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

Secure Income REIT Plc  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  over 30 years’ track record in successful real estate investment and financing 3

2016 Highlights Alton Towers Hotel

2016 Highlights  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% 5

2016 Total Return  Clear sector leader in share price total return performance over 2016, well ahead of peers: 40.0 30.1 30.0 2016 Share price TSR % 20.0 15.1 12.5 11.0 11.0 10.8 8.2 7.2 10.0 4.1 2.3 1.0 1.0 0.7 0.0 (0.7) (0.7) (3.7) (5.3) (6.3) (10.0) (7.3) (8.7) (9.5) (11.0) (11.8) (15.5) (16.0) (16.4) (20.0) (18.2) (18.9) (23.4) (25.3) (30.0) (29.7) (31.2) (32.3) (36.4) (40.0) SIR Tritax GCP Living Target Picton SEGRO Primary Health Assura Grainger TR Property Safestore Shaftesbury Hansteen LondonMetric Hammerson Mucklow UNITE Land Securities Intu Properties Conygar Sector Capital & Regional Big Yellow Workspace LXB British Land Great Portland Urban & Civic Derwent London St Modwen Inalnd Homes McKay Securities Capital & Counties Helical Source: Stifel 6

31 December 2016 Results Highlights 2016 2015 ↑ 46.2% EPRA NAV £745.9m £510.1m Including £137.5m net equity issue & portfolio valuation up 7% ↑ 14.4% EPRA NAV per share 323.6p 282.8p 8.4% higher than Oct 16 placing price ↑ 334.6% 11.3p Adjusted EPRA EPS 2.6p 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 16.5% 9.4% Total Shareholder Return in the year 30% growth plus dividends ↓12.3% Net LTV 53.5% 61.0% Continuing downward trend for LTV 7

Balance Sheet & EPRA NAV Progression £m 1 Jan Valuation Net Travelodge Dividends FX & 31 Dec 2016 uplift earnings purchase paid other 2016 1,642 Properties 1,350 85 194 13 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 282.8 39.2 8.5 (1.1) (5.8) - 323.6 share (p) + 14.4% Initiated Aug 16 – Analysis at 1.1p issue 2 quarters paid slide 21 costs 8

EPRA Earnings per share 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 9

2016 EPRA NAV growth plus dividends £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 248 46.6 16.5% TSR (share price growth + dividends) sector leading Return 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 10

Financing  £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 2,000 Illustrative Portfolio Valuation and Net LTV at Constant Valuation Yield 1 60 % £m Gross Asset Value 53.5% 1,900 55 % % LTV 1,800 50 % 1,700 45 % 1,642 1,600 40 % Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Portfolio Valuation (£m) Net LTV (%) 1 See assumptions on page 28; There is no certainty that these illustrative projections will be achieved 11

Financing  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 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% None yrs 1 – 5 Annual amortisation £1.0m £3.2m £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 12 2 First stage partial cash sweep to lender, second stage full cash sweep to lender

Efficient cost structure  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 13

Distribution Policy offering highly visible dividend growth Geared returns drive an attractive and growing income profile Illustrative growth in distributions on range of RPI assumptions • 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 ¹ See assumptions on page 28; there is no certainty that these illustrative returns will be achieved 14

Portfolio and 2016 valuation 2016 Financial results highlights Change photo Thorpe Park