2012 Full Year Results 27 February 2013 Casino, Ile de France - PowerPoint PPT Presentation

2012 Full Year Results 27 February 2013 Casino, Ile de France

Headlines  A year of considerable progress  Strategic portfolio reshaping ahead of plan  Strong operational performance  Net debt significantly reduced  Well positioned for 2013 and beyond  Good underlying earnings momentum  Limited supply; attractive growth drivers  Excellent land bank for future expansion Creating the best owner-manager and developer of industrial properties and a leading income-focused REIT 1

Financial Results Justin Read Group Finance Director DB Schenker, Heathrow

Key financial highlights P&L 2012 2011 Change % EPRA PBT (£m) 144.9 138.5 4.6 EPRA EPS (pence) 19.3 18.4 4.9 Dividend per share (pence) 14.8 14.8 Balance sheet 2012 2011 Change % EPRA NAV per share¹ (pence) 294 340 (13.5) Net borrowings (£m) 2,090.3 2,303.4 (9.3) 51 / 50 2 LTV – including JVs at share (%) 49 3 1 EPRA NAV per share excludes fair value of interest rate derivatives and deferred tax provisions but includes trading property uplifts 2 Pro forma for £152m of disposals completed post year end

Good underlying earnings momentum; 4.6% increase in EPRA PBT 2012 2011 £m £m Gross rental income 326.1 305.4 Property operating expenses (54.9) (50.6) Net rental income 271.2 254.8 Joint venture management fee income 5.9 7.4 Share of joint ventures’ EPRA profit 1 16.6 20.2 Administration expenses (32.1) (27.9) EPRA operating profit 261.6 254.5 EPRA net finance costs (123.1) (109.6) EPRA profit before tax 138.5 144.9 Tax on EPRA profit (1.9) (1.9) 4 1 Net property rental income less administrative expenses, net interest expenses and taxation

Net rental income lower due to disposals; like for like net rental income up 1.9% £(23.2)m £5.7m £8.1m £3.9m £(4.6)m £(6.3)m £271.2m £254.8m 1 2011 2012 2011 Like for like Developments Acquisitions Disposals Surrender Currency 2012 net rental premiums & translation income related rent lost 5 1 Net of rental income from properties taken back for re-development

Pro forma net rental income and vacancy Net rental income Vacancy rate £m % Full Year 2012 255 8.2 Annualised incremental impact of: Disposals since Jan-12 1 (25) 0.3 Developments completed and let in 2012 7 - Acquisitions in 2012 7 - Neckermann takeback in Jan-13 (12) 1.1 Pro forma FY 2012 232 9.6 6 1 Including disposals completed post year end

Further reduction in the total cost ratio 35 30.4% Total cost ratio 1 (%) 29.9% 30 28.1% 24.5% 25 22.9% 20 15 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 2012 2011 Change £m £m % Property operating expenses 50.6 54.9 (7.8) Administrative expenses 27.9 32.1 (13.1) Total 78.5 87.0 (9.8) 7 1 Total costs as a percentage of gross rental income. Total costs include property operating expenses (net of service charge income and management fees) and recurring administration expenses

EPRA NAV per share bridge 19.3p (14.8)p (47.7)p Core (7.5)p Non-core (40.2)p (2.0)p (0.8)p 340p 294p EPRA NAV per EPRA NAV per EPRA EPS Dividend Realised and Early close-out Other share as at 31 share as at 31 unrealised of bond and December 2011 December 2012 valuation bank debt movements 8

Like for like valuation down 5.9%; Core Industrial -1.2% (IPD UK Industrial: -3.8%) Value 1 Movement 2 Yield 2,3 £m % % Core portfolio (excluding offices) 3,553.5 (1.2) 7.7 Suburban offices 376.9 (15.9) 8.4 Large non-strategic assets 4 8.6 5 304.8 (29.5) Smaller non-core assets 420.1 (10.6) 8.9 Total 4 4,655.3 (5.9) 7.9 1 Valuation including joint ventures at share (including land and development) 2 In relation to the completed properties only 3 Net true equivalent yield 9 4 Including disposals completed post year end 5 Excluding Neckermann

Robust financing metrics Group level 1 2012 2011 Net borrowings (£m) 2,090.3 2,303.4 Available funds - cash & undrawn facilities (£m) 449 456 Gearing (%) 93 89 51 / 50 2 Loan to value - including JVs at share (%) 49 Weighted average cost of debt 3 (%) 4.6 4.8 Average duration of debt (years) 8.3 8.8 Interest cover 4 (x) 2.3 2.2 Net debt / EBITDA 8.1 8.7 1 All metrics, except LTV, at Group level excluding JVs 2 Pro forma for £152m of disposals completed post year end 3 Excluding commitment fees and amortised costs 10 4 Net property rental income / net interest before capitalisation

Reducing net borrowings and financial leverage  Net debt reduced by 9.3% to £2,090m  LTV 50% (including post year end disposals); impacted by portfolio revaluation  Key financing metrics remain solid  A- bond rating reaffirmed by Fitch in September 2012  Remain committed to reducing LTV over the longer term  Will continue to assess opportunities for further profitable capital deployment 11

Significant future rental growth potential Total Core Non-core £m £m £m Annualised gross passing rent 1 250 46 296 Rent free on let properties 36 3 39 ERV of vacant/short let space 27 14 41 Reversion to ERV of occupied properties (12) (6) (18) Current development projects 7 4 11 Potential gross passing rent 308 61 369 Additional development projects represent a further £84m of annual rent 12 1 Adjusted for post year end disposals and Neckermann takeback

Financial Summary  Progress against strategic priorities delivering positive results  Good underlying earnings momentum, benefiting from reduced costs and developments  Balance sheet in good shape - reducing leverage remains a strategic priority over the longer term  Dividend maintained reflecting our confidence in the core business 13

Our Progress in 2012 David Sleath, Chief Executive La Courneuve, Ile de France

Progress made against all four strategic priorities Divesting non-core assets 1. Re-shape the existing portfolio Improving utilisation of core assets (land & vacant assets) Generating attractive returns by building a high quality, 2. Seek profitable modern portfolio with critical mass in target markets; growth by reinvesting achieved through both development and acquisitions 3. Reduce net debt Reducing net debt and leverage over time and introduce Partnering with third party capital where appropriate 3 rd party capital Greater customer focus and market knowledge 4. Drive operational performance across Capitalise on favourable growth drivers the business Efficiency improvements and cost reductions 15

Strong operational progress  262 new lettings generating £35.3m of new rental income  72 lease renewals, securing £18.8m of rental income Leasing,  TRLs 2.9% above Dec 2011 ERVs; Lease incentives 8.2% (2011: 11.0%) Customer and  Retention rate of 65% (core 74%); take-backs broadly flat at £21.5m Asset  Group vacancy rate 8.2% (core: 7.6%), lowest reported in last 10 years Management  Average lease lengths increased from 7.7 yrs to 8.4 yrs since 2009  Like for like net rental income up 1.9%  21 developments completed; £16.4m annual rental income – 89% let  >25% average profit on total development cost Development  14 active developments; £10.8m annual rental income – 70% pre-let  9.6% average development yield on completed and active projects  10% reduction in total costs Operational  160bp improvement in total cost ratio to 22.9% Efficiency  Improved CRM, sustainability, procurement & property systems 16

£700m of non-core asset disposals at 3.6% average discount to Dec-11 valuations MPM, Munich Thales, UK IQ Farnborough, UK 24 further disposals in the UK and CE 17

£207m reinvested in acquisitions at 7.7% yield; expanding SEGRO’s UK and French logistics platform UK logistics portfolio French logistics portfolio  £315m portfolio acquisition, completed Jan 2012  £130m portfolio acquisition; completed Sept 2012  SEGRO equity contribution £65m  13 prime logistics warehouses in the Ile de France and Lyon  14 prime logistics warehouses, predominantly in the  Excellent customer base, including UPS, Geodis, Midlands and South Saint-Gobain  Excellent customer base, including Tesco,  c.€14m of annual rent Sainsbury’s, Royal Mail, DHL, GKN, and Booker  c.£18m of annual rent  8.4% net initial yield; reverting to 7.7%  6.3% net initial yield, rising to 7.7%  Potential to add value through asset management  Potential to add value through asset management 18

£218m reinvested or committed to profitable development programme 21 Completed development projects 14 Current development projects Karl Storz, Slough Trading Estate DB Schenker, Heathrow  190,000 sq m of new space  155,200 sq m of new space  £151m total development cost  £129m total development cost  £16.4m of annual rent (89% let)  £10.8m of annual rent (70% let)  >25% average profit on total development cost 9.6% average development yield for completed and active projects 19

SEGRO today Target 31 December 2012 1 30 June 2011 Split of total portfolio by core and non-core assets 13% 31% 100% 69% 87% Core Non-core Split of core portfolio by stabilised and opportunity assets 8% 20% 5% 6% 43% 30% 64% 49% 75% Stabilised (vacancy <10%) Opportunity (built; vacancy >10%) Opportunity (land & development) 20 1 Pro forma for £152m of disposals completed post year end

2013 And Beyond Infinity, Slough Trading Estate