Real Estate Investors Plc · LSE:RLE
Real Estate Investors — H1 2023 Earnings Presentation
27 slides from Real Estate Investors's earnings presentation, September 2023
Slide 1: The UK's Only Midlands Focused REIT
THE UK’S ONLY MIDLANDS FOCUSED REIT Results for the period ended 30 June 2023 Investor and Analyst Presentation THE MIDLANDS INVESTOR REI PLC
Slide 2: Introduction
REAL ESTATE INVESTORS PLC INTRODUCTION REI Diversified Active Asset Multi- Attractive Today Portfolio Management banked Returns • UK’s only Midlands • Multi-sector • Break up opportunities • Multi-banked across 4 • Covered dividend focused REIT diversification, no within assets to satisfy lenders po
Slide 3: Highly Experienced Board & Proven Track Record
HIGHLY EXPERIENCED BOARD & PROVEN TRACK RECORD Non-Executive Executive William Wyatt Peter London Ian Stringer Paul Bassi CBE Marcus Daly FCA Non-Executive Chairman Non-Executive Director Non-Executive Director Chief Executive Officer Finance Director • Joined REI Board in 2010, • Joined REI Board i
Slide 4: Resilient Business Model
RESILIENT BUSINESS MODEL IN LINE WITH THE COMPANY’S COVERED DIVIDEND POLICY SINCE 2012 TOTAL DIVIDENDS DECLARED/PAID TO SHAREHOLDERS = £48.5 MILLION Financial Crisis / General Election / Scottish Referendum / European Referendum / BREXIT / COVID19 2006 2010 2011 2012 2014 2015 2019 2020 2021 2022 H1
Slide 5: H1 2023 Operational Highlights
H1 2023 OPERATIONAL HIGHLIGHTS • Strong overall rent collection for H1 2023 of 99.93% Contracted Rental Income £m • Contracted rental income: £12.5 million p.a. 17.0 17.7 16.2 16.7 (FY 2022: £12.6 million p.a.) due to sales 14.9 14.3 11.9 12.6 12.5 • Gross property assets: £169.2 million (FY 2022: £
Slide 6: H1 2023 Financial Highlights
H1 2023 FINANCIAL HIGHLIGHTS EPRA NTA • EPRA NTA per share of 60.3p (FY 2022: 62.2p) 64.5 66.2 68.9 69.3 67.4 59.1 61.3 58.8 62.2 60.3 55.2 • EPRA EPS of 1.26p (H1 2022: 1.64p) FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 H1 2023 • Q2 2022 dividend per share of 0.6
Slide 7: H1 2023 Financials Robust Performance
H1 2023 FINANCIALS ROBUST PERFORMANCE • Revenue* of £6.1 million (H1 2022: £7.2 million) reduction due to sales in H1 2023 H1 2022 H2 2022 and H1 2023 Income Statement £m £m • Underlying profit before tax** of £2.2 million (H1 2022: £2.9 million) Revenue 6.1 7.2 • Loss before tax of £779,000 (H1 202
Slide 8: H1 2023 Financials Strong Balance Sheet
H1 2023 FINANCIALS STRONG BALANCE SHEET Gross property assets Net assets H1 2023 H1 2022 Balance Sheet £m £m Property 169.2 190.2 £169.2m £106.4m Cash 8.0 8.3 Debt (67.9) (83.8) Other (2.9) (4.2) Net assets 106.4 110.5 EPRA NTA per share Net LTV Adjustments (0.4) 0.9 60.3p 35.9% EPRA NTA 106.0 111.4
Slide 9: Movement in EPRA NTA per Share (p)
MOVEMENT IN EPRA NTA PER SHARE (P) REI PLC 8
Slide 10: Movement in EPRA Earnings per Share (p)
MOVEMENT IN EPRA EARNINGS PER SHARE (P) REI PLC 9
Slide 11: Uninterrupted Dividend
UNINTERRUPTED DIVIDEND Uninterrupted dividend payments despite disposals Shareholder Distribution Year on Year £48.5 million total dividends declared/paid since 2012 COVID19 Q2 dividend for 2023 of 0.625p per share (Q2 2022: +7% PERIOD 0.8125p) Interim +14% Final 1 Dividend paid quarterly 0.
Slide 12: H1 2023 Financials Simplified Debt Position
H1 2023 FINANCIALS SIMPLIFIED DEBT POSITION • Cost of debt 3.7% (FY 2022: 3.7%) Debt Structure % Debt Profile • 100% of debt is fixed with a blended debt maturity profile term of 18 months Lender Debt Debt Hedging Fixed Floating Facility Maturity Net LTV 35.9% (target LTV - 35% or below) (FY 2022: 3
Slide 13: Attractive Spread Between NIY, Reversionary Yield & Cost of Debt
ATTRACTIVE SPREAD BETWEEN NIY, REVERSIONARY YIELD & 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 2015 2016 2017 2018 2019 2020 2021 2022 2023 Cost of Debt NIY Reversionary Yield REI PLC 12
Slide 14: Ongoing Disposals at a Premium or Book Value
ONGOING DISPOSALS AT A PREMIUM OR BOOK VALUE Acquisitions & Disposals 70 Acquisitions 2023 TO DATE - BREAKING UP ASSETS Disposals 60 • Completed disposals totalling £10.4 million 50 (aggregate uplift of 8.7% before costs above 40 COVID19 PERIOD book value) 30 20 • Significant sales in pipeline legal
Slide 15: Private Investor & Owner Occupier Demand Continues
PRIVATE INVESTOR & OWNER OCCUPIER DEMAND CONTINUES Strong appetite continued throughout 2023 from private investors & owner occupiers seeking smaller lot sizes of between £200,000 up to £1 million. We identified several assets that could be broken up into smaller sales to achieve premium values and
Slide 16: Oven Ready Assets in a Normalised Market
OVEN READY ASSETS IN A NORMALISED MARKET We have a number of properties in the portfolio which are ready for sale, all of which have undergone successful business plans and improvements. Due to the current subdued marketplace our normal buyer pool of property companies, REITs, UK funds, pension fund
Slide 17: Key Lease Events Proactive Asset Management
KEY LEASE EVENTS PROACTIVE ASSET MANAGEMENT In H1 2023, we effected 46 lease events, to include 6 lease renewals, 5 breaks removals and 19 new lettings with new lettings generating £385,438 p.a. of new income to the portfolio, more than offsetting the £184,500 p.a. of lost income associated with sal
Slide 18: Income & Void Potential
INCOME & VOID POTENTIAL EXISTING UNLOCKING VOID POTENTIAL (year to date) INCOME LOSS DUE TO DISPOSALS Of the 15% vacancy within the portfolio, two thirds of this (c.10%) can Contracted rental income as at 31 Dec 2022 - £12.6 million p.a. be attributed to spaces at 5 properties (Barracks Road, Newcas
Slide 19: Diverse and Attractive Portfolio
DIVERSE AND ATTRACTIVE PORTFOLIO Other 12.50% FS Office Sector £ per annum % by income 85.04% of 3.25% 43.17% Office Office 5,398,868 43.17% our offices FIN TR Traditional Retail 2,027,790 16.22% are ‘non 2.77% Birmingham Discount Retail - DR Poundland/B&M/Poundstretcher etc 1,472,350 11.77% City ce
Slide 20: Top 10 Tenants by Income No Material Exposure
TOP 10 TENANTS BY INCOME NO MATERIAL EXPOSURE Rank Tenant Rent £’000 % Sector Property 25.73% 1 450 3.60 Discount Retail Jasper, Tunstall Top 10 tenants represent only 25.73% of REI’s 2 420 3.36 Office Molineux House, Wolverhampton & Titan House, Telford contracted income 3 396 3.17 Office Avon Hous
Slide 21: ESG & the REI Portfolio
ESG & THE REI PORTFOLIO Energy Performance Certification Carbon Emissions Reporting In accordance with government guidelines, REI also continues to ensure our • REI continues to work with leading professionals to collect, track and assets meet the UK statutory regulations and timeframes for Energy r
Slide 22: Delivering on Strategy
DELIVERING ON STRATEGY EXECUTING STRATEGY In the absence of any consolidation opportunities within the real estate sector that align with shareholder best interests and the backdrop of poor market • Disposals to date in 2023 of £10.4 million an conditions, management have focused efforts on an oppor
Slide 23: Outlook & Summary
OUTLOOK & SUMMARY • Execute stated strategy – We anticipate continued sales to a strong private investor market, which will allow us to execute our stated strategy and reduce our debt further – if the share price discount to NTA persists, we will consider a share buyback or other form of capital ret
Slide 24: Appendices
APPENDICES REI Real Estate Investors Pk REI PLC 23
Slide 25: 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/private investors/ Leisur
Slide 26: Operational Team
OPERATIONAL TEAM Ian Clark Andrew Osborne Jack Sears Anna Durnford BSc (Hons) MRICS BSc (Hons) BSc (Hons) MRICS Donna Mooney Director, Investor Relations Director, Asset Manager Investment Manager Asset Management Receptionist/Administrator • Joined REI in 2007 • Joined REI in 2011 • Joined REI in 2
Slide 27: 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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