SEGRO plc · LSE:SGRO
SEGRO — Investor Presentation (September 2012)
36 slides from SEGRO's investor presentation, September 2012
Slide 1: Investor Presentation September 2012
Investor Presentation September 2012 0
Slide 2: 2012 Half Year Results - Headlines
2012 Half Year Results - Headlines Further operational progress - Good underlying earnings momentum with EPRA EPS up 5.3% to 9.9p - Vacancy maintained at 9.1%; costs reduced; good progress with mainly pre-let development programme Encouraging start to the strategic reshaping of our portfolio - £1,12
Slide 3: SEGRO today – a unique platform
SEGRO today – a unique platform A leading European REIT with AUM of £5.4bn industrial and logistics specialist UK 70% an attractive asset class Continental Europe 30% Strong market positions with excellent quality assets UK: London & SE England France/Germany/Poland Logistics 20% High quality, diver
Slide 4: Industrial and logistics – An attractive asset class
Industrial and logistics – An attractive asset class Light industrial / • Multi occupier estates IPD Total Returns % from 1986 to 2011 (annualised to 2011) urban logistics • Located in and around major conurbations Logisticswarehousing warehousing Logistics • Standard buildings of varying sizes suit
Slide 5: Strategy to create a leading income-focused REIT
Strategy to create a leading income-focused REIT GOAL: The best owner-manager & developer of industrial property in Europe Disciplined Operational Capital Excellence Allocation STRATEGY: Allocate capital to the Deliver great customer markets and assets likely to service and optimise produce the best
Slide 6: Creating the "Right Portfolio Shape" is a fundamental element of Disciplined Capital Allocation
Creating the “Right Portfolio Shape” is a fundamental element of Disciplined Capital Allocation Total portfolio 30 June 2012 Right asset class – industrial & logistics Non-core 19% Right geographies – larger more liquid markets and where the demand/supply Core balance is most favourable 81% Right po
Slide 7: Four strategic priorities to transform our performance
Four strategic priorities to transform our performance 1. Re-shape the existing portfolio • Divest underperforming assets which do not fit our strategic criteria • Reduce land holdings and other non-income producing assets 2. Re-invest – grow AUM in a smaller number of core markets through developme
Slide 8: H1 2012 - Encouraging progress with strategic priorities
H1 2012 - Encouraging progress with strategic priorities 1. £503m of non-core disposals 3. £281m reduction in net debt • 3 significant UK portfolio sales and various smaller • 12% reduction in net debt due to net disposal deals in UK and Continental Europe - mainly activity secondary / regional indu
Slide 9: H1 2012 Financial Results
H1 2012 Financial Results Earnings Net Asset Value Outlook EPRA EPS up 5.3% to 9.9 pence EPRA NAV per share down Reaffirming our intention to at least from 340p maintain the current level of dividend during the portfolio re-shaping exercise • 1.0% increase in like for like • £92m (21%) valuation • G
Slide 10: Insolvency rates generally low as a result of our diversified customer base
Insolvency rates generally low as a result of our large and diversified customer base 3% Percent of annualised rental income Karstadt Quelle lost through insolvencies 2% 1.5% 1% 0.7% 1.1% 1.7% 0.7% 1.2% 0.6%* 0% 2007 2008 2009 2010 2011 H1 2012 9 *Excluding Neckermann which became insolvent on 18 Ju
Slide 11: £816m of non-core assets remaining
£816m of non-core assets remaining Valuation Income UK Europe Total Total (£m) (£m) (£m) (£m) Neckermann 0 43 43 12 Other ‘Big four’ assets 84 204 288 24 Smaller industrial assets 204 217 421 34 Other land holdings 10 54 64 - Total 298 518 816 70 Valuations as at 30 June 2012, including joint ventur
Slide 12: Summary
Summary Further operational progress – core portfolio performing well Encouraging start to the strategic reshaping of our portfolio Making good progress towards our goal of creating a leading, income-focused REIT 11
Slide 13: Appendix I – Financials
WHERE BUSINESS WORKS Appendix | Financials
Slide 14: Good underlying earnings momentum; 5.3% increase in EPRA PBT
Good underlying earnings momentum; 5.3% increase in EPRA PBT H1 2012 H1 2011 £m £m Gross rental income 156.9 161.5 Property operating expenses (26.0) (26.0) Net rental income 130.9 135.5 Joint venture management fee income 2.9 1.8 Share of joint ventures’ EPRA profit after tax1 10.1 9.7 Administrati
Slide 15: Further reduction in the total cost ratio
Further reduction in the total cost ratio 35 30.4% 29.9% Total cost ratio* (%) 30 28.1% 24.3% 25 22.4% 20 FY 2008 FY 2009 FY 2010 FY 2011 H1 2012 H1 2012 H1 2011 Movement (£m) (£m) (%) Property operating expenses (26.0) (26.0) - Administration expenses (13.1) (15.8) (17.1) *Total costs as a percenta
Slide 16: £281m reduction in net debt: Solid financial position
£281m reduction in net debt: Solid financial position 30 June 31 December 2012 2011 Available funds – cash & undrawn facilities (£m) 618.9 456.1 Net borrowings (£m) 2,022.3 2,303.4 Loan to value ratio (%) 49 50 Weighted average cost of debt* (%) 5.1 4.8 Average duration of debt (years) 9.1 8.8 Inter
Slide 17: Cash flow summary
Cash flow summary H1 2012 H1 2011 £m £m Cash flow from operations 107.4 106.5 Finance costs (net) (52.3) (54.3) Dividends received (net) 2.3 3.3 Tax paid (net) (12.2) (2.1) Free cash flow 45.2 53.4 Capital expenditure (excluding trading properties) (64.6) (65.6) Investment property sales 352.5 21.8
Slide 18: Euro currency management and hedging
Euro currency management and hedging Balance sheet (as at 30 June 2012) •€1.24:£1 as at 30 June 2012 Euro gross assets 1,673 Euro debt •€ assets 89% hedged by € liabilities 117 Euro currency swaps •€214m (£173m) of residual exposure – 7% of Group NAV € million Other Euro liabilities 1,887 1,270 NAV
Slide 19: EPRA NAV per share bridge
EPRA NAV per share bridge 10p (1)p (10)p 340p (22)p Core (3)p Non-core (19)p 317p NAV DECEMBER 2011 EPRA PBT Other Dividend Realised and unrealised NAV JUNE 2012 valuation movements 18
Slide 20: Valuation movements support our strategic selection of assets and markets
Valuation movements support our strategic selection of assets and markets Greater Thames Valley France Germany Poland & Czech Benelux & TOTAL 5 London & the Regions Republic Other 0.4 0.1 0 *Valuation movement (%) (0.5) (0.9) (1.0) (1.4) (1.7) (2.3) (5.9) -5 (5.3) (5.6) (6.2) -10 (16.6) (11.6) -15 (
Slide 21: A diversified income stream
A diversified income stream Headline rent by customer geography Headline rent by customer type Other Food Poland & Czech 7% Other 5% Republic 15% 7% Engineering 13% France 8% Utilities Finance & media 8% 7% Germany 8% Comms & technology 11% UK 70% Transport & distribution Retail 26% 15% SEGRO has ov
Slide 22: Top customers represent 22% of the Group's headline rent
Top 20 customers represent 22% of the Group’s headline rent (excluding Neckermann) Customer Type Customer Type 1 Telefonica/O2 Communications & technology 11 Jacobs Engineering & electrical 2 Deutsche Post/DHL Transport & distribution 12 Equinix Communications & technology 3 Krauss-Maffei Engineerin
Slide 23: Appendix II – Core and non core analysis
Appendix II Core and non core analysis 22
Slide 24: Overall performance of core portfolio supports our strategic selection of assets and markets
Overall performance of core portfolio supports our strategic selection of assets and markets Core Big five Other non- Group core Portfolio value* (£m) 3,483.8 296.8 527.3 4,307.9 (completed properties) Land and developments* (£m) 347.6 33.6 63.4 444.6 Net initial yield (%) 6.1 10.4 7.1 6.5 True equi
Slide 25: £503m of non-core asset disposals; 3.1% average discount to Dec 2011 valuations
£503m of non-core asset disposals; 3.1% average discount to Dec 2011 valuations Month Portfolio/Asset Acquirer Sale proceeds Net initial yield (£m) (%) February Four regional UK estates Ignis 71.2 6.5 April IQ Farnborough Harbert 90.2 6.5 May Four regional UK estates Harbert 204.5 6.7 July 10 region
Slide 26: Thales, Crawley
Thales, Crawley Key information: A 35,000 sq m bespoke office and R&D campus for French defence contractor, Thales, located close to Gatwick airport in Crawley Pre-let development agreed in 2005; completed in 2007 Total development cost £60m Vacancy 0.0% at 30 June 2012 WAULT to break 13.5 years at
Slide 27: Neckermann, Frankfurt
Neckermann, Frankfurt Key information: A 309,000 sq m campus including offices and bespoke distribution facilities for the German retailer, Neckermann Acquired in 2007 as a sale & leaseback to Neckermann Asset valued at £43m at 30 June 2012 Neckermann filed for administration on 18 July 2012 Potenti
Slide 28: Energy Park, Vimercate (Milan)
Energy Park, Vimercate (Milan) Key information: A 70,000 sq m office and R&D campus located c.20km north-east from central Milan close to the A4 highway Acquired in 2007 as a long term re-development opportunity - First new building of 10,900 sq m completed in 2009; 100% occupied (SAP principal tena
Slide 29: Pegasus Park, Brussels
Pegasus Park, Brussels Key information: A high quality 82,000 sq m modern suburban office park located approximately 8km east of Brussels within close proximity to the international airport First building acquired in 1984 Site developed over a number of years Last development completed in 2009 Vacan
Slide 30: MPM/Siemens, Munich
MPM/Siemens, Munich Key information: A large 155,000 sq m engineering and manufacturing facility leased by Krauss-Maffei (formerly MPM) and Siemens (as a sub-tenant). Acquired in 2007 as a sale & leaseback to MPM Vacancy 0.0% at 30 June 2012 WAULT to break 10.6 years at 31 March 2012 29
Slide 31: Appendix III – Reinvestment: Development and acquisitions
Appendix III Reinvestment: Development and acquisitions 30
Slide 32: £179m of development capex invested or committed in H1
£179m of development capex invested or committed in H1; 9.7% average expect yield Logistics Industrial Zabka in Tychy, Poland DB Schenker at the Portal Site, Heathrow Completed January 2012 Due to be completed August 2012 Data centre Industrial Gyron at the Slough Trading Estate Parc des Damiers in
Slide 33: Significant earnings momentum from the current development pipeline
Significant earnings momentum from the current development pipeline Project Customer Space to be Project Customer Space to be built (sq m) built (sq m) UK CONTINENTAL EUROPE Pre-let projects under construction Pre-let projects under construction STE Infinity 11,600 Frankfurt, Germany Pro Tex (30%)/s
Slide 34: £65m acquisition of the UK Logistics Fund
£65m acquisition of the UK Logistics Fund £315m portfolio acquisition in a 50/50 JV partnership with Royal Mail, Birmingham Moorfield Real Estate Fund (SEGRO’s equity contribution £65m) 14 prime logistics warehouses, located predominantly in the Midlands and South Excellent customer base, including
Slide 35: £130m acquisition of French logistics assets
£130m acquisition of French logistics assets Ris Orangis, Ile de France £130m acquisition, due to complete September 2012 13 prime logistics assets in the Ile de France and Lyon; close to our existing assets Strong customer line-up: UPS, Geodis, Saint-Gobain Saint Witz, Ile de France €14.2m of high
Slide 36: 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