ATLANTIC LEAF PROPERTIES LIMITED Results presentation Year ended 28 February 2020
CONTENTS Introduction Financial results Asset management Closing and summary 2
CONTENTS > Presentation will focus on the results for 2020 > Given the current market uncertainty, no forward looking information will be provided at this stage > Atlantic Leaf’s management team and our external auditors, Mazars, are also to be commended for the timely completion of the year-end audit under difficult conditions 3
OPERATING ENVIRONMENT Fully operational • Staff safe › Disaster recovery plan fully implemented › All staff working remotely • Property manager operational › Rent collections continuing 4
OVERVIEW – FEB 2020 AVERAGE AVERAGE COST OF DEBT PROPERTY YIELDS WALT 8.67 yrs 7.05 % 3.57 % CURRENT INDUSTRIAL RETAIL ASSETS EXPOSURE LTV Reduced to Reduced to 40 % 77 % 1 % 5
FINANCIAL RESULTS 2019/20 Impact of COVID-19 Adjusted Earnings • Post balance sheet event 10.56 pence 13% • Strong cash position: £26m at year end (2019: 9.3 pence) • Valuations confirmed as at 28 February • Greater uncertainty in the markets • Positive first rental collection period H2 Dividend: 4.5 pence (March-June) since COVID-19 lockdown (full year dividend of 9.0 pence ) • Majority of rents collected quarterly in advance - 85% collected in full Sale of Runcorn asset: - 4% of tenants paying monthly in 28 February advance £4.3m capital profit • - Payment terms being agreed with the • IRR: 16% balance 6
OUR CASH POSITION > Cash and available cash 28 February Cash 26 158 106 RCFs 1 599 252 27 757 358 > Key cash flow assumptions › UK REIT’s required to distribute at least 90% of its property income - Final dividend of 4.5 pence declared (£8m) › No debt maturities in the 2020/21 financial year › Peterborough multi-let conversion to go ahead – expected to cost £3,3m > Strong cash position even after payment of dividend > Atlantic Leaf is comfortable that it has sufficient resources to continue as a going concern for the next 12 months 7
FINANCIAL RESULTS
2019/2020 FULL YEAR REVIEW NET RENTAL ADJUSTED ADJUSTED EARNINGS REVENUE* EARNINGS PER SHARE NET RENTAL £ 26.6 million £ 19.9 million 10.5 pence REVENUE +8.8 % 9.3 pence £ 24.4 million £ 17.6 million (Feb 2019) (Feb 2019) (Feb 2019) NAV DIVIDEND NET FINAL DISTRIBUTION PER SHARE PER SHARE LTV 4.5 p 9.00 pence 40 % £ 1.04 £ 1.03 9.30 pence 48 % (Feb 2019) (Feb 2019) (Feb 2019) * Net rental revenue includes straight line lease adjustments relating to rent free incentive periods but excludes inflation related straight line lease adjustments 9
KEY EVENTS DURING THE YEAR £ 22.8 m £ 39.9 m £ 22 m RCF 90 % REDEPLOYED INCREASED DEBT SOLD RETAIL WAREHOUSE NEW DEBT FACILITY PROCEEDS INTO FIVE HEDGING TO OVER JOINT VENTURE WITH LLOYDS BANK INDUSTRIAL ASSETS April 2019 August 2019 ASSET SALES £ 7 m £ 34 m BOOKER RUNCORN LEICESTER & BARNSLEY February 2020 October 2019 10
ADJUSTED EARNINGS 35 (0.5) 3.8 (3.0) 30 (6.8) 26.6 25 19.9 GBP millions 20 15 10 5 0 Net Capital Gains & Property operating Other operating Finance costs Adjusted earnings rental income Other Income expenses expenses 11
CAPITAL GAINS Booker: Leicester Runcorn DFS JV Investment & Barnsley Sold: February 2020 Sold: April 2019 Sold: October 2019 Proceeds: £34m Proceeds: £22,6m Proceeds: £7m Capital Gain: £4,3m Net Loss: £0,7m* Capital Gain: £-m IRR: 16% IRR: 9% IRR: 10% * Net of £620k dividends received in current financial year 12
FAIR VALUE & IMPAIRMENTS FAIR VALUE > Investment > Right of > Swaps Properties Use Asset Cash flow hedges taken directly IFRS 16 long to other comprehensive income Upward: £17,1m leaseholds Swaps not designated as cash > Listed Shares Downward*: (£15,4m) flow hedges - Statement of Downward Comprehensive Income movement on Straight line lease: listed REIT’s Included in average cost of debt (£1,8m) – will unwind over term IMPAIRMENT Loan not due and payable – Decrease in JSE share price > APIL Loan Serviced from dividends received resulted in a provision • Includes £2,9m reversal of fair value gains relating to the investment properties sold 13 • Acquisition costs of £2,6m incurred on new investment properties
STATEMENT OF FINANCIAL POSITION Strong cash position 28 Feb 2020 28 Feb 2019 £’m £’m Investment properties – direct 334.9 328.9 – right of use 15.9 - Investment in JV - 23.0 Listed Investments 2.9 3.6 Cash 26.1 12.6 Interest bearing borrowings (162.4) (170.1) ^Long term lease liabilities (15.9) - Fair value of derivatives (3.4) (1.2) Other net assets/(liabilities) (1.7) (1.5) Net assets 196.5 195.3 Interest bearing borrowings (162.4) (170.1) Short term interest-bearing borrowings (6.5) (6.3) Long term interest-bearing borrowings (155.9) (163.8) ^ Adoption of IFRS 16 14
NAV BRIDGE GBP pence NAV on 28 February 2019 103.30 Dividends paid (9.15) Other comprehensive Income (1.12) Retained earnings 10.94 • Adjusted earnings 10.54 • ^Straight line lease income 0.74 • ^Impairment (0.32) • ^Fair value: Properties (net) 0.89 • ^Fair value: Other (ROU Asset, listed investments, asset (0.91) held for sale) NAV at 28 February 2020 104.00 Dividend to be paid May 2020 (4.50) ^ Excluded from adjusted earnings 15
DEBT AND HEDGING • Debt covenants have been met • Maintained good relationships with funders • Funders remain supportive if needed • Funders been kept fully up to date with rent collections Loan to value ratio* (%) Interest cover ratio Cost of debt (%) ^ Maturity debt (years) Debt hedged* (%) 4.0 48% 47% 46% 3.6% 91% 3.3% 4.2 4.1 3.2% 3.2% 40% 4.0 3.9 3.1 77% 74% 2.9 66% 2.0 Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb Feb 17 18 19 20 17 18 19 20 17 18 19 20 17 18 19 20 17 18 19 20 * On a gross proportional look through to the JV debt in 2018 but excluded in 2019 onwards due to sale 16 ^ Refinance in Oct 2018 to longer maturities increased the weighted average cost of debt in 2019/20
ASSET MANAGEMENT
UK PROPERTY MARKET Disruptions in business caused by COVID-19 will have a ripple 5.04% effect that will slow economic growth in the short-term, but a degree of bounce back is likely, albeit unevenly distributed The UK average prime yield In the short term it is expected that volumes may decline and selective yield hardening may occur Over the longer term the outbreak may fast-track the adoption of £12.7bn remote working and investment into collaborative technologies Investment volume in Q1 2020 Structural, cyclical and temporary factors will continue to exert pressure on the retail sector throughout 2020 resulting in further CVA’s and business failure Demand for logistics space in the UK will continue to be resilient during 2020 whilst industrial and logistics rents are due to continue to outperform most other sectors 10% Rise in 2020 investment Investment activity is likely to slow in H1 2020 as investors react activity (Q1 compared to to uncertainty, with the retail and hospitality sectors being the same period in 2019 most affected. A shift to defensive assets is expected 18
PROPERTY PORTFOLIO – 28 FEB 2020 Sector spread (by value) Salient details Feb 2020 Feb 2019 28 Feb 2020 28 Feb 2019 AUM – Direct assets (£m) 335 367 1% 10% AUM – JV assets (£m) 0 43 22% No of properties 51 54 20% No of tenants 31 37 Property forward yield* 7.05% 7.24% WALT (years)* 8.67 9.01 79% 77% Vacancy (sq ft)* 2.68% 0.5% Industrial warehouse/logistics Office Retail warehouse *Feb 2020 including Thomas Cook on like for like basis: ● Forward yield – 7.45% ● WALT (years) – 8.88 ● Vacancy – 0.29% Regional spread (by value) Tenant classification (by income) Booker 2% 8% 9% West Midlands 2%2% Santander Halfords 7% East Midlands 3% 31% Epwin 3% North East B&M 34% 3% E. ON North West Smurfit Kappa 3% South East 11% Buffaload 3% South West Koito EE 3% East Anglia Gestamp 4% York & the Humber 8% 4% Law Bauer Scotland 5% 4% 8% Lockwood Group Ltd 9% Wales 5% Robert McBride 16% 5% 8% Other 19
ASSET MANAGEMENT REVIEW REDUCE Sale of DFS which CONCLUDED NEW Re-let to B&M on 15 year EXPOSURE TO LEASE AT BRECON lease post Homebase CVA achieved a 9% IRR RETAIL SECTOR £39.9m re-invested CONCLUDED TARGETED Re-let to Law Distribution into quality mid-box units INDUSTRIAL following administration NEW LEASE TRANSACTIONAL (6.5 year WAULT, OPERATIONAL ACQUISITIONS of Palmer & Harvey AT HAYDOCK NIY of 6.7%) Repositioning of asset CONFIRM STRATEGIC 2 Booker sales re-affirming following liquidation of STRATEGY FOR … SALES OF valuations and desirability PETERBOROUGH Thomas Cook BOOKER ASSETS of asset class ASSET – in progress OPPORTUNISTIC Discussions commenced … Disposal of DHL asset BOOKER RENT SALE TO REDUCE on rent reviews above the – achieving a 16% IRR REVIEW minimum PORTFOLIO RISK 20
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