intu properties plc Interim results 2016 intu properties plc Winter 2016

About intu

Our centres

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~ intu Bromley was sold in October 2016

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Our centres

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~ intu Bromley was sold in October 2016

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UK’s top ranked shopping centres

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Source: PMA – top shopping centres on basis of PMA Retail Score (December 2015). intu shopping centres highlighted ~ adjoined to intu Milton Keynes

Rank Centre Location Rank Centre Location

1 Westfield London London - Shepherds Bush 22 The Oracle Reading

2 Bluewater Greenhithe 23 intu Watford Watford

3 Westfield Stratford City London - Stratford 24 intu Bromley Bromley

4 Meadowhall Sheffield 25 Union Square Aberdeen

5 intu Trafford Centre Manchester 26 Festival Place Basingstoke

6 St David's Cardiff 27 Cabot Place/Canada Place London

7 intu Lakeside Thurrock 28 Victoria Square Belfast

8 Liverpool One Liverpool 29 Trinity Leeds Leeds

9 intu Metrocentre Gateshead 30 Princesshay Exeter

10 Bullring Birmingham 31 intu Eldon Square Newcastle

11 Manchester Arndale Manchester 32 Touchwood Solihull

12 Cabot Circus Bristol 33 Golden Square Warrington

13 Brent Cross London 34 White Rose Shopping Centre Leeds

14 The Mall at Cribbs Causeway Bristol 35 Churchill Square Brighton

15 Highcross Leicester

16 the centre: mk~ Milton Keynes 41 intu Chapelfield Norwich

17 intu Merry Hill Brierley Hill 44 intu Victoria Centre Nottingham

18 West Quay Southampton 45 intu Potteries Stoke-on-Trent

19 intu Derby Derby 60 intu Milton Keynes Milton Keynes

20 intu Braehead Glasgow 64 intu Uxbridge Uxbridge

21 Silverburn Glasgow 169 intu Broadmarsh Nottingham

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Our priorities in 2016

Update titles – H1 2016 overview H1 2016 overview

Highlights A strong first half

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+7.5% like-for-like net rental income growth

7.5p underlying EPS, 10% growth

+0.6% like-for-like valuation growth

405p adjusted, diluted NAVPS

+3% total financial return including dividend

£564m cash and available facilities

Note: all figures include Group’s share of joint ventures

UK market background Many positive factors in first half

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Investment market Occupier market Consumer market

Prime centres remain attractive

Strong demand in prime high footfall locations

Unemployment at record lows

Less volatile than Central London market

New international retailers

Increasing disposable income

Limited supply of new quality retail space

Aspirational and lifestyle brands expanding

Established retailers upsizing

Optimising asset performance Like-for-like net rental income +7.5 per cent

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2016 full year guidance

raised by 1% to

+3% to +4%

Note: all figures include Group’s share of joint ventures

Optimising asset performance Continuing outperformance versus IPD

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Capital growth

Note: all figures include Group’s share of joint ventures

UK development momentum Substantial organic growth potential (2016-2019)

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£49m active asset management committed

£23m active asset management investment in H1 2016

CGI - leisure extension, intu Lakeside

CGI – Charter Place, intu Watford Qube extension, intu Metrocentre

CGI - Halle Place, Manchester Arndale

£178m intu Watford extension committed

£128m extensions and redevelopments

£189m active asset management pipeline

CGI – Barton Square, intu Trafford Centre

Making the brand count A key differentiating factor driving outperformance

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26m website visits

+23% increase in year-on-year website visits

440 affiliate retailers - December 2015: 350

2.3m active marketing database

74 net promoter score, an increase of 9 points

£20m intu Experiences gross income per annum1

1. Excludes £17m car park net income

Heat map of users of intu.co.uk

Seizing the growth opportunity in Spain Development plans backed by operational performance

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5% valuation growth

2% growth in footfall and retailer sales

16 new lettings in period

£187m capex to end of 2019

£23m active asset management pipeline

€600m intu Costa del Sol development

Operational performance Development pipeline

Puerto Venecia, Zaragoza CGI – intu Costa del Sol

Financial performance Matthew Roberts, Chief Financial Officer

intu Chapelfield

Key highlights Strong operating performance

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0.6% valuation uplift IPD: -1.1%

7.5% like-for-like net rental income growth

7.5p underlying EPS 2015: 6.8p

4.6p interim dividend 2015: 4.6p

405p adjusted, diluted NAVPS

£500m debt raised on intu Merry Hill

£96m debt raised on intu Bromley

4.5% weighted average cost of gross debt1

44% debt to assets ratio

7.2 years weighted average debt maturity

Note: all figures include Group’s share of joint ventures. 1. Excludes RCF

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Underlying earnings 12 per cent growth

Note: all figures include Group’s share of joint ventures

First half 2016

£m

First half 2015

£m

Net rental income 219.4 207.6

Administration expenses (18.3) (16.3)

Net finance costs (underlying) (103.6) (107.5)

Dividend from US investment - 3.4

Other 2.0 1.5

Underlying earnings 99.5 88.7

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Financial metrics Improving ratios

1. The EPRA cost ratio (excluding direct vacancy costs) is calculated in accordance with EPRA guidelines

First half 2016

First half 2015

Interest cover 1.99 x 1.85 x

EPRA cost ratio1 14.1 % 16.3 %

Earnings per share 7.5 p 6.8 p

Weighted average shares in issue 1,332 m 1,308 m

Dividend per share 4.6 p 4.6 p

Net rental income Growth from acquisition and like-for-like

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Note: all figures include Group’s share of joint ventures

First half 2016

£m

6 months to June 2015 208

Like-for-like (+7.5%) 15

Disposals and Charter Place (4)

Total net rental income 219

Net rental income Drivers of like-for-like growth

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Note: all figures include Group’s share of joint ventures

First half 2016

Capital investment +0.9%

Reduced vacancy +1.9%

Rent reviews, improved lettings and turnover income +2.3%

Other letting activity (e.g. reduced bad debt; surrender premiums) +2.4%

Total net rental income LFL +7.5%

2016 like-for-like net rental income growth guidance of 3 to 4% (assuming no material tenant failures)

Items excluded from underlying profit 2015 benefited from greater valuation gains

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Note: all figures include Group’s share of joint ventures

First half 2016

£m

First half 2015

£m

Underlying earnings 99.5 88.7

Property revaluation 5.2 162.2

Change in fair value of financial instruments (130.6) 32.2

Gain on acquisition of businesses 34.8 0.8 Gain on sale of other investments 74.1 0.9

Exceptional finance costs (12.5) (16.4)

Exceptional administration expenses (1.3) (0.7)

Other (e.g. deferred tax) (21.1) (5.4)

Profit for the year 48.1 262.3

Net asset value per share 405 pence 3 per cent total financial return including dividend

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Note: all figures include Group’s share of joint ventures

£368m change in net external debt

Currently 79 per cent hedged1

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Note: all figures include Group’s share of joint ventures. 1. Excluding forward starting swaps and including RCF

Debt maturity as at 30 June 2016 Minimal near term refinancing

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7.2yrs weighted average

debt maturity

4.5% weighted average cost

of gross debt1

£564m cash and committed

facilities Note: all figures include Group’s share of joint ventures. 1. Excludes RCF

In October 2016 intu secured

£375m of Convertible Bonds (due 2022)

Capital structure Robust and gives intu flexibility

Secured debt, asset by asset

Flexible structure

Refinancing activity has rebased covenants

No covenants on intu Trafford Centre debt

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LTV covenants Substantial headroom

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Equity cure required for 25% fall in values and

10% fall in income £84m

* intu Bromley was sold in October 2016

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Capital expenditure £716m to be spent by 2019; £216m committed

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Funded through

Available facilities Development finance Capital recycling

and partners

Financial flexibility

Debt to assets 44 per cent

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Note: all figures include Group’s share of joint ventures.. 1. Excludes RCF

30 June 2016 31 December 2015

£m £m

Total properties 10,147  9,602

Net external debt (4,507)  (4,139)

Net debt to assets 44%  43%

Cash 266  301

Undrawn committed corporate facitities 298  287

Net assets attributable to shareholders 4,869  4,976

Adjusted net asset per share 405p  404p

Weighted average cost of gross debt1 4.5%  4.6%

Weighted average debt maturity 7.2 years 7.8 years

intu Lakeside

New title page

Optimising asset performance H1 2016

Optimising asset performance Strong operating metrics

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82* new long term lettings

+7% aggregate lettings ahead of previous rent

96% occupancy June 2015 95%

+1.3% footfall growth Experian: -1.7%

+0.2% retailer sales growth

27 leases exchanged since EU referendum

79 further new lettings in solicitor’s hands

Lettings in line with valuers’ assumptions

Pull & Bear, intu Trafford Centre * September 2016: 165 new long term leases

Optimising asset performance Retailer trends

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Upsizing International

Portfolio of brands Aspirational

Optimising asset performance Improving occupancy

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Effect of improved occupancy

Reduced void costs

New rental income

Increased commercial tension

100%

99%

99%

98%

June 2015

95% June 2016

96%

Optimising asset performance Increasing our strong, stable income streams

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7.5% like-for-like net rental income growth

+10% total rent reviews ahead of previous rent

92% of top 40 tenants below average risk (Experian Delphi scores)

7.7years weighted average unexpired lease term

Optimising asset performance Increased market values

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Note: stamp duty increased from 4 per cent to 5 per cent in the period. All figures include Group’s share of joint ventures

Market value 30 June 2016

£mSurplus/

deficit £m

Like-for-like surplus/ deficit % Yield Income

Develop- ment

intu Chapelfield 295 23 8 ● ●intu Lakeside 1,358 21 2 ●intu Derby 466 17 4 ●intu Eldon Square, Newcastle 314 9 3 ● ●intu Potteries 169 (8) (4) ● ●intu Braehead 574 (13) (2) ●Other like-for-like 6,396 6 -

Like-for-like 9,572 55 1

intu Merry Hill acquisition 445 -

Developments 130 (50)

10,147 5

UK development momentum Martin Breeden, Development Director

intu Potteries

New title page

UK development momentum H1 2016

Fully let catering projects opened Improving catchment, footfall and dwell times

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Number of restaurants 9 5

Total cost (intu share) £10m £5m

Stabilised initial yield 8.3% 7.4%

Qube extension, intu Metrocentre – opened Easter 2016

Queen’s Garden, intu Bromley – opened July 2016

Committed active asset management £49m capital expenditure

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Project Redevelopment (20 restaurants)

Hotel Redevelopment (10 restaurants)

Opening Autumn 2016 Summer 2017 Summer 2018

Total cost (intu share) £15m £9m

Stabilised initial yield 7.7% 6.2%

Near term active asset management £189m active asset management pipeline

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£189m potential project costs 2016-2019

6-10% stabilised initial yield

CGI – Barton Square, intu Trafford Centre

CGI – Soar at intu Braehead

CGI – intu Merry Hill repositioning

Repositioning intu Watford 400,000 sq ft extension on site, opening 2018

CGI – intu Watford extension

Top 20 in UK retail ranking 1

2015: 42nd

60% pre-let

£178m total project cost

6-7%2 stabilised initial yield

1. Estimate post completion as per CACI residential comparison goods market potential for Watford. 2. Includes 1-2% generated through the existing centre

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New lettings in period:

Near term development Two major projects

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CGI – intu Lakeside

Project Leisure extension Redevelopment

Potential start date 2017 2017

Total cost (intu share) £70m £75m

Stabilised initial yield 6% 6-8%

CGI – intu Broadmarsh

Future potential Optionality on future developments

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Planning approved Retail extension

Planning approved Retail extension

Planning approved Retail and leisure extension

Called in Retail extension

Application submitted Retail and leisure extension

Seizing the growth opportunity in Spain

intu Asturias

New title page

Seizing the growth in Spain H1 2016

Our Spanish strategy

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Create a business of scale

Focus on top 10 markets

Acquire, develop and manage market leading retail and leisure resorts

Two top 10 Spanish centres Operating metrics

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Market value (100%) €261m (+8%)1 €468m (+4%)1

Occupancy 99% 95% Footfall +2% Retailer sales +2% New lettings 16

1. Valuation uplift percentage for H1 2016

intu Costa del Sol Flagship shopping resort for the region

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Consider data 175,000 sq m

€600m total cost1

7% stabilised initial yield

3m residents (10m annual tourists)

2017 potential start date

1. Includes €70m already incurred by intu

CGI – intu Costa del Sol

New title page

Concluding remarks H1 2016

Concluding remarks Significant momentum from strong first half

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Like-for-like net rental income growth

Positive impact from active asset management projects

Differentiated by brand and digital initiatives

Cash and available facilities over £500 million

Organic growth potential enhanced by capital expenditure plans

Appendices Questions

Appendices

Development pipeline As at 30 June 2016

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£m Description

UK planning approval

New space

000 sq ftCost to

completion

Committed 2016-2019 2020+intu Watford Charter Place extension 380 163 163intu Lakeside Hotel 40 8 8Manchester Arndale Halle Square redevelopment 7 7intu Eldon Square Restaurant development 4 4intu Broadmarsh Pre-development 4 4Other committed projects Various initiatives 26 26

212 212 -

Active asset management pipelineintu Trafford Centre Barton Square courtyard enclosure 112 45 45intu Merry Hill Various initiatives 98 83 15Manchester Arndale Various initiatives 54 12 42intu Metrocentre Various initiatives 18 18Other projects Various initiatives 274 31 243

489 189 300

Major extensionsintu Lakeside Leisure extension 225 95 70 25intu Broadmarsh Redevelopment 50 75 45 30intu Milton Keynes 70 10 60intu Victoria Centre Retail and leisure extension 500 225 3 222intu Braehead Retail and leisure extension 475 200 200intu Lakeside Retail extension 440 180 180Cribbs Causeway Retail and leisure extension 380 105 105Sprucefield 40 - 40

990 128 862Total UK 1,691 529 1,162

SpainCommitted and pipeline* Various initiatives 33 23 10intu Costa del Sol Shopping resort 220 154 66Valencia Shopping resort 276 10 266Palma or Vigo Shopping resort 107 107Total Spain 636 187 449Total 2,327 716 1,611* includes asset management initiatives at intu Asturias (£15m) and Puerto Venecia (£18m)

Indicative timing

First Second First half half half 2016 2015 2015 Group1 revaluation surplus (like-for-like) +0.6% +2.1% +1.9%

IPD2 capital growth -1.1% +1.6% +1.2% Group1 weighted average nominal equivalent yield

5.01% 5.14% 5.25%

Change in Group nominal equivalent yield -13bp -11bp -7bp IPD2 equivalent yield shift +4bp -10bp -13bp Group1 ‘topped-up’ initial yield (EPRA) 4.49% 4.52% 4.55% Group1 change in like-for-like ERV -0.1% +1.0% +0.6%

IPD2 change in rental value index +0.5% +0.6% +0.1%

Property table metrics

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1. Including Group’s share of joint ventures 2. IPD monthly index, retail

Yield comparisons Wide spread relative to corporate bonds

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Net rental income margin

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Six months ended 30

June 2015

Total£m

Partners' share

£mIntu share

£mIntu share

£m

Gross rental income 258 (16) 242 239

Head rent payable (13) 13 - -

245 (3) 242 239

Net service charge expense and void rates (11) 1 (10) (11)

Bad debt and lease incentive write off (1) - (1) (5)

Property operating expenses (see below) (14) 2 (12) (15)

(26) 3 (23) (31)

Net rental income 219 - 219 208

Net rental income margin 90% 87%

Six months ended 30 June 2016

Property operating expenses include £4 million of car park operating costs and £5 million contribution to shopping centre marketing.

Lease expiry profile Weighted average expiry 7.7 years

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Expressed as a percentage of rent roll * Excludes five per cent in respect of leases which have expired and are mainly holding over and in negotiations

Rent review profile

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Expressed as a percentage of rent roll * 2015 includes rent reviews prior to 31 December 2015 yet to be settled

Retailer affordability

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Estimated occupancy cost trends1 2 3

30 June 2016

31 December 2015

30 June 2015

Excluding anchor stores 11.6% 11.5% 11.6%

Excluding anchors and MSUs4 12.5% 12.5% 12.3%

Current rent per square foot5 6

30 June 2016

31 December 2015

30 June 2015

Anchors £12 £12 £11MSUs £30 £30 £31Standard units £48 £48 £52

Note: December 2015 included intu Merry Hill and intu Derby for the first time

1. Compares rent to retailers turnover2. Actual sales of around two-thirds of sales, estimates of sales for one-third. Extent of data varies between centres

4. MSU: major space user >10,000 sq ft.5. Based on net internal area. Generally 10 per cent to 40 per cent higher than retail area6. Anchors and MSUs are generally let on on a rent per square foot basis; standard shop unit rents are generally determined on a zoned basis

12 months ended

As at

3. Not comparable with continental Europe and US shopping centre statistics, differences include measurement of retail area (see 5) and treatment of property taxes

Aggregate ERV

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* Total reversion of +8% includes one per cent realisable on lease expiry with over 10 years remaining

** ‘Topped up’ net rent comprises passing rent of £436m, plus other net income of £39m (net car park income, turnover rent and commercialisation income ) and contracted rent subject to rent free periods of £20m, less non-recoverable costs and running voids of £21m

Top 20 tenants

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Rank Tenant groupNumber of

units% secured

rent Note

1 Arcadia 39 4% Includes Topshop, Topman, Burton, Dorothy Perkins, Miss Selfridge, Wallis and Evans

2 Next 20 3%

3 Boots 23 3%

4 Debenhams 11 3%

5 Dixons Carphone 33 2%

6 H&M 18 2%

7 New Look 19 2%

8 River Island 17 2%

9 Primark 9 2%

10 A S Watson 43 2% Superdrug and The Perfume Shop

11 JD Sports 21 2% Includes Blacks and Size?

12 Signet Group 39 2% H Samuel and Ernest Jones

13 Inditex 11 1%

14 Sportsdirect 20 1% Includes USC and Van Mildert

15 Marks & Spencer 18 1%

16 Monsoon 23 1%

17 Superdry 16 1%

18 House of Fraser 4 1%

19 Clarks 14 1%

20 Goldsmiths 21 1%

419 37%

Optimising asset performance Top 40 tenants covenant strength

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Arcadia Next Boots Debenhams H&M New Look Primark River Island Signet M&S Dixon’s Carphone JD

Monsoon Superdry House of Fraser Inditex

Superdrug Sportsdirect.com Clarks Aurum EE Apple Clintons HMV W H Smith Vodafone Schuh Argos O2 Sainsbury’s Hollister

John Lewis Waterstone’s Vision Express Disney

3 Store Game Selfridges Holland & Barrett

Based on Experian Delphi bands at 12 July 2016. Top 40 tenants represent 51% of intu’s rent roll

Corporate responsibility highlights

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39% reduction in CO2 emissions since 2011

99.7% waste diverted from landfill across all directly managed centres

2,000 people directly reached by our community projects

121,000 jobs directly supported by intu and its retailers

EPRA non-GAAP measures Net asset value (diluted, adjusted)

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Net assets£m

NAV per sharepence

Reported net assets, basic net assets per share 4,869 366

Dilutive convertible bonds and share options/awards 11 -

Diluted NAV 4,880 364

Adjustments:

Financial instrument-related valuation adjustments 467 35

Share of joint ventures' adjusting items 10 1

Non-controlling interest 71 5

NAV (diluted, adjusted) 5,428 405

EPRA NNNAV (diluted, adjusted) 4,593 343

The EPRA vacancy rate at 30 June 2016 was 2% (31 December 2015: 3%)

EPRA cost ratio £mEPRA costs - including direct vacancy costs 42EPRA costs - excluding direct vacancy costs 34Gross rental income 243EPRA cost ratio - including direct vacancy costs 17%EPRA cost ratio - excluding direct vacancy costs 14%

EPRA NNNAV is arrived at by adjusting NAV for the fair value of financial instruments (-35p), the difference between the fair value and book value of debt (-28p), share of joint ventures' adjusting items (-1p) and the non-controlling interest in respect of financial instruments (+2p).

EPRA costs include all operating costs of the business included in underlying earnings. Gross rental income is stated after deducting head rent and service charge costs recorded directly through rents.

Proportionally consolidated income statement and balance sheet

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Summarised income statement (£m)

Group as reportedShare of joint

ventures

Group including share of joint

ventures

Attributable to non-controlling

interests

Group proportionally

consolidated

Net rental income 194 25 219 (9) 210

Other income - - - - -

Administration expenses (18) - (18) 1 (17)

Net finance costs (underlying) (91) (13) (104) 10 (94)

Other underlying items 15 (12) 3 - 3

Underlying earnings 100 - 100 2 102

Valuation and exceptional items 21 9 30 1 31

Other non-underlying items (73) (9) (82) - (82)

Net profit for the period 48 - 48 3 51

Summarised balance sheet (£m)

Group as reportedShare of joint

ventures

Group including share of joint

ventures

Attributable to non-controlling

interests

Group proportionally

consolidated

Investment property 9,403 719 10,122 (375) 9,747

Net external debt (4,372) (135) (4,507) 165 (4,342)

Derivative financial instruments (467) (5) (472) - (472)

Other net assets 380 (579) (199) 135 (64)

Net assets 4,944 - 4,944 (75) 4,869

Top properties

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