Hansteen. Half Year Results to 30 June Castrop-Rauxel, Germany

Transcription

1 Hansteen Half Year Results to 30 June 2016 Castrop-Rauxel, Germany

2 Introduction Hansteen - Pan European Real Estate Investment Trust (REIT) Pan European REIT Five countries Regional teams in 15 offices High yielding industrial property Yield on passing rent 7.6% Topped up EPRA NIY 6.7% Avondale, UK Reversionary yield 9.3% Property portfolio of 1.67 billion Rent roll of million pa from 41.4 million sq ft 5,270 tenants High and realised returns All dividends well covered by Normalised Profits Holhauser Strasse, Germany Saltley, West Midlands 2

3 Record Half Year Results Normalised Income Profit ( NIP ) increased by 28.1% to 29.2 million (H1 2015: 22.8 million) Normalised Total Profit ( NTP ) of 30.8 million (H1 2015: 30.1 million) Adjusted EPRA NAV per share increased to 120p (31 December 2015: 111p) November interim dividend increased by 4.8% to 2.2p per share (November 2015: 2.1p per share) Refinancing of Netherlands portfolio with new 145 million five-year facility Valuation increases in all regions 1.0% or 15.5 million on the attributable portfolio Post 30 June: AIF ownership increased to 100% through acquisition of remaining 14.4% of units for 39.5 million and refinanced UK portfolio with new five-year loan facility of 330 million Bordesley Green, Midlands, UK 3

4 Overview Croft Road, Newcastle Under Lyme, UK 4

5 Why Light Industrial? Consistently outperformed office and retail over the longer term Most flexible and economical commercial property type with widest occupational audience Recognised winner from growth in internet retailing Fundamental value dynamics strong Opportunities for adding value in low growth environment In scale, industrial property produces high and robust income Amersfoort, Netherlands Bellway, Newcastle Waalwijk, Netherlands 5

6 Hansteen returns underpinned by high income yield Yield on property - 7.6% Misconceptions about the Hansteen high yield Leakage? Works on property? Growth? Lease profile? 6

7 Question: Does leakage negate Hansteen s high yield? Hansteen: 5,270 tenants, short leases, high vacancy, multi jurisdiction Requires active asset management (15 offices, detailed hands-on approach) IMPORTANT YIELD IS THE NET INCOME AFTER ALL COSTS H1 results H1 results annualised Return on Market Cap Return on NAV Total Rent Leakage: Property costs (7.9) (15.8) Admin costs (11.7) (23.4) less 3 rd party fees Total leakage (17.9) (35.8) Ungeared Net operating income % 5.7% Interest (12.7) (25.4) Geared Net Income Profit (NIP) % 7.2% 7

8 Hansteen 1.5% 2.8% 3.2% 3.8% 3.6% 5.0% 4.7% 4.6% 4.6% 4.6% 4.3% 4.3% 6.8% Question: Does leakage negate Hansteen s high yields? 7.0% Net income return on a share purchased 1 Jan % 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 8

9 Hansteen 1.3% 1.7% 2.1% 2.1% 2.1% 2.0% 2.4% 2.9% 2.9% 2.8% 3.4% 3.2% 4.9% 5.1% Question: Does leakage negate Hansteen s high yields? 6.0% Earnings per share all REITS % 4.0% 3.0% 2.0% 1.0% - 9

10 Question: Do works on property negate Hansteen s high yields? Works on property consist of two elements: Repairs and maintenance: paid for by tenants paid for by Hansteen included in total leakage 3.0 million (annualised based on H1 16) Capital works: added to book cost then revalued at end of period think of spend equivalent to acquiring additional property run rate c. 11 million (annualised based on H1 16) breakdown of capex: 20% new building development 80% adding rent, ERV and value Cash required but adding to rent, ERV and value Veghel, Netherlands Ridderkerk, Netherlands 10

11 Question: Does Hansteen s high yield sacrifice future growth? Earnings on share purchased 1 Jan 2012 Grown 60%: % % % % % Hansteen s levers for earnings growth: rental growth and occupancy improvement on existing portfolio growth generated from CapEx property acquisitions at higher yields than sales 11

12 Question: Does Hansteen s lease profile mean high yield is fragile? High tenant retention level Robust like-for-like rent performance (annual growth ranging from 0.5% to 4% of the rent roll) IPD outperformance of industrial Bergkamen, Germany 12

13 2016 Half Year Results Earnings Robust, high and growing Dividend Unbroken, progressive and well covered Bremen, Germany Saltley Business Park, Midlands, UK 13

14 Half Year Results Profit and loss account million 30 June June 2015 Rent Cost of sales (5.8) (6.3) Gross Profit Management fees Share of Associates Income Administration (9.7) (9.2) Interest (9.9) (9.0) Normalised Income Profit Profit on sales Other Normalised Total Profit NIP per share 3.9 p 3.3 p NTP per share 4.2 p 4.4 p Diluted EPRA EPS 3.4 p 0.4 p Dividends 2.2 p 2.1 p 14

15 Half Year Results Balance Sheet million 30 June December 2015 Investment Property 1,224 1,061 Trading Property ,234 1,072 Associates share of NAV ,491 1,333 Other Assets/Debtors Cash ,570 1,432 Debt (615) (538) Other liabilities / creditors (91) (88) (706) (626) IFRS NAV 864 (115p) 806 (105p) MTM on convertible bond Deferred tax and other adjustments Adjusted EPRA NAV 1,013 (120p) 955 (111p) 15

16 Half Year Results EPRA NAV bridge 7p (3p) 120p EPRA IFRS 3p 2p Dec 2015 NAV 111p 105p 111p NTP net of tax 3p 4p Property revaluation 2p 2p FX net of hedging 7p 7p Dividend (3p) (3p) Other - 1p Dec 2015 EPRA NAV NTP net of tax Property revaluation FX net of hedging Dividend Like-for-like June 2016 EPRA NAV June 2016 NAV 120p 116p 16

17 Post Balance Sheet Events AIF ownership increased to 100% through acquisition of remaining 14.4% of units for 39.5 million Immediate NAV enhancement of circa 3.5 million reflecting performance fee on those units Equivalent property purchase of 62.9 million at an 8.0% yield on the passing rent Some savings on admin and interest costs Refinanced UK portfolio with new five-year loan facility of 330 million 280 million drawn Replaces 95 million RBS facility and million RBS facility in AIF Cost of debt reduced to 2.7% (including fees) Saltley Business Park, Midlands, UK 17

18 Proforma adjustment for AIF transaction Balance sheet - million 30 June 2016 AIF adjustment Proforma Investment Property 1, Investment in Associates 257 (257) Cash , , ,731 Debt (615) (185) (800) Other liabilities (56) (8) (64) (671) (193) (863) IFRS NAV

19 Half Year Results Balance sheet analysis Position post UK refinancing in July 2016: Borrowings NDV 44.9% NDV excluding convertible 38.2% All-in cost 3.2% Total swapped 46% average rate 0.68% Total capped 16% average rate 1.17% Total fixed (convertible) 11% rate 4.0% Total floating 27% Alfred Nobel Straase, Germany Dormagen, Germany Convertible 100 million convertible bond. Conditions for convert not met during H Current convert rate of 91.35p (92.8 million shares) Adjusted EPRA NAV includes dilution of 4p per share Dreiech, Germany See appendix for details 19

20 Half Year Results Currency hedging 1. Net assets in Sterling - 45%, Net assets in Euros - 55% 2. Balance sheet hedge expired 30 June 2016 and not renewed. Euro debt reduces currency exposure but no additional hedging. 3. Continue to hedge short term euro net income (see appendix for details of current instruments) Radway Green, UK 20

21 Property Performance Kenfig Industrial Estate, Port Talbot, Wales 21

22 Property Performance Portfolio summary post AIF consolidation No. Acres Built Area Vacant Area Passing Rent Value Yield Reversionary sqm Euros Sterling Euros Sterling Yield m m m m UK 299 1,494, % % 9.4% UK land Germany 104 1,577, % % 8.9% Netherlands, Belgium & France , % % 11.8% Total Wholly owned ,848, % , , % 9.3% Exchange rates: June 2016 =

23 Property Performance Statistics at 30 June 2016 Rent p.a. Yield Passing rent m 7.6% Contracted rent m 7.9% ERV m 9.7% EPRA topped up net initial yield m 6.7% Number of tenants: 5,270 Average rent: 24,000 per annum No tenant > 1.7% rent roll H1 like-for-like valuation increase across total portfolio: 1.0% Like-for-Like occupancy: decreased by 34,759 sq m (0.9%) Like-for-Like rent: decreased by 0.65 million (0.5%) Average rent: UK 38 per sq m ( 3.50 per sq ft) Europe 46 per sq m ( 4.24 per sq ft) 38 per sq m ( 3.50 per sq ft) 23

24 Property Performance German portfolio Year Properties Tenants Built area Vacant area Passing rent ( m) Value ( m) June ,011 1,577, % % Dec ,007 1,594, % % Yield 43% of Hansteen s property investments Berlin, Germany Like-for-like valuation increased by 9.2 million or 1.1% Like-for-like occupancy decreased by 37,053 sq m Like-for-like rent down 1.5 million Dormagen, Germany Both rent and occupancy up in July 2016 One property sale for 8 million - profit of 1 million over 31 December valuation and 3.1 million over cost Neuss, Germany 24

25 Property Performance UK portfolio Excluding 49.2 million of development land: North Tyne, UK Year Properties Tenants Built area Vacant area Passing rent ( m) Value ( m) June ,754 1,494, % % Dec ,776 1,508, % % 40% of Hansteen s property investments Yield Like-for-like valuation increased by 5.2 million or 0.8% Like-for-like occupancy increased by 9,765 sq m Like-for-like rent up 1.0 million Nine sales for 7.3 million profit of 1.3 million over 31 December valuation Kings Court, Tyneside, UK 25

26 Property Performance Benelux and France portfolio Year Properties Tenants Built area Vacant area Passing rent ( m) Value ( m) June , % % Dec , % % Yield 17% of Hansteen s attributable property investments Like-for-like valuation increased by 4.7 million or 1.4% Like-for-like rent decrease of 0.5 million Utrecht, Netherlands Like-for-like occupancy down by 7,472 sq m Ridderkerk, Netherlands 26

27 Outlook Bremen, Germany 27

28 Outlook Earnings out performance will continue Strong occupational demand and rental growth Efficiencies from consolidation in the UK Since 30 June 2016, favourable currency movement continued Longer term the sector still has room for yield compression Viersen, Germany Hellerhof Parc, Germany 28

29 Appendix Dietzenbach, Germany 29

30 Half Year Results Associates Profit & Loss - million Saltley AIF Total Hansteen 100% 100% 100% Share Rent Cost of sales (0.02) (2.5) (2.5) (2.1) Administration (0.04) (2.4) (2.4) (2.0) Interest (0.12) (3.3) (3.4) (2.8) Normalised Income Profit Profit on sales / other income Normalised Total Profit Hansteen Balance sheet - million Saltley AIF share 100% 85.6% Investment Property Cash Debt - (138.1) (118.2) Other liabilities - (7.9) (6.8) - (146.0) (125.0) IFRS NAV Hansteen share

31 Appendix Debt and cash at 31 st July 2016 million 30 June December 2015 Germany debt Benelux debt Convertible Total Euro debt Total Euro debt in Sterling UK debt Total debt Cash Property 1,671 1,072 Net LTV 44% 41% Net LTV assuming convertible converts 38% 34% Gross average cost of borrowing 3.2% 3.6% Weighted average length to expiry 3.7 years 2.8 years 31

32 Appendix Borrowings summary at 31 st July 2016 Country Bank Debt Amount EUR Debt Amount GBP Jun-16 Dec-16 Jun-17 Dec-17 Dec-18 Dec-19 Dec-20 Dec-22 Dec-24 Dec-26 Germany Helaba 187, ,088 Feb- 19 Germany HSBC 106,075 89,387 Dec- 18 Germany HSBC 40,000 33,707 Sep- 19 Germany DG Hyp 2,482 2,091 Jun- 17 Netherlands ING 145, ,188 Jun -21 Belgium Various 5,561 4,686 Mar - 25 UK RBS 332, ,000 Jul - 21 UK RBS 23,734 20,000 Oct - 17 UK RBS- Conv. 100,000 84,267 Jul- 18 Total 942, ,413 / :

33 Appendix Hedging summary Currency hedges: Party Amount hedged Rate Sterling equivalent Maturity Date RBS 30 m m Dec 2016 RBS 33 m m Jun 2017 HSBC 35 m m Dec 2017 Total currency hedges 98 m m Interest rate hedges: Summary Rate % total Swaps % 46% Caps % 16% Fixed % Floating % Total interest rate hedges

34 Appendix Portfolio summary at 30 June 2016 No. Built Area Vacant Area Passing Rent Value Yield Reversionary sqm Euros Sterling Euros Sterling Yield m m m m UK , % % 7.5% Germany 104 1,577, % % 8.9% Netherlands, Belgium & France , % % 11.8% Total Wholly owned 264 2,815, % , , % 9.3% AIF 220 1,033, % % 9.4% Total attributable to Hansteen Total under management Total under management Dec 2015 Hansteen s attributable property investments ,699, % , , % 9.3% 484 3,848, % , , % 9.3% 494 3,885, % , , % 9.5% 452 3,647, % , , % 9.5% * Hansteen s attributable property investments is defined as the wholly owned properties plus 82.8% Exchange rates: June 2016 = Dec 2015 = of the AIF properties and 100% of Saltley. 34

35 Appendix Comparators Workspace London Metric Shaftesbury Segro Unite Intu British Land Hammerson Land Securities GPE Derwent Big Yellow 35