Real Estate Investors Plc · LSE:RLE
Real Estate Investors — FY2023 Earnings Presentation
25 slides from Real Estate Investors's earnings presentation, March 2024
Slide 1: Real Estate Investors Plc Results for the year ended 31 December 2023
Real Estate Investors Plc Results for the year ended 31 December 2023 Investor and Analyst Presentation
Slide 2: Maximising Shareholder Returns
REAL ESTATE INVESTORS PLC MAXIMISING SHAREHOLDER RETURNS REI Portfolio Diversified Active Asset Multi- Attractive Orderly Sale Today Portfolio Management banked Returns of Assets • Gross property assets • Multi-sector • Break up opportunities • Banked across 3 • Uninterrupted and • Persistent and of
Slide 3: Highly Experienced Board Aligned with Shareholders
HIGHLY EXPERIENCED BOARD ALIGNED WITH SHAREHOLDERS 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 Boa
Slide 4: A Resilient Record Throughout Challenging Times
A RESILIENT RECORD THROUGHOUT CHALLENGING TIMES IN LINE WITH THE COMPANY’S COVERED DIVIDEND POLICY SINCE 2012 TOTAL DIVIDENDS DECLARED/PAID TO SHAREHOLDERS = £50.6 MILLION 3-YEAR DISPOSAL STRATEGY ANNOUNCED IN JANUARY 2024 Financial Crisis General Election Scottish Referendum EU Referendum BREXIT CO
Slide 5: FY 2023 Operational Highlights
FY 2023 OPERATIONAL HIGHLIGHTS • Strong overall rent collection for 2023 of 99.82% Contracted Rental Income £m • Contracted rental income: £10.9 million p.a. (FY 2022: £12.6 million p.a.) due to disposals 17.7 16.2 17.0 16.7 14.9 14.3 • Gross property assets: £145.5 million (FY 2022: £175.4 million)
Slide 6: FY 2023 Financial Highlights
FY 2023 FINANCIAL HIGHLIGHTS • EPRA NTA per share of 54.9p (FY 2022: 62.2p) after 2 years of growth EPRA NTA • EPRA EPS of 2.6p (FY 2022: 2.7p) 66.2 68.9 69.3 67.4 61.3 64.5 62.2 59.1 55.2 58.8 54.9 • Final dividend per share of 0.625p (Final Q4 2022: 0.4375p) paid as an Ordinary Dividend, represent
Slide 7: FY 2023 Financials: Robust Underlying Profits
FY 2023 FINANCIALS ROBUST UNDERLYING PROFITS • Revenue of £11.5 million (FY 2022: £13.3 million) reduction due to sales FY 2023 FY 2022 Income Statement £m £m • Underlying profit before tax* of £4.5 million (FY 2022: £4.6 million) Revenue 11.5 13.3 • Loss before tax of £9.4 million (FY 2022: £10.9 m
Slide 8: FY 2023 Financials: Strong Balance Sheet
FY 2023 FINANCIALS STRONG BALANCE SHEET Gross property assets Net assets FY 2023 FY 2022 Balance Sheet £m £m Property 145.5 175.4 £145.5m £95.6m Cash 8.0 7.8 Debt (54.4) (71.5) Other (3.5) (2.7) Net assets 95.6 109.0 EPRA NTA per share Net LTV Adjustments 0.4 (0.1) 54.9p 32.4% EPRA NTA 96.0 108.9 EP
Slide 9: FY 2023 Financials: Simplified Debt Position
FY 2023 FINANCIALS SIMPLIFIED DEBT POSITION • Cost of debt 3.7% (FY 2022: 3.7%) & 100% of debt was fixed to 30 November 2023 Debt Profile • Net LTV 32.4% (FY 2022: 36.8%) & Interest cover of 2.9x (FY 2022: 2.5x) Lender Debt Facility (£m) Debt Maturity • Total drawn debt of £54.4 million (FY 2022: £7
Slide 10: Movement in EPRA NTA per Share (p)
MOVEMENT IN EPRA NTA PER SHARE (P) REI PLC 9
Slide 11: Movement in EPRA Earnings per Share (p)
MOVEMENT IN EPRA EARNINGS PER SHARE (P) REI PLC 10
Slide 12: Uninterrupted Dividend Delivering Consistent Returns
UNINTERRUPTED DIVIDEND DELIVERING CONSISTENT RETURNS Uninterrupted dividend payments despite disposals Shareholder Distribution Year on Year £50.6 million total dividends declared/paid since 2012 Final Q4 dividend for 2023 of 0.625p per share (Q4 2022: COVID19 +7% PERIOD 0.4375p) Interim +14%
Slide 13: A Year of Sales at a Premium to Book Value
A YEAR OF SALES AT A PREMIUM TO BOOK VALUE Acquisitions & Disposals 70 Acquisitions • Completed 30 disposals totalling £17.97 million Disposals 60 (aggregate uplift of 2.93% before costs above book 50 value) 40 COVID19 PERIOD • Disposals in 2023 - average lot size of £600,000 given 30 break up of un
Slide 14: Weak Market Sentiment & Softened Yields
WEAK MARKET SENTIMENT & SOFTENED YIELDS Total UK property investment reached £31.3 billion in 2023, a 36% decrease on 2022 volumes of £49.0 billion, 40% below the 10-year average of £51.8 billion and the lowest since 2012. Source: JLL Research Summary of 2023 Widespread economic uncertainty and po
Slide 15: Private Investor & Owner Occupier Active Buyer Pool
PRIVATE INVESTOR & OWNER OCCUPIER ACTIVE BUYER POOL Summary of 2023 & Outlook for next 24 months: • Sales of £17.97 million • 30 units/assets sold in 2023 with an average lot size of £600,000 • 2.93% (pre-costs) above 2022 year-end book values • £17.1 million debt repaid using proceeds • Strong pipe
Slide 16: Larger Lot Sizes Oven Ready for Sale
LARGER LOT SIZES OVEN READY FOR SALE 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 funds, o
Slide 17: Active Asset Management: 90 Lease Events, Improved WAULT
ACTIVE ASSET MANAGEMENT 90 LEASE EVENTS, IMPROVED WAULT During 2023, the asset management team completed 90 lease events (to include 10 lease renewals, 7 break removals and 26 new lettings) with new lettings during the year totalling just over £500,000k p.a., combatting some of the loss of income as
Slide 18: Maximising Occupancy & Income
MAXIMISING OCCUPANCY & INCOME BREAKDOWN OF CONTRACTED RENTAL INCOME CHANGE UNLOCKING VOID POTENTIAL Of the 16.97% vacancy (as at 31 December 2023) within the portfolio, almost two Contracted rental income as at 31 Dec 2022 - £12.6 million p.a. thirds of this (10.72%) can be attributed to spaces at 4
Slide 19: Diverse and Attractive Portfolio, Balanced Risk
DIVERSE AND ATTRACTIVE PORTFOLIO BALANCED RISK Other 13.87% Office 45.42% Income by Income by 84.98% of FS Sector Sector Sector our office 3.72% (£) (%) investments are FIN ‘non- Birmingham 1.98% Office 4,968,850 45.42% City centre core’ Traditional Retail 1,480,039 13.53% RBC 3.87% Discount Retail
Slide 20: Top 10 Tenants by Income: Diversity is Key
TOP 10 TENANTS BY INCOME DIVERSITY IS KEY Rank Tenant Rent £’000 % Sector Property 1 450 4.11 Discount Retail Jasper, Tunstall Top 10 tenants represent 2 420 3.84 Office Molineux House, Wolverhampton & Titan House, Telford only 29% of REI’s contracted income 3 396 3.62 Office Avon House, Bromsgrove
Slide 21: ESG & the REI Portfolio
ESG & THE REI PORTFOLIO Energy Performance Certification Carbon Emissions Reporting In accordance with government guidelines, REI has undertaken a REI is now working alongside Systemslink, (a leading energy management software programme to ensure our assets meet the UK statutory regulations and prov
Slide 22: FY24 Outlook: Disposal Strategy to Maximise Returns
FY24 OUTLOOK DISPOSAL STRATEGY TO MAXIMISE RETURNS Dispose Repay Return of Assets Debt Capital Disposals Programme – Accelerate disposals programme to the strong private investor/owner-occupier markets. Prepare larger assets for sale in anticipation of institutional/corporate buyers returning to the
Slide 23: Appendices
APPENDICES REI Real Estate Investors Pk REI PLC 22
Slide 24: Disposal Strategy Alignment: STIP and Remuneration Changes
DISPOSAL STRATEGY ALIGNMENT STIP AND REMUNERATION CHANGES Shorter Term Incentive Plan (“STIP”) Revised Remuneration Policy (Effective 1 January 2024) To support the Disposal Strategy and the return of capital to shareholders, the In addition, the Company’s Remuneration Committee has approved changes
Slide 25: 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