Atlantic Leaf Properties Limited Six months ended 31 August 2017 - - PowerPoint PPT Presentation

Atlantic Leaf Properties Limited

Six months ended 31 August 2017

Atlantic Leaf Proposition

2

Strong underlying property fundamentals Low risk in our portfolio Benefitting from low UK interest environment

• Debt cost still well below property yield
• Long leases give comfort on 50% LTV level
• The forecast is for interest rates to remain fairly low for a longer period
• 76% of debt hedged against interest rate increase
• 100% occupancy
• Strong tenant covenants
• No vacancies foreseen
• No requirements for tenant improvements or rent-free periods
• Secure and regular income flows
• Long leases in place
• Good prospects for rental growth in the next few years:
• Contractual, upward only rent reviews
• RPI linked leases will escalate with higher UK inflation, currently at

2.9% Attractive regular distributions

• First year (2016) 7 pence
• Second year (2017) 8.5 pence (21% growth)
• Third year (2018) 9.1 pence target (7.1% growth forecast)

Solid growth in distributions is being achieved

September Activity

3

Capital Raise and Investments

Capital raise of £47m, increasing the NAV by 30% Will need shareholder approval to issue further shares Investments DFS JV with London Metric £25m Listed REIT equity portfolio £7m Cash for further direct property investment £15m Triggered by going through 30% on SEM Vukile currently hold 34.9% Waivers obtained from approx. 58% of shareholders Procedural process to follow Vukile support has been key to growth

Vukile Mandatory Offer

Atlantic Leaf at a glance

4 Growth in Assets Under Management Portfolio composition – Post DFS (Proportional %) Key Property Portfolio Statistics – Post Capital Raise & DFS Transaction

AUM*

£335m

Equity

£196m

£ 27m £ 50m £ 68m £ 131m£ 143m£ 158m £ 195m £ 264m £304m £ 304m £ 335m Apr-14 Mar-15 Jun-15 Jul-15 Oct-15 Nov-15 Feb-16 Oct-16 Feb-17 Aug-17 Sep-17

LTV*

45.6%

Average cost of debt

3.2%

Assets

59 properties 15 Tenants

WAULT

11.2 years

Weighted average asset yield

7.4%

Vacancy

0%

Industrial warehouse/ logistics 64% Office 22% Retail Warehouse 14%

• DFS will be equity accounted
• On a gross proportional look through, AUM: £357 & LTV: 50.5%

Distributions

5

4.3 pence final dividend – February 17 4.5 pence interim dividend – August 17 Forecast dividend of 9.1 pence – an increase of 7.1%

Distribution profile

8.5p 7.0p

Focus on continual growth in distributions All distributions from cash earnings

9.1p

2 4 6 8 10 2016 2017 2018 Interim Final Forecast

Proforma Balance Sheet

6

31-Aug-17 Post 31-Aug-17 £’m £’m Investment Properties 303.4 303.4 Investment in Joint Venture

• 24.3

Listed REIT’s 0.7 7.0 Cash 7.2 24.7 Interest bearing debt (151.3) (153.6) Fair value of derivatives (1.7) (1.7) Other net assets/(liabilities) (2.9) (2.9) Net assets 155.4 201.2 NAV per share £1. 09 £1.07

7

123 143 189 19 46

• 50

100 150 200 29-Feb- 16 Added in FY 17 28-Feb- 17 Added in FY 18 30-Sep- 17 ALP Shares (m)

Shares in issue/New shares added

Closing shares in issue (m) Shares added (m)

216 290 324 395 50 100 150 200 250 300 350 400 450 28-Feb-16 31-Aug-16 28-Feb-17 31-Aug-17

Total number of shareholders

21,597 30,600 17,134 69,089 51,952

• 10,000

20,000 30,000 40,000 50,000 60,000 70,000 80,000 31-Aug-16 30-Nov-16 28-Feb-17 31-May-17 31-Aug-17

Average number of shares traded per day

Increasing Trade & Liquidity

Liquidity & Free Float

67% 33%

FY 2017

Tightly held Free float

66% 34%

YTD 2018

Tightly held

£47m raised in September 2017 AUM of £335m at September 2017 Good pipeline of opportunities in place Improved trading liquidity (34% free float) Number of shareholders increasing steadily 2016: 7 pence 2017: 8.5 pence 2018: Revised Forecast 9.1 pence £150m by Feb 2016 £300m by Feb 2017 Target 20-30% growth in AUM subject to

• Opportunities that fit
• Appropriate yields
• Raising new capital

Attract more institutional investors Increase trading liquidity 2016: 7.0 pence 2017: 8.5 pence 2018: Initial Projection 8.9 pence

Key Objectives

8

Notes:

Key Objectives Current Position Shareholder Diversification Distribution AUM Grow the company Deliver performance

Results for the six months ended 31 August 2017

Financial Highlights

10

6 months ended 31- Aug-17 6 months ended 31- Aug-16 Revenue £11.4m £9.7m Distributable earnings £6.4m £5.7m Adjusted Earnings per share 4.51 pence 4.57 pence Dividend per share 4.5 pence 4.2 pence NAV per share 1.09 1.09 Revenue

+18%

Distributable Earnings

+12%

Dividends

+7.14% Solid growth

Key Financial Metrics

11

Loan to Value Ratio (%) Interest Cover Ratio Cost of Debt (%) Debt Maturity (Years) Debt Hedged (%)

39% 52% 50% 0% 10% 20% 30% 40% 50% 60% Feb-16 Feb-17 Aug-17 3.2% 3.2% 3.2% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Feb-16 Feb-17 Aug-17 3.4 2.9 2.4

• 0.5

1.0 1.5 2.0 2.5 3.0 3.5 4.0 Feb-16 Feb-17 Aug-17 63 74 76

• 10

20 30 40 50 60 70 80 Feb-16 Feb-17 Aug-17 2.6 4.0 4.2

• 0.5

1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 Feb-16 Feb-17 Aug-17

Statement of Comprehensive Income

12

For the 6 months ended 31-Aug-2017 For the 6 months ended 31-Aug-2016 £’m £’m Net rental income 11.4 9.7 Property Operating expenses (0.4) (0.4) Net operating expenses (1.1) (0.7) Finance costs (2.5) (2.2) Tax Expense (1.0) (0.7) Adjusted Earnings/Distributable earnings 6.4 5.7 Once-off transaction costs

• 0.4

Reported Profit 6.4 5.3

Statement of Financial Position

13

31-Aug-2017 31-Aug-2016 £’m £’m Investment Properties 303.1 263.7 Cash 7.2 5.1 Interest bearing debt 151.3 134.1 Fair value of derivatives 1.7 3.0 Other net assets/(liabilities) (1.9) 3.6 Net assets 155.4 135.3 NAV per share £1.09 £1.09

Our Portfolio

UK property market

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¹ Property data/Knight Frank ² CBRE, ONS ³ IPD

Industrial logistics and warehousing remains in vogue with further yield compression and upward rental growth trajectory

Industrial transaction volumes ¹ UK industrial logistics properties remains in vogue for local and foreign investors Demand remains for secure, long term income Investment volumes in the industrial sector up on 2016 highlighting the renewed strength post Brexit Yield compression evident in the market and rental growth continues its upward trajectory on the back of strong occupier demand and limited supply of new accommodation Segments of the market beginning to look fully priced, with investors also looking to retail,

• ffice

and alternative sectors for opportunities All industrial 12 month market rental value growth ³ Real estate market indicators ² Indicator Date Rate/Yield Trend GDP Q2 2017 0.3% Upwards BOE base rate Sep 2017 0.25% Flat RPI inflation rate Aug 2017 3.9% Upwards Prime distribution Sep 2017 4.85% Lower Good Secondary Industrial Sep 2017 5.75% Lower

Property portfolio

16 Salient details Sector spread

31 Aug 2017 30 Sep 2017 Property AUM (£’m) 303 350

• No. of properties

48 59

• No. of tenants

14 15 Property forward yield 7.3% 7.4% WAULT (Years) 11.1 11.2 Vacancy 0% 0%

Tenant classification Regional spread

100% occupied, long term cash flows supported by strong tenant covenants

DFS exposure

15%

Note: Graphs illustrate the property portfolio as at 30 Sep 2017 (post DFS transaction) * Booker exposure diversified across 31 assets

64% 22% 14%

Industrial warehouse/logistics Office Retail Warehouse

31% * 15% 8% 7% 7% 5% 5% 4% 3% 3% 3% 3% 2% 2% 2%

Booker DFS Santander Halfords DHL Epwin Thomas Cook

• E. ON

Inspirepac Gestamp EE P&H Bauer Robert McBride Homebase

Booker exposure

5%

18% 17% 14% 13% 12% 10% 7% 4% 3% 2%

North East North West West Midlands South West East Midlands Scotland

• York. & the humber

South East East Anglia Wales

DFS acquisition

17

Yield accretive strategic stake in a retail warehouse and industrial portfolio

Salient details

Total portfolio value (£’m) 104.5 Atlantic Leaf holding 45% Net rental income (£’m) 8.4 Tenant covenant DFS Trading Limited

• No. of assets

11 Area (sq ft) 436,615 Location United Kingdom WAULT (years) 12.6 Cash on cash return (50% gearing) ¹ 9.29%

▪ Strategic JV partnership with LondonMetric, a leading UK property company ▪ Yield accretive acquisition ▪ Investment vehicle to grow JV partnership with LondonMetric ▪ Pipeline of opportunities to acquire further assets/grow the income stream ▪ DFS has a 5A1 Dun & Bradstreet credit rating (the most secure rating on the risk scale) ▪ Net ALP investment after gearing of £24 million Investment highlights JV structure

Shareholders LondonMetric controlled entity (55%) Atlantic Leaf (45%) LTV 50% Debt outstanding (£’m) 51 Debt maturity July 2019 Interest rate 3 month Libor + 275 bps Hedging Interest rate cap at 3.5% DFS Head Office, Doncaster United Kingdom

¹ Cash on cash return after taking into account transaction costs and UK tax

Asset Management Plan for 2017/18

18

M&A activity

Executed on yield enhancing DFS transaction Opportunities to exit smaller non-core assets and re-invest capital

Enhanced cash on cash returns by claiming capital allowance benefits

Management continue to explore capital allowances across the existing portfolio Successfully secured allowances on several assets, enhancing returns

Lease Re-gearing and Redevelopment Opportunities

Focus on shorter leases Strategic rent reviews and lease re-gears on existing portfolio Booker, Hull: Opportunity to surrender the lease and undertake a redevelopment

Outlook

19

UK focused and primarily industrial / distribution warehouse assets Add further assets and grow the London Metric partnership Focus on growing earnings at above UK inflation Strict discipline of delivering on distribution target

1 2 3 4

The target dividend per share for 2017/18 of 9.1 pence, an increase of 7% on 2016/17

Contacts Paul Leaf-Wright T: +44 203 355 3092 E: paul@atlanticleaf.mu Shaun Fourie T: +44 7470 110 955 E: shaun@atlanticleaf.mu General enquiries E: info@atlanticleaf.mu Website www.atlanticleaf.mu

Appendices

• 1. Top Assets
• 2. Our Tenants

3.Summary of Debt Facilities

• 4. Share Price Statistics

5.History

• 6. Management Team

• 1. Top Assets by Value at 30 September

22

Sector Location Tenant GLA (sq ft) Annual Income (£) GMR (£/sq ft) WAULT (years) Value (£m)

Industrial Runcorn DHL Supply Chain 635,656 1,827,000 2.87 7.22 29.3 Office Newcastle Santander Cards 102,650 2,112,257 20.58 10.43 28.4 Industrial Redditch Halfords 361,407 1,889,441 5.23 11.50 28.3 Office Peterborough Thomas Cook, Bauer Consumer Media 177,621 1,762,804 9.92 10.8 23.0 Office Coventry E.On 46,515 1,071,065 23.03 5.54 14.3 Industrial St Helens Palmer & Harvey McLane 145,966 688,085 4.71 14.53 11.2 Industrial Wetherby Inspirepac 155,095 612,750 3.95 9.34 10.6 Office Greenock EE 61,740 725,000 11.74 11.72 10.3 Industrial Nuneaton Booker 90,669 696,412 7.68 9.75 10.2 Industrial Cannock Gestamp Tallent 165,095 796,956 4.83 8.04 10.0

• 2. Tenants as at 30 September

23

100% occupancy across the portfolio Strong tenant covenants WAULT of 11.2 years to expiry and 9.69 years to the break First expiry in 5.5 years

Tenant classification

Grade A: Large, multinational or national companies with significant local and/or international operating facilities, strong financial strength and risk credit ratings Grade B: Sizable, national companies with multiple operating facilities, average to good financial strength and risk credit ratings Grade C: Other to be specified on case by case basis

6% 7% 3% 6% 10% 12% 43% 5% 8% 0%

8% 36% 3% 6% 10% 10% 15% 5% 8% 0%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Less 7 Yr 8 Yr 9 Yr 10 Yr 11 Yr 12 Yr 13 Yr 14 Yr 15 Yr 15 + % of Net rental income

Lease expiry profile

Expiry Break 90% 10% 0% A B C

• 3. Summary of Debt Facilities

24

Funder Interest Rate Facility End Date Amount Variable Rate Loans Santander Bank 2.25% + LIBOR 17-Jul-18 2 601 619 2.25% + LIBOR 17-Jan-19 2 181 716 2.45% + LIBOR 29-Apr-19 1 033 000 2.45% + LIBOR 29-Apr-19 2 378 000 2.45% + LIBOR 29-Apr-19 2 273 000 2.45% + LIBOR 29-Apr-19 360 000 2.45% + LIBOR 29-Apr-19 533 500 2.25% + LIBOR 22-Oct-20 4 769 038 2.25% + LIBOR 22-Oct-20 1 921 875 2.25% + LIBOR 27-Nov-20 5 603 579 HSBC Bank 1.90% + LIBOR 16-Oct-18 9 767 932 1.65% + LIBOR 16-Mar-19 14 606 056 1.60% + LIBOR 16-Mar-19 8 281 644 1.65% + LIBOR 16-Mar-19 12 790 756 1.80% + LIBOR 16-Mar-20 18 876 693 1.90% + LIBOR 29-Jul-20 12 983 061 1.95% + LIBOR 16-Oct-20 34 038 891 Fixed Rate Loans Aviva Commercial Finance Limited 2.15% 25-Nov-21 16 282 727 Total Interest Bearing Loans 151 283 087

• 3. Summary of Swap Agreements

25

Counterparty Fixed Basis Swap end Date Nominal HSBC 1.27% 16/10/2018 10,000,000 HSBC 0.85% 16/03/2019 10,987,500 HSBC 0.88% 16/03/2019 15,877,500 HSBC 0.95% 16/03/2020 14,261,250 HSBC 0.71% 30/07/2020 9,918,750 HSBC 1.60% 16/10/2020 20,000,000 Santander 1.53% 17/01/2019 2,656,056 Santander 1.79% 17/07/2018 2,232,072 Santander 2.29% 12/05/2019 1,067,000 Santander 2.29% 12/05/2019 2,454,000 Santander 1.54% 22/10/2020 1,478,250 Santander 1.54% 22/10/2020 3,663,750 Santander 1.03% 27/11/2020 5,787,500 100,533,628

• 4. Atlantic Leaf Share Price

26

ALP share price (JSE) Vs. ALP share price (SEM) Vs. GBPZAR exchange rate

Sources: 1) Factset share price performance and GBPZAR exchange rate from Feb 2016 to Sept 2017

1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 0.00 5.00 10.00 15.00 20.00 25.00 30.00 ALP (JSE) GBP:ZAR ALP (SEM)

• 5. History

27

Timeline of Key Events

Listed on SEM & JSE Vukile Strategic investment

£17.5m

Moved to the JSE Main Board Primary Listing

• n JSE

Maiden dividend announced Mar 2014 Oct 2014 YE Feb 2015 Aug 2015 YE Feb 2016 Jun 2016 Aug 2016 Nov 2016 YE Feb 2017 Interim dividend 3p/s Final dividend 4p/s AUM - £195m Interim dividend 4.2p/s AUM - £50m Final dividend 4.3p/s AUM - £304m Interim dividend 4.5p/s Aug 2017 Capital raise £47m & Acquisition of DFS Portfolio Sept 2017

• 6. Management

28

Experienced team with strong networks

Key employees

• Paul Leaf-Wright, CA(SA)

CEO

• Shaun Fourie

CIO

• Warren Morton, CA(SA)

Financial Director

• Mark Pryce, CA(SA)

Head of finance and operations

• Jaideep Khandpur, RICS

Asset Manager

• Robert Ferguson, RICS

Asset Manager

• Sana Dawood, ACCA

Financial manager

• Tim Leaf-Wright, CA(NZ)

Risk and compliance manager

Management structured to fully comply with the requirements of the various jurisdiction in which Atlantic Leaf operates

• Primary listing in Mauritius requires full board and

accounting presence

• All properties wholly owned out of Mauritius
• Property assets located in the UK requires full

property administration and property accounting functions located in the UK Annual objectives set by the Board for management

• Assets
• Distribution targets
• Growth in assets
• Risk and compliance framework

This document is not, nor is it intended to be, any financial, investment, trading, tax, legal, accounting, actuarial or other professional advice (“advice”). Atlantic Leaf Properties Limited (“Atlantic Leaf”), their agents and affiliates, are dealing with you exclusively on the basis that you have sufficient knowledge, experience and/or professional financial, tax, legal and other advice to undertake your own assessment of the information. The views in this document are those of Atlantic Leaf and are subject to change, and Atlantic Leaf has no obligation to update its views or the information in this document. This document does not aim to notify you of any possible risks, direct or indirect, in undertaking a transaction and counterparties should ensure that they fully understand and obtain professional advice in respect of the terms of the transaction, including the relevant risk factors and any legal, tax and accounting consideration applicable to them, prior to transacting. The information contained in this publication has been obtained from sources that Atlantic Leaf believes are reliable but we do not represent or warrant that it is accurate or complete. The information may be based on assumptions or market conditions and my change without notice. Market fluctuations and changes in exchange rates may have an effect on the value or price of investments. Past performance is not a guide to future investment performance. This document is confidential and the recipient may not distribute it to other persons without prior written consent of Atlantic Leaf. Distribution of this information may be restricted by law and persons who come into possession of this document should seek advice on and observe any restrictions. Neither Atlantic Leaf nor any of its affiliates or agents accepts any liability whatsoever for any direct, indirect or consequential damages or loss arising from any use of or reliance on this documentation

• r its contents.

No proposal put forward in this document is intended to be binding upon Atlantic Leaf or any of its affiliates or agents whether by way of agreement, representation or otherwise. Atlantic Leaf will not be obliged to carry out any proposals or fulfill any terms mentioned herein. All terms hereby proposed are subject to, among other things, obtaining the necessary mandate appointment for Atlantic Leaf, completion of due diligence as required and execution of the documentation.

Level 3, Alexander House 35, Cybercity, Ebene 72201 Republic of Mauritius T: +230 403 0800 E: info@atlanticleaf.mu W: www.atlanticleaf.mu