Project Spring June 2019 Charles Peach, CFO Jonathan Laredo, CEO - - PowerPoint PPT Presentation
Project Spring June 2019 Charles Peach, CFO Jonathan Laredo, CEO - - PowerPoint PPT Presentation
Project Spring June 2019 Charles Peach, CFO Jonathan Laredo, CEO Michael Gibbons, CIO Disclaimer (1/2) This information presentation document (this document) has been prepared and issued by Yew Grove REIT PLC ("YG") for
Disclaimer (1/2)
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- Diversified and differentiated commercial property portfolio – ex-Dublin CBD, well
built, well tenanted, with strong income, quarterly dividend payments commenced Q1 2019
- Full deployment of IPO proceeds within 7 months, majority of debt facility deployed
3 months later
- Identified acquisitions expected to be earnings accretive, supporting future dividend
capacity and enhancing reversionary potential
- 100m share issuance placing programme launched, initially raising €10m
Key Highlights
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- 3.76% uplift in EPRA NAV per share from 96.55 at 30 June 2018 to 100.18 at 31
December 2018
Company Overview 1.
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- Attractive pipeline of available assets
- Strong occupier demand driving rents for office and industrial property upwards in the
Company’s target market
- Only public institutional investor in the target market. Limited equity and debt capital
available to existing competitors Investment
- pportunity
Yew Grove REIT
- Provide shareholders with high, good quality income from a portfolio of well-tenanted Irish
commercial real estate in select locations outside of the Dublin CBD
- Particular focus on office and industrial assets let to Irish government entities and other State
Bodies, IDA Ireland supported and other FDI companies, and large enterprises
- Targeting a fully covered dividend equal to 7c per share per annum payable quarterly
Supportive market backdrop
- Ireland expected to have second fastest growing economy in Europe in 20191
- Office rents in Dublin CBD have recovered to their 2007 peak, increasing demand elsewhere
- Approx. 50% of recent FDI job creation outside Dublin2 – Project Ireland 2040 supports
targeted regional growth
1 – CSO 2 – IDA data, 2013 to 2018. Approx. 58% of FDI job creation in 2018 was outside Dublin
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Yew Grove – introduction
- Capitalise on first mover advantage – only public vehicle in our target market
– Identify institutional grade industrial and office buildings, with a targeted cost of between €5m and €15m, at yields exceeding 7% – Establish appropriate access to equity and debt capital to fund property purchases – Broaden the Company’s shareholder base and reduce the total expense ratio, spreading fixed costs over a larger invested capital base
- Asset management to optimise rent roll and property portfolio
– Rotate capital by selling smaller assets in favour of larger assets that better fit the Company’s strategy – Establish and improve relationships with tenants to build a forward pipeline on or adjacent to existing properties – Maximise rent roll by managing any vacancy and rent reviews – Optimise NAV and rent through tactical lease regearing
Strategic priorities
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- Acquisition of 2 further assets for €11.5m
– 40,953 sq. ft. Office Block, Cork Airport Business Park – €7.5m at net initial yield of 7.85%
- Let to Clearstream Global Securities Services Ltd, a subsidiary of Deutsche Borse AG
– 36,845 sq. ft. Office Block, IDA Ireland business park, Waterford – €4m at net initial yield of 8.56%
- Let to Tech Mahindra Business Services Ltd and SE2 Information Services Ireland Ltd
- IPO proceeds and substantially all of the debt facility fully invested within 12 months
- f IPO
– 16 properties totalling in excess of 550,000 sq. ft. in aggregate – Annualised rent roll: €7.457m1
- WAULT of 7.3yrs to end1, 4.4yrs to break1 – opportunity to capture reversionary yields
- Payment of quarterly dividends commenced
– Q1 2019 dividend of 1.1 cents per share – Q2 2019 dividend to include portion of lease surrender income on Cork Airport Business Park property2; Q2 distribution expected to be not less than 3 cents per share, including approx. 1.5 cents special dividend
Update since 31 December 2018
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1 – As at 31 May 2019. Excludes impact of Cork Airport Business Park lease surrender 2 – Refer to RNS on 29 May 2019
8 6 11 7 2 12 10 13 9 4 5 14
Greater Dublin Area Cork Limerick Galway Athlone
1+3
Portfolio by Tenant Type
Portfolio Overview
Location Key Portfolio by Asset Type
16 15
1 One Gateway Office 2 IDA Letterkenny Office 3 Three Gateway Office 4 Ashtown Gate Office 5 Airways Ind Est. Industrial 6 IDA Athlone Industrial 7 Blackwater House Office 8 Bridge Centre Retail 9 Holly Avenue Industrial 10 Naas Enterprise Park Industrial 11 Listowel Mixed Use 12 Canal House Mixed Use 13 Heather Road Industrial 14 Centre Point Industrial 15 IDA Waterford Office 16 Cork Airport Business Park Office 9
4% 63% 33% SME FDI Large enterprises Govt/State 80% 15% 3% 2% Office Industrial Mixed Use Retail
Detailed Portfolio Breakdown
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Note: Valuations for assets 1 – 14 as at 31 December 2018. Valuations for assets 15 & 16 as at date of release of the corresponding RNS All other metrics correct as at 31 May 2019 Cork Airport Business Park lease surrender effective from 30 June 2019 Asset 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 One Gateway Office Dublin 18.0 1,194 6.6% 1,437 8.0% 3.0 4.5 0.0% 2 IDA Letterkenny Optum Office North West 16.0 1,437 9.0% 1,458 9.1% 8.8 8.8 0.0% 3 Three Gateway Office Dublin 14.0 913 6.5% 1,080 7.7% 1.6 1.6 0.0% 4 Ashtown Gate Office Dublin 9.4 783 8.3% 864 9.2% 2.6 8.4 0.0% 5 Airways Ind Est. Industrial Dublin 4.5 300 6.6% 510 11.3% 6.4 11.4 0.0% 6 IDA Athlone KCI Industrial Midlands 3.9 435 11.2% 505 13.0% 4.3 14.1 0.0% 7 Blackwater House Office Cork 2.3 233 10.3% 367 16.2% 1.2 5.0 30.4% 8 Bridge Centre Retail Midlands 1.9 229 11.8% 182 9.4% 2.0 2.6 14.4% 9 Holly Avenue Industrial Dublin 1.8 170 9.4% 170 9.4% 1.7 8.7 0.0% 10 Naas Enterprise Park Industrial Dublin 1.7 170 9.9% 194 11.2% 3.7 3.7 0.0% 11 Listowel Mixed use South West 1.6 276 16.9% 150 9.2% 3.8 14.7 0.0% 12 Canal House Mixed use Midlands 1.0 107 10.8% 52 5.3% 7.6 7.6 0.0% 13 Heather Road Industrial Dublin 1.0 93 9.7% 54 5.6% 10.2 10.2 0.0% 14 Centre Point Industrial Dublin 0.9 110 12.9% 51 6.0% 7.3 7.3 0.0% 15 IDA Waterford TM SE2 Office South East 4.0 371 9.3% 424 10.6% 3.4 14.5 0.0% 16 Cork Airport Bus Park Office Cork 7.5 638 8.5% 655 8.7% 4.8 4.8 0.0% Total 89.4 7,457 8.3% 8,155 9.1% 4.4 7.3 1.8%
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- Asset acquired in May 2019
‒ Offices constructed in 2005 ‒ Located on the IDA Ireland business park, adjacent to the N25 and 2.5km from Waterford city centre ‒ The building is let to Tech Mahindra and SE2 Information Services
- Asset Management
‒ Fully occupied ‒ Car parking expansion potential ‒ Capture reversionary rent
Recent acquisitions: Office Block A, IDA Ireland Waterford Business & Technology Park
Key Facts
Cost: €4m Asset type: Office Area: 36,845 sq. FT Yield to Yew Grove: 9.3% Vacancy: 0.0% Reversionary yield: 10.6% WAULT to break: 3.4 WAULT to lease end: 14.5 11
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- Asset acquired in February 2019
‒ Building constructed in 1999 and interior fully renovated in 2015, including 163 surface car park spaces ‒ Located in the Cork Airport Business Park, beside the Airport, 6km south of Cork city centre ‒ Let to major FDI tenant
- Asset Management
‒ Lease surrender agreed dated 30 June 2019 for €3.0m
Recent acquisitions: Unit 2600, Cork Airport Business Park
Key Facts
Cost: €7.5 million Asset type: Office Area: 40,953 sq. FT Yield to Yew Grove: 8.5% Vacancy: 0.0% Reversionary yield: 8.7% WAULT to break1: 4.8 WAULT to lease end1: 4.8 12
1 – As at 31 May 2019. Lease surrender takes effect on 30 June 2019
Market Commentary 2.
Market Commentary
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0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0%
Sep-08 Mar-10 Sep-11 Mar-13 Sep-14 Mar-16 Sep-17 Mar-19 Premium vs. Dublin CBD Income Premium Provincial Income Premium Non-Core Dublin 0.1 0.1 0.1 0.1 0.1 0% 2% 4% 6% 8% 10% 12% Industrial Retail - Provincial Office - Central Dublin Office - Rest
- f Dublin
Office - Provincial Equivalent Yield Cyclical Range High-Low 2007-19 Current
Non-core office yields are still a long way off previous peak highs Income premiums of 160bps are still available from property outside of Dublin CBD
Source: Goodbody, MSCI Source: Goodbody, MSCI
4% 5% 6% 7% 8% 9% 10% 11% Sep-08 Mar-10 Sep-11 Mar-13 Sep-14 Mar-16 Sep-17 Mar-19 Office - Central Dublin Office - Rest of Dublin Office - Provincial Equivalent yield
- 1.0%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% Secondary Office Dublin CBD Prime Office Provincial Prime Office Dublin CBD Office Dublin Suburban 12-mth Move Current Spread over 10YR Gov. Bonds
- 0.25
0.0 0.0 0.0 4.32 6.32 3.32 5.32
Non-core offers attractive yield spread 120-150bps with similar income risk Attractive yield spreads remain available above both relative and long-term norms
Source: MSCI Source: Goodbody, CBRE, MSCI
1 – Analysis above runs to March 2019
Market Commentary
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Early capital value growth has been largely constrained to prime Dublin offices Non-core Dublin offices will see average reversionary uplifts of 12% at next review Regional property has surpassed its over-rented position as rents have improved
- 50
- 40
- 30
- 20
- 10
10 20 30 Jun-08 Oct-09 Feb-11 Jun-12 Oct-13 Feb-15 Jun-16 Oct-17 Feb-19 % Annual capital growth Prime Secondary Tertiary 2 4 6 8 10 12 14 Jun-08 Oct-09 Feb-11 Jun-12 Oct-13 Feb-15 Jun-16 Oct-17 Feb-19 % Net Reversionary Yield Net Initial Yield 2 4 6 8 10 12 Jun-08 Oct-09 Feb-11 Jun-12 Oct-13 Feb-15 Jun-16 Oct-17 Feb-19 % Net Reversionary Yield Net Initial Yield
Source: Goodbody, MSCI Source: Goodbody, MSCI Source: Goodbody, MSCI
1 – Analysis above runs to March 2019
Market Commentary
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Provincial lots sizes often half that of Dublin Investor allocations in the Irish market Income is a far more critical component of total return for provincial investment assets Income returns from non-core Dublin offices are almost 50% above that of the CBD
5 10 15 20 25 30 35 Mar-95 Mar-98 Mar-01 Mar-04 Mar-07 Mar-10 Mar-13 Mar-16 Mar-19 % Allocation in average portfolio Total Provincial Office - Outside Dublin CBD Industrial - Dublin €0m €10m €20m €30m €40m €50m
Industrial - South East Dublin Retail - Provincial Industrial - South West Dublin Industrial Retail - Henry/MaryStreet Industrial - North Dublin Retail - Grafton Street Office - Rest of Dublin Retail Warehouse Retail - Shopping Centre Office - Provincial Office - Dublin 4 Office - Dublin 1 3 & 7 Office - Central Dublin Office - Dublin 2
Source: Goodbody, MSCI Source: Goodbody, MSCI
0% 50% 100%
Industrial - North Dublin Office - Provincial Industrial Office - Dublin 1 3 & 7 Office - Central Dublin Office - Dublin 2 Office - Rest of Dublin Office - Dublin 4 Industrial - South West Dublin Retail Warehouse Retail - Other City Centre Retail - Grafton Street Retail - Henry/MaryStreet Retail - Provincial Retail - Shopping Centre Industrial - South East Dublin
Income Return as a % of Total Return Capital Growth as a % of Total Return 4.4 6.1 6.1 7.7 2 4 6 8
Retail - Grafton Street Office - Dublin 2 Retail - Henry/MaryStreet Office - Central Dublin Retail - Other City Centre Office - Dublin 4 Office - Dublin 1 3 & 7 Retail - Shopping Centre Industrial - North Dublin Office - Rest of Dublin Office - Provincial Industrial Retail Warehouse Industrial - South West Dublin Industrial - South East Dublin Retail - Provincial
Source: Goodbody, MSCI Source: Goodbody, MSCI
1 – Analysis above runs to March 2019
Market Commentary
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...while regional commercial rents remain well below peak. Dublin commercial rents have returned to near peak levels...
50 100 150 200 250 300 350 400 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13 Sep-14 Mar-16 Sep-17 Mar-19 50 100 150 200 250 300 350 400 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13 Sep-14 Mar-16 Sep-17 Mar-19 Still 58% below peak Only 4% off peak
Source: Goodbody, MSCI Source: Goodbody, MSCI
1 – Analysis above runs to March 2019
Acquisition pipeline 3.
- Continuing to build the target property acquisition pipeline
– A projected pipeline of acquisitions with a combined cost in excess of €70 million has been identified and is being progressed
Identified acquisition and broader pipeline
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- Target portfolio priced at €13m – 3 buildings
– Represents a 7.6% NIY, 8.1% reversionary yield – 3 FDI tenants; WAULT of 12.5 years to expiry / 3.9 years to break – Capital enhancing opportunities – rent reviews; additional capacity for expansion – Central MedTech hub
- 3 purpose built industrial/medical technology facilities of 114,498 sq.ft with adjacent car parking
- Well located site in heart of Ireland’s ‘MedTech Triangle’
Placing 4.
- On completion, acquisition and placing together expected to be earnings accretive
– Pro forma annualised rent roll: €8.52m1
- Further support future dividend capacity
– Expect Q3 2019 dividend to be diluted due to timing of deployment of new funds – Expect Q4 2019 dividend and thereafter to be enhanced
- Reduction of total expense ratio as fixed costs are spread over a larger capital base
- Capability to raise further equity against targeted property acquisitions
– Minimise dividend and dilution risk
- Proposed increase to existing debt facility by €9m to part finance the proposed and
- ther acquisitions
Capital raise objectives
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1 – Excludes Cork Airport Business Park lease surrender income
- Placing of new shares to raise €10 million (before expenses)
– Placing proceeds used to part finance the acquisition of the target portfolio for €13.0m plus costs – Placing Shares to rank pari passu with existing ordinary shares, participating in dividend distributions from Q3 2019 forward
- Placing Programme to issue up to 100 million new ordinary shares
– Subject to shareholder approval at EGM; authority to expire after 12 months
Placing
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- Successful deployment of IPO capital and majority of debt capital
- Differentiated, diversified portfolio
– Strong income profile with accretive asset management opportunities
- Acquisition pipeline
– Earnings enhancing acquisition opportunities to support future dividend capacity
- Placing programme allows timely execution of accretive investments
– Major benefits in growing size of invested portfolio
- Board continues to believe that consolidation within its target market offers the
- pportunity to build a €300-500 million portfolio of high-yielding, high-quality
assets over a medium term period
Conclusion
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Appendices
2018 Financial Highlights
Period to Dec 31 181
Equity raised in the period €75m Profit for the period €2.3m Net valuation change €1.6m Adjusted EPS 3.1c Net income (excluding property valuation gains) per share 0.966c Dividend per share 0.964c Property Income Distribution per share 0.873c Portfolio value €77.9m EPRA NAVPS 100.2c Loan facility €19.9m ‒ Facility drawn €6.2m ‒ Facility undrawn €13.7m Loan to Value 8.0% 25
- The Company was incorporated in April 2018 and
started trading following the 8 June 2018 IPO
- In this period to 31 December 2018 the Company
raised €75.0m of equity capital and €19.9m of debt
- capital. Expenditure on new properties in the period
was €76.4m
- The December property valuation showed gains from
property purchase price of €5.1m, being €1.6m after costs of purchase
- The Company’s revolving debt facility was arranged
at a more attractive cost than had been the case for the Seed portfolio Fund
1 – Consolidated Financial Statements for the Company and its subsidiaries. Refer to the 2018 annual report on www.ygreit.com for further detail
Summary Balance Sheet
26 Balance Sheet (€’m) At Dec 31 181 Non-Current Assets Investment properties 77.9 Investment in joint venture 0.0 Total Non-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
- The Company’s investment properties include €25.9m from the
seed portfolio, the remainder were acquired between July and December
- Total acquisition costs of purchases were €3.4m, including stamp
duty, legal, surveying and other fees. The IPO share issuance costs of €2.2m were also capitalised in the period
- The Company had head room of €13.7m in its revolving debt
facility at 31 December 2018, the majority of which has subsequently been drawn to purchase 2 additional properties for €11.5m (and costs) in 2019
- The year end NAV of 100.2 cents per share compares favourably
with the 30 June 2018 NAV of 96.6 cents per share
1 – Consolidated Financial Statements for the Company and its subsidiaries. Refer to the 2018 annual report on www.ygreit.com for further detail
Summary Income Statement
27 Income Statement (€’m) To Dec 31 181 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 €2.0m, including one-
- ff expenses relating to:
1. Liquidation of the Yew Tree Fund (source of the €25.9m seed portfolio) 2. A share premium reduction
- Running costs include all costs of the internal management
structure and the AIFM, management keep a very tight focus on costs
- Net rental income for the period was €2.6m, the Company’s
annualised rent roll rose from €2.6m following IPO to €6.3m at year end
- In February 2019 the Company declared a dividend for 2018, and
- n 29 March 2019 declared the first quarterly dividend for 2019
1 – Consolidated Financial Statements for the Company and its subsidiaries. Refer to the 2018 annual report on www.ygreit.com for further detail
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