November 2019 THE SPECIALIST WAREHOUSE INVESTOR HALF YEAR RESULTS 5 NOVEMBER 2019 WAREHOUSE REIT PLC TILSTONE
November 2019 AGENDA • Externally managed by an experienced team Key Highlights 3 Tilstone Partners – Investment Adviser • Financial Results 5 • Acquisitions 9 • Portfolio Overview 14 • Asset Management 17 • Outlook 20 • Peter Greenslade FCA Andrew Bird MRICS Appendices 21 Tilstone Partners Tilstone Partners Managing Director Finance Director Paul Makin MRICS Simon Hope FRICS Tilstone Partners Tilstone Partners - Chairman Investment Director Warehouse REIT Non-Executive Director 2
November 2019 HALF YEAR RESULTS – KEY OPERATIONAL HIGHLIGHTS • 8.0% 91.5% Rents are growing • Strong occupational demand from a variety of sources LETTINGS OCCUPANCY • April capital raise fully invested at 7.0% NIY within six months and ahead of AHEAD OF ERV target 43 new lettings during the Excluding units under refurbishment • WAULT continues to increase period at 8.0% ahead of ERV or under offer occupancy is 96.8% LfL ERV growth of 1.2% (12 months As at 31 March 2019: 92.0% • growth of 4.1%) Quality of assets improved (location, covenant strength, age, size) • Progressing value add opportunities on ‘lazy acres’ • Improved cost ratios • Dividend fully covered by underlying EPS in the period, not reflecting full positive impact of recent acquisitions 5.1 YEARS 5A1 WAULT QUALITY OF INCOME Top 10 tenants generate As at 31 st March 19 27% of total rent, WAULT was 4.6 years all rated 5A1 by D&B 3
November 2019 HALF YEAR RESULTS – KEY FINANCIAL HIGHLIGHTS • £7.3m 105.2p Strong financial position Rental income and operating profit strongly ahead of 2018 half year • EPRA EPRA NAV EPRA NAV per share impacted by £8.6m of deployment costs less revaluation • EARNINGS PER SHARE uplift from those assets now delivering Target dividend for the full year to March 2020 will increase • Decrease of 4.1% from 109.7p EPRA earnings up to £7.3m against LTV marginally ahead of target range but will be managed below 40% in the • at 31 March 2019 after share issue £2.9m in 6 months to September impact and deployment costs near term through the disposal of a small number of non-core assets 2018 • Post-period end activity Completed the acquisition of the multi-let Midpoint Estate in Middlewich, • Cheshire, for £15.5m, reflecting a net initial yield of 6.6% Disposal of four small assets for £3.0m, ahead of their 31 March 2019 book • 3.0p 40.2% value of £2.8m reflecting a NIY of 5.8% Commenced lease renewal negotiations on more than £400,000 pa of rent • DIVIDEND PAID LTV currently due to expire before 31 March 2020 PER SHARE RATIO Target dividend for the year Just outside target to 31 March 2020 increased range of 30-40% 4
November 2019 FINANCIAL HIGHLIGHTS 30 Sept 2019 30 Sept 2018 Change IFRS profit before tax £2.8m £11.0m - Adjusted EBITDA £9.7m £7.2m +35% Adjusted Earnings £7.3m £5.1m +43% Adjusted EPS 3.0p 3.1p -1% EPRA EPS 3.0p 1.8p +67% Dividends per share 3.0p 3.0p - 30 Sept 2019 31 March 2019 Change Portfolio value £438.7m £307.4m +43% Loan-to-value 40.2% 39.7% -1.3% EPRA NAV per share 105.2p 109.7p -4% Total costs ratio 26.5% 28.9% -8.3% 5
November 2019 ADJUSTED EARNINGS 30 Sept 2019 30 Sept 2018 Change Gross rental income £13.6m £10.7m +26% Property operating expenses (£1.7m) (£1.8m) -8% Investment management fee (£1.4m) (£0.9m) +53% Other administration expenses (£0.8m) (£0.8m) +13% Adjusted EBITDA £9.7m £7.2m +35% Net finance costs (£2.4m) (£2.1m) +19% Adjusted earnings £7.3m £5.1m +43% Adjusted EPS 3.0p* 3.1p -3% Ongoing charge ratio 1.0% 2.2% - * Adjusted EPS covered dividend despite cash drag of April raise 6
November 2019 MOVEMENT IN EPRA NAV Pence per share 112p Like-for-like increase 0.6% 110p -1.3p 109.7p (2.8p) 108p 1.9p (3.0p) 106p 3.0p (3.6p) 105.2p -4.1% 104p 102p Reduced EPRA NAV per share by 5.8% 100p 98p 31 Mar'19 Equity issue Property acquistion Adjusted earnings Property revalaution Dividends paid 30 Sep'19 costs 7
November 2019 BALANCE SHEET 30 Sept 2019 31 March 2019 Change Investment properties £438.7m £307.4m +43% Net borrowings (£176.3m) (£122.1m) +44% Other net liabilities (£9.7m) (£3.0m) - Total equity £252.7m £182.3m +39% Fair value of interest rate derivatives (£0.1m) (£0.2m) - EPRA NAV £252.6m £182.1m +39% Number of shares 240.3m 166.0m - EPRA NAV per share 105.2p 109.7p -4% Total costs ratio 26.5% 28.9% -8% 8
November 2019 ACQUISITIONS – FULL DEPLOYMENT AHEAD OF TARGET Acquisitions completed during H1 Property Price NIY John Lewis Stapleton’s Tyres, Wakefield £4.2m 6.3% Northampton Murcar Industrial Estate £8.0m 9.0% John Lewis, Northampton £29.0m 5.9% Alpha Close, Tewkesbury £3.8m 6.9% Eaton Point, Chorley £3.6m 6.8% Direct Wines, Delta Court, Doncaster £1.7m 6.7% Gloucester Echelon Portfolio £70.0m* 7.0% Total £120.3m 7.0% Midpoint, Post Period End Middlewich Midpoint, Middlewich £15.5m 6.6% * Plus up to £5.0m deferred consideration on or before Sept 2023 9
November 2019 THE ECHELON PORTFOLIO Fully-let portfolio of reversionary warehouse and distribution assets • What is it? – Reversionary portfolio of eight warehouse and distribution properties in key locations across England Total floor area of 995,100 sq ft arranged across 1 multi-let and 7 single let – assets Headline rent of £5,378,000 reflecting a low rent of £5.40 per sq ft – 100% of the income is secured against D&B rated "minimum risk” covenants – WAULT of 5.3 years Portfolio is fully let to 9 tenants including Amazon, Iron Mountain, Direct Wines – and Sytner Purchase price Net initial yield Contracted Average rent rent (pa) £70,000,000* 7.0% £5,378,000 £5.40 sq ft Key tenants Occupancy Amazon, Iron Mountain, Direct Wines 100% and Sytner * Excluding deferred consideration of up to £5.0m 10
November 2019 THE ECHELON PORTFOLIO Amazon UK Services, Exeter Way, Theale, Reading Direct Wines, Hurricane Road, Gloucester Area Average rent Area WAULT WAULT Contracted Contracted Average rent rent (pa) rent (pa) 91,700 sq ft £9.40 sq ft 188,300 sq ft 12.0 years 2.0 years £894,000 £1,065,000 £5.66 sq ft Tenant Tenant Occupancy Occupancy Amazon UK Services Limited Direct Wines Limited 100% 100% 11
November 2019 THE ECHELON PORTFOLIO Iron Mountain, Stretton Green, Warrington Sytner & Emerson Process Management, Leicester Area WAULT Contracted Average rent Area WAULT Contracted Average rent rent (pa) rent (pa) 106,100 sq ft 0.4 years £487,000 £4.59 sq ft 114,000 sq ft 5.8 years £848,000 £7.44 sq ft Tenant Tenant Occupancy Occupancy Sytner Ltd & Emerson Process Iron Mountain (UK) plc 100% 100% Management Ltd 12
November 2019 THE ECHELON PORTFOLIO Fully-let portfolio of reversionary warehouse and distribution assets Sherwood 217, Nottingham Liberty Aluminium Technologies, Coventry Area Area 217,400 sq ft 138,500 sq ft WAULT WAULT 3.0 years 2.8 years Average rent Average rent £4.50 sq ft £3.57 sq ft Daniels Chilled Foods & Convenience Foods, Europarc, Grimsby Area 139,100 sq ft WAULT 7.9 years Average rent £4.37 sq ft 13
November 2019 INCREASED WEIGHTING TO STORAGE & DISTRIBUTION AND MIDLANDS Portfolio value by use Portfolio value by location 90% 40% 79% 80% 36% 71% 34% 35% 70% 30% 60% 30% 50% 25% 25% 23% 22% 40% 20% 30% 14% 15% 20% 16% 12% 10% 10% 5% 5% 10% 4% 4% 3% 2% 0% 5% 3% Warehouse Storage & Distribution Light Manufacture & Assembly Warehouse - Trade Use Warehouse - Retail Use Workspace / Office 1% 0% Southern England Midlands Northern England Scotland Wales & Northern Ireland 31 March 2019 30 September 2019 31 March 2019 30 September 2019 Source: IPF End-2017 xxx 14
November 2019 THE VALUATION As at Valuation % of total Average rent Lease length to Net initial Reversionary Capital value 30 September 2019 £m portfolio Occupancy £ per sq ft pa expiry years yield yield £ per sq ft Warehouse storage & distribution 348.4 79% 92.5% 5.30 5.3 6.2% 7.0% 71 Light manufacture & assembly 45.4 10% 84.1% 4.59 4.3 7.2% 8.5% 53 Warehouse - trade use 12.4 3% 100.0% 7.19 6.1 7.1% 7.3% 93 Warehouse - retail use 10.8 2% 100.0% 10.44 5.0 8.2% 9.4% 119 Workspace & office 21.7 5% 85.0% 10.00 3.9 7.3% 8.8% 106 Total 438.7 100% 91.5%* 5.47 5.1** 6.5% 7.3% 71 As at 31 March 2019 As at 30 September 2019 Portfolio valuation Portfolio valuation ERV Contracted rent ERV Contracted rent £m £m £m per annum £m per annum £m per annum £m per annum 307.4 21.6 24.9 438.7 30.3 34.5 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 4.6 4.6 67 6.2 5.1 71 * Excluding units under offer to let and units undergoing refurbishment, occupancy was 96.8% ** Lease length to first break 3.9 years 15
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