European Property Tour. September 2013

Transcription

1 European Property Tour September 2013

2 Contents Page The journey to date 03 Income focused property investment 04 Relative positioning in UK & SA markets Addressing market perceptions 12 Corporate and portfolio objectives Property portfolio Financial highlights Looking forward 42 Document Redefine International name and P.L.C. description here 2

3 Market Cap m The journey to date Corovest International Real Estate Fund founded as an open ended property investment fund Ciref plc makes initial investment into Wichford P.L.C. Initial investment into Cromwell Property Group, Australia Redefine Properties International Ltd is listed on JSE & becomes Redefine International s largest shareholder 127.5m capital raising to strengthen balance sheet December 2009 September 2010 October Ciref plc is listed on AIM with Redefine Properties acquiring an initial 18% shareholding Redefine Properties increases shareholding in Ciref plc to over 50% Ciref plc is rebranded as Redefine International May 2006 December 2009 July 2010 August 2011 September RDI Market Cap Redefine International completes reverse takeover of Wichford P.L.C. & is admitted to Premium Segment of Official List Document Redefine International name and P.L.C. description here 3

4 Income focused property investment Portfolio and strategy focused on income within tightly defined business segments Each business segment supported by specialist and proven asset management teams Diversification provides exposure to different sources of income Ability to allocate capital to performing business segments Policy to distribute at least 90% of distributable earnings (UK REIT compliant) Targeted distribution growth of CPI +1% to 2% p.a. through sustainable expansion Development exposure to be limited but creating value through asset management is a core strategy Document Redefine International name and P.L.C. description here 4

5 Relative positioning (UK market) High yielding Helical Bar plc CLS Development Stabilised Primary Document Redefine International name and P.L.C. description here 5

6 Relative positioning (SA market) High yielding Development Stabilised Primary Document Redefine International name and P.L.C. description here 6

7 SA & UK REIT Analysis SA Market Caps (Rm) Delta Redefine Properties Hyprop Capital Resilient NEPI Fountainhead Fortress Acucap Vukile Redefine International Emira Sycom Hospitality Arrowhead Investec Rockcastle Rebosis Ascension Premium Dipula Octodec Vunani Vividend Mas Synergy Annuity Capital & Counties Growthpoint - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Intu UK Market Caps ( m) Hammerson Intu Capital & Counties Derwent London SEGRO Great Portland Shaftesbury Songbird Grainger St. Modwen Workspace Unite Hansteen Big Yellow CLS Redefine International Quintain Primary Health Helical Bar Max Safestore Mucklow LXB Retail Development Securities MedicX Assura LMS Conygar Sirius Condor Alpha Pyrenees Land Securities British Land Document Redefine International name and P.L.C. description here 7

8 Aug 2012 Aug 2012 Aug 2012 Sep 2012 Sep 2012 Oct 2012 Oct 2012 Nov 2012 Nov 2012 Dec 2012 Dec 2012 Jan 2013 Jan 2013 Jan 2013 Feb 2013 Feb 2013 Mar 2013 Mar 2013 Apr 2013 Apr 2013 May 2013 May 2013 Jun 2013 Jun 2013 Jul 2013 Jul 2013 Jul 2013 Aug 2013 Aug 2013 Share price (pence) Relative share price performance Redefine International FTSE All Share FTSE 250 FTSE 350 Real Estate % % 18.4% % Source: Bloomberg Document Redefine International name and P.L.C. description here 8

9 MedicX (n/r) LondonMetric Property Redefine PHP SEGRO Intu Properties British Land Hansteen Holdings Mucklow Safestore Hammerson Big Yellow Land Securities Development Securities Workspace Helical Bar Shaftesbury Great Portland Derwent London St. Modwen Capital & Regional Grainger2 Unite Conygar Investment Capital & Counties Alpha Pyrenees Songbird CLS LXB Retail Quintain Max Property Group Assura (n/r) Sirius Real Estate Forecast dividend yields (UK) 8% 7% 6% 5% 4% 3% 2% 1% - Source: Peel Hunt Forecasts (1 September 2013) Note: Intu dividend yield c4.9% Document Redefine International name and P.L.C. description here 9

10 Capital & Counties MedicX (n/r) Hansteen Holdings PHP Workspace Redefine Shaftesbury Derwent London St. Modwen Great Portland SEGRO Unite LondonMetric Property Big Yellow Helical Bar Land Securities Max Property Group CLS Assura (n/r) British Land Hammerson Grainger2 Intu Properties Quintain Capital & Regional Development Securities Safestore Songbird Sirius Real Estate Alpha Pyrenees Premium / (discounts) to NAV (UK) 40% 20% - (20%) (40%) (60%) (80%) (100%) Source: Peel Hunt Forecasts (1 September 2013) Note: Intu discount to NAV c(20% ) Document Redefine International name and P.L.C. description here 10

11 Songbird PHP Sirius Real Estate Grainger2 Intu Properties Helical Bar Quintain Safestore Capital & Regional CLS Redefine Unite British Land SEGRO Hansteen Holdings LondonMetric Property St. Modwen Workspace Development Securities Land Securities Max Property Group Hammerson Shaftesbury Great Portland Derwent London Big Yellow Capital & Counties Forecast gearing (UK) 180% 160% 140% 120% 100% 80% 60% 40% 20% - Source: Peel Hunt Forecasts (1 September 2013) Notes: (1) Gearing reflects net debt /equity (2) Intu gearing c98% Document Redefine International name and P.L.C. description here 11

12 Addressing market perceptions Structure too complex Redefine International to be dual listed on the JSE, dual company structure to be removed Conversion to a UK REIT Management to be internalised Diversification Focused on income returns Ability to allocate capital to performing segments Strong support from income focused investors Secondary property portfolio Portfolio quality being improved Reduced cost of capital allowing investment into higher growth assets Conversion of vacant offices to higher value uses and recycling capital Indifferent track record Global financial crisis largely past Wichford debt successfully restructured Portfolio rationalised and improved High risk Leverage reduced Portfolio improved Board and management strengthened Document Redefine International name and P.L.C. description here 12

13 Corporate objectives Short Term Complete inward listing REIT conversion Manco internalisation Senior appointments FTSE All share and FTSE 250 index inclusions ( 580m entry level for FTSE 250) EPRA index inclusion Medium Term Further reduce cost of capital Sustainable distribution growth of CPI +1% - +2% p.a. compound Share re-rating based on a sustainable dividend yield Relevant player in UK listed market Long Term Alternative sources of flexible and cost efficient capital Global player with Redefine Properties Document Redefine International name and P.L.C. description here 13

14 Portfolio objectives Stable Income Further sales of non-core assets Focus on fewer and higher quality assets with greater emphasis on the South East Reposition assets with higher value alternative uses Move into higher growth sectors or locations UK Retail Continued focus on income and occupancy protection Capital expenditure projects at Birchwood and Harrow to enhance asset quality and value Rebranding of centres and development of additional sources of income Opportunistic acquisition of good quality, high yielding centres Hotels Focus to remain on branded, limited service hotels in Greater London Capital expenditure and refurbishment programme largely complete Capitalise on management expertise Exposure to be limited to 15% - 20% of total assets Document Redefine International name and P.L.C. description here 14

15 Portfolio objectives (cont.) Europe Enhance income security through lease extensions and indexation Deliver asset management opportunities from CMC acquisition Sale of smaller non-core assets Cromwell Co-ordinate strategy with Redefine Properties Liquid currency if required for deal making Positive diversification Development opportunities Recycle capital into income producing investments Redevelop older but well located assets Obtain planning permissions for higher value alternative uses Work with tenants looking to expand Ancillary income (advertising, commercialisation, managed parking) Document Redefine International name and P.L.C. description here 15

16 Europe Stephen Oakenfull

17 Europe The European portfolio continues to be a highly cash generative investment supported by strong covenants on index-linked leases Gross rental income Switzerland 1.7m The Netherlands 2.2m 6.1% 8.3% VBG restructuring completed delivering 19% cash on cash returns CMC acquisition successfully completed Portfolio quality enhanced through recent acquisitions and the sale of smaller non-core assets Cashflow growth supported by inflation-linked leases Lease expiry profile Gross rent ( m) % Germany 23.1m Document Redefine International name and P.L.C. description here 17

18 UK Stable Income Stephen Oakenfull and Vedran Kosoric The Observatory, Chatham

19 UK Stable Income The portfolio has and continues to be restructured to provide exposure to high quality covenants, indexlinked leases and an increasing focus on Greater London and the South East Gross rental income Occupancy increased to 96.8% despite challenging market Evidence of increased occupier demand from small to medium private sector occupiers Inflation remains above target supporting cashflow growth from index linked leases Opportunities to redevelop well located assets and recycle capital in progress Other 4.2m 29.5% Lease expiry profile Gross rent ( m) % Government 7.4m Kwik Fit 1.1m 7.5% Petrol Filling Stations 1.5m 10.6% Document Redefine International name and P.L.C. description here 19

20 Harrow residential conversion Planned conversion of vacant office site to residential led mixed use scheme Site value enhanced through land assembly and successful planning application for 238 private residential units and approximately 30,000 sqft of commercial space Partnered with Metropolitan Housing Trust to agree the provision of 49 affordable units Document Redefine International name and P.L.C. description here 20

21 St Anne House, Croydon Former Home Office government building and legacy Wichford asset originally built in 1960 s Asset management strategy to convert now obsolete offices into hotel and residential units Secured planning permission and agreed 20 year lease with hotel operator and 10m pre-sale of residential apartments St Anne House Westfield / Whitgift Centre Note: All pictures are architect's impressions Document Redefine International name and P.L.C. description here 21

22 UK Retail Mike Watters and Nick Gregory Grand Arcade Shopping Centre, Wigan

23 UK Retail Improvements in key operating metrics Continued investment and asset management initiatives have been reflected in income and value stability Gross rental income Harrow 4.2m Valuations stabilised +1.0% vs IPD Shopping Centres (-4.9%) Net income +1.58% vs IPD (-1.9%) Footfall (-2.6%) vs Experian (-3.8%) Sales +2.0% (BRC index +1.1%) Occupancy 95.9% up 0.7% 8 new leases signed +14,000 sqft net increase Key letting to Nandos at St Georges, Harrow Crewe 0.9m 4.5% 20.6% 36.1% Wigan 7.4m Lease expiry profile Gross rent ( m) 8.1 Seaham 1.4m 6.7% 3.9 Birchwood 2.6m 12.9% 19.3% Coventry 3.9m Document Redefine International name and P.L.C. description here 23

24 UK Retail portfolio St George s Shopping Centre, Harrow Valued at 57.5 million (pre refurbishment/re-letting) 212,000 sq ft Vue Cinemas, Fitness First, H&M, Boots, T.K. Maxx, Prezzo, Pizza Express, Nandos Leisure focused retail scheme Grand Arcade Shopping Centre, Wigan Valued at 76.4 million 470,000 sq ft Debenhams, M&S, BHS, Monsoon, Next, T.K. Maxx Dominant city centre modern scheme West Orchards Shopping Centre, Coventry Valued at 37.0 million 210,000 sq ft Debenhams, M&S, Body Shop, WH Smith, KFC Dominant city centre scheme Document Redefine International name and P.L.C. description here 24

25 UK Retail portfolio (cont) Birchwood Shopping Centre, Warrington Valued at 29.2 million 400,000 sq ft ASDA, Aldi, Argos, Home Bargains, New Look, QVC Retail park Byron Place Shopping Centre, Seaham Valued at 17.1 million 115,000 sq ft ASDA, Argos, Farmfoods, Peacocks, Wilkinson Retail park Delamere Place Shopping Centre, Crewe Valued at 9.2 million 180,000 sq ft BHS, Arriva Redevelopment Document Redefine International name and P.L.C. description here 25

26 Seaham Dominant value and convenience centre anchored by ASDA Scheme five years old with opportunities for further investment Retail demand has driven Redefine International to progress development extension Currently in pre-application discussions with the supportive Durham Council Options to extend within existing ownership Document Redefine International name and P.L.C. description here 26

27 The changing face of retail The retail environment is undergoing structural change but is definitely not dead The internet has not destroyed retail, rather it has changed consumer behaviour The perfect storm Years of carefree spending in the 1980s s and careless spending in the 2000s pushed the retail investment and development market to unsustainable levels This was followed by the perfect storm with worldwide economic problems, volatile commodity prices, negative UK wage inflation, changing consumer habits, high consumer debt and retailer insolvencies (often driven by poor corporate management rather than a vulnerable retail model) Understanding the impact of online retailing The internet is fundamentally an analytical past time and shopping is an emotional and social experience The most successful retailers have embraced the omnichannel experience and use it to drive sales e.g. John Lewis and Apple Pure-play (internet only) retailers are finding a world without bricks and mortar limits sales, i.e. these retailers will start to acquire physical space to grow their brands But retail from a consumer and investor perspective remains an attractive proposition if the strategy is correct Document Redefine International name and P.L.C. description here 27

28 Commercialisation Leveraging our experience to introduce high quality retail operations and complimentary uses Unique modular kiosks to reduce capex risk in the event of tenant default High quality commercialisation to drive additional income Before After Document Redefine International name and P.L.C. description here 28

29 Focused capital expenditure Focused capital expenditure to encourage retailers to invest in their stores Combined with a tenant and marketing strategy to drive sales turnover Strategies targeted at improving retailer sales increasingly important in relation to rental growth Economic use of capex to deliver the look and feel of a new shopping centre New double height shop fronts New ceilings, lighting, pilasters and entrance to create a fresh look Soft re-launch in Autumn 2013 including a well researched new brand to ensure the correct tone of voice Document Redefine International name and P.L.C. description here 29

30 Hotels Mike Watters Holiday Inn Express, Southwark

31 Hotels Focused strategy on limited service branded hotels in London to capitalise on long-term growth in business and leisure demand Gross rental income Reading 1.0m 9.4% Portfolio strengthened with acquisition of Earls Court Holiday Inn Express Marked increase in trading performance since June 2013 New InterContinental Group open lobby concept completed at Holiday Inn Brentford Lock Ongoing opportunities to leverage the management platform Current acquisition opportunities limited due to pricing and limited availability Development of new product and extension of existing hotels 90.6% Greater London 10.1m Brentford Lock, Holiday Inn Document Redefine International name and P.L.C. description here 31

32 Hotel portfolio Holiday Inn Brentford Lock Valued at 25 million 61,064 sq ft rentable per sq ft 134 bedrooms and 12,743 sq ft meeting room area Holiday Inn Express Earls Court Valued at 27.0 million 19,957 sq ft rentable per sq ft 150 bedrooms and 226 sq ft meeting room area Holiday Inn Express Limehouse Valued at 23.3 million 23,476 sq ft rentable per sq ft 150 bedrooms and sq ft meeting room area Document Redefine International name and P.L.C. description here 32

33 Hotel portfolio (cont) Holiday Inn Express Southwark Valued at 16.4 million 38,373 sq ft rentable per sq ft 88 bedrooms Holiday Inn Express Park Royal Valued at 24.0 million 61,860 sq ft rentable per sq ft 108 bedrooms and 1,371 sq ft meeting room area Holiday Inn Express Royal Docks Valued at 22.4 million 49,094 sq ft rentable per sq ft 136 bedrooms and 190 sq ft meeting room area Document Redefine International name and P.L.C. description here 33

34 Hotel portfolio (cont) Crowne Plaza, Reading Valued at 11.9 million sq ft rentable per sq ft 122 bedrooms and 386 sq ft meeting room area Document Redefine International name and P.L.C. description here 34

35 Cromwell Mike Watters

36 Cromwell Cromwell has delivered exceptional income and capital growth and remains well positioned to outperform their A-REIT peer group Record operating profit for FY2014 of A$102.4m FY2014 EPS guidance of 8.3 cents (+8.8%) FY2014 DPS guidance of 7.5 cents (+3.4%) Gross rental income Other 0.6m Gearing reduced to 46% LTV A$641m of acquisitions provide significant opportunities Recent ASX 200 inclusion New South Wales 3.8m 20% 3% 28% Queensland 5.3m Opportunity to expand funds management Redefine Group to maintain a 25% - 30% shareholding 23% ACT 4.4m 25% Victoria 4.7m Notes: (1) Cromwell data reflects share of underlying Cromwell portfolio as at 28 February 2013 Document Redefine International name and P.L.C. description here 36

37 Dec 2009 Jan 2010 Feb 2010 Mar 2010 Apr 2010 May 2010 Jun 2010 Jul 2010 Aug 2010 Sep 2010 Oct 2010 Nov 2010 Dec 2010 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011 Aug 2011 Sep 2011 Oct 2011 Nov 2011 Dec 2011 Jan 2012 Feb 2012 Mar 2012 Apr 2012 May 2012 Jun 2012 Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 Jan 2013 Feb 2013 Mar 2013 Apr 2013 May 2013 Jun 2013 Jul 2013 Aug 2013 Cromwell Share Price AUD Cromwell Identified as an undercapitalised company at the bottom of the cycle with a strong management team Provided strategic support as a cornerstone shareholder and underwriter to raise growth capital Remain a strategic shareholder (13.7%) together with parent company (12.4%) 1.40 Cromwell Cromwell (GBP) ASX 200 Closing Share price (AUD) +40.5% since entry Share price (GBP) +49.2% since entry 1.20 Initial acquisition of 12.97% at $0.70 Supported rights issue at $0.71 Share price of $1.04 as at 6 September 2013 Supported capital raising at $ Supported placement and rights issue at $0.72 $0.75 Supported entitlement offer at $0.68 Sale of 84.5m securities between $0.90 and $ Document Redefine International name and P.L.C. description here 37

38 Financials

39 HY2013 results highlights Operating HY2013 FY2012 Change Occupancy (by area) 95.9% 95.5% ppt Indexation 58.4% 52.0% ppt WAULT (1) (years) (0.1) Income HY2013 HY2012 Change Distributable earnings ( m) % Distributable EPS (32.7%) Dividend per share (29.8%) Financial Position HY2013 FY2012 Change Adjusted NAV per share % Group LTV 51.2% 81.7% (30.5) ppt Successful 127.5m capital raise and improved capital structure Improvements in key operating metrics Distributable EPS ahead of post capital raising consensus Distributable earnings delivered off a substantially stronger capital base Investment of capital raising proceeds yet to be fully reflected Notes: (1) Excluding the Delta portfolio EPS figures reflect 962,855,467 ordinary shares outstanding as at 28 February 2013 following the capital raise Document Redefine International name and P.L.C. description here 39

40 Debt position Group LTV reduced to 51.2% (43.6% excluding the Delta facility) See through LTV including share of JVs reduced to 61.9% (56.0% excluding the Delta facility) Debt maturity profile significantly enhanced to 8.2 years (excluding the Delta facility) Weighted average interest rate reduced to 4.3% (5.0% excluding the Delta facility) 99.9% of debt at fixed or capped rates Debt maturity profile ( m) m remaining Delta facility to be sold down (non-recourse) Discussions underway to extend or refinance 173.2m of debt maturing in FY FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023+ Note: The Delta facility remains non-recourse to the Group and is subject to an agreed sales process which will be utilised to repay debt Document Redefine International name and P.L.C. description here 40

41 Lease expiry profile Strong income visibility Indexation increased to 58.4% of portfolio rental income Exposure to regional offices and Government occupiers significantly reduced Lease expiry profile Gross income excl. Cromwell and Delta ( m) 35.1 UK Stable Income UK Retail Europe Hotels % of total 48.3% 17.5% 8.3% 5.4% 6.2% 4.1% 3.2% 2.4% % 2.3% Note: Rental income reflects 100% of property assets including joint ventures Document Redefine International name and P.L.C. description here 41

42 Looking Forward Finalise proposed corporate restructuring including inward listing Progress conversion to a REIT and management internalisation Continue to improve the quality of the portfolio and long-term income security and growth potential Selective redevelopment and investment into existing assets to support income growth Opportunistic approach to new acquisition opportunities Continue to recycle capital across the portfolio into performing sectors Manage risks (increasing interest rates, asset price bubbles) Document Redefine International name and P.L.C. description here 42

43 Contacts Mike Watters Chief Executive Officer, RIPML t: +44 (0) e: Redefine International P.L.C. Top Floor, 14 Athol Street Douglas Isle of Man IM1 1JA t: +44(0) Stephen Oakenfull Chief Operating Officer, RIPML t: +44 (0) e: Redefine International Property Management Limited 2nd Floor, 30 Charles II Street London SW1Y 4AE t: +44 (0) Document Redefine International name and P.L.C. description here 43

44 Additional information Document Retail Presentation name May and 2013 description here 44

45 Business segments portfolio metrics Group Hotels Gross asset value 1,099.4m Gross asset value 150.2m Gross rent 91.4m Gross rent 11.1m ERV 87.2m ERV 11.1m Ave. rent per sq. ft Ave. rent per sq. ft 38.6 Net intial yield (%) 7.3 Net intial yield (%) 7.0 Occupancy (by area) 97.0% Occupancy (by area) 100.0% Total area (sq. ft '000) 6,389 Total area (sq. ft '000) 288 No. of assets 150 No. of assets 7 WAULT 8.5 WAULT 10.3 UK Stable Income Europe Gross asset value 174.8m Gross asset value 372.6m Gross rent 14.1m Gross rent 27.0m ERV 13.0m ERV 23.5m Ave. rent per sq. ft 9.0 Ave. rent per sq. ft 12.9 Net intial yield (%) 7.5 Net intial yield (%) 6.6 Occupancy (by area) 96.4% Occupancy (by area) 98.6% Total area (sq. ft '000) 1,562 Total area (sq. ft '000) 2,092 No. of assets 74 No. of assets 37 WAULT 9.2 WAULT 7.1 UK Retail Cromw ell Property Group Gross asset value 226.3m Gross asset value 175.4m Gross rent 20.5m Gross rent 18.7m ERV 20.9m ERV n/a Ave. rent per sq. ft 12.8 Ave. rent per sq. ft n/a Net intial yield (%) 7.5 Net intial yield (%) 8.4 Occupancy (by area) 95.9% Occupancy (by area) 94.9% Total area (sq. ft '000) 1,602 Total area (sq. ft '000) 846 No. of assets 6 No. of assets 26 WAULT 11.0 WAULT 6.0 Note: All figures are pro-forma reflecting the portfolio at 28 February 2013 and adjusting for subsequent acquisitions or disposals Document Redefine International name and P.L.C. description here 45