HALF YEAR RESULTS TO SEPT 2015 26 th November 2015 - PowerPoint PPT Presentation

HALF YEAR RESULTS TO SEPT 2015 26 th November 2015 www.londonmetric.com

AGENDA Highlights • • Strategy & Market Financial • Investment • • Property • Outlook Questions • 2

HIGHLIGHTS Andrew Jones

Financial Highlights Key highlights 30 Sept 2015 6 month change EPRA NAV per share 147p +5.7%¹ Reported Profit £64.3m Valuation Movement £47.2m Income Statement 30 Sept 2015 12 month change EPRA Earnings £23.4m +12% EPRA Earnings per share 3.75p +12% Interim Dividend per share 3.50p - Accounting Return over 6 months 8.2% 1. Comparative period adjusted for 2.0p special dividend 4

Portfolio Highlights Portfolio Valuation £1,471m March 2015: £1,400m Core portfolio +4.8% Distribution: +5.9% Retail: +3.2% capital return ERV Growth +2.7% like for like Income Growth +2.1% like for like EPRA NIY 1 5.5% 22 bps yield movement Total Property Return 2 +7.0% IPD total return 6.8% 1. Topped up NIY 2. Commercial Portfolio 5

Operational Highlights Investment activity £208m £120.0m disposals at NIY 5.3% Efficient in the period £87.8m acquisitions at NIY 6.1% 1 Capital Yield Arbitrage Allocation £59.3m development capex at 7.2% yield on cost¹ +80bps +120bps including capital expenditure 1.9m sq ft of development completed² 0.7m sq ft under development at 6.2% yield on cost Delivered development ² Delivering 2 1.9m sq ft Development 1.4m sq ft development pipeline at c.7.1% yield on cost adding £11.7m of rent pa Occupancy Delivered £1.9m pa additional rent from 31 asset management deals 99.9% Growing Like for like income growth 2.1%; ERV growth of 2.7% investment portfolio 3 Earnings with Future income growth embedded in 48% of the portfolio Future Growth WAULT 13.4 years investment portfolio 1. Excluding lease incentives 2. Including post period end completions of Warrington & Kirkstall, Leeds (rent based on income once fully let) 6

STRATEGY & MARKET REVIEW Andrew Jones

Retail Market Structural Shift Evolution of consumer trends Online UK shoppers UK most sophisticated online shopping market 61.3% double OECD average Non food internet penetration now 17.5% Online sales growth +45% Supply chains now consumer facing as retailers compete for to 25% of all non food sales 2019 next day delivery Next day delivery +18% Spending migrating away from more traditional modes of growth year on year shopping Click & Collect +63% Consumer trends affecting real estate decisions growing to £4.0bn by 2018 Sources: Verdict, IMRG 8

Sheds Are The New Shops Distribution the strongest sub sector of retail Retailers looking to meet shopper demands for instant gratification Distribution take up Demand for sophisticated logistic networks with increasing >32m sq ft investment in automation +25% against long term average Distribution Availability Changing consumer patterns affecting trajectory of rental <22m sq ft movements for both distribution and retail reflecting 8 months of take up Retailer demand represents Marginalising formerly prime retail locations 60% Distribution & fulfilment becoming more important than stores of distribution take up Sources: Savills, Verdict 9

Our Core Sectors Focus on winning retailers September 2015 Portfolio valuation: £675m 5% 4% Total return: +8.6% 5% Distribution NIY: 5.0% Occupancy: 100%, WAULT: 13.9 yrs 46% £1,471m 28% Portfolio valuation: £470m Total return: +5.9% 4% Retail 8% NIY: 5.9% Occupancy: 99.7%, WAULT: 12.4 yrs Distribution Development Convenience Retail Retail Parks Leisure Residential Office 10

Investment Strategy Asset Short-cycle Income management development Strong and sustainable Grow, strengthen and Refurbish, redevelop lengthen income and extend Dagenham Wakefield Newark Distribution Occupier led Aldi, Middlesboro Kirkstall, Leeds Kings Lynn Retail Opportunistic Odeon Core Stretch 1 1. Core stretch assets will have strong real estate fundamentals, good income characteristics & high occupier contentment in sectors where we have expertise 11

FINANCIAL REVIEW Martin McGann

Income Progression (£m) Pipeline Activity Development Activity 100.0 Delivered Activity 95.0 Warrington 9.1 Bedford 90.0 Stoke Asset Mgmt Wakefield 85.0 1.9 4.6 80.0 5.3 3.3 86.8 75.0 84.3 79.7 70.0 79.7 75.8 65.0 60.0 Net Mar 15 Delivered Sept 15 PPE Activity Committed Occupier Run Rate Investment annualised Development annualised Development transactions Activity passing rent passing rent & Pipeline & New Space 13

Income Statement 30 Sept 2015 30 Sept 2014 Change Reported Profit £64.3m £69.7m Revaluation Surplus £47.2m £52.3m Net rental income £31.4m £28.3m Share of joint venture income £3.3m £5.6m Management fees £1.1m £1.0m Administrative costs £(6.6)m £(6.5)m (EPRA cost ratio 17%) Finance costs £(5.8)m £(7.5)m EPRA earnings £23.4m £20.9m +12% EPRA EPS 3.75p 3.35p +12% DPS 3.50p 3.50p - Dividend Cover 107% 96% +11bps 14

Balance Sheet Statutory 30 Sept 2015 31 Mar 2015 Property portfolio £1,261.8m £1,164.1m Joint ventures £134.8m £148.4m Cash £21.9m £50.6m Bank debt (£551.2m) (£465.5m) Other net liabilities £33.8m (£27.4m) Net Assets £901.1m £870.2m EPRA Adjustments £13.8m £7.0m EPRA Net assets £914.9m £877.2m EPRA NAV per share 147p 141p 15

Movements in EPRA NAV NAV per share (p) 160.0 155.0 150.0 145.0 7.6 2.0 3.5 0.2 3.7 140.0 135.0 146.6 140.6 138.8 130.0 139.0 138.6 138.6 138.8 125.0 120.0 EPRA NAV Special EPRA NAV EPRA Revaluation Dividend Other Sept-15 Dividend Mar-15 Earnings Adjusted 16

Finance Metrics 30 Sept 2015 31 Mar 2015 30 Sept 2014 Gross Debt £629m £563m £573m Undrawn facilities £56.3m¹ £83.4m £23.2m Loan to Value 37% 36% 38% Weighted average cost of finance 3.5% 3.7% 3.7% Weighted average maturity 6.1 years 4.2 years 3.6 years Hedging 95% 80% 71% 17 1. Excludes £43.8m accordion facility agreed post period end

INVESTMENT REVIEW Valentine Beresford

Investment Activity Summary H1 2015/16 H1 2015/16 NIY WAULT incl PPE £m 2 £m¹ Acquisitions £116.6m £87.8m 6.1% 13.1 yrs Retail £15.8m £15.8m 5.9% 18.7 Distribution £100.8m £72.0m 6.3% 11.9 Disposals £136.3m £120.0m 5.3% 12.4 yrs Retail £65.0m £50.1m 5.7% 10.5 Distribution £62.2m £62.2m 5.4% 14.6 Non Core (Residential) £9.1m £7.7m 1.9% - T otal Activity £252.9m £207.8m + 80 bps +0.7 yrs ¹ LM Share ² Includes PPE Activity: Two disposals at Cannock, & Enfield; One acquisition at Reading. Excludes conditional Omega South forward funding announced on 26 Nov 2015. 19

Capital Recycling Dispose assets that have delivered to plan Retail Sales Distribution Sales Five disposals - £65.0m¹, NIY 5.9% Three disposals - £62.2m, NIY 5.4% Asset management plans completed Fully executed asset management plan 15 leasing initiatives undertaken IRR 2 of 32% IRR 2 of 29% 1 further sale in legals Four further sales in legals Milton Keynes Southampton DFS, Enfield Harlow Wellingborough £27.2m 5.7% NIY £37.2m 4.7% NIY £29.2m 5.8% NIY £16.2m 5.8% NIY £24.5m 6.6% NIY Sold Sept 2015 Sold Aug 2015 Sold Oct 2015 (PPE) Sold Apr 2015 Sold Aug 2015 £18.6m at Share £7.5m at Share ¹ Including post period end 2 Geared IRR 20

Warrington – Omega South Speculative Development New distribution unit Speculative funding agreed on 356,000 sq ft grade A 356,000 sq ft development Capital expenditure Omega South top 5 UK distribution location c.£30m Target rent Supply / Demand favourable for speculative development £2.2m Limited UK supply • Attractive YOC c.7.0% Strong underlying occupier demand • Attractive anticipated returns Yield on cost of c.7.0% • 150bps+ yield arbitrage • Short cycle development - PC December 2016 • 21

Distribution Portfolio Aligning our portfolio to omni channel retailing £766 million 1 across 23 assets Building best in class portfolio Leveraging our retail expertise and relationships - 75% let to retailers 99% of portfolio acquired since merger at NIY 6.4% £130m of capex on completed developments – 7.1% yield on cost £145m of committed development and pipeline capex 1. Value of distribution investments and developments as at 30 September 2015 and including the DHL acquisition in Reading post period end 22

PROPERTY REVIEW Mark Stirling

Development Activity Delivered Islip Warrington Leeds Delivered 1.9m sq ft 94% distribution Total Rent £11.7m per annum Yield on Cost 7.2% Islip – 1.1m sq ft Omega South – 690,000 sq ft Kirkstall – 120,000 sq ft blended £5.3m pa rent £3.8m pa rent £2.6m pa rent¹ 25 year lease 15 year lease 13.8 years average lease BREEAM Very Good BREEAM Very Good BREEAM Very Good 1. Rent based on income when fully let. Currently 85% let. 24