RETAIL Investor Conference Oxford 2018 RETAIL PORTFOLIO Scott Parsons Managing Director Landsec – Investor Conference 2018 3 Agenda
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RETAIL Investor Conference Oxford 2018 RETAIL PORTFOLIO Scott Parsons Managing Director Landsec – Investor Conference 2018 3 Agenda MARKET AND PORTFOLIO UPDATE Scott Parsons Managing Director, Retail Portfolio OUTLETS Ailish Christian-West Head of Property WESTGATE OXFORD Andrew Dudley Head of Development FILM Q&A TOUR OF WESTGATE OXFORD LUNCH Landsec – Investor Conference 2018 4 Repositioned Retail Portfolio Retail Portfolio proportion of capital value – March 2007 vs September 2017 38% 33% 27% 23% 15% 14% 12% 12% 11% 9% 6% 2007 2017 2007 2017 2007 2017 2007 2017 2007 2017 2007 2017 2007 2017 Regional Suburban London Hotels Retail parks Leisure parks Outlets Secondary shopping centres shopping centres centres Landsec – Investor Conference 2018 5 Retail Portfolio strategy Landsec – Investor Conference 2018 6 Retail space UK vs US Shopping centre GLA (sq m) per capita Department store % of total GLA USA 2.19 USA 46% Canada 1.56 UK 27% Australia 1.03 Austria 0.45 Australia 23% UK 0.43 European Union 0.31 Asia 17% China 0.26 Middle East 15% Germany 0.22 Source: ICSC Source: JLL Landsec – Investor Conference 2018 7 Internet penetration Despite fast growth in online retail, physical store is and will continue to be the dominant sales channel. Today, 85.5% of the total £223bn of comparison goods spend in the UK touches a store. Source: CACI Landsec – Investor Conference 2018 8 Department store rents are relatively low Rental comparison between shopping centre “anchors” and other uses Rent / sq ft £5.82 £5.82 £6.75 £22.43 £21.00 £22.10 £21.50 £20.25 £21.18 £10.87 £10.87 £10.73 Supermarket Cinema Gym Department store Contracted rent/sq ft Passing rent/sq ft ERV/sq ft Source: Landsec Westgate Oxford Landsec – Investor Conference 2018 9 Repositioning retail space MSUs — Relatively low rents — Affordable space — Strong destinations perform well Landsec – Investor Conference 2018 10 Repositioning the offer Retailers taking space — New brands taking space — Global retailers UK expansion — Brands arriving exceeding brands departing… but only in the best locations Landsec – Investor Conference 2018 11 Potential pure-play online retailers taking physical space Landsec – Investor Conference 2018 12 Retail Portfolio strategy Landsec – Investor Conference 2018 13 Cinemas Resilient reasons to visit centres Annual spend per head £ 19.17 19.18 17.00 17.40 17.13 17.60 15.27 15.87 13.57 13.91 12.46 12.87 12.93 12.65 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: UK Cinema Association White Rose, Leeds UK Retail vs Leisure: historic YoY card expenditure UK card expenditure, YoY change 2016 % Total retail sales Total leisure 14 13 9 9 6 7 6 3 3 3 2012 2013 2014 2015 2016 Source: The UK card Association 2017 Westgate Oxford Landsec – Investor Conference 2018 14 Food and beverage Adding to the mix Eating out market value Westgate Oxford roof terrace restaurants Westgate Social +2.2% p.a. £70.1bn £65.6bn 10% Breakfast 8% 21% Snack 19% 30% 31% Lunch Bluewater, Kent Galleria, Hatfield Dinner 43% 38% 2013 2016 Source: JLL Trinity Kitchen, Leeds White Rose leisure extension, Leeds Landsec – Investor Conference 2018 15 Curating the brand mix — Attracting brands consumers want — Leases outside the Landlord and Tenant Act — Greater landlord control — Curating a relevant mix of brands Bluewater, Kent Landsec – Investor Conference 2018 16 Keeping the offer fresh Engaging and design-led shop fit-outs Westgate Oxford St David’s, Cardiff Landsec – Investor Conference 2018 17 Evolving leisure offer Landsec – Investor Conference 2018 18 Innovation Smart parking directs you to a free space Landsec – Investor Conference 2018 19 Everything is experience St David’s, Cardiff Follow your Dreams. St David’s, Cardiff Yorkshire Day. Xscape, Yorkshire Future Sports Stars. Xscape, Yorkshire Student Lock-in. St David’s, Cardiff Narnia Experience. Gunwharf Quays, Portsmouth Titan the Robot. Xscape, Yorkshire Aardman Early Man Workshop. Bluewater, Kent Landsec – Investor Conference 2018 20 Retail Portfolio strategy Landsec – Investor Conference 2018 21 Making our great destinations even better — New Primark unit at Bluewater — White Rose leisure extension fully let — UK’s largest retail solar PV installation — Two new mixed-use destination opportunities in London Yorkshire day. White Rose extension, Leeds Aardman Early Man workshop. Bluewater, Kent O2, Finchley Road London PV installation. White Rose, Leeds Landsec – Investor Conference 2018 22 Summary — Outperforming benchmarks — Greater dwell time — Low voids — Resilient income — Selective investment St David’s, Cardiff OUTLETS Ailish Christian-West Head of Property Landsec – Investor Conference 2018 24 Landsec outlet update +37% Gunwharf Quays – retail sales FY11/12 – FY16/17 (£m) sales uplift 150 145 140 135 130 125 120 115 110 105 100 FY11/12 FY12/13 FY13/14 FY14/15 FY15/16 FY16/17 Landsec – Investor Conference 2018 25 Our locations Junction 32 Castleford Braintree Essex Galleria Hatfield Clarks Village Gunwharf Quays Street Portsmouth Landsec – Investor Conference 2018 26 Landsec view of outlet categorisation in the UK Outlet schemes Main operators £2,000+ Luxury Bicester Village Value Retail £500 – £1,000 Premium Gunwharf Quays Landsec Cheshire Oaks, York, Ashford McArthur Glen Braintree, Clarks Village, Galleria, Landsec Junction 32 £200 – £500 High Street Realm, Peel, Wembley, East Midlands, Gloucester Quays, Gretna, McArthur Glen Livingston, Lowry, Swindon, Resorts World, Bridgend Springfields Spalding, Dalton Park, Freeport Talke, Freeport Fleetwood, < £200 Discount Realm, Savills Chatham Dockside, Festival Park, Boundary Mills, Clacton-on-Sea Increasing sales densities £/sq ft £/sq densities sales Increasing Landsec – Investor Conference 2018 27 Why retailers like outlets — To clear end of season stock — Better margins — Customer experience Gunwharf Quays, Portsmouth — To test new products — Limited overlap with premium full-price stores Gunwharf Quays, Portsmouth Landsec – Investor Conference 2018 28 Why we like outlets — Relevant retailer mix — Stronger demand tension — Shorter lease lengths — Leases typically outside Landlord and Tenant Act — Performance related break clauses Gunwharf Quays, Portsmouth Landsec – Investor Conference 2018 29 How we operate outlets — Vibrant environment — Evolving mix of brands — Close customer relationships — Insights and intelligence at the heart of everything we do Landsec – Investor Conference 2018 30 Insights and intelligence Instant feedback pods Feedback from over Real-time parking information on website 1,200 and sensors to aid access shoppers Providing sales analytics TORK system to helping to assess impact measure footfall into on store performance public conveniences Computerised surveying of roofs to gather maintenance status Landsec – Investor Conference 2018 31 Landsec outlet assets Gunwharf Quays, Portsmouth Galleria, Hatfield Braintree, Essex Clarks Village, Street Junction 32, Castleford — 570,000 sq ft — 300,000 sq ft — 200,000 sq ft — 200,000 sq ft — 240,000 sq ft — Void rate of 1% — Void rate of 6.2% — Void rate of 1.6% — Void rate of 3.9% — Void rate of 3.2% — WAULT of 6.1 years — WAULT of 5.2 years — WAULT of 4.1 years — WAULT of 4.7 years — WAULT of 3.4 years — Brands include — Brands include Nike, — Brands include Nike, — Brands include — Brands include Nike, Polo Ralph Lauren, M&S, TK Maxx, Gap, Hugo Boss, Hollister, Superdry, Clarks, M&S, Next, Clarks, Coach, Michael Kors, Clarks, Billabong, Gant, Ted Baker, Adidas, Next, Barbour, Ecco, Sports Direct, Adidas, Nike, M&S, Armani, Denby, Antler Clarks, Gap, Lacoste, Hobbs, Gap, Hamleys, Antler, Billabong, Hugo Boss, Ted Baker The North Face, Radley Joules, Molton Brown, The Body Shop, Levis White Stuff Latest brands: Latest brands: Latest brands: Latest brands: Latest brands: Landsec – Investor Conference 2018 32 Summary — Leading owner manager of outlets in the UK — Acquired three assets with NIY of 6.5% — Sales up by average of 3.2% in first six months of ownership — Drivers of success — Physical environment — Curation of brand mix — Specialist outlet team Braintree, Essex WESTGATE OXFORD Andrew Dudley Head of Development Landsec – Investor Conference 2018 34 Creating Westgate Oxford Westgate story — Why Oxford? — How we did it — Delivery — Performance Landsec – Investor Conference 2018 35 Creating Westgate Oxford Why Oxford? 1 2 Strong 3 retailer Great demand catchment Constrained supply Landsec – Investor Conference 2018 36 Why Oxford Retailer demand — Number 1 PROMIS location — 1m sq ft retail requirement — Poor existing F&B and leisure offer Landsec – Investor Conference 2018 37 Why Oxford Great catchment — Young, affluent — 7 million visitors each year — Student annual spend £750m Landsec – Investor Conference 2018 38 Why Oxford Constrained supply Poor Poorly Piecemeal existing configured ownership retail offer and undersized units Man vyi Landsec – Investor Conference 2018 39 How we did it History 1971 Westgate opened Landsec – Investor Conference 2018 40 How we did it History 2010 Bought by Westgate Oxford Alliance Landsec – Investor Conference 2018 41 How we did it Quality of design — Strong expectations on architecture — Five distinct city blocks — Five different architects, one retained as master planner Glenn Howells Architects – Buildings 1 and 1A Panter Hudspith Architects – Building 2 Allies and Morrison Architects – Building 3 Dixon Jones Architects – Building 4 Landsec – Investor Conference 2018 42 How we did it Approach to design Height limit of 18.2m to preserve