Secure Income REIT Plc Preliminary results for the year ended 31 - - PowerPoint PPT Presentation

Secure Income REIT Plc

Preliminary results for the year ended 31 December 2016

9 March 2017

www.SecureIncomeREIT.co.uk

1. Introduction: Nick Leslau 2. 2016 Financial results highlights: Sandy Gumm 3. Portfolio and 2016 valuation: Mike Brown 4. Market conditions and outlook: Nick Leslau

Travelodge Nottingham Riverside

• Established and substantial sector agnostic UK REIT investing only in real estate let on long leases
• c. £750m market capitalisation - listed in June 2014 at c. £293m market cap
• NAV per share 323.6 p per share up from 282.8p in Dec 2015 and 172p on IPO in June 2014 –

up 88% since listing

• longest weighted average unexpired lease term of any large UK REIT at > 23 years
• £1.64bn portfolio of 81 key operating assets let to financially strong businesses
• Highly predictable returns and growth from fixed and upwards only, uncapped RPI linked rental

uplifts and long term fixed rate debt

• Strong governance with highly experienced independent Directors: Martin Moore, Leslie Ferrar,

Jonathan Lane & Ian Marcus

• Managed by the Prestbury team:
• closely aligned with shareholders via their holding in the Company of 15.4% worth over £110m
• ver 30 years’ track record in successful real estate investment and financing

Secure Income REIT Plc

3

2016 Highlights

Alton Towers Hotel

2016 Highlights

5

• Two oversubscribed placings in the year:
• £282m secondary placing at 255p per share in March 16 to widen shareholder base and

increase liquidity, positioning the company for growth

• £140m new shares at 298.6p per share for Travelodge acquisition in Oct 16
• Returns enhancing £196m acquisition of Travelodge portfolio yielding 7%
• Covered quarterly dividend payments initiated August 2016
• EPRA NAV plus dividends returned 16.5% over the year
• Delivered sector leading share price total return performance in the year at 30%

2016 Total Return

6

• Clear sector leader in share price total return performance over 2016, well ahead of peers:

Source: Stifel

(36.4) (32.3) (31.2) (29.7) (25.3) (23.4) (18.9) (18.2) (16.4) (16.0) (15.5) (11.8) (11.0) (9.5) (8.7) (7.3) (6.3) (5.3) (3.7) (0.7) (0.7) 0.7 1.0 1.0 2.3 4.1 7.2 8.2 10.8 11.0 11.0 12.5 15.1 30.1

(40.0) (30.0) (20.0) (10.0) 0.0 10.0 20.0 30.0 40.0 Helical Capital & Counties McKay Securities Inalnd Homes St Modwen Derwent London Urban & Civic Great Portland British Land LXB Workspace Big Yellow Capital & Regional Sector Conygar Intu Properties Land Securities UNITE Mucklow Hammerson LondonMetric Hansteen Shaftesbury Safestore TR Property Grainger Assura Primary Health SEGRO Picton Target GCP Living Tritax SIR

2016 Share price TSR %

31 December 2016 Results Highlights

7

2016 2015

EPRA NAV £745.9m £510.1m ↑ 46.2% Including £137.5m net equity issue & portfolio valuation up 7% EPRA NAV per share 323.6p 282.8p ↑ 14.4% 8.4% higher than Oct 16 placing price Adjusted EPRA EPS 11.3p 2.6p ↑ 334.6% Positive impact of 2015 refinancing and accretive Travelodge acquisition Dividend per share 5.8p

• Initiated covered dividends Aug 16: two quarterly

dividends paid in the year EPRA NAV per share growth plus dividends 16.5% 9.4% Total Shareholder Return in the year 30% Net LTV 53.5% 61.0% ↓12.3% Continuing downward trend for LTV

Balance Sheet & EPRA NAV Progression

8

£m

1 Jan 2016 Valuation uplift Net earnings Travelodge purchase Dividends paid FX &

• ther

31 Dec 2016 Properties 1,350 85 194 13 1,642 Gross debt (905) (60) (4) (969) Cash 82 24 (12) (2) 92 Other Net assets (17) 4 (6) (19) EPRA NAV 510 85 24 138 (12) 1 746 EPRA NAV per share (p) 282.8 39.2 8.5 (1.1) (5.8)

• 323.6

+ 14.4%

1.1p issue costs Initiated Aug 16 – 2 quarters paid Analysis at slide 21

EPRA Earnings per share

9

Pence per share 2016 2015

Net rent: Like for like portfolio 40.9 41.9 Reflects issue of 46m shares to finance Travelodges Travelodge 1.1

• Two month contribution from 28 October

Sold in 2015

• 6.0

Net finance costs (25.9) (40.0) Impact of 2015 sales & refinancing: interest cover improved and gearing further reduced Admin & corporate costs (4.8) (4.5) Tax

• (0.8)

REIT interest cover test met since 2015 refinancing Adjusted EPRA EPS 11.3 2.6 2016 first half 5.4p; second half 5.9p - fully distributed via quarterly dividends from Aug 16

2016 EPRA NAV growth plus dividends

10

£m p per share

EPRA NAV 1 Jan 510 282.8 EPRA NAV at 31 Dec 746 323.6 2016 increase 236 40.8 14.4% Dividends 12 5.8 First two quarterly payments Total Accounting Return 248 46.6 16.5% TSR (share price growth + dividends) sector leading for 2016 at 30%

• Q1 2017 dividend 3.325p per share on 227.3m shares in issue
• 2016 returns are stated after impact of 3.3m shares to be issued in March ‘17 to satisfy £9.3m incentive fee; Q2

2017 dividend follows issue of incentive shares and expected to be 3.277p (c. 1.5% dilution)

• All else being equal, expect dividend to increase to c. 3.5p per share for Q3 following completion of majority of

2017 rent reviews: annualised 4.3% yield on Dec 2016 EPRA NAV

Financing

11

• £969.4m of secured credit in four ring-fenced facilities
• LTV 53.5% at 31 December 2016, further reduced from 61.0%
• 12% (7.5pts) reduction, approx equally from valuation uplift on like for like portfolio and from

reduction as Travelodge financed at 31% LTC

• Interest cover 1.9x at Dec 2016, up from 1.6x in 2015
• Weighted average term to maturity 7.5 years from 31 December 2016
• Unusually long leases with minimum fixed uplifts mean that at constant valuation yields, LTV can

be expected to continue to fall each year – would be sub 50% by mid 2019 at Dec 16 valuation yields

1 See assumptions on page 28; There is no certainty that these illustrative projections will be achieved 1,642 53.5%

40 % 45 % 50 % 55 % 60 % 1,600 1,700 1,800 1,900 2,000 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 % LTV £m Gross Asset Value

Portfolio Valuation (£m) Net LTV (%) Illustrative Portfolio Valuation and Net LTV at Constant Valuation Yield 1

• All facilities are non recourse with substantial headroom on financial covenants
• Structural protections: paramount importance to avoid “trip hazards” in debt facilities
• All facilities have cash cure rights and SIR has over £60m uncommitted cash that could if necessary

be deployed for covenant cure

Financing

12

Debt facilities: Healthcare Healthcare Leisure Travelodge Principal at 31 Dec 16 £218.8m £312.2m £378.4m £60.0m Assets in security pool 9 11 6 55 Fixed rate 4.29% 5.30% 5.68% 2.71% Annual amortisation £1.0m £3.2m None yrs 1 – 5 £3.7m yrs 6 & 7 None Final repayment Sept 2025 Oct 2025 Oct 2022 Oct 2023 LTV cash trap headroom n/a 21% 14% /19%(2) 24%/33%(2) LTV default headroom 31% (Sept 19) (1) 26% n/a 39% DSCR cash trap headroom n/a 15% n/a 64% DSCR default headroom 27% 27% n/a 70%

1 Not tested until Sept 2019 2 First stage partial cash sweep to lender, second stage full cash sweep to lender

Efficient cost structure

13

• Recurring total administrative costs £9.1m in 2016 (£8.1m in 2015)
• Majority of overheads covered by Prestbury and paid by way of advisory fee geared to EPRA

NAV on sliding scale – 2016 cost £7.8m (inc VAT) against £6.9m in 2015

• 1.25% of EPRA NAV up to £500m; plus
• 1.0% of EPRA NAV between £500m and £1bn; plus
• 0.75% of EPRA NAV thereafter
• Non recurring costs in the year:
• £2.0m of company costs to co-ordinate £282m secondary placing in March
• £9.4m of incentive fee paid in restricted shares, plus £1.1m of VAT for exceeding threshold

return in the year – TSR was clear sector leader at 30% and exceeded 307.7p per share EPRA NAV benchmark

14

Distribution Policy offering highly visible dividend growth

Geared returns drive an attractive and growing income profile

• Pay-out ratio of 1x Adjusted EPRA EPS
• Feb 2017 distribution annualises to 13.3p per share
• Dividend yield of currently c.4.1% on Dec 16 EPRA NAV or 4.5% on October 2016 placing price of 298.6p
• On illustrative bases, expectation of yield on December EPRA NAV of c. 4.3% (c. 14p annualised) by Q3 2017
• Illustrative 5 year dividend growth CAGR (2016-2021) of 6.7% on base case assumptions¹

Illustrative growth in distributions

• n range of RPI assumptions

¹ See assumptions on page 28; there is no certainty that these illustrative returns will be achieved

2016 Financial results highlights

Change photo

Portfolio and 2016 valuation

Thorpe Park

Merlin 34% Ramsay 49% Orpea 2% Travelodge 15% 16

Portfolio

Multi sector portfolio underpinned by strong tenant covenants

 Portfolio total passing rent £92.6m at 31 Dec 2016 from 81 key

• perating assets with income security from strong operating

businesses underpinning £1.64bn of property value

• 49% of rent guaranteed by Ramsay Health Care Limited: £8.5bn

market capitalisation ASX 50 company and one of the top five private hospital operators in the world

• 34% of rent guaranteed by Merlin Entertainments Plc: FTSE 100

company with £5.0bn market capitalisation: second largest visitor attractions company in the world and largest in Europe

• 15% of rent guaranteed by Travelodge Hotels Ltd: a well-

capitalised business with 2015 revenues of £560m and £105m EBITDA; one of the UK’s top two budget hotel brands

• 2% of rent guaranteed by Orpea SA, mental health and aged care

specialists, listed on Euronext with £4.3bn market capitalisation

• 58% of rent subject to fixed annual uplifts averaging 2.8%, 42% to

uncapped upwards only RPI

Portfolio Value December 2016: £1.64bn

Sources: Market data as at 8 March 2017 using GBP/AUD exchange rate of A$1:£0.62210 and GBP/EUR exchange rate of €1:£0.86769

Portfolio Rent December 2016: £92.6m per annum

Travelodge Hotels 12% Orpea: London Psychiatric Hospital 2% Merlin UK assets 28% Ramsay Hospitals 52% Merlin German assets 6%

17

The Healthcare Portfolio

 19 private hospitals valued at £850.5m at 31 December 2016 representing 52% of current portfolio value generating £45.6m

• f passing rent

 Well located throughout England – 55% by value in South East  Key operating assets representing 61%1 of Ramsay’s UK

• perations

 Let on individual fully repairing and insuring leases with a current term to expiry of 20 years without break clauses  Rent increases by a fixed 2.75% per annum throughout the lease term in May each year and potential open market rent catch up at landlord’s option in 2017 and 5 yearly thereafter  Guaranteed by Ramsay Health Care Limited

Ramsay

Healthcare Portfolio Net Initial Yield of 5.0% as at 31 December 2016

1 By number of UK assets: Ramsay operates 36 medical facilities in the UK (Annual Report 2015) of which 5 are treated as forming part of a single hospital in the

company’s portfolio.

 Let to a UK subsidiary of Groupe Sinoué on a fully repairing and insuring lease for 27 years  Central London’s only private psychiatric hospital – located in Lisson Grove, near Marylebone station  Rent increase of 3.0% in May each year  Guaranteed by Orpea SA  Valued at £42.4m at 31 December 2016, representing 2.6% of current portfolio value generating £1.9m of passing rent

London Psychiatric Hospital

Ashtead Hospital Duchy Hospital Euxton Hall Hospital Fitzwilliam Hospital Fulwood Hospital Mount Stuart Hospital Nightingale Hospital North Downs Clinic 2 1 3 4 5 6 7 8 Oaklands Hospital Oaks Hospital Pinehill Hospital Reading Hospital Renacres Hospital Rivers Hospital Rowley Hospital Springfield Hospital 10 9 11 12 13 14 15 16 West Midlands Hospital Winfield Hospital Woodland Hospital Yorkshire Clinic 18 17 19 20

Ramsay Health Care Portfolio London Psychiatric Hospital

20 2 3 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 1 7 Liverpool Manchester Sheffield London Leeds Cambridge Bristol United Kingdom Birmingham

18

The Leisure Portfolio

4 Germany Hamburg Berlin Munich Hanover Düsseldorf Frankfurt Nuremberg Alton Towers Theme Park and Alton Towers Hotel Thorpe Park Warwick Castle 1 2 3 Heide Park Theme Park and Heide Park hotel 4

Overview

 Valued at £550.7m1 at 31 December 2016 valuation representing 34% of current portfolio generating £31.4m of passing rent2.

• UK (82.5% by value):

− Alton Towers Park and Hotel, Thorpe Park, Warwick Castle − Alton Towers and Thorpe Park are 2 of top 3 theme parks in the UK3

• Germany (17.5% by value):

− Heide Park attractions and hotel

• Visitor attractions account for 82% of passing rent and

hotels 18%  Individual fully repairing and insuring leases with:

• Average unexpired lease term of 25 years
• Upwards only uncapped RPI-linked rent reviews every

June for the UK portfolio

• Fixed annual increases of 3.34% every July for the German

properties  Guaranteed by Merlin Entertainments Plc

1 Includes £96.5m of German assets valued in Euros and translated at €1 : £0.8583 2 Includes £5.9m of rent from German assets denominated in Euros and translated at €1 : £0.8583 3 The Global Attractions Attendance Report 2015.

Leisure Portfolio Net Initial Yield of 5.3%

1 2 3 Liverpool Manchester Sheffield London Leeds Bristol United Kingdom Birmingham Cambridge

Travelodge Portfolio

Inflation linked, long term income from one of the UK’s leading budget hotel brands

19

1 Employs RPI swap curve at 3 March 2017 2 By number of rooms and hotels operated

• 55 Hotels with 3,096 rooms,
• Key assets in Manchester, Oxford & Edinburgh:

average lot size £19.5m

• Remaining 52 properties: average lot size £2.7m
• 26 year weighted average unexpired lease term
• no lease shorter than 21 years
• no break clauses
• Five yearly RPI upwards only rent reviews
• Purchased in October 2016 for £192.6m contract price off £13.7m income at

completion; yield of 7.0%

• Each hotel let to Travelodge Hotels Ltd – the UK’s second largest budget

hotel brand2 and its biggest independent brand with 543 hotels and over 40,000 rooms

• Range of yields on Travelodge transactions over the past six months of 4.2%

to 7.0%

Location (by value) Property type (by value)

City centre 34% Edge of town 17% City roadside 22% Roadside 27%

South East 30% South West 15% East Mids 11% West Mids 4% North 5% North West 16% Scotland 19%

20

Travelodge – case study for acquisitions

 Our aim is to source attractive deals that are accretive to shareholder returns  Not all deals will look like Travelodge on property fundamentals but the key criteria delivered immediately post transaction were:  Shares issued at pro forma EPRA NAV  Dividend yield increased from 3.9% to 4.5%  TSR enhancing  Income diversification through new tenant accounting for 15% of portfolio rent  LTV reduced from 59.5% to 56.0%

21

December 2016 property valuation uplift

Healthcare Merlin Leisure Travelodge Hotels Total

31 Dec 2016 Change

• ver year

31 Dec 2016 Change

• ver year

31 Dec 2016 Change

• ver year

31 Dec 2016 31 Dec 2015 Change £m £m £m £m £m £m £m £m % Rent at 31 Dec 47.5 +2.6% 31.4 +1.6%(1) 13.7

• 92.6

77.2 LFL +2.2%(1) Values: England 892.9 +7.0% 454.2 +2.9% 160.2

• 1,507.3

1,276.0 LFL + 5.5% Scotland

• 37.9
• 37.9
• LFL n/a

Germany at constant FX

• 82.6

+12.3%

• 82.6

73.5 LFL + 12.3% Euro rate movement

• 13.9
• 13.9
• Fair value

892.9 +7.0% 550.7 +6.9% 198.1

• 1,641.7

1,349.5 LFL + 7.0% 2016 2015 2016 2015 2016 2015 2016 2015 Net Initial Yield 5.0% 5.2% 5.3% 5.5% 6.5%

• 5.3%

5.3% Running Yield at July 2017(2) 5.1% 5.5% 6.6% 5.4% WAULT 20.6 21.6 25.5 26.5 26.3

• 23.1

23.5 (1) At 31 Dec 16 FX rate (2) Using valuers’ assessments of RPI at next uplift of 2%, and taking no account of any open market uplift on Ramsay Hospitals

Enlarged Portfolio anticipated to deliver attractive total shareholder returns

22

¹See assumptions on page 28

Estimated Base Case Returns (EPRA NAV plus dividends) assuming constant valuation yields and RPI curve¹

There is no certainty that these illustrative projections will be achieved

323.6 344.5 364.5 384.8 408.2 442.7 13.7 28.4 44.0 60.8 78.8 53.5% 51.8% 50.3% 48.9% 47.4% 45.7%

Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 100 200 300 400 500 600

Net LTV p per share EPRA NAV per share (pence) Accumulated dividends (pence)

2016 Financial results highlights

Travelodge Oxford Peartree

Outlook

24

Market conditions and outlook

 Uncertainty abounds with Brexit, European elections & evolving US policy – there is little visibility on the likely outcomes and 2016 warns us to expect the unexpected  Despite strong prices being paid by overseas investors for trophy assets, the London office cycle has peaked with downside risks to both historically high rents and low yields  There is widespread concern that real incomes will be squeezed which will put downward pressure on retail rents  This creates a highly polarised market with domestic investors focussing on a relatively small part: logistics, south east industrials and well-let alternatives  The extended period of uncertainty is likely to keep interest rates low and continue to drive the search for yield  We expect this process to continue until at least 2019

25

Market conditions and outlook

 We seek to buy key operating assets with high barriers to entry let on long, index linked leases to defensive businesses with strong balance sheets  Such income streams are scarce, making SIR’s portfolio difficult to replicate  Indeed, we are now in a market where it appears easier to raise money to buy well-let alternative property than to source high quality deals  We have avoided cash drag, maintaining balance sheet tension so that the growing demand for these assets has been fully reflected in our returns  This also allows us to maintain strong discipline in deal selection criteria  Having already assembled a £1.64 billion portfolio we have an established track record of sourcing deals and continue to believe that patience will be rewarded

26

Conclusion

 Sector leading Total Shareholder Return in 2016  Strong, growing dividend at c.4.1% annualised yield on EPRA NAV; expected to rise to c.4.3% by Q3  On steady state, highly predictable illustrative 5 year annual EPRA NAV growth + dividends of c. 11% pa¹  Defensive portfolio underpinned by high quality long term income  Strongly aligned management team with a long term proven track record and experienced board  Firm intention to seek further growth opportunities

¹See assumptions on page 28

EPRA NAV per share Net LTV Adjusted EPRA EPS

Assumptions and Glossary

Lisson Grove hospital

Assumptions

1. Employs RPI swap curve at 3 March 2017, averaging increases of 3.5% per annum over the period 2. Constant valuation yield at 31 December 2016 external valuation yields 3. Only fixed uplifts on Ramsay leases: ignores potential for open market uplifts 4. No purchases or sales of properties or lease variations 5. Constant Euro exchange rate of €1:£0.8583 (note Euro denominated net assets amount to 4.7%

• f the whole at 31 December 2016; 31 December 2016 rate used throughout illustrative forecast

periods) 6. Valuation shift on sensitised valuation scenarios occur on last day of calculation period

28

Glossary

29

DSCR Debt service cover ratio – measured as rental income divided by specified payments due to lenders (comprising interest or interest plus amortisation as specified in specific credit agreement) EPRA European Public Real Estate Association EPRA EPS A measure of EPS designed by EPRA to present underlying earnings from core operating activities EPRA NAV A measure of NAV designed by EPRA to present the fair value of a company on a long term basis by excluding items such as interest rate derivatives held for long term benefit, net of deferred tax EPS Earnings per share, calculated as the earnings over a period after tax attributable to members of the parent company dividend by the weighted average number of shares in issue over the period Net Initial Yield / NIY Annualised net rents on investment properties expressed as a percentage of the investment property valuation, less purchaser’s costs LTV Loan to value: the outstanding amount of a loan expressed as a percentage of property value NAV Net asset value Net LTV LTV calculated on the gross loan amount and any other secured liabilities, less cash balances Running yield The anticipated net initial yield at a future date, taking account of any rent reviews in the intervening period Total Accounting Return The movement in EPPRA NAV over a period plus distributions paid in the period, expressed as a percentage of EPRA NAV at the start of the period Total Shareholder Return The movement in share price over a period plus distributions paid in the period, expressed as a percentage of the share price at the start of the period WAULT Weighted average unexpired lease term

Appendix: Governance

Warwick Castle

31

Highly Experienced Board: Independent Directors

Experienced Independent Directors Governance Structure Strongly Aligned with Shareholder Interests

 Board structure

• Chairman highly experienced in long lease sector and independent of managers
• 4 independent non-executive directors (including Chairman)
• 3 management representatives on Board (Nick Leslau, Mike Brown and Sandy Gumm) must be in minority for all meetings

 Senior advisor to KKR and non-executive director at SEGRO Plc since July 2014  Chairman of M&G Real Estate until 2013 and CEO from 1996 to 2012  Past President & board member of British Property Federation  Chartered Surveyor  Non-Executive member of HMRC Risk & Audit Committee  Non-executive Chairman of The Risk Advisory Group  Treasurer to TRH the Prince of Wales and the Duchess of Cornwall 2005 to 2012  Former head of international expatriate tax at KPMG  Chartered Accountant  Senior Advisor to Morgan Stanley & Chairman (and former Co-head) of EMEA Real Estate Investment Banking  Non-Executive Director of Grosvenor Europe & Grosvenor Liverpool Limited and the advisory board of Resolution Real Estate Advisers  Policy Committee member of the British Property Federation, member of the Bank of England Commercial Property Forum  Senior Adviser to Wells Fargo Securities  Chairman of The Prince’s Regeneration Trust. Past President of British Property

• Federation. Past Chairman of

Investment Property Forum  Former Chairman of Bank of England Commercial Property Forum  Former MD & Chairman of Credit Suisse European Real Estate Investment Banking Jonathan Lane Nominations Committee Chair Ian Marcus Remuneration Committee Chair and Senior Independent Director Leslie Ferrar, CVO Audit Committee Chair Martin Moore Chairman

32

A Proven Management Team with 110+ Years Combined Experience

Strong Manager Alignment

 Management team members have a strong track record of long-term investment in the companies they have managed (Burford, Prestbury, Helical Bar, Max Property Group Plc)

 Over 30 years’ real estate experience (Secure Income REIT Plc, Max Property Group Plc, Prestbury Group Plc, Burford Holdings Plc)  Extensive Plc board experience both as executive and non- executive  BSc (Hons) Est Man, FRICS  Over 30 years’ real estate experience in funds and listed companies (Secure Income REIT Plc, Max Property Group Plc, Helical Bar plc, Threadneedle)  BSc (Hons) Land Man, MRICS  Over 20 years’ experience in property finance with extensive Plc board experience (Secure Income REIT Plc, Prestbury Group Plc, Burford Holdings Plc)  9 years with KPMG in Sydney and London  BEc, CA (ANZ)  Over 25 years’ experience as a Chartered Surveyor (Secure Income REIT Plc, Prestbury Group Plc, Jones Lang LaSalle, Hill Samuel Asset Management, MEPC)  MA Hons (Cantab), MRICS  Over 10 years’ experience in property investment, refurbishment and design  BSc (Hons) Est Man, MRICS Nick Leslau Prestbury’s Chairman Mike Brown Prestbury’s CEO Sandy Gumm Prestbury’s COO Tim Evans Prestbury’s Property Director Ben Walford Prestbury’s Senior Surveyor

Overseeing an experienced team of finance, property and administrative staff

33

Management Team Strongly Aligned with Shareholders

 Management Team has among the largest shareholdings in the quoted UK Real Estate sector and intends to remain among the largest following a potential placing  Prestbury exclusively offers all qualifying long lease deals to the Company  Contract term to June 2022 – no renewal rights or termination payment at end of term  Incentive to achieve above target returns via incentive share awards of 20% of above target growth:

• Target is higher of 10% above year end EPRA NAV and EPRA NAV at time of last incentive share award
• Paid in shares subject to lock-in of 18 – 42 months
• EPRA NAV before distributions of over 356p per share / £820.7 million to be exceeded before incentive

earned for 2017

• Scheduled 2017 Independent Director review of incentive arrangements completed in March; no changes

required; appropriateness of incentive fee structure to be reviewed again in 2019, three years ahead of expiry of the management agreement  Management meets overhead costs and receives advisory fee on sliding scale relative to EPRA NAV: paid in cash quarterly 1.25% p.a. up to £500m, plus 1.0% p.a. between £500m – £1.0bn, plus 0.75% p.a. thereafter

25 50 75 100 Dec-1997 Dec-1998 Dec-1999 Dec-2000 Dec-2001 Dec-2002 Dec-2003 Indices Rebased to Prestbury NAV Per Share 34

A Proven Track Record of Delivering Shareholder Returns

Max Properties – Average Total Return of 17.1% p.a. (May-2009 – Sep-2014) vs. Peer Group1

De-listing and disposal of majority

• f portfolio

25% p.a. returns

Prestbury Group Plc: Average Total Returns of 25% p.a. (1997 – 2003) Burford Holdings Plc – Total Returns of 34% p.a. (1987 – 1997)

A B C

Sources: Data compiled from company announcements and annual reports over the following periods: Max Property Group Plc (May 2009 to September 2014); London & Stamford Property Plc (May 2009 to September 2012); Metric Property Investments Plc (March 2010 to September 2012); LXB Retail Properties Plc (October 2009 to September 2014); LondonMetric Property Plc (January 2013 to September 2014); New River Retail Ltd (September 2009 to September 2014); and Conygar Investment Company Plc (May 2009 – September 2014). LondonMetric Property Plc was not listed as a cash shell but created through the merger of London & Stamford Property Plc and Metric Property Investments Plc which were listed in 2007 and 2010 respectively.

 The Prestbury Team has a strong track record including, between them, the management of three listed real estate investment vehicles, Burford Holdings Plc, Prestbury Group Plc and Max Property Group Plc

Prestbury Team Track Record

250 500 750 1,000 1,250 1,500 Dec-1986 Dec-1988 Dec-1990 Dec-1992 Dec-1994 Dec-1996 Rebased to 100 Burford NAV Progression Peers NAV Progression 34% p.a returns 8.2% p.a returns 14.6x 2.0x

NAV per share Distributions Previous Distributions FTSE 350 Real Estate Index

17.1% 15.6% 9.2% 8.2% 6.6% 6.1% 5.1% Max London Metric (Jan-13 - Sep-14) London & Stamford (May-09 to Sep-12) LXB Metric Retail (Mar-10 to Sep-12) NewRiver Retail Conygar Average NAV Total return per Share

35

Note on forward looking statements

This document includes forward looking statements which are subject to risks and uncertainties. You are cautioned that forward looking statements are not guarantees of future performance and that if risks and uncertainties materialise, or if the assumptions underlying any

• f these statements prove incorrect, the actual results of operations and financial condition of the Group may differ materially from those

made in, or suggested by, the forward looking statements. Other than in accordance with its legal or regulatory obligations, the Company undertakes no obligation to review, update or confirm expectations or estimates or to release publicly any revisions to any forward looking statements to reflect events that occur or circumstances that arise after the date of this document.