UK analyst and investor property tour

Transcription

1 UK analyst and investor property tour 3 June 2014

2 Intu Properties plc UK analyst and investor property tour 3 June Itinerary 09:45 11:00 13:00 14:15 14:45 16:15 Welcome David Fischel, Chief Executive Q&A Mike Butterworth, Chief Operating Officer Matthew Roberts, Group Finance Director Introduction to intu Merry Hill Julian Wilkinson, Regional Director Tour Leave for Derby Lunch Introduction to intu Derby Martin Breeden, Regional Director Tour Leave for Nottingham Introduction to Intu s plans for Nottingham Tour Mike Butterworth, Chief Operating Officer Martin Ellis, Construction & Development Director Depart for onward travel 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

4 Intu at a glance Over 21m sq ft of retail, catering and leisure space 12 of UK s top 25 shopping centres 1.2bn development pipeline 2/3 of the UK s population live within a 45 minute drive time of one of our centres 30m unique customers Our centres attract 400m customer visits a year 95% occupancy Page 4

5 Scale, focus and quality set Intu apart 2 Assets of which Intu s share is > 100m Page 5

6 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= intu Braehead Glasgow 4 Meadowhall Sheffield 25= Victoria Square Belfast 5 intu Trafford Centre Manchester 27 East Kilbride Shopping Centre Glasgow 6 St David's Cardiff 28 Victoria Quarter Leeds 7 intu Lakeside Thurrock 29 Silverburn Glasgow 8 intu Metrocentre Gateshead 30 White Rose Shopping Centre Leeds 9 Liverpool One Liverpool 31 The Oracle Reading 10 Bullring Birmingham 32 Buchanan Galleries Glasgow 11 Arndale Centre Manchester 33 Churchill Square Brighton 12 Brent Cross London 34 Golden Square Warrington 13 intu Merry Hill (2) Brierley Hill 35 Trinity Leeds Leeds 14 The Mall at Cribbs Causeway Bristol 15 Cabot Circus Bristol 45 intu Victoria Centre Nottingham 16 Cabot Place, One Canada Square London 50 intu Potteries Stoke-on-Trent 17 Highcross Leicester Leicester 52 intu Chapelfield Norwich 18 intu Derby (2) Derby 60 intu Milton Keynes Milton Keynes 19 thecentre: mk (3) Milton Keynes 71 intu Uxbridge Uxbridge 20 intu Watford Watford 187 intu Broadmarsh Nottingham 21 Festival Place Basingstoke 22 West Quay Southampton Source: PMA (1) Top shopping centres on basis of PMA Retail Score (December 2013). Intu shopping centres highlighted orange (2) Acquired on 1 May 2014 (3) Adjoined by intu Milton Keynes, which was acquired by Intu in March 2013 Page 6

7 Newly acquired centres intu Merry Hill intu Derby Market value 408m* 390m Occupancy 96% 99% Size (m sq.ft.) 1.4** 1.3 Net annual 22.6m 28.2m rent*** % ownership 50% 100% Headline rent ITZA Number of stores Approx 215 Over 180 Key stores M&S, Debenhams, Primark, Asda M&S, Debenhams, Next, Cinema De Lux * Intu s 50% share ** Size of covered shopping centre. Total retail space, including retail parks, c 1.7m sq ft *** Net Annual Rent as at 20 March 2014 per valuation report Page 7

8 intu Merry Hill Investment rationale Strategic West Midlands location filling a gap in Intu s national coverage Relatively low valuation and rental levels on a per square foot basis for a super-regional centre Scope to re-engineer and update tenant mix, encouraging large flagship formats and reducing supply of smaller units Potential to widen role as a family day out destination with an integrated shopping, dining and leisure offer, extending dwell time, trading hours and catchment Significant opportunities to increase the rental tone through asset management initiatives Intu is taking on the role of asset and development manager with QIC as a new major global financial partner QIC is Australia s third largest institutional investment manager with A$75bn in funds under management Page 8

9 intu Derby Investment rationale Provides attractive income return, with potential for capital growth from yield comparison Modern, prime in-town centre yet to reach potential following opening of major redevelopment in 2007, shortly before downturn Scope to rebalance the proportions of retail, catering and leisure to drive footfall and extend dwell time Opportunity to reconfigure existing retail space to realign supply and demand for shop units Opportunity for ERV growth over the medium term through asset management initiatives Page 9

10 Extending reach of nationwide brand, intu Roll out started at intu Merry Hill and intu Derby Renaming and signage local press recognition on announcement Websites converted 1 May, intu.co.uk home page World class service approach training underway Wi-Fi installation scheduled for early 2015: adding to 11 intu centres already installed ownership model infrastructure and data to date 60% of intu Wi-Fi registrants opted in 9 million unique visitors per annum to intu websites driving footfall between online and physical National operational efficiencies and best practice Nationwide marketing partnerships Page 10

11 Nottingham Major city centre refurbishment opportunity Nottingham has slipped from five to nine in Experian UK retail rankings underinvestment relative to other UK cities Stalemates between Victoria Centre and Broadmarsh unlocked by Intu s 2011 purchase of Broadmarsh Agreement now reached with Nottingham City Council Three projects intu Victoria Centre refurbishment and upgrade (underway) new catering offer redevelopment of intu Broadmarsh intu Victoria Centre northern extension Recent lettings Urban Outfitters, Superdry Expect major positive impact, both financially and to the customer experience, from intu Victoria Centre refurbishment Page 11

12 Intu s priorities leading change Optimise performance of existing assets through active asset management focusing on customer experience, combining retail, catering and leisure Continue to improve financial flexibility including capital recycling and introducing partners Obtaining competitive advantage from intu brand and digital presence demonstrating the benefits of scale and national coverage Seizing opportunities for profitable expansion drive forward 1.2 billion development pipeline acquisition opportunities Page 12

13 intu Merry Hill Julian Wilkinson, Regional Director

14 Contents Key statistics, rent and tenant mix Catchment Vision and business plan Strategy: improving tenant mix, ensure rental sustainability, drive ERVs Lease expiry and rent review cycles Centre plans Q&A Page 2

15 Key statistics, rent and tenant mix Valuation: 815 million (100%) Initial yield: 5.21%* Equivalent yield: 5.10%* GLA: 1.7 million sq ft total retail space, 1.4 million sq ft main covered mall Ownership: Freehold 50% ERV: 46.6 million (100%) Current income: 48.1 million (100%) Prime Zone A rents typically 150psf ITZA Anchored by Marks & Spencer, Debenhams, Bhs, Primark, Sainsbury s, Next and Asda. 7% of rental income from catering and leisure * Shopping centre only Page 3

16 Map of intu Merry Hill current rental position Key SEGMENT ERV Current income NIA Size = rent UPPER RETAIL PARK 2.0m pa LOWER RETAIL PARK ASDA 0.7m pa 2.2m pa 2.8m pa MALL 0.1m sq ft 2.6m pa 38.5m pa 0.2m sq ft 40.1m pa Page 4 2.6m pa 0.7m pa 0.1m sq ft 1.4m sq ft OFFICES 2.6m pa 0.7m sq ft

17 Catchment M6 M42 Primary + Secondary catchment M5 (1) Source: CACI Retail Footprint 2012 Page 5

18 Vision & Business Plan Merry Hill represents one of the few super-regional shopping centres Relative position has declined in recent years, presenting significant opportunities for growth Potential to be re-positioned as the Trafford Centre of The West Midlands over the medium term create entertainment venue to host a range of events provide a location where retailers want to have flagship stores intu Trafford Centre provides a case study of what can be achieved We believe there is significant potential to improve rental tone ahead of 2019 rent reviews focus on a number of short to medium term opportunities to re-position the centre specific actions in respect of a number of key units to create evidence for rent reviews across the scheme Working with QIC to determine detailed business plan 3 to 5 year re-positioning Potential to recycle capital from adjacent property holdings into main mall Engaging with local authority, hiring local asset management team Page 6

19 Driving growth through active management Letting strategy Improving tenant mix Sustainability with 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 7

20 intu Merry Hill Significant scope to improve rental tone Relatively low rental levels on a per square foot basis for a super-regional centre (see chart) Scope to re-engineer and update tenant mix, encouraging large flagship formats and reducing supply of smaller units Potential to widen role as a family day out destination with an integrated shopping, dining and leisure offer, extending dwell time, trading hours and catchment Headline ITZA (1) psf (1) Current headline rent ITZA Annual contracted rent per square foot after expiry of concessionary periods in terms of Zone A Page 8

21 Opportunities to increase the rental tone through asset management initiatives Tenant mix significant gaps relative to other super-regional shopping centres, particularly international and aspirational names over 40 retailers trading in Bullring but not at intu Merry Hill of which over a third trade in both central Manchester and intu Trafford Centre, including Pandora, All Saints, Footlocker, Apple, Kurt Geiger encouraging flagship shopfits and reducing temporary occupiers Catering and leisure offer currently limited relative to other super-regional shopping centres only 7% of rent roll, typically super-regional centres double that level scope for additional family leisure Rental sustainability: many retailers currently trading from unsuitable locations right-sizing anchors and major space users eg. Primark, M&S, River Island, H&M amalgamating smaller standard units Refreshing the appearance and ambience of the centre through rebranding, free Wi-Fi and improved promotional activities Page 9

22 Lease expiry and rent review profiles Weighted average expiry 7 years, rent review opportunity ,000,000 Lease expiries by year 14,000,000 12,000,000 10,000,000 Passing ERV 8,000,000 6,000,000 4,000,000 2,000, Page 10

23 Centre letting plan Page 11

24 Q&A Page 12

25 Appendices

26 intu Merry Hill Site overview current rental position Lower Mall Upper Mall PURPLE MALL 0.3m sqft psf YELLOW MALL 0.3m sqft psf ORANGE MALL 0.1m sqft 175 psf Key SEGMENT NIA Current ERV tone ITZA Notes 1 Grey circles represent zoned units GREEN MALL 0.2m sqft psf PINK MALL 0.2m sqft psf BLUE MALL 0.2m sqft psf FOOD COURT 0.1m sqft Page 14

27 intu Derby Martin Breeden, Regional Director

28 Contents Key statistics, rent & tenant mix Catchment Derby Vision and Business Plan Expiries Centre Plans Gap Analysis Q&A Page 2

29 Key statistics, rent & tenant mix Valuation: 390 million Purchase price: million Initial yield: 6.89% Equivalent yield: 6.45% GLA: 1,300,000 sq ft Ownership: Freehold: 100% ERV: 28.1 million pa Current Income: 30.5 million pa Prime Zone A rents typically 110 psf ITZA Well anchored: Debenhams, Marks & Spencer, Boots Good fashion mix Excellent cinema and good catering offer Page 3

30 Intu Derby Catchment M1 Primary + Secondary catchment (1) Source: CACI Retail Footprint 2012 Page 4

31 intu Derby Specialist Engineering heartland: Rolls Royce (12,000 employees in East Midlands), Toyota (3,500 employees), Bombardier (1,600 employees), Delta Rail, Balfour Beatty and Tracsis The strong job market, combined with the low cost of living, means that the population of Derby has a greater disposable income than cities of a comparable size Page 5

32 Vision & Business Plan Opportunity for ERV growth over the medium term through asset management initiatives including - Continue to evolve fashion offer and tenant mix - Adding restaurants in the upper level to provide a further draw in the evening and support cinema trade - Reducing the number of short term lets - Reducing the disparity in appearance and rents between the older and the redeveloped areas Active role in improving city centre Page 6

33 Driving growth through active management Letting strategy Improving tenant mix Sustainability with 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 7

34 Asset Management Gap Analysis Page 8

35 Inside intu Derby Lease Expiries Lease Expiries By Year 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 Passing ERV 3,000,000 2,000,000 1,000, Page 9

36 intu Derby Headline ITZA (1) (1) Current headline rent ITZA Annual contracted rent per square foot after expiry of concessionary periods in terms of Zone A Page 10

37 intu Derby Letting Plan Level One Page 11

38 intu Derby Letting Plan Level Two Page 12

39 Raising the Bar for Retail in Nottingham intu Victoria Centre City Heart intu Broadmarsh Page 1

40 Current position intu Victoria Centre Valuation: 306 million Initial yield: 4.7% Equivalent yield: 6.6% GLA: 981,000 sq ft Ownership: Freehold 100% ERV: 24.2 million Current income: 17.6 million pa Prime Zone A rents typically 210 psf ITZA Anchor stores John Lewis, House of Fraser, Boots, Topshop, Next Page 2

41 Nottingham City Centre The simplicity and power of the diagram which has historically underpinned Nottingham s retailing status HoF intu Victoria Centre (anchor) JLP Old Market Square Lace Market intu Broadmarsh (anchor) Page 3

42 intu Victoria Centre - history First covered shopping centre in UK, opened in 1972 Built on the site of original Victoria train station Retained Grade II listed Clock Tower Refurbished and extended in m remodelling commenced 2014 Built, owned and managed by the Group throughout 23m per annum footfall Page 4

43 intu Victoria Centre Page 5

44 The retail proposition in Nottingham 2007: Nottingham was ranked fifth in the Experian UK retail rankings report Today: Nottingham is at No 9 in the rankings: still ahead of Leicester & Liverpool Significant development projects at both the Victoria and Broadmarsh Centres were promoted over many years The Broadmarsh Centre was largely occupied by temporary lets in anticipation of a significant redevelopment project Major investment stalled at both centres pending resolution of the uncertainty In 2011 Intu unlocked the stalemate by purchasing the Broadmarsh Centre from Westfield Discussions then commenced with Nottingham City Council to agree a way forward for the whole city Page 6

45 The way forward for Nottingham city centre Agreement with Nottingham City Council has now been reached on an appropriate way forward It is recognised and understood that the two shopping centres must complement rather than compete with each other Improvements and upgrades to both shopping centres are required Upgraded city heart: High quality, good public realm, streets based café culture Intu Victoria Centre extended, refurbished, upgraded: Mainstream & aspirational fashion Upgrading of the city centre forms an integral part of the whole Nottingham strategy Intu Broadmarsh extended, refurbished, upgraded; Specialty Retail, new leisure, dining, food and convenience shopping Page 7

46 The opportunity for both centres Page 8

47 A three stage plan One: Refurbishment of intu Victoria Centre Page 9

48 A three stage plan One: Refurbishment of intu Victoria Centre Two: Redevelopment of intu Broadmarsh Page 10

49 A three stage plan Three: intu Victoria Centre northern extension One: Refurbishment of intu Victoria Centre Two: Redevelopment of intu Broadmarsh Page 11

50 1. Refurbishment of intu Victoria Centre Started Feb 2014 Intu Victoria Centre refurbished and upgraded: Mainstream & aspirational fashion Page 12

51 Designs Central Square Mall Halls Existing Existing Proposed Proposed Page 13

52 Designs Lower Parliament Street Entrance Clock Tower Entrance Existing Existing Proposed Proposed Page 14

53 New catering offer Twelve new restaurants more than doubling the proportion of rent from catering operators Split over two floors External seating areas Adjacent to listed clocktower New escalator link Able to trade out of centre trading hours Lower Mall Upper Mall Page 15

54 Programme Q Q2 - Q Board approval to take to contract procurement - Progress detailed design and submit planning application (Q4) Q Q Procure contract and obtain planning consents Q Start on site Q Main refurbishment works complete Q Catering units complete Page 16

55 intu Victoria Centre Driving returns from the refurbishment A full refurbishment of the malls will make it easier to attract new and retain existing tenants Examples include recent lettings to Urban Outfitters and Superdry A refurbishment will reinforce intu Victoria Centre as the prime retail pitch in Nottingham The centre will be capable of being traded beyond its current hours of 9am to 6pm The clocktower refurbishment works will add to and complement the existing café and limited casual dining offer The result of the refurbishment will be a material increase in rental tone..and an increase in property valuation Page 17

56 2. Redevelopment of intu Broadmarsh Planning application early 2015 Intu Broadmarsh extended, refurbished and upgraded; Specialty Retail, new leisure, dining, food and convenience shopping Page 18

57 2. Redevelopment of intu Broadmarsh Upgraded mall graphic Page 19

58 2. Redevelopment of intu Broadmarsh Public consultation under way Page 20

59 3. Northern extension of intu Victoria Centre After intu Broadmarsh development Intu Victoria Centre extended by half a million square feet at the Northern end Page 21

60 3. Northern extension of intu Victoria Centre Planning application issued in 2010 Resolution to grant an 8 year planning consent issued by NCC in April 2014 Agreement of the S.106 imminent Page 22

61 And it doesn t stop there Lower Parliament Street pedestrianisation Page 23

62 Public realm improvements to Clumber Street Page 24

63 Nottingham-wide improvements by others Railway station upgrade Tram system Phase 2 extension A453 dualling Trinity Square upgrade 24m transformation Page 25

64 Questions Page 26

65 Appendices

66 Super-regional centres Page 15

67 Top in-town centres Page 16

68 In-town centres 11 intu Milton Keynes Page 17

69 Highly experienced executive management team David Fischel Chief Executive David Fischel was appointed Finance Director in 1988, Managing Director in 1992 and Chief Executive in March During his 27 year career with Intu, David has gained significant executive experience in numerous aspects of the shopping centre industry including shopping centre acquisitions and developments. He has also been closely involved with the group s corporate development including equity and debt financings and a wide range of other corporate transactions, including the 2010 demerger of Capital & Counties from CSC. Matthew Roberts Finance Director Matthew Roberts (FCA) joined Intu as Finance Director in May 2010 and was part of the team which acquired The Trafford Centre, Manchester, in the UK's largest ever single property transaction. In Spring 2013 he led the establishment of Intu s Secured Group Structure with initial issue of 1.15 billion of bond and bank debt. Previously the Finance Director of Debenhams plc from 1996 to 2003, and Chief Financial Officer of Gala (subsequently Gala Coral Group) from 2004 to Mike Butterworth Chief Operating Officer Mike Butterworth was appointed Chief Operating Officer on 3 October He joined the Group as Chairman, CSC Trafford in January Mike was formerly the Property Director of Peel Holdings and the Managing Director of The Trafford Centre Limited and is a fellow of the Royal Institution of Chartered Surveyors. Page 18

70 Senior management hosts Julian Wilkinson Regional Director Appointed Director of Asset Management in October 2011, with responsibility for The Trafford Centre, Braehead, Arndale Manchester and Cribbs Causeway Bristol. He joined the Group as Property Director, CSC Trafford in January 2011, responsible for investment and property management. He has held similar positions at Director level over the last 15 years as a retailer and landlord. He was appointed Director of Property at The Trafford Centre in Martin Breeden Regional Director Joined the Group in 2002 and has worked on almost all of Intu's assets at various times and in particular, was responsible for the delivery of the major development and investment programme at Eldon Square, Newcastle-upon- Tyne. Martin has over 20 years experience in the retail property industry and has previously worked for MEPC and Jones Lang LaSalle, the latter including four years in Spain. He is a Fellow of the Royal Institution of Chartered Surveyors and a member of the advisory panel of the British Council of Shopping Centres. Kate Grant Regional Director Joined the Group in 1998 and has worked across most of the shopping centres in both asset management and property management roles, with particular involvement at Chapelfield, Norwich; Manchester Arndale; Cribbs Causeway, Braehead, and Eldon Square, Newcastle. Kate has over 15 years experience in the retail property industry, including retail leasing roles at a number of private practices prior to joining Intu. She was responsible for the property management business across the shopping centre portfolio, from 2008 to June 2013 when she assumed her current role. Page 19

71 Senior management hosts Janine Bone Regional Centre Director - Midlands Janine Bone joined intu as Centre Manager of intu Victoria Centre and intu Broadmarsh in 2013 and has since been promoted to Regional Centre Director for the Midlands. Previously Janine managed the newly redeveloped Derby ( ) and Broadmarsh ( ) for Westfield, after 17 years at Marks & Spencer. Martin Ellis Construction & Development Director Martin Ellis joined the Group in 1990 and was appointed a Director of Capital Shopping Centres PLC on 1 October In 2008 was appointed Managing Director, Liberty International Construction and Development Limited. Following the demerger of Capital & Counties in May 2010, he reverted to being Intu's Construction Director responsible for development and construction projects. Julie Pears Director of Development Joined the Group's Development team in 2005, having qualified as a Chartered Surveyor and spent 15 years specialising in retail agency and development consultancy. Former clients include Church Commissioners, Crown Estate, UBS, and Mercury Asset Management. Page 20