Real Estate Investors plc · LSE:RLE
Real Estate Investors — H1 2021 Earnings Presentation
27 slides from Real Estate Investors's earnings presentation, September 2021
Slide 1: The UK's Only Midlands Focused REIT
THE UK’S ONLY MIDLANDS FOCUSED REIT Results for the period ended 30 June 2021 Investor and Analyst Presentation THE MIDLANDS INVESTOR REI PLC
Slide 2: Introduction
REAL ESTATE INVESTORS PLC INTRODUCTION REI Diversified Active Asset Multi- Attractive Today Portfolio Management banked Returns • UK’s only Midlands • Multi-sector • Value creation rent • Multi-banked across 5 • Progressive dividend focused/ REIT diversification, no reviews, lease renewals, lenders
Slide 3: Highly Experienced Board & Proven Track Record
HIGHLY EXPERIENCED BOARD & PROVEN TRACK RECORD Non-Executive Executive William Wyatt Peter London Ian Stringer 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 2010, • Join
Slide 4: REIT Responsibility - Dividend Maintained Through Challenging Times
REIT RESPONSIBILITY - DIVIDEND MAINTAINED THROUGH CHALLENGING TIMES IN LINE WITH THE COMPANY’S PROGRESSIVE DIVIDEND POLICY SINCE 2012 TOTAL DIVIDENDS DECLARED/PAID TO SHAREHOLDERS = £39.1 MILLION Financial Crisis / General Election / Scottish Referendum / European Referendum / BREXIT / COVID19 2004
Slide 5: 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 Asset Management Value & convenience retail Lease renewals HNW/private investors/ Leisur
Slide 6: Highlights & Financials
HIGHLIGHTS & FINANCIALS Birmingham Commonwealth Games 2022 Image courtesy of Birmingham City Council REI PLC 5
Slide 7: H1 2021 Operational Highlights
H1 2021 OPERATIONAL HIGHLIGHTS Contracted Rental Income £m • Strong overall rent collection for H1 2021 (adjusted for monthly and deferred agreements) of 98.53% despite pandemic impact 17.0 17.7 16.7 16.2 14.9 14.7 • Contracted rental income: £14.7 million p.a. 11.9 (FY 2020: £17.0 million p.a.) 7.7
Slide 8: H1 2021 Financial Highlights
H1 2021 FINANCIAL HIGHLIGHTS • EPRA NTA per share of 57.7p (FY 2020: 55.2p) up 4.5% EPRA NTA • Like for like valuation up 1.88% to £192.8 million 64.5 66.2 68.9 69.3 67.4 61.3 (FY 2020: £189.3 million) 59.1 55.2 57.7 • EPRA EPS 2.1p (H1 2020: 2.20p) down 4.5% • Q2 2021 dividend of 0.75p per share (Q
Slide 9: H1 2021 Financials: Growing Earnings & Income
H1 2021 FINANCIALS GROWING EARNINGS & INCOME • Revenue of £7.7 million (H1 2020: £8.2 million) – down 6% H1 2021 H1 2020 Income Statement £m £m • Underlying profit before tax* of £3.8 million – down 7% Revenue 7.7 8.2 • Pre-tax profit of £9 million (FY 2020: £3.8 million loss) after Cost of sales (0
Slide 10: H1 2021 Financials: Strong Balance Sheet
H1 2021 FINANCIALS STRONG BALANCE SHEET Gross property assets Net assets H1 2021 FY 2020 Balance Sheet £m £m Property 195.2 201.3 £195.2m £103m Cash 9.1 4.2 Debt (96.0) (101.4) Other (5.3) (6.4) Net assets 103.0 97.7 EPRA NTA per share Net LTV Adjustments 2.8 3.5 57.7p 45.1% EPRA NTA 105.8 101.2 Net
Slide 11: Movement in EPRA NTA per Share (p)
MOVEMENT IN EPRA NTA PER SHARE (P) REI PLC 10
Slide 12: Movement in EPRA Earnings per Share (p)
MOVEMENT IN EPRA EARNINGS PER SHARE (P) Note: Chart based on 12 months of EPRA EPS from 1 Jul 2020 to 30 Jun 2021 REI PLC 11
Slide 13: H1 2021 Financials: Simplified Debt Position
H1 2021FINANCIALS SIMPLIFIED DEBT POSITION Debt Structure % Debt Maturity £m • Cost of debt of 3.4% at 30 June 2021 (FY 2020: 3.4%) 47 Fixed Floating • Net LTV 45.1% (target LTV - 40% or below) • 46% of debt is fixed (86% from 1 Jan 2022) 14 32 • Interest cover of 3.3x (FY 2020: 3.2x) 54 • Multi-ban
Slide 14: Attractive Spread Between NIY & Cost of Debt
ATTRACTIVE SPREAD BETWEEN NIY & COST OF DEBT 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2014 2015 2016 2017 2018 2019 2020 2021 Cost of Debt NIY REI PLC 13
Slide 15: Quarterly Dividend Payments Continued Despite Pandemic
QUARTERLY DIVIDEND PAYMENTS CONTINUED DESPITE PANDEMIC Continued dividend payments despite pandemic Shareholder Distribution Year on Year £39.1 million total dividends declared/paid since 2012 Q2 Dividend for 2021 of 0.75p per share (Q2 2020: 0.50p) +7% Interim Paid quarterly +14% COVID19 Fi
Slide 16: Rent Collection Robust Despite COVID19 Backdrop
RENT COLLECTION ROBUST DESPITE COVID19 BACKDROP • We are pleased to report 97.43% rental collection for H1 2021 (adjusted for monthly and deferred agreements) improved from 97.22% reported in our 5 July trading update. • The current quarter (June to September 2021) rent collection so far is 96.58% (
Slide 17: Valuation Recovery: Capital Upside
VALUATION RECOVERY CAPITAL UPSIDE • External valuations by JLL/Cushman & Wakefield/Colliers • Ongoing return to work - occupier decisions - improve occupancy/capital value gain • Pent up demand from new occupiers • Strong private investor market with significant access to low cost of debt and new eq
Slide 18: Valuation Recovery: Break Up Value
VALUATION RECOVERY BREAK UP VALUE REI - STRONG RETAIL STOCK From our retail portfolio, we have 171 properties that could be potentially sold off individually to secure a higher break-up value than they could achieve as a collective parade/asset. These assets represent £8.4 million p.a. rental income
Slide 19: Diversification: Proactive Management - Lease Events
DIVERSIFICATION PROACTIVE MANAGEMENT – 15 LEASE EVENTS 15 key lease events have been completed including 5 lease renewals and numerous matters now ongoing. As a result of initiatives during the period, our WAULT has improved to 5.01 years to break and 6.70 years to expiry (YE 2020: 4.84 years to bre
Slide 20: Enhanced Occupier Demand Post COVID19
ENHANCED OCCUPIER DEMAND POST COVID19 • Increase in occupier demand from roadside/fast food and drive thru occupiers • We have identified sites that have previously been either unoccupied or redundant land • Growing appetite from occupiers – competitive terms to good covenants - increase in value •
Slide 21: Diverse and Attractive Portfolio
DIVERSE AND ATTRACTIVE PORTFOLIO FS % by 6.02% Sector £ per annum Income FIN Office 4,865,051 33.05 74.33% of 4.33% our offices Office Traditional Retail 2,911,048 19.77 Other are ‘out of 10.08% 33.05% Discount Retail - Poundland/B&M etc 1,751,402 11.90 town’ Medical and Pharmaceutical - RBC Boots/H
Slide 22: Top Tenants by Income: No Material Exposure
TOP 10 TENANTS BY INCOME NO MATERIAL EXPOSURE Rank Tenant Rent £’000 % Sector Property 26.13% 1 572 3.89 Discount Retail Crewe Shopping Centre, Acocks Green & Kings Heath Top 10 tenants represent only 26.13% of REI’s 2 536 3.64 Office Westgate House & Kingston House contracted income 3 450 3.06 Disc
Slide 23: Active Capital Recycling: Acquisitions & Disposals
ACTIVE CAPITAL RECYCLING ACQUISITIONS & DISPOSALS Acquisitions & Disposals 70 Acquisitions 2021 TO DATE Disposals 60 • Completed 7 portfolio disposals in H1 totalling (net of costs) £9.4 million and 1 inventory sale for 50 £1.15 million (aggregate uplift of 10.3% above 40 book value, 14.0 % uplift o
Slide 24: Why REI? Outlook & Opportunities
WHY REI? OUTLOOK & OPPORTUNITIES Outlook • Stability – Normalise income frequency post COVID-19 • Dividend – Maintain progressive dividend policy • Opportunities – To re-let lease expiries to improve income/WAULT/capital values to secure valuation recovery • Strong occupier demand – Capitalise on dr
Slide 25: Poised for Take Off: The Region with a Head Start
POISED FOR TAKE OFF… THE REGION WITH A HEAD START Commonwealth Games 2022: • Birmingham host city for 2022 Commonwealth Games • Global spotlight on the region • 2nd-largest sporting event in the UK after 2012 Olympics • Captivating up to 1.5 billion people across the world • £72.4million scheme is o
Slide 26: Operational Team
OPERATIONAL TEAM Ian Clark Andrew Osborne Jack Sears Anna Durnford BSc (Hons) MRICS BSc (Hons) BSc (Hons) MRICS Donna Mooney Head of Investor Relations Senior Asset Manager Investment Manager Asset Management Receptionist/Administrator • Joined REI in 2007 • Joined REI in 2011 • Joined REI in 2014 •
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
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