Londonmetric Property Plc · LSE:LMP
Londonmetric Property — Q2 2022 Earnings Presentation
36 slides from Londonmetric Property's earnings presentation, Nov 23, 2022
Slide 1: Half Year Results
HALF YEAR RESULTS Half Year Ended 30 September 2022 www.londonmetric.com
Slide 2: Agenda
AGENDA Highlights Financial Review Property Review Outlook Q&A 2
Slide 3: Overview
Overview Sector calls, asset selection and income focus delivering strong portfolio metrics 5 year swaps • Macro investment backdrop shifted – Economic and political environment deteriorated +200bps Since March 22 – Real estate capital markets re-calibrating Urban logistics • Portfolio shaped by str
Slide 4: Financial Highlights
Financial Highlights Half Year to 30 September 2022 P&L Sept 2022 Sept 2021 Change HY 23 dividend cover 112% Net Rental Income £72.1m £63.5m +13.5% Allowing further progression EPRA Earnings £50.2m £44.2m +13.6% Debt hedged1 EPRA Earnings (pps) 5.14p 4.87p +5.5% 85% Up from 71% Dividend (pps) 4.6p 4
Slide 5: Financial Review
LONDONMETRIC lay PROPERTY PLC FINANCIAL REVIEW
Slide 6: Income Statement
Income Statement1 30 Sept 2022 30 Sept 2021 Change Net rental income Net rental income £72.1m £63.5m +13.5% 3 years: +31% Administrative costs £(8.6)m £(8.2)m Rent collection Net Finance costs £(13.6)m £(12.0)m 99.9% £37k outstanding EPRA Earnings £50.2m £44.2m +13.6% EPRA cost ratio3 EPRA Earnings
Slide 7: Balance Sheet
Balance Sheet1 30 Sept 2022 31 March 2022 Property portfolio2 £3,455.3m £3,598.4m Cash £49.1m £54.3m Debt £(1,204.8)m £(1,053.7)m Fair value of derivatives £19.0m £0.1m Other net liabilities £(48.8)m £(39.4)m IFRS Net Assets £2,269.8m £2,559.7m EPRA Adjustments £(19.0)m £(0.1)m EPRA Net Tangible Ass
Slide 8: Financing Activity
Financing Activity • Existing debt facilities enhanced Debt expiry profile (£m) – £550m lengthened maturity 1,400 • New debt facilities PPE of £300m 1,200 25.0 107.7 140.0 – £225m new RCF facility, at existing RCF rate 1,000 New debt facilities de-risk maturities 225.0 – £75m accordion facility 800
Slide 9: Debt Metrics
Debt Metrics Debt Metrics1 23 Nov 30 Sept 31 March 2022 2022 2022 Total facilities3 £1,363m £1,288m £1,297m Gross Debt £1,130m £1,205m £1,054m Headroom £262m £134m £299m Average maturity2 6.2 years 5.8 years 6.5 years Hedging2 85% 77% 71% Average cost of finance 3.4% 3.2% 2.6% LTV 32.1% 28.8% Intere
Slide 10: Income Progression
Income Progression 160.0 10.0 4.7 3.9 150.0 2.9 (£m) Reviews 1.7 Lettings 2.6 161.3 140.0 150.5 150.5 151.3 151.3 147.6 143.3 143.3 130.0 120.0 Contracted Asset Investment/ Contracted Void & Net Embedded Pro Rent management Other Rent development Divestment2 reversion Forma 31-Mar-22 30-Sept-22 inco
Slide 11: Delivering Long Term Shareholder Returns
Delivering Long Term Shareholder Returns Consistently delivering attractive compound led returns Net Rental Income Earnings Total Property Return Total Shareholder Return (£m) (pps) (rebased to 100)2 (rebased to 100)1,2 140 11.0 320 400 10.0 300 120 350 9.0 280 Share price 100 8.0 260 Dividend 300 7
Slide 12: Property Review
LONDONMETRIC lay PROPERTY PLC PROPERTY REVIEW
Slide 13: Our Portfolio
Our Portfolio Aligned to structurally supported sectors Value1 EY2 EY WAULT TPR3 LFL 30 Sept 22 (£m) (%) mvmt (Years) (%) Income (bps) Growth Urban, 42.9% Urban 1,479 4.8 +67 8.6 -6.6 4.1% Regional 702 4.4 +36 13.6 -6.9 0.6% Distribution Mega 366 4.3 +61 17.3 -12.1 0.6% Grocery-led 73.9% long income
Slide 14: Distribution
Distribution Aligned to a structurally supported sector enjoying highly favourable demand/supply dynamics Urban Regional Mega Value £2,547m Urban £1,479m Occupancy 99% Mega & regional: 100% WAULT 11.2 years • 134 assets • 14 assets • 3 assets 2022: 11.3 years • £59m rent (£7.90 psf) • £27m rent (£6.
Slide 15: Long Income
Long Income Operationally light assets let to high quality occupiers with long and strong income characteristics Grocery NNN Retail Trade & DIY Value2 £808m Grocery led: £359m WAULT 13.3 years 2022: 14.1 years Occupancy • 69 assets • 25 assets • 33 assets 100% • £16m rent (£19.50 psf) • £14m rent (£
Slide 16: Investment market
Investment market Uncertainty creating dislocation across investment markets • Interest rates remain a critical yardstick LondonMetric disposals – Volatile swap rates creating illiquidity, but off peak £140m – Buyers and sellers are re-calibrating NIY 4.2%, WAULT 7 years – Debt availability and refi
Slide 17: Occupier market
Occupier market Occupational market fundamentals remain strong • Occupational demand remains strong in core sectors LondonMetric lettings & regears (H1) – Structural tailwinds: online, localisation & onshoring +£2.6m rent pa – Logistics take up of 38.5m sq ft YTD, +15% v LT average1 Across 27 transa
Slide 18: Rent reviews
Rent reviews Strong rental increases helping to deliver like for like income growth of 2.9% over H1 • Sustainable and growing income, reviews added £1.7m p.a. 25% 25% RPI 23% – Contractual reviews +17%¹ 20% 18% CPI 16% 20% – Open market reviews +22% 15% 10% 8% – Urban logistics outperforming +25%1 a
Slide 19: Actively improving the portfolio quality
Actively improving the portfolio quality Strong stewards of underinvested assets and improving the portfolio’s sustainability through our activities • De-risked developments adding high quality income BREEAM Very Good1 – 296k sq ft completed H1: +£1.8m income 95% On developments in FY 23 – 560k sq f
Slide 20: Outlook
LONDONMETRIC lay PROPERTY PLC OUTLOOK
Slide 21: Outlook
Outlook Structurally supported real estate with strong and growing income characteristics will outperform • Fundamentals remain strong in preferred sectors – Structural demand from changing consumer behaviour and geopolitical event – Value and convenience well positioned given challenging environmen
Slide 22: Appendices
LONDONMETRIC lay PROPERTY PLC APPENDICES
Slide 23: Swap rates driving sentiment
Swap rates driving sentiment Borrowing costs increased significantly over the year 6.0 5Y Swap 5.0 10Y Gilt 4.0 3.0 2.0 1.0 0.0 Jan/2022 Feb/2022 Mar/2022 Apr/2022 May/2022 Jun/2022 Jul/2022 Aug/2022 Sep/2022 Oct/2022 Nov/2022 23
Slide 24: Warehouse Affordability
Warehouse Affordability¹ Occupiers are less sensitive to rent rises than other costs • Transport & labour are majority of total operating costs – 85% for parcel operators & 77% for ecommerce companies Breakdown of operating costs – Rent represents just 8% & 13% respectively for logistics operators –
Slide 25: Portfolio Metrics
Portfolio Metrics Area Valuation Revaluation MSCI WAULT Contracted Rent Average (Share) Surplus/(Deficit) CVg2,4 Occupancy NIY1 EY⁵ (years) Rent Uplifts Rent (m sq As at 30 September 2022 ft) (£m) (£m) (%) (%) (%) (%) (%) Expiry Break (£m) (%) (£psf) Mega distribution 2.4 366.0 (59.4) (14.0) (13.6)
Slide 26: Total Property Returns – LondonMetric
Total Property Returns – LondonMetric 250 225 Urban (+129%) Regional (+111%) 200 175 LMP All Property (+78%) Mega (+67%) 150 Long Income (+51%) MSCI All Prop (+35%)2 125 100 H1 FY19 H2 FY19 H1 FY20 H2 FY20 H1 FY21 H2 FY21 H1 FY22 H2 FY22 H1 FY23 1. Source: MSCI to 30 Sept 2022 26 2. Comparison MSCI
Slide 27: Income Breakdown
Income Breakdown Delivering long term reliable, repetitive & growing income with diversification Top 10 occupiers Contractual Uplifts 60.1% 3.9% Primark Fixed 8.2% Uplift, 3.2% Market 14.1%, Amazon Review, 3.4% Sept 2022 – 27% 39.9%, RPI 2.8% Linked, Argos 29.9%, 3.4% Mar 2021 – 36%1 CPI 2.8% Linked
Slide 28: Inflation captured through index linked rent reviews
Inflation captured through index linked rent reviews Warrington Our index linked reviews across our portfolio have a range of collars and caps typically between 1% to 4% over a five year period: • At 22% inflation over a five year period (4% p.a.), 82% of CPI inflation is captured under our index-li
Slide 29: Distribution Assets
Distribution Assets Top 10 assets Occupier Annualised (by value) rent (£m) Islip 1 Primark 5.9 Dagenham 2 Eddie Stobart 4.1 Bedford 3 Argos 4.1 Warrington 4 THG 4.1 North East & Yorkshire Croydon 5 Tesco 1.9 4&7 4% North West Bedford 6 Movianto 2.8 10% Warrington 7 Amazon 2.4 10 Other 1 3% Swindon 8
Slide 30: Net Zero Carbon Ambition
Net Zero Carbon Ambition #1 Operations to be #2 Developments to be #3 Buildings to be net zero by 2023 net zero by 2030 net zero by 2035 Assets where we have control & Reduce emissions from Help occupiers to lease NZC ready management will be NZC by 2023 development & offset residual buildings, offs
Slide 31: Environmental improvements
Environmental improvements Improving the sustainability of our portfolio through refurbishment and green initiatives • Strong stewards of underinvested assets, with capital and expertise • Cost effective improvements through regears/accretive capex • Occupier approach framing our decisions • Strateg
Slide 32: Developments Summary
Developments Summary Sq ft PC1 BREEAM Rent/ YOC Total Up to 30 H2 FY Comment 000 Very Good uplift (%) cost Sep 22 23 24 £m £m £m £m £m Ipswich 296 Q3 22 100% 1.8 4.6 39 39 - Tottenham 23 Q3 22 0.5 5.2 9 9 - Completed 319 2.3 4.7 48 48 - in H1 Huntingdon 300 Q4 22 100% 2.0 3.7 54 41 13 Pre Let to AM
Slide 33: Acquisitions - H1 2023
Acquisitions - H1 2023 Sector Geography Value Yield WAULT (LM share) (years) £m NIY Reversion1 Expiry 1B Colliers Wood Urban Logistics London & South East 4.1 4.3 4.3 0.0 0.0 Stratford Urban Logistics London & South East 6.0 4.5 4.5 0.0 0.0 Hackney Urban Logistics London & South East 2.6 4.3 5.2 20.
Slide 34: Disposals - H1 2023 / Post Period End
Disposals - H1 2023 Sector Geography Value WAULT (LM share) (years) £m NIY Expiry 1B Reading Regional Distribution London & South East 60.6 3.5 3.1 3.1 X3 Multi-let assets in Birmingham Urban Logistics Midlands 21.6 5.7 3.2 2.6 Greenwich Leisure & Hotel London & South East 4.6 4.4 22.0 22.0 Cardiff
Slide 35: Debt Facilities (30 Sept 2022)
Debt Facilities (30 Sept 2022) Lender Facility Maturity1 Expiry (£m) (years) Wholly-owned portfolio Unsecured RCF (2021) Syndicate 225.0 2.6 2025 Unsecured RCF (2021) Wells Fargo 175.0 4.6 2027 Unsecured short-term Barclays 150.0 1.2 2022-24 Private Placement (2021) Syndicate 380.0 9.7 2028-36 Priva
Slide 36: Historic Debt Metrics
Historic Debt Metrics Warrington Bedford Loan to Value Ratio Cost of Debt Debt Maturity Interest Cover Ratio (%) (%) (years) (x) 40 4.0 8.0 6.0 38 5.5 35 36 5.2 5.1 3.5 3.5 6.4 6.5 5.0 5.0 5.0 4.7 32 6.0 5.8 4.5 32 32 3.2 5.6 4.3 3.1 5.2 30 4.8 30 29 3.0 2.9 4.7 4.0 2.8 4.2 2.6 4.0 2.5 3.0 20 2.0 2.
LondonMetric Property — Q2 2022 Earnings Presentation on 6ix