to March 2013 31 st May 2013 Agenda Financial highlights Strategy - - PowerPoint PPT Presentation

Full Year Results to March 2013

31st May 2013

Agenda

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Financial highlights Strategy Operational highlights Investments Asset management activity Financial results Outlook Q&A

Financial highlights

Financial highlights

Pro-forma Enlarged group figures(1) indicative of operational performance PBT(2) £45.6m (2012: £32.7m) +39% Underlying profit £25.9m (2012: £31.0m) -16.4% Valuation £20.3m (2012: £11.1m) +83% EPRA EPS 4.1p (2012: 4.9p) -16.4%; DPS flat at 7p EPRA NAV 109p (2012: 119p) -8.4% Adjusted NAV (adding back exceptionals) 116p (2012: 119p) -2.5%

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(1) 12 months of London & Stamford and 12 months of Metric Property (2) Includes revaluation surplus, derivatives movement and profit on sales, 2013: £18.6m, 2012: -£4.8m, excludes exceptional items and tax

Strategy

Strategic priorities

Continued focus on income, asset management & developments:

• Out of town retail
• Retailer distribution

Divestment of low yielding assets:

• Wholly-owned residential investments
• City offices

Continue to leverage strong joint venture relationships Emphasis on growing income & underlying profits to cover the dividend Exploit enlarged group synergies, both value creation & costs

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Synergies

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• £2.5m

Costs

• People
• Corporate
• Operations

Value creation

• Occupier reach
• Firepower
• Execution capabilities

Operational highlights

Operational highlights

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(1) Post distribution portfolio sales announced 4 June 2013 for £247.56m (2) Investment portfolio as at 31 March 2013, excluding developments and residential (3) Post distribution portfolio sale 11.1 years to first break; 31 March 2013: 11.6 years to expiry, 10.8 years to first break

Portfolio valuation £1.2bn, up £20.3m Total property return 8.0% vs IPD All Property 3.0% Topped up initial yield 6.4% – post period end 6.6%(1) (2012: 5.6%) Occupancy(2) 95% – post period end 99%(1) (2012: 94%) Like-for-like rental growth +3.5% (2012: -6.1%) WAULT 11.9 years(2) (2012: 9.4 years)

Operational highlights since merger

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Acquired Saturn portfolio of 6 retail parks for £92.4m, yield 7.8% Acquired Primark Distribution Centre, Thrapston for £60.5m, yield 6.4% £59.6m of sales agreed across 116 residential units One Carter Lane: 67,400 sq ft in solicitors’ hands (58% of target income) Tamworth letting: 336,500 sq ft (57% of area) for £1.6m p.a. Disposal of 11 distribution centers for £247.6m (£138.4m net share)

• 10 JV assets with Green Park + 1 wholly-owned former Focus DC in Tamworth

Investments

Investment Strategy

Distribution London Retail

Coventry Carter Lane, London Leicester Primark, Thrapston Tesco, Harlow Clerkenwell Quarter, London Bishop Auckland

Opportunity driven Strong cashflow Retailer led Income Asset management Short-cycle development

Unilever, Leatherhead 12

In solicitor’s hands

Investment activity in the period

£397m(1) of acquisitions – average yield 7.4%

• 19 properties
• WAULT 12.9 years

£489m(1) of disposals – average yield 5.9%

• 18 properties
• WAULT 6.8 years

(1) LondonMetric net share

Saturn – 6 retail parks

Purchase price £92.4m, yoc 7.8% 393,200 sq ft, WAULT 10.2 years

Retail

Primark, Thrapston

Purchase price £60.5m, yoc 6.4%

• c. 20 year lease with 1.5% indexation

Distribution

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£400m +

Sold Distributi

• n

Portfolio ‘Piccolo’

Acquired Primark £60.5m Acquired Saturn £92.4m £100m tender

• ffer

Merger complete

Transactions summary since merger

25 January 20 February

27 March Post period end

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18 February

JV distrib’n portfolio sale £109.1m(1) Tamworth disposal £29.3m Residential sales £59.5m(2) Acquisitions in solicitors’ hands £70m

(1) Gross disposal proceeds £218.2m (2) Across 116 units: Clerkenwell Quarter 57 units for £32.1m, residential investment portfolio 59 units for £27.5m includes Highbury, Battersea and Stockwell

Distribution portfolio disposal income hurdle £5.1m(1)

(1) Reflects net income of distribution portfolio sale. Recent Tamworth letting is not including as rent does not start flowing until after the disposal completes.

Investment pipeline

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Acquisition 1 £13m Acquisition 2 £22m Acquisition 3 £35m

Asset management activity

Delivering the strategy

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At merger Today(1)

(1) Including post period end acquisitions, disposals and deals in solicitors’ hands

Valuation surplus: £20.3m

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Outperforming IPD

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Occupier contentment

14 new lettings, 4.8% ahead of anticipated rental levels

• WAULT 12 years(1)
• Including lettings across the legacy portfolio

12 re-gears/renewals at 7.5% ahead of previous passing rents 3.5% like-for-like rental growth 19% of rental income subject to fixed uplifts 288 residential occupier transactions 2.6% ahead of previous passing rent

(1) Weighted average lease term for new lettings, 10.0 years to first break

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Status of developments

(1) Includes recently completed Bishop Auckland Phase I (92% let, 5% in solicitors’ hands, 3% to let) and Cannock (84% let, 16% in solicitors’ hands) (2) Anticipated rental income at Carter Lane, London of £6.2m, of which £2.6m or 42% is to let

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Development activity

Rent roll YOC on PC Location Sector Sq ft Description (£m) CTC Total (%) Existing developments Berkhamsted Retail 22,500 Food store development 0.6 4.4 7.6 7.9 Bristol Retail 61,400 External alternations 0.6 0.5 8.6 7.3 Committed Developments Carter Lane Office 133,000 Refurbishment 6.2 29.5 106.5 5.9 Conditional Developments BA Ph II Retail 27,000 New Open A1 development 0.4 3.8 4.5 9.3 Leeds Retail 105,000 New Open A1 development 2.8 21.7 35.5 8.0 St Austell Retail 171,000 New Open A1 development 2.3 29.6 29.6 7.9 Total 519,900 12.9 89.5 192.3 6.8

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Costs (£m)

Financial results

Income statement

FY to 31 March (£m) 2013 2012 2013 2012 Profit before tax & exceptional items 45.6 32.7 39.9 19.5 Net rental income 39.4 48.1 29.2 35.5 Share of JV net income 5.3 5.5 4.5 5.3

Management fees & other income

10.6 6.4 10.4 6.4 General corporate costs (15.6) (14.2) (11.0) (9.5) Net finance costs (13.7) (14.7) (11.8) (13.4) Underlying profit 25.9 31.0 21.3 24.3 Valuation movements(3) 19.7 1.7 18.6 (4.8)

(1) 12 months of London & Stamford and 12 months of Metric Property (2) 12 months of London & Stamford and two months of Metric Property for 2013, London & Stamford only for 2012 (3) Includes revaluation, derivative movements and profit/(loss) on sales

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Pro-forma Enlarged group(1) Statutory format(2)

Growing income – post distribution sale

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(1) P&L rental income based on 12 months of London & Stamford and 12 months of Metric Property (2) Contracted annualised rent roll (3) Includes £0.7m of contracted development income and £0.4m of contracted letting income (4) Includes £0.7m for Ipswich acquisitions and £5.7m of deals in solicitors’ hands

(1) (2) (3) (4)

Dividend cover – post distribution sale

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(1) Based on 12 months of London & Stamford and 12 months of Metric Property (2) Full year Metric Property and post merger contracted income from acquisitions

(2) (1)

Balance sheet

At 31 March (£m) 2013 2012 Property portfolio (incl trading properties) 990.6 663.9 Joint ventures 120.9 161.6 Cash 37.6 136.9 Bank debt (464.5) (322.8) Other net assets (7.9) (8.7) Net assets 676.7 630.9 EPRA adjustments 10.6 12.7 EPRA net assets 687.3 643.6 EPRA NAV per share 109p 119p Exceptional items 38.9 1.8 Adjusted net assets 726.2 645.4 Adjusted NAV per share 116p 119p LTV 43% 34%

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Movement in net assets

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(1)

(1) Merger with Metric: £11.9m, internalisation of management contract £14.4m, impairment of Meadowhall mark to market £23.2m (2) Metric merger: £190.3m, tender offer: -£100.7m (3) Add back exceptional items of £49.5 less EPRA adjustments of £10.6m

(2) (3)

Debt financing – post distribution sale

Debt £573m, now £514m (2012: £499m)

• £76m through merger

Net gearing 43%, now 38% (2012: 34%) Cost of debt 3.6% in the year (2012: 4.1%) Term to maturity 3.0 years (2012: 3.0 years(1)) Joint venture equity commitments: £296m

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(1) Excludes net share of joint ventures

Outlook

Retail market

UK has too many shops – consumers continue to polarise Rents remain under pressure, especially on ‘formerly’ prime assets Capital expenditure is becoming a necessity, not an option! Lease expiries, not administrations are now the chief risk

• 51% of high street and shopping centre leases to expire by 2015

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Retail market

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Growing Competitively Threatened Rightsizing

Distribution market

Distribution warehouses will be driven increasingly by the needs

• f e-tailing

Retailers are being forced to reconfigure their supply chains to cater for multi-channel retailing Warehouse take-up by retailers forecast at 50.0m sq ft over next five years, up 20% over last five years(1) Supply of new distribution space (8.3m sq ft) at a historic low There are supply shortages of Grade A space

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(1) Source: Savills

Market outlook

Strong overseas focus on London: commercial & residential Long & strong income is becoming very ‘well bid’ Increasing investor appetite for risk across all sectors helping yields Good secondary could outperform prime in many sub-sectors Financial pressures and Life expiries continue creating more

• pportunities

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Summary

Targeting a run rate to cover the dividend by year end 2013/2014 Rebalancing of portfolio

• Deep occupier appeal
• Utilise first class occupier relationships
• Leverage firepower, including joint venture relationships
• Improved yields and longer lease lengths

Lower operating costs Stock selection, asset management initiatives and accretive development opportunities

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Appendix

Investment activity

• No. of

Acquisitions Sector assets Date Cost (£m) NIY (%) To expiry To 1st break Thrapston Distribution 1 Mar 2013 60.5 6.4 19.5 19.5 Saturn portfolio Retail 6 Jan 2013 92.4 7.8 10.2 9.1 Clerkenwell Quarter Residential 1 Dec 2012 45.7 — — — Marlow International Office 1 Jul 2012 50.2 8.9 11.2 7.0 MIPP JV Retail 6 Various 54.5(1) 7.1 17.4 17.4 Leatherhead Office 1 Jun 2012 61.2 6.9 10.9 10.9 Retail parks Retail 2 Various 10.3 7.4 9.8 9.8 Moore House Residential 1 Jun 2012 147.1(2) — — — Ipswich – post period end Retail 1 May 2012 10.4 6.5 11.2 11.2 Subtotal 20 532.3(3) 7.4 12.8 11.8 Disposals Proceeds (£m) Triangle portfolio Distribution 17 Apr 2012 265.0(4) 6.6 4.1 4.1 Meadowhall SC Retail 1 Oct 2012 762.5(5) 5.1 9.5 9.5 Subtotal 18 1,027.5(6) 5.9 6.8 6.8

(1) LondonMetric 33.3% share: £18.2m, (2) LondonMetric 40% share: £58.9m, (3) LondonMetric share: £407.6m, (4) LondonMetric 94% share: £249.1m (5) LondonMetric 16% share: £239.4m, (6) LondonMetric share: £488.5m

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WAULT

Asset management – planning gains

Scheme Name Location Sector Sq ft Consent Comment Longwell Green(1) Bristol Retail 2,500 Open A1 Pod unit & external alterations Haven’s Head RP Milford Haven Retail 15,000 Open A1 Relaxation of consent Airport RP Coventry Retail 15,000 Bulky External alterations & relaxation Channon’s Hill RP Bristol Retail 10,000 Open A1 External alterations & relaxation

Post period end

Tindale Cresc Ph I Bishop Auckland Retail 4,100 A3 For Pod units Pierpoint RP King’s Lynn Retail 9,000 Open A1 Unit extension Damolly RP Newry Retail 9,700 Open A1 Change of use Total 65,300

(1) MIPP JV

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Planning submitted

Scheme Name Location Sector Sq ft Consent Comment Initiative Alban RP Bedford Retail 2,500 Open A1 Pod unit Development Haverhill RP(1) Haverhill Retail 6,000 Bulky New unit Development Pier Point RP King’s Lynn Retail 9,010 Open A1 Extension Asset management Nottingham Rd RP Mansfield Retail 1,875 Open A1 Pod unit Development Coyte Farm St Austell Retail 171,000 Open A1 New development Development

Post period end

Faustina RP(1) Londonderry Retail 20,000 Open A1 Extension Development Faustina RP(1) Londonderry Retail 3,500 Open A1 Pod unit Development Total 213,885

(1) MIPP JV

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Developments – timing & CTC

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(1) Based on financial year ended 31-Mar (2) CTC = Cost to complete (3) YOC on PC = yield on cost on practical completion (4) Conditional on receiving planning consent

Occupier activity

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Retail portfolio

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(1) 10 properties are held in MIPP JV (2) LondonMetric 33.3% share £30.6m

Distribution portfolio

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(1) Tesco Distribution Centre, Harlow is held in LSP Green Park Distribution JV (2) LondonMetric 50% share £12.75m

Office portfolio

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Residential portfolio

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(1) Moore House is held in LSP London Residential Investments JV (2) LondonMetric 40% share £76.8m

Development portfolio

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Valuation contributions by sector

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Top 10 tenant exposure(1)

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(1) Gross rental income based on contracted rents (2) Market capitalisations as at 30 May 2013 (3) Market capitalisation of parent Associated British Foods (4) Market capitalisation of parent Kingfisher

Debt facilities

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(1) RBS Retail revolver: Bishop Auckland, Mansfield, Loughborough, Milford Haven, Wick, Congleton, Scarne, King's Lynn, Bedford (Alban Retail Park & Midland Road), Sheffield, St Albans, Hove & Cannock (2) Eurohypo Retail term loan: Launceston, Coventry & Newry (3) Distribution JV: Harlow (4) MIPP JV: Ashford, Bristol (Longwell Green), Camborne, Haverhill, Inverness, Lichfield, Londonderry, Nottingham, Orpington, Swindon

(1) (2) (3) (4)