Supermarket Income Reit Plc · LSE:SUPR
Supermarket Income Reit — H1 FY2019 Earnings Presentation
26 slides from Supermarket Income Reit's earnings presentation, February 2019
Slide 1: Half Year Results Presentation
HALF YEAR RESULTS PRESENTATION FOR THE SIX MONTH PERIOD FROM 1 JULY 2018 TO 31 DECEMBER 2018
Slide 2: Highlights for the 6 month Period
Highlights for the 6 month Period £321 million portfolio valuation • + 1.3% like-for-like valuation growth over 6 months (1) 2.5 pence EPRA Earnings Per Share • + 4.7% valuation growth over aggregate purchase price (2) • + 3.2% average increase on two rent reviews in the Period 2.8 pence Dividend de
Slide 3: Our market
Our market • Investment strategy • Omnichannel focused • Online fulfilment in the UK • Supermarket performance • Total shareholder return • Supply and demand 3
Slide 4: Highly focused investment strategy
Highly focused investment strategy Index linked income from omnichannel grocery stores Supermarkets fulfilling Top trading Large flexible online stores sites Future proof stores operating as physical Strong trading track record Low site cover providing asset supermarkets and online fulfilment centre
Slide 5: 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 6: 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 7: Supermarket yields continue to offer value
Supermarket yields continue to offer value MSCI Yields 2004 -2018 (1) 9.0 MSCI Yields 2018 Supermarkets 5.2% Distribution warehouses 4.6% UK Commercial property 4.6% 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 Co
Slide 8: Supermarket sector news
Supermarket sector news Oct 2018 8
Slide 9: Performance
Performance • Share price performance • Portfolio summary • Rent and valuation increase • EPRA NAV • Rental uplifts • Asset management update Image – Bristol Limes Trees store 9
Slide 10: Stable performance in a volatile market
Stable performance in a volatile market Total shareholder return Jan 2018 – Dec 2018 (1) 110.0 105.0 Index Jan 2018 = 100 100.0 95.0 90.0 85.0 Jan 2018 Feb 2018 Sep 2018 Dec 2018 Nov 2018 May 2018 Aug 2018 Mar 2018 Jul 2018 Jun 2018 Oct 2018 Apr 2018 Supermarket Income REIT PLC FTSE 250 REIT Composi
Slide 11: Our Portfolio
Our Portfolio Portfolio Summary as at 31 December 2018 As at 31 December 2018 Valuation £321 million Valuation yield 4.9% WAULT 19 Yrs Rent reviews RPI linked Off market transactions 100% Valuation increase over acquisition 4.7% price (1) Average rent increase for the period 3.2% Portfolio tenant mi
Slide 12: Rent reviews and valuation increase
Rent reviews and valuation increase Rent reviews for the six month period (£ millions) (1) Valuation increase components (£ millions) 1.2% like for like increase in passing rent +1.3% like for like valuation increase (+3.2% average per store) (+4.7% increase on aggerate acquisition price ) 16.5 0.08
Slide 13: Movement in EPRA NAV per share
Movement in EPRA NAV per share Components of EPRA NAV per share for the six month period ending 31 December 2018 100 3.6 (4.1 ) 2.2 95 96 (1.7 ) 96 90 85 80 EPRA NAV 30 June 2018 Acquisition costs Property valuation EPRA Earnings Dividend paid EPRA NAV 31 December 2018 13
Slide 14: Contracted RPI uplifts drive rental growth
Contracted RPI uplifts drive rental growth Estimated future annualised rent receipts and illustrative future yield on purchase price (1) 22 6.0% 21 5.7% 5.5% 5.4% 20 5.3% 5.1% 19.4 19 4.9% 5.0% 18.9 (1) Yield on Purchase Price % 18 18.4 Annualised Rent £ms 17.9 17 17.4 4.0% 16.5 16 15 3.0% 14 13 12
Slide 15: Advanced asset management
Advanced asset management Quick service restaurant use Comprehensive plans developed across all sites • Repurposing of quiet carpark areas into leisure and quick service restaurant use • Installation of decarbonised on site electricity generating plant • Development to be undertaken on a pre let bas
Slide 16: Financial results
Financial results • Income statement • Statement of financial position • Debt financing overview • EPRA ratios
Slide 17: Income statement
Income statement 31 Dec 2018 31 Dec 2017 For the 6 month period ending £, Millions £, Millions Rental income 8.3 3.2 Administrative and other expenses (1.5) (1.0) Finance costs (2.1) (0.6) EPRA earnings 4.7 1.3 Dividend paid 5.1 1.4 EPRA dividend cover ratio 92% 93% Adjusted EPRA cost ratio (1) 17%
Slide 18: Statement of financial position
Statement of financial position For the period ending 31 Dec 2018 30 Jun 2018 £, Millions £, Millions Investment property 320.7 264.9 Cash and cash equivalents 5.9 2.2 Other assets 0.2 1.1 Gross assets 326.7 268.2 Borrowings (143.7) (88.1) Prepaid rents and other liabilities (6.0) (3.4) EPRA net ass
Slide 19: Debt financing overview
Debt financing overview £100m Revolving Credit Facility from HSBC • 3 year term with two one-year extension options 43.0% • 1.60% over 3 month LIBOR Net loan to value ratio as at 31 December 2018 • £93m drawn, £7m undrawn liquidity • £65m hedged with an interest rate cap at LIBOR 1.75% 2.5% Annualis
Slide 20: Financial metrics
Financial metrics As at As at 31 Dec 2018 30 Jun 2018 EPRA NAV Per Share 96 pence 96 pence EPRA Triple Net Asset Value (NNNAV) Per Share 96 pence 96 pence For the period For the period ending 31 Dec 2018 ending 30 Jun 2018 EPRA EPS 2.5 pence 3.8 pence EPRA Net Initial Yield 4.9% 4.9% EPRA Topped Up
Slide 21: Outlook
Outlook • Outlook • Appendices ₋ Portfolio metrics ₋ IGD channel forecasts ₋ World adoption of the UK model of online grocery
Slide 22: Outlook
Outlook The fundamentals of the UK grocery market remain favourable • 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 - Sainsburys & Asda / Tesco & Carrefour / Morrisons & Amazon
Slide 23: Appendix 1: Portfolio Metrics
Appendix 1: Portfolio Metrics Property portfolio details as at 31 Dec 2018 Store Size Store Size Valuation Passing Rent Valuation WAULT Rent Rent Review Site Size Property Tenant GIA 000, NSA 000, (£ m) (£ m) yield (Yrs) Review Floor – Cap (acres) (Sqft) (Sqft) Scunthorpe Tesco 55.6 2.9 5.3% 22 Annu
Slide 24: 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 25: Appendix 3: The world is adopting the current UK model of online grocery
Appendix 3: 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
Slide 26: 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
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