CLS Annual Results 2012 v01 10 - Issuer...
Transcript of CLS Annual Results 2012 v01 10 - Issuer...
Annual Results 2012
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Contents • Overview
• Financials
• Portfolio
• Markets
• Summary
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Richard Tice Chief Executive Officer
John Whiteley Chief Financial Officer
London 46%
France 25%
Germany 20%
Direct 6%
Indirect 3%
Property investments by value
Sweden
About CLS
• Top TSR performance since 2008 in UK listed property sector - 18.7% pa compound
• Specialist in high-yielding offices and opportunistically adding value
• Cash generative: high yield (7%) vs low cost of debt (3.67%)
• Rental income £68.3m; Property portfolio £934.5m
• Management strong alignment of interest via shares
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31 December 2012
Highlights of 2012 • Substantially increased EPRA NAV
– Increased occupancy levels
– Increased rents like-for-like in local currency
– Planning secured at Spring Mews, Vauxhall Square, Catena and Clifford’s Inn
– Lowered cost of debt
– Issued retail bond
• Delivered Total Shareholder Return of 29.7%
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• Overview
• Financials
• Portfolio
• Markets
• Summary
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Contents
Financial Highlights
• EPRA NAV up 17.4% to 1,154.4p (2011: 983.1p)
• Profit after tax up 20.4% to £46.7m (2011: £38.8m)
• Interest cover 3.9x (2011: 2.6x)
• Low cost of debt 3.67% (2011: 4.06%)
• Issue of 5.5% £65m retail bond 2019
• Distributions increased by 6.7% to £13.1m (2011: £12.3m)
• TSR 29.7% in 2012; 135.4% in 5 years
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983.1
89.4 8.5
37.1
45.0
-8.7
800
840
880
920
960
1,000
1,040
1,080
1,120
1,160
1,200
1 Jan 2012 Underlying profit after tax
Share buy-backs
Revaluation of properties
FV movements on bonds
FX 31 Dec 2012
Strong NAV Growth Movement in EPRA NAV
Pence
7
1,154.4
Strong Cash Generation Profit after Tax
36.2
-7.4
16.2
-1.5
3.2
46.7
28.1
1.6
18.0
-18.5
9.6
38.8
-20
0
20
40
60
2012 2011
£m
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EPRA PBT Tax Property valuation surplus
FV movement on derivatives
Other Profit after tax
85.1
127.3
55.3
65.0
31.9 3.7
-12.6
-26.6
23.1
97.6
0
50
100
150
200
250
300
1 Jan 2012 Retail Bond From operations
Other Tender buy-back
Capital expenditure
Corporate Bonds
revaluation
31 Dec 2012
Very High Liquidity Movement in Liquid Resources
£m
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Cash Corporate Bonds
224.9
140.4
New Sources of Finance Movement in Gross Debt
625.1
690.2 65.0
35.1
-6.0
-21.3 -7.7
500.0
550.0
600.0
650.0
700.0
750.0
1 Jan 2012 Retail bond issue New loans Net refinancing Repaid FX 31 Dec 2012
£m
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Debt Profile As at 31 December 2012
0
20
40
60
80
100
120
140
160
180
200
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Amortisation Bullet Repayments
£m
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Diverse Financing Strategy to lower risk
• Spread risk
– 21 banks
– 2 unsecured bonds
– 1 debenture
– Ring fencing model
• 67% fixed or hedged
• 73% floating rate
• Weighted avg. cost of debt 3.67% (2011: 4.06%)
• Property LTV 58.8% (2011: 62.5%)
Sources of Finance
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Hedged
Floating
27% 40% 33%
-100
-50
0
50
100
150
Total Shareholder Return TSR of listed property companies 2008 – 2012
13 Source: Bloomberg Property investment and development companies listed on LSE with Market Cap over £50m
CLS
%
Contents
• Overview
• Financials
• Portfolio
• Markets
• Summary
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Govt. 40%
Corporates 29%
Other 31%
Occupiers by sector
Property Portfolio Overview
• Diversified portfolio in major European cities:
– 418 customers in 71 properties
– 424,000 sq m
– Cost effective rents
• 65% of rents indexed
• Secure income; 69% from governments & major corporations
• WAULT 7.2 years (6.1 years to first break)
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0
4
8
12
2007 2008 2009 2010 2011 2012
CLS Major European Cities
Actively Managed Portfolio
• In-house property management • Low vacancy rate of 3.8% vs
European office average of over 9%(1)
• Rented in line with market rates
Historical long-term low vacancy rate Rented in line with market rates(2) (£m pa)
Source: 1. BNP Paribas Real Estate Research Q1'12. Average of 9 office markets:
London, Paris, Munich, Berlin, Hamburg, Brussels, Madrid, and Milan. 2. CLS Holdings plc
(1)
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Impact of Indexation on rental income
1.0% increase +£423,000 pa
3.0% increase +£956,000 pa
5.0% increase +£1,646,000 pa
0
10
20
30
40
50
2013 2014 2015 2016 2017 Later
Rent expiring ERV of rent expiring
Property Portfolio Schedule
At 31 December 2012
Contracted Rent
£m Valuation
£m
Revaluation in local
currency
Net Initial Yield
%
Vacancy by rent
% WAULT (Years)
Rent £ psm
Capital Value* £ psm
London 29.1 437.5 4.7% 6.6 2.3 8.4 218 3,066
France 18.7 239.6 1.4% 7.7 3.8 5.0 202 2,490
Germany 14.1 197.4 0.1% 7.0 7.4 9.0 106 1,361
Sweden 6.4 60.0 0.3% 7.5 1.7 3.5 144 1,323
Total portfolio
68.3 934.5 1.7% 7.0 3.8 7.2 169 2,164
17 *Excludes Spring Mews
Movement in Rental Income
66.2 66.1
1.0
1.3
-0.1
-2.3
60
61
62
63
64
65
66
67
68
69
70
Rental Income 2011
Acquisitions Indexation Lettings & Expiries FX Rental Income 2012
£m
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Movement in Investment Properties
902.1
934.5
13.1
9.2
5.0
16.2
-11.1
880
890
900
910
920
930
940
950
1 Jan 2012 Additions Developments Refurbishments Valuation Uplift FX 31 Dec 2012
£m
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Property Portfolio Acquisitions in year
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Property Crosspoint House,
Wallington SM6 Gateway House, Kennington SE11
Sentinel House, Coulsdon CR5 Total
Area 1,963 sq m 1,844 sq m 3,411 sq m 7,218 sq m
Rent £320,885 £281,960 £526,641 £1,129,486
Purchase price £2.19 m £3.33 m £5.89m £11.41m
NIY 14.10% 8.46% 8.94% 9.89%
Capital value £1,115 / sq m £1,807 / sq m £1,726 / sq m £1,580 / sq m
Weighted avg period to first
break 2.4 years 4.2 years 10.1 years
Vauxhall Regeneration
New US Embassy
Vauxhall Bridge
Vauxhall Transport Interchange Vauxhall Square
Spring Mews
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Adding Value On site - Spring Mews, SE11
Gross internal area 20,800 sq m
• 400 student rooms
• 93 bedroom suite hotel
• 245 sq m retail space
• 468 sq m offices
• 561 sq m community centre
• Planning gained May 2012
• Started on site Q4 2012
• Completion late 2014
• Development cost c.£55m ex. land
• Estimated rental value >£5.5m
• Heads of terms agreed with hotel operator and with student manager
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Adding Value Planning Gained – Vauxhall Square, SW8
Gross internal area 143,000 sq m • 520 apartments – 410 private in 2 x 50 storey
towers, 110 affordable homes • 22,732 sq m offices • 3,119 sq m of retail • 278 bedroom hotel, 123 bedroom suite hotel • 359 student bedrooms • 3,777 sq m multi-screen cinema, community
facilities, 50 bedroom hostel • Substantial new public square and public
realm improvements • Commence 2015 onwards, exploring options • Reviewing approaches received from
operators and funding partners • Development cost c£500 m
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Adding Value Planning Gained
Clifford’s Inn, Fetter Lane, EC4 • 3,423 sq m office refurbishment and 8 residential
apartments • Consent received Q1 2013, complete mid-2014 • £10.1m refurbishment cost, income £1.4m pa
Catena, Stockholm • Associate, 29.9% stake • 150,000 sq m: 800 apartments,
73,000 sq m commercial • Consent secured end 2012,
exploring phasing and funding options
CGI of Clifford’s Inn
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Sustainability
In London portfolio
• Lowered gas usage by 25%
• Lowered energy intensity per sq m by 15%
• Installed >500 LED lights, 250 remaining
• Installed 296 sq m photovoltaic panels at Buspace Studios
– 44kWp capacity
– Zero net emissions from landlord areas
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Other Investments
Cash management via corporate bonds
• 48 bonds from 38 issuers valued at £127.3 million
• ROCE since late 2008: 74.9%
• Running yield 8.2%
• Income £9.1m year • Return in 2012: 31.4%
Other associates (1.1% gross assets)
• Cood Investments, Bulgarian Land Development, Nyheter24
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• Overview
• Financials
• Portfolio
• Markets
• Summary
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Contents
Future Direction in our Markets • Increasing appetite for security of
income of real estate
• Positive arbitrage to continue
between high net yields and low
interest rates
• New funding sources and capital
replacing traditional debt sources;
margins levelling out
• Genuine tenant demand continues
• Across the board reduction in lettable
available space
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London Continuing Vibrancy
• Global investment destination of choice
• Distressed sales continuing outside prime areas
• Occupier demand firm, availability reducing outside CBD
• Vauxhall Nine Elms regeneration zone – significant successes
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London Population London Inward Migration
Continental Europe Wide variations
FRANCE • Eurozone crisis impacted on confidence • GDP growth negligible in 2012 & 2013
• 2012 lettings down 4% and 29% in Paris and Lyon respectively • Investment transaction volume down 8% in 2012
GERMANY • Employment at all time high >41 million • 2012 lettings (lower than 2011) above 10 year average at 3m sq m
• Vacancy levels at 10 year low of 9% • New construction at 5 year low
• Competitive availability of bank debt
SWEDEN • GDP growth strong at 1.2% in 2013, 2.6% 2014
• 3.8% vacancy in Stockholm CBD; 9.6% in Greater Stockholm • Low new supply leading to near prime rental growth +20% in 2012
• Catena can benefit from Stockholm population growth and office shortage 30 Source: DTZ, CLS
• Overview
• Financials
• Portfolio
• Markets
• Summary
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Contents
Summary
• Strong TSR performance
• Year of achievement at operating level
• Innovative funding
• Investing in new acquisitions
• £60m development programme
• Retaining high levels of liquidity
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www.clsholdings.com CLS Holdings plc 86 Bondway Tel: +44 (0) 20 7582 7766 London Fax: +44 (0) 20 7820 7728 SW8 1SF Email: [email protected]
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Appendices
Corporate Bond Portfolio At 31 December 2012
Banking Insurance Building
Societies Financials Other Total
Value £29.3m £42.8m £8.7m £7.3m £39.2m £127.3m
Coupon yield 8.5% 7.5% 8.7% 7.0% 8.9% 8.2%
Issuers KBC
RBS
HBOS
Lloyds
Investec
Dresdner
SNS Bank*
Rothschild
Danske Bank*
Brit
AXA
Aviva
Generali
Irish Life
Swiss Re
Swiss Life
Direct Line
RL Finance
Phoenix Life
Legal & General
Friends Provident
Yorkshire
Nationwide
Man Group
Aberdeen AM
TUI
Fiat
SAS
Boparan
Europcar
Telefonica
Swissport
Alliance Oil
Lottomatica
Norske Skog
Corral Finans
Thomas Cook
British Airways
Renewable Energy Corp
34 * Less than £0.3m market value
London
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• 28 properties • 137,800 sq m
France
• 26 properties • 17 in Paris • 96,200 sq m
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LUXEMBOURG
Germany
• 16 properties • 145,000 sq m
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Sweden
1 property • 45,400 sq m office park
2 associates • Catena AB - 150,000 sq m
mixed-use development in Stockholm
• Cood Investments
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Vacancy Rate History
2.0%
4.0%
6.0%
8.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
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KPI
Average Unexpired Lease Term
0
2
4
6
8
10
London France Germany Sweden Group
To first break To end of lease
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EPRA Profit Before Tax Driven by lower net interest costs 12 months to 31 December 2012 2011 Difference
£m £m £m
Net rental Income 62.9’ 63.0’ (0.1)
Administration expenses (10.5) (10.9) 0.4’
Other expenses (2.9) (2.2) (0.7)
49.5’ 49.9’ (0.4)
Finance income 10.0 9.3’ 0.7‘
Finance expense (24.1) (29.2) 5.1’
FX translations 0.6’ 0.7’ (0.1)
Share of associates, excluding revaluations 0.2’ (0.8) 1.0‘
Wyatt -’ (0.5) 0.5’
Other -’ (1.3) 1.3’
EPRA profit before tax 36.2’ 28.1’ 8.1’
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