FULL YEAR RESULTS TO MARCH 2016 1 st June 2016 www.londonmetric.com
AGENDA Highlights Strategy & Market Financial Investment Property Outlook Questions 2
HIGHLIGHTS Andrew Jones
Financial Highlights Key highlights FY Mar 2016 FY Mar 2015 Change EPRA Earnings £48.5m £40.9m +19% EPRA Earnings per share 7.8p 6.6p +18% Dividend per share 7.25p 7.0p 1 +4% EPRA NAV per share 148p 141p +7% 2 Earnings yield 3 5.5% 5.4% Reported Profit £82.7m £159.5m Valuation Movement £49.8m £118.4m LTV 38% 36% Accounting Return 11.5% 21.7% 1. Excludes 2.0p special dividend 2. Comparative period adjusted for 2.0p special dividend 3. EPRA earnings for the year divided by opening EPRA NAV 4
Portfolio Highlights Portfolio Valuation £1,521m March 2015: £1,400m Total Property Return 1 +10.9% Benchmark: 10.1% 2 Capital Return 1 +5.2% Distribution: +7.9% Retail: +2.3% ERV Growth +6.4% in period Income Growth +3.1% like for like EPRA NIY 3 5.4% 1. Core Portfolio 2. Reweighted to LMP core sectors 5 3. Topped up NIY
Operational Highlights Net Rental Income 1 +10% Increase in net rental income to £77.7m Growing +£6.8m in the year 1 Resilient Rental Like for like income growth of 3.1% Income Delivered Development Completed developments during the year contributed £5.0m 1.9m sq ft Adding £11.7m pa rent² £204m disposals at NIY 5.6% Efficient Investment Activity Yield Arbitrage 2 Capital £188m acquisitions at NIY 6.6% +100bps Allocation £42m development capex 3 at yield on cost 7.1% Occupancy 99.3% 1.1m sq ft under development investment portfolio Future Income 3 Contracted rent £87.1m rises to £89.3m upon completion Growth WAULT 1.1m sq ft development pipeline adding further £7.7m 12.8 years investment portfolio 1. Including JV rental income 2. Including Islip, THG Warrington & Kirkstall (rent based on income once fully let) 3. Capex relates to spend in FY15/16 on developments currently in construction 6
STRATEGY & MARKET REVIEW Andrew Jones
Investment Strategy Income taking centre stage as yield tranquillity sets in Income Repetitive and predictable income is increasingly attractive Compounding strategies will outperform many hyperactive ones Income to average 84% of total returns over next 4 years 1 Asset Asset management increasingly opportunistic Management Less focus on multi let operational assets Development Building income through short cycle development Creating value through extensions and refurbishments Operating in markets with attractive demand/supply dynamics 1. Source: Capital Economics 8
Post Merger Strategy Delivering Long T erm Value Our key focus is to drive earnings Distribution Net Rental Earnings Lfl Income Exposure (%) Income (£m) Growth (%) Growth (pps) 90.0 9.0 60% 4.0% 7.8 52% 77.7 3.5% 80.0 8.0 3.4% 3.5% 70.9 50% 3.1% 6.6 70.0 7.0 2.9% 3.0% 40% 58.5 60.0 6.0 40% 2.5% 45.5 5.0 50.0 4.2 28% 30% 3.9 2.0% 40.0 4.0 20% 1.5% 30.0 3.0 20% 1.0% 2.0 20.0 10% 10.0 1.0 0.5% - - 0% 0.0% 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 9
Our Core Sectors Focus on winning retailers March 2016 Portfolio valuation: £824m 1 5% 4% Total return: +13.1% 4% Distribution NIY: 5.2% 2 Occupancy: 100%, WAULT: 13.1 yrs £1,521m 52% 27% Portfolio valuation: £491m 1 Total return: +8.6% 4% 4% Retail NIY: 5.8% 2 Occupancy: 98.1%, WAULT: 12.1 yrs Distribution Development Convenience Retail Retail Parks Leisure Residential Office 1. Portfolio valuation includes assets in development 2. Topped up NIY 10
FINANCIAL REVIEW Martin McGann
Income Progression Warrington Bedford (£m) 100.0 Bedford 90.0 Stoke Crawley 3.1 Warrington 12.8 9.4 13.5 1.8 80.0 5.7 70.0 84.0 84.0 60.0 75.9 77.7 75.9 70.9 50.0 40.0 Net rental L-f-L income from Property PPE & Contracted rent FY15 & FY16 Net rental & FY 16 income development cost savings deals in potential acquisitions contracted Disposals Mar 15 and portfolio legals 1 income Mar 16 12 1. PPE and deals in legals as at 1 June 2016. Includes income effect of Hut disposal (£3.8m), expected letting of voids (£0.6m) and 2016 expected rental uplifts (£1.4m)
Income Statement 1 31 Mar 2016 31 Mar 2015 Reported Profit £82.7m £159.5m Revaluation Surplus £49.8m £118.4m Net rental income £77.7m £70.9m Management fees £1.3m £1.3m Administrative costs £(13.8)m £(12.6)m (EPRA cost ratio 17%) Finance costs £(16.7)m £(18.6)m Other - £(0.1)m EPRA earnings £48.5m £40.9m EPRA EPS 7.8p 6.6p DPS 7.25p 7.0p Dividend Cover 107% 94% 1. Proportionally consolidated basis 13
Balance Sheet 1 31 Mar 2016 31 Mar 2015 Property portfolio £1,520.9m £1,400.4m Cash £46.7m £63.6m Bank debt £(637.9)m (£563.0)m Other net liabilities £(31.5)m (£30.8)m Net Assets £898.2m £870.2m EPRA Adjustments £23.9m £7.0m EPRA Net assets £922.1m £877.2m EPRA NAV per share 148p 141p 14 1. Proportionally consolidated basis
Movements in EPRA NAV NAV per share (p) 160.0 155.0 1.8 0.3 150.0 145.0 8.0 7.0 7.8 2.0 140.0 135.0 147.7 147.4 139.4 140.6 130.0 139.4 138.6 138.6 125.0 120.0 Other EPRA NAV EPRA Revaluation Special Dividend EPRA NAV Mar-16 Earnings Dividend Less SDLT Mar-15 Adjusted Adjustment 15
Finance Metrics 31 Mar 2016 31 Mar 2015 Gross Debt £637.9m £563.0m Undrawn facilities £69.9m £83.4m Loan to Value 38% 36% Weighted average cost of finance 3.5% 3.7% Weighted average maturity 5.6 years 4.2 years Hedging 93% 80% 16
INVESTMENT REVIEW Valentine Beresford
Investment Activity Summary Number of 2015/16 Income NIY WAULT transactions £m¹ £m¹ % 2 years Acquisitions 16 £187.6m 12.6 6.6% 12.9 yrs Retail 7 £32.1m 2.2 7.0% 19.0 Distribution 9 £155.5m 10.4 6.6% 11.4 Disposals 43 £204.1m 11.5 5.6% 13.9 yrs Retail 13 £110.1m 6.7 5.8% 13.3 17 Distribution 4 £80.4m 4.5 5.4% 15.5 Residential 26 £13.6m 0.3 1.8% - T otal Activity 59 £391.7m + 100 bps 1. LM Share 2 NIY, on fully let basis 18
Disciplined Capital Allocation Dispose assets that have delivered to plan Retail & Leisure Sales Distribution Sales 13 disposals - £110.1m, NIY 5.8% 4 disposals - £80.4m, NIY 5.4% Asset management plans completed Fully executed asset management plan 22 leasing initiatives undertaken IRR 1 of 36% IRR 1 of 26% £53.7m sale of HUT Warrington 4 further disposals PPE - £17.1m, NIY 5.6% IRR 1 of 22% 8 further sales in legals completes Nov 16 Hove Preston Bristol Wellingborough Birmingham £13.6m 5.4% NIY £29.2m 5.8% NIY £18.2m 5.2% NIY £10.2m 5.8% NIY £12.6m 5.4% NIY Sold Dec 2015 Sold Jan 2016 Sold Dec 2015 Sold Aug 2015 Sold Dec 2015 £6.3m at Share 1. Geared IRR 19
Distribution Portfolio 2 End to end logistics Mega Distribution Regional Distribution Depots 8 assets 10 assets 9 assets 5.4m sq ft 2.4m sq ft 600,000 sq ft, 70% in S.E. £27.9m rent (av £5.15 psf) £13.4m rent (av £5.60 psf) £3.8m rent (av £6.50 psf) Average NIY 1 5.1% Average NIY 1 5.3% Average NIY 1 6.1% WAULT 14.9 years WAULT 10.8 years WAULT 7.5 years One acquisition in year One acquisition in year Five acquisitions in year Two under construction £29m, NIY 5.8% £28m, NIY 6.8% 1. Topped up net initial yield 20 2. Excludes developments at Warrington, Stoke, Bedford and Crawley
Distribution Portfolio Building best in class Strong portfolio metrics 2 £824 million 1 across 31 locations Occupancy 75% let to retailers 100% Contractual uplifts 99% acquired since merger 58% at 6.3% NIY 38% fixed T wo developments under Average rent per sq ft construction: £5.50 0.9m sq ft blended WAULT 6.8% yield on cost 13 years Three pipeline developments: 62% of leases >10 years 1.1m sq ft 5yrs 20+yrs 5% 12% 6.8% yield on cost 10yrs 33% 20 yrs 30% 15 yrs Developments 20% 1. Valuation as at 31 March 2016 Investments 2. Investment portfolio as at 31 March 2016 21
PROPERTY REVIEW Mark Stirling
Distribution Development Activity T wo developments under construction totalling £70 million Wakefield Warrington Take up (2015) 30m sq ft 2014: 32m sq ft M62 Supply (2015) 15m sq ft 2014: 22m sq ft Spec Development 5.6m sq ft v 10m sq ft average 2005-08 Active Requirements 524,000 sq ft distribution 356,000 sq ft distribution 23m sq ft Yield on cost 6.3% Yield on cost c7.0% 75% from retailers and 3PL £2.5m pa rent with RPI uplifts, 15 yr lease £2.2m pa rent 1 Rental Growth +3.5% £17.3m costs to complete £24.7m costs to complete IPD distribution warehouse Completion in September 2016 Completion in November 2016 ERV growth BREEAM Very Good BREEAM Very Good Units > 100,000 sq ft Source: LSH, Gerald Eve, JLL 23 1. Rent estimated
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