Newriver Reit Plc · LSE:NRR
Newriver Reit — H1 FY22 Earnings Presentation
40 slides from Newriver Reit's earnings presentation, Nov 25, 2021
Slide 1: Half year results 6 months to 30 September 2021
Half year results 6 months to 30 September 2021 25 November 2021
Slide 2: Overview
OVERVIEW BALANCE SHEET RESILIENT POSITIVE REBUILDING VALUATIONS SIGNIFICANTLY OPERATING STRATEGIC UFFO STABILISING STRENGTHENED PERFORMANCE PROGRESS • £252m disposals • UFFO up 67% 0 • Rent collection • Overall core portfolio • Resilient retail completed to date normalising stable defined • H1 FY22
Slide 3: Improving market backdrop
IMPROVING MARKET BACKDROP • Consumer Spending Rising; retail sales volumes up +3.6% since March Volume - Store Sales (2019=100) (up 7.0% vs pre-pandemic) of which non-food store sales volume up 23% 140 120 since March and 4.4% vs pre-pandemic levels1 100 • Online retail growth normalising; online sh
Slide 4: Our resilient operating performance
OUR RESILIENT OPERATING PERFORMANCE Robust rent Affordable average Diversified occupier base collection rent % NRR total Retailer rental income 1 2.8% 90% £11.51 psf 2 3 2.8% 2.6% H1 average cash (March 2021: £11.51) 4 2.4% collection 5 2.3% Key categories 6 2.3% outside top 100 7 2.2% Retailer cate
Slide 5: Improving investment market
IMPROVING INVESTMENT MARKET RETAIL PARKS SHOPPING CENTRES • £2.7bn of transactions to end of Q3 with reported £0.6bn • Significantly increased liquidity - £885m of transactions to end under offer or exchanged of Q3 • 2021 expected to record 2nd highest deal volume in past 10 • Volumes 3x higher than
Slide 6: Improving investment market
IMPROVING INVESTMENT MARKET MSCI Shopping Centres Shopping centre buyer profile 12.0% 9.6% 9.6% 9.7% 10.0% 8.2% 8.5% 8.8% 9.3% • Private equity and overseas capital have been the 8.0% Yields & ERVs stabilising dominant buyers of shopping centres so far in 2021, 6.0% 4.0% responsible for 44% of all t
Slide 7: Our valuations are stabilising
OUR VALUATIONS ARE STABILISING Valuation Portfolio Average Valuation EY Retail Portfolio - Revaluation over last 18 30 September 2021 (£m) Weighting lot size Movement % (£m) H1 6.0% months 4.0% Shopping Centres – Core 214 30% 18.8 -0.4% 9.4% 4.0% Shopping Centres – Regen 209 30% 41.3 -1.6% 6.6% 2.0%
Slide 8: Finance review
FINANCE REVIEW Will Hobman: Chief Financial Officer HALF YEAR RESULTS PRESENTATION 6 MONTHS TO 30 SEPTEMBER 2021
Slide 9: Positioned for growth
POSITIONED FOR GROWTH Completed disposal activity has reset LTV position • LTV reduced to 39.4% from 50.6% in March - within management guidance • Proforma LTV of 38.0% including £17 million of retail disposals completed so far in H2 Balance sheet remains fully unsecured with improved maturity and s
Slide 10: Balance sheet strength restored
BALANCE SHEET STRENGTH RESTORED • Investment property was £702m at 30 September 2021 (March 2021: £974m); decrease from March due predominantly to Hawthorn disposal • Cash holdings reduced closer to pre-pandemic levels, and Borrowings reduced following the repayment of £170m of HAWTHORN RCF and the
Slide 11: EPRA NTA per share (pence)
EPRA NTA PER SHARE (PENCE) Nee (11.3) ' ' : ' 25 (3.0) : b ' ! 139.6 2) | O7 3 5) 1384 ' 79) } H ' : 1 130.5 2.6p Hawthorn ' H ' ' UFFO contribution i i H H included within H : H ' Hawthorn disposal Values | | Strategy | | stabilised | | toexit | | in H1FY22 | ' byend } ' H ‘of FY23 Mar-21 Hawthorn
Slide 12: Loan to value within guidance and valuations stabilising
LOAN TO VALUE WITHIN GUIDANCE AND VALUATIONS STABILISING
Slide 13: Capital allocation: return focused strategy
CAPITAL ALLOCATION: RETURN FOCUSED STRATEGY REGENERATION INVEST INTO EXISTING PORTFOLIO ACCRETIVE AM PROJECTS COMPLETED As we complete disposals DISPOSALS currently exchanged or under SURPLUS ON BALANCE SHEET + offer, we expect to accumulate CAPITAL INVEST INTO LTV <40% c.£50m of surplus capital to
Slide 14: Debt structure & maturity: impact of H1 actions
DEBT STRUCTURE & MATURITY: IMPACT OF H1 ACTIONS Actions Impact (1) £335m of drawn debt repaid/ cancelled (1) £335m of drawn debt repaid/ cancelled (2) RCF size reduced and maturity extended • Improved UFFO efficiency • £7m annual finance cost saving • Will see benefit of saving in H2 FY22 • Improved
Slide 15: Financial policies: fully compliant
FINANCIAL POLICIES: FULLY COMPLIANT • Conservative financial policies form a key FY21 HY22 Improvement Financial Policies Policy Reported Reported vs FY21? component of financial risk management strategy Guidance <40% • Impact of Covid on portfolio valuation and LTV 51% 39% EBITDA in FY21 meant that
Slide 16: Recovery from Covid-19 underway
RECOVERY FROM COVID-19 UNDERWAY • Underlying Funds From Operations (“UFFO”) £15.5 million, Proportionally consolidated compared to £9.3 million in HY21 and £11.5 million in FY21 £m £m • Retail net property income increased to £25.2 million, Revenue 38.3 41.6 despite £67.4 million of disposals in FY2
Slide 17: Retail net property income bridge (£m)
RETAIL NET PROPERTY INCOME BRIDGE (£M)
Slide 18: Contribution from Hawthorn (£m)
CONTRIBUTION FROM HAWTHORN (£M) Removing the impact of the timing of the insurance settlement, the Hawthorn contribution increased from £3.7m in HY21 to £4.5m in HY22
Slide 19: Dividend policy: sustainable, flexible and fully covered
DIVIDEND POLICY: SUSTAINABLE, FLEXIBLE AND FULLY COVERED • • • • • • • • In September paid dividend for FY21 of 3.0 pence per share, first dividend under new policy • H1 dividend declared of 4.1 pence per share, equivalent to 80% of H1 UFFO per share of 5.1 pence • Next dividend will be declared wit
Slide 20: Looking ahead: UFFO building blocks (£m)
LOOKING AHEAD: UFFO BUILDING BLOCKS (£M) 1 SAVINGS UNLOCKED / IDENTIFIED 3 2 2 COVID IMPACT TO RECOVER OVER TIME Disposal & redeployment into: 3 FUTURE DRIVERS OF GROWTH 1 Retail parks & Core shopping centres Regeneration Capital partnerships 5.1 4.6 7.4-10.2 Pence PS Pence PS Pence PS
Slide 21: Strategic update
STRATEGIC UPDATE Allan Lockhart: Chief Executive HALF YEAR RESULTS PRESENTATION 6 MONTHS TO 30 SEPTEMBER 2021
Slide 22: Revised retail strategy
REVISED RETAIL STRATEGY Our revised retail strategy aims to deliver a consistent 10% total accounting return underpinned by a: • Resilient retail portfolio, focused on Retail Parks, Core Shopping Centres and Regeneration, and • Strong and flexible balance sheet September 2021 Medium term priorities
Slide 23: Regeneration: highlights this year
REGENERATION: HIGHLIGHTS THIS YEAR OUR REGENERATION ACTIVITY: • In October we disposed of our Regeneration Shopping Centre in Penge to leading residential developer • Replaces surplus retail space • Acquired in December 2015 for £6.9 million we spent a further £2.3 million to with sustainable altern
Slide 24: Increasing focus on ESG
INCREASING FOCUS ON ESG • Formalising net zero pathway; submission to Science Based Targets initiative (SBTi) in Jan 2022 • Signatory of Better Building Partnership Climate Commitment • Completed net zero asset plans to provide visibility on materiality • 100% of assets now have Environmental & Soci
Slide 25: Outlook
OUTLOOK Consumer spend rebound and Balance sheet significantly retailers performing well despite strengthened headwinds Clear role for physical retail in Revised strategy underway; multichannel strategies reshaping on track and close to surplus capital Increasing liquidity in investment Well positio
Slide 26: Appendix
Appendix title Slide # Appendix title Slide # Background information Valuation Presentation team 27 Valuation analysis for shopping centres and retail parks 38 Performance track record 28 Our proven business model 29 Portfolio segmentation: key characteristics 30 Top 10 assets by value 31 Financial
Slide 27: Presentation team
Allan Lockhart Will Hobman Chief Executive Chief Financial Officer • Co-founded NewRiver in 2009 as Property Director. Appointed • Will is a Chartered Accountant with over 10 years of experience, CEO effective 1 May 2018 having qualified at BDO LLP working in its Audit and Corporate • Started his ca
Slide 28: Performance track record
HY22 FY21 HY21 Underlying FFO (‘UFFO’) £15.5m £11.5m £9.3m Underlying FFO (‘UFFO’) per share 5.1p 3.8p 3.0p Ordinary dividend per share 4.1p 3.0p - Total dividend per share 4.1p 3.0p - Total dividend cover (based on UFFO) 125% 127% - EPRA Net tangible asset (NTA) per share 131p 151p 171p Total accou
Slide 29: Our proven business model
IVER OUR PROVEN BUSINESS MODEL NEW R Disciplined Stock Selection We target high yielding assets with low risk characteristics in our key sectors of community shopping centres and conveniently-ocated retail parks. We acquire these assets either directly or through capital partnerships . Our significa
Slide 30: Portfolio segmentation: key characteristics
Shopping Shopping Shopping Centres Centres Centres Retail Parks - Core - Regen - Work Out Other Valuation £159m £214m £209m £104m £16m Portfolio Weighting 23% 30% 30% 15% 2% Number of Assets 18 14 5 13 5 Average Lot Size (100% £17.5m £18.8m £41.3m £8.0m £1.8m Share) Occupancy Rate 97.8% 96.2% 95.2%
Slide 31: Top 10 assets by value
Floor area Gross rent Name ‘000 sq ft (NR Share) Occupancy Key occupiers Broadway Shopping Centre & Broadway Square Retail 532,000 £9.5m 96% Sainsbury’s, M&S, Boots, Wilko Park, Bexleyheath Abbey Centre, Newtownabbey 320,000 £5.4m 94% Primark, Next, Argos, New Look Priory Meadow Shopping Centre, Has
Slide 32: Retail lease profile
Passing rent of ERV of Passing rent ERV of leases leases expiring leases expiring subject to review subject to review £m £m £m £m FY22 5.4 5.7 3.1 2.4 FY23 7.4 8.6 2.8 2.2 FY24-25 13.4 14.9 6.5 6.0 Total 26.2 29.2 12.4 10.6
Slide 33: Reconciliation of IFRS loss after taxation to UFFO
HY22 HY21 £m £m Loss after taxation (49.9) (92.3) Adjustments Revaluation of investment properties 24.6 92.9 Revaluation of joint ventures’ investment properties (2.4) 1.8 Changes in fair value of financial instruments and associated close out costs (0.6) 1.2 Loss on disposal of investment propertie
Slide 34: Adjusted Funds from Operations
HY22 HY21 Analysis of capital HY22 HY21 Recoverable £m £m expenditure £m £m Criteria Capitalised from tenants Gross rental income (GRI) 48.3 52.1 Essential 0.5 0.5 Works required to maintain physical environment in state P O UFFO before void costs for repairs 16.1 9.7 of good repair Net contribution
Slide 35: Financial policies and additional guidelines
Proportionally consolidated Financial Policies 30 Sept 2021 31 March 2021 Net debt £276.4m £493.3m Principal value of gross debt £318.1m £653.1m Weighted average cost of drawn debt1 3.4% 3.2% Weighted average debt maturity2 5.2 years 4.3 yrs LTV Guidance <40% 39% 51% Policy <50% HY22 HY21 Net debt:
Slide 36: Loan to value
30 Sept 2021 31 March 2021 £m £m Borrowings 295.8 629.7 Cash and cash equivalents (34.6) (150.5) Net debt 261.2 479.2 Equity attributable to equity holders of the parent 402.1 460.4 Net debt to equity ratio (‘Balance sheet gearing’) 65% 104% Share of joint ventures’ and associates’ borrowings 17.9 1
Slide 37: Number of shares
Number of shares (m) 30 Sept 2021 31 March 2021 Weighted average – basic1 306.6 306.4 Weighted average – diluted2 307.6 307.2 Year end – basic3 307.0 306.5 Year end – diluted4 308.0 307.3
Slide 38: Valuation analysis for shopping centres and retail parks
NewRiver Shopping Centres 20% NewRiver Retail Parks Average lot size: £18.0m Average lot size: £17.5m 25% NEY: 9.5% 18% NEY: 7.2% 16% 20% 14% Equivalent Yield 12% Equivalent Yield 15% 10% 8% MSCI1 EY: 6.8% MSCI1 EY: 9.7% 10% 6% 4% 5% 2% 0% 0% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 0% 1% 1% 2% 2% 3%
Slide 39: 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 assumptions about New
Slide 40: NewRiver REIT plc
NewRiver REIT plc 16 New Burlington Place London Wi1S 2HX www.nrr.co.uk