Regeneration. Morgan Sindall Group plc Presenta4on to City Analysts 3 July 2012

Transcription

1 Regeneration. Morgan Sindall Group plc Presenta4on to City Analysts 3 July 2012

2 Introduc4on Paul Smith Chief Execu4ve, Morgan Sindall Group plc

3 Introduc4on itinerary Muse presenta4on The regenera)on project cycle Walking tour through Salford and Manchester Northern Quarter tour Lovell presenta4on Reviving a community 1.15 Lunch (Crowne Plaza) 2.25 Tour of east Manchester 4.15 Train departs

4 Introduc4on What is regenera4on? Working in long term partnerships with our clients to use their land and property assets to achieve large- scale social and economic renewal Usually a complex scheme delivered in joint venture, typically using publicly- owned land currently in sub- op4mal use Property developed for a variety of improved uses: commercial, housing, retail, leisure and light industrial Overall aim to create employment and improve the local community A number of phases, over a long 4me frame, usually years Working capital invested phase- by- phase and recycled

5 Growing regenera4on What drives regenera4on? General - 17bn of land and assets suitable for development held by public sector - Government land and disposal strategy; land is key to promo4ng economic growth, housing delivery and community ac4on - Mixed- use developments allow cross- subsidy of social renewal from commercial development - Market driven by occupier and investor demand Housing- led (Lovell) - 4.5bn investment to deliver 150,000 new social housing in Mixed- tenure schemes - Low entry cost or deferred payment for land; overage arrangements share any addi4onal land value created Mixed- use (Muse and MSIL) - Longer term development agreements - Phased developments with land retained on partner s balance sheets allows efficient use of working capital and healthy ROCE - Schemes can be promoted by tax incen4ves

6 Mab Crompton Joint Managing Director, Muse Developments

7 Contents regeneration. Track record The regenera4on process Muse current pordolio Site visits Muse pipeline

8 Barbirolli Square Manchester A former bus sta4on used for surface car parking

9 Barbirolli Square Manchester Office and leisure development 85% pre- let and forward funded m

10 HMRC Newcastle Estate Inefficient, unsuitable and dated office accommoda4on

11 HMRC Newcastle Estate 1.6 million square i offices 100% pre- let and forward funded m

12 Quayside Newcastle upon Tyne A derelict wharf

13 Quayside Newcastle upon Tyne Three phases of offices, hotel, bars, restaurants and car parks m

14 Chatham Place Reading Redundant mul4- storey car park

15 Chatham Place Reading 300 apartments, leisure and MSCP Phase 2 now planned for residen4al m

16 Merchant Gate Wakefield Redundant railway sidings and former milk bobling plant

17 Merchant Gate Wakefield Phase 1: offices, residen4al, leisure Phase 2: council offices m

18 Walkergate Durham The site of a former carpet factory used for surface car parking

19 Walkergate Durham City centre venue with a hotel, leisure, car park and residen4al m

20 St Paul s Square Liverpool Liblewoods computer building

21 St Paul s Square Liverpool Three phases of offices, cafés, residen4al and showrooms m

22 Regenera4on key factors year projects provide visibility Broad social purpose - LAs want regenera4on, less focused on immediate realisa4on of land value Cash efficient - limited upfront land costs, forward funding, pre- let tenants fund construc4on costs Risk/reward share - protects against variables in rent, yield, build cost etc Local knowledge and quality of rela4onships - complex process through design, planning, lenngs and sales Track record and trust - no cash up- front, partner values quality delivery Quality earnings - not driven by the cycle; long lead 4mes allow for selec4vity

23 The regenera4on process IDENTIFY SECURE ASSEMBLE MASTERPLAN/ SECURE CONSTRUCTION LET SELL OPPORTUNITIES LAND TEAM PLANNING FUNDING MANAGEMENT End to end integrated exper4se Average project length years Flexibility within the process to respond to changing market dynamics Efficient cash flows and ROCE

24 Using track record to maximise the odds... IDENTIFY SECURE ASSEMBLE MASTERPLAN/ SECURE CONSTRUCTION LET SELL OPPORTUNITIES LAND TEAM PLANNING FUNDING MANAGEMENT Published compe44ons (OJEU) - play to strengths - beber than 4:1 odds - educated/ advised client - > 100m GDV - best loca4ons Rela4onships - banks - professionals - landowners

25 Low entry cost agreements, not land banking... IDENTIFY SECURE ASSEMBLE MASTERPLAN/ SECURE CONSTRUCTION LET SELL OPPORTUNITIES LAND TEAM PLANNING FUNDING MANAGEMENT 70% of schemes secured via development agreements: MUSE RESPONSIBILITIES Secure planning Primary infrastructure Development management LANDOWNER RESPONSIBILITIES Hold land in trust Release on demand Reward = Profit Reward = Enhanced land value Low entry price Land drawdown at prevailing land values Performance milestones (legal deadlines)

26 Low entry cost agreements, not land banking... IDENTIFY SECURE ASSEMBLE MASTERPLAN/ SECURE CONSTRUCTION LET SELL OPPORTUNITIES LAND TEAM PLANNING FUNDING MANAGEMENT

27 Managing numerous and diverse disciplines... IDENTIFY SECURE ASSEMBLE MASTERPLAN/ SECURE CONSTRUCTION LET SELL OPPORTUNITIES LAND TEAM PLANNING FUNDING MANAGEMENT

28 Intellectual approach to future- proofing... IDENTIFY SECURE ASSEMBLE MASTERPLAN/ SECURE CONSTRUCTION LET SELL OPPORTUNITIES LAND TEAM PLANNING FUNDING MANAGEMENT Research led - Demand analysis - Use classes - Densi4es - Planning costs/obliga4ons Pordolio predominantly mixed- use complexity Many vested interests/ stakeholders Area- based regenera4on not infill construc4on Future- proofing: build flexibility into masterplan to respond to evolving market dynamics

29 Pursue the most efficient funding route... IDENTIFY SECURE ASSEMBLE MASTERPLAN/ SECURE CONSTRUCTION LET SELL OPPORTUNITIES LAND TEAM PLANNING FUNDING MANAGEMENT Return on Capital Employed is key Funding priority: - Owner occupier the occupier funds development - Forward funding the long- term investor funds development - Non recourse debt levering with bank debt - Forward commitment sell investment prior to commencement - Equity scale/4ming/bank costs English Ci4es Fund (Muse, HCA and Legal & General) Public sector funding

30 Construc4on risk transfer... IDENTIFY SECURE ASSEMBLE MASTERPLAN/ SECURE CONSTRUCTION LET SELL OPPORTUNITIES LAND TEAM PLANNING FUNDING MANAGEMENT Design and build: 100% construc4on risk transferred to main contractor Bespoke contract: based on BPF but adapted over 25 years to suit Muse risk profile Tight contractual arrangements: upstream and downstream Back to back damages: client and contractors

31 Occupiers generate the value... IDENTIFY SECURE ASSEMBLE MASTERPLAN/ SECURE CONSTRUCTION LET SELL OPPORTUNITIES LAND TEAM PLANNING FUNDING MANAGEMENT Market driven Maximise pre- let Lease terms are crucial value drivers - rent - inducement - rent review - lease length - aliena4on

32 Know your target market... IDENTIFY SECURE ASSEMBLE MASTERPLAN/ SECURE CONSTRUCTION LET SELL OPPORTUNITIES LAND TEAM PLANNING FUNDING MANAGEMENT Pension fund Property companies Syndicates SIPPs Individuals

33 The Muse pipeline Nigel Franklin Joint Managing Director, Muse Developments

34 The Muse pipeline Pipeline with end development value of 1.625bn, from 2012 to comple4on Pipeline reflects projects where Muse controls land, mainly via Development Agreements Further four projects at preferred developer stage of 605m, giving total pipeline of 2.23bn Pipeline of >30 projects with total built area of 10.2 million sq i Includes 2,800 residen4al units Note: Where projects are carried out in JV we include only our share of revenue

35 Pordolio resilience Regional split Sector split Scotland Other 8% North West Yorkshire & North East Residential 19% Offices 33% London & South Industrial & Distribution 30% Retail 10%

36 Urban Regenera4on and Investments pipeline m Urban Regeneration 1.6bn Investments 0.2bn Preferred bidder 0.6bn

37 Current pordolio Residen4al Office Retail Leisure Industrial

38 Ashton Moss Office Retail Ashton under Lyne Leisure Industrial

39 Basing View Basingstoke Residen4al Retail Preferred developer 2011

40 BrenQord Lock West London Residen4al Retail Leisure Planning secured 2011

41 Bridge Street Quarter Warrington Office Retail Leisure Preferred developer 2011

42 Chatham Place Reading Residen4al Retail Leisure First phase completed 2009

43 Cheadle Royal Stockport Office Leisure Completes 2017

44 Cherryhill Residen4al Retail Larkhall Leisure Started on site 2012

45 Chester Central Chester Residen4al Office Retail Leisure Planning applicadon 2012

46 Eurocentral Lanarkshire Industrial Completes 2016

47 Granary Wharf Leeds Residen4al Leisure 100% sold 2014

48 Grand Central Stockport Office Retail Leisure Preferred developer 2011

49 Islington Wharf Manchester Residen4al Leisure 100% sold 2012

50 Lewisham Gateway Residen4al Retail South London Leisure Starts on site 2014

51 Lingley Mere Warrington Office Leisure Industrial First phase completed 2010

52 Logic Business Park Leeds Industrial Starts on site 2013

53 Manchester Victoria Manchester Residen4al Office Retail Leisure Land agreement exchanged 2011

54 Merchant Gate Wakefield Residen4al Office Retail Leisure Second phase completed 2011

55 Millbay Plymouth Residen4al Office Retail Leisure Second phase completes 2013

56 Northshore Residen4al Office Stockton on Tees Retail Leisure Started on site 2011

57 Rathbone Market Canning Town Residen4al Retail Leisure First phase completes 2012

58 Rolls- Royce Hucknall Residen4al Industrial Preferred developer 2011

59 Salford Central Salford Residen4al Office Retail Leisure Starts on site 2013

60 Smithfield Manchester Residen4al Office Retail Leisure Sixth phase starts 2012

61 South Rings Office Retail Preston Leisure Completes 2016

62 St Andrews Bearsden Residen4al Started on site 2011

63 St Paul s Square Liverpool Residen4al Office Leisure Final phase completed 2012

64 Talbot Gateway Office Retail Blackpool Leisure Signed 2009

65 Town centre Residen4al Office Swindon Retail Leisure Starts on site 2012

66 Waterdale CCQ Doncaster Residen4al Office Retail Leisure First phase completes 2013

67 Summary and Outlook Paul Smith Chief Execu4ve, Morgan Sindall Group plc

68 Summary and Outlook Lack of confidence and liquidity is holding back the market Global uncertainty and austerity are hindering growth Popula4on growth and increasing urbanisa4on driving demand for brownfield development Government ac4vely looking to release and regenerate under- u4lised land assets, to s4mulate jobs and economic growth Morgan Sindall can enable councils and LAs to unlock the value and opportunity of under- u4lised land, at no upfront cost to the public sector

69 Summary and Outlook Our track record of delivery and ability to provide solu4ons to complex problems makes us a partner of choice Technology and changing occupier needs will con4nue to feed the market Muse and Lovell are well placed, respected and resourced to outperform rivals Regenera4on is perpetual...

70 Site visits New Bailey, Salford

71 Site visits Manchester Victoria

72 Site visits Smithfield

73 Site visits

74 Morgan Sindall Group plc, Kent House, Market Place, London W1W 8AJ Tel: morgansindall.com