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RECOMMENDED ACQUISITION OF A&J MUCKLOW A strategic combination - - PowerPoint PPT Presentation
RECOMMENDED ACQUISITION OF A&J MUCKLOW A strategic combination - - PowerPoint PPT Presentation
RECOMMENDED ACQUISITION OF A&J MUCKLOW A strategic combination to create one of the UKs leading listed logistics & distribution platforms www.londonmetric.com IMPORTANT NOTICE The information contained in this presentation in respect
IMPORTANT NOTICE
The information contained in this presentation in respect of LondonMetric Property Plc (the “Company”) and communicated during any delivery of the presentation whether orally or in writing, including the talks given by the presenters, any question and answer session and any document or material distributed at or in connection with the presentation (together, the “Presentation”) is only being made, supplied or directed at persons (a) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (“Order”) (investment professionals) or (b) who fall within Article 49(2)(a) to (d) of the Order (high net worth companies, unincorporated associations etc.) (all such persons referred to above being “Relevant Persons”). Any investment or investment activity to which the Presentation relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. Each recipient is deemed to confirm, represent and warrant to the Company that they are a Relevant Person. Persons who are not Relevant Persons must not attend or receive this Presentation. No person may rely on or act upon the matters communicated in this Presentation. Any person who is not a Relevant Person who has received any document forming part of this Presentation must return it immediately. This Presentation is not a prospectus or a prospectus equivalent document and does not constitute, or form part of, nor is it intended to communicate, any offer, invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company, nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract for any such sale, issue, purchase or subscription. This Presentation does not constitute a recommendation regarding the Company’s securities. In particular, but without limitation, the information in this Presentation prepared in connection with the proposed recommended cash and share offer for A&J Mucklow Group plc(“Mucklow”) by the Company pursuant to which the Company will acquire the entire issued share capital and to be issued share capital of Mucklow, to be implemented by way of a scheme of arrangement under Part 26 of the Companies Act 2006, as amended (the “Combination”) should not be considered a recommendation regarding the Company’s securities or a recommendation to vote in favour of the Combination. Any such decision should only be made on the basis of the information in the combined circular and prospectus, and, in the case of Mucklow shareholders, the scheme document which will be circulated to Mucklow shareholders, to be published in connection with the Combination and not on the information contained in this Presentation. Recipients of the Presentation should conduct their own investigation, evaluation and analysis of the business, data and property described in the Presentation. The contents of the Presentation have not been examined or approved by the Financial Conduct Authority (“FCA”) or London Stock Exchange plc (the “London Stock Exchange”), nor is it intended that the Presentation will be so examined or approved. The information and opinions contained in the Presentation are subject to updating, completion, revision, further verification and amendment in any way without liability or notice to any party. The contents of this Presentation have not been independently verified and accordingly, no reliance may be placed for any purpose whatsoever on the information or opinions contained or expressed in the Presentation or
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Transaction Summary
Recommended offer for A&J Mucklow Group plc by LondonMetric Property Plc (“Combination”)
1. Closing share prices as at 22 May 2019 of 205.8p for LondonMetric and 547.5p for Mucklow 2. Mucklow’s Rolled-Forward NAV based on EPRA NAV as at 31 December 2018 of £363.3m (572 pps) plus valuation uplift of £10m (16pps) between 31 December 2018 and 30 April 2019 as disclosed in Cushman & Wakefield’s valuation report. The Mucklow Directors have confirmed that other adjustments are not material 3. 35.74% irrevocables and 3.61% letters of intent
- Recommended £415m offer for Mucklow at 655p per share1
– NAV for NAV valuation approach – 2.19 New LondonMetric shares, 204.5p in cash – c.£130m in cash – 11% premium to the rolled-forward Mucklow NAV2 – Unanimous board approval, 39.35% irrevocables and letters of intent received3
- Compelling strategic and portfolio rationale
– Consistent with our strategy to increase exposure to urban logistics sector where rental growth is superior – Creates one of the UK’s leading listed logistics & distribution platforms
- Strong operational benefits
– Creates a larger and more resilient portfolio with greater income diversification – More intensive asset management and portfolio enhancement programme will deliver significant upside
- Financial benefits supporting progressive dividend policy
– Immediately earnings accretive through economies of scale and cost synergies – Rental reversions and portfolio activity will deliver further benefits – Conservative LTV approach maintained
- Transaction provides the combined entity with greater scale
– Improved liquidity and optionality in both equity and debt markets
Income focused REIT that is delivering strong income led returns
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- £347m market capitalisation1
– Family business founded in 1933, floated in 1962 and converted to a REIT in 2007 – Extended family have a combined interest of c.30% – Long-term focus on income growth and value creation
- Attractive and well located real estate2
– Total assets: £453m; capital value: £119 psf – 3.8m sq ft across 64 investment assets and 330+ units – Rent £26.1m pa, £6.90 psf (ERV:£7.50 psf) – 69% in distribution & multi-let industrial
- Strong income growth prospects
– NIY of 5.4%3, equivalent yield of 6.1%3 – 135,000 sq ft of committed development adding c.£1.0m rent – Over 400,000 sq ft of pipeline developments
Mucklow – Overview
Earnings yield5
5.3%
Dividend cover 110%5
Midlands 86% London & SE 10% South West 4%
Geographical Exposure4 Occupancy2
97.6%
And WAULT of 7.2 years4
1. Closing share price as at 22 May 2019 of 547.5p for Mucklow 2. As at 31 December 2018 except for Mucklow asset value which is as at 30 April 2019 3. NIY calculated based on reported income at 31 December 2018. NIY and EY based on asset value as at 30 April 2019 4. LondonMetric calculation 5. EPRA EPS of 25.1p for FY 2018 divided by EPRA NAV of 471pps at start of that year. Dividend cover based on EPRA EPS divided by Dividend per share for FY 2018
Mucklow – Portfolio & Assets
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Property Sector Sq ft
1 - Coventry Long Income (Costco) 129,000 2 - Crawley Distribution (Elekta, CGG) 161,000 3 - Wednesbury Distribution (HFR, Exova) 172,500 4 - Dudley Distribution (Eriks, Timken) 158,000 5 - Worcester Distribution (Bosch) 116,000
Distribution 54% Multi-let industrial 15% Office 15% Long Income 14% Retail Parks 2%
£0.45bn Distribution and Long Income focused REIT Top 5 assets by value ~ c25% of portfolio value
1. LondonMetric classification based on Mucklow 30 April 2019 valuations 2. Source: LSH 3. Up to 50,000 sq ft warehousing, current supply is less than a third of peak level 4. Source: Gerald Eve
- Largest UK region for
distribution take up over the last 5 years2
- Supply of small &
medium box at lowest level since peak in 20122,3
- Rents grown by c.27%
- ver 6 years compared
to London at c.31%4
- Birmingham distribution
rents increased c.7% in 20182
West Midlands
Costco, Coventry Bosch, Worcester
Portfolio Split1
1 3 4 5
Urban 54% Multi-let industrial 15% Office 15% Long Income 14% Retail Parks 2% Mega 19% Regional 18% Urban 31% Multi-let industrial 4% Long Income 20% Retail Parks 4% Office & Resi 4%
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Mega 23% Regional 22% Urban 27% Long Income 22% Retail Parks 5% Resi 1%
£2.3bn £1.85bn £0.45bn
1. LondonMetric data as at 31 March 2019 2. Long Income includes convenience & leisure 3. Mucklow data as at 30 April 2019, split by LondonMetric classification 4. Mucklow’s logistics/multi-let industrial assets classified as urban logistics
LondonMetric1,2 Mucklow3 Combined2,4
Complementary Portfolios
£2.3 billion portfolio focused on distribution and long income
Distribution & Long Income focused REIT
- Enlarged end-to-end distribution portfolio of £1.65bn
- Increases LondonMetric’s urban logistics exposure from 27% to 35%4
- 79% weighting to superior geographies - South East and Midlands
- Increases income diversification – top 10 tenants exposure falls from 51% to 39%
- Combined WAULT of 11.3 years and occupancy of 97.8%
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LondonMetric(1) Mucklow(2) Combined
Portfolio value £1.85bn £0.45bn £2.3bn Area (Sq Ft) 12.1m 3.8m 15.9m Contracted rent roll £89.7m £26.1m £115.8m Net initial yield 4.7% 5.4%3 4.9%3 Equivalent yield 5.1% 6.1% 5.3%3 Earnings Yield 5.3% 5.3% 5.3%3 Dividend Cover 1.07x4 1.10x4 1.07x4 WAULT (years) 12.5 7.23 11.33 Occupancy 97.8% 97.6% 97.8%3 Debt Drawn £626.2m £80.7m £852.1m5 Loan to value (LTV) 32% 16%3 35%3,5 Weighted average interest cost 3.1% 3.3% 3.1%3,5 Debt Maturity (years) 6.4 10.23 6.13,5
Combined information
1. LondonMetric data as at 31 March 2019. NIY is topped up 2. Mucklow portfolio value as at 30 April 2019, all other stats as at 31 December 2018 3. LondonMetric calculation. Combined represents Proforma 4. Mucklow as at FY18, LondonMetric as at FY19. Combined represents Proforma cover 5. Allowing for cash element of the offer
Creating a larger and more resilient company
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Transaction structure and timetable
Consideration 2.19 New LondonMetric shares and 204.5p in cash for each Mucklow ordinary share held Mix and Match Scheme1: Opportunity to realise part or all of investment at a premium to current share price2, and/or remain substantially invested Ownership & financing Irrevocables and letters of intent received of 39.35%3 Combined Group will be owned 16.5% by Mucklow shareholders & 83.5% by LondonMetric shareholders Cash element paid from LondonMetric’s existing facilities (2.0% marginal cost of debt) Dividends Mucklow shareholders entitled to Q2 Mucklow dividend of 5.24p, payable on 26 June LondonMetric shareholders entitled to Q4 dividend of 2.5p, payable on 11 July LondonMetric Q1 2019/20 dividend payable to shareholders in Combined Group (expected October) Structure Combination to be effected by means of a scheme of arrangement The Combination constitutes a Class 1 transaction for LondonMetric requiring shareholder approval Timetable 23 May Rule 2.7 announcement Late May Class 1 Circular, Prospectus and Scheme Document posted Mid June Shareholder meetings End June Anticipated completion
1. There will be a Mix and Match Facility with details in the Mucklow Scheme Document; no offer is being made for the Mucklow Preference shares (£675,000 nominal value) at this time 2. Closing share prices as at 22 May 2019 of 205.8p for LondonMetric and 547.5p for Mucklow 3. 35.74% irrevocables and 3.61% letters of intent