Half Year Results 2013

Transcription

1 Half Year Results

2 Contents Overview Financials Portfolio Markets Summary Richard Tice Chief Executive Officer John Whiteley Chief Financial Officer 2

3 About CLS Top TSR performance since 2008 in UK listed property sector % pa compound Specialist in high-yielding offices and opportunistically adding value Cash generative: high yield (7.05%) vs low cost of debt (3.55%) Property investments by value 30 June 2013 France 24% Germany 21% Rental income 72.2m Property portfolio 1.0bn Management strong alignment of interest via shares London 46% Direct 6% Indirect 3% Sweden 3

4 Achievements in H Healthy growth in NAV Seven acquisitions; five in first half More acquisitions in prospect Good progress at Spring Mews, Clifford s Inn and Vauxhall Square Lowered cost of debt Delivered Total Shareholder Return of 30.1% 4

5 Contents Overview Financials Portfolio Markets Summary 5

6 Financial Highlights EPRA NAV up 6.0% to 1,223.7p (Dec 2012: 1,154.4p) Profit after tax up 6.6% to 22.7m (June 2012: 21.3m) Interest cover 3.8x (Dec 2012: 3.9x) Low cost of debt 3.55% (Dec 2012: 3.67%) Proposed distribution increased by 7.4% to 5.0m (June 2012: 4.6m) TSR 30.1% in 6 months to 30 June 2013; 190.1% in 5 years 6

7 Strong NAV Growth Movement in EPRA NAV Pence 1,280 1, , , ,120 1,080 1,040 1,000 1 Jan 2013 Underlying profit after tax FX Share buybacks Revaluation of properties Other 30 Jun

8 Strong Income Generation Profit after Tax m EPRA PAT Property revaluation Gain on bond sales Other Profit after tax 8

9 Very High Liquidity Movement in Liquid Resources m 300 Cash Corporate Bonds At 1 January 2013 From operations Other Tender buyback Property acquisitions Capital expenditure Net loan repayments Bond revaluation At 30 June

10 Debt Profile As at 30 June 2013 m 250 Amortisation Bullet Repayments H

11 Diverse Financing Strategy to lower risk Spread risk Hedging of Finance 22 banks 2 unsecured bonds 1 debenture Ring fencing model 23% Fixed 56% Capped 21% 79% fixed or hedged 77% floating rate Weighted avg. cost of debt 3.55% (2012: 3.67%) Balance sheet LTV 51.4% (2012: 52.5%) Hedged Floating 11

12 Total Shareholder Return TSR of listed property companies % CLS -100 Source: Bloomberg Property investment and development companies listed on LSE with Market Cap over 50m, 1 July June

13 Contents Overview Financials Portfolio Markets Summary 13

14 Property Portfolio Overview Diversified portfolio in major European cities: 450 customers in 76 properties Occupiers by sector 439,000 sq m 1 Cost effective rents 64% of rents indexed Secure income; 68% from governments & major corporates WAULT 6.9 years (5.9 years to first break) Other 32% Major corporates 29% Govt. 39% 1. Excludes developments 14

15 Actively Managed Portfolio Rented in line with market rates (1) ( m pa) 50 Rent expiring 40 ERV of rent expiring Year 2 Year 3 Year 4 Year 5 Year Later In-house property management Low vacancy rate of 5.5% vs European office average of over 9% (2) Rented in line with market rates with future growth potential Impact of Indexation on rental income 1.0% increase + 438,000 pa 3.0% increase + 973,000 pa 5.0% increase + 1,523,000 pa Source: 1. CLS Holdings plc 2. BNP Paribas 15

16 Property Portfolio Acquisitions in year Area (sq m) Rent ( 000s) Purchase price ( m inc costs) N.I.Y. (%) Capital Value ( psm) WAULT to breaks (years) Benwell House SunburyTW16 Kings House Bromley BR1 405 Kennington Road London SE11 Hygeia Harrow HA1 Bismarckallee Freiburg Sub Total H Melita House Chertsey KT16 62 London Road Staines TW18 Sub Total H , , , , , , ,742 1, , ,135 1, , ,857 3, , , , , , , , Total 22,386 3, ,

17 Investment Property Portfolio At 30 June 2013 Contracted Rent m Valuation m Revaluation in local currency Net Initial Yield % Vacancy by rent % WAULT (Years) Rent psm Capital Value* psm London ñ 0.2% ,990 France ò 1.7% ,599 Germany ñ 0.3% ,437 Sweden ò 1.1% ,426 Total portfolio ,001.8 ò 0.4% ,204 *Excludes development sites: Spring Mews and Clifford s Inn 17

18 Movement in Rental Income m Rental Income to 30 June 2012 Acquisitions Indexation Lettings & Expiries FX Rental Income to 30 June

19 Movement in Investment Properties m 1,020 1, ,

20 Vauxhall Regeneration Growing momentum US Embassy Chinese Investor 5 star hotel + residential Dutch Embassy Spring Mews Possible Chinese Embassy Vauxhall Square Transport Interchange 20

21 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 Development cost c. 55m ex. land Estimated rental value 5.5m Started on site Q Completion late 2014 Heads of terms agreed with hotel operator Fresh Student Living appointed Good interest from universities 21

22 Adding Value Moving forwards - 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 Substantial new public square and realm Section 106 signed Phasing commences 2015 onwards Discussions under way with four-star hoteliers and student operators: strong interest received Development cost c 500 m 22

23 Adding Value Progress Clifford s Inn, Fetter Lane, EC4 On site 3,423 sq m office refurbishment and 8 residential apartments Construction under way, complete mid m refurbishment cost, income 1.4m pa Active pre-let enquiries Catena, Stockholm - Planning gained 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 23

24 Sustainability London Saving for occupiers of 150,000 in electricity and gas costs Continuing LED light installations Installing ground-source energy system at Spring Mews Installation of photovoltaic panels at second property Sweden Ground-source energy system reduced energy usage by 21% and emissions by 64% 24

25 Other Investments Cash management via corporate bonds 30 bonds from 26 issuers valued at 88.9 million ROCE since late 2008: 87.4% Running yield 8.7% Income 7.7m pa Return in H1 2013: 6.2% Other associates (1.1% of gross assets) Cood Investments, Bulgarian Land Development, Nyheter24 Significant UK portfolio acquisition in due diligence Agreed broad terms on 34 government-let properties in receivership Income over 15m pa, yielding over 12.25% Class 2 transaction 25

26 Contents Overview Financials Portfolio Markets Summary 26

27 Future Direction in our Markets Investors returning to non-prime markets, prices responding Rays of economic sunshine appear Greater competition amongst more varied types of debt providers, margins reducing Genuine occupier demand continues Across the board reduction in lettable available space 27

28 London Continuing Vibrancy Swap Rates / Equivalent Yield 1 16% 5yr Interest Rate Swaps Inner South Eastern Offices Central London Offices 12% 8% 4% 0% Firm economic growth accelerating Distressed sales continuing outside prime areas Foreign capital prevalent Vauxhall Nine Elms regeneration zone successes continue New rules enhance residential conversion potential 1. Source: Savills 28

29 Continental Europe Wide variations France Eurozone crisis compounded by internal policies and corporate wait and see mode GDP growth negligible for foreseeable future Unemployment at 10.8%, almost double that of Germany Greater Paris: letting and investment volumes down 19% and 13% y-on-y Germany Employment at all time high, almost 42 million Six month investment volumes up 37% y-on-y Vacancy levels at 10 year low of 8.7% New construction at 5 year low, likely to rise as prime rents increasing Most advantageous availability of bank debt Sweden GDP growth firm at 1.2% in 2013, 2.6% 2014 PMI Index at 56.6%, amongst highest in Eurozone 4.5% vacancy in Stockholm CBD; rents stable Source: DTZ, CLS 29

30 Contents Overview Financials Portfolio Markets Summary 30

31 Summary Investing into the upturn Right time to buy real estate 7 acquired 34 under offer Delivering on developments Further TSR performance Retaining high levels of liquidity 31

32 Appendices CLS Holdings plc 86 Bondway Tel: +44 (0) London Fax: +44 (0) SW8 1SF

33 Corporate Bond Portfolio At 30 June 2013 Banking Insurance Building Societies Financials Other Total Value 30.1m 24.2m 6.4m 7.6m 20.6m 88.9m Running yield 8.9% 7.7% 9.1% 9.5% 9.3% 8.7% Issuers KBC Brit Yorkshire Man Group TUI RBS Generali Nationwide Aberdeen AM ISS Co-op Swiss Re SAS Lloyds Direct Line JC Penney Investec Phoenix Life Europcar SNS Bank* Friends Provident Swissport Rothschild Alliance Oil Corral Finans Telecom Italia * Less than 0.3m market value 33

34 London A1 31 properties 149,000 sq m A40 WEST END BRENTFORD VAUXHALL A2 NEW MALDEN A3 INNER M25 34

35 France 27 properties 17 in Paris 96,100 sq m LILLE PARIS LUXEMBOURG LYON ANTIBES 35

36 Germany SÜDERHASTEDT 17 properties 152,300 sq m HAMBURG BERLIN BOCHUM DÜSSELDORF LANDSHUT FREIBURG MUNICH 36

37 Sweden 1 property 45,400 sq m office park 2 associates Catena AB - 150,000 sq m mixed-use development in Stockholm Cood Investments VÄNERPARKEN GOTHENBURG STOCKHOLM 37

38 Average Unexpired Lease Term 10 To first break To end of lease London France Germany Sweden Group 38