investor / analyst visit to braehead, 27 – 28 june 2013 ... · – secure further investment from...

Investor / Analyst visit to Braehead, 27 – 28 June 2013 Corporate strategy overview David Fischel, Chief Executive

Welcoming remarks

David Fischel

Braehead Power Station - 1960s

Taking derelict land…

…and creating a destination

Retail context

• Population of Scotland 5.2m • Scotland retail spend 2013 - £14.2b, forecast 2020 - £16.9b (source: CACI)

(9% of UK total) • Average spend per head in Scotland in 2013 is £2,672, above the UK

average of £2,604 • Glasgow attracting significant investment – 2014 Commonwealth Games

(c£525m), Europe’s largest hospital campus (£1b), airport expansion (£290m) • Intu Braehead is Scotland’s best-ranked shopping centre (CACI) • Intu Braehead catchment 2.4m (45 minute drive time) • Intu Braehead attracts 74% of shoppers from its primary and secondary

catchments • Relatively affluent catchment – “Secure Families” represent 16% of intu

Braehead shoppers (9% Scotland average)

Corporate Strategy Overview

Focus, scale and quality

Providing great retail and leisure experiences

Enhancing our dynamic retail and leisure destinations

Digital reshaping retail

82% of UK consumers say social networks save them time in making a retail purchase

Consumers believe social media and online sources should be a fully integrated part of the store

There are 81.6m mobile handsets in the UK of them

• There are 21m mobile internet uses a month

• 39% want to use mobiles to receive personalised promotions

• 83% of users research online prior to in-store visit

• 42% of users use a mobile phone to locate products in-store

• 74% of users would be happy to receive retailer messaging whilst in store

• 68% of smartphone users use them in-store

• 44% of shoppers always check online before buying in-store

SOURCES: Cisco 2012; eConsultancy 2012; Deloitte 2012: Ofcom 2012

Key statistics 2012

• Average dwell time 106 minutes − in town centres 77 minutes − out of town centres 137 minutes

• Aggregate spend c £5 billion • Average spend per visit £16

− in town centres £11 − out of town centres £25

New nationwide brand

Bond issue significantly extends debt maturity profile Weighted average maturity c 8 years (was 6 years)

-

100

200

300

400

500

600

700

800

900

1,000

2013 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029+

Annu

al r

epay

men

ts (£

'm)

Pro forma, adjusted for 2013 refinancing 31 December 2012 as reported

Key Messages

• Benefits of scale • Growth opportunities

– digital – physical

• Leading change • Capital structure

• Prospects for returns

Mike Butterworth, Chief Operating Officer Update on operational strategy

Operational strategy Delivering growth

Operational strategy

•Customer experience

•Asset management

•Development

Asset management

•Tenant mix

•Encouraging commitment –

fewer temps

•Protect rental values

•Creative change

Developments

Developments

Sidgate, intu Eldon Square – CAD drawing Platinum mall, intu Metrocentre – CAD drawing

Developments

SEA LIFE, intu Trafford The Avenue, intu Potteries – CAD drawing

Developments

Food Court, intu Lakeside – CAD drawing Intu Victoria Centre – CAD drawing

Developments

Intu Bromley – CAD drawing Charter Place, intu Watford – CAD drawing

Drawing customers from further, for longer and more often

New Retailer Demand

Range &

Choice

Customer Experience

Footfall Dwell Time

Emerging

Segments

Asset

Property

World Class Service

Memorable Moments

Marketing

Experiences

Martin Ellis, Construction Director

Developments

intu Braehead planning application

intu Braehead planning application Planning red line boundary around existing

intu Braehead planning application Proposed building plots

intu Braehead planning application Block plans

intu Braehead planning application Shopping centre retail plans

New Retail

Existing Retail

intu Braehead planning application Plans in context

intu Braehead planning application Fitting into a masterplan

intu Braehead planning application Building sections

intu Braehead planning application Public realm

intu Braehead planning application Transport interchange

intu Braehead planning application Department store and public square

Construction and development work

“£1 billion pipeline of

organic developments

over 10 years, including

major extensions at

intu Lakeside, intu

Braehead and intu

Victoria Centre, is

focused on projects

which position each of

our centres as broader

destinations, providing

top retailers and iconic

brands along with a mix

of leisure”

Indicative timeline

intu Watford

Page 44

intu Victoria Centre

Page 45

intu Broadmarsh

Nottingham intu

NCC

View of possible Southern Entrance showing linkages

Page 46

Asset management Julian Wilkinson, Asset Management Director

Strategy

Driving growth through active management

Tenant re-investment and commitment to the Centre

Consistent growth in rental income

The right space at the right rent Goal

Outcome

Letting strategy Improving tenant mix Sustainability with

key retailers Achieving ERV on review / renewal + +

1 2 3

Strategy – intu Braehead 2011 reappraisal • Key tenant mix opportunities • Scope to expand catering offer • Low outlay, high impact environment improvements • Pockets of temporary lettings • Expiry profile 2014

Improving tenant mix Attracting catalyst brands to enhance appeal to consumers and other retailers

Super regional centres – major destinations

intu Trafford Centre

Barton Square

158 acres land

M60

Coach House Premier Inn Petrol

Frankie & Benny’s

Bus station

Selfridges

Debenhams

M&S

The Great Hall

The Orient

John Lewis

Improving tenant mix – example intu Trafford Centre Over 100 new brands since 2006

20 15 9 15 18 8 31

2011 2012 2006 2007 2008 2009 2010

Sele

cted

reta

ilers

join

ing

the

Cen

tre

No.

2013

8

Improving tenant mix intu Braehead tenant mix evolution from opening in 1999

Lydia Brown providing moving image

•Upper level double height signage zones

•Escalator removal to improve linkages and sight lines

•Mall de-cluttering

Improving tenant mix - recent initiatives Enhancing the environment to attract new retailers

• Improvement of food court environment

• Development of distinct offers for ground and first floor

• Ground floor – 2011 casual dining offer - 3 new

restaurants and a 4th coming soon – Champagne Bar added – Other kiosks to be remodelled and

converted to restaurants in 2014 – Costa relocation

• First floor

– Consolidation of fast food offers – Tenant mix improvements e.g. Fuel

Juice Bars – Additional initiatives to generate

space - new fascias and relocations from ground floor

Improving tenant mix Extending the catering offer

Sustainability with key retailers Meeting needs of existing retailers – up / down sizing, flagship configurations

Sustainability with key retailers - examples

Next 25,000 sq ft

M&S 83,000 sq ft

Ernest Jones 2,000 sq ft

Superdrug 8,000 sq ft

WH Smith 18,000 sq ft

42,000 sq ft

99,000 sq ft

5,000 sq ft

5,000 sq ft

8,000 sq ft

Next 23,000 sq ft

JD Sports 9,000 sq ft

Topshop 11,000 sq ft

34,000 sq ft

11,000 sq ft

11,000sq ft

intu Braehead FROM TO

intu Trafford Centre FROM TO

• Next 34,000 sq ft. Opening 1 August 2013

• JD Sports 10,000 sq ft. Opening Oct/Nov 13

• Topshop/Topman. Full refit summer 2013

Sustainability with key retailers intu Braehead - repositioning anchor / MSU units

Achieving ERV Establishing rental tone for upcoming lease expiry cycle

Achieving ERV

• intu Braehead – £250 Scottish Zone A (£335 English

equivalent)

• intu Trafford Centre – £400 Zone A (Prime)

intu Trafford Centre intu Braehead

Achieving ERV Lease renewal strategy

• Strategy

– Early engagement with retailers – Secure MSU mix, rental tone and shop fit, e.g. Next – Secure large standard units e.g. JD Sports & Topshop/Topman – Establish appropriate mix of food, leisure and retail – Secure further investment from retailers e.g. Thorntons

• Successfully applied at intu Trafford Centre

– 63 expiries 2013, passing rent £15m, ERV £18m – Two thirds completed / under offer, in aggregate 2% ahead of ERV

• intu Braehead lease expiries 2014

– 45 expiries of original 15 year leases – passing rent £12.6m, representing 40% of rent roll – ERV £14.7m

• intu Braehead total reversion from expiries and reviews - £6.9m (21% of current contracted rent)

Long term growth in rental income and capital value

Market value CAGR +3.0%

£406m £582m £1,230m £1,800m Market value CAGR +4.9%

CAGR +3.3% CAGR +4.8%

intu Braehead

Long term rental growth Long term rental growth

intu Trafford Centre

Achieving ERV – example intu Trafford Centre Increase in zone A tone 2008 to 2012 – first floor

Key

2008

2012

Achieving ERV – intu Braehead Zone A tone 2013 – evidence for 2014 lease expiry cycle

2009

2013

Achieving ERV –intu Braehead Reversion to ERV *

+21%

*Uplift from current contracted rent to ERV of occupied units based on 31 December 2012 valuation data.

Asset management - key messages

• Strong tenant mix – Strengthening range of brands – Food, retail, leisure – Complementary adjacent uses – Moved up 3 places to # 22 in PMA tenant mix rankings 2008 to 2012

• Improving operational metrics

– 2012 retailer sales up 4%, footfall down 1%

• Sound financial base – Sustainable rental levels – Reduced temporary lettings – Retailer buy-in - £8 million capital investment committed ytd 2013

• Scope for future rental & capital growth

– £250 Scottish ZA (£335 English equivalent) evidenced for 2014 expiry cycle

investor / analyst visit to braehead, 27 – 28 june 2013 ... · – secure further investment from...

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