Full year results presentation October 2017 02 Redefine - PowerPoint PPT Presentation

Full year results presentation October 2017

02 Redefine International P .L.C. 2017 Full Year Results Presentation Agenda Introduction and highlights Mike Watters (CEO) Financial results Donald Grant (CFO) Effjcient capital structure Stephen Oakenfull (Deputy CEO) Income focused portfolio Adrian Horsburgh (Property Director) Outlook and conclusion Mike Watters (CEO) Q&A

03 Redefine International P .L.C. 2017 Full Year Results Presentation Strong set of results Superior income returns with 6.3% dividend yield on NAV (UK-REIT average 4.1%) Financial highlights Operational highlights • Underlying earnings of £49.8m (+7.6%) • Disposals of £148.2m, at a 12.2% premium • Underlying earnings per share 2.75p in line • Occupancy remains high at 97.7% with guidance • 235 lease events totalling £17.3m +3.9% • Gross rental income of £103.1m on passing rent and +0.7% on ERV (+3.7% like-for-like) • WAULT of 7.4 years (8.5 years to expiry) • Dividend pay-out ratio of 94.5% • TK Maxx for new 22,000 sqft unit in Derby • Portfolio valued at £1.5bn (+3.0% like-for-like) • 38.9% of leases indexed (+420bps) • LTV of 50.0% (-340bps) (1) • IHL acquisition post year end • Weighted average cost of debt 3.1% (-30bps) • EPRA NAV per share 41.4p (+3.5%) Committed to being the UK’s leading income focused REIT (1) Proforma adjusted to refmect transactions post 31 August 2017.

04 Redefine International P .L.C. 2017 Full Year Results Presentation Continued progress against strategic objectives Superior, sustainable and growing income returns • Solid progress on strategic targets in 6 months • Achieved underlying EPS in line with recent guidance • Progress in strengthening the balance sheet • Portfolio quality enhanced through capital recycling Performance indicator Medium-term target FY2017 Underlying EPS (in year guidance 2.7p–2.8p) 2.75p Pay-out ratio 90% – 95% 94.5% (1) LTV 45% – 50% 50.0% Continuing to deliver upper quartile distributions to our shareholders (1) Proforma adjusted to refmect transactions post 31 August 2017.

05 Redefi ne International P .L.C. 2017 Full Year Results Presentation Acquisition of additional 42% in IHL Earnings accretive acquisition complementing existing portfolio UK Hotels including IHL acquisition to increase Deal summary to 21% of overall portfolio • As announced in August 2017: • Increase holding in IHL from 17.2% to 50.0% via scheme of arrangement • Share swap ratio of 2.5 implying a 0.4% premium to IHL’s 28 February 2017 SCOTLAND net assets • Consideration value £17.4m • EGM approval received NORTHERN IRELAND NORTH 15 September 2017 EAST BELVEDERE • 45.9m Redefj ne International shares YORKSHIRE NORTH WEST to be issued EAST MIDLANDS • Completion date early November 2017 WEST MIDLANDS WALES EAST OF ENGLAND • IHL will be delisted shortly after GREATER LONDON SOUTH • Agreement reached to acquire additional SOUTH KEY WEST EAST • EXISTING PORTFOLIO • IHL PORTFOLIO 9% from Redefj ne Properties under the same terms on 1 November 2017 Demonstrates our strategic priority to increase scale subject to securing the right income enhancing investments

06 Redefine International P .L.C. 2017 Full Year Results Presentation Deal rationale and portfolio detail Simple integration to continue income growth and deliver cost savings • £104.4m portfolio of 9 hotels, implied 6.9% net initial yield • 5 branded hotels • 4 Travelodges • Well located with alternative uses and high residual value Travelodge, Travelodge, Holiday Inn Express, • 80% in London, UK “Big 6” or Southern UK Belvedere Value: £4.6m Leatherhead Value: £6.9m Dunstable Value: £9.2m • Hampton by Hilton, Gatwick integrally linked to Gatwick North Terminal • Secure and growing income • 21.2% of income with uncapped CPI escalations • Travelodge hotels with average unexpired lease Travelodge, Travelodge, Holiday Inn Express, Perth Value: £4.4m Slough Value: £13.1m Edinburgh Value: £17.7m terms >20 years • Limited service hotels • Anticipated yield on equity of over 10% Hampton by Hilton, Holiday Inn Express, Holiday Inn Express, Gatwick Value: £21.3m Southampton Value: £20.2m Redditch Value: £7.0m Diversified portfolio strategy provides ability to opportunistically increase weighting to sectors with positive outlook

07 Redefine International P .L.C. 2017 Full Year Results Presentation Financial results

08 Redefine International P .L.C. 2017 Full Year Results Presentation Underlying earnings (including share of joint ventures) Re-based Reported FY17 FY16 FY16 Change £m £m £m £m Net rental income 93.5 89.3 4.2 Other income 2.7 3.1 (0.4) Administrative costs (15.6) (11.4) (4.2) Net fjnance expense (29.0) (33.1) 4.1 Other items (0.7) (3.8) 3.1 EPRA earnings 50.9 44.1 44.1 6.8 Company adjustments: – Reverse debt accretion charges 0.9 3.1 3.1 – FX gains (2.0) (0.9) (0.9) – Discontinued Company adjustments — — 5.9 Underlying earnings 49.8 46.3 52.2 Earnings per share 2.75p 3.2p Dividend per share (declared H2: 1.3p) 2.6p 3.2p Diluted weighted average shares in issue 1,811.9m (31 August 2016: 1,637.9m).

09 Redefine International P .L.C. 2017 Full Year Results Presentation Gross rental income (including share of joint ventures) Gross rental income (£m) Like-for-like (1) +3.7% 2.1 0.2 0.5 103.1 8.8 (0.2) 96.6 (4.9) Gross rental income Disposals Acquisitions UK Retail UK Commercial UK Hotels Europe Gross rental income (FY16) (FY17) (1) Like-for-like continues to exclude the majority of the 2016 acquisition of the AUK Portfolio.

10 Redefine International P .L.C. 2017 Full Year Results Presentation Valuations (including share of joint ventures) Market Market value value Gain/ Gain/ EPRA FY17 FY16 (loss) (1) (loss) NIY £m £m £m % % UK Retail 514.6 535.0 (25.1) (4.7) 6.3 UK Commercial 364.2 334.1 27.8 8.3 5.1 UK Hotels 239.6 229.2 6.6 2.9 5.9 UK total 1,118.4 1,098.3 9.3 0.8 5.8 Europe 311.7 279.9 31.4 11.2 5.4 €+2.5% Total like-for-like 1,430.1 1,378.2 40.7 3.0 Acquisitions 85.2 — Disposals — 132.3 Development 23.4 18.5 Total property portfolio 1,538.7 1,529.0 5.7 Disposal proceeds of £148.2m reflect a 12.2% premium to book value (1) Gain/(loss) includes the effect of capital expenditure, tenant incentives and FX.

11 Redefine International P .L.C. 2017 Full Year Results Presentation Debt & gearing (including share of joint ventures) Key statistics Medium term target FY17 FY16 LTV 45% – 50% 50.0% (1) 53.4% Weighted average debt maturity 7.3yrs 6.9yrs Weighted average interest rate 3.2% – 3.4% 3.1% 3.4% Debt with interest rate protection >75% 93.0% 95.4% Interest cover (2) >3x 3.2x 2.7x (1) Proforma adjusted to refmect transactions post 31 August 2017. (2) Group interest cover calculated as net rental income divided by net fjnance cost.

12 Redefine International P .L.C. 2017 Full Year Results Presentation EPRA NAV per share Up 3.5% to 41.4p NAV per share (p) 0.8 0.3 0.9 2.75 (2.9) (0.3) (0.15) 41.4 40.0 EPRA NAV Underlying Profits on Valuation FX Dividends Aviva Other EPRA NAV (FY16) earnings disposal gains gain refinancing (FY17) charges Total shares on issue 1,828.1m (31 August 2016: 1,794.6m).

13 Redefine International P .L.C. 2017 Full Year Results Presentation Cash fmow & available facilities (including share of joint ventures) Cash flow (£m) 113.9 (38.7) (41.0) 51.6 (18.9) 63.4 57.3 10.0 (39.5) 23.0 (5.5) (2.8) 53.4 34.3 Cash and Operating Disposals Net debt Acquisition Capital Dividends Aviva Other Cash and available cash flow repaid of joint expenditure & refinancing available facilities (FY16) venture interest development charges facilities (FY17) Undrawn, committed facilities Capital commitments of £16.8m

14 Redefine International P .L.C. 2017 Full Year Results Presentation Medium term guidance maintained Underlying EPS growth target at 3% – 5% Performance indicator Medium term target H1 H2 FY17 Rental income growth (like-for-like) 2% – 5% 3.3% 4.3% 3.7% Rent collection >95% within 7 days 94.0% 94.3% 94.3% 19.0% 19.8% (1) Administrative overheads <15% EPRA cost ratio 20.7% Cost of debt 3.2% – 3.4% 3.3% 3.1% 3.1% LTV 45% – 50% 49.9% 50.0% 50.0% Interest cover >3x 3.1x 3.4x 3.2x Pay-out ratio 90% – 95% 96.3% 92.9% 94.5% Dividend of 2.6p provides headroom to operational cash flow (1) 17.2% when adjusted for non-recurring items.

15 Redefine International P .L.C. 2017 Full Year Results Presentation Effjcient capital structure Schloss-Strassen Center, Berlin

16 Redefine International P .L.C. 2017 Full Year Results Presentation Effjcient capital structure Reducing leverage effectively whilst limiting impact on income £148.2 m £41.9 m £27 .5 m FY17 gross proceeds on disposals Equity reinvestment during FY17 Net debt reduction 12.2% premium Acquisition of controlling Targeting highest on book value stake in Leopard portfolio, LTV facilities Germany £9 .4 m £5.1 m £4.3 m Disposed net Acquired annualised Annualised fjnance cost income annualised net rental income reduction, incl. £1.5m Aviva profjt share saving Average NIY of 6.2% Acquisition of long dated indexed Achieving marginal returns in Average reversionary yield 5.6% rents at an average NIY of 7.4% excess of our cost of debt