THE SPECIALIST WAREHOUSE INVESTOR FULL YEAR RESULTS 31 MARCH 2019 - PowerPoint PPT Presentation

Full Year Results 2019 TILSTONE THE SPECIALIST WAREHOUSE INVESTOR FULL YEAR RESULTS 31 MARCH 2019 WAREHOUSE REIT PLC

Full Year Results 2019 Investment Director Outlook 21 Appendix 22 Externally managed by an experienced team Tilstone Partners – Investment Adviser Paul Makin MRICS Tilstone Partners Simon Hope FRICS AGENDA Tilstone Partners - Chairman Warehouse REIT Non-Executive Director Andrew Bird MRICS Tilstone Partners Managing Director Peter Greenslade FCA Tilstone Partners 19 Market Finance Director 6 4 Key Financial Highlights 5 14 Financial Results 3 Portfolio Overview 10 Investment Case Pipeline and Acquisitions 2 Key Operational Highlights • • • • • • • • •

Full Year Results 2019 80 Internet sales - £bn (LHS) 18 17 16 15 14 13 12 11 70 0% 60 50 40 30 20 10 0 20% 15% 10% Internet as % of total retail sales (RHS) 2% 0% 300 Secondary Prime 19 Q1 18 Q1 17 Q1 16 Q1 15 Q1 14 Q1 13 Q1 12 Q1 250 4% 200 150 100 50 0 14% 12% 10% 8% 6% 5% 18% THE INVESTMENT CASE Strong market fundamentals Limited supply driving rental growth, particularly in urban 16% Properties purchased below construction cost of replacement expected to grow to 26% of retail sales by 2022 from 18% in 2018 Structural not cyclical demand from rise in e-commerce which is multi let industrial in the UK from a variety of sectors Strong occupier demand for urban ‘last-mile’ warehousing and opportunities to grow income/value through asset management Attractive growth prospects Urban warehouses provide attractive high income returns and transport infrastructure point 100% of assets are within 2.5 miles of a town centre or major than big boxes let to a single occupier on a long lease potential to add value through active asset management rather Diversified UK real estate portfolio of urban warehouses with the Strategic focus 3 warehousing, with the secondary market outperforming prime Vacancy rate (RHS) 11% 9% Source: CoStar/Savills Source: ONS UK industrial availability - million sq ft 13% UK online retail sales growth outperform all other UK real estate sectors over next three years IPF Consensus forecasts for Industrial/Warehouse sector to opportunities to grow income/value through asset management 10% Acquisitions anticipated to be earnings accretive with 15% £76.5m to build scale in an attractive market Successful capital raise in April 2019 generated gross proceeds of 8% • – – – • – – – – • – – –

Full Year Results 2019 As at 31 March 2019 with Successfully reinvested the disposal proceeds at attractive yields, acquiring four assets for a total of £16.7m, reflecting a net initial yield of 6.9% and adding a further 250,700 sq ft of space to the portfolio 13.0% LETTINGS AHEAD OF ERV 62 lettings in year to 31 March 2019 at 13.0% ahead of ERV vs 27 between IPO and 31 March 2018 at 7.8% ahead of ERV 92.0% OCCUPANCY WAULT of 4.6 years up from FULL YEAR RESULTS – KEY OPERATIONAL HIGHLIGHTS 4.1 years as at 31 March 2018 6.1% EPRA NET INITIAL YIELD As at 31 March 2019 a c.300 bps spread over 3.1% weighted average cost of debt 27% PREMIUM ON DISPOSALS Average premium of disposal proceeds over 31 March 2018 book value on £19.0m of 5.1% and a 27% premium to 31 March 2018 book values Sold four assets for £19.0m, reflecting an average net initial yield of sales at NIY of 5.1% Further leasing successes outperformance on new lettings capitalising on positive underlying market trends Completed 62 lettings of vacant space, generating rent of £2.1m per annum, 13.0% ahead of estimated rental value (“ERV”) Renewed 46 leases, securing income of £1.5m and a 14.6% increase in contracted rents al Occupancy of 92.0% at 31 March 2019 – excluding units under offer to let and units undergoing refurbishment, occupancy was 94.9% at 31 March 2019 (93.1% at 31 March 2018) WAULT up to 4.6 years from 4.1 years as at 31 March 2018 Fu Low average rent of £5.26 per sq ft and capital value of £67 per sq ft Pr Profitab able recycling of cap apital 4 Hands-on asset management delivering consistent • – – – – – – • – –

Full Year Results 2019 PER SHARE through a placing, open offer and offer for subscription, with strong support from new and existing shareholders Acquired four assets in Wakefield, Northampton, Aberdeen and Tewkesbury for a total consideration of £45.0m, at a blended NIY of 6.6% 13.3% TOTAL RETURN Increase in EPRA NAV per share and dividends paid in the year to 31 March 2019 ahead of 10% pa target 109.7p EPRA NAV As at 31 March 2019 FULL YEAR RESULTS – KEY FINANCIAL HIGHLIGHTS Increase of 11.8% from 98.1p at IPO after issue costs 6.0p DIVIDEND PAID PER SHARE Target dividend for the year to 31 March 2019 increased to 6.0p from 5.5p at IPO 39.7% LTV RATIO As at 31 March 2019 reduced from 40.5% at 31 March 2018 and within target Successfully raised gross proceeds of £76.5m at 103p per share ty tivity Strong earnings growth to date with 6.0p dividend meeting target 5 St Strong fin inancia ial l posit itio ion Total return of 13.3% in the year to 31 March 2019, ahead of 10% pa target NAV growth of 7.4% driven by a like-for-like property valuation uplift of 4.3% and surpluses on disposals giving rise to EPRA NAV per share of 109.7p d acti range of 30-40% for the year, covered 1.1x by adjusted EPS peri Loan to value ratio reduced to 39.7% as at 31 March 2019 down from 40.5% as at 31 March 2018 Period end average cost of debt 3.1% with 44% of total borrowings fixed/hedged d end Po Post-pe riod • – – – – – • – –

Full Year Results 2019 102.1p £307.4m £291.0m +4.3%** Loan-to-value 39.7% 40.5% -0.8% EPRA NAV per share 109.7p +7.4% +162% Total accounting return 13.3% 4.6% +8.7% Total cost ratio 29.4% 34.5% -5.1% * Accounting period is from 1 August 2017 to 31 March 2018. Operations commenced post-IPO on 20 September 2017 Portfolio value 1.9p FINANCIAL HIGHLIGHTS £10.6m 6 31 March 2019 31 March 2018* Change IFRS profit before tax £22.8m £8.4m +172% Adjusted earnings £3.4m 5.1p +214% Adjusted EPS 6.4p 2.0p +214% Dividends per share 6.0p 2.5p +140% EPRA EPS ** Like-for-like change

Full Year Results 2019 £3.4m (£4.6m) (£0.8m) +479% Tax £0.0m £0.0m n/a Adjusted earnings £10.6m +214% +265% Adjusted EPS 6.4p** 2.0p*** +214% Ongoing charge ratio 1.9% n/a n/a * Accounting period is from 1 August 2017 to 31 March 2018. Operations commenced post-IPO on 20 September 2017 ** EPRA EPS 5.1p including one-off property and acquisition provision of 1.3p Net finance costs £4.2m ADJUSTED EARNINGS (£2.9m) 7 31 March 2019 31 March 2018* Change Gross rental income £21.4m £6.4m +238% Property operating expenses (£0.6m) £15.2m +357% Investment management fee (£1.9m) (£0.8m) +138% Other administration expenses (£1.5m) (£0.8m) +94% Adjusted EBITDA *** EPRA EPS 1.9p including loan break fees of 0.1p

Full Year Results 2019 n/a n/a EPRA NAV £182.1m £169.5m +7.4% Number of shares 166.0m 166.0m EPRA NAV per share (£0.2m) 109.7p 102.1p +7.4% LTV ratio*** 39.7% 40.5% -0.8% * Fair value of investment property ** Like-for-like valuation change +4.3% £0.0m Fair value of interest rate derivatives BALANCE SHEET Net borrowings 8 31 March 2019 31 March 2018 Change Investment properties* £307.4m £291.0m +5.6%** (£122.1m) +7.6% (£117.9m) +3.6% Other net liabilities (£2.9m) (£3.6m) -19.0% Total equity £182.3m £169.5m *** Outstanding amount of gross loan balances less cash as a percentage of property value

Full Year Results 2019 166.0m n/a (£0.2m) EPRA NAV £182.1m £75.0m £257.0m Number of shares 74.3m Fair value of interest rate derivatives 240.3m EPRA NAV per share 109.7p 107.0p LTV ratio 39.7% 26.2% * Post period-end purchases in Wakefield, Northampton, Aberdeen and Tewkesbury, for a total purchase price of £45.0m (£0.2m) £257.3m PRO FORMA BALANCE SHEET Net borrowings 9 31 March 2019 Capital raising impact Pro forma Investment properties* £307.4m £45.0m* £352.4m (£122.1m) £75.0m** £30.0m (£92.2m) Other net liabilities (£2.9m) n/a (£2.9m) Total equity £182.3m ** Estimated net proceeds of capital raising (gross proceeds of £76.5m)

Full Year Results 2019 Warehouse - Retail Use 8.3% 5.3 10.94 100.0% 3.6% 11.2 95 Workspace / Offices 6.7% 6.5 7.02 100.0% 4.1% 12.7 Warehouse - Trade Use 124 14.8 7.0% 92.0%* ** Lease length to first break 3.1 years * Excluding units under offer to let and units undergoing refurbishment, occupancy was 94.9% 67 6.6%*** 4.6** 5.26 100.0% 4.8% 307.4 Total 106 7.4% 2.8 10.20 84.5% 59 4.4 THE VALUATION Occupancy years to expiry Lease length £ per sq ft pa rent Average portfolio initial total % of £m Valuation 31 March 2019 As at 10 Net yield 4.53 4.6 96.3% 16.2% 49.9 Assembly Light Manufacture & 65 6.3% 5.02 Average capital 90.6% 71.2% 218.8 Distribution Warehouse Storage & £ per sq ft value *** EPRA net initial yield 6.1%