Real Estate Investors plc · LSE:RLE
Real Estate Investors — H1 2020 Earnings Presentation
24 slides from Real Estate Investors's earnings presentation, September 2020
Slide 1: The UK's Only Midlands Focused REIT
THE UK’S ONLY MIDLANDS FOCUSED REIT Results for the period ended 30 June 2020 Investor and Analyst Presentation THE MIDLANDS INVESTOR REI PLC
Slide 2: Introduction
REAL ESTATE INVESTORS PLC INTRODUCTION Active REI Strong Asset Prudent Attractive Today Platform Management Finance Returns • UK’s only Midlands • Internally managed/ • Value creation • Prudent leverage • Aim to deliver capital focused/ Birmingham proven track through reviews, lease providing certai
Slide 3: Highly Experienced Board & Proven Track Record
HIGHLY EXPERIENCED BOARD & PROVEN TRACK RECORD Non-Executive Executive John Crabtree OBE D.UNIV William Wyatt Peter London Paul Bassi CBE DL D.UNIV DSC Marcus Daly FCA Non-Executive Chairman Non-Executive Director Non-Executive Director Chief Executive Officer Finance Director • Joined REI Board in
Slide 4: Delivering Through Challenging Times
DELIVERING THROUGH CHALLENGING TIMES IN LINE WITH THE COMPANY’S PROGRESSIVE DIVIDEND POLICY SINCE 2012 TOTAL DIVIDENDS PAID TO SHAREHOLDERS = £31.9 MILLION PB & MD join as Company listed NED’s, REI Plc converted on AIM with taking a 29% stake Commencement to a REIT Quarterly Gross assets of £10m £12
Slide 5: The REI Business Model: Active Asset Management
THE REI BUSINESS MODEL ACTIVE ASSET MANAGEMENT Generating value through asset management Buys REI market expertise Sells/holds Institutional sales VALUE ADD 12 - 24 months of Institutional quality assets Offices Asset Management Value & convenience retail Lease renewals HNW/investors/pension funds –
Slide 6: Highlights & Financials
HIGHLIGHTS & FINANCIALS Birmingham Commonwealth Games 2022 Image courtesy of Birmingham City Council REI PLC 5
Slide 7: H1 2020 Operational Highlights
H1 2020 OPERATIONAL HIGHLIGHTS Contracted Rental Income £m • Contracted rental income: £17.0 million p.a. (FY 2019: £17.7 million p.a.) (H1 2019: £17.0 million p.a) 17.7 16.2 17.0 17.0 17.0 14.9 • Strong rent collection for March quarter (March to June – 11.9 adjusted for monthly and deferred agreem
Slide 8: H1 2020 Financial Highlights
H1 2020 FINANCIAL HIGHLIGHTS • Underlying profit before tax* of £4.1 million EPRA EPS (H1 2019: £4.0 million) up 2.4% 4.3 3.9 • Revenue £8.2 million (H1 2019: £8.1 million) up 1.2% 2.8 3.3 0.8 2.20 0.4 0.3 • EPRA EPS 2.20p (H1 2019: 2.15p) up 2.3% FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2
Slide 9: H1 2020 Financials: Growing Earnings & Income
H1 2020 FINANCIALS: GROWING EARNINGS & INCOME • Revenue of £8.2 million – up 1.2% H1 2020 H1 2019 Income Statement £m £m • Underlying profit before tax of £4.1 million – up 2.4%* Revenue 8.2 8.1 • Pre-tax loss of £3.8 million (H1 2019: £1.7 million) after deficit on revaluation of interest rate swap
Slide 10: H1 2020 Financials: Strong Balance Sheet
H1 2020 FINANCIALS: STRONG BALANCE SHEET Gross property assets of Net assets of H1 2020 FY 2019 Balance Sheet £m £m Property 221.8 228.9 £221.8m £118.7m Cash 9.0 10.1 Debt (105.0) (105.2) Other (7.1) (8.4) Net assets 118.7 125.4 EPRA NAV per share of Well capitalised with Adjustments 3.2 2.7 net LTV
Slide 11: Movement in EPRA NAV per Share
MOVEMENT IN EPRA NAV PER SHARE 72 “The overall reduction in valuations was 70 circa 3% and was spread broadly 2.2 (3.8) across the 68 portfolio. The downward 67.4 sentiment was Pence offset by 18 value 66 enhancing lease (1.5) renewals during 0 the period. Void 64 64.3 presents opportunity to re- le
Slide 12: Movement in EPRA Earnings per Share
MOVEMENT IN EPRA EARNINGS PER SHARE 3.0 2.5 0.01 0.25 (0.21) 2.0 2.15 2.20 Pence 1.5 1.0 0.5 0.0 1 Jul 2019 Rental Income Other Expenses & Interest Admin Expenses 30 Jun 2020 Note: Chart based on 12 months of EPRA EPS from 1 Jul 2019 to 30 Jun 2020 REI PLC 11
Slide 13: H1 2020 Financials: Simplified Debt Position
H1 2020 FINANCIALS: SIMPLIFIED DEBT POSITION • Cost of debt of 3.4% at 30 Jun 2020 Debt Structure % Debt Maturity £m (FY 2019: 3.4%) at 30 Jun 2020 at 30 Jun 2020 • Property net LTV 44.0% Floating • 83% of debt is fixed Fixed 2020 3 • Interest cover of 3.2x (FY 2019: 3.3x) 2021 45 • Multi-banked acr
Slide 14: Attractive Spread Between NIY & Cost of Debt
ATTRACTIVE SPREAD BETWEEN NIY & COST OF DEBT 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2014 2015 2016 2017 2018 2019 2020 Cost of Debt NIY Reversionary Yield REI PLC 13
Slide 15: Quarterly Dividend Payments: Continued Despite Pandemic
QUARTERLY DIVIDEND PAYMENTS: CONTINUED DESPITE PANDEMIC AS A RESULT OF COVID19 AND THE UNCERTAINTY OF THE MARKETS IN Increasing Shareholder Distribution Year on Year WHICH WE OPERATE, THE BOARD TOOK THE DECISION TO REDUCE THE QUARTERLY DIVIDEND PAYMENTS WITH A VIEW TO PRESERVING CASH +7% AND RETAI
Slide 16: Rebirth of a Region
REBIRTH OF A REGION Big Wins….. HS2 Confirmed 2021 Coventry City of Culture 2022 Commonwealth Games Cityscape, Birmingham City Centre REI PLC 15
Slide 17: Rent Collection: COVID19-Resilient Through Diversification
RENT COLLECTION COVID19-RESILIENT THROUGH DIVERSIFICATION • Rent collection for the March quarter (March to June - adjusted for monthly and deferred agreements) is 90.68% and improved from 90.16% as reported in our 15 July trading update and 81% March Quarter June Quarter reported in our June tradin
Slide 18: Diverse and Attractive Portfolio
DIVERSE AND ATTRACTIVE PORTFOLIO Rent £ 30 Jun 2020 3.21% Sector % by Income 0.59% 2.55% Office 5,061,985 29.77% 6.33% Essential/key services/food stores etc 4,080,940 24.00% 1.39% 2.54% Government 1,373,057 8.07% 0.31% 29.77% 1.18% 0.06% Traditional Retail 3,332,047 19.59% 0.41% Discount Retail 68,
Slide 19: Top 10 Tenants by Income: No Material Exposure
TOP 10 TENANTS BY INCOME NO MATERIAL EXPOSURE Rank Tenant Rent £’000 % Sector Property 1 580 3.41 Office Westgate House & Kingston House 24.60% Top 10 tenants represent 2 572 3.36 Discount Retail Crewe Shopping Centre, Acocks Green & Kings Heath only 24.60% of REI’s contracted income 3 518 3.05 Offi
Slide 20: Improvement in WAULT – 18 Lease Events
DIVERSIFICATION IMPROVEMENT IN WAULT – 18 LEASE EVENTS Leamington Southgate Retail Park McDonalds at Leamington The Gym Group at Southgate had a lease end in June Retail Park used the opportunity 2022. Discussions took place to remove the Break in March around a new deal and a 2021 and also extend t
Slide 21: Active Capital Recycling: Acquisitions & Disposals
ACTIVE CAPITAL RECYCLING ACQUISITIONS & DISPOSALS Acquisitions & Disposals 70 2020 Acquisitions Disposals 60 50 • No acquisitions made during period due to pandemic with priority being to protect the balance sheet – high 40 levels of uncertainty 30 20 10 • Under offer or exchanged - £9.1 million 0 2
Slide 22: Why REI? 12 Month Outlook & Opportunities
WHY REI? 12 MONTH OUTLOOK & OPPORTUNITIES Outlook • Stability – Normalise income frequency post COVID-19 • Dividend – 0.50p for each of Q1 and Q2 – upside potential for final dividend • Opportunities – To re-let lease expiries to improve income/WAULT/capital values • Sales – Strong investor demand f
Slide 23: Operational Team
OPERATIONAL TEAM Ian Clark Andrew Osborne Jack Sears Anna Durnford BSc (Hons) MRICS BSc (Hons) BSc (Hons) MRICS Donna Mooney Head of Investor Relations Senior Asset Manager Investment Manager Asset Management Receptionist/Administrator • Joined REI in 2007 • Joined REI in 2011 • Joined REI in 2014 •
Slide 24: Real Estate Investors Plc
REAL ESTATE INVESTORS PLC 2nd Floor 75–77 Colmore Row Birmingham B3 2AP Telephone: 0121 212 3446 Fax: 0121 212 1415 www.reiplc.com
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