Newriver Reit Plc · LSE:NRR
Newriver Reit — H1 2018 Earnings Presentation
50 slides from Newriver Reit's earnings presentation, Nov 22, 2017
Slide 1: Half Year Results Presentation, 6 months to 30 September 2017
NEW RIV=R CONVENIENCE-LED COMMUNITY-FOCUSED Half Year Results Presentation 6 months to 30 September 2017 22 November 2017 Allan Lockhart — Property Director Mark Davies — Chief Financial Officer www.nrr.co.uk
Slide 2: Highlights
NEW RIV=R HIGHLIGHTS Increased scale through significantly over-subscribed £225 million equity raise * New shares issued at a 14.7% premium to March 2017 EPRA NAV * Immediately deployed £60 million acquiring BRAVO JV’s stake in 4 convenience-led shopping centres Move to unsecured funding providing t
Slide 3: Our Marketplace: Occupational Market
NEW RIV=R NRR retail portfolio income profile f 60% Convenience > © and § Community & oO G & eo cow @ Food & Grocery 19% Home, Electrical and DIY 13% @ Value Clothing 16% Mid-market Fashion 7% @ Discounters 13% | @ Books & Stationery 6% @ Health & Beauty 10% Service Related 6% @ Banks 1% Jewellery 2
Slide 4: Our Marketplace: Investment Market
NEW OUR MARKETPLACE RIV=R INVESTMENT MARKET MSCLIPD shows a total return of 5.0% for all property during the period; including 2.6% capital growth * Since June 2017: Acquired £0.1bn of shopping centres * Submitted bids on £0.6bn of assets Viewed/viewing a further £2.0bn of assets Blended yield requi
Slide 5: Funds From Operations
• • • • • • • • *FFO = Recurring Profits +/(-) Profit/(Loss) on Disposal of Assets +/(-) Exceptional/non-cash items 5
Slide 6: Net Property Income (£m)
R NET PROPERTY INCOME (£M) PUBS & RETAIL C-STORES 22 (1.1) (0.3) i (0.4) 2.0 J be —s (0.1) fs L4L ex BHS +0.9% BHS impact (1.3)% Retail L4L (0.4)% HY17 Net Acquisitions Disposals Held for L4_ BRAVO JV Pubs Other HY18 Net property income development Promote property income 6
Slide 7: Pubs - Net Property Income (£m)
PUBS - NET PROPERTY INCOME (£M) TRENT TRANSFER PROGRAMME C-STORE PROGRAMME £(0.5)m £+0.1m (0.2) (0.3) De a (2.0) 1.5 (0.2) 0.3 (0.2) a P| a HY17 Net Net disposals 22 pubs re-let | Reduction in Increase in C-store Rent from new] Mantle pubs HY18 Net property income on 15 year RPI | income due to inco
Slide 8: Dividend Track Record: +5% Growth in HY18
NEW DIVIDEND TRACK RECORD: RIV=R +5% GROWTH IN HY18 23.0 3.0 Special 18.5 17.0 16.0 16.0 15.0 Ordinary Dividend +5% DPS (pence) FY13 FY14 FY15 FY16 FY17 HY18 Total dividend cover 115% 100% 102% 98% 16% 144% 108% HY 95% *Q3 dividend announced of 5.25 pence per share. Ex-dividend date 28 December 2017
Slide 9: Future Rent Roll (£m)
IV=R FUTURE RENT ROLL (£M) 4+£21m (+21%) ae 15.0 to Le HY18 Annualised rent Pub Portfolio £200m future Canvey Island Burgess Hill Future Annualised rent roll (C-stores) acquisitions roll
Slide 10: Investment properties increased to £1.23bn with firepower to increase to £1.5bn
Investment properties increased to £1.23bn with firepower to increase to £1.5bn EPRA NAV increased to 297p from 292p in March 2017; ° Would have been 300p excluding Special Dividend of 3p per share e Valuation surplus +0.2% LTV of 25%, in line with guidance of <40% and expected to increase conservat
Slide 11: EPRA NAV per Share (pence)
| R EPRA NAV PER SHARE (PENCE) 10.0 (10.25) 1.1 7.9 (8) 0.4 EE (3.0) — as Cash break costs (1.0) Non-cash unamortised fees (0.8) Refinance costs (1.8) EPRA NAV Funds From Ordinary Special Property £225m equity Gain on Unsecured Other EPRA NAV Operations dividends paid _ dividend paid Revaluation iss
Slide 12: Balance Sheet Refinancing
BALANCE SHEET REFINANCING ° Atthe full year, announced intention to refinance the balance sheet on an unsecured basis * Strong support from relationship banks (HSBC, Barclays, Santander, RBS) ° Announced refinancing of £430 million of new unsecured debt facilities in August 2017 ° Benefits include a
Slide 13: New Debt Structure — Move to Unsecured
NEW DEBT STRUCTURE — MOVE TO UNSECURED RIV=R REFINANCING Unsecured Secured Total Facilities Facilities Facilities Maturity £m £m £m Term loan LIBOR+185 bps 165 165 165 2022* Revolving Credit Facility LIBOR+185 bps 215 215 - 2022* Short term loan LIBOR+185 bps 50 50 50 2019 HSBC (Swallowtail portfoli
Slide 14: Financial Policies and Guidelines
N R EW IVER Key financial policies have been in place for some time LTV guidance <40%, currently 25% Now include Net debt:EBITDA as an additional measure of leverage High level of interest cover currently at 4.6x Expect dividend to be fully covered once equity proceeds are invested Now introducing a
Slide 15: Portfolio valuation and retail occupancy track record
NEW RIV=R 96% 96% gy, 95% 96% 96% 97% FY11 FY12 FY13 FY14 FY15 FY16 FY17 HY18 Retail occupancy track record: above 94% since IPO res cst0 67% @ Shopping centres 11% @ Retail warehouses 2% High street (Big Boxes) 6% @ Retail development 14% @ Pubs & C-stores Based on contracted rent: Primark #1 retai
Slide 16: Resilient Performance from Balanced Portfolio
NEW RESILIENT PERFORMANCE FROM RIV=R BALANCED PORTFOLIO As at 30 September 2017 Valuation Weighting Valuation Topped-Up NEY L4L ERV surplus/ NIY Movement (deficit) % % % Shopping Centres 824 67 (0.1) 6.8 7.3 (0.8) Retail Warehouses 139 "1 2.8 6.3 7A 1.5 High Street (Big Boxes) 28 2 (1.8) 8.1 74 (3.7
Slide 17: Acquired shopping centres: Abbey Centre and The Avenue
Abbey Centre, Belfast: Dunnes extension opened August 2017 Gross asset value (share acquired) Net equivalent yield Net operating income (share acquired) Occupancy Weighted average lease length Average rent Key anchors ‘Including Primark deals signed in August 2017 (to open 2018) £41.0m 7.6% £2.7m* 9
Slide 18: Active asset management: former BHS units
NEW RIV=R Abbey Centre, Belfast Priory Meadow, Hastings Agreed new 15 year lease on 40k sq ft former BHS unit Agreed a new 20 year lease on 40k sq ft former BHS unit Primark were significantly overtrading from existing 19k sq ft Primark new entrant to Hastings; NRR proactively approached Former Prim
Slide 19: Active Asset Management: Pub & C-store Portfolio
NEW ACTIVE ASSET MANAGEMENT: RIV=R PUB & C-STORE PORTFOLIO * Pub & estore portfolio accounts for 14% of total portfolio * 336 pubs in total at period end; 187 in the ‘Trent’ portfolio, 149 in the ‘Mantle’ portfolio * Experienced in-house pub team of 6 responsible for running the portfolio, alongside
Slide 20: Profitable Capital Recycling
NEW ~ RIV=R PROFITABLE CAPITAL RECYCLING Disposal March 2017 Vs Unlevered price Valuation Valuation IRR £m £m Clough Road Retail Park Retail Warehouse 11.2 10.0 12% 1.1 1% 14% Primark, Warrington High Street (Big Box) 8.0 75 7% 78 3% 1% 49/51 Northumberland Street, Ligh Street (Big Box) 69 5.5 25% 6
Slide 21: Risk-Controlled Development Pipeline
RISK-CONTROLLED DEVELOPMENT PIPELINE Shopping Retail Residential Total Total vs Retail& Residential Centre Warehouse March Leisure Pre-sold 2017 Pre-let (000) (000) (000) (000) (000) (000) sq ft sq ft sq ft sq ft sq ft sq ft Gompleted in period/ 15.0 - - 34.7 - 497 (53.4) 100% n/a Inder construction
Slide 22: Risk-Controlled Development Pipeline: Retail Portfolio Progress
NEW RISK-CONTROLLED DEVELOPMENT PIPELINE: RIV=R RETAIL PORTFOLIO - SIGNIFICANT PROGRESS MADE Canvey Island — 62,000 sq ft retail park development * 75% pre-let from 52% in March 2017 * Secured further pre-lets with M&S Foodhall and Costa in the period * Preferred contractor appointed, on-site in ear
Slide 23: C-store and residential developments
NEW RIV=R C-Store developments Agreement to deliver up to 40 c-stores to Co-op Further 3 handed over in period; 14 handed over to date, 6 currently on-site Receive premium payments from the Co-op on delivery of 15'" c-store, expected in early 2018 Receive £750k on delivery of 15'" c-store, and betwe
Slide 24: Looking Ahead
NEW R IV=R LOOKING AHEAD Well placed in the most resilient segment of a dynamic market Continued focus on distributing growing and sustainable cash returns Actions in the period have created a platform for future growth Strong balance sheet metrics 24
Slide 25: Appendix
Appendix
Slide 26: Convenience & community focus: proven business model
Convenience & community focus Disciplined stock selection High yield, low risk assets Sustainable income, affordable rents Active asset management Risk-controlled development Profitable capital recycling Benefits of scale Profitable capital recycling PROVEN BUSINESS MODEL Disciplined stock selection
Slide 27: Experienced Management Team
David Lockhart Chief Executive David is a Chartered Accountant and Solicitor with over 35 years’ experience in UK commercial property Founded Halladale in 1991 and sold in 2007 Co-founded NewRiver in 2009 Mark Davies Chief Financial Officer Mark is a Chartered Accountant who joined the Company at it
Slide 28: Portfolio property list
@ 33 Shopping ReneS 1. Leith, Edinburgh }2. Hull 2. Paisley 13. Wakefield 3. Newton Mearns 14. Huddersfield 4. Kilmarnock 15. Widnes 5. North Shields. 16. Skegness 6. Wallsend 17. Market Deeping 7. Newtownabbey, Belfast 18. Wisbech 8. Middlesbrough 19. Erdington 9. Darlington 20. Carmarthen 10. Brid
Slide 29: Top Assets by Value
NEW ~ RIV=R TOP 10 ASSETS BY VALUE Floor area Gross rent Occupancy Key occupiers ‘000 Sq ft The Broadway Shopping Centre & Broadway Square Retail Park, 525,000 stam 100% M&S, Sainsburys, Wilko, TK Bexleyheath Maxx The Abbey Centre, Newtownabbey 320,000 £5.8m* 98%" Numark punnes Stores, Next, Hillstr
Slide 30: Reconciliation of IFRS Profit After Taxation to FFO
IV=R RECONCILIATION OF IFRS PROFIT AFTER TAXATION TO FFO 30 September 30 September 2017 2016 £7000 £7000 IFRS profit for the period after taxation 29,257 6,498 Adjustments: Revaluation of investment properties (2,215) 8,177 Revaluation of joint ventures’ investment properties 274 3,204 Revaluation o
Slide 31: Performance Track Record
IV=R PERFORMANCE TRACK RECORD HY18. FY17 HY17 FY16 FY15 FY14 FY13 Annualised rent roll £100.0m £96.5m £97.1m £85.1m £56.2m £31.2m £19.2m Admin cost ratio 14% 15% 14% 19% 23% 22% 24% Funds From Operations (‘FFO’) £26.5m £58.2m £24.5m £47.1m £20.9m £9.5m £5.2m FFO per share 10.0p 24.9p 10.5p 26.6p 19.
Slide 32: Adjusted Funds From Operations (AFFO)
IV=R ADJUSTED FUNDS FROM OPERATIONS (AFFO) es ee ee =) £m £m £m Gross property income (GPI) 49.9 45.6 35.7 FFO before void costs for repairs 26.7 24.6 19.8 Net contribution to R&M through service charge attributable to vacant units (A) (0.2) (0.1) (0.1) Funds from operations (FFO) 26.5 24.5 19.7 Ess
Slide 33: Net Rental Income
NEW RIV=R NET RENTAL INCOME Accounting basis £m hs to 30 September 2017 Annualised as at 30 September 2017 JVs & Funds Total Group JVs & Funds Total Shopping Centres 19.9 44 24.0 471 0.4 47.5 Retail Warehouses 47 - 47 9.4 - 9.4 High Street (Big Boxes) 15 0.1 16 2.8 0.2 3.0 Pubs & Convenience Stores
Slide 34: Debt Summary
R DEBT SUMMARY Financial Policies Proportionally consolidated 30 September 2017 31 March 2017 Net debt £304.0m £417.9m Principal value of gross debt £380.9m £470.9m Weighted average cost of drawn debt 3.6%! 3.5% Weighted average debt maturity of drawn debt 4.0 yrs? 2.5 yrs Loan to value Guidance <40
Slide 35: Debt maturity profile
250 200 150 100 50 0 2018 2019 2020 2021 2022 2023 2024 2025 35
Slide 36: Loan to Value
IV=R LOAN TO VALUE 30 September 2017 31 March 2017 £000 £000 Borrowings 371,728 403,079 Cash and cash equivalents (71,217) (45,956) Net debt 300,511 357,123 Equity attributable to equity holders of the parent 906,215 684,538 Net debt to equity ratio (‘Balance sheet gearing’) 33% 52% Share of joint v
Slide 37: Number of Shares
NEW RIV=R NUMBER OF SHARES Number of shares (m) As at 30 September 2017. —— As at 31 March 2017 Weighted average — basic! 266.5 233.7 Weighted average — diluted? 268.6 235.8 Period end — basic? 303.0 234.1 Period end — diluted* 305.7 237.4 (1) For the purposes of Basic EPS, FFO and EPRA (2) For the
Slide 38: Key facts: retail warehouse disposal
NEW RIV=R Key facts Acquired from an institution in: 2014 for £ Go Outdoors ¥ 29k sq ft Total size: 97,300 sq ft 71,100 sq ft of leasing 20k sqft y. Total capex spend: £1.3m Valuation: £11.1m at March 2017 Currys PC World right sized to 20k sq ft Sold for: £11.2m in July 2017 Total return: 25% New r
Slide 39: Risk-Controlled Development Pipeline: Summary
Retail portfolio Completed in period/ Shopping Centre (k) sq ft RISK-CONTROLLED DEVELOPMENT PIPELINE: Retail Warehouse (k) sq ft (k) sq ft Residential SUMMARY Retail & Residential Leisure Pre-sold Pre-let Under construction 15.0 7 7 7 eo 100% na Planning granted 286.8 92.4 87.7 461.9 928.8 5% 35% In
Slide 40: Development Pipeline: Completed, Planning Granted, In Planning
NEW RISK-CONTROLLED DEVELOPMENT PIPELINE: RIV=R COMPLETED & U/C, PLANNING GRANTED, IN PLANNING Shopping Retail Warehouse Residential Retail & Residential Centre Leisure Pre-sold Pre-let (k) sq ft (k) sq ft (k) sq ft Retail portfolio The Abbey Centre - Dunnes 15.0 15.0 100% n/a ae 160 oo ns Canvey Is
Slide 41: Estimated Development Cost Phasing
NEW RIV=R Key projects Pre-let & in solicitors hands" £m Retail portfolio RISK-CONTROLLED DEVELOPMENT PIPELINE: ESTIMATED DEVELOPMENT COST PHASING Current market value + TDC to come Total development cost to come (TDC)? £m £m Burgess Hill redevelopment 261 3.6 14 55.7 74.0 Canvey Island retail park
Slide 42: Development cost phasing by project
Retail portfolio Burgess Hill redevelopment 55.7 3.7 10.6 32.0 1.1 Canvey Island retail park 8.6 0.6 8.0 - - Cowley, Oxford 60.7 0.3 76 34.0 18.8 Contracted residential receipts! (34.0) C-stores (Under construction) 3.5 3.5 - - - C-stores (Planning granted) 6.6 - 6.6 - - C-stores (In planning) 1.9 -
Slide 43: Canvey Island site
Acquired site in July 2015 as part of Ramsay portfolio Value of £1.0m attributed to brownfield site at acquisition, next to existing Morrisons Planning consent received in November 2016 for a 62,000 sq ft retail park Scheme is 75% pre-let and preferred contractor appointed
Slide 44: Risk-Controlled Development: Burgess Hill
NEW RIV=R On-site progress to date * Demolition works underway at Leylands Road site to relocate Lidl * Works underway at former Store 21 unit to relocate Iceland Planned next steps * In 2018, demolition works will commence at the shopping centre on the former Iceland unit and the former library (wh
Slide 45: Planning Granted — Burgess Hill
NEW RIV=R Overview Acquired The Martlets Shopping Centre (123k sq ft) in 2010 for £12m, 8.5% NIY Obtained full detailed consent for a 465k sq ft regeneration in March 2016 including: * 10screen cinema * 63 bed hotel * 142 residential units; nil affordable housing * Improved retail & leisure offer *
Slide 46: Templars Square, Cowley, Oxford
i i! i t i il f F| 2=mmce ceo =m Acquired Templars Square Shopping Centre for £24.6m in December 2012 Planning consent received recently for a 236,000 sq ft development Retail & leisure element 82% pre-let 226 residential units 71 bed hotel, Agreement for Lease signed with Travelodge 2 new restauran
Slide 47: UK Retail & Leisure: Net Store Openings & Closures
NEW RIV=R Net Openings & Closures of Retail and Leisure units in UK by location type, 2012-June 2017 (c.500k units tracked) 1,500 1,000 500 -500 Y -1,000 1,500 -2,000 -2,500 -3,000 2012 2013 2014 2015, 2016 H1 2017 Shopping Centres —==Retail parks ——High Street. ——Standalone Source: LDC Retail and L
Slide 48: Changing Demographics: Older Shoppers Expected to Drive In-Store Spend
NEW CHANGING DEMOGRAPHICS: RIV=R OLDER SHOPPERS EXPECTED TO DRIVE IN-STORE SPEND The 55+ age-group is set to account for 57.5% of all store and click & collect sales growth over the next ten years Spend growth by age 2016-2026 ge male female +£5bn |#86ibR 4813bn —4£3bn, +£15.1bn. 4£22.4bn ry A A 4 A
Slide 49: Disclaimer
NEW RIV=R DISCLAIMER The information in this presentation may include forward-looking statements, which are based on current expectations and projections about future events. These forward-looking statements reflect the directors’ beliefs and expectations and are subject to risks, uncertainties and
Slide 50: NewRiver REIT plc contact details
NewRiver REIT pic 16 New Burlington Place London WIS 2XH nrr.co.uk