Real Estate Investors Plc · LSE:RLE
Real Estate Investors — H1 2022 Earnings Presentation
23 slides from Real Estate Investors's earnings presentation, September 2022
Slide 1: The UK's Only Midlands Focused REIT
THE UK’S ONLY MIDLANDS FOCUSED REIT Results for the period ended 30 June 2022 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 • Value creation rent • Multi-banked across 4 • Covered dividend policy focused/ REIT diversification, no reviews, lease renewals, lende
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: Covered Dividend
COVERED DIVIDEND IN LINE WITH THE COMPANY’S COVERED DIVIDEND POLICY SINCE 2012 TOTAL DIVIDENDS DECLARED/PAID TO SHAREHOLDERS = £44.8 MILLION Financial Crisis / General Election / Scottish Referendum / European Referendum / BREXIT / COVID19 2004 2006 2010 2011 2012 2014 2015 2016 2019 2020 2021 2022
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/private investors/ Leisur
Slide 6: H1 2022 Operational Highlights
H1 2022 OPERATIONAL HIGHLIGHTS Contracted Rental Income £m • Strong overall rent collection for H1 2022 (adjusted for monthly and deferred agreements) of 99.36% 17.0 17.7 16.7 16.2 14.9 • The current quarter (Q3 - June 2022 to September 2022) rent collection 11.9 14.3 14 is 99.86% 7.7 5.8 • Contract
Slide 7: H1 2022 Financial Highlights
H1 2022 FINANCIAL HIGHLIGHTS • EPRA NTA per share of 61p (FY 2021: 58.8p) EPRA NTA • EPRA EPS 1.64p (H1 2021: 2.13p) 64.5 66.2 68.9 69.3 67.4 59.1 61.3 58.8 61 55.2 • Q2 2022 dividend per share of 0.8125p per share (Q2 2021: 0.75p) FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2
Slide 8: H1 2022 Financials
H1 2022 FINANCIALS • Revenue of £7.2 million (H1 2021: £7.8 million) H1 2022 H1 2021 Income Statement £m £m • Profit before tax of £8.3 million (H1 2021: £9 million profit) to include £3.1 million gain on property revaluations (H1 2021: £3.3 Revenue 7.2 7.8 million gain), £1 million profit on sale o
Slide 9: H1 2022 Financials: Strong Balance Sheet
H1 2022 FINANCIALS STRONG BALANCE SHEET Gross property assets Net assets H1 2022 H1 2021 Balance Sheet £m £m Property 190.2 195.2 £190.2m £110.5m Cash 8.3 9.1 Debt (83.8) (96.0) Other (4.2) (5.3) Net assets 110.5 103.0 EPRA NTA per share Net LTV Adjustments 0.9 2.8 61p 40.2% EPRA NTA 111.4 105.8 Net
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: Quarterly Dividend Payments
QUARTERLY DIVIDEND PAYMENTS Continued dividend payments in volatile market Shareholder Distribution Year on Year £44.8 million total dividends declared/paid since 2012 Q2 Dividend for 2022 of 0.8125p per share (Q2 2021: 0.75p) COVID19 +7% PERIOD Interim Paid quarterly +14% Final 1 Dividend
Slide 13: H1 2022 Financials: Simplified Debt Position
H1 2022 FINANCIALS SIMPLIFIED DEBT POSITION Debt Structure % Debt Maturity £m • Cost of debt 3.5% (FY 2021: 3.5%) • 95.2% fixed debt (90% as at 1 Jan 2022) 50 • Net LTV 40.2% (target LTV - 40% or below) (FY 2021: 42.2%) Fixed Floating 95 90 • Interest cover of 2.8x (FY 2021: 3.0x) • Multi-banked acr
Slide 14: 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 H1 2022 Cost of Debt NIY Reversionary Yield REI PLC 13
Slide 15: Private Investor Demand and Strategy
PRIVATE INVESTOR DEMAND AND STRATEGY • £5.7 million of assets sold in H1 2022 at an aggregate uplift of 27.9% on Dec 21 valuations • A further £4.5 million of disposals completed since period end • Strong private investor market • Current significant sales in pipeline legals • Improved overseas inte
Slide 16: Active Capital Recycling: Acquisitions & Disposals
ACTIVE CAPITAL RECYCLING ACQUISITIONS & DISPOSALS Acquisitions & Disposals 70 Acquisitions 2022 60 Disposals • Completed 11 disposals totalling (before costs) 50 £5.7 million (aggregate uplift of 27.9% above book value) 40 COVID19 • Post period - completions of £4.5 million 30 PERIOD • Significant s
Slide 17: Improving Occupancy
IMPROVING OCCUPANCY Contracted rental income as at 30 June 2022 - £14m Post period contracted rental income (allowing for sales) - £13.7m Should ‘key’ lettings in pipeline of £685,000 p.a. complete they would translate into: • Improved contracted rental income of £14.3* • Improved occupancy of 89.70
Slide 18: Diverse and Attractive Portfolio
DIVERSE AND ATTRACTIVE PORTFOLIO 80.47% of % by FS Sector £ per annum Income our offices 4.19% are ‘non RBC Office 5,039,442 36.03 5.67% Fin Birmingham 10.78% Traditional Retail 2,457,794 17.57 City centre’ Discount Retail - Poundland/B&M etc 1,895,350 13.55 M&P 5.04% of our 7.63% Office Other - Hot
Slide 19: Top Tenants by Income: No Material Exposure
TOP 10 TENANTS BY INCOME NO MATERIAL EXPOSURE Rank Tenant Rent £’000 % Sector Property 26.53% 1 572 4.09 Discount Retail Crewe Shopping Centre, Acocks Green & Kings Heath Top 10 tenants represent only 26.53% of REI’s 2 450 3.22 Discount Retail Jasper, Tunstall contracted income 3 420 3.00 Office Mol
Slide 20: ESG & the REI Portfolio
ESG & THE REI PORTFOLIO EPC – ENSURING THE PORTFOLIO IS COMPLIANT • From April 2023 all assets require an EPC rating of ‘E’ or above ONGOING ESG STRATEGY IN 2022 • Currently 0.24% of the portfolio is below an ‘E’. Some of our non- compliant assets have been/are being sold. • Continued meetings of ES
Slide 21: Why REI? Outlook
WHY REI? OUTLOOK Outlook • Execute stated strategy – Subject to market conditions • Sales – Satisfy strong private and overseas investor demand through asset break up • Strong occupier demand – Capitalise on renewed occupier demand to reduce voids, improve income/WAULT/capital values • Reduce gearin
Slide 22: 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 23: 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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