Real Estate Investors plc · LSE:RLE
Real Estate Investors — H1 2019 Earnings Presentation
25 slides from Real Estate Investors's earnings presentation, September 2019
Slide 1: The UK's Only Midlands Focused REIT
THE UK’S ONLY MIDLANDS FOCUSED REIT Results for period ended 30 June 2019 Investor and Analyst Presentation THE MIDLANDS INVESTOR REI PLC 0
Slide 2: Introduction
INTRODUCTION Birmingham Commonwealth Games 2022 Image courtesy of Birmingham City Council REI PLC 1
Slide 3: Real Estate Investors Plc
REAL ESTATE INVESTORS PLC Active REI Strong Asset Prudent Attractive Today Platform Management Finance Returns • UK’s only Midlands • Internally managed/ • Value creation through • Prudent leverage • Aim to deliver capital focused/ Birmingham proven track reviews, lease renewals, providing certainty
Slide 4: 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 5: REI Plc Building a Business of Substance
REI PLC BUILDING A BUSINESS OF SUBSTANCE IN LINE WITH THE COMPANY’S PROGRESSIVE DIVIDEND POLICY SINCE 2013 TOTAL DIVIDENDS PAID TO SHAREHOLDERS = £25,577,000 Company listed Quarterly dividend on AIM with Peter London John Crabtree joins as NEC payments adopted market cap joins as NED and William Wya
Slide 6: 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 7: Highlights and Financials
HIGHLIGHTS AND FINANCIALS Canalside, Birmingham City Centre Did you know?.. Birmingham has 35 miles of canals within the city, 9 miles more than Venice REI PLC 6
Slide 8: H1 2019 Operational Highlights
H1 2019 OPERATIONAL HIGHLIGHTS • Contracted rental income: £17.0 million p.a. Gross Property Assets £m (H1 2018: £15.8 million p.a.) up 7.59% 213.1 224.8 221.1 201.9 • Gross property assets: £221.1 million 157.5 (FY 2018: £224.8 million) down 1.65% 75.2 104.4 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017
Slide 9: H1 2019 Financial Highlights
H1 2019 FINANCIAL HIGHLIGHTS • Underlying profit before tax* of £4.0 million EPRA NAV (H1 2018: £3.4 million) up 17.9% 68.9 69.3 68.8 66.2 • Revenue £8.1 million (H1 2018: £7.4 million) up 8.4% 61.3 64.5 59.1 • EPRA EPS 2.15p (H1 2018: 1.8p) up 19.4% FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 H
Slide 10: H1 2019 Financials: Growing Income
H1 2019 FINANCIALS: GROWING INCOME • Revenue of £8.1 million – up 8.4% H1 2019 H1 2018 Income Statement £m £m Change • Underlying profit before tax of £4.0 million – up 17.9%* Revenue 8.1 7.4 +8.4% • Pre-tax profit of £1.7 million (H1 2018: £5.3 million) after deficit on revaluation of interest rate
Slide 11: H1 2019 Financials: Strong Balance Sheet
H1 2019 FINANCIALS: STRONG BALANCE SHEET Gross property assets of Net assets of H1 2019 FY 2018 Balance Sheet £m £m Change Property 221.1 224.8 -1.6% £221.1m £127.1m Cash 12.2 10.8 +12.9% Debt (98.5) (98.8) -0.3% Other (7.7) (8.1) +4.5% Net assets 127.1 128.7 -1.2% EPRA NAV per share of Well capital
Slide 12: Movement in EPRA NAV per Share
MOVEMENT IN EPRA NAV PER SHARE 74 72 2.2 (1.1) 70 (1.9) 0.3 69.3 68 68.8 Pence 66 64 62 60 01 Jan2019 1 Jan 2019 Underlying Profit Revaluation of Properties Dividend Other revaluations 30 Jun 2019 REI PLC 11
Slide 13: Movement in EPRA Earnings per Share
MOVEMENT IN EPRA EARNINGS PER SHARE 4.5 0.2 4.2 4.0 (0.1) 0.6 3.5 3.5 3.0 2.5 Pence 2.0 1.5 1.0 0.5 0.0 1 July 2018 Rental Income Other Expenses & Interest Admin Expenses 30 June 2019 Note: Chart based on 12 months of EPRA EPS from 1 July 2018 to 30 June 2019 REI PLC 12
Slide 14: H1 2019 Financials: Simplified Debt Position
H1 2019 FINANCIALS: SIMPLIFIED DEBT POSITION Debt Structure % Debt Maturity £m at 30 Jun 2019 at 30 Jun 2019 • Cost of debt lowered to 3.7% at 30 Jun 2019 (H1 2018: 4.1%) Floating • Property net LTV 39.7% Fixed 2020 8 (We aim to keep LTV below 40%) • 67% of debt is fixed 2021 45 • Interest cover of
Slide 15: H1 2019 Financials: Growing, Fully Covered Dividend
H1 2019 FINANCIALS: GROWING, FULLY COVERED DIVIDEND • REI adopted a quarterly dividend policy with effect Increasing Shareholder Distribution Year on Year from the financial year beginning 1 January 2016 Interim • Dividend is fully covered by EPRA earnings Final +14% • Aim to grow dividend in line w
Slide 16: Rebirth of a Region
REBIRTH OF A REGION Cityscape, Birmingham City Centre REI PLC 15
Slide 17: An Emerging Economy
AN EMERGING ECONOMY The Next London? Population Migration Business Confidence Flexible Working West Midlands is gaining the title According to the latest Business Birmingham is set to be at the as the fastest growing economy No. 1 destination for those migrating from London. Boosted by Barometer fro
Slide 18: Active Capital Recycling: Making Capital Work
ACTIVE CAPITAL RECYCLING MAKING CAPITAL WORK Acquisitions & Disposals • H1 2019 - Inactive market/unrealistic pricing/no 70 Acquisitions distressed vendors/no criteria compliant Disposals 60 opportunities 50 • REI completed the sale of Metro Court in March 2019 for the sum of £2.1 million 40 • Dispo
Slide 19: Diverse and Attractive Portfolio
DIVERSE AND ATTRACTIVE PORTFOLIO 0% 0% Rent £ 30 Jun 2019 Sector % by Income 3% Office Office 6,649,961 39.20% 3% 5% Traditional Retail Traditional Retail 3,195,866 18.84% Discount Retail Discount Retail 1,650,902 9.73% 6% Medicaland Medical and Pharmaceutical Pharmaceutical 1,137,540 6.70% 39% Food
Slide 20: Top Tenants by Income: No Material Exposure
TOP 10 TENANTS BY INCOME NO MATERIAL EXPOSURE Rank Tenant Rent £’000 % Sector Property 1 572 3.36 Discount Retail Crewe Shopping Centre, Acocks Green & Kings Heath 0.58% of our contracted rental 2 518 3.05 Office Birch House, Oldbury income has been impacted by CVAs 3 481 2.83 Office Molineux House,
Slide 21: Untapped Residential Value and Pipeline Opportunities
UNTAPPED RESIDENTIAL VALUE AND PIPELINE OPPORTUNITIES CITYGATE HOUSE, LEICESTER – Sold for £2.6m with permitted development rights • The property occupies a prominent position on a main • The property has a total net office space of 18,070 route to Leicester City Centre and comprises a self- sq ft a
Slide 22: Asset Management Case Studies: Value Add
ASSET MANAGEMENT CASE STUDIES: VALUE ADD – ACTIVE INVESTORS WESTGATE HOUSE, WARWICK • Purchased in June 2014 for £7.25 million at a net initial • New Leases were agreed at £285,758 per annum; yield of 8.25% passing rent was £244,935 – an uplift of £40,823 • ‘Tactical’ S25 Notice served on the NHS of
Slide 23: Why REI? Platform, Outlook & Opportunities
WHY REI? PLATFORM, OUTLOOK & OPPORTUNITIES Platform Outlook Opportunities • Aligned management with proven • Operating in a transformational • Selective Investment Sales – track record and 6.7% holding region in the process of rebirth where asset management has been • Scalable property management •
Slide 24: Operational Team
OPERATIONAL TEAM Ian Clark Andrew Osborne Jack Sears Anna Durnford BSc (Hons) MRICS BSc (Hons) BSc (Hons) MRICS Catherine Gee Donna Mooney Investor Relations Senior Asset Manager Investment Manager Asset Management Property Management Receptionist/Administrator • Joined REI in 2007 • Joined REI in 2
Slide 25: 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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