar 20
Sep 19
Mar 19
Sep 18
Mar 18
Sep 17
Mar 17
Sep 16
Mar 16
Sep 15
Mar 15
Sep 14
Mar 14
Sep 13
Mar 13
Sep 12
Mar 12
Sep 11
Mar 11
Sep 10
Mar 10
Sep 09
Mar 09
Sep 08
Mar 08
Sep 07
Mar 07
Sep 06
Mar 06
Sep 05
Mar 05
Sep 04
Mar 04
Sep 03
Mar 03
Sep 02
Mar 02
Sep 01
Mar 01
Sep 00
Mar 00
Sep 99
Mar 99
Sep 98
Mar 98
Sep 97
Mar 97
Sep 96
Mar 96
Sep 95
Mar 95
Sep 94
Mar 94
Sep 93
Mar 93
Sep 92
Mar 92
Sep 91
Mar 91
Sep 90
Mar 90
Sep 89
Mar 89
Source: Bloomberg, MSCI Monthly Index All Property
Landsec ─ Appendices | 38 |
Central London investment market
2020 transaction levels, so far, were down 45% on the corresponding period in 2019; overseas investors represented 73% of all investments
Investment volumes | Office capital inflow by region | |||||||||||||||||||||||
£bn | UK | Rest of Europe | Asia | |||||||||||||||||||||
Germany | Middle East / North Africa | US / Canada | ||||||||||||||||||||||
25 | ||||||||||||||||||||||||
100% | Other overseas | |||||||||||||||||||||||
20 | 90% | |||||||||||||||||||||||
80% | ||||||||||||||||||||||||
15 | 70% | |||||||||||||||||||||||
60% | ||||||||||||||||||||||||
10 | 50% | |||||||||||||||||||||||
40% | ||||||||||||||||||||||||
Q4 | 30% | |||||||||||||||||||||||
5 | Q3 | 20% | ||||||||||||||||||||||
Q2 | ||||||||||||||||||||||||
10% | ||||||||||||||||||||||||
Q1 | ||||||||||||||||||||||||
0 | 0% | |||||||||||||||||||||||
1990 | 1995 | 2000 | 2005 | 2010 | 2015 | 2020 | 1984- | 1990- | 2000- | 2010- | 2013- 2016 2017 2018 | 2019 | Q1-Q3 | |||||||||||
1989 | 99 | 09 | 12 | 15 | 2020 |
Source: CBRE; shows calendar years
Landsec ─ Appendices | 39 |
Central London quarterly take-up
Take-up of new space since March '20 represented 48% of total take-up; ahead of the
long-term average
m sq ft 6
5
4
3
2
1
0 | ||||||||||||||||||||||||||||||||||||||||||||
Q3 2010 | Q4 2010 | Q1 2011 | Q2 2011 | Q3 2011 | Q4 2011 | Q1 2012 | Q2 2012 | Q3 2012 | Q4 2012 | Q1 2013 | Q2 2013 | Q3 2013 | Q4 2013 | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | Q1 2015 | Q2 2015 | Q3 2015 | Q4 2015 | Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 | ||||
Secondhand | New completed | Pre-let | ||||||||||||||||||||||||||||||||||||||||||
Source: CBRE
(1) New space here is defined as newly-completed and pre-let
Landsec ─ Appendices | 40 |
Central London rolling 12-monthtake-up
Rolling annual take-up was 8.4m sq ft as of Q3 2020; 35% below the long-term average
m sq ft 16
14
12
10
8
6
4
2
0
2008 Q3 | 2008 Q4 | 2009 Q1 | 2009 Q2 | 2009 Q3 | 2009 Q4 | 2010 Q1 | 2010 Q2 | 2010 Q3 | 2010 Q4 | 2011 Q1 | 2011 Q2 | 2011 Q3 | 2011 Q4 | 2012 Q1 | 2012 Q2 | 2012 Q3 | 2012 Q4 | 2013 Q1 | 2013 Q2 | 2013 Q3 | 2013 Q4 | 2014 Q1 | 2014 Q2 | 2014 Q3 | 2014 Q4 | 2015 Q1 | 2015 Q2 | 2015 Q3 | 2015 Q4 | 2016 Q1 | 2016 Q2 | 2016 Q3 | 2016 Q4 | 2017 Q1 | 2017 Q2 | 2017 Q3 | 2017 Q4 | 2018 Q1 | 2018 Q2 | 2018 Q3 | 2018 Q4 | 2019 Q1 | 2019 Q2 | 2019 Q3 | 2019 Q4 | 2020 Q1 | 2020 Q2 | 2020 Q3 |
Secondhand | New completed | Pre-let | Serviced office | 10-year average | ||||||||||||||||||||||||||||||||||||||||||||
Source: CBRE
Landsec ─ Appendices | 41 |
Central London availability and vacancy rate
Availability increased by c.45% since March '20 pushing the vacancy rate to 6.5%
compared to the long-term average of 4.2%
m sq ft | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
35 | 16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
30 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
25 | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
15 | 6.5% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | Q3 2007 | Q1 2009 | Q3 2010 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Q1 1991 | Q3 1991 | Q1 1992 | Q3 1992 | Q1 1993 | Q3 1993 | Q1 1994 | Q3 1994 | Q1 1995 | Q3 1995 | Q1 1996 | Q3 1996 | Q1 1997 | Q3 1997 | Q1 1998 | Q3 1998 | Q1 1999 | Q3 1999 | Q1 2000 | Q3 2000 | Q1 2001 | Q3 2001 | Q1 2002 | Q3 2002 | Q1 2003 | Q3 2003 | Q1 2004 | Q3 2004 | Q1 2005 | Q3 2005 | Q1 2006 | Q3 2006 | Q1 2007 | Q1 2008 | Q3 2008 | Q3 2009 | Q1 2010 | Q1 2011 | Q3 2011 | Q1 2012 | Q3 2012 | Q1 2013 | Q3 2013 | Q1 2014 | Q3 2014 | Q1 2015 | Q3 2015 | Q1 2016 | Q3 2016 | Q1 2017 | Q3 2017 | Q1 2018 | Q3 2018 | Q1 2019 | Q3 2019 | Q1 2020 | Q3 2020 |
Availability | Rolling annual total take-up excluding pre-let | Vacancy rate (RHS) | ||
Source: CBRE, MSCI Monthly Index
-
Availability represents the total net lettable floor space in existing properties, which is being actively marketed, either for lease, sublease, and assignment or for sale for owner occupation as at the end of the survey period. Availability includes space that is being marketed and is physically vacant or occupied. Space that is physically vacant, but not being marketed or is not available for occupation is excluded from availability.
Space that is Under Construction and will become ready to occupy within 12 months is included within availability
Landsec ─ Appendices | 42 |
Central London secondhand supply vs rental value growth
The increase in overall availability was driven by an increase in secondhand space;
47% rise since March '20
m sq ft | Rental value growth % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
20 | 30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18 | 20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
14 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | -10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | -20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | -30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | Q3 1999 | Q1 2012 | -40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Q1 1991 | Q3 1991 | Q1 1992 | Q3 1992 | Q1 1993 | Q3 1993 | Q1 1994 | Q3 1994 | Q1 1995 | Q3 1995 | Q1 1996 | Q3 1996 | Q1 1997 | Q3 1997 | Q1 1998 | Q3 1998 | Q1 1999 | Q1 2000 | Q3 2000 | Q1 2001 | Q3 2001 | Q1 2002 | Q3 2002 | Q1 2003 | Q3 2003 | Q1 2004 | Q3 2004 | Q1 2005 | Q3 2005 | Q1 2006 | Q3 2006 | Q1 2007 | Q3 2007 | Q1 2008 | Q3 2008 | Q1 2009 | Q3 2009 | Q1 2010 | Q3 2010 | Q1 2011 | Q3 2011 | Q3 2012 | Q1 2013 | Q3 2013 | Q1 2014 | Q3 2014 | Q1 2015 | Q3 2015 | Q1 2016 | Q3 2016 | Q1 2017 | Q3 2017 | Q1 2018 | Q3 2018 | Q1 2019 | Q3 2019 | Q1 2020 | Q3 2020 |
Availability - secondhand space | MSCI central London rental value growth (12m to quarter) | |
Source: CBRE, MSCI Monthly Index
- Secondhand space is space which is being marketed having been previously occupied in its current state. Current state can include a minor re-decoration, but not a comprehensive refurbishment
- Availability represents the total net lettable floor space in existing properties, which is being actively marketed, either for lease, sublease, and assignment or for sale for owner occupation as at the end of the survey period. Availability includes space that is being marketed and is physically vacant or occupied. Space that is physically vacant, but not being marketed or is not available for occupation is excluded from availability.
Space that is Under Construction and will become ready to occupy within 12 months is included within availability
Landsec ─ Appendices | 43 |
London Office market availability - grade A vs second hand space
The majority of availability in London is second hand space with the proportions between prime and secondary continuing to diverge, indicating a bifurcation of the market
Proportion of total 80%
74%
70%
60%
50% | 50% |
40%
30%
26%
20%
10%
0%
Q2 2008 | Q3 2008 | Q4 2008 | Q1 2009 | Q2 2009 | Q3 2009 | Q4 2009 | Q1 2010 | Q2 2010 | Q3 2010 | Q4 2010 | Q1 2011 | Q2 2011 | Q3 2011 | Q4 2011 | Q1 2012 | Q2 2012 | Q3 2012 | Q4 2012 | Q1 2013 | Q2 2013 | Q3 2013 | Q4 2013 | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | Q1 2015 | Q2 2015 | Q3 2015 | Q4 2015 | Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | Q1 2017 | Q2 2017 | Q3 2017 | Q4 2017 | Q1 2018 | Q2 2018 | Q3 2018 | Q4 2018 | Q1 2019 | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 | Q2 2020 | Q3 2020 |
Share of grade A space | Share of secondhand space | ||||||||||||||||||||||||||||||||||||||||||||||||
Source: CBRE
(1) Grade A space here is defined as newly-completed space and space that is under construction and will become ready to occupy within 12 months
Landsec ─ Appendices | 44 |
Central London supply as at 30 September 2020
14.6m sq ft currently under construction and a further 17m sq ft could complete by 2024
m sq ft | Vacancy rate % | |||||||||||||||||||||||||||||||||||||||
18 | 16 | |||||||||||||||||||||||||||||||||||||||
16 | 14 | |||||||||||||||||||||||||||||||||||||||
14 | 12 | |||||||||||||||||||||||||||||||||||||||
12 | 10 | |||||||||||||||||||||||||||||||||||||||
10 | ||||||||||||||||||||||||||||||||||||||||
6.5% | 8 | |||||||||||||||||||||||||||||||||||||||
8 | ||||||||||||||||||||||||||||||||||||||||
6 | 6 | |||||||||||||||||||||||||||||||||||||||
4 | 4 | |||||||||||||||||||||||||||||||||||||||
2 | 2 | |||||||||||||||||||||||||||||||||||||||
0 | 1993 | 2004 | 2015 | 0 | ||||||||||||||||||||||||||||||||||||
1984 | 1985 | 1986 | 1987 | 1988 | 1989 | 1990 | 1991 | 1992 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
Completed | Under construction | Definite/Likely | Average completions (1984-2019) | (RHS) Vacancy rate (all grades) | ||||
Source: CBRE, Knight Frank, Landsec; shows calendar years
- Completions/under construction includes fringe (White City, Non-Core Docklands, Stratford, Nine Elms, Hammersmith). Vacancy rate as at September 2020. From 2017, supply pipeline monitors schemes above 20,000 sq ft
- Landsec estimated future supply based on data from CBRE and Knight Frank
- "Definite/likely" are proposed schemes where it is reasonable to expect delivery in that year based on, inter alia: planning, pre-let, funding, vacant possession, demolition, construction contract
- Grade A space is brand new or comprehensively refurbished space, with high specification and prominent market image
- Vacancy rate is expressed as vacant space as a percentage of total stock
- Total stock represents the total completed space (occupied and vacant) in the private and public sector recorded as the net lettable area
Landsec ─ Appendices | 45 |
Central London supply as at 30 September 2020
Between March and September 2020, the total pipeline for the | ||
forecast period remained stable but new construction starts | ||
reduced by c.46% compared to the same period in 2019 - | ||
46% of space under construction is already pre-let | demonstrating the potential for current market uncertainty to | |
as flight to quality continues | delay completions | |
Under construction pipeline split into pre-let and speculative | Speculative pipeline only | ||||||||||||||
m sq ft | Vacancy rate % | m sq ft | Vacancy rate % | ||||||||||||
12 | c.46% of space | 10 | 12 | Continued caution over construction | 10 | ||||||||||
under construction is pre-let | starts could impact completion timing | ||||||||||||||
10 | 10 | ||||||||||||||
6.5% | 8 | 8 | |||||||||||||
8 | 8 | 6.5% | |||||||||||||
6 | 6 | 6 | 6 | ||||||||||||
4 | 4 | 4 | 4 | ||||||||||||
2 | 2 | 2 | 2 | ||||||||||||
0 | 0 | 0 | 0 | ||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
Completed | U/C pre-let | U/C speculative | Definite/Likely | Average speculative completions | Average completions | Vacancy rate (RHS) | |||||||||
(2010-2019) | (1984-2019) | (all grades) |
Source: CBRE, Knight Frank, Landsec; shows calendar years
- Completions/under construction includes fringe (White City, Non-Core Docklands, Stratford, Nine Elms, Hammersmith). Vacancy rate as at September 2020. From 2017, supply pipeline monitors schemes above 20,000 sq ft
- Landsec estimated future supply based on data from CBRE and Knight Frank
- "Definite/likely" are proposed schemes where it is reasonable to expect delivery in that year based on, inter alia: planning, pre-let, funding, vacant possession, demolition, construction contract
- Grade A space is brand new or comprehensively refurbished space, with high specification and prominent market image
- Vacancy rate is expressed as vacant space as a percentage of total stock
- Total stock represents the total completed space (occupied and vacant) in the private and public sector recorded as the net lettable area
Landsec ─ Appendices | 46 |
Central London office market
Demand has broadly kept pace with supply over the last three years which has prevented
a cumulative build-up of new space. This coupled with the 'flight to quality' may limit any
rental decline
m sq ft | -55.9% rental growth | -25.1% rental growth | -25.0% rental growth | % | |||||||||||||||||||||||||||||||||||||
(-18.5% CAGR) | (-13.4% CAGR) | (-13.4% CAGR) | |||||||||||||||||||||||||||||||||||||||
18 | Forecast | 36 | |||||||||||||||||||||||||||||||||||||||
16 | In previous downturns, significant rental appreciations beforehand coupled with an | 32 | |||||||||||||||||||||||||||||||||||||||
14 | 28 | ||||||||||||||||||||||||||||||||||||||||
"unchecked" supply of space, exacerbated the rental decline during the respective crises | |||||||||||||||||||||||||||||||||||||||||
12 | 24 | ||||||||||||||||||||||||||||||||||||||||
10 | 20 | ||||||||||||||||||||||||||||||||||||||||
8 | 16 | ||||||||||||||||||||||||||||||||||||||||
6 | 12 | ||||||||||||||||||||||||||||||||||||||||
4 | 8 | ||||||||||||||||||||||||||||||||||||||||
2 | 4 | ||||||||||||||||||||||||||||||||||||||||
0 | 0 | ||||||||||||||||||||||||||||||||||||||||
-2 | -4 | ||||||||||||||||||||||||||||||||||||||||
-4 | -8 | ||||||||||||||||||||||||||||||||||||||||
-6 | -12 | ||||||||||||||||||||||||||||||||||||||||
-8 | -16 | ||||||||||||||||||||||||||||||||||||||||
-10 | -20 | ||||||||||||||||||||||||||||||||||||||||
-12 | 131.5% rental growth | 99.3% rental growth | 39.8% rental | 65.1% rental growth | -24 | ||||||||||||||||||||||||||||||||||||
-14 | -28 | ||||||||||||||||||||||||||||||||||||||||
(18.3% CAGR) | (9.0% CAGR) | growth | (5.1% CAGR) | ||||||||||||||||||||||||||||||||||||||
-16 | -32 | ||||||||||||||||||||||||||||||||||||||||
(8.7% CAGR) | |||||||||||||||||||||||||||||||||||||||||
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 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
Early 90's recession | Dotcom | GFC | Referendum | Transition period ends | |||||||||||||||||||||||||||||||||||||
New space take-up | Completions | Forecast speculative completions | Rental growth (RHS) |
Source: CBRE, Knight Frank, MSCI Annual Index, Landsec; shows calendar years
- Landsec forecast based on data from CBRE and Knight Frank
- New space is defined as newly-completed and pre-let
Landsec ─ Appendices
Portfolio segmental split aligned to strategic priorities
47
Office
Retail
Specialist
Previous segments
West End
City
Mid-town
Southwark and other
London retail
Regional retail
Outlets
Retail parks
Leisure and hotels
Other
New segments
Offices
Central London portfolio
London retail
Other central London
Specialist
Regional shopping centres and shops
Regional retail | |
Outlets | |
Urban opportunities | |
Urban opportunities |
Retail parks
LeisureSubscale sectors
Hotels
Strategic priorities
our central London
business
our Regional retail
business
through Urban opportunities
capital from Subscale
sectors
Landsec ─ Appendices | 48 |
Important notice
This presentation may contain certain 'forward-looking' statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements.
Any forward-looking statements made by or on behalf of Landsec speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared.
Landsec does not undertake to update forward-looking statements to reflect any changes in Landsec's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.
Information contained in this presentation relating to Landsec or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.
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Land Securities Group plc published this content on 10 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 November 2020 08:52:05 UTC