End of financial year presentation For the year ended 31 March 2020 1
Agenda Highlights Our Portfolio Paul Arenson Chief Executive Officer Financial Highlights Dealing with Coronavirus MLI Strategy & Performance James Beaumont Chief Financial Officer Transition Strategy Conclusion Julian Carey Appendices Executive Property Director 2 End of financial year presentation for the year ended 31 March 2020
Highlights 3
Highlights Fully covered dividend of 6.75p for the year Strong balance sheet Resilient Strong Valuations up 2.8% on like-for-like basis Significant banking covenant headroom Financial Balance MLI like-for-like contractual rental £70m free cash at 31 March 2020 Performance Sheet growth 5.6% for the year Balancing Corona safety buffer with buying opportunities All 2-year transition milestones achieved: MLI performing strongly LTV 41% (target 40%) Highly diversified MLI portfolio 58% (target 60%) Successful Growth 3rd party fund management now exited Industrials operating transition Strategy REIT status and listed on LSE platform delivering in progress New milestones for March 2022: Long term MLI trends accelerated by Transition to 100% MLI Coronavirus Deliver Industrials operating platform 4 End of financial year presentation for the year ended 31 March 2020
Our Portfolio 5
Portfolio Overview Retail Multi-let Industrial (Germany) (UK) £95m £309m 18% 58% Office Total Assets (Guernsey) £57m 11% £533m £217m debt £70m free cash 7% Care Homes 2% (Germany) 4% £36m Leisure (Switzerland) Urban Logistics £14m (UK) £22m 6 End of financial year presentation for the year ended 31 March 2020
Portfolio valuations at 31 March 2020 In GBP – vs 31 March 2019 values * United Kingdom 2.8% 3.7% MLI (0.9%) non-MLI Germany 4.9% 1.6% values Total portfolio 3.3% currency 2.8% Switzerland 11.7% 1.7% values 1.1% currency (18.9%) values United Kingdom 7.2% currency £388m Only one property valued in CHF remaining Germany £14m £131m * On a like-for-like basis, excluding the impact of acquisitions and disposals. Refer to Slide 36 for more detail on valuation movements 7 End of financial year presentation for the year ended 31 March 2020
Significant shift to MLI income GRI % of total GRI % of total WAULT No of assets Sector March 2019 income March 2020 income Vacancy (years) March 2020 MLI £18.2m 46% £22.7m 60% 8.9% 2.6 70 UK Urban Logistics £1.7m 4% £1.7m 4% 0.0% 1.5 5 Guernsey Office £4.3m 11% £4.3m 11% 0.2% 7.1 1 UK non-MLI £0.8m - 2% - - - - Germany - Bleichenhof £5.1m 13% - - - - - German Retail £5.6m 14% £5.7m 15% 0.8% 8.5 8 German Care Homes £2.4m 6% £2.5m 7% 0.0% 9.3 4 Swiss Leisure £1.2m 3% £1.0m 3% 0.0% 17.5 1 £39.3m £37.9m 100% 100% 7.1% 4.8 89 8 End of financial year presentation for the year ended 31 March 2020
Financial Highlights 9
Financial highlights for the year ended 31 March 2020 Final dividend per share Full year FY20 Diluted adjusted fully covered out of earnings dividend per share EPRA earnings per share 3.375p 6.75p 6.88p 22% with scrip alternative and 21% due to exiting third party management matching buyback programme 1% due to holding high levels of cash in the year Diluted EPRA Dividend yield Dividend yield on current share price 1 NAV per share on EPRA NAV £1.39 1.4% 4.9% 6.3% (vs March 2019) 1 Based on a share price of £1.07 10 End of financial year presentation for the year ended 31 March 2020
Significantly reduced leverage LTV incl. free cash LTV LTV 31 March 2020 31 March 2020 31 March 2019 27.7% 40.8% 44.2% Weighted average debt maturity All in cost of debt 2.7 years 2.62% Deliberate decision to keep short on non-MLI Revolving credit facility Target LTV £30m < 40% to facilitate new MLI acquisition while selling non-MLI assets. Incurs no non-utilisation fees 11 End of financial year presentation for the year ended 31 March 2020
Strong balance sheet Well placed to cope with COVID-19 disruption 31 March 2020 (£ million) Investment properties 533 Free cash 70 Other net assets 5 Debt (217) Net assets 391 LTV ratio covenants LTV covenants allow for an average Free cash at year end represents 18% of net assets 33% reduction in values Low level of gearing German sales at valuation would deliver cash of c. £57m: Interest Service Cover ratio ‒ Further strengthening the balance sheet covenants ‒ Net assets would comprise c. 30% cash 1 Loan facilities subject to debt service ‒ Current share price would comprise c. 38% cash 1 cover ratio covenants allow for an average reduction in net rents of Considerable cash resources for MLI acquisitions 60% 1 Based on a share price of £1.07 and after payment of final dividend (c. £9.6m) 12 End of financial year presentation for the year ended 31 March 2020
Dealing with Coronavirus 13
Resilient Income Through Diversification Rent collected as a % of total billed Rental income by tenant industry 2% Quarterly 1% Monthly Rents Total Rents Transportation & 2% Other Service Storage Activities April May April-June Accommodation & 2020 2020 2020 3% Food Service Activities 18% County / Sector Food Retail Wholesale & UK MLI 75% 69% 86% 82% 4% Retail Trade UK Urban Logistics - - 100% 100% Professional, Scientific & 4% Technical Activities Guernsey Office - - 100% 100% Consumer Retail 4% Germany 85% 84% - 84% Construction 5% Switzerland 0% 0% - 0% Other 16% Total 74% 72% 91% 84% 6% Manufacturing As at 10 th June 2020 Private Individual/ Unknown 7% 12% Care Homes Financial & Insurance 7% Activities By late The vast majority of our customers 8% Arts, Administrative & were open and trading May 2020 Entertainment & Support Service Recreation Activities 14 End of financial year presentation for the year ended 31 March 2020
Dealing with Coronavirus Reassure and support staff in move Resolve outstanding Corona related rent Establish new working practices and to home working arrears HR protocols Support and engage with customers through Complete disposals of non-MLI assets Monitor customer who are trading lock down vs closed Reinvest proceeds into highly diversified Offer rent deferrals and monthly rents MLI property Agree and implement payment plans and/or to those unable to pay revised lease terms with remaining Continue to invest into digital infrastructure customers Halt acquisitions and review expenditure Capitalise on trend of more businesses plans Start releasing capital for acquisitions with moving into MLI space attractive risk-adjusted returns Continue sales where interest Enhance product offering to generate more remains at pre-Corona levels Continue with disposals where attractive diverse revenue base pricing persists Continued investment into digital platform Mar -May Jun - Dec 2021 2020 2020 Onwards 15 End of financial year presentation for the year ended 31 March 2020
Strong bounce-back in leasing enquiries Call centre leasing calls Article 50 Coronavirus Extension Pandemic Conservatives 60 signed declared Boris Johnson win General 12 Apr 11 Mar confirmed Election Leader 13 Dec 23 July 50 Theresa May resigned General 24 Apr Election 40 confirmed 31 Oct 30 20 10 0 1 Jan 2019 1 Apr 2019 1 Jul 2019 1 Oct 2019 1 Jan 2020 1 Apr 2020 16 End of financial year presentation for the year ended 31 March 2020
Post-Corona Predictions Financial 1 Anticipate short term Impact on earnings MLI rents remain affordable and will remain resilient MLI valuations may fall initially, but will recover strongly Our non-MLI asset values will hold up driven by low interest rates and strong fundamentals Operational 2 MLI occupier activity will bounce back quickly (see graph on previous page) We are likely to see higher than average insolvencies in the second half of 2020, but demand/supply will remain evenly balanced Digital only transactions will see increased acceptance, boosting demand for Smart Leases and online leasing Demand for MLI will increase as more businesses look to grow their online presence supported by industrial property Trends 3 Existing trends will be accelerated by Coronavirus – working from home, e-commerce, digital transactions, video conferencing Supply chains will be rethought – more onshoring, higher stock levels, greater resilience QE will lead to hardening of yields in some real estate asset classes Operational businesses will benefit from digital investment which brings greater efficiency and productivity 17 End of financial year presentation for the year ended 31 March 2020
MLI Strategy & Performance 18 End of financial year presentation for the year ended 31 March 2020
What is MLI? Multi-Let Multi-Let Industrial Industrial 19 End of financial year presentation for the year ended 31 March 2020
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