Presentation to Trafford Centre Noteholders. 22 September 2014

Transcription

1 Presentation to Trafford Centre Noteholders 22 September 2014

2 Intu Properties plc Presentation to Trafford Centre Noteholders Corporate overview David Fischel Financial details Matthew Roberts Operational review Mike Butterworth intu Trafford Centre overview Mike Butterworth Questions Appendices This presentation includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Intu Properties plc to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Any information contained in this presentation on the price at which shares or other securities in Intu Properties plc have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide to future performance Page 2

3 Corporate overview David Fischel, Chief Executive

4 Introduction Strong revaluation surplus for super-prime shopping centres Successful integration of intu Merry Hill, intu Derby and Sprucefield acquisition Improved financial flexibility Letting progress as retailer demand strengthens for quality space Gaining momentum with 1.2 billion development pipeline Distinguishing Intu from competitors through brand and digital presence A long term business 20 years of measured expansion Shopping Centre Space, '000 sq. ft. 25,000 20,000 15,000 10,000 5, Page 4

5 Strong revaluation surplus for super-prime shopping centres Revaluation surplus 573 million (1), 7.6% like-for-like Increasing NAV per share to 372p Total financial return (from pro forma NAV of 335p) 14 per cent in six months Investment properties 8.8 billion (1) May 2010 demerger 4.6 billion (1) Including Group share of joint ventures Page 5

6 Successful integration of intu Merry Hill, intu Derby and Sprucefield acquisition Increasing intu ownership to 9 of top 20 UK centres Initial indications positive and confirming investment case Impact of rebranding and World Class Service training Opportunities rental levels tenant repositioning/upsizing active management/development potential Page 6

7 Gaining momentum with 1.2 billion development pipeline Projects on site in first half Soon to commence Barton Square, intu Trafford Centre intu Watford, Charter Place extension Other major extensions Design and pre-letting Foregoing some income ahead of redevelopment Page 7

8 Distinguishing Intu from competitors through brand and digital presence Tell intu customer feedback programme brand driving dwell and frequency Wi-Fi 11 intu centres already installed ownership model infrastructure and data over 1 million registrants to date 60% of intu Wi-Fi registrants opted in Intu.co.uk website upgrade H2 fully mobile enabled National mobile wayfinding app under development location-based messaging High quality nationwide commercial partnerships Page 8

9 Financial details Matthew Roberts, Chief Financial Officer

10 Key highlights Valuation up 7.6 per cent (IPD up 3.5 per cent) Underlying earnings 6.4p ( p) - impact of lease expiries and development offsetting rental uplifts Interim dividend of 4.6p NAV per share 372p Additional leverage raised on intu Trafford Centre, Parque Principado, intu Derby, intu Merry Hill, Sprucefield and St. David s, Cardiff Repaid 146m intu Uxbridge loan in June Robust financial position: debt to assets ratio 44.4 per cent, 7.7 years average debt maturity and 510m of cash and committed facilities at 30 June 2014 Page 10

11 Underlying earnings including Group share of joint ventures First half First half m m Net rental income Administration expenses (14.9) (13.9) Net finance cost (underlying) (100.3) (101.2) Dividend from US investment Other (5.0) (1.1) Underlying earnings Interest cover EPRA cost ratio (1) 16.4% 16.3% Earnings per share (pence) (2) Weighted average shares in issue (million) (2) 1,130 1,004 Dividend per share (pence) (2) (1) The EPRA cost ratio presented excludes direct vacancy costs and is calculated in accordance with EPRA guidelines (2) Adjusted for rights issue bonus factor Page 11

12 Change in like-for-like net rental income Page 12

13 2014 debt funding activities 110m intu Trafford bond issue at 4.6% cost 40m raised on Parque Principado (Intu share of 95m) 146m loan repaid on intu Uxbridge 163m 7 year loan and revolving credit facility refinancing Intu s share of the maturing St. David s, Cardiff loan raising an additional 44m of debt and providing a on-going 41m liquidity facility Three new debt facilities totalling 424m to provide part-funding for the acquisition Weighted average all-in cost of debt 2.5 per cent for first year Margins step up after 12 months and thereafter at 6 month intervals LTV of transaction was 48.9% broadly in line with Group LTV intu Merry Hill - 191m, initial LTV of 46.9%; maturity in 2016 with a one year extension option; secured against equity stake intu Derby - 203m, initial LTV of 51.9%; maturity in 2016 Sprucefield - 30m, initial LTV of 43.9%; maturity in 2016 Page 13

14 Debt maturity Weighted average debt maturity of 7.7 years Largely fixed, weighted average cost 4.7 per cent 510m of cash and committed facilities Capex: 164m approved; 130m proposed (excludes major extensions) Page 14

15 Improved financial flexibility Net debt to assets 44% 30 June 2014 (1) 31 December 2013 (1) Total properties 8,843m 7,624m Net external debt (3,924)m (3,698)m Net debt to assets 44.4% 48.5% Cash 200m 235m Undrawn committed corporate facilities 310m 90m Net assets attributable to shareholders 4,546m 3,519m Adjusted net assets per share 372p 346p 335p NAV pro forma basis Weighted average cost of gross debt 4.7% 4.8% Weighted average maturity of gross debt 7.7 years 8.0 years (1) Group including share of joint ventures Page 15

16 intu Trafford Centre 30 June 2014 Valuation (1) Valuation of 2,098m intu Trafford Centre topped up net initial yield of 4.0% and nominal equivalent yield of 4.5% Ratio of outstanding loan note to intu Trafford Centre valuation: 39% Rent (1) Annual property income of 84.5m; ERV of 101.7m Headline rent prime ITZA psf 410 Occupancy (2) Current occupancy rate of 96% by rent as at 30 June 2014 (1) Excludes Barton Square and other land holdings Site location (2) Occupancy defined as passing rent of let and under offer units expressed as a percentage of the passing rent of let and under offer units plus ERV of unlet units, excluding development and recently completed properties. Units let to tenants currently in administration and still trading are treated as let and those no longer trading are treated as unlet Page 16

17 intu Trafford Centre operating cash flow* Year ended 30 June 2014 m Year ended 30 June 2013 m Rents (including turnover rent) Other income 2.1 (1) 3.1 (2) Property and other costs (1.8) (4.7) Operating cash flow Net interest paid (44.0) (43.6) Net operating cash flow * Proforma cash flow basis, excluding the exceptional cash flow of REIT entry, corporation tax and interest rate floor termination (1) Excludes 1.0m of premiums received (2) Excludes 0.4m of premiums received Source: The Trafford Centre Limited Quarterly Reports: Cash flow statement and management commentary. Page 17

18 Debt Service Cover Ratio (DSCR) Calculated using twelve months historic cash flows June 2014 Quarterly report 1.47 : 1 Components: Rental and other income less costs Interest payments and note amortisation 87.9 million 60.0 million ( 44.0m interest, 16.0m amortisation) Page 18

19 Debt Service Cover Ratio and Interest Cover Ratio History Temporary decrease due to rent free for major tenant during store expansion 220% Interest Cover Ratio Debt Service Cover Ratio 210% 200% 190% 180% 170% Ratio (%) 160% 150% 140% 130% 120% 110% 100% Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Page 19

20 Trafford Centre loan notes analysis Initial launch February 2000 Second issue July 2005 Third issue March 2014 Issue size (total) 974.5m Outstanding amount 30 June m (1) Fixed: Floating (2) ratio 70% : 30% Security Trustee Deutsche Bank Hedge counterparties Deutsche Bank & RBS Liquidity facility Lloyds Banking Group Cash Manager Deutsche Bank (1) For analysis by class see slide 43 (2) Floating rate notes are fully hedged with interest rate swaps and caps Page 20

21 Trafford Centre loan notes amortisation by class Amortisation Profile of Trafford Centre Notes B2 - Floating A3 - Floating D1N - Floating A2 - Fixed 6.50% B - Fixed 7.03% D3 - Fixed 4.75% B3 - Fixed 4.25% D2 - Fixed 8.28% A4 - Fixed 2.875% A1N - Floating Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Jun-23 Jun-24 Jun-25 Jun-26 Jun-27 Jun-28 Jun-29 Jun-30 Jun-31 Jun-32 Jun-33 Jun-34 Jun-35 Principal Outstanding Pay Date Page 21

22 Operational review Mike Butterworth, COO

23 Operating metrics 98 new long-term leases 15m +4% passing rent Occupancy 96% Vacancy UK big shopping centres * 11% Valuation +7.6% like-for-like (IPD** capital growth + 3.5%) Footfall +1% (Experian benchmark flat) Retailer sales (est.) +1½% * PMA estimate top 70 locations plus regional shopping centres. ** IPD monthly index, retail Page 23

24 Valuation million, +7.6% like-for-like Notable valuation movements: Market value (1) Surplus (deficit)(1) m m % intu Trafford Centre 2, intu Lakeside 1, intu Metrocentre Manchester Arndale intu Milton Keynes intu Eldon Square intu Braehead intu Potteries 162 (2) (1) intu Victoria Centre 299 (13) (4) Others 2, , (1) Including Group share of joint ventures Page 24

25 Nationwide opportunities Page 25

26 intu Trafford Centre overview Mike Butterworth, COO

27 Overview of retail mix 200+ units (including over 65 catering and leisure units); approximately 1.5m sq. ft. retail and 0.3m sq. ft. catering and leisure space over 2 levels Anchor tenants: Selfridges, Debenhams, John Lewis and Marks & Spencer Opened to public in September 1998 Significant redevelopment of main entrance for additional catering in 2007 (The Great Hall) Major 0.2m sq. ft. homeware and leisure extension (Barton Square) opened in 2008 Retailers significantly expanding in 2011, 2012 and 2013 include Marks & Spencer, Debenhams, Next, Superdry, H&M Site location Page 27

28 Catering and leisure c 310,000 sq ft devoted to catering and leisure over 50 catering units generating c 75m annual turnover themed areas - The Orient, The Great Hall adding a sense of theatre Continuous evolution with brands including Tampopo, Zizzi, Nando s, TGI Friday s, Five Guys and Carluccios An unrivalled leisure offer: Odeon Multiplex IMAX cinema, Paradise Island Adventure Golf, Laser Quest, Aerial Extreme (treetop adventure course) Legoland Discovery Centre and SeaLife aquarium in the adjacent Barton Square Events include: Celebrity Christmas lights switch on high profile fashion shows firework displays Page 28

29 Driving growth through active asset management Letting strategy Sustainability with Improving tenant mix + + key retailers Achieving ERV on review / renewal Goal The right space at the right rent Outcome Tenant re-investment and commitment to the Centre Consistent growth in rental income Page 29

30 Asset management Recent asset management activity Recent openings include: Five Guys: first site in the North Victoria s Secret: one of first five UK stores Next: expansion to 40,000 sq ft via phased opening March to June 2013 Hamleys: first store in the North West opened November 2013 Forever 21: fourth UK store opened July Nespresso: first stand alone UK store Wokooshii: new concept restaurant Fat Face: new concept store Hugo Boss: expansion from 3,000 to 5,500 sq ft Page 30

31 Recent openings Page 31

32 Overview of Trafford Centre rent reviews and lease maturities Rent reviews* Lease maturities* 50% 40% 70% 60% 50% 62% 30% 28% 40% 20% 10% 0% 20% 12% 13% 9% 4% Pre % 20% 10% 0% 11% 9% 6% 4% 4% 2% 2% *As % of 30 June 2014 passing rent Page 32

33 Significant asset management opportunities Future-proofed structure Scope for asset management initiatives at intu Trafford Centre including: original structure built to accommodate additional floors enabling cost effective expansion, e.g. above Debenhams along link bridge to Barton Square opportunities to introduce MSU flagship stores through conversion of space to additional retail, subject to planning permission creation of space to enable unit reconfigurations scope for retailers to create cost-effective mezzanine floors Page 33

34 Barton Square opportunities Second storey retailing and roof Scope for asset management initiatives at Barton Square including: structure includes an additional floor enabling cost effective expansion achieved retail consent for 93,000 sq. ft. on upper level courtyard to be enclosed by glass roof to enhance environment anticipate an increase in rental tone across Barton Square Site location Page 34

35 Over 21m sq ft of retail, catering and leisure space 1.2bn development pipeline 2/3 of the UK s population live within a 45 minute drive time of one of our centres Q&A 30m unique customers 9 of UK s top 20 shopping centres Our centres attract 400m customer visits a year 96% occupancy Page 35

36 Appendices

37 Intu - leading owner, developer and manager of prime UK shopping centres Centre Location Centre Location 1 Westfield London London - Shepherds Bush 23 intu Bromley Bromley 2 Bluewater Greenhithe 24 intu Eldon Square Newcastle 3 Westfield Stratford City London - Stratford 25 Victoria Square Belfast 4 Meadowhall Sheffield 26 intu Braehead Glasgow 5 intu Trafford Centre Manchester 27 Victoria Quarter Leeds 6 St David's Cardiff 28 Golden Square Warrington 7 intu Metrocentre Gateshead 29 Silverburn Glasgow 8 intu Lakeside Thurrock 30 White Rose Shopping Centre Leeds 9 Bullring Birmingham 31= The Oracle Reading 10 Arndale Centre Manchester 31= Trinity Leeds Leeds 11 The Mall at Cribbs Causeway Bristol 31= Thistle Centre Stirling 12= Brent Cross London 34 Buchanan Galleries Glasgow 12= Cabot Place, One Canada Square London 35 East Kilbride Shopping Centre Glasgow 14 Liverpool One Liverpool 15 Cabot Circus Bristol 16 intu Merry Hill (2) Brierley Hill 17 Highcross Leicester Leicester 43 intu Victoria Centre Nottingham 18 intu Derby (2) Derby 45 intu Chapelfield Norwich 19 intu Watford Watford 46 intu Potteries Stoke-on-Trent 20 thecentre: mk (3) Milton Keynes 59 intu Milton Keynes Milton Keynes 21 West Quay Southampton 69 intu Uxbridge Uxbridge 22 Festival Place Basingstoke 182 intu Broadmarsh Nottingham Source: PMA (1) Top shopping centres on basis of PMA Retail Score (June 2014). Intu shopping centres highlighted orange (2) Acquired on 1 May 2014 (3) Adjoined by intu Milton Keynes Page 37

38 Yield comparisons Prime UK shopping centres - attractive asset class for major international investors Yield premium to fixed rate assets combined with increasing likelihood of rising rents from economic growth now attracting wider investor interest Page 38

39 intu Trafford Centre Key catchment & demographic statistics Large catchment area 8.9 million people live within a 70 minute drive 70 minute drive time around Trafford Centre 4.8 million within 45 minutes Total available retail expenditure of 11.9bn Loyal customer base 25 times p.a. average visiting frequency 16% of visitors visit at least once per week 61% visit at least monthly Wealthy demographic 1 66% ABC1; 61% years 70 Minute Drivetime 79% female shoppers Trafford Centre Metrolink under consideration by the Greater Manchester Combined Authority 1) UK social groups A, B and C1, defined as members of households whose chief earner s occupation is professional, higher or intermediate management or supervisory Source: ResearchCraft, Experian Page 39

40 intu Trafford Centre top 10 tenants Rank Tenant Group Secured rent 1 Arcadia (1) 6% 2 Next 4% 3 Selfridges 3% 4 Boots 3% 5 Marks and Spencer 3% 6 Debenhams 3% 7 H&M 2% 5 United Cinemas 2% 9 J D Sport 2% 10 Forever 21 2% % Top 10 tenants total 30% (1) Includes BHS, Topshop, Topman, Miss Selfridge, Dorothy Perkins and Wallis Page 40

41 intu Trafford Centre analysis of rental income by sales category Other 15% Anchor Tenants 20% Books/Cards 3% Catering & leisure 14% Jewellers 6% Ladieswear 11% Footwear 5% Phone Retailers inc. Mobiles 4% Mixed: Ladies & Menswear 18% Menswear 4% * Other includes banks, childrenswear, confectionery, electrical computer retailers, gifts / soft furnishings / furniture, health and beauty, opticians, outdoor clothing / equipment, music retailers, sportswear, toys, travel agents and office. Page 41

42 intu Trafford Centre Increase in rental tone 2008 to Key Page 42

43 Trafford Centre loan notes analysis by class Class Amount Rating Coupon Maturity m Fitch Moody s S&P A1 (N) 5.3 AAA Aaa AA+ Libor +0.20% July 2015 A AAA Aaa AA+ 6.50% July 2033 A AAA Aaa AA+ Libor +0.29% July 2038 A AAA Aaa AA % April 2019 B 85.2 AA Aa2 AA- 7.03% July 2029 B AA Aa2 AA- Libor +0.33% July 2038 B AA Aa2 AA- 4.25% April 2024 D1(N) 29.1 BBB Baa2 BBB Libor +0.80% April 2035 D BBB Baa2 BBB 8.28% Oct 2022 D BBB Baa2 BBB 4.75% April 2024 Page 43