Regional Reit Ltd. · LSE:RGL
Regional Reit — H1 2019 Earnings Presentation
43 slides from Regional Reit's earnings presentation, Sep 5, 2019
Slide 1: Investor Presentation Half year to 30 June 2019
Investor Presentation Half year to 30 June 2019 regionalreit.com regionalreit.com Active Asset Management continuing to deliver Yield 1
Slide 2: Introduction
Introduction Introduction Stephen Inglis Chief Executive Officer Financial Highlights Market Overview and Outlook Portfolio Derek McDonald Managing Director Financial Information Dividend & Performance Appendix Simon Marriott Investment Director regionalreit.com Offices held at London and Scottish P
Slide 3: Financial Highlights – Active Asset Management delivering yield
Financial Highlights – Active Asset Management delivering yield Dividend yield c.8%* Dividend declared for 2019 • H1 2019 : 3.80pps +3% Progressive dividend policy • H1 2018: 3.70pps One of the highest dividends • FY 2019 Target : 8.25pps in the sector Total EPRA accounting return Aztec West, Bristo
Slide 4: 2019 Portfolio Highlights
2019 Portfolio Highlights Proactive property asset management achieving outperformance Sold UK Property Locations as at 30 June 2019 2 properties for £19.7m (after costs) Weighted average net initial yield of c.6.7%; £1.7m profit generated above Dec 18 valuation Acquisition 1 property for £20.0m (be
Slide 5: Regional Offices
Regional Offices Central London & regional office returns Outperformance of regional offices 25% 22.9% 19.3% • Comprises 78.2% by value of portfolio 20% 18.5% 16.3% • CBRE research – highlights 2019 regional offices 15% outperformed: 12.0% 11.5% 10.8% - Regional office returns of 10.8% 10% 8.0% - Ce
Slide 6: Regional Industrial
Regional Industrial Occupier Demand Continues in the UK industrial & logistics take-up (million sq. ft.) UK Industrial Market Q1 Q2 25 • Comprises 14.3% by value of portfolio H1 2018, 19.3m sq. ft. 20 H1 2019, • Cushman & Wakefield - take-up in the first 6 15.9 m sq. ft. months of 2019 totalled 15.9
Slide 7: Outlook
Outlook • Regional offices have outperformed in comparison to central London offices, delivering Regional commercial superior returns of 10.8% in the 12 months ended July 2019 in comparison to central London office returns of 4.9% – a trend that has been witnessed over the last three property – rema
Slide 8: Portfolio
Portfolio regionalreit.com 8
Slide 9: £721.7m Property Portfolio
£721.7m Property Portfolio IPO – November 2015 31 December 2018 30 June 2019 Sector Split (% by value) 5.0% 7.1% 6.0% 1.5% 11.3% 1.4% (£19.4m) (£50.8m) (£43.3m) (£10.7m) (£43.3m) (£9.9m) 14.3% Office 15.5% (£103.1m) (£111.3m) 25.3% Industrial (£97.8m £386.1m £718.4m £721.7m Retail Other 58.4% 78.2%
Slide 10: Highly Diversified Portfolio
Highly Diversified Portfolio Administrative and Diversified Tenant Base Tenants by SIC code, as a % of gross rent support service activities Professional, scientific 13.0% and technical activities • Diversified income - large tenant mix 13.6% (12.1%) (10.4%) Public Sector • No tenant > 3.0% of rent
Slide 11: Financial Information
Financial Information regionalreit.com 11
Slide 12: Generating Stable Income
Generating Stable Income Half year ending 30 June 2018 Half year ending 30 June 2019 Change* EPS (fully diluted) 12.0pps 2.9pps (9.1pps) Net rental income (excl. service charge income) £30.6m £29.9m (£0.7m) EPRA cost ratio (incl. direct vacancy costs) 41.8% 31.3% 1050bps Adj. EPRA cost ratio (excl.
Slide 13: Financial Position Remains Strong, Flexible and Defensive
Financial Position Remains Strong, Flexible and Defensive Year ending 31 December 2018 Half year ending 30 June 2019 Change Investment Property £718.4m £721.7m £3.3m NAV (fully diluted) 115.2pps 113.7pps (1.5pps) EPRA NAV (fully diluted) 115.5pps 114.3pps (1.2pps) Bank borrowings (incl. zero dividen
Slide 14: Debt Facilities – 100% fixed or hedged
Debt Facilities – 100% fixed or hedged Lender Original Facility Outstanding Debt* Maturity Date Gross Loan to Annual Interest £'000 £'000 Value* % Rate % Royal Bank of Scotland 55,000 45,919 Jun-24 42.0 2.15 Over 3mth £ LIBOR Scottish Widows Ltd. & Aviva Investors Real Estate 165,000 165,000 Dec-27
Slide 15: Dividend and Performance
Dividend and Performance regionalreit.com 15
Slide 16: Dividends and performance
Dividends and performance Consensus Mean Dividend Yield Estimate Total Return since Regional REIT IPO (Nov 15) NewRiver REIT 12.5% -33.0% AEW UK REIT 8.8% 24.0% Regional REIT 7.9% 36.0% Real Estate Investors 7.2% -2.0% Palace Capital 6.9% -8.0% Town Centre Securities 6.2% -30.0% Custodian REIT 5.7%
Slide 17: Appendix
Appendix Financials Property Portfolio Property Case Studies regionalreit.com Appendix 17
Slide 18: Financial – Statement of Comprehensive Income
Financial – Statement of Comprehensive Income Half year-end 2018 Half year-end 2019 Change (£’000) (£’000) (£’000) Rental Income 36,706 35,411 (1,295) Property costs (9,796) (9,399) 397 Net rental income 26,910 26,012 (898) Administrative & other expenses (9,288) (5,430) 3,858 Operating profit (loss
Slide 19: Financial – Statement of Financial Position
Financial – Statement of Financial Position Half year-end Half year-end Year-end 2018 Year-end 2018 June 2019 Change June 2019 Change (£’000) (£’000) (£’000) (£’000) Assets Non-current Assets Liabilities Current liabilities Investment properties 718,375 721,695 3,320 Bank and loan borrowings – curre
Slide 20: Delivering Returns to Shareholders
Delivering Returns to Shareholders • EPRA : £426.2m (114.3pps fully diluted) (31 Dec’18: £430.5m, 115.5pps fully diluted) • IFRS: £423.8m (113.7pps fully diluted) (31 Dec’18: £429.5m, 115.2pps fully diluted) EPRA Net Asset Value - Diluted Bridge 30 June 2019 125 7.0 0.2 0.4 (1.5) 120 (1.0) (1.8) Cha
Slide 21: Debt Metrics
Debt Metrics Net Loan to Value - % Weighted Average Cost of Debt - % Weighted Average Debt – years 50 3.9 9 8 47.3 3.8 7.8 3.8 3.8 3.8 45 45.0 7 3.7 6.4 3.7 6 41.2 6.0 40 39.9 5.4 5 3.6 38.3 4 35 3.5 3.5 3 2.3 30 3.4 2 HY 2017 FY 2017 HY 2018 FY 2018 HY 2019 HY 2017 FY 2017 HY 2018 FY 2018 HY 2019 H
Slide 22: Property Portfolio
Property Portfolio regionalreit.com 22
Slide 23: Diversified Income Stream
Diversified Income Stream Portfolio details at 30 June 2019 Gross % by Occupancy WAULT to Average Capital Sector Properties Valuation Sq. ft. rental ERV Yield valuation (EPRA) first break rent rate income (£m) (mil) (%) (yrs) (£m) (£psf) (£m) (£psf) Net initial Equivalent Reversionary Office 106 564
Slide 24: Top 15 Tenants (Share Of Rental Income)
Top 15 Tenants (Share Of Rental Income) Tenant Property Sector WAULT to first Lettable Annualised % of Gross rental break (years) area gross rent income (Sq Ft) (£m) Administrative and support service Barclays Execution Services Ltd Tay House, Glasgow 2.4 78,044 1.6 2.8% activities Buildings 3 HBOS
Slide 25: Top 15 Investments (Market Value)
Top 15 Investments (Market Value) EPRA Annualised WAULT to Market value % of Lettable area % of gross Property Sector Anchor tenants Occupancy gross rent first break (£m) portfolio (Sq Ft) rental income (%) (£m) (years) Barclays Execution Services Ltd, University Tay House, Glasgow Office 32.9 4.6%
Slide 26: Diversified Office – led portfolio focused on the UK regions
Diversified Office – led portfolio focused on the UK regions Gross property assets by value - %* WAULT - years Average Rent & Capital rate - £psf 6.0 £10 £9.64 £120 100% £9.40 £9 90% £8.46 £100.82 14.3% 5.0 £96.64 £100 15.5% 5.4 5.5 £8 80% 21.0% 5.3 £89.20 70% £7 4.0 £80 60% £6 3.0 3.5 3.5 50% 3.4 £
Slide 27: Investment Property Activity – proactive strategy
Investment Property Activity – proactive strategy Investment Properties Bridge 30 June 2019 760 740 1.7 718.4 20.4 3.9 721.7 720 (2.9) 700 CAPEX yet to be captured in the (19.7) valuations 680 £ millions 660 640 620 600 580 560 Valuations Disposals (Net of Acquisitions (Incl. Gain/(loss) on the CAPE
Slide 28: Property Case Studies
Property Case Studies • Active Asset Management Initiatives • Disposals • Acquisition H1 2019 • Post 30 June 2019 Acquisition regionalreit.com 28
Slide 29: Active Asset Management Initiatives
Active Asset Management Initiatives regionalreit.com regionalreit.com 29
Slide 30: Mile End Road, Colwick
Mile End Road, Colwick Acquired as part of Empire Portfolio in August 2014 The property comprises a three-bay warehouse and production unit, incorporating two storey offices in part Located in Colwick which is approximately 3 miles east of Nottingham City Centre off the A412 Property became vacant i
Slide 31: Century Way, Thorpe Park, Leeds
Century Way, Thorpe Park, Leeds Before After Acquired in 2014 The property comprises a modern good quality office pavilion set over three storeys providing a combined floor area of 30,840 sq. ft. Thorpe Park is considered to be one of the region’s most popular business parks. Located at J46 of the M
Slide 32: Aztec West, Bristol
800 Aztec West, Bristol Acquired March 2016 Before After A 71,651 sq. ft. three storey office located in the Aztec West Business Park near the M4 / M5 interchange in Bristol The building was previously occupied by EE Recently undertaken a major “back to shell” refurbishment of the whole building com
Slide 33: Before (Exterior)
Before (Exterior) regionalreit.com 33
Slide 34: After (Exterior)
After (Exterior) regionalreit.com 34
Slide 35: 2800 The Crescent, Birmingham Business Park
2800 The Crescent, Birmingham Business Park Before After Acquired as part of Empire Portfolio in August 2014 28,996 sq ft HQ building over two floors with 140 car spaces located on premier business park in proximity to Birmingham Airport Let to Severn Trent Water on lease expiring March 2016 The bui
Slide 36: Disposals
Disposals regionalreit.com regionalreit.com 36
Slide 37: Aspect Court, Pond Hill, Sheffield
Aspect Court, Pond Hill, Sheffield Acquired May 2016 A 57,976 sq. ft. fully let city centre office property with 37 on site car parking spaces and within walking distance of Sheffield station and university campus At acquisition, the property was fully let to Sheffield Hallam University and SDL Plc
Slide 38: Tokenspire Business Park, Beverley
Tokenspire Business Park, Beverley Acquired in March 2016 as part of the Wing portfolio, a multi-let industrial property within a secure site The industrial estate extends to over 24 acres and consists of 322,211 sq. ft. of commercial space The park is situated on the A1174 and is located 10 minutes
Slide 39: Acquisition H1 2019
Acquisition H1 2019 regionalreit.com regionalreit.com 39
Slide 40: Norfolk House, Birmingham
Norfolk House, Birmingham Acquisition of office property for £20.0m, with a current net initial yield of 7.9%, in an off market transaction. The freehold property is in a highly commercial location in the centre of Birmingham; situated adjacent to Birmingham New Street Station, the Bullring Shopping
Slide 41: Post 30 June 2019 Acquisition
Post 30 June 2019 Acquisition regionalreit.com 41
Slide 42: Acquisition of £25.9 million portfolio
Acquisition of £25.9 million portfolio Acquisition of a portfolio of six office assets for a total consideration of £25.9million The portfolio comprises six offices located in Birmingham, Bristol, Cardiff, Chester, Glasgow and Manchester The assets total circa 172,442 sq. ft. The portfolio is expect
Slide 43: Disclaimer
Disclaimer This document (“Document”) (references to which shall be deemed to include any information which has been made or may be supplied orally in connection with this Document or in connection with any further enquiries) has been prepared by and is the sole responsibility of Toscafund Asset Man