2018 Preliminary Results Presentation Charles Peach, CFO Jonathan - - PowerPoint PPT Presentation

2018 Preliminary Results Presentation

Jonathan Laredo, CEO Michael Gibbons, CIO Charles Peach, CFO

Disclaimer

This presentation (hereinafter "this document") has been prepared by Yew Grove REIT plc (the "Company“ or “Group”) for information purposes only. This document has been prepared in good faith but the information contained in it has not been independently verified and does not purport to be comprehensive. This document is neither a prospectus nor an offer nor an invitation to apply for securities. No representation or warranty, express or implied, is given by or on behalf of the Company, its group companies, or any of their respective shareholders, directors, officers, employees, advisers, agents or any other persons as to the accuracy, completeness, fairness or sufficiency of the information, projections, forecasts or opinions contained in this document. In particular, the market data in this document has been sourced from third parties. Save in the case of fraud, no liability is accepted for any errors, omissions or inaccuracies in any of the information or opinions in this document. Forward-looking statements This Announcement contains forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical

• facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results,

performance or achievements of the Group or the industry in which it operates, to be materially different from any future results, performance

• r achievements expressed or implied by such forward-looking statements. The forward-looking statements speak only as at the date of this
• Announcement. The Group will not undertake any obligation to release publicly any revision or updates to these forward-looking statements to

reflect future events, circumstances, unanticipated events, new information or otherwise except as required by law or by any appropriate regulatory authority.

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1. Key Highlights 2. Portfolio Overview 3. Financial Review 4. Market Commentary 5. Conclusion and Outlook

Table of Contents

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Key Highlights 1.

• Successful IPO and additional debt raise
• Full deployment of the IPO proceeds in less than 7 months, and continue to develop the

acquisition pipeline

• Diversified and differentiated portfolio – ex-Dublin CBD, well built, well tenanted, with strong

income

• EPRA NAV per share above par within 7 months
• Impressive income profile resulting in dividend for 2018, and quarterly distribution from 2019
• nwards

Key Highlights

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Financial Highlights

Period to Dec 31 18 Profit for the period €2.3m Net valuation change €1.6m Adjusted EPS 3.1c Net income (excluding property valuation gains) per share 0.964c Dividend per share 0.964c PID per share 0.870c Portfolio value €77.9m EPRA NAVPS 100.2c Loan facility €19.9m ‒ Facility drawn down €6.2m ‒ Headroom €13.7m Loan to Value 8.0%

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Portfolio Overview 2.

54% 39% 5% 2% FDI Govt/State Large corporate SME

8 6 11 7 2 12 10 13 9 4 5 14

Dublin Catchment Area 5 Cork Limerick Galway Athlone

1+3

Portfolio by Tenant Type

1 Building One, Gateway Office 2 Letterkenny Offices Office 3 Building Three, Gateway Office 4 Ashtown Gate Office 5 Airways Industrial Estate Industrial 6 IDA Athlone Industrial 7 Blackwater House Office 8 Bridge Centre Retail 9 Holly Avenue Industrial 10 Naas Enterprise Park Industrial 11 Listowel Office/Retail 12 Canal House Office/Retail 13 Heather Road Industrial 14 Centre Point Industrial

Portfolio Overview

Location Key

77% 18% 3% 2% Office Industrial Mixed Use Retail

Portfolio by Asset Type

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Type Location Value (€‘m) Current Rent (€‘000) Yield to Yew Grove Reversionary Rent (€’000) Reversionary Yield to Yew Grove WAULT to Lease Break (Years) WAULT to Lease End (Years) Vacancy 1 Building One, Gateway Office Dublin 18.0 1,101.2 6.1% 1,398.5 7.8% 3.5 5.0 5.6% 2 Letterkenny Offices Office North West 16.0 1,436.7 9.0% 1,489.6 9.3% 9.3 9.3 0.00% 3 Building Three, Gateway Office Dublin 14.0 913.4 6.5% 1,070.6 7.7% 2.0 2.0 0.00% 4 Ashtown Gate Office Dublin 9.4 766.7 8.2% 755.5 8.1% 3.0 7.3 0.00% 5 Airways Industrial Estate Industrial Dublin 4.5 300.0 6.6% 461.9 10.2% 6.8 11.8 0.00% 6 IDA Athlone Industrial Midlands 3.9 386.7 10.0% 443.5 11.5% 4.7 15.7 0.00% 7 Blackwater House Office Cork 2.3 229.0 10.1% 358.8 15.9% 1.6 5.5 24.9% 8 Bridge Centre Retail Midlands 1.9 229.2 11.8% 177.6 9.2% 2.4 3.0 0.00% 9 Holly Avenue Industrial Dublin 1.8 169.9 9.4% 169.9 9.4% 2.1 9.1 0.00% 10 Naas Enterprise Park Industrial Dublin 1.7 170.0 9.9% 185.5 10.8% 4.2 4.2 0.00% 11 Listowel Office/Retail South West 1.6 275.9 16.9% 150.3 9.2% 4.2 10.7 0.00% 12 Canal House Office/Retail Midlands 1.0 106.5 10.8% 51.6 5.2% 8.0 8.0 0.00% 13 Heather Road Industrial Dublin 1.0 92.5 9.7% 53.0 5.6% 10.7 10.7 0.00% 14 Centre Point Industrial Dublin 0.9 110.0 12.9% 51.0 6.0% 7.7 7.7 0.00% Total 77.9 6,287.7 8.1% 6,817.3 8.7% 4.9 7.4 3.5%

Detailed Portfolio Breakdown

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Note: Figures are as at 31 Dec 2018

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• Asset acquired July 2018

‒ Offices developed in phases between 2007 and 2009 ‒ Located immediately south of Eastpoint Business Park and north of the IFSC and North Docklands ‒ Location increasing in value as the area matures in line with the substantial development of the North Docklands ‒ Business case is focused on increasing ERV’s in line with market recovery and increased attractiveness of location to international occupiers who wish to establish themselves in Dublin City Centre

• Asset Management

‒ Letting vacant space and managing rent reviews ‒ Proactive discussions with tenants about post break occupancy

Key Facts

One Gateway Three Gateway Valuation: €18m €14m Asset type: Office Office Area1: 51,645 sq. ft 43,211 sq. ft Yield to Yew Grove2: 6.1% 6.5% Vacancy: 5.6% 0.0% Reversionary yield: 7.8% 7.7% WAULT to break: 3.5 2.0 WAULT to lease end: 5.0 2.0

One and Three Gateway

1. The building area excluding the basement car park, and showers 2. Yield is the current rent divided by the all in cost or latest valuation (if the building has been valued since purchase

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• Asset acquired December, 2018

‒ Offices developed in phases between 2001 and 2007 and totally refurbished in 2016, adjacent land includes 688 surface car parking spaces ‒ All 3 buildings are let to Optum, a subsidiary of United Healthcare Inc (which guarantees the leases) ‒ The buildings are situated on one of the 3 neighbouring IDA parks which ring Letterkenny town ‒ Letterkenny is the centre of a regional stronghold of FDI business with Pramerica, United Health, Optibelt, SITA and Cloudranger amongst local

• ccupiers. The town benefits from excellent business infrastructure including some of the best superfast broadband in the country. The planned

development of the national motorway network will improve road access to an area already close to sea and air connections

• Asset Management

‒ The tenant is actively considering an expansion on the site to house its rapidly growing workforce and discussions on a potential forward funded development will begin in 2019

Key Facts

Valuation1: €16m Asset type: Office Area: 100,548 sq. ft Yield to Yew Grove: 9.0% Vacancy: 0.0% Reversionary yield: 9.3% WAULT to break: 9.3 WAULT to lease end: 9.3

Offices 1, 2 & 3 Letterkenny Office Park

1. The properties cost €16 million plus associated costs of c €1.2 million. The three properties have been valued together.

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• Asset acquired in October, 2018

‒ Offices developed in 2000 and situated on a business park which also houses a substantial Primary Healthcare Centre ‒ The building purchase came with land on the park which is zoned for office/industrial development

• Asset Management

‒ Initially over 40% vacancy and three of the existing tenants [holding over]. The immediate plan is to regularise the existing leases, rent the vacant space and manage the upcoming rent reviews ‒ The park has zoned land and discussions with the IDA and potential OPW/FDI tenants will begin with a view to developing a forward funded

• pportunity

1. The valuation of the property has been adjusted to account for c €400k of capital expenditure which will occur over a year, and includes c. €220k of value for the development land adjoining the property 2. Vacancy is calculated at the reversionary rental value

Blackwater House, Mallow

Key Facts

Valuation1: €2.3m Asset type: Office Area: 28,880 sq. ft and 200 car park spaces Yield to Yew Grove: 10.1% Vacancy2: 24.9% Reversionary yield: 15.9% WAULT to break: 1.6 WAULT to lease end: 5.5 12

Financial Review 3.

Summary Balance Sheet

14 Balance Sheet (€’m) At Dec 31 18 Non-Current Assets Investment properties 77.9 Current Assets 77.9 Trade and other receivables 0.6 Cash and cash equivalents 4.8 Total Current Assets 5.4 Total Assets 83.3 Current Liabilities Trade and other payables (2.3) Non-Current Liabilities Borrowings (5.8) Total Liabilities (8.2) Net Assets 75.1 IFRS NAVPS (cents) 100.2 EPRA NAVPS (cents) 100.2 Diluted IFRS NAVPS (cents) 100.2

• In addition to the seed portfolio, properties with a

combined purchase price of €46.9m were purchased, and a project with an expected cost of €0.5m was commenced

• Total acquisition costs of purchases were €3.4m,

including stamp duty, legal, surveying and other fees

• Valuation gains on all properties totalled €1.6m,
• f which €1.2m was generated by properties

bought during 2018

• The cost of the current facility is more attractive

than the previous Fund facility

Note: The financial information shown above is preliminary and unaudited in nature

Summary Income Statement

15 Income Statement (€’m) To Dec 31 18 Total Revenue Rental Income 2.8 Property Expenses (0.2) Net Rental Income 2.6 Fair value gains on investment properties 1.6 Total income 4.2 Expenditure AIFM’s fees 0.1 Impairment of goodwill 0.2 Administration expenses 1.6 Total Expenditure 1.8 Profit for the period 2.3 Total comprehensive income 2.3 Basic and diluted EPS (cents) 4.08

• The Group’s expenses during 2018 totalled

€1.8m, including one off expenses relating to: 1. The liquidation of Yew Tree Fund 2. The share premium reduction process

• Running costs include all costs of the internal

management structure and the AIFM and management keep a very tight focus on costs

• Net rental income was €2.6m, with a gain in value
• n investment properties of €1.6m contributing to

a total income of €4.2m for the period

Note: The financial information shown above is preliminary and unaudited in nature

• Valuation uplift for in place portfolio

– EPRA NAV: 100.2c vs 96.5c – Portfolio Value: €77.9m vs €56.9m

• Agreed debt facility allows additional opportunities to be realised

– Debt facility: €19.9m – Loan to value ratio: 8.0%

• Capital ready to be deployed to further increase current rent roll

– Annualised rent roll: €6.3m vs €4.6m – Headroom: €13.7m

Summary Metrics and Movements since June 30

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Note: The financial information shown above is preliminary and unaudited in nature

Market Commentary 4.

Economic Backdrop

Labour Force Demographics

45 50 55 60 65 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Manufacturing Services 2 4 6 8 10 12 14 16 18 1,500 1,750 2,000 2,250 2,500 Q198 Q102 Q106 Q110 Q114 Q118 Total Employment Unemployment % (RHS)

Irish PMIs Multinational Company Track Record Total Employment

Source: Investec Source: Investec Source: IDA Ireland, Eurostat 18 Source: IDA Ireland

• Ireland has the youngest population in Europe with one

third of the population under 25 years of age. The population is forecast to increase by almost one million people to 5.75m by 2040

• The share of 30-34 year olds in Ireland with a third level

qualification is 53.5%, compared to an EU average of 40%

• Companies operating in Ireland have access to a labour

pool of almost 250m people from across the EU

• There are more than 535k non-Irish nationals living in

Ireland, with persons born abroad accounting for just over 17% of the country’s population

0% 20% 40% 60% 80% 100% 120% 1997 2002 2007 2012 2016

% of Companies operating in this year that are still operating today

30 15 10 25 10 20 10 8 10 10 13 35 22 18 30 10 32.5 20 18 15 15 16 5 10 15 20 25 30 35 40

Market Commentary

21 194 123 270 346 519 100 200 300 400 500 600 2013 2014 2015 2016 2017 YTD 2018

€'m

Dublin ex-CBD Office Investment Current1 Office Rent per sq. ft ex-Dublin (€) Dublin Suburban Office Take-Up 2018 (Sq. M) Current1 Dublin Prime Office Rents per sq. ft (€)

Source: IDA Ireland Source: CBRE Source: Cushman & Wakefield 19

5000 10000 15000 20000 25000 Q118 Q218 Q318 Q418

Source: CBRE

65 28.5 19.5 17.5 10 20 30 40 50 60 70 City Centre South Suburbs North Suburbs West Suburbs

1. Current as of October 2018

Conclusion and Outlook 5.

• Successful IPO and subsequent debt raise – Yew Grove successfully raised €75m at IPO and subsequently arranged

€19.9m debt facilities

• Successful deployment of capital – acquired the seed portfolio and six additional properties in 2018 to deliver a portfolio
• f €77.9m
• Differentiated, diversified portfolio – target market of well built commercial property ex Dublin CBD, with high quality
• tenancies. EPRA NAV has increased to 100.2c at year end, above the IPO price notwithstanding significant property

acquisition costs and the IPO costs

• Strong income profile – the portfolio has a current yield of 8.1%, an expected reversionary yield of 8.8% with a WAULT of

4.9 years, with government/semi state and FDI tenants representing 93% of the total

• Commencement of quarterly dividend – Yew Grove will distribute its 2018 profits by way of an interim dividend, and will

commence quarterly dividends in 2019

• Significant opportunity to deploy further capital – Yew Grove has benefitted from first mover advantage in its target

market, and continues to build a strong pipeline of well built, well tenanted, strong yielding assets

Conclusion and Outlook

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