Real Estate Investors plc · LSE:RLE
Real Estate Investors — FY2018 Earnings Presentation
27 slides from Real Estate Investors's earnings presentation, March 2019
Slide 1: The UK's Only Midlands Focused REIT: Results for Year Ended 31 December 2018
THE UK’S ONLY MIDLANDS FOCUSED REIT Results for year ended 31 December 2018 Investor and Analyst Presentation THE MIDLANDS INVESTOR REI PLC 0
Slide 2: Introduction
INTRODUCTION Curzon Street HS2 Terminal Image courtesy of Birmingham City Council REI PLC 1
Slide 3: Real Estate Investors Plc
REAL ESTATE INVESTORS PLC Active REI Strong Asset Prudent Attractive Today Platform Management Finance Returns • Midlands focused/ • Internally managed/ • Value creation through • Prudent leverage • Aim to deliver capital Birmingham based proven track reviews, lease renewals, providing certainty and
Slide 4: Highly Experienced Board & Proven Track Record
HIGHLY EXPERIENCED BOARD & PROVEN TRACK RECORD Non-Executive Executive John Crabtree OBE D.UNIV William Wyatt Peter London Paul Bassi CBE DL D.UNIV DSC Marcus Daly FCA Non Executive Chairman Non Executive Director Non Executive Director Chief Executive Officer Finance Director • Joined REI Board in
Slide 5: REI Plc: Building a Business of Substance
REI PLC BUILDING A BUSINESS OF SUBSTANCE Company listed Quarterly dividend on AIM with John Crabtree joins as NEC Peter London payments adopted market cap and William Wyatt as NED joins as NED Gross property assets of £2.3m £10m Placing £20m Placing top £200m 2004 2006 2010 2011 2014 2015 2016 2018
Slide 6: 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 (38%) Asset Management Value & convenience retail Lease renewals HNW/investors/pension f
Slide 7: Highlights and Financials
HIGHLIGHTS AND FINANCIALS Canalside, Birmingham City Centre Did you know?.. Birmingham has 35 miles of canals within the city, 9 miles more than Venice REI PLC 6
Slide 8: FY 2018 Operational Highlights
FY 2018 OPERATIONAL HIGHLIGHTS • Gross property assets: £224.8 million Gross Property Assets £m (FY 2017: £213.1 million), up 5.5% 213.1 224.8 201.9 • Contracted rental income: £17.0 million 157.5 (FY 2017: £16.2 million), up 4.9% 75.2 104.4 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 • Acquisit
Slide 9: FY 2018 Financial Highlights
FY 2018 FINANCIAL HIGHLIGHTS • EPRA NAV per share of 69.3p (FY 2017: 68.9p), up 0.6% EPRA NAV • EPRA EPS 3.9p (FY 2017: 3.3p), up 16.3% 68.9 69.3 64.5 66.2 61.3 • Total Dividend per share of 3.562p, up 14.0% 59.1 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 • Revenue £15.6 million (FY 2017: £14.9
Slide 10: FY 2018 Financials: Growing Income
FY 2018 FINANCIALS: GROWING INCOME • Revenue of £15.6 million – up 5.1% FY 2018 FY 2017 Income Statement £m £m Change • Underlying profit before tax of £7.2 million – up 16.1%* Revenue 15.6 14.9 +5.1% • Pre-tax profit of £8.4 million (FY 2017: £11.3 million) after surplus on revaluation of interest
Slide 11: FY 2018 Financials: Strong Balance Sheet
FY 2018 FINANCIALS: STRONG BALANCE SHEET Gross property assets Net assets of FY 2018 FY 2017 Balance Sheet £m £m Change increased to Property 224.8 213.1 +5.5% £224.8m £128.7m Cash 10.8 4.3 +151.0% 5.5% 1.3% Debt (98.8) (84.6) -16.8% Other (8.1) (5.7) -42.1% Net assets 128.7 127.1 +1.3% EPRA NAV per
Slide 12: Movement in EPRA NAV per Share
MOVEMENT IN EPRA NAV PER SHARE 74 0.3 (3.5) 72 3.8 70 (0.2) 69.3 68.9 68 Pence 66 64 62 60 01 Jan2018 1 Jan 2018 Underlying Profit Revaluation of Properties Dividend Other revaluations 31 Dec 2018 REI PLC 11
Slide 13: Movement in EPRA Earnings per Share
MOVEMENT IN EPRA EARNINGS PER SHARE 4.5 4.0 0.2 3.9 3.5 0.4 0.0 3.3 3.0 2.5 Pence 2.0 1.5 1.0 0.5 0.0 1 Jan 2018 Rental Income Other Expenses & Interest Admin Expenses 31 Dec 2018 REI PLC 12
Slide 14: FY 2018 Financials: Simplified Debt Position
FY 2018 FINANCIALS: SIMPLIFIED DEBT POSITION • Cost of debt lowered to 3.7% at 31 Dec 2018 Debt Structure % Debt Maturity £m (FY 2017: 4.1%) at 31 Dec 2018 at 31 Dec 2018 • Property net LTV 39.8% (FY 2017: 38.3%) Floating (We aim to keep LTV below 40%) 2020 8 Fixed • 67% of debt is fixed • Renewed £
Slide 15: FY 2018 Financials: Growing, Fully Covered Dividend
FY 2018 FINANCIALS: GROWING, FULLY COVERED DIVIDEND • REI adopted a quarterly dividend policy with effect Increasing Shareholder Distribution Year on Year from the financial year beginning 1 January 2016 Interim • Dividend is fully covered by EPRA earnings Final +14% • Aim to grow dividend in line w
Slide 16: Rebirth of a Region
REBIRTH OF A REGION Cityscape, Birmingham City Centre REI PLC 15
Slide 17: An Emerging Economy
AN EMERGING ECONOMY The Next London? Migration Leadership Investment West Midlands is gaining the title Pro-active leadership from City LSH reported that investment as the fastest growing economy No. 1 destination for those migrating from London. Boosted by Mayor Andy Street who recently volumes in
Slide 18: Active Capital Recycling: Making Capital Work
ACTIVE CAPITAL RECYCLING MAKING CAPITAL WORK • Proven track record of putting capital to work Acquisitions & Disposals • Acquisitions of £15.4 million (net of acquisition 70 Acquisitions costs), with a combined income of £1.454 million, Disposals 60 at an average Net Initial Yield of 8.88% and a Rev
Slide 19: Diverse and Attractive Portfolio
DIVERSE AND ATTRACTIVE PORTFOLIO 0% 0% Rent £ 31 Dec 2018 Sector % by Income 3% Office Office 6,440,322 37.86% 3% 5% Traditional Retail Traditional Retail 3,333,828 19.60% Discount Retail Discount Retail 1,713,440 10.07% 6% FoodStores Food Stores 1,011,150 5.94% 38% Medicaland Medical and Pharmaceut
Slide 20: Top Tenants by Income: No Material Exposure
TOP 10 TENANTS BY INCOME NO MATERIAL EXPOSURE Rank Tenant Rent £’000 % Sector Property 1 572 3.36 Discount Retail Crewe Shopping Centre, Acocks Green & Kings Heath >22.07% Top 10 tenants represent 2 518 3.04 Office Birch House, Oldbury only 22.07% of REI’s contracted income 3 481 2.83 Office Molineu
Slide 21: Spotlight on: Midlands Residential Market
SPOTLIGHT ON: MIDLANDS RESIDENTIAL MARKET Annual change In house prices (%) UK Average Performance Factors Property prices in the East and West Midlands Underpinned by low supply Notably lower residential 3.5% are growing by at least 6% per year, outstripping and high demand pricing than London and
Slide 22: Untapped Residential Value: Permitted Development Rights
UNTAPPED RESIDENTIAL VALUE: PERMITTED DEVELOPMENT RIGHTS “OVER 250,000 SQ FT OF POTENTIAL PERMITTED DEVELOPMENT IDENTIFIED WITHIN PORTFOLIO” CITYGATE HOUSE, LEICESTER – Sold for £2.6m with permitted development rights • The property occupies a prominent position on a main • The property has a total
Slide 23: Acquisition: Topaz Business Park, Bromsgrove
ACQUISITION: TOPAZ BUSINESS PARK, BROMSGROVE ASSET OPPORTUNITIES/BENEFITS £4m The current total rent roll represents £16.72 per square foot. Levels of £19.00 per square foot have recently been achieved in the property, which is in line with other local market transactions. Since acquisition, we have
Slide 24: Asset Management Case Studies: Value Add – Active Investors
ASSET MANAGEMENT CASE STUDIES: VALUE ADD – ACTIVE INVESTORS 40 ST PAUL’S SQUARE, BIRMINGHAM • Purchased in June 2015 for £3.75 million • Some of the additional monies were used to create a new space for another tenant in the building that • Following the service of a Break Notice by a tenant, it was
Slide 25: Why REI? Platform, Outlook & Opportunities
WHY REI? PLATFORM, OUTLOOK & OPPORTUNITIES Platform Outlook Opportunities • Aligned management with proven • Operating in a transformational • Selective Investment Sales – track record region in the process of rebirth where asset management has been • Diversified multi-sector portfolio – a • Growing
Slide 26: Operational Team
OPERATIONAL TEAM Ian Clark Andrew Osborne Jack Sears Anna Durnford BSc (Hons) MRICS BSc (Hons) BSc (Hons) MRICS Catherine Gee Donna Mooney Investor Relations Senior Asset Manager Investment Manager Asset Management Property Management Receptionist/Administrator • Joined REI in 2007 • Joined REI in 2
Slide 27: 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