Wynnstay Properties (LSE:WSP) — Post AGM investor Presentation

0:02 Good afternoon, ladies and gentlemen, and welcome to the WYNNSTAY PROPERTIES PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, we'll and publish those responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, we would just like to

0:32 submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the team from WYNNSTAY PROPERTIES PLC. Philip, good afternoon, sir. Good afternoon. My name is Philip Collins, Chairman of WYNNSTAY PROPERTIES. Together with Chris Betts, WYNNSTAY's managing director, we're here to present an introduction to WYNNSTAY and our annual results following the publication of our annual report and our AGM held earlier today. I should add that all the information we're presenting in this presentation is contained in our annual reports and on our website, and there is no material no material contains any inside information or price sensitive information as defined under the market abuse regulation.

1:23 WYNNSTAY is a long established property investment and development business. It's been quoted on AIM since it was established thirty years ago in 1995. Our principal investors are private, that is retail investors. Many have been shareholders for a long time. Indeed, some can trace their holdings back through several generations to the founding of the company in 1886. Others have become shareholders more recently, particularly through the trading platforms retail investors introduced over the past twenty years. We have an established portfolio held to deliver resilient income and well positioned for medium to long term growth of both income and capital. The current focus of the portfolio is on industrial, including trade counter units in Central And Southern England.

2:20 We have two sizable industrial estates, several smaller self contained assets with five to seven units each, and a variety of smaller assets comprising terraces of units within established estates. The portfolio also includes some stand alone properties led to a single tenant. The portfolio's diversity and resilience are reflected in the location, number, and nature of the assets and the mix of lease terms, tenants, and uses. By value, the majority of the portfolio is multilet, I. E, our largest assets are estates where there are many different tenants and uses. And Chris will be providing insight into the portfolio shortly. WYNNSTAY has a distinctive, approach to its business.

3:09 It may sound odd at first sight to say we're focused on shareholders' interests as all companies should, in principle, be focused on their shareholders. What we mean by this expression is this. The portfolio is directly managed by us. We do not contract out management to third parties. Obviously, we use, for instance, agents to find new tenants, advise on market conditions and retail rental levels, and in some cases, manage our service charges. But our managing director takes all the important decisions on the portfolio under the direction of, and where appropriate, after consultation with the board. There are also no performance based incentive schemes for management, such as share plans, options, or bonuses. Management remuneration is in the form of salary and a cash bonus.

4:00 We also ensure close control over our operational costs. While many of these are fixed, including those required by being a quoted company, we review our budget regularly and look to identify both potential savings and ways of improving efficiency, for instance, through the use of digital technology such as in accounting and property management.

4:23 The result of this approach is that our focus is on creating value for shareholders, avoiding dilution of shareholders' investment and conflicts of interest.

4:34 Our growth has been incremental and organic. The portfolio has been built up over time from a variety of smaller assets in various asset classes, including retail shops and offices. We have disposed of these smaller assets and reinvested to enhance the quality and geographic spread of the portfolio. We have funded this growth from retained profits and recycled capital coupled with modest loan to value borrowing from an experienced and supportive property lender who has been financing us for fifteen years.

5:11 We've pursued a progressive dividend policy, which aims to provide a rising income for shareholders commensurate with the underlying growth and finances of the company, and we know that income is important to many investors. Our dividends have increased by 28.6% over the past five years, and dividends have more than doubled from 12.3 p to 27 p per share over the past ten years. We also know that investors expect capital value to increase. The objective is to increase is to achieve a reasonable balance between progressive dividend payments and increased capital value. Our net asset value per share has increased by 28.2% over the last five years and has more than doubled from 531 p to 1,168 p per share over the past ten years.

6:05 I will come back later to talk about performance, including share price performance against market indices. And I'll now hand over to Chris to talk about the portfolio. Good afternoon. I'd like to give a short review of the property portfolio and then a little more detail about some of the properties. Following two sales last year, all of our properties now comprise light industrial or warehouse units. Currently, are 18 distinct properties in 16 locations, as shown on the map you can see. All are in England, with the concentration to the South Of London in Kent, Essex at East Sussex, and Hampshire. Although more recently, we have sought to diversify by investing in locations a little further afield in Central England, such as Litchfield and most recently Cambridge.

6:58 We seek to reduce risk through the number of properties and the lettable units within each property. There are 93 units that are let on 86 separate leases. I'm pleased to say that at present, none are vacant. Our properties are not large logistics or distribution warehouses. The units are predominantly small. The largest are around 10,000 square feet, but the average is 3,000 square feet. One of the attractions of investing in this type of property is the wide variety of businesses that make use of the space, coming from the manufacturing, service, and retail sectors of the economy. To further illustrate some of the characteristics of the property that WYNNSTAY is currently invested in, I'll give some detail on a few examples.

7:46 A good place to start is our most recent acquisition in Cambridge, where the strong local economy extends well beyond the boundaries of the city itself. The property is in Water Beach, about six miles north of the city center, directly adjacent to the A 10 and about three miles north of north of Inter junction with the A 14, which links East Coast ports with the National Motorway Network. It forms part in an an established industrial state that is dominated by engineering and production businesses. The location is near a sizable proportion of the research business parks associated with Cambridge, which are identified on the map. Water Beach itself is the focus of considerable development activity predominantly for housing on a form of RAF base immediately to the north.

8:42 In addition to its location, we like this property because it comprises a regular terrace of five units that are readily visible and have a large accessible area in front for maneuvering and parking vehicles. These units are about 4,500 to 5,000 square feet in size and provide good high bay storage.

9:06 The main tenants here is a specialist supplier of wax and resin for high precision casting molds, which owns three of the units close by on the estate. Alongside is a national chain of spare suppliers to the motor trade. The final unit is not income producing at present for us because it is left on a very long lease at a nominal rent to a private investor that sublets the space. One particular attraction of this investment is the relatively long unexpired leases, with over 70% of the rent secured until August 2033, with a balance to June 2029. We consider the passing rents to be below the current market rental value and anticipate further increases.

9:53 With the growth of science based industry research and business parks, along with housing development, the supply and availability of more basic light industrial where light industrial and warehouse space needed by the struggling local economy has been squeezed. In the longer term, we view these properties as being potentially suitable for upgrading through refurbishment. Our largest property, both by value and floor space, is in Aylesford in Kent. It has been held in a portfolio for seventeen years.

10:30 It forms part of the Quarrywood Industrial Estate located just off Junction 5 Of The M 20 Motorway on the Northwest Side of Maidstone and is a major employment center. In addition in addition to light industrial warehousing, there is a supermarket and retail park. Coralwood forms part of a cluster of larger estates either side of the motorway that is the dominant location for distribution and manufacturing in Mid Kent.

11:04 Property comprises 64,000 square feet in four blocks, one of which is a single warehouse led to one tenant that was acquired at a later date and which we report on separately. The remainder is currently let as 16 units of varying sizes, which is a good feature for a holding of this size. Our ability to readily let units is helped by the regularity of the buildings, the ample yard space. The location is popular, and a diverse range of businesses is reflected in the tenants, including a commercial window and cladding manufacturer, tray counters in the plumbing sector, a pet food retailer, and most recently, a supplier and installer of security equipment.

11:49 There is some under underutilized land in the estate that could form a development opportunity, and we are exploring this. We own two properties in Petersfield, a small which is a small, attractive, and relatively affluent town alongside the a three in Hampshire. The properties are on Bedford Road, which is the principal location for light industrial warehouse, trade counter, and indeed office space in the town. Supply space in the town for commercial use is limited, and the town's location within South Downs National Park means it is unlikely to increase. Each property comprises a terrace of units, and they back onto each other.

12:37 Trade counter uses dominate this location. Our first acquisition in town was of an investment that is now led to Howden's Motorparts Direct and the national outdoor advertising company as a depot and a firm of Precision Engineers. Shortly after, we acquired an adjoining site that was primarily open storage at the time and then carried out development of three tray counter units. The scheme was successfully let to Screwfix, Toolstation, and Easy Bathrooms. Other properties that are similarly drake counter dominated within the portfolio are in Ipswich, Banbury, and Litchfield. In contrast, the property located 15 miles further to the north on the A 3 in Lipphook has no tray counter uses and is let to to a diverse range of SMEs, some local in nature.

13:36 Our ownership is the entirety of the 28,740 square feet Beaver Industrial Estate, which is the only provision of any scale in the town and therefore dominant. The property comprises three blocks, and the majority of the units are small at around 1,000 square feet. This suits the demand in the town, which is supported by the relative prosperity of the area. A wide range of business includes an electrical contractor, an IT support business, a maker of handmade beds, and a wine merchant. Some have been in occupation for many years.

14:15 In common with many of our properties, land supply in the area is constrained by environmental protections, and the value of residential developments in both monetary and planning terms squeezes out other uses. After our original acquisition ten years ago, we bought an adjoining parcel of brownfield land. This has been successfully let in the short term as open storage for network rail, but we are now in the process of obtaining planning permission for development of two light industrial units. Depending on our analysis of viability, construction could commence early next year with complete completion approximately a year later.

14:59 In summary, we take a long term view with our investments, seeking opportunities where we see that an imbalance between supply and demand will produce rental growth. We seek to minimize risk and, through direct and active management, maintain high occupancy levels and income stability. Our approach seeks to identify opportunities to enhance the assets and pursue refurbishments and development opportunities. This slide gives some key financial information over the past five years on the growth of the capital value of the portfolio and of rental income, together with the weighted average unexplored lease terms, the brakes, and our loan to value ratios.

15:47 I'll now hand you back over to Fred. Thank you very much, Chris. This slide summarizes our corporate performance over the past five years, and the figures are taken from our annual recent annual report. I mentioned in my introduction the cumulative growth in net asset value of 28.2% and dividends of 28.6%. The slide also shows the cumulative growth in total accounting return of 47.5%, totaling a total accounting return being the combination of movements in net asset value and dividends for the five year period expressed as a percentage of the opening net asset value per share. The slide also shows how we've managed our costs as a percentage of portfolio value and of income.

16:33 Over the past five years, our operating costs have fallen from 2.5% to 1.6% of portfolio value and from 34.8% to 25.9 of income.

16:46 These reductions reflect in part the increase in value of the portfolio and the growth in income over the period, and in part our focus on control of operational costs. Turning now to the portfolio. While we look, of course, at the absolute increases in income and portfolio value, our main focus in reporting to shareholders is on the performance of assets that have been in the portfolio for five years or more. This enables us to review the performance of the established part of the portfolio and consider whether each individual asset is performing and making its proper contribution. Of course, we also continue to monitor monitor the performance of assets acquired within the five year period to ensure they are also performing as anticipated and when acquired.

17:34 We also, at management level, take a forward look at the likely returns in future years from all the assets in the portfolio, taking account of both past performance and forecast market conditions.

17:46 The underlying income growth has been 19.4% over five years, and portfolio growth has been 26%. Two other key indicators for any property business are rent collection and occupancy. Our record in rent collection has been excellent, 98% to 100% on the reported figures. In fact, it's now 99% to 100% as the small debt provided for last year has now been paid. We also measure occupancy at the year end. Again, our record is excellent, 99% to 100%. This slide taken from our annual report shows our share price relative to the FTSE real estate investment trust index over a ten year period in the first chart and relative to the AIM all share and and FTSE indices in the second chart, I'll show now.

18:41 I'll show them both again so you can see them clearly. In both cases, our share prices essentially outperformed the market indices. Share prices are, of course, determined by market conditions and sentiment affecting particular types of business and asset classes and by supply and demand. However, we consider that our performance as a business has contributed substantially to this outperformance against the market indices. Before closing any questions, I now want to reflect on the annual results on our AGM today. A first summary of the year on which we've just reported would be good, steady, further progress.

19:26 You can see the key numbers on the slide. Rental income increased by 5.44%,

19:33 with underlying rental income, that is assets held for five years or more, increasing by 9.4%. Although operating income before fair value adjustment fell slightly, after fair value adjustment, it rose by 26.5%. To explain further, the fair value adjustment is the movement in the fair value of the portfolio arising from the annual revaluation carried out by our independent valuers, which in 2024 was £683,000. The reason for the slight fall before the fair value adjustment was that we realized profits on disposals of £282,000 in 2024 compared to 52,000 in 2025.

20:19 Earnings per share increased by 15.5%. Dividends increased by 5.9%. Net asset value per share increased by 2.8%. And total accounting return rose by 5.1%. During the year, we disposed of two assets, an office building in Cosham and a retail cafe in in Midhurst, and we reinvested the proceeds into the industrial units at Waterbeach near Cambridge, which Chris has already described earlier in this presentation. And I'm going to pass back to Chris for some key points on the year. So key points on last year, As you can see on the slide, our direct approach and relationship with tenants means that we act quickly on the rare occasions when tenants do leave or are in financial difficulty.

21:14 For instance, new open market lettings in Aylesford last year and in Lythwick this May eliminated potential vacancies and indeed secured higher rents. A similar outcome will be completed in Hailsham shortly to ensure that the portfolio remains fully led. This slide shows the position since year end, some highlights from since year end. The first part of this year has been we've seen successful lease renewals that have increased rental income, notably at Litchfield by 29%, which continues the theme of last year when significant uplifts were achieved at Tunbridge and Lake Bouldershot.

21:55 Last year, only one out of 10 tenant break options were exercised. Since the year end, two more have been have lapsed, further demonstrating our strong tenant retention, and meaning that we benefit in both cases from a further five years of lease income. So far this year, rent collection has continued to be very satisfactory with only one instance of arrears remaining as of today. Apart from the portfolio management update at the AGM, which Chris has mentioned, there was no new information reported to shareholders at the meeting. A number of questions received from shareholders were addressed at the meeting, and they'll be placed on the website together with the answers from this presentation in due course.

22:48 That is the end of the presentation. All the information in this presentation is publicly available in our annual report and from our website, as I mentioned earlier. We have received a couple of questions, and I'll ask Caroline to raise them with us.

23:09 Can you just note that disclaimer at the end is required for legal purposes, and I'm sure everyone will read it if they're looking at this presentation. Thank you, Philip and Chris. First question I'd like to pose be posed to ask you is with portfolio fully met, are there any strategic plans to recycle capital through disposals or mature assets or acquisitions of higher yielding ones? Chris, do have that? We constantly review our assets to assess as to whether a disposal would be in the best long term interest. At present, we have no specific plans for disposals and recycling of capital. But as I say, it's something that we're constantly reviewing in the context of projected performance, and that may change.

24:06 We're also actively looking at potential new acquisitions at all stages. And that is something, again, that might well happen in the near future in terms of the purchase. We have another question to do with acquisitions and expansion. Do you see any opportunity or interest in expanding beyond your current focus on Central And Southern England, particularly in light of regional rental growth and disparities? The feel that there are enough opportunities to to consider within the broad sphere of Central And Southern England For a company of our size, keeping a tight control on its cost base, there are issues with acquiring properties that are further afield and therefore disproportionate potentially in terms of management time because we do like to visit our properties and our tenants regularly.

25:08 Certainly, issue of regional rental growth disparities and rental levels generally, and indeed the yield position in terms of potential investment acquisitions, is the reason why we have been looking at more acquisitions within Central as opposed to Southern England. And sticking with the property questions, what is the average downtime for me letting Sorry. I think it's it's gone down. Units when a tenant vacates? It's us a little bit. The name is them or us? What do we do? Okay. We're back on. Hi, guys. We can hear you. Okay.

25:56 Sorry. There was a interruption there. Would you like to repeat the question? Yes. I'll repeat the question. I was sticking with property questions that have come in and asking questions. What's the average downtime for reletting units when a tenant vacates? And has this changed in recent years? In recent years, the downtime has been extremely limited. In most instances, we have been able to secure a reletting and complete a reletting on at the immediately after an existing lease ends or very shortly thereafter within a matter of weeks. It's difficult to discern a trend over a longer period. But as I say, the picture we have is of strong demand that enables us to to relapse very readily.

26:50 And final property question, which is difficult with some uncertainty, on what is your current exposure to assets that fall within the below the future minimum EEC standards and how you might be addressing that. I haven't got the exact figures in front of me. But if we're looking at all future minimum EPC standards, it is the majority of the portfolio. So we only hold one asset that is brand new, and therefore, at the top EPC rating. Ensuring compliance with the EPC standards is very much in our minds, and we are developing plans for individual assets to address this individual assets and the units to address this.

27:41 At present, to bring properties up to minimum standards is proving fairly modest in costs. And therefore, when projected over our portfolio as a whole, is at a level that is, we feel, is very much manageable within our financial planning. Okay. And there's another property question that's just come in. So it admits we touched on this in your presentation, but can you elaborate at all on any plans for development on land across the estate? Or you may be not. Difficult to elaborate in deep detail as as might be expected. There are there is underutilized land in in three locations at present that we that could be give potential for development.

28:35 Liability is still something to be addressed because the cost of construction is still quite high relative to development value. But there are opportunities that we are actively considering and exploring. Okay. And finally, more for corporate question, which is how frequently does the board view its listed status, given the increased cost of being a listed business? Any view on this? Yeah. We have considered this from time to time. The cost of the actual listing has not, in fact, increased very much over the last, I would say, five to seven years. But we do review it from time to time, and if needs be, we try and make sure we have competitive tendering for services that we need as a quoted company.

29:30 But I think it's important to recognize that most shareholders want the benefit of a listing because that means they can buy and shell their shares. And the alternatives to a formal listing on the LSE, none of them appear so far to be particularly attractive, although we know that there are new evolving models coming in from time to time. So it's something that we keep our eye on, but at the moment, we consider that the benefits of a listing and the cost of it are worthwhile. So thank you very much. Sure. So it's a question now about the spread of the share price I've just seen has come up now. The answer is the share price is a matter for the market. It's not a matter for the board, and it's determined by demand in the market.

30:17 And it's really a question that we cannot address. Okay. That's the final question. Perfect. Perfect. Guys, if I may just jump back in there. Thank you very much indeed for your presentation and for being so generous of your time then addressing all of those questions that came in for investors this afternoon. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But, Philip, perhaps before really now, just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that'd be great. Yes. Just to say that I hope that those who've been watching this and will be watching in the future find it useful. I'd like to thank you all for your interest in WYNNSTAY by watching the presentation, and we hope you'll continue to follow WYNNSTAY's progress in the future.

31:08 Thank you very much. Perfect, Philip. That's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of WYNNSTAY PROPERTIES PLC, we would like to thank you for attending today's presentation. That now concludes today's session, so good afternoon to you all.