Slide 1 :Presentation to Analysts
September 2001 CANARY WHARF G R O U P P L C
Slide 2 :Peter Anderson George Iacobescu Chief Executive Officer Vice President - Leasing & Marketing Mike Hussey Managing Director - Finance
Slide 3 :Chairman’s & Chief Executive’s Statement - Highlights Ahead of schedule on leasing, construction and financing programmes Taking strategic steps to enlarge Canary Wharf district by almost 50% Turnover increased to £159.2 million (up 39.2%) Net profit after interest of £42.5 million (up 183.3%) Net asset value per share £6.73 (up 29.9%)
Slide 4 :Progress on leasing remained strong with pre-lets of approximately 3.3 million sq ft Recently announced agreement in principle with Barclays PLC on new 1 million sq ft building 7.1 million sq ft of office and retail under construction Leasing
Slide 5 :£875 million securitisation of three buildings Commenced return of capital earlier than envisaged £2 billion return anticipated over next four years Buy back of 24.75 million shares at cost of £131.4 million Undertaking corporate restructuring Return of Capital
Slide 6 :Development Company Development team represents significant franchise value Potential for new development company (“Devco”) examined Interim results to incorporate additional disclosure of Devco
Slide 7 :Development Company Steps taken to acquire further land Subject to planning, possible to build up to 6.6 million sq ft of additional development Canary Wharf has led the market Positive about prospects but recognise current economic climate Reviewing strategy towards speculative buildings London has key long term fundamentals
Slide 9 :PROGRESS UPDATE - LEASING Lease contracts exchanged Agreed heads of terms Retail 110,000 sq ft Office 3,300,000 sq ft Since July 2000 Since July 2001 Retail 45,500 sq ft Office 1,200,000 sq ft Lease contracts exchanged Retail 92,000 sq ft
Slide 10 :Pre-staging Retail approx 290,000 sq ft Shell & Core PROGRESS UPDATE - CONSTRUCTION Office approx 6,850,000 sq ft Office approx 1,600,000 sq ft Since July 2000
Slide 11 :Agreed heads of terms 850,000 sq ft Under construction 4,272,000 sq ft PROGRESS UPDATE - Fit-out Since July 2000
Slide 13 :FINANCIAL HIGHLIGHTS 2001 2000 Change
£m £m %
Slide 14 :SUMMARY CONSOLIDATED PROFIT & LOSS Note 1: Development costs include planning, marketing and letting costs relating to the properties under or held for development.
Note 2: Net of interest capitalised of £27.5m (1999 - £11.7m) Year to June Year to June
2001 2000 %
£m £m Change
Slide 15 :TURNOVER ANALYSIS 2001
£m 2000
£m Rent
Service charge
Other 81.6
25.7
7.1
114.4 121.7
28.4
9.1
159.2 %
Change 49.1
10.5
28.1
39.2
Slide 16 :2001 2000 %
£m £m Change SUMMARY CONSOLIDATED BALANCE SHEET
Slide 17 :PROPERTY PORTFOLIO 2001 2000
£m £m
Slide 18 :Valuation
2001 2000
£m £m INVESTMENT PROPERTIES VALUATION BY PROPERTY
Slide 19 :2,196.7
757.0
675.0
3,628.7
(803.3)
(295.1)
(50.2)
2,480.1 30 June 2001 30 June 2000
Book Book
Value OMV NRV Value OMV NRV £m £m £m £m £m £m Investment properties
Properties under
construction
Properties held for development
Net debt excluding prepayments
Other net liabilities
LUL commitment PROFORMA BALANCE SHEET 2,196.7
325.0
147.0
2,668.7
(803.3)
(295.1)
(50.2)
1,520.1 2,196.7
1,110.5
1,480.0
4,787.2
(803.3)
(295.1)
(50.2)
3,638.6 2,300.5
1,005.0
124.8
3,430.3
(1,237.6)
(504.6)
(50.2)
1,637.9 2,300.5
2,142.5
438.0
4,881.0
(1,237.6)
(504.6)
(50.2)
3,088.6 2,300.5
3,074.5
1,190.0
6,565.0
(1,237.6)
(504.6)
(50.2)
4,772.6 NAV per share based on NRV* Fully diluted** * Based on 686,621,421 shares at 30 June 2001 (30 June 2000 - 685,714,629) £6.95 £6.73 £5.31 £5.18 ** Based on 736,797,971 shares at 30 June 2001 (30 June 2000 - 740,630,710)
Slide 20 :2001 2000 £m £m NET DEBT
Slide 21 :SUMMARY OF COSTS TO COMPLETE ON COMMITTED BUILDINGS At 30 June 2001: Pre-let
Speculative
Infrastructure 708
71
37
816 298
4
-
302 2001/02 2002/03 2003/04
£m £m £m 48
-
-
48
Slide 22 :CAPITAL EXPENDITURE Projects Underway Note: Does not include completion of BP1 or DS3 Pre lets
- 5 Canada Square (CSFB)
- 8 Canada Square (to be sold to HSBC)
- 25 Canada Square (Citigroup)
- 15 Westferry Circus (Morgan Stanley)
- DS4: 535,000 sq ft (310,000 sq ft let to The McGraw-Hill Companies)
- HQ1 (Morgan Stanley)
- HQ2 (Lehman Brothers)
- HQ4: 217,400 sq ft (134,000 sq ft let to The Northern Trust Company)
- HQ5: 1,000,000 sq ft (785,000 sq ft let to Clifford Chance)
- Canada Place Retail extension: 205,000 sq ft (of which 80,000 sq ft let to
Waitrose Food & Home and 92,000 sq ft to Reebok subsequent to the year end)
Available
- HQ3 (600,000 sq ft)
- Jubilee Place Retail Centre (RT3) (85,000 sq ft)
Infrastructure
- Canary Wharf substructure to grade (DS3)
- Heron Quays and future phases infrastructure
Slide 23 :SECURITISATION I TAP - February 2001 Repayable by instalment from 2004 to 2027 £105 million AAA rated, £15 million AA rated Rates fixed at 7.23% and 7.425% respectively Issued at premium of £14.7 million £120 million of additional Class A and B term notes
Slide 24 :SECURITISATION II TAP - June 2001 £350 million from new tranches A3, A4 and B1 Secured on: inter alia : £525 million from additional class A1 and A2 notes Net premium on issue £19.8 million Repayable by instalment from 2004 to 2037 £875 million of term notes £825 million rated AAA, £50 million AA (including €183 million swapped to sterling) All interest rates fixed
Slide 25 :Leasing & Rent Review
Slide 26 :The last 12 months have witnessed a strong performance, particularly in transactions at Canary Wharf. Canary Wharf has a vacancy rate of only 1.7% of stock against total Central London of 5.2% LEASING & RENT REVIEW 19.45 million sq ft of office take up in Central London 3.32 million sq ft at Canary Wharf 2001 - Lehman Brothers, CSFB 2nd Half 2000 - Clifford Chance, McGraw Hill,
Morgan Stanley, Northern Trust Demand still outweighs available space by about 5:1
Slide 27 :Strong pre-letting at Canary Wharf, Paddington Basin and More London Bridge Canary Wharf constructing 600,000 sq ft speculatively. Heads of Terms agreed on c.200,000 sq ft 75% of all space under construction in Central London is pre-let Canary Wharf’s construction activity represents 44% of all office development in Central London LEASING & RENT REVIEW Rent review activity at Canary Wharf is low Next key rent review in 2002
CENTRAL LONDON OFFICE MARKET BALANCE: 1984-2001 :Source: Knight Frank Research CENTRAL LONDON OFFICE MARKET BALANCE: 1984-2001 Long Term Average Take-up = 11.96 m sq ft * Q2 Availability. Projected Annual Take-up
CENTRAL LONDON OFFICE VACANCY RATES: 1990-2001 :Source: Knight Frank Research CENTRAL LONDON OFFICE VACANCY RATES: 1990-2001 Long Term Average Vacancy Rate = 10.5% * Q2 Vacancy Rate
CENTRAL LONDON OFFICE DEVELOPMENT PIPELINE: :Source: Knight Frank Research CENTRAL LONDON OFFICE DEVELOPMENT PIPELINE: 2001-2004 50,000 sq ft+
CENTRAL LONDON OFFICE MARKET DEMAND - Q1 2001 :Source: Knight Frank Research CENTRAL LONDON OFFICE MARKET DEMAND - Q1 2001 Total : 8.6 million sq ft Total : 12.3 million sq ft
CENTRAL LONDON OFFICE MARKET DEMAND - Q2 2001 :Source: Knight Frank Research CENTRAL LONDON OFFICE MARKET DEMAND - Q2 2001 Total : 7.9 million sq ft Total : 10.2 million sq ft
CENTRAL LONDON TAKE-UP BY SIZE-BAND 2000 :CENTRAL LONDON TAKE-UP BY SIZE-BAND 2000 Source: Knight Frank Research Million sq ft Size-band sq ft
CENTRAL LONDON TAKE-UP BY SIZE-BAND Q1 & Q2 2001 :CENTRAL LONDON TAKE-UP BY SIZE-BAND Q1 & Q2 2001 Source: Knight Frank Research Million sq ft Size-band sq ft
OFFICE AVAILABILITY (Q2 01) & TAKE-UP (Last 12 months) :100-200,000 sq ft Over 200,000 sq ft OFFICE AVAILABILITY (Q2 01) & TAKE-UP (Last 12 months) Source: Knight Frank Research By size-band including speculative under-construction
PRIME HEADLINE RENTAL VALUES - 1995 & Q2 2001 :PRIME HEADLINE RENTAL VALUES - 1995 & Q2 2001 Source: Knight Frank Research 1995 Q2 2001 CW