Supermarket Income Reit Plc · LSE:SUPR
Supermarket Income Reit — H1 2021 Earnings Presentation
41 slides from Supermarket Income Reit's earnings presentation, March 2021
Slide 1: Investing in the Future of UK Grocery - Results Presentation
INVESTING IN THE FUTURE OF UK GROCERY RESULTS PRESENTATION FOR THE SIX MONTHS FROM 1 JULY 2020 TO 31 DECEMBER 2020
Slide 2: Agenda and Board of Directors
Agenda Supermarket Income REIT Board of Directors Section Page 1 Market Update 3 2 Financial results 6 Nick Vince Prior Jon Austen Cathryn Vanderspar 3 ESG 15 Hewson Senior Independent Chair of Audit Independent Chairman Director Committee Director 4 Current portfolio 20 Atrato Capital Senior Team I
Slide 3: Supportive grocery market backdrop
Supportive grocery market backdrop Sector continues to be a net beneficiary of changes in consumer habits Increased investment demand for grocery property Rotation of capital continues 3
Slide 4: COVID-19 changes in consumer grocery habits
COVID-19 changes in consumer grocery habits Temporary Accelerated Permanent shifts trends changes 66% 2 days per 30% average 1st time online week grocery shoppers average post increase in who expect to Covid working basket size(1) continue(2) from home(3) 14% Step Calorie shift online change from ea
Slide 5: Period highlights – 6 months to 31 December 2020
Period highlights – 6 months to 31 December 2020 £315m £1bn 100% Deployed Gross Rent assets received 5.5% 104p 2.9p LfL valuation EPRA NTA Dividend paid increase per share per share 5
Slide 6: Financial results
Financial results • Income statement • Annualised rent • Statement of financial position • Movement in EPRA NTA per share • Pro forma income statement • Current bank financing Image: Tesco, Newmarket 6
Slide 7: Income statement
Income statement Six months to Six months to Twelve months 31-Dec-20 31-Dec-19 to 30-Jun-20 £m £m £m Rental income 20.4 11.9 26.4 Net income from joint venture (undistributed) 2.9 0.0 0.5 Administrative & other expenses (4.1) (2.3) (5.2) Finance costs (3.7) (2.5) (4.9) EPRA Earnings 15.5 7.2 16.8 EP
Slide 8: Annualised rental growth via acquisitions
Annualised rental growth via acquisitions Direct supermarket portfolio annualised rental growth 55 50 0.5 0.1 45 4.8 £m 2.7 40 55.0 2.4 0.8 48.0 35 3.0 3.8 30 29.9 25 Annualised IFRS Waitrose Newmarket Telford Bracknell Newcastle Leicester Market Rent reviews Annualised IFRS Annualised IFRS rent 30
Slide 9: Income statement
Income statement Six months to Six months to Twelve months 31-Dec-20 31-Dec-19 to 30-Jun-20 £m £m £m Rental income 20.4 11.9 26.4 Net income from joint venture (undistributed) 2.9 0.0 0.5 Administrative & other expenses (4.1) (2.3) (5.2) Finance costs (3.7) (2.5) (4.9) EPRA Earnings 15.5 7.2 16.8 EP
Slide 10: Adjusted EPRA earnings reconciliation
Adjusted EPRA earnings reconciliation Six months to Twelve months to 31-Dec-20 30-Jun-20 £m £m EPRA earnings 15.5 16.8 Net income from joint venture (undistributed) (2.9) (0.5) Adjusted EPRA earnings 12.6 16.3 Adjusted EPRA EPS 2.2p 4.9p EPRA dividend cover 1.12x 0.84x Adjusted EPRA dividend cover 0
Slide 11: Pro forma income statement
Pro forma income statement(1) Annualised including post balance sheet events £m Rental income 55.0 EPRA earnings 49.0 Dividend cover (EPRA earnings) 1.26x Adjustment: net income from joint venture (undistributed) (11.6) Adjusted EPRA earnings 37.4 Dividend cover (Adjusted EPRA earnings) 0.95x (1) In
Slide 12: Statement of financial position
Statement of financial position As at As at 31-Dec-20 30-Jun-20 £m £m Investment properties 885.3 539.4 Investment in joint venture 61.1 56.1 Cash and cash equivalents 61.9 20.3 Other assets 3.3 1.7 Gross assets 1,011.6 617.5 Borrowings (301.2) (126.8) Prepaid rents and other liabilities (18.6) (13.
Slide 13: Movement in EPRA NTA per share
Movement in EPRA NTA per share Components of EPRA NTA pence per share: June to December 2020 110 0.3 105 (2.4) 2.3 (2.1) 5.1 100 95 104 101 90 85 EPRA NTA 30 June Property and JV Equity issue - Acquisition costs (1) EPRA earnings Dividend paid EPRA NTA 31 2020 revaluation premium to NTA less Decembe
Slide 14: Diversified bank lending group
Diversified bank lending group Lender Facility Interest cost Expiry date Term to expiry £140m 1.73% Aug 2022 18 mths £59m 2.50% July 2023 3 yrs £28m 2.03% Aug 2025 5 yrs £77m 1.90% Sep 2026(1) 6 yrs £160m(2) 2.13% July 2027(1) 7 yrs Dec 2020 £464m £150m(3) 1.55% Jan 2026(1) 5 yrs Mar 2021 £614m £168
Slide 15: Extended maturity, reduced interest cost
Extended maturity, reduced interest cost Six months Pro forma to 31-Dec-20 Drawn debt £446m £304m Total debt facilities(2) £614m £464m Net LTV 42% 27% Weighted average interest cost(1) 1.9% 2.0% Average debt maturity(2) 5 years 4 years (1) Excluding unamortised finance costs. (2) Including uncommitt
Slide 16: Environmental, Social & Corporate Governance
Environmental, Social & Corporate Governance “We want to make a positive contribution to the environment & society while generating a financial return for shareholders” 16
Slide 17: Environmental, Social and Corporate Governance
Environmental, Social and Corporate Governance ENVIRONMENTAL SOCIAL GOVERNANCE(2) Assets with Women in senior 2x EPRA Gold environmental plan (1) 100% leadership roles (2) 40% governance awards Independent Board Covid-19 safe members 100% Our approved Thetford workplace(2) Yes solar array: 370 kw Fe
Slide 18: Ambitious targets create renewable energy opportunity
Ambitious targets create renewable energy opportunity Carbon neutral Net zero Carbon neutral by 2040 by 2035 by 2045 Net zero Carbon neutral by 2035 since 1 January 2019(1) Grocers estimated to consume nearly 5% of electricity in the UK(2) (1) Relates to ALDI UK & Ireland. (2) Atrato Capital estimat
Slide 19: The renewable energy opportunity
The renewable energy opportunity SUPR is uniquely placed to provide our tenants with renewable energy SUPR’s rooftops Grocers’ rooftops Ground mounted Long dated secure income streams CHARACTERISTICS Average >15 yr supply contract with grocers Fixed or inflation linked uplifts High single digit IRR
Slide 20: Portfolio
Portfolio • Valuation growth • Current portfolio • Lease maturity • Rental income • Non-food assets • Portfolio breakdown Image: Morrisons, Telford 20
Slide 21: Components of direct portfolio valuation uplift
Components of direct portfolio valuation uplift Direct portfolio valuation increase for the 6 month period ending 31 December 2020 5.5% LFL growth 30 June 20 LFL Valuation LFL valuation New acquisitions Purchase costs on 31 December 20 Direct portfolio increase from rental increase from yield yield
Slide 22: Current portfolio of 53 stores
Current portfolio of 53 stores(1) 27 directly owned stores 26 indirectly owned stores Portfolio tenant split by valuation Non food, 2.4% 0.5% 9.4% 41.0% 8.7% Sainsburys direct Portfolio value Sainsbury’s Reversion Portfolio= 9.7% 37.0% Net portfolio valuation £1.1bn Map key Tesco Sainsbury’s Morriso
Slide 23: How we think about our non-food assets
How we think about our non-food assets Of our 53 supermarket sites, 5 have non-food units Store redevelopment Site repurposing Site control Potential grocery Potential QSR Enabling store redevelopment Repurposing to enhance the Control of site to support future and regear onsite offer store / GOL de
Slide 24: SUPR portfolio breakdown
SUPR portfolio breakdown(1) Directly owned Sainsbury’s supermarkets Reversion Non-food Total portfolio Portfolio Portfolio valuation £978m £119m £27m £1,124m Percentage of overall portfolio valuation 87.0% 10.6% 2.4% 100% Annualised passing rent income £49.2m £13.4m £3.0m £65.6m Percentage of overal
Slide 25: Direct portfolio supermarket lease maturity by value
Direct portfolio supermarket lease maturity by value Supermarket direct portfolio valuation by lease maturity (including post balance sheet events) 600 500 400 300 £m 517 200 100 167 180 114 0 1-5 Yrs 5-10 Yrs 10-15 Yrs 15-20 Yrs 20-25 Yrs (1) Includes post balance sheet acquisitions at cost 25
Slide 26: 86% of rent is inflation linked
86% of rent is inflation linked(1) Rent review basis for directly owned portfolio including post balance sheet events 3% 12% 86% 7% 79% RPI CPIH Open Market Value Fixed (1) Weighted by passing rental income 26
Slide 27: Market Outlook
Market Outlook • Conclusion and Q&A Image Sainsbury’s, Hessle 27
Slide 28: The outlook for UK grocery
The outlook for UK grocery Positive tailwinds continue for sector Last 12 months → significant strengthening of our tenants’ balance sheets The 'new normal' bodes well for grocery The 'future model of grocery' has arrived and it's omnichannel 28
Slide 29: Long inflation linked income supporting daily life
Supporting daily life Long inflation linked Real asset backing: through mission critical income large flexible sites last mile function 29
Slide 30: Appendix 1: Financial
Appendix 1: Financial • EPRA metrics • SRP – balance sheet • SRP – income statement • Pro forma statement of financial position 30
Slide 31: Appendix 1: EPRA metrics
Appendix 1: EPRA metrics As at As at 31-Dec 20 30-Jun-20 EPRA NTA per share 104 pence 101 pence EPRA NRV per share 113 pence 109 pence EPRA NDV per share 105 pence 102 pence For the period For the period ending ending 31-Dec-20 30-Jun-20 EPRA EPS 2.8 pence 5.0 pence EPRA NIY 4.7% 5.0% EPRA cost rati
Slide 32: Appendix 1: Sainsbury's Reversion Portfolio – Balance sheet
Appendix 1: Sainsbury’s Reversion Portfolio – Balance sheet As at As at 31-Dec-20 30-Jun-20 £m £m Portfolio valuation (1) 916.5 900.7 Rent receivable 34.4 29.3 Bonds notional value (42.7% LTV) (4) (390.9) (405.3) Interest accruals & other liabilities(2) (79.4) (80.5) Book value 481.0 444.3 SUPR shar
Slide 33: Appendix 1: Sainsbury's Reversion Portfolio Income statement
Appendix 1: Sainsbury’s Reversion Portfolio Income statement Period to 12 months 31-Dec-20 Pro forma (1) £m £m Rental income 3.7 14.8 Expenses (0.1) (0.4) Finance cost (0.5) (2.0) Taxation (0.2) (0.8) Joint venture earnings (undistributed) 2.9 11.6 Change in fair value of investment properties 2.0 -
Slide 34: Appendix 1: Pro forma statement of financial position
Appendix 1: Pro forma statement of financial position Pro Forma 31-Dec-20 Investment portfolio (including net investment in joint venture) £1,127m EPRA NTA £687m Net loan to value(1) 42% EPRA NTA per share 103 pence Proportionate consolidation of Sainsbury’s Reversion Portfolio Investment portfolio
Slide 35: Appendix 2: General
Appendix 2: General • Key Terms • Share price performance • Combined portfolio details Image: Sainsbury’s Preston 35 35
Slide 36: Appendix 2: SUPR key terms
Appendix 2: SUPR key terms • UK listed REIT The Company • London Stock Exchange Main Market, Specialist Fund Segment Gearing • Targeted average leverage of 30-40% through the cycle IRR • Target IRR of 7 to 10% (1) Governance • An independent board of directors; compliant with the AIC Corporate Gover
Slide 37: Appendix 2: Share price performance
Appendix 2: Share price performance Relative share price performance since IPO (£p)(1) Trading volume – 4 wk rolling daily average since IPO (£m)(2) 140 2.5 130 2.3 120 2.0 110 1.8 100 1.5 90 1.3 80 1.0 70 0.8 60 0.5 50 0.3 40 0.0 Feb-21 Jul-19 Feb-21 May-20 Jul-17 Jul-18 Jul-20 May-18 May-19 Nov-17
Slide 38: Appendix 2: Portfolio as at 31 December 2020
Appendix 2: Portfolio as at 31 December 2020 23 directly owned stores(1) 26 indirectly owned stores (1) Portfolio tenant split by valuation (2) Non food 0.6% 0.5% 9.0% 7.9% Sainsburys direct Portfolio value Sainsbury’s Reversion Portfolio= 5.4% 38.0% 44.0% Net portfolio valuation £937m (2) Map key T
Slide 39: Appendix 2: Current portfolio valuation
Appendix 2: Current portfolio valuation(1) Portfolio valuation: £1.1bn Portfolio valuation: £1.2bn (including JV net asset value) (including JV gross asset value (2)) Non-food Non-food 2.4% 2.2% 0.5% 0.4% 9.4% 8.5% 41.0% 7.8% 47.9% 8.7% Sainsbury’s Sainsbury’s Sainsbury’s direct portfolio direct por
Slide 40: Appendix 2: Current portfolio rent roll
Appendix 2: Current portfolio rent roll(1) Portfolio passing rent roll: £52.2m Portfolio passing rent roll: £65.6m (excluding JV rental income) (including JV gross rental income) Non-food Non-food 5.7% 4.5% 0.5% 0.4% 7.3% 9.2% 7.0% 32.8% 46.6% Sainsbury’s Sainsbury’s direct portfolio 8.8% direct por
Slide 41: Important notice: strictly confidential
THIS PRESENTATION IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED, REDISTRIBUTED, COPIED OR PUBLISHED (IN WHOLE OR IN PART) TO ANY OTHER PERSON FOR ANY PURPOSE. ANY RECIPIENT OF THIS PRESENTATION AGREES TO KEEP PERMANENTLY CONFIDENTIAL ALL
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