June 2020 THE SPECIALIST WAREHOUSE INVESTOR FY2020 RESULTS JUNE 2020 WAREHOUSE REIT PLC TILSTONE
June 2020 AGENDA Externally managed by an experienced team Tilstone Partners – Investment Adviser • Introduction 3 – Andrew Bird • Financial results 6 – Peter Greenslade • Portfolio review 11 – Paul Makin Andrew Bird MRICS Peter Greenslade FCA • Market 22 Tilstone Partners Tilstone Partners Managing Director Finance Director – Andrew Bird • Outlook 24 – Andrew Bird • Appendices 25 Paul Makin MRICS Simon Hope FRICS Tilstone Partners Tilstone Partners - Chairman Investment Director Warehouse REIT Non-Executive Director 2
June 2020 FULL YEAR RESULTS – KEY HIGHLIGHTS • Further progress across the business – Successful £76.5m equity raise in April 2019 8.1% £450.5m – Capital deployed ahead of target at blended 7.0% NIY – New lettings 8.1% ahead of March 2019 ERVs LETTINGS PORTFOLIO – Total occupancy increased to 93.4% from 92.0% AHEAD OF ERV VALUE – New debt facility reducing the cost and extending maturity • Robust financial performance 75 lettings in year to 31 March 2.5% like-for-like valuation 2020 at 8.1% ahead of ERV – Total accounting return of 5.4% in the year to 31 March 2020 increase – EPRA NAV 109.5p impacted by share issue and acquisition costs with like-for-like property valuation uplift of 2.5% – Adjusted earnings per share up 2.3% to 6.5p – Total dividend per share increased by 3.3% to 6.2p – Disposal of 12 smaller non-core assets raising £16.7m at an £15.6m 6.2p 8.3% premium to 31 March 2019 book values – Three main refurbishments delivered a 10.0% valuation uplift ADJUSTED DIVIDEND • Intention to raise capital near term to fund pipeline EARNINGS PER SHARE – Pipeline of c.£350m with focus on e-commerce opportunities of which c.£120m is in exclusive or final negotiations Paid or declared dividends 2.0% like-for-like rental – Dividend target for FY21 maintained at 6.2p increase of 3.3% on FY2019 income growth 3
June 2020 COVID-19 IMPACTS Impact How WHR is positioned Online sales surge Around half of customers have online sales/distribution Consumers demanding shorter delivery times 100% of portfolio within 2.5 miles of a town centre or major transport point Social distancing measures Suburban locations less reliant on public transport Onshoring Requirement for supply chain space closer to customers Negative gilt yields Portfolio valued at 6.3% EPRA ‘topped-up’ net initial yield Heightened tenant default risk Payments made or agreed for 94.0% of March 2020 contracted rent UK REITs cancelling dividends 3.3% increase in FY20 dividend with 6.2p target maintained for FY21 4
June 2020 DELIVERING ON OUR STRATEGY Online sales vs instore sale growth • Clear strategy and well positioned 25% 25% 21% 20% – Focus on e-commerce users and multi-let estates which 18% 20% 20% 16% 16% 15% 15% 14% 13% diversifies risk and provides active management opportunities 12% 15% 15% 10% 10% 10% – 100% of assets are within 2.5 miles of a town centre or major 5% 5% transport infrastructure point 0% 0% – 28% of total rent roll accounted for by top ten tenants -5% -5% – Consistent leasing outperformance ahead of ERV since IPO -10% -10% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* Online (LHS) Store (LHS) Internet as % of total (RHS) • Strong position to capitalise on accelerating e-commerce Source: ONS *year to date to April 2020 – Strong occupier demand for urban warehousing and multi let UK industrial vacancy rate vs average rent industrial units from a variety of sectors – Structural not cyclical demand from rise in e-commerce with 14% £6.50 UK online retail sales up 15% in 2020 year-to-date 12% £6.00 – Post lockdown ecommerce sales were up 33% year-on-year in April and the share of total sales surged to 30% 10% £5.50 – Cushman & Wakefield research suggests a 5-10% increase in 8% £5.00 occupier demand equating to an additional 200m sq ft 6% £4.50 – Vacancy rates close to historic lows 4% £4.00 – Investment market remains open with transactions proceeding 12Q1 13Q1 14Q1 15Q1 16Q1 17Q1 18Q1 19Q1 20Q1 Vacancy rate (LHS) Average rent £ per sq ft (RHS) Source: CoStar/Savills 5
June 2020 FINANCIAL SUMMARY Year to 31 March 2020 Year to 31 March 2019 Change IFRS profit before tax £20.7m £22.8m -9% Adjusted EBITDA £21.5m £15.2m +41% Adjusted earnings £15.6m £10.6m +48% Adjusted EPS 6.5p 6.4p +2% EPRA EPS 6.3p 5.1p +26% Dividends per share 6.2p 6.0p +3% 31 March 2020 31 March 2019 Change Portfolio value £450.5m £307.4m +47% Loan-to-value 40.2% 39.7% +0.5% EPRA NAV per share 109.5p 109.7p -0.2% 6
June 2020 ADJUSTED EARNINGS Year to 31 March 2020 Year to 31 March 2019 Change Gross rental income £29.4m £21.4m +37% Property operating expenses (£3.3m) (£2.9m) +14% Investment management fee (£2.8m) (£1.9m) +49% Other administration expenses (£1.8m) (£1.5m) +22% Adjusted EBITDA £21.5m £15.2m +41% Net finance costs (£5.9m) (£4.6m) +27% Adjusted earnings £15.6m £10.6m +48% Adjusted EPS 6.5p 6.4p +2% Total cost ratio 27.1% 29.4% -2.3% Ongoing charges ratio 1.9% 1.9% - 7
June 2020 BALANCE SHEET 31 March 2020 31 March 2019 Change Investment properties £450.5m £307.4m +47% Net borrowings (£181.0m) (£122.1m) +48% Other net liabilities (£6.4m) (£3.0m) — Total equity £263.1m £182.3m +44% Fair value of interest rate derivatives - (£0.2m) — EPRA NAV £263.1m £182.1m +44% Number of shares 240.3m 166.0m +45% EPRA NAV per share 109.5p 109.7p -0.2% Loan-to-value ratio 40.2% 39.7% +0.5% 8
June 2020 MOVEMENT IN EPRA NAV Pence per share 120p Like-for-like 118p Increase 2.5% 0.4p 116p -1.3p (0.3p) 6.2p 114p 112p (6.1p) 110p 109.7p 109.5p 6.5p 108p (2.8p) 106p 104p (4.0p) 102p 100p Reduced EPRA NAV per share by 6.2% 98p 96p 31 Mar'19 Equity issue Property Adjusted Property Profit on Other items Dividends 31 Mar'20 acquistion earnings revalaution disposal paid costs 9
June 2020 STRONG FINANCING POSITION Debt maturity £m 250 250 • Growth in dividend and underlying earnings per share 200 33.5 200 • Successful refinancing in January 2020 150 150 100 100 • 186.5 Weighted average cost of debt reduced to 2.6% 50 50 • Interest coverage ratio 3.7x (1) , LTV ratio 40.2% with clear 0 0 objective to reduce below 40% FY21 FY22 FY23 FY24 FY25 • No debt maturities until January 2025 with option to extend Drawn Undrawn • 32% of drawn debt fixed/hedged Capital expenditure £m • Limited capex commitments – will not commit to new projects until there is greater clarity on the outlook 5 5 • Cash and available facilities of £39.0m at year end 3.6 4 4 • Operating well within banking covenants 3 3 2.0 2 2 1.0 1 1 0.2 0 0 FY18 FY19 FY20 FY21 Actutal Committed (1) Adjusted operating profit before interest & tax divided by underlying net interest expense 10
June 2020 PORTFOLIO VALUATION SUMMARY As at Valuation % of total Average rent Lease length to Net initial Reversionary Capital value 31 March 2020 £m portfolio Occupancy £ per sq ft pa expiry years yield yield £ per sq ft Southern England 151.7 33.7% 89.0% 6.52 5.8 5.6% 6.6% 95 Midlands 120.6 26.8% 94.1% 5.08 4.3 6.6% 7.1% 69 Northern England 103.3 22.9% 98.3% 4.80 5.2 6.7% 7.3% 65 Rest of UK 57.9 12.8% 93.4% 5.53 5.7 7.7% 8.6% 59 Land and development 17.0 3.8% n/a n/a n/a n/a n/a n/a Total 450.5 100.0% 93.4% 1 5.47 5.2 2 6.3% 6.9% 73 As at 31 March 2020 As at 31 March 2019 Portfolio valuation Portfolio valuation Contracted rent ERV Contracted rent ERV £m £m £m per annum £m per annum £m per annum £m per annum 450.5 307.4 21.6 24.9 30.4 33.4 Area Weighted unexpired Average capital value Area Weighted unexpired Average capital value m sq ft lease term years £ per sq ft m sq ft lease term years £ per sq ft 6.2 5.2 73 4.6 4.6 67 (1) Excluding units under offer to let and units undergoing refurbishment, occupancy was 96.5% (2) Weighted average lease length to first break 4.0 years 11
June 2020 INCREASED WEIGHTING TO STORAGE & DISTRIBUTION AND THE MIDLANDS Number of assets Portfolio value by use 100% 120 104 82% 31 Mar 19 31 Mar 20 95 92 91 71% 100 89 80% 80 60% 60 40% 16% 40 27 20% 10% 5% 4% 4% 3% 3% 2% 20 0% 0 Warehouse Light Warehouse - Warehouse - Workspace / Storage & Manufacture Trade Use Retail Use Office IPO Sep 17 31 Mar 18 30 Sep 18 31 Mar 19 30 Sep 19 31 Mar 20 Distribution & Assembly Including development property and land Portfolio value by location Number of tenants 652 36% 638 40% 700 624 34% 607 560 31 Mar 19 31 Mar 20 30% 600 30% 25% 23% 23% 500 400 20% 14% 12% 300 10% 3% 200 129 2% 100 0% Southern Midlands Northern Scotland Wales & 0 England England Northern IPO Sep 17 31 Mar 18 30 Sep 18 31 Mar 19 30 Sep 19 31 Mar 20 Ireland Including development property and land 12
Recommend
More recommend
