HALF YEAR RESULTS TO SEPTEMBER 2014 26 NOVEMBER 2014 www.londonmetric.com
AGENDA HIGHLIGHTS STRATEGY FINANCIAL RESULTS INVESTMENT ACTIVITY ASSET MANAGEMENT ACTIVITY OUTLOOK Q&A 2
FINANCIAL HIGHLIGHTS H1 H1 FY 2014/15 2013/14 2013/14 EPRA NAV per share 129p 112p 121p Valuation Movement¹ £52.3m £35.6m £95.9m Reported Profit £69.7m £44.1m £125.3m EPRA earnings per share 3.4p 1.9p 4.2p Dividend per share 3.5p 3.5p 7.0p Loan to Value (LTV) 38% 30% 32% 1. Including share of joint ventures 3
PORTFOLIO HIGHLIGHTS Portfolio valuation: £1,346m March 2014: £1,220 m Portfolio Returns: Six Month Ungeared Property Returns Retail 9.9% Distribution 9.2% IPD All Property 9.3% Core Portfolio¹ 9.6% Topped up initial yield: 6.1% March 2014: 6.4% Contracted rental income: £83.0m March 2014: £78.0m Occupancy¹: 99.6% IPD: 92.8% Investment portfolio WAULT: 12.7 years² 1. As at 30 September 2014, excluding Carter Lane, London 2. Weighted average unexpired lease term 11.8 years to first break 4
OPERATIONAL HIGHLIGHTS £416m Investment activity 1 Investment Acquisitions £149m 6.4% NIY 15.3 years WAULT Disposals £267m 4.9% NIY 14.1 years WAULT 920,000 sq ft of occupier transactions Asset 4.1% ahead of ERV; 6.8% ahead of previous passing rent Management/ 1.25 million sq ft of committed development Development 750,000 sq ft of pipeline development agreed £483m new debt facilities Finance With average term to maturity of 6.0 years Blended cost 220 bps below property yields 5 1. LM share including post period end transactions 5
STRATEGY
STRATEGIC FOCUS Aligning our portfolio to an omni-channel world Portfolio Value¹ (£m) WAULT (years) Occupancy (%) Distribution 451 13.2 100.0 Retail & Leisure 552 12.8 99.4 Development 60 22.8 80.7 Core 1,063 12.9 99.7 Non core 142 9.9 100.0 T otal 1,205 12.7 99.7 Partner of choice for our key customers 1. LM share including post period end transactions (contracted as at 26 November 2014) 7
INVESTMENT STRATEGY Short-cycle Income Asset management development Bishop Auckland Southampton Out of town Leicester Occupier led 1m sq ft DC, Islip Distribution Newark Harlow Middlesborough Opportunistic Loughborough Core Stretch 1 Odeon 1. Core Stretch assets will have strong real estate fundamentals, good income characteristics & high occupier contentment in sectors where we have expertise 8
FINANCIAL RESULTS
INCOME STATEMENT STATUTORY H1 H1 FY 2014/15 2013/14 2013/14 £000 £000 £000 Net rental income 28,349 25,085 51,272 Share of joint venture income 5,611 1,743 3,056 Management fees 982 58 799 Admin costs (6,503) (6,138) (13,484) Finance costs (7,491) (9,135) (15,404) Other - 113 130 EPRA earnings 20,948 11,726 26,369 EPRA EPS 3.4p 1.9p 4.2p DPS 3.5p 3.5p 7.0p Actual dividend cover 96% 53% 60% 10
DELIVERING INCOME GROWTH (£m) Development Activity New net rental income from management activity 100.0 90.0 1.5 3.5 2.1 4.5 80.0 6.5 6.4 5.3 6.5 70.0 82.8 76.4 60.0 76.5 76.4 72.7 69.9 50.0 40.0 PPE net PPE sale of Reinvestment Mar 14 Occupier Sept 2014 Nov 2014 Annualised Net investment Carter Lane contracted transactions contracted contracted Run Rate investment rent roll & new space rent roll rent roll 11
EPRA EARNINGS (£m) Net rental income from management activity 60.0 55.0 50.0 44.0 £44m = 100% dividend cover 45.0 5.8 6.5 5.1 5.3 1.5 1.2 40.0 2.2 35.0 14.7 46.8 41.7 43.8 41.7 41.7 41.0 30.0 37.3 38.8 11.7 25.0 20.0 Contracted Occupier Committed Reinvestment Mar 14 Contracted Net Sept 14 PPE Nov14 Annualised income Transactions Development Contracted Income investment Annualised Transactions Contracted Run Rate Islip Net Income Kirkstall Net Income Net Income 12
BALANCE SHEET STATUTORY 30 September 31 March 2014 2014 £000 £000 Property portfolio 1,125,230 1,030,553 Joint ventures 142,060 108,990 Cash 45,309 78,357 Bank debt (485,717) (415,474) Other net liabilities (24,940) (46,572) Net assets 801,942 755,854 EPRA net assets¹ 803, 932 756,970 EPRA NAV per share 129p 121p 1. Excludes fair value of derivatives 13
MOVEMENTS IN EPRA NAV NAV per share (p) 130.0 128.0 128.8 8.4 126.0 8.4 124.0 3.4 3.4 3.5 128.8 122.0 0.5 120.0 121.0 120.4 118.0 116.0 EPRA NAV EPRA Dividend Other Revaluation EPRA NAV Mar-14 Earnings Sept-14 14
DEBT METRICS 30 Sept 2014 31 March 2014 Gross Debt £573.3m £473.0m Loan to Value (LTV) 38% 32% Average Interest Rate 3.7% 3.9% Interest Cover 4.0 3.2 Average Maturity of Drawn Debt 3.6 years 3.7 years 15
£483M NEW DEBT FACILITIES Average maturity for drawn debt now 4.4 years Average interest rate now 3.6% vs 3.9% in March 2014 Loan to Value now 35% Facility (£m) Asset Pool T erm (years) Comment Helaba 196.2 Distribution portfolio 7 Extension M&G 71.8 DFS portfolio 5 New Facility Deutsche Pfandbrief 125.0 MIPP portfolio 5 Extension RBS 90.0 Revolver 5 Extension T otal 482.8 6 16
INVESTMENT ACTIVITY
INVESTMENT ACTIVITY Number of Value 1 NIY² WAULT Rental Income transactions Acquisitions 11 £149m 6.4% 15.3 years £9.3m Retail 8 £37m 6.7% 12.6 years £2.6m Distribution 3 £84m 6.3% 17.2 years £4.9m MIPP Equalisation - £28m 6.2% 14.3 years £1.8m Disposals 14 £267m 4.9% 14.1 years £11.8m Commercial 14 £244m 5.1% 14.9 years £11.2m Residential - £23m 2.4% 0.0 years £0.6m T otal 25 £416m Arbitrage +150 bps +1.2 years 1. LM share 2. Topped Up NIY 18
£149M INVESTMENT ACQUISITIONS 3 distribution acquisitions¹ DixonsCarphone, £84.0m, reflecting 6.3% NIY Newark £5.2m post period end acquisition £4.9m rental income WAULT 17.2 years 7 retail & 1 multiplex acquisitions² Middlesborough £37.1m, reflecting 6.7% NIY £12.9m post period end acquisitions £2.6m rental income WAULT 12.6 years MIPP units acquired for £27.9m (1) Distribution acquisitions: Rotherham, Newark & Leicester 19 (2) Retail acquisitions: Llanelli, Isle of Man, Birkenhead, Liskeard, Bangor, Middlesborough (Guisborough), Hull & Totton
£178M NON CORE DISPOSALS £155 million office disposals Crawley Average exit yield 4.7% £5.8m rental income 1 non core office asset remaining in Marlow £23 million¹ residential sales across 46 units Moore House/Resi JV 2 units remaining in wholly owned portfolio £4.3m¹ of sales at Moore House across 13 units² £3.6m¹ under offer at Moore House across 8 units 1. LM share 2. 10 units sold FY 2014 20
CARTER LANE DISPOSAL Gross sale - £138.8m (4.3% NIY) Net sale receipt - £124.8m September valuation - £115m (4.6% NIY) £4.5m net rental income Completion long stop 26 Jan 2015 Purchase June 2011 £75m – NIY 7.3% Purchaser costs £4.4m Rent received during hold period £12.9m Construction costs £15.0m Gross Receipt £138.8m – NIY 4.3% Net Receipt¹ £124.8m Net profit £43.3m Total Return (Profit on cost) 45.9% (28.6%) 21
£89M RETAIL DISPOSALS Former Focus unit acquired March 2012, redeveloped Bishop Auckland new 76,500 sq ft shopping park Total cost: £15.8m (8.5% YOC) Disposal price: £23.6m (5.3% NIY) Profit to date: £7.8m (49% profit on cost) Milton Keynes Part portfolio acquisition in Feb 2013 Allocated acq’n price - £16.0m (8.3% NIY) Disposal price - £21.8m (6.1% NIY) Profit to date - £4.9m (29% profit on cost) 5 assets - part of DFS portfolio from March 2014 Allocated acq’n price - £4.9m¹ (10.2% NIY). DFS Disposal price¹ - £6.4m¹ (7.9 % NIY). Profit to date - £1.0m¹ (20% profit on cost) 1. LM share 22
REPOSITIONING THE PORTFOLIO At Merger November 2014 12% 11% 24% 5% 37% 6% 55% 89% 24% core core 19% 35% 6% 21% OFFICE DEVELOPMENT¹ RESIDENTIAL RETAIL LEISURE DISTRIBUTION 1. Development shown as land value and committed capital expenditure 23
ASSET MANAGEMENT
VALUATION METRICS Outperformance across core retail and distribution portfolio of 34 bps Yield compression: 28 bps IPD: 39 bps Income expiring in next 5yrs: 4.1% IPD: 29.5% Total Return Income Return Capital Return LM IPD LM IPD LM IPD Retail 9.9 8.3 3.5 2.7 6.2 5.5 Distribution /Industrial 9.2 11.2 3.0 2.9 6.0 8.1 Core Portfolio¹ 9.6 9.3 3.2 2.6 6.3 6.6 Office 6.6 10.5 2.1 2.2 4.4 8.1 Other 5.8 6.9 2.3 2.7 3.4 4.1 T otal incl. residential 8.8 9.3 2.9 2.6 5.7 6.6 25
VALUATION GROWTH DRIVERS £8.6m £34.5m Development £4.7m £3.6m £8.4m Asset Management Shift £52.8m £13.5m £39.2m Market Yield Shift £18.5m 100 80 60 £95.9m 40 £52.3m 20 £35.6m 0 Sept 14 Sept 13 Mar14 NEY yield movement of 28 bps; NIY yield movement 29 bps 26
ASSET MANAGEMENT No. Area Uplift % above % above LFL WAULT (Sq Ft) (£m) ERV previous rental rent growth New Lettings & 14 332,000 £0.4m 7.9% 26.5% 0.7% 18.6 Regears Rent Reviews 12 588,000 £0.2m 3.1% 2.6% 0.3% - Total 26 920,000 £0.6m 4.1% 6.8% 1.0% 18.6 Asset management activity delivered 12% income return on capital expenditure 1 1. Asset management capital expenditure incurred in the period of £5.3m 27
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