Slide 1: 2013 Half Year Results
2013 Half Year Results 31 July 2013 Geopost, Enfield
Slide 2: An active and successful period
An active and successful period Strong operational performance Lettings up 30% Good momentum in development pipeline Further cost savings achieved Portfolio valuation up 0.3% Core portfolio valuation up 0.8%; outperforming IPD Industrial Index Suburban offices flat Non-core assets do
Slide 3: Financial Results
Financial Results Justin Read Group Finance Director Booker, Hatfield
Slide 4: Financial highlights
Financial highlights EPRA PBT down £5.9m despite £26.6m NRI impact of disposals/ Neckermann Further reduction in central costs and in cost ratio adjusted for Neckermann Dividend maintained Stable asset values Balance sheet strength – significantly greater financial flexibility to reinvest
Slide 5: EPRA PBT 7.9% lower due to disposals activity and Neckermann
EPRA PBT 7.9% lower due to disposals activity and Neckermann H1 2013 H1 2012 £m £m Gross rental income 144.6 156.9 Property operating expenses (25.9) (26.0) Net rental income 118.7 130.9 Joint venture management fee income 2.0 2.9 Share of joint ventures’ EPRA profit1 11.4 10.1 Administration expens
Slide 6: Net rental income lower due to net effect of capital recycling and Neckermann
Net rental income lower due to net effect of capital recycling and Neckermann £7.0m £(19.5)m £6.2m £2.1m £(7.1)m £(0.6)m £(0.3)m £130.9m £118.7m H1 2012 H1 2012 Currency Developments Acquisitions Disposals Neckermann Like for like net Surrender H1H12013 2013 translation impact rental income premiums
Slide 7: Further cost savings achieved
Further cost savings achieved (including vacant property costs) 35 EPRA total cost ratio1 (%) 30.4% 29.9% 30 28.1% 24.5% 25 22.9% 23.5% 20 22.4% Excluding Neckermann 15 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 H1 2013 H1 2013 H1 2012 Change £m £m % Gross rental income (inc. share of JVs) 165.3 176.5
Slide 8: EPRA NAV per share unchanged
EPRA NAV per share unchanged 9.2p 1.8p (9.9)p (1.1)p 294p 294p EPRA NAV per EPRA EPS FX movements Dividend Realised and EPRA NAV per share as at 31 unrealised share as at 30 December 2012 valuation June 2013 movements 7
Slide 9: Strong financing metrics
Strong financing metrics 30 June 30 June 31 Dec 2013 2013 2012 Pro forma1 Group: Net borrowings (£m) 2,132 1,313 2,090 Available funds - cash & undrawn facilities (£m) 325 1,011 449 Gearing (%) 96 65 93 Weighted average cost of debt2, 5 (%) 4.5 5.2 4.6 Average duration of debt (years) 7.8 9.2 8.3 In
Slide 10: Significant reduction in pro forma look through LTV ratio
Significant reduction in pro forma look through LTV ratio £855 million of net proceeds receivable in H2 2013 Used to pay down net debt and pursue profitable reinvestment opportunities Pro forma on balance sheet net debt of £1.3bn2 at 30 June 2013 (3)% (4)% (1)% 52% 44% LTV ratio at IQ Winnersh
Slide 11: Pro forma earnings
Pro forma earnings EPRA PBIT £m Reported H1 2013 operating profit 120.0 Pro forma impact of significant H1 2013 transactions Disposals in H1 (1.1) Acquisitions in H1 0.8 Developments completed and let in H1 1.0 Net impact of Neckermann departure 0.9 121.6 Pro forma impact of significant H2 2013 tran
Slide 12: Financial summary
Financial summary EPRA PBT down £5.9m despite £26.6m NRI impact of disposals/ Neckermann Good progress in cost management Dividend maintained Stable asset values Balance sheet strength – significantly greater financial flexibility to reinvest 11
Slide 13: Business Review
Business Review David Sleath Chief Executive Selig, Slough Trading Estate
Slide 14: An active and successful period
An active and successful period Strong operational performance Lettings up 30% Good momentum in development pipeline Further cost savings achieved Portfolio valuation up 0.3% Core portfolio valuation up 0.8%; outperforming IPD Industrial Index Suburban offices flat Non-core assets do
Slide 15: Strong operational performance
Strong operational performance 122 new lettings generating £16.7m of new rental income (up 30%) - £2.6m additional rental income in solicitors’ hands 53 lease re-gears and renewals, securing £7.5m of rental income - Retention rate of 75% (H1 2012: 63%) Group vacancy rate 9.5% (core: 8.1%), or
Slide 16: Positive portfolio valuation movements
Positive portfolio valuation movements H1 2013 Core warehouse portfolio by asset type 2.5% 2.0% Core ‘industrial’ +0.8% 1.5% 1.0% 0.5% Offices 0.0% 0.0% -0.5% -1.0% -1.5% Non core (2.4)% Logistics Light industrial & urban distribution Data centres Other business space H1 2013 Core warehouse po
Slide 17: £437m of disposals at 5.6% above book value and 6.2% average exit yield
£437m of disposals at 5.6% above book value and 6.2% average exit yield Thales, UK (£80m) MPM, Munich (£56m) 16 Neckermann, Germany (£39m) IQ Winnersh, UK (£245m)
Slide 18: £560m of non-core assets remaining
£560m of non-core assets remaining At 30 June 20131 Valuation Income2 £m £m ‘Big 2’ assets3 157 16 Other assets & land 403 36 Total 560 52 Pegasus Park, Brussels Geographical split 29% 71% UK Continental Europe Energy Park, Milan 1 Including our share of joint venture assets 17 2 Income based on hea
Slide 19: €1bn Continental European logistics JV to take advantage of growth opportunities
€1bn Continental European logistics JV to take advantage of growth opportunities 50/50 JV with PSP to create a leading Continental Europe logistics platform Seeded with SEGRO’s €1 billion Continental European logistics portfolio, including 84 hectares of development land Provides access to lon
Slide 20: £55m reinvested into modern warehouses at a 7.5% average entry yield
£55m reinvested into modern warehouses at a 7.5% average entry yield Urban distribution park, Warsaw Large logistics warehouse, UK Acquired for €43m £18m acquisition due to complete Aug 2013 49,900 sq m of urban distribution space 28,200 sq m big box logistics warehouse Prime location clos
Slide 21: £126m invested or committed to developments; 9% yield on total cost
£126m invested or committed to developments; 9% yield on total cost 8 Completed development projects 14 Current development projects 1 4 5 2 6 3 69,100 sq m of new space 137,200 sq m of new space £3.5m of annual rent (86% let) £10.3m of annual rent (71% let) £28.2m development cost (excl.
Slide 22: Well positioned for future growth
Well positioned for future growth Geopost, Enfield
Slide 23: Key trends supporting our strategy
Key trends supporting our strategy Attractive structural demand drivers Limited supply of modern warehouse assets Growth in internet retailing, convenience shopping and B2B UK supply (millions sq ft) distribution requiring local delivery/fulfilment solutions 30 On-going supply chain improvements
Slide 24: SEGRO is well positioned to serve the supply chain evolution
SEGRO is well positioned to serve the supply chain evolution 23
Slide 25: Parcel delivery companies – the most active sub-sector of our customer base
Parcel delivery companies – the most active sub-sector of our customer base Existing space New developments 5,700 sq m at Park Royal 3,100 sq m pre-let signed 11,700 sq m in Krefeld, Dusseldorf 5,200 sq m in Lyon, France Slough Trading Estate 2,600 sq m at The Heathrow Estate 4,300 sq m at Slough Tr
Slide 26: Land bank well located to capitalise on the favourable demand/supply dynamics
Land bank well located to capitalise on the favourable demand/supply dynamics Current land holdings by value (as at 30 June 2013) Residual land bank £86m (231 ha) Potential Current development projects projects £49m £200m (310 ha) (31 ha) Potential development projects £77m of potential future ann
Slide 27: Summary
Summary Strong operational performance Significant progress with strategic portfolio repositioning Investment market strengthening Well positioned for future growth Creating the best owner-manager and developer of industrial properties and a leading income-focused REIT 26
Slide 28: Q&A
SEGRO WHERE BUSINESS WORKS Q&A
Slide 29: Appendix I
SEGRO WHERE BUSINESS WORKS
Slide 30: £985m of disposals announced or completed since January 12
£985m of disposals announced or completed since 1 January 2012 Month Portfolio/Asset Acquirer Sale proceeds Net initial yield (£m) (%) H1 2013: January Thales in Crawley L&G Property 80.0 5.9 / 5.91 February MPM in Munich Private investor 55.6 7.9 / 7.91 Various Other non-core assets Various 16.6 7.
Slide 31: Current development pipeline
Current development pipeline Project Customer Space to Project Customer Space to be built be built (sq m) (sq m) UK CONTINENTAL EUROPE Pre-let projects under construction Pre-let projects under construction Feltham (joint venture) Toll / spec 8,000 Vimercate, Italy Alcatel-Lucent 34,000 Edmonton, Lo
Slide 32: Appendix II: Supplementary financial data
Appendix II Supplementary financial data
Slide 33: EPRA pro forma profit before tax: JVs proportionally consolidated
EPRA pro forma profit before tax: JVs proportionally consolidated H1 2013 H1 2012 Group JVs Total Group JVs Total £m £m £m £m £m £m Gross rental income 144.6 20.7 165.3 156.9 19.6 176.5 Property operating expenses (25.9) (1.4) (27.3) (26.0) (1.0) (27.0) Net rental income 118.7 19.3 138.0 130.9 18.6
Slide 34: Movement in Group net borrowings
Movement in Group net borrowings H1 2013 H1 2012 £m £m Opening net debt (2,090.3) (2,303.4) Cash flow from operations 91.4 107.4 Finance costs (net) (58.4) (52.3) Dividends received (net) 11.8 2.3 Tax paid (net) (0.7) (12.2) Free cash flow 44.1 45.2 Dividends paid1 (63.0) (65.9) Acquisitions and dev
Slide 35: EPRA PBT bridge
EPRA PBT bridge £4.9m £1.3m £1.0m £(0.9)m £(12.2)m £74.9m £69.0m H1 2012 Net interest EPRA Admin JV management Net rental H1 2013 JV PAT expenses fees income 34
Slide 36: Pro forma vacancy rate
Pro forma vacancy rate 0.5% 0.1% (1.2)% 9.5% 8.9% IQ Winnersh SELP Neckermann Vacancy at Pro forma vacancy 30 June 2013 at 30 June 2013 Pro forma Group vacancy rate reduced to 8.9% Largely driven by disposal of the high vacancy Neckermann site 35
Slide 37: Euro currency exposure and hedging
Euro currency exposure and hedging Balance sheet (as at 30 June 2013) €1.17:£1 as at 30 June 2013 1,741 € assets 86% hedged by € liabilities Euro gross assets 122 Euro debt €275m (£235m) of residual exposure - 11% of Group NAV Euro currency swaps NAV sensitivity versus €1.17: € million Other
Slide 38: Group debt maturity profile
Group debt maturity profile £600m £500m £400m £300m £200m £100m £0m 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024+ Bonds and Notes Bank debt drawn Cash Undrawn Facilities Average maturity of gross borrowings 7.8 years (31 December 2012: 8.3 years) 37
Slide 39: Appendix III: Continental European Logistics JV
Appendix III Continental European Logistics JV
Slide 40: Key terms of the joint venture
Key terms of the joint venture Capitalisation • Initial equity commitment by PSP Investments of €303 million, of which 50% deferrable at SEGRO’s option for up to 2 years(1) • Non-recourse 5-7 year secured JV debt funding of up to c. €390 million at a c. 40% LTV ratio and a weighted average margin ab
Slide 41: Transaction proceeds and impact on leverage
Transaction proceeds and impact on leverage Net cash proceeds to SEGRO at Closing of £434 million Proceeds to SEGRO(1) (€508 million) with a further £129 million (€152 million) of €m £m consideration deferred for up to two years Sale of Seed Portfolio 973.8 831.6 Flexibility for SEGRO on the def
Slide 42: Impact on SEGRO's earnings
Impact on SEGRO’s earnings Full-year reduction in EPRA post-tax earnings of £11 Annualised Impact on EPRA Post-Tax Earnings(1) million (€13 million), as a result of: £m pp NRI Impact (54.2) (7.4) ‒ The deleveraging effect from selling 50% of the assets going into the Venture (loss of rents less in
Slide 43: Forward-looking statements
Forward-looking statements This presentation may contain certain forward-looking statements with respect to SEGRO’s expectations and plans, strategy, management’s objectives, future performance, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty