Secure Income REIT Plc Results for the year ended 31 December 2018 www.SecureIncomeREIT.co.uk
Secure Income REIT Plc (SIR) is a specialist UK REIT, investing in real estate assets that provide long term rental income with inflation protection. It owns a 175 property, £2.3 billion portfolio at 31 December 2018 external valuation. High quality assets are let to financially strong businesses in defensive sectors on leases with a c. 21 year weighted average unexpired term. SIR has a highly experienced Board and a management team which has a very close shareholder alignment through one of the largest management shareholdings in the sector. An investment in SIR offers secure, growing income streams and strong foundations for sustainable capital growth, while continuing to deliver attractive risk adjusted returns for shareholders over the long term. 2
1. Introduction 2. 2018 results 3. Portfolio update and market outlook 4. Q&A Warwick Castle
Operating Highlights: year to 31 December 2018 £436m acquisition of two off market portfolios during the year: £212m hotels portfolio – completed 24 April 2018 £224m leisure portfolio – completed 2 July 2018 financed by £315.5m equity issue and £128.7m new secured debt facilities Portfolio externally valued at 5.1% blended net initial yield amounting to £2.3bn at 31 December 2018 Like for like portfolio value up 5.3% in the year values of property acquired in the year up 2.4% above gross purchase cost Net LTV down from 49.6% to 43.0% 175 Key Operating Assets in defensive sectors producing £125.0m p.a. passing rent, up from £95.7m like for like portfolio rents up 2.6% rents on portfolios acquired added £26.8m to portfolio income 48% of rents subject to fixed uplifts; 52% to upwards only uncapped RPI-linked reviews Weighted average lease length 20.9 years with no breaks Term of appointment of management team extended by 3.5 years to December 2025 4
Financial Highlights: year to 31 December 2018 31 December 2018 31 December 2017 % change • Net Assets £1,281.6m £860.6m ↑ 48.9% • EPRA Net Asset Value £1,292.9m £870.8m ↑ 48.5% • EPRA Net Asset Value per share 400.5p 370.4p ↑ 8.1% • Net LTV 43.0% 49.6% ↓ 13.4% • Adjusted EPRA EPS 14.7p 13.6p ↑ 8.1% • Dividends paid £41.4m £31.2m ↑ 32.7% • Dividends per share 13.9p 13.6p ↑ 2.2% • Latest DPS annualised as a percentage of 3.9% 3.8% ↑ 2.6% EPRA NAV • Portfolio net initial yield 5.1% 5.1% - • Annualised passing rent £125.0m £95.7m ↑ 30.6% 5
EPRA Net Assets progression EPRA NAV up 48.5% £m Oversubscribed placing to raise £315.5m Blended NIY maintained at 5.1% 6
EPRA NAV per share progression TAR: 11.9% 0 TSR: 8.3% EPRA NAV per share (pence) 7
Adjusted EPRA Earnings 2018 2017 £m Pence £m Pence Net rent: Like for like portfolio 98.4 33.0 94.4 40.9 Acquisitions * 14.8 4.6 - - Net finance costs Like for like portfolio (50.6) (16.9) (51.0) (22.0) New facilities * (2.7) (0.8) - - Admin & corporate costs (15.3) (5.1) (11.9) (5.2) Tax charge (German assets) (0.3) (0.1) (0.3) (0.2) Adjusted EPRA Earnings 44.3 14.7 31.2 13.6 * Acquisitions completed and new facilities drawn 24 April (£15.0m p.a. rent) and 2 July (£11.9m p.a. rent) 2.6% rental uplifts on portfolio held through the period Positive contribution from acquisitions reflecting full deployment of funds raised in March Fully covered quarterly dividends driven by rents with in-built uplifts providing inflation protection 8
Financing Reduction in net LTV from 49.6% to 43.0% over the period Six ring fenced facilities with substantial headroom & flexibility on financial covenants valuation headroom on LTV default tests in all cases >32% and ICR default headroom > 32% all facilities have cash cure rights: over £66m uncommitted cash available for cures if needed Weighted average term to debt maturity 5.3 years from 31 December 2018 – first expiry in Oct 2022 Weighted average cost c. 4.8% p.a., down from 5.1% in prior year Interest cover 2.4x 1 up from 2.0x 1 at 31 December 2018 On base case assumptions 2 net LTV expected to further reduce to below 37% at Dec 2023 Illustrative Portfolio Valuation and Net LTV at Constant Valuation Yield 2 £m 2,700 44.0 % 43.0 % 2,650 43.0 % 2,672 2,600 42.0 % 2,550 41.0 % 2,500 40.0 % 2,450 39.0 % 2,400 38.0 % 2,350 37.0 % 2,300 36.8 % 2,307 36.0 % 2,250 2,200 35.0 % 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 Portfolio Valuation LTV 1 calculated as current passing rent divided by annualised interest cost as at the balance sheet date 2 See assumptions on page 24 9 There is no certainty that these illustrative projections will be achieved
Delivering Strong Total Returns Performance since listing in June 2014 NAV per share up 130% Net LTV down from 80% to 43% Annualised DPS 15.7p per share (3.9% pa on Dec 2018 Total accounting return CAGR c. 21% EPRA NAV) Total Accounting Return 33.4p 19.5p Cumulative dividends 5.9p per share EPRA NAV per share 370.4p 400.5p 282.8p 323.6p 258.5p Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dividends paid (£m) and Adjusted EPRA EPS Net Loan to Value Annualised DPS 15.7p 69.7% 61.0% 14.0p 53.5% 14.7p 49.6% 43.0% 13.6p 11.8p 11.3p 2.6p £31.2m £41.4m £12.0m Dec-15 Dec-16 Dec-17 Dec-18 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-16 Dec-17 Dec-18 10
Portfolio Update and Market Outlook 3 11 Thorpe Park
30% Increase in Investment Property 5.1% Net Initial Yield 5.1% The Arena Manchester Victoria Station Car Park Martin House – Part Basement 12
2018 Property Valuation Uplift Healthcare Leisure Hotels Total 2018 Change in 2018 Change in 2018 Change 2018 2017 Change in Passing rent: £m year £m year £m in year £m £m year Like for like 50.2 2.8% 33.8 3.6% 14.1 0.0% 98.1 95.6 2.6% Acquisitions - - 11.9 - 15.0 - 26.9 - n/a Disposals - - - - - - - 0.1 Total 50.2 2.8% 45.7 39.9% 29.1 105.0% 125.0 95.7 30.6% Valuation: Like for like Sterling 984.8 4.3% 522.2 7.1% 242.4 5.8% 1,749.4 1,661.0 5.3% Like for like constant € - - 111.4 3.3% - - 111.4 107.8 3.3% Euro FX - - 1.2 1.1% - - 1.2 - 1.1% Like for like portfolio 984.8 4.3% 634.8 6.6% 242.4 5.8% 1,862.0 1,768.7 5.3% ↑ 2.4% on cost Acquisitions - - 191.9 - 252.8 - 444.7 - Disposals - - - - - - - 1.5 - Total: 984.8 4.3% 826.7 38.9% 495.2 116.2% 2,306.7 1,770.2 30.3% 2018 2017 2018 2017 2018 2017 2018 2017 Net Initial Yield 4.8% 4.9% 5.1% 5.1% 5.5% 5.7% 5.1% 5.1% Like for like NIY 4.8% 4.9% 5.0% 5.1% 5.5% 5.8% 4.9% 5.1% 12bp yield shift Running Yield at July 2019 1 4.9% 5.3% 5.5% 5.2% 13 1 Using valuers’ assessments of RPI at next uplift (weighted average 2.6%) and taking no account of any open market uplift on Ramsay Hospitals
Very long term income underpins growth Weighted average term to first break 20.9 years 60 No other REIT with a market capitalisation of over £1 bn has a WAULT over 15 years 50 Rent Passing at 31 December 2018 (£m) The Arena 40 30 20 Manchester Victoria Station Car Park 10 - Martin House – Part Basement 14
Healthcare: £985m, 43% of total portfolio value Ramsay Location (by value) 19 private hospitals valued at £935.2m at 31 Dec 2018 generating £48.2m of passing rent West Midlands Let on individual fully repairing and insuring leases with a 4% North term to expiry of 18.4 years at Dec 2018 without break clauses 8% Rent increases by at least 2.75% p.a. throughout the lease term in May each year Midlands Guaranteed by Ramsay Health Care Limited, one of the top 9% five private hospital operators in the world , an ASX 50 company with a market capitalisation of £6.9bn 1 ; H1 to Dec 2018 EBITDA +9.8% Nightingale Hospital, London South West 11% South East Let to a UK subsidiary of Groupe Sinoué on a fully repairing 57% and insuring lease for 25.6 years Central London’s only private psychiatric hospital – located in Lisson Grove, near Marylebone station Rent increase of 3.0% in May each year North West Valued at £49.7m at 31 Dec 2018 generating £2.0m of passing 11% rent Guaranteed by Orpea SA, mental health and aged care specialists, listed on Euronext with £5.7bn 1 market capitalisation Healthcare Portfolio Net Initial Yield of 4.8% as at 31 Dec 2018 1 At 5 March 2019 15
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