Supermarket Income Reit Plc · LSE:SUPR
Supermarket Income Reit — Period from incorpor Earnings Presentation
30 slides from Supermarket Income Reit's earnings presentation, September 2018
Slide 1: Results Presentation
RESULTS PRESENTATION FOR THE PERIOD FROM INCORPORATION ON 1 JUNE 2017 TO 30 JUNE 2018
Slide 2: Agenda
Agenda Section Page Presentation Team Ben Green 1 Highlights for the Period 3 Principal Atrato Capital 2 Our market 4 3 Overview 10 4 Financial results 17 Steve Windsor Principal Atrato Capital 5 Outlook 22 6 Appendices 25 Steven Noble Contact Partner Atrato Capital Supermarket Income REIT plc Offic
Slide 3: Highlights for the Period since IPO
Highlights for the Period since IPO £255 million Invested in the Period since IPO 8% • £100 million equity raised at IPO Total shareholder return for the Period (1) • £85 million from two oversubscribed follow on fundraisings • 32.4% net loan to value ratio as at 30 June 2018 5.5 pence Five omnichan
Slide 4: Our market
Our market • Investment strategy • Omnichannel focused • Online fulfilment in the UK • Supermarket performance • Supply and demand 4
Slide 5: Highly specific investment strategy
Highly specific investment strategy Index linked income from omnichannel focused grocery stores Supermarkets fulfilling Large flexible Top trading online sites stores Future proof stores operating as physical Low site cover providing asset Strong trading track record supermarkets and online fulfilme
Slide 6: Investing in the future model of UK Grocery
Investing in the future model of UK Grocery Since 2000, the major operators have built a network of omnichannel stores combining supermarkets (the most IGD Channel forecasts 2018 -2023 (1) dominant channel) with online (the fastest growing channel) £120 74% of online grocery 113 orders is fulfilled
Slide 7: Online grocery fulfilment in the UK
Online grocery fulfilment in the UK Tesco’s online distribution network (1) Sainsbury’s online distribution network (1) • In-store fulfilment (337) • In-store fulfilment (117) • Online only (6) • Online only (1) • Online only fulfilment centres limited to M25 area where population density justifies
Slide 8: The world is adopting the current UK model of online grocery
The world is adopting the current UK model of online grocery 2007 2012 2011 Amazon launch Fresh, selling Alibaba launches TMALL Walmart commences testing on and delivering grocery through Supermarket selling grocery via its home delivery service, not until its fulfilment centres network of distribut
Slide 9: Supermarket yields offer value
Supermarket yields offer value Supermarket operators performed strongly over the Period, however, supermarket property yields continue to offer value Share price relative performance – Aug 2017 – June 2018 (1) Supermarket property yields 2004 to 2018 (2) 150 % growth above FTSE 9.0 MSCI Yields June
Slide 10: Supply and demand
Supply and demand SUPR is the leading buyer of indexed linked supermarkets Purchaser of supermarkets June 2017 to June 2018 (1) Vendors of supermarkets June 2017 to June 2018 (1) £ Millions £ Millions Supermarket Income REIT 255 British Land 158 Councils (2) 124 Legal & General (inc Cumbernauld and
Slide 11: Portfolio
Portfolio • Investment strategy • Portfolio summary • Rent and valuation increase • EPRA NAV • Contracted RPI uplifts • Asset management update Image – Bristol Limes Trees store 11
Slide 12: Our Portfolio
Our Portfolio Portfolio Summary as at 30 June 2018 Omnichannel focus underpinned by strong covenants Valuation £265 million Valuation yield 4.9% WAULT 19 Yrs Rent reviews Annual RPI Off market transactions 100% Valuation increase over acquisition 4.1% price (1) Average rent increase 3.6% Portfolio t
Slide 13: Rent reviews and valuation increase
Rent reviews and valuation increase Rent reviews for the Period (£ millions) (1) Valuation increase components (£ millions) (2) + 3.6% average rent review + 4.1% valuation increase 275.0 264.9 13.7 3.4 +3.8% 7.0 13.7 110k 260.0 254.5 +3% 110k 13.5 +3.9% 245.0 50k +3.7% 100k 13.4 13.4 230.0 13.2 215.
Slide 14: Movement in EPRA NAV per share
Movement in EPRA NAV per share Components of EPRA NAV per share for the Period 100 +3.8 (3.7 ) 98 (7.6) +5.5 96 95 Pence per share 90 85 80 Net IPO proceeds Acquisition costs Property valuation EPRA Earnings Dividend paid EPRA NAV 30 June 2018 14
Slide 15: Rapid deployment of capital
Rapid deployment of capital Equity invested in 4 wks, fully leveraged in 6 wks Property acquisition profile (£ millions) 5.5p dividend declared in the period 350 May 18: £65m equity raise – Equity invested in 2 wks ave and fully deployed in 5 wks £51.7 300 £53.0 250 Nov 17: £20m equity raise – Equit
Slide 16: Contracted RPI uplifts drive rental growth
Contracted RPI uplifts drive rental growth Estimated future annualised rent receipts and future yield on purchase price (1) 20 5.8% 6% 5.7% 5.5% 5.4% 19.0 4.9% 5.1% 18.5 18 18.0 5% 17.6 Yield on Purchase Price % (1) Annualised Rent £ms 16.7 15 4% 13.7 13 3% 10 2% Jun 2018 Jun 2019 Jun 2020 Jun 2021
Slide 17: Proactive asset management
Proactive asset management Thetford scheme visuals Comprehensive plans developed across all sites • Repurposing of quiet carpark areas into leisure and quick service restaurant use • Installation of decarbonised onsite electricity generating plant • Development to be undertaken on a pre let basis Ad
Slide 18: Financial results
Financial results • Income statement • Statement of financial position • Debt financing overview • EPRA ratios 18
Slide 19: Income statement
Income statement For the period ending 30 June 2018 £, Millions Rental income 8.9 Administrative and other expenses (2.2) Finance costs (1.9) EPRA earnings 4.8 Dividend paid 4.7 Dividend paid cover ratio 102% Adjusted EPRA cost ratio (1) 20% (1) The Group also calculates an Adjusted EPRA Cost Ratio
Slide 20: Statement of financial position
Statement of financial position For the period ending 30 June 2018 £, Millions Investment property 264.9 Cash and cash equivalents 2.2 Other assets 0.1 Gross assets 267.2 Borrowings (88.0) Prepaid rents and other liabilities (2.2) EPRA net assets 176.7 EPRA NAV per share 96 Pence 20
Slide 21: Debt financing overview
Debt financing overview £100m Revolving Credit Facility from HSBC • 3 year term with two one-year extension options • 1.60% over 3 month LIBOR 32.4% • £88m drawn, £12m undrawn liquidity Net loan to value ratio as at 30 June 2017 • £65m hedged with an interest rate cap at LIBOR 1.75% Significant head
Slide 22: EPRA metrics
EPRA metrics As at 30 June 2018 EPRA NAV Per Share 96 pence EPRA Triple Net Asset Value (NNNAV) Per Share 96 pence For the period ending 30 June 2018 EPRA EPS 3.8 pence EPRA Net Initial Yield 4.9% EPRA Topped Up Net Initial Yield 4.9% EPRA Vacancy Rate 0% EPRA Cost Ratio 23% Adjusted EPRA Cost Ratio
Slide 23: Outlook
Outlook • Post balance sheet events • Outlook • Appendices ₋ Portfolio metrics ₋ IGD channel forecasts ₋ Online grocery fulfilment in the UK ₋ Supermarket yields ₋ Supply and demand ₋ World adoption of the UK model of online grocery 23
Slide 24: Post balance sheet events
Post balance sheet events Sheffield store visuals In July 2018, we completed the acquisition of a Morrisons store located on an 8.4-acre site in the historic and prominent Hillsborough Barracks, Sheffield • £51.7 million (excluding acquisition costs) • 4.9% net initial yield • 21 Years unexpired lea
Slide 25: Outlook
Outlook The fundamentals of the UK grocery market remain favorable • According to IGD, total UK grocery spending to increase 15% in the next 5 years - driving operator sales growth • Consolidation and strategic alliances improving margins – Sainsbury’s & Asda / Tesco & Carrefour / Morrisons & Amazon
Slide 26: Appendix 1: Portfolio Metrics
Appendix 1: Portfolio Metrics Property portfolio details as at 30 June 2018 Valuation Passing Rent Valuation WAULT Rent Rent Review Store Size Site Size Property Tenant (£ m) (£ m) yield (Yrs) Review Floor – Cap 000’sqft 000’sqft Scunthorpe Tesco 54.1 2.9 5.3% 22 Annual RPI 0% - 5% 98 350 Cumbernaul
Slide 27: Appendix 2: UK food and grocery sales forecast
Appendix 2: UK food and grocery sales forecast IGD forecasts 2018 -2023 (1) +15% forecast growth 220 218 212 210 206 200 200 195 190 $ Bn's 190 185 180 170 160 2017 2018 2019 2020 2021 2022 2023 Forecast Actual (1) Source IGD 27
Slide 28: Appendix 2: Grocery sales by channel
Appendix 2: Grocery sales by channel IGD Channel forecasts 2018 -2023 (1) £120 113 106 74% of online is fulfilled in supermarkets (2) £100 £80 £ Billions £60 47 40 £40 32 23 £20 17 11 10 10 £0 Supermarkets Convenience Discount Online Other retailers 2018 Value (£bn) 2023 Value (£bn) (1) Source IGD (
Slide 29: Appendix 4: Supermarket yields offer value
Appendix 4: Supermarket yields offer value MSCI Yields 2004 -2018 (1) 9.0 8.0 Net initial yield (%) 7.0 6.0 5.0 4.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Supermarket UK Commercial Property Distribution Warehouses (1) Source MSCI 29
Slide 30: This presentation is 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
Supermarket Income REIT — Period from incorpor Earnings Presentation on 6ix