PRELIMINARY RESULTS FOR THE YEAR ENDED 28 …

1

PRELIMINARY RESULTS

FOR THE YEAR ENDED28 FEBRUARY 2017

2

AGENDAOVERVIEW AND HIGHLIGHTS

FINANCIAL RESULTS

STRATEGIC UPDATE

+ DEVELOPMENT AND TRADING PORTFOLIO

+ INVESTMENT PORTFOLIO

+ SPECIALIST PLATFORMS

SUMMARY

APPENDICES

+ APPENDIX 1: OVERVIEW

+ APPENDIX 2: FINANCIALS

+ APPENDIX 3: PORTFOLIO STATS

+ APPENDIX 4: ECONOMIC CHARTS

3

OVERVIEW AND HIGHLIGHTS

05/14 – FINANCIAL RESULTS 14/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES03/04 – OVERVIEW AND HIGHLIGHTS

4

FY2017 HIGHLIGHTS


STRONG

PERFORMANCE

IN H2

+ £35m of development and trading gains (in line with guidance) with £23.5m

secured in H2

+ Basic NAV of 278p per share – after payment of FY2016 dividend

+ Total dividends of 8.7p per share including a declared supplemental dividend

of 2.8p per share, to be paid in June 2017

+ Investment portfolio valuation decline of £6.8m – stable in H2

PORTFOLIO

STRENGTHENED

TO DRIVE

FUTURE

GROWTH

+ Four major PPP projects won with a GDV of over £1.5bn – potential to realise

profits in excess of £90m from FY2020

+ Investment portfolio transition underway – £18m of non-core assets sold in

FY2017

+ Two specialist platforms created: JVs with Proprium Capital Partners and

Colony NorthStar

+ Good visibility on restated £65-70m development & trading gains in FY2018

Targeting a post-tax return of 12% and a minimum of £150m of development and trading gains over 3 years

5

FINANCIAL RESULTS


6

FY2017 PERFORMANCE

FY2017 FY2016

Development and trading gains £35.0m £51.1m

Basic NAV £347.6m(1) £363.3m

Basic NAV per share 278p(1) 291p

Profit before tax £0.4m(2) £25.8m

Dividend per share (in respect of period reported) 5.9p 5.9p

Supplemental dividend per share declared(1) 2.8p 8.0p

Net debt £120.9m £161.4m

Gearing 34.8% 44.4%

(1) After payment of supplemental dividend (£10.0 million/8p per share) – declared for FY2016 and paid in June 2016(2) Before exceptional item relating to serviced office business (£2.1m)


7

FY2017: DEVELOPMENT AND TRADING GAINS

Project nameForecast(1)

FY17 gains

Realised

FY17 gains Value trigger

Dublin:

The Vertium Building £4-5m £4m Trading: entire building let triggering a profit payment

entitlement

Other £8m £5m Trading: sale of Percy Place and further commercial and

residential units across two projects

Birmingham International Park (UK) £8m £8m Trading: planning secured and site disposal completed

Elizabeth House (LCR*) £2-6m £5m Trading: disposal of site completed pre planning

Powergen site, Ashford (LCR*) £4m £4m Trading: disposal of site completed post planning

Springfield Park, Maidstone (LCR*) £2-4m £2mTrading: disposal of Phase 1 of site completed post

planning

Other (8 projects) £8m £7m Trading: smaller projects (profit below £2m)

Guidance £35-40m £35m

* London City Region: an area within a one hour’s commute of Central London(1) Per guidance (October 2016)


8

4651

35

0

10

20

30

40

50

60

70

80

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Realised gains Revised guidance (April 2017)

65-70

ANTICIPATED GAINS TO FY2020

£155 - £180m (from existing projects)

3 - 5 year target £50m pa

12% post-tax total return*

*Total returns: the growth in our basic net asset value including dividends

£m

40-50

50-60


9

OUTLOOK FOR FY2018: DEVELOPMENT AND TRADING GAINS

Project nameForecast(1)

FY18 gains H1/18 H2/18 Value trigger

12 Hammersmith Grove (LCR*) £9-11m – £9-11mTrading: let 90% of office space; 43% let or under offer;

negotiations on further 31%

Scheme A, Brighton (LCR*) £8-10m – £8-10m PPP: completion of funding strategy

Residential Scheme A (LCR*) £7-10m – £7-10mPPP: surplus arising from either disposal of the site

(post planning) or from development

Residential Scheme B (LCR*) £6-10m – £6-10mTrading: surplus arising from either disposal of the site

(post planning) or from development

Wind Farm Portfolio (UK) £6-8m £3-4m £3-4mTrading: surplus arising from disposal of 2-3 sites

(planning secured on one project)

Mill Green, Cannock (UK) £5-6m – £5-6mPPP: entering into a funding agreement to develop the

scheme (planning consent secured)

Ashford (LCR*) £3-4m £1-2m £2mTrading: surplus arising from either disposal of the site

or from development (planning consent secured)

The Old Vinyl Factory, Hayes (LCR*) £2-3m – £2-3mTrading: surplus arising from disposal of the next

residential phase (post planning); BTR potential

Telegraph Way, Greenwich (LCR*) £2-4m – £2-4m

Trading: disposal of 16 town houses that were to be

constructed for U+I as part of the original land

transaction

Other (12 projects) £15m £6m £9mTrading: smaller projects with profit below £2m per

project

Guidance range £65-70m £10-12m £55-58m

* London City Region: an area within one hour’s commute of Central London(1) Per guidance (October 2016)


10

FY2020 Value trigger

Morden Wharf, Greenwich (LCR*) PPP: realisation of first phase of site (post planning) from within JV

Scheme B, Brighton (LCR*) PPP: practical completion of pre-funded mixed-use development

Pincent’s Hill, Reading (LCR*)Trading: surplus arising from either disposal of the site (post planning) or from

development

Guidance: major projects contribute c45% of forecast development & trading gains of £50-60m(1) (from existing projects)

FY2019 & FY2020: MAJOR DEVELOPMENT AND TRADING PROJECTS

FY2019 Value trigger

Charlton Riverside, Greenwich (LCR*) Investment asset: realisation of first phase of site

Harwell, Oxfordshire (LCR*)PPP: refinancing to release value from early phases of commercial

development

Valentine House, Ilford (LCR*)Trading: practical completion of pre-sold residential units currently under

construction

Guidance: major projects contribute c40% of forecast development & trading gains of £40-50m(1) (from existing projects)

* London City Region(1) Per guidance (April 2017)


11

EPRA NAV VALUATION

Proportion

of assets

valued

Change in

Valuation

Directly owned portfolio 43% £15.5m

Assets held in JVs 20% (£2.4m)

Total 30% £13.1m

+ EPRA valuation exercise for development and trading assets undertaken

+ U+I’s business model frequently involves either not owning land (e.g. PPP schemes)

or contractual profit shares (e.g. 12 Hammersmith Grove)

+ Only 30% of assets qualify to be valued with an uplift of £13.1 million and an EPRA

NAV of 288p per share

+ 80% of development and trading guidance (FY2018-2020) result from assets which

are not valued

+ Development and trading guidance most reliable measure of value within portfolio


12

DEBT FINANCE

FY2017£m

FY2016£m

Gross debt 172.1 213.3

Cash (51.3) (51.8)

Net debt 120.8 161.5

Gearing 34.8% 44.4%

Share of net debt in joint ventures 44.0 43.6

Net debt including joint ventures 164.8 205.1

Gearing including joint ventures 47.4% 56.4%

Analysis of gross debt (excluding JVs)

Fixed rate 41.6% 35.1%

Capped / SWAP 29.8% 30.1%

Floating rate 28.6% 34.8%

Weighted average interest rate 4.6% 4.9%

Weighted average maturity 4.8 years 4.5 years


13

DEBT MATURITY PROFILE

40.139.8

68.4

20.9

0

10

20

30

40

50

60

70

80

0

10

20

30

40

50

60

70

Feb-18 Feb-19 Feb-20 Feb-21 Feb-22 Feb-23 Feb-24 Feb-25 Feb-26

Corporate Drawn - Investment Drawn - Development

2.32.6

60.7

*Terms of refinance agreed

£m

** On Balance Sheet


14

TARGETING BUSINESS EFFICIENCIES IN FY2018

Efficiency GainsFY2018

£m

Reduction in recurring overhead(1)

Platform management fees

Offsetting costs

Additional revenue(2)

1.0

1.9

(0.9)

1.0

2.0

(1) Targeting a 5% reduction in FY2018

(2) Across specialist platforms

+ Reduction in recurring overhead (from FY2018)

+ Additional revenue – net management fees from specialist platforms and major schemes

Additional revenue (secured)FY2018

£m

Office repositioning platform

Income producing platform

Mayfield (Manchester)

0.6

0.2

0.2

Net management fees(2)1.0


15

STRATEGIC UPDATE


16

U+I: AN INTEGRATED PORTFOLIO

DEVELOPMENT AND

TRADING PORTFOLIO

PPP

22%Of gross assets*

£116m**Capital Value***

Trading

39%Of gross assets*

£206m**Capital Value***

39%Of gross assets*

£211mCapital Value***

INVESTMENT

PORTFOLIO

CREATING

PLACESDelivers

– Longer-term development profit

– Shorter-term trading profit

– Some elements of completed

developments retained within

investment portfolio

Key value drivers

– Planning gain

– Arbitrage/mispricing

– Development margin

FY2017 KPIs

£35m profit

£1.5bn GDV added to pipeline

Delivers

– Income return

– Capital growth

– Future development

opportunities

(warehouse)

Key value drivers

– Asset management

– Planning gain

FY2017 KPIs

£179.2m portfolio

6.6% initial yield

*Group share where appropriate

**Assets held at cost, not revalued

***Capital value includes all property interests held both directly and indirectly


17

MARKET OVERVIEW

EXTERNAL RISK Change in FY2017

MARKET RISK

SCARCITY OF VIABLE INVESTMENT

AND DEVELOPMENT OPPORTUNITIES

COUNTERPARTY RISK

BANK FUNDING RISK

CONSTRUCTION RISK

PLANNING RISK


18

DEVELOPMENT AND TRADING PORTFOLIO


19

A YEAR OF ACHIEVEMENT – FOUR MAJOR PPP WINS

COCKPIT YARD, HOLBORN

8 ALBERT EMBANKMENT, LONDONMAYFIELD, MANCHESTER

WESTMINSTER INDUSTRIAL ESTATE, CHARLTON


20

A BALANCED APPROACH TO DEVELOPMENT AND TRADING

– SHORT-TERM PROFIT FLOWS (1-3 YEARS)

– PLANNING GAIN IS USUALLY KEY

– ARBITRAGE/MISPRICING OPPORTUNITIES

– IRR OF >30%

– EQUITY MULTIPLE 1.5X

TRADING

– LARGE SCALE MIXED-USE REGENERATION

PROJECTS DELIVERED IN PARTNERSHIP

(2-5 YEARS)

– MAX £20M EQUITY IN ANY ONE PROJECT

BUT HIGH UPSIDE POTENTIAL IN ALL

– PLANNING GAIN IS KEY VALUE DRIVER

– DEVELOPMENT IS KEY PROFIT DRIVER

– PROJECTS DE-RISKED VIA FORWARD

FUNDING OR PRE-SALES

– EQUITY MULTIPLE 2.0X – 5.0X

PPP

Gains

Project delivery time


21

2015 2016 2017 2018 2019 2020 2021 2022

BID1

PLANNING2

VIABILITY3

DERISKING DEVELOPMENTPRACTICAL

COMPLETION

TRIGGER: 15%

MARGIN (GDV)

SALES + PROFIT

REALISATION

CASE STUDY: 8 ALBERT EMBANKMENT – INDICATIVE COSTS:

1. Bid cost: £200 - £300k

2. U+I equity investment of £4.7m (planning phase)

3. U+I equity investment of £5m (viability phase)

PHASING OF PUBLIC PRIVATE PARTNERSHIP PROJECTS


22

PUBLIC PRIVATE PARTNERSHIP PROJECTS

Case Study: Preston Barracks, Brighton


23




24




25

CREATING VALUE THROUGH TRADING ASSETS

ACQUISITION

PLANNIMG

CONSENT

SELL/DEVELOP

DISCOVERINGVALUE

ADDINGVALUE

REALISINGVALUE

Identify

macro

planning

policy shift

Target

relevant

areas

Off-market

transactions

Enhance planning

mix and density through

planning process

Value add

Time

ASSET MANAGE INCOME

LAND IMPROVEMENT

PROFIT


26

TRADING PORTFOLIO

Case Study: Birmingham International Park



28

INVESTMENT PORTFOLIO


29

EXISTING

PORTFOLIO

18 ASSETS

£179.2m*

OPTIMISE

ASSETS: SWANLEY &

KILLINGWORTH

Targeting £5m of added

value

DISPOSE

£50m non-core asset disposals targeted

FUTURE

PORTFOLIO

Regeneration

WAREHOUSE & RETAINED

ASSETS

£50m new acquisitions

INVESTMENT PORTFOLIO: TRANSITION IN FY2018

2-4 years to transition (target 10% return)

*Valuation as at 28 February 2017


30

SPECIALIST PLATFORMS


31

SPECIALIST PLATFORMS

+ Opportunity to grow U+I’s pipeline of projects

+ Two specialist platforms completed:

- Proprium (£200 million) – focus on income-

producing assets in the London City Region

with potential for long-term development

- Colony NorthStar Inc (€300 million) – focus

on office repositioning

+ Built to Rent: progressing discussions


32

SUMMARY


33

ROBUST

PERFORMANCE

+ Solid performance in FY2017 with a record level of development and

trading gains forecast for FY2018

PORTFOLIO

STRENGTHENED TO

DRIVE STRATEGIC

GROWTH

+ Focus on fewer, larger mixed-use regeneration projects

+ Repositioning investment portfolio to align to Group’s focus on

regeneration

+ Growing specialist platforms

DELIVER

SUSTAINABLE

SHAREHOLDER

RETURNS

+ On target to deliver post-tax return of 12% over 3 years through:

• A minimum of £150m of development and trading gains over 3 years

• £5m of added value from our investment portfolio

• Increasing efficiency within the business

SUMMARY

U+I POSITIONED AS THE LEADING REGENERATION DEVELOPER AND INVESTOR


34

APPENDICES


35

APPENDIX 1: BUSINESS STRATEGY


36

OPERATING IN LONG-TERMGROWTH MARKET

CLEAR COMPETITIVEADVANTAGE

POSITIONEDFOR GROWTH

OPTIMAL CAPITALALLOCATION

UK regeneration market is evolving:

(40%) of developable land owned by

local authorities

– Number of Public Private Partnerships

opportunities is growing

– Pressure on local authorities to deliver

with shrinking resources

– Consumer demand for mid-market

homes is growing and housing delivery a

government priority

Focussed on 3 strong growth regions:

London City Region*, Manchester,

Dublin

25-year track record, experts in planning

and leading PPP player

Mix of PPP, trading and investment

activity gives several routes to value

creation

PPP market has high barriers to entry -

trust, reputation and quality (rather than

just price) are key

Competitive strength within 3 core regions

– London City Region: focussed

on projects outside of prime/zone 1

locations where demand is growing and

price point is appealing to consumers

– Manchester: development partner to

Manchester City Council on £850m

regeneration project

– Dublin: investing since 2014 giving early

mover advantage in a market with reduced

developer capacity

Visibility on £50m+ development and

trading gains per annum to FY2021 -

driven by large scale PPP projects

balanced with shorter-term trading

activity

Guidance of over £150m of gains over

the next 3 years

NAV driven by cash returns from

management driven development,

trading and investment activity, not

accounting revaluations

£6bn development portfolio

Development assets held at cost – latent

uplift potential from improved planning

not reflected in NAV until projects are

crystallised

Operational leverage:

– PPP model and joint ventures with major

capital partners (specialist platforms)

enable us to grow pipeline and deliver

returns with limited equity investment

in any one project

– Limits specific project risk and keeps

balance sheet debt at appropriate

levels

Committed to redistributing surplus

capital to shareholders

Balance sheet managed to minimise

risks and maximise returns

INVESTMENT CASE

CREATING VALUE AND DELIVERINGGAINS THROUGH REGENERATION

DEVELOPMENT AND TRADING GAINS

£50mper annum and £150 minimum

in the next 3 years

INVESTMENT PORTFOLIO TOTAL RETURN

10%return per annum

in the next 2-4 years

TOTAL RETURNS**

12%post tax total return per annum

in the next 3 years

GEARING

40-50% on balance sheet

OUR KPIs

* A catchment area including satellite towns and locations within an hour’s commute of Central London ** Total return comprises NAV growth including dividends


37

OUR INTEGRATED BUSINESS

PIPELINEPRACTICAL

COMPLETIONFUNDING

PLANNINGMain Value Driver

PROJECT DELIVERY

PPP

WAREHOUSE

(INVESTMENT)

TRADING

DEVELOPMENT

LAND DISPOSAL

RETAINED ASSETS

(INVESTMENT)

DISPOSED

ASSETS

CAPITAL GROWTH

AND INCOME

+

(POTENTIAL FUTURE

DEVELOPMENT

PIPELINE)

TRADING GAINS

DEVELOPMENT

GAINS

INCOME AND

CAPITAL GROWTH

OFF BALANCESHEET

(INC SPECIALISTPLATFORMS)

ON BALANCE

SHEET


38

THE PUBLIC PRIVATE PARTNERSHIP MODEL

PLANNING CONSENT

PUBLIC BODY

PROJECT DELIVERY

GREAT PLACES

DEVELOPER/JV

COMMUNITY

IMPROVEMENTS

– Inspiring public amenity

– New public buildings

– Jobs

– Profit share

– Retention of freehold

– Long-term asset improvement

– Risk-mitigated delivery

RISK-MANAGED

DEVELOPMENT

– Equity light, risk managed

approach

– Unique route to high

quality sites

– Hard to deliver – key

distinction

– Development profit

LAND

PLANNING EXPERTISE

RISK CAPITAL

PROJECT EQUITY


39

SPECIALIST PLATFORMS MODEL

U+I

FUNDING PARTNER

PROFIT VIA PROMOTE

STRUCTURE

DEVELOPMENT

MANAGEMENT FEE

PROFIT PROMOTE

ASSETS ACQUIRED

VALUE ADDED THROUGH

PLANNING/DEVELOPMENT

ASSET MANAGEMENT

SPECIALIST PLATFORMASSETS DISPOSED

OR DEVELOPED

CAPITAL

(LAND/ASSETS)

+

MINORITY EQUITY

INVESTMENT

+

PLANNING AND

DEVELOPMENT EXPERTISE


40

DIVIDEND POLICY: GREATER VISIBILITY ON SHAREHOLDER RETURNS

Supplemental dividend

Paid from net free cash flow

FY2017: 2.8p (45%)

FY2016: 8.0p (46%)

FY2015: 13.9p (48%)

DEVELOPMENT

+

TRADING

GAINS

CASH PROFIT

NET FREE

CASH FLOW

REINVESTREDUCE

DEBT

RETURN

CAPITAL

Ordinary dividend

Fixed + recurring

CORPORATION

TAX

OVERHEAD

SHORTFALL

NET FINANCE

COST

ORDINARY

DIVIDENDS


41

APPENDIX 2: FINANCIALS


42

KPIs

DEVELOPMENT AND

TRADING GAINS

Gains realised in 2017

£35m

Target£50 million minimum per annum and a

minimum of £150m in the next 3 years

TOTAL RETURNS

Total return in 2017

0.2%

Target12% per annum in the next 3 years

INVESTMENT PORTFOLIO

TOTAL RETURN

Investment portfolio return in 2017

1.7%

Target10% total return in the next 2-4 years.

GEARING

2017 Gearing (excluding JVs)

34.8%

Target40-50% on balance sheet and 50-60%

including our share of joint venture debt

28.1 27

45.7

51.1

35

0

10

20

30

40

50

60

2013 2014 2015 2016 2017

1

6

10

7

0.2

0

2

4

6

8

10

12

2013 2014 2015 2016 2017

47.9 48

36.3

44.4

34.8

0

10

20

30

40

50

60

2013 2014 2015 2016 2017

£’m % %


43

MOVEMENT IN NAV THROUGH THE PERIOD

Pence

per

share


Valuation

reduced by

5.1% on a

like for like

basis

44

NET DEBT, NET ASSETS AND GEARING

£m

*On Balance Sheet

304.5 306.7312.6

320.3

335.5346.4

342.9

363.3

340.5347.6

147.1 146.8 143.0153.8 150.7

125.7

203.3

161.4

128.0120.9

0%

10%

20%

30%

40%

50%

60%

70%

0

50

100

150

200

250

300

350

400

Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17

Net assets (LHS) Net debt (LHS) Gearing excl JVs (RHS)


45

APPENDIX 3: PORTFOLIO STATS


46

SchemeRegion, Acqn Date GDV

Profit Range, U+I Equity Timeframe

Planning Status

Rates (per sqft) Scheme details

Mayfield Quarter Manchester,

Sept 2016

£850m £40-60m,

£20m (max)

FY2020-2024 Pre-planning

Apply: 2017

Resi: £450

Office: £28

Retail: N/A

24 acres; 1,300 residential units; 800k sqft offices; hotel & retail; JV with public sector partners

Morden Wharf,

Greenwich

London City

Region,

March 2012

£605m £15-20m,

£13m (max)


Apply: 2018

Resi: £600-800

Office: £30

Retail: £20

19 acres; 1,000 residential units plus c300k

sqft other uses; U+I has a Leasehold interest;

Development Agreement with the Freeholder

8 Albert

Embankment,

Lambeth

London City

Region,

August 2016

£400m £25-35m,

£10m (max)


Apply: 2017

Resi: £1,550

Office: £52

Retail: £30

2.5 acres; 332 residential units, hotel, 70k sqft

office, fire station & museum, retail. Profit shared

with ultimate long-term funding partner

Harwell,

Oxfordshire

(Phase 1&2)

London City

Region,

December 2013

£400m £6-7m

£10m (max)

FY2019-2022 Pre-planning 789,000 sqft; 350 residential units; 362,000 sqft

office space; 15,000sqft leisure space. Profit shared

with Public Sector partner

Westminster

Industrial Estate,

Charlton

London City

Region,

October 2016

£175m £10-13m,

£8m (max)

FY2021 Pre-planning

Apply: 2017

Resi: £650

Office: £15

Retail: N/A

5.4 acre; Private Private Partnership with Royal London, JV with Galliard Homes; 400 residential apartments and associated creative use floor space

Preston Barracks,

Brighton

London City

Region,

July 2014

£150m £10-12m,

£8m (max)

FY2018-2021 Planning submitted

February 2017

Resi: £475

Office: £20

Retail: £20

5 acres; JV with University of Brighton; 314 residential units, 50k sqft offices, 534 student beds and ancillary retail

Circus Street,

Brighton

London City

Region,

April 2008

£120m £8-10m,

£10m (max)

FY2018-2020 Secured Resi: £550

Office: £30

Retail: £30

2.2 acres; 142 residential units, 30,000 sqft of Office space, 450 student bed accommodation, 10,000sqft of ancillary retail space and community assets

Mill Green,

Cannock

UK

November 2013

£115m £5-6m,

£4m (max)

FY2018-2020 Secured Resi: N/A

Office: N/A

Retail: £35

Design outlet village: 130 units (285,000 sqft)

Cockpit Yard,

Holborn

London City

Region,

October 2016

£105m £8-10m,

£4m (max)

FY2022 Pre-planning

Apply: 2018

Resi: £1,500

Office: N/A

Retail: £50

110 residential apartments; new library and arts facility

Friarsgate,

Lichfield

UK,

July 2011

£80m £4-5m,

£7m (max)

FY2020 Secured Resi: £300

Office: N/A

Retail: £30

2.8 acres; PPP to provide a new mixed-use centre

comprising retail, leisure and residential uses

£3bn £128-178m,

£94m (max)

DEVELOPMENT PIPELINE: MAJOR PPP PROJECTS


47

DEVELOPMENT PIPELINE: PRINCIPAL TRADING SCHEMES

SchemeRegion, Acqn Date GDV

Profit Range, U+I Equity Timeframe

Planning Status

Rates (per sqft) Scheme details

Charlton Riverside,

Greenwich

London City

Region,

2015/2016

£500m £8-11m,

£7m (max)

FY2019 Pre-planning 10 acres (4 sites): 1,000 residential units & associated uses (700,000 sqft)

Kensington Church

Street

London City

Region,

March 2011

£300m £6-10m,

£8m (max)

FY2018-2020 On appeal Awaiting determination of planning appeal; 46 resi units, 40k sqft offices, 30k sqft retail

The Old Vinyl

Factory, Hayes

London City

Region,

April 2011

£250m £2-3m,

£10m (max)

FY2018 Planning

Secured

Resi: £600

Office: £35

Retail: £15

17 acres: 280 residential units; retail (20,000 sqft); office (600,000 sqft); leisure (20,000 sqft)

12 Hammersmith

Grove

London City

Region,

Nov 2010

£140m £9-11m,

N/A

FY2018 Secured Resi: N/A

Office: £52.50

Retail: £30

170k sqft NIA offices with ancillary restaurant; forward funded with Aberdeen; profit share based on waterfall calculation with rent and yield variable; balancing payment trigger is PC+2yrs or 90% let on office NIA

Blackhorse Road London City

Region,

Aug 2016

£135m £7-10m,

£10m (max)

FY2018-2021 Planning

submitted

March 2017

Resi: £630

Office: N/A

Retail: £20

3 acres: 337 homes and 18,500 sqft commercial space; U+I act as DM; fixed land price post planning with surplus shared 50/50

Valentines House,

Ilford

London City

Region,

July 2011

£50m £3-4m,

£8m


Office: N/A

Retail: £20

122 pre-sold residential units; 16,350 sqft retail space

Pincent’s Hill,

Reading

London City

Region,

April 2008

£15m £5-10m,

£5m

FY2020 Pre-planning

Apply: 2017

Resi: £315

Office: N/A

Retail: N/A

250 residential units

Victoria Way,

Ashford

London City

Region,

Nov 2015

£12m £3-4m,

£1m (max)


Office: N/A

Retail: N/A

Proposed development will consist of an 18,000 sqft Aldi, Curious Brew Brewery, 120 bed hotel, 216 apartments and ancillary retail/workshop uses

Springfield Park,

Maidstone

London City

Region,

Dec 2015

£12m £3-4m,

£7m (max)


Office: N/A

Retail: N/A

4.9 acres; Phase 1 - 192 residential units; Phase 2 – residential 310 units

£1,4bn £38-56m,

£56m (max)


48

INVESTMENT PORTFOLIO: OVERVIEW

NUMBER OF ASSETS VALUATION CHANGE (inc. JVs) SIZE OF PORTFOLIO

18Feb 2016: 20

(£6.8m)Feb 2016: £1.7m

£179.2mFeb 2016: £203.3m

INITIAL YIELD* CONTRACTED RENTAL INCOME

6.6%Feb 2016: 6.8%

£12.7mFeb 2016: £13.6m

ESTIMATED RENTAL VALUE* VOID RATE EQUIVALENT YIELD*

£13.7mFeb 2016: £13.5m

4.7%Feb 2016: 4.5%

7.5%Feb 2016: 7.1%

*On a like-for like basis and core portfolio only


49

INVESTMENT PORTFOLIO: ANALYSIS

Type

% of Portfolio

(by value) Contracted Rent % of Portfolio Let ERV Vacant ERV WAULT

Future Portfolio 12.9% £1.77m 12.4% £1.76m £0.21m 4.72

Optimise 21.1% £2.89m 20.1% £2.84m £0.34m 5.06

Disposal 66.0% £9.03m 67.5% £9.56m £0.55m 5.77

100% £13.69m 100% £14.16m £1.10m 5.40


50

INVESTMENT PORTFOLIO: TOP FIVE ASSETS

Project name* Overview Key statistics*

The Furlong Shopping Centre,

Ringwood

85,000 sqft retail centre anchored by Waitrose

Key tenants: AGA; Café Nero; Crew Clothing; Fat Face;

Gerry Weber; Holland & Barrett; Joules; Hobbs; Phase Eight;

Paperchase; Waterstones;

Valuation: £25m - £35m

Valuation change: ↔Running yield: 6.0%

WAULT: 5.3 years

ERV growth: (1.4%)

Top Zone A rent: £75

The Killingworth Centre,

Newcastle

Retail centre anchored by Morrisons (not owned)

Key tenants: Matalan; 28 further retail units (including

Wilkinsons, Poundworld, Card Factory, McDonalds,

Specsavers, Betfred)



WAULT: 3.2 years

ERV growth: 9.6%


Borough Parade,

Chippenham

Retail centre anchored by Waitrose

Key tenants: Argos; Café Nero; EWM, New Look; Pandora;

Patisserie Valerie; Waterstones



WAULT: 4.1 years

ERV growth: 2.4%


Kingsland Shopping Centre,

Thatcham

Retail centre anchored by Waitrose

Key tenants: Costa Coffee; Lloyds Pharmacy



WAULT: 12.1 years

ERV growth: 0%


Crown Glass Shopping Centre,

Nailsea

Retail centre anchored by Waitrose (not owned)

Key tenants: Boots; Costa Coffee; HSBC; JD Wetherspoon;

Poundland; WHSmith


Valuation change: ↓Running yield: 8.0%

WAULT: 5.3 years

ERV growth: 0%


*Valuation change – movement from end August 2016 to end February 2017 (includes capital expenditure): ↑↓(over 2% increase/decrease) ↔ (under 2%

increase/decrease); ERV growth (August 2016/February 2017)


51

APPENDIX 4: ECONOMIC CHARTS


5252

MARKET OVERVIEW

EXTERNAL RISK Risk Exposure

Market risk The UK economy remains supportive – overshadowed by instability in commodity and equity markets

and continuing political uncertainty following the result of the EU Referendum and triggering of Article 50

Scarcity of viable investment

and development opportunities

Opportunities continue to be sourced for both development and investment which satisfy

Group underwriting criteria

Counterparty risk Group has higher exposure to the private residential market (on and off balance sheet)

– increased risk of purchasers failing to complete, not material in FY2017

Bank funding risk – New entrants in the lending market – reduction in margins, increase in maturities available

– Gradual reduction in lender’s appetite for development risk (post EU Referendum)

Construction risk – Post EU Referendum: Increased material costs on weakness of GBP to Euro; uncertainty over possible

workforce shortages and increased labour costs; difficulty in placing contracts in an uncertain market

– New tenders: increased prices to build in contingencies for losses; extended tender periods

Planning risk – Planning process potentially compromised ahead of key political events

– Financial strain on Local Authorities – under resourcing of planning departments against an increased

complexity in projects and planning regulations impacting larger mixed-use schemes

– Urgent need to professionalise planning departments – overlooked in recent White Paper


5353

BUSINESS INVESTMENT


54

REAL WAGE GROWTH (%)


55

AVERAGE EARNING AND CPI INFLATION


56

HOUSING MARKETS: STRUCTURAL DEFICIT AND PROJECTIONS

0

50

100

150

200

250

300

0

50

100

150

200

250

300

1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 2025

Household Formation Housing Starts

Forecasts

‘000s ‘000s


Source: Capital Economics

57

HIGH DEMAND, LOW COMPLETIONS


58

CRE EQUITY DEMAND BY SOURCE

£’bn


59

DUBLIN: TAKE UP BY BUSINESS SECTOR

Source: CIS Ireland


60

BREXIT TENDER PRICE FORECAST – DEVELOPING PICTURE


61

INVESTMENT PORTFOLIO: SHOPPING CENTRES

Percentage --------------------- 1 Month -------------------- --------------------- 3 Months ------------------- --------------------- 12 Months ----------------

Rental

Growth

Capital

Growth

Total

Return

Rental

Growth

Capital

Growth

Total

Return

Rental

Growth

Capital

Growth

Total

Return

Central London shops 0.4 0.5 0.8 0.7 1.1 2.0 5.1 4.6 8.1

Standard shops 0.1 0.2 0.7 0.1 1.1 2.5 1.2 (0.8) 4.6

Retail warehouses 0.0 0.1 0.6 0.2 0.4 2.0 1.0 (5.5) 0.4

Shopping Centres (0.1) (0.1) 0.5 0.1 (0.3) 1.4 (0.1) (7.6) (1.3)

Retail 0.0 0.1 0.6 0.1 0.5 2.0 0.6 (4.5) 1.4

City Offices 0.1 0.1 0.4 0.6 2.0 2.9 3.6 (2.5) 1.2

West End and Midtown

offices(0.0) 0.0 0.3 (0.4) 0.5 1.4 0.6 (3.6) (0.3)

Rest of London offices 0.0 0.0 0.4 0.3 1.1 2.3 2.0 (2.4) 2.1

Rest of UK offices (0.1) 0.1 0.6 0.4 0.8 2.4 1.2 (6.2) (0.1)

Offices 0.0 0.1 0.4 0.2 0.9 2.1 1.6 (4.0) 0.6

London industrial 0.5 0.7 1.1 2.0 3.6 4.9 5.5 5.3 10.4

Distribution warehouses 0.2 0.5 1.0 1.1 2.7 4.2 3.8 0.7 6.8

Industrial 0.3 0.5 1.0 1.2 2.5 4.0 4.0 1.4 7.5

All property 0.1 0.2 0.6 0.4 1.2 2.6 1.7 (2.8) 2.7

MSCI Monthly performance data

Source: MSCI, Lazarus


62

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Documents

PRELIMINARY RESULTS FOR THE YEAR ENDED 28 …