SEGRO PLC Presentation to Bondholders 12 April 2011
Contents 1. Business Overview and Strategy 2. 2010 Results and 2011 outlook 3. Funding and Treasury overview 4. Summary and Q&A Appendices 1
1. Business Overview and Strategy Ian Coull - CEO
SEGRO Europe’s leading industrial REIT SEGRO provides a range of flexible business space concentrated in and around major business centres and transportation hubs such as ports, airports and motorway intersections 3
Straightforward business model Buy Smart, Add Value, Sell Well BUY SMART CAREFUL AND WELL TIMED ASSET SELECTION Efficient Financial SELL WELL Structure ADD VALUE CO-ORDINATE DEVELOPEMNT INDIVIDUAL ASSET AND/OR STRATEGIES WITH ASSET MANAGEMENT MARKET CYCLE 4
Overview of the Portfolio £5.3bn of total properties 17% 17% 31% 69% 66% UK Continental Europe Logistics warehousing Other business space Office Key portfolio statistics at 31 December 2010 Passing rent (£m) 326 Net initial yield (%) 6.0 True net equivalent yield (%) 7.9 Vacancy (%) 12.0 Weighted average lease term to expiry (years) 8.3 5
UK Portfolio £3.5bn of completed properties NATIONAL MARKETS Midlands and North LONDON MARKETS Valuation: £274m (8%) Park Royal Valuation: £524m (15%) NATIONAL MARKETS Rest of UK South Valuation: £385m (11%) LONDON MARKETS Heathrow THAMES VALLEY Valuation: £668m (19%) Rest of Thames Valley Valuation: £366m (11%) LONDON MARKETS Rest of London Valuation: £315m (9%) THAMES VALLEY Slough Trading Estate Valuation: £947m (27%) 6 Based on value of completed properties. Joint ventures included at share
Improve occupancy UK - Strong lettings performance and rental growth 14 £m annualised rental income 12 10 8 6 4 2 0 H1 2009 H2 2009 H1 2010 H2 2010 Existing properties New developments • Lettings completed at headline rental levels 0.7% above December 2009 ERVs • Rent free incentives stable at 11.2% (2009: 11.3%) 7
Improve occupancy Takebacks remain high driven by space consolidation 12 10 £m annualised rental income 8 6 4 2 0 H1 2009 H2 2009 H1 2010 H2 2010 UK • Retention rates: Group – 63% and UK – 55% 8
Continental European Portfolio £1.4bn of completed properties OTHER Valuation: £131m (9%) GERMANY Valuation: £398m (29%) BENELUX Valuation: £275m (20%) FRANCE Valuation: £376m (27%) POLAND Valuation: £205m (15%) 9 Based on value of completed properties. Joint ventures included at share
Improve occupancy Continental Europe lettings 8 £m annualised rental income 6 4 2 0 H1 2009 H2 2009 H1 2010 H2 2010 Calculated at average exchange rates Existing properties New developments • Lettings completed at headline rental levels 2.2% below December 2009 ERVs • Rent free incentives decreased to 6.8% (2009: 9.0%) 10
Improve occupancy Takebacks remain high driven by space consolidation 10 8 £m annualised rental income 6 4 2 0 H1 2009 H2 2009 H1 2010 H2 2010 Continental Europe Continental Europe calculated at average exchange rates • Retention rates: Group – 63% and Continental Europe – 75% 11
2010 results and 2011 outlook David Sleath – Group Finance Director
Full year results to 31 December 2010 Further improvement in occupancy � Strong operating performance � Continued delivery against our three priorities to: - Improve occupancy • Group vacancy reduced to 12.0% from 14.1% at 31 March 2010 - Profitably grow and improve the portfolio • Portfolio further enhanced and focused - Prudently manage our financial position • Significant extension of maturity profile and gearing reduced � 2011 will be another challenging year but SEGRO well positioned 13
Key financial highlights 2010 2009 Change % EPRA PBT (£m) 127.3 104.3 22.1 EPRA EPS (pence) 17.1 18.3 (6.6) Total dividend per share (pence) 14.3 14.0 2.1 - final dividend per share (pence) 9.6 9.4 2.1 2010 2009 Change % EPRA adjusted NAV per share¹ (pence) 376 367 2.5 Net debt (£m) 2,203.2 2,420.1 (9.0) Gearing (%) 80 91 (12.1) 14 1. EPRA adjusted NAV per share including fair value of derivatives and trading properties
Improve occupancy Group vacancy rate of 12.0% 20 Return of Verdus Building, Greenford 14.8% 15 % by rental value 13.3% 10 Return of Karstadt-Quelle 10.7% space, Germany 8.9% 5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec UK vacancy Continental European vacancy 15
Improve occupancy Group vacancy bridge 0.1% 7.9% 0.2% 0.3% 7.0% 13.5% 0.7% 0.4% 0.1% 12.0% Vacancy rate as Space returned Development Short term Other (ERV Space let Space made Disposals Acquisitions Vacancy rate as at 31 December completions lettings/vacations changes) redundant at 31 December 2009 2010 16
Improve and grow the portfolio Growing pre-let pipeline with 12 projects signed Contracted Approved internally Under Construction Freight handler Heathrow, London (9,900 sq m) Expected completion Ragus Sugars Data centre Slough Trading Estate Slough Trading Estate H2 2011 H1 2011 (3,300 sq m) (5,700 sq m) Data manager HCH HL Display Selco Heathrow, London Berlin, Germany Slough Trading Estate Gliwice, Poland Selig (5,700 sq m) (5,100 sq m) (3,200 sq m) (7,600 sq m) Slough Trading Estate (7,000 sq m) Power generation Co. Berlin, Germany Adler Distribution Co. (5,100 sq m) Enfield, London Ostrava, Czech Republic Lonza (3,500 sq m) (5,100 sq m) Slough Trading Estate Telecoms Co. (5,500 sq m) Milan, Italy (11,800 sq m) Casino Distribution Co. Gonesse, Paris Southall, London Budget hotel (3,400 sq m) (28,000 sq m) Electronics Co. Edmonton, London Milan, Italy (3,800 sq m) (7,000 sq m) Takko Hamburg, Germany Distribution Co. (20,700 sq m) Silesia, Poland c.£9m rental income and £68m capex (6,000 sq m) 17 Data as of 24 February 2011
Outlook 2011 will present further challenges � Enquiry levels strong � Healthy pipeline of pre-let developments � Challenges in 2010 likely to continue into 2011 - Managing takebacks remains key focus � Future potential: - Reduction of 1% in vacancy = c.£6m additional annualised earnings - Well located and prudently valued land bank 18
Funding and Treasury Strategy Andrew Pilsworth – Group Treasurer
Maintaining Balance Sheet Strength A year of active financial management and rationalisation Strong financial position at 31 December 2010 � Net debt of £2.2bn (Dec 2009: £2.4bn) Key Treasury activity in 2010 Feb Interest rate risk policy review � Cash and undrawn bank facilities of £527m £281m new/extended bank June facilities (3 - 4.5 years) � Adjusted gearing ratio of 80% (Dec 2009: 91%) - Property valuation headroom of >28% vs. 160% covenant - LTV of 46% (Dec 2009: 47%) Sep Full Treasury Policy review Currency translation hedge risk � Balanced debt funding mix Nov policy review - 83% of net borrowings are bonds - 17% of net borrowings are bank debt net of cash Brixton bond substitution Dec (£348m face value of bonds) � Weighted average cost of gross borrowings: 5.1% New €240m (£205m) 5 year - 5.5% allowing for commitment fees and amortised costs bank facility � Weighted average debt maturity of 9.8 years � 97% of net borrowings are unsecured 20
Treasury Strategy - Debt maturity profile 31 December 2010 � Strong maturity profile � Only around £100m of debt funding facilities mature before December 2012 � > £500m of liquidity for refinancing, capital expenditure and headroom 600 500 Average weighted maturity = 9.8 years 400 £m 300 200 100 0 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Ye ar B onds and N otes B ank Debt drawn Cas h Undrawn fac ilities 21
Treasury Strategy Interest rate risk management � Full policy review conducted in February 2010 December 2010 Floating � Policy is to manage fixed interest cover within a 19% range of 60-100% of net borrowings by major borrowing currency � Fixed cover level within the policy range depends Fixed 81% on a number of factors including: - Impact on debt covenants - Impact of earnings - Forecast debt levels - Interest rate views - Adopting consistent and transparent hedging strategies 22
Treasury Strategy Euro currency exposure and hedging Full policy review conducted in 2010 Balance sheet as at 31 December 2010 � Board approved policy is that 50% to 90% of gross assets should be hedged by liabilities in the same 1,636 currency 141 - Top end of the range protects NAV, 2,020 earnings and cash flow from weaker € 978 - Bottom end of the range protects gearing from stronger € 517 � Target within the range depends on a number of factors including : • € assets 81% hedged by € liabilities - Actual and forecast gearing • €385m (£329m) of residual exposure – 12% of - Actual and forecast € asset levels Group NAV - Exchange rate views • NAV sensitivity (vs. Dec-10 rate of €1.17:£1) - Adopting consistent and transparent • +/- 10% (€1.29/€1.05) = +/- c.£33m NAV hedging strategies • € income 54% hedged by € expenditure � Actual level of translation hedged • Income sensitivity (€1.17:£1 in 12m to Dec-10) increased from 69% at 31 December •+/- 10% (€1.29/€1.05) = +/- c.£4.4m 2009 to 81% at 31 December 2010 23
Executive Summary Ian Coull – Group CEO
Recommend
More recommend
