INVESTOR PRESENTATION

Transcription

1 INVESTOR PRESENTATION

2 Table of Contents Introduction to SEGRO 3 Market drivers 10 High quality development pipeline 15 Balance sheet and financing 21 Operating performance 26 Portfolio overview 30 APP acquisition 34 Data correct as at 7 November

3 Introduction to SEGRO A leading owner-manager and developer of modern big box and urban warehousing 8 billion of assets under management in the UK and nine Continental Europe countries A FTSE 100 Real Estate Investment Trust (REIT) 3

4 SEGRO invests in big box and urban warehouses across Europe Big Box warehouses Typically >10,000 sq m Used for national or regional distribution Located along major transport corridors and in key logistics hubs Usually let to a single customer Urban warehouses Typically 2,000 10,000 sq m Used for multiple purposes, including last mile delivery Located in or on the edge of major cities for access to customers and labour Can be let to a single customer or multiple customers Big box warehouses 39% Urban warehouses 54% Portfolio by type (valuation, SEGRO share) 4

5 Big box warehouses 5

6 Single-let urban warehouses 6

7 Multi-let urban warehouses 7

8 SEGRO portfolio at 30 June 2017 Portfolio by type: UK (valuation, SEGRO share) Other 9% Urban warehousing 64% Big box warehouses 27% Portfolio by location (valuation, SEGRO share) Portfolio by type: Cont Europe (valuation, SEGRO share) Other 3% Urban warehousing 28% Big box warehouses 69% Portfolio by location (valuation, AUM) Customer sectors (headline rent, SEGRO share) Services & Utilities 8% TMT 8% Wholesale & Retail Distribution 8% Food and general manufacturing 18% Other 8% Portfolio yield profile (yields, %) Transport & Logistics 22% Parcel delivery 11% Retail 17% Northern Europe 12% Greater London 39% Greater London 2.9bn Equivalent Yield Initial Yield Thames Valley 19% Thames Valley 1.4bn Greater London Slough TE Midlands Logistics Germany France Poland 8

9 Disciplined capital allocation central to SEGRO strategy Key elements of SEGRO strategy Disposal and investment activity since 1 January 2012, bn (to 30 September 2017) To be the pre-eminent owner-manager and developer of industrial and warehouse properties in Europe and a leading income-focused REIT Our Goals To deliver attractive shareholder returns through progressive dividends and NAV growth bn Dvpt capex ( 1.1bn) 2.0 Land ( 0.5bn) bn Disposals Asset acquisitions Development capex 9

10 MARKET DRIVERS

11 Favourable market conditions Economic growth outlook is supportive (GDP average annual growth rates ; source: OECD) UK logistics supply continues to fall short of demand (UK logistics take up and average availability; source: JLL) 4.0% 3.0% 2.0% 1.0% 0.0% 3.4% 3.4% 1.6% 2.0% 1.0% 1.4% 2.4% 1.3% 0.6% 0.9% Poland Germany France UK Italy Take-up / availability, m sq m Take-up for H and H H No. of years supply Historic ( ) Forecast ( ) Average availability Take-up No. of years' supply Online sales continue to gain market share (Online purchases as share of total retail sales; source: Centre for Retail Research) Supply of speculative development remains low (Speculative UK big box warehouse completions; source: JLL) UK Germany France Europe ave Poland Italy 0.0% 5.0% 10.0% 15.0% 20.0% Completions, m sq m In dvpt 11

12 European industrial and logistics supply dynamics Logistics space under construction 1 (m sq m) France logistics supply-demand dynamics 2 (m sq m) Take-up / availability, m sq m Take-up for H and H No. of years supply UK Germany France Belgium Neth. Poland Italy Spain Average availability H17 Pre-let Speculative Take-up Available space as multiple of annual take-up 1 Source: 1Q 2017, JLL 2 Source: CBRE 12

13 Prime logistics yields vs 10 year bond yields Warsaw: 6.0% Paris: 5.0% Dusseldorf: 4.8% London: 4.5% H17 UK 10yr bond: 1.3% Germany 10yr bond: 0.5% Source: CBRE, Bloomberg (data correct at 30 June 2017) 13

14 Limited and falling supply of industrial land in London 46% decline in London s industrial floorspace since 1984 Industrial land expected to decline by a further 33% between 2015 and 2041 England London England London +2.5% % 8.5% 45.9% e 2041e Source: Deloitte/ONS Source: GLA (Land zoned for industrial use, thousand hectares) Decline driven by alternative uses of industrial land Olympic Village Westfield London Nine Elms Old Oak Common 14

15 HIGH QUALITY DEVELOPMENT PIPELINE AS AT 30 JUNE 2017

16 Current development pipeline: 46m of rent, 40 projects, 1m sq m of space Yoox pre-let, Milan Martorelles, Barcelona FedEx pre-let, Paris Amazon pre-let, Rome SEGRO Park Rainham, East London Premier Inn, Slough Trading Estate 16

17 Significant development opportunities within SEGRO s control 1 Current development pipeline 2 920,400 sq m of space Current book value 431m; 231m cost to complete 46m potential gross rent; 31m (68%) secured through pre-lets Projected 7.7% yield on total cost Near term development projects 243,000 sq m of space 146m potential capex 14m potential gross rent 63% rent related to potential pre-lets Projected 7.6% yield on total cost 3 Future development pipeline m sq m of space c 1.1bn potential capex 113m potential gross rent Projected c8% yield on total cost Land under option 750,000 sq m of space c 50m potential gross rent Expected blended yield of c7% on total cost, including land Capital deployment ahead of expectations at the time of 2016 equity placing and 2017 rights issue 1 Excludes near-term projects and potential developments on land held under option. 17

18 Current development pipeline Current development pipeline (as at 30 June 2017) Current development projects, asset type by ERV (30 June 2017) 920,400 sq m 46m ERV Urban warehouses 21% 31m rent secured (68%) Gross rent from development completions, m (as at 30 June 2017, including joint ventures at share) Amazon, Rome Logistics 60% 231m cost to complete % Yield on cost H H H H Pre-let Speculative 18

19 Future development pipeline Development land bank (30 June 2017) Geographic split of land bank, by potential ERV 1 (30 June 2017) Near-term projects 243,000 sq m c 14m of rent (63% related to pre-lets) 146m of potential capex Poland 9% Italy/Spain 14% Germany 18% UK 41% Future pipeline (2.3m sq m 2 ) 1.1bn estimated development costs 2 113m of potential annual rent 2 8% estimated yield on TDC 1 10% estimated yield on new money 1 And land held under option 750,000 sq m 50m of potential annual rent All figures include joint ventures at share. 1 Future development pipeline including near-term projects but excluding land under option. 2 Excludes near-term projects and potential developments on land held under option. Estimated blended yield of 7% on total cost, incl land 19

20 Substantial opportunity to grow rental income Annualised gross cash passing rent 1, million (as at 30 June 2017) 126m potential from current activity 163m from land bank and land options Passing rent at 30 Jun 17 Rent in rent-free Reversion and vacant space Current development pipeline (68% let) Near-term development opportunities 2,3 (63% pre-lets) Future pipeline 2 Land held under option Total Potential 1 Including JVs at share 2 Near-term development opportunities include pre-let agreements subject to final conditions such as planning permission, and speculative developments subject to final approval, which are expected to commence within the next 12 months 3 Total rent potential of 127m from near-term development opportunities and Future pipeline 4 Estimated. Excludes rent from development projects identified for sale on completion and from projects identified as Near-term opportunities 20

21 BALANCE SHEET AND FINANCING 30 JUNE 2017

22 1.9bn of new financing raised to strengthen balance sheet further Rights Issue 216m cash consideration for APP 557m net proceeds 341m for future development capex LTV ratio and average cost of debt (incl share of JVs, M ) 60% 5.0% Private Placement Issue 650m of new debt 11yr ave duration, 1.9% ave coupon Repaid 200m % bonds early Repaid 320m APP 2.5% secured debt LTV ratio 40% 20% 4.0% 3.0% 2.0% 1.0% Average cost of debt Bond Tender 550m of bonds tendered Issued 750m new bonds Longer-dated bonds targeted Increased average debt duration by 3 years Reduced average cost of debt by 0.5% 0% 0.0% M 17 LTV ratio 1 Pro forma for bond tender Ave cost of debt 22

23 Robust financial position Balance sheet and gearing metrics (look-through basis), 31 December September 2017 Including joint ventures at share 30 Sept 2017 Pro Forma 30 June December 2016 Weighted average cost of debt 1 (%) Attractive marginal cost of Group bank borrowings of c1.4% (UK) and 1.1% (CE) 3 Average maturity of debt (years) Fixed rate debt as proportion of net debt (%) n/a Net borrowings ( bn) LTV ratio (%) FY 2017: 350m+ estimated development capex (and further c 50m of infrastructure capex) 1 Based on gross debt, excluding commitment fees and amortised costs 2 Pro forma for repayment of APP secured debt and drawing of US private placement debt 3 Marginal borrowing costs after commitment fee 23

24 Debt maturity profile at 30 September 2017 (pro forma), m Debt maturity by type and year, millions (as at 30 September 2017, pro forma for bond tender and issue in October 2017) SEGRO undrawn JV debt at share SEGRO Bank debt SEGRO bonds & PP notes

25 Euro currency exposure and hedging Balance sheet, m 30 June Assets 68% hedged 2,500 2,000 1,500 1,000 Other euro liabilities Euro currency swaps Euro debt 1.14: 1 as at 30 June 2017 assets 68% hedged by liabilities 741m ( 650m) of residual exposure 13% of Group NAV Illustrative NAV sensitivity vs 1.14: + 5% ( 1.20) = - c. 31m (-c.3.1p per share) - 5% ( 1.08) = + c. 34m (+c.3.4p per share) Euro gross assets Loan to Value (on look-through basis) at 1.14: 1 is 29%, sensitivity vs 1.14: +5% ( 1.20) LTV -0.6%-points Income Statement, m 6 months to 30 June Income 37% hedged Euro income Euro costs -5% ( 1.08) LTV +0.6%-points Average rate for 6 months to 30 June : 1 income 37% hedged by expenditure (including interest) Net income for the period 37m ( 32m) 35% of Group Illustrative annualised net income sensitivity versus 1.16: + 5% ( 1.22) = c 1.5m (c0.2p per share) - 5% ( 1.10) = +c1.7m (c0.2p per share) 1 Pro forma for repayment of APP secured debt (in July 2017) and drawing of US private placement (in August 2017). 25

26 OPERATING PERFORMANCE 9 MONTHS TO 30 SEPTEMBER 2017

27 H Results Summary +3.2% Adj EPS (9.7p) +5.4% EPRA NAV (504p) +5.0% DPS (5.25p) +3.9% lfl net rental income growth 33% LTV ratio (PF at 30 Sept 17) Strong financial results and robust balance sheet Driving performance through operational excellence and disciplined capital allocation High quality pipeline of growth opportunities Optimistic outlook B+S, Frankfurt 27

28 Driving performance: operational excellence and disciplined capital allocation Operating performance updated for the nine months to 30 September 2017 Leasing and Asset Management Developments Completed development 36m contracted headline rent, +3% from 9M % uplift on UK rent reviews and renewals 392,000 sq m new space completed: 17m of potential rent, 97% secured 20m new pre-lets signed Amazon, Munich Low vacancy rate of 4.1% 725,000 sq m under construction Acquired Disposals Acquisitions 248m of asset disposals Part consideration for APP 150m Non-strategic German and French assets 570m of asset acquisitions Incl 50% interest in APP portfolio APP portfolio topped-up NIY of 4.2% (5.2% excl Cargo Area) Sold APP portfolio Former Northfields industrial estate sold to residential developer Average yield of 5.2% (3.9% incl land) 48m of land acquisitions Primarily land for immediate development in Germany, Italy and Spain Nelson Trade Park 28

29 Growth from the existing portfolio Reversion capture 2.7m potential reversion from general UK rent reviews in H ( 13m in total) 6.2m (55%) of Heathrow Cargo Area 2019 peppercorn rent reversions secured or under negotiation ( 11m in total) Rapid leasing of speculative space (Letting status of development completions in , %) 100% 80% Further vacancy reduction c 5.5m (25%) of vacancy at 30 June 2017 is in five UK buildings 2 big box warehouses in Midlands 1 let by 30 Sept 3 urban warehouses in London 2 let by 30 Sept 60% 40% 20% Index-linked uplifts c40% of portfolio (c 140m of headline rent) contains indexation provisions Almost all Continental Europe leases c10% of UK leases (most with cap and collar) 0% M 2017 Speculative Pre-let Let at 30 Sept

30 PORTFOLIO OVERVIEW 30 JUNE 2017

31 Portfolio value change driven by improving yields and asset management 1 400m 350m 300m +4.6% UK +5.5% Slough Trading Estate +7.1% Park Royal +8.8% Heathrow +3.0% UK big box logistics % Continental Europe +2.3% SELP +1.1% SEGRO wholly-owned +4.1% 250m 200m +5.7% 150m 100m +5.2% +3.7% 50m 0m Total Greater London Thames Valley & National Logistics 2.3% +0.1% Northern Europe Southern Europe Central Europe ERV growth 0.8% 0.9% 0.9% 0.6% 0.6% 0.0% UK: 0.9% Continental Europe: 0.4% 1 Percentage change relates to completed properties, including JVs at share. 2 Includes big box warehouses part of the Greater London portfolio 31

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34 APP ACQUISITION

35 Gaining full control of attractive portfolio focused on Heathrow APP portfolio statistics (31 December 2016) Gross Asset Value - Standing assets - Development - Land Annualised rent - Passing - ERV Size Yield profile - Net initial - Topped-up NIY - Topped-up NIY excluding cargo centre - Equivalent yield 1,097m 1,068m 9m 20m 42m 67m 350,000 sq m 3.6% 4.2% 5.2% 5.5% Vacancy (by ERV) 7.5% WAULT - To break - To expiry 11.1 years 11.7 years 35

36 Heathrow Cargo Area Central Terminal Area Terminal 5 Terminal 4 Sandringham Road Zulu Cul-de-sac Shoreham Road (The Horseshoe) 36

37 Greater operational flexibility; opportunities to add value Asset management opportunities Near-term cash generation from rent-free expiry and void reduction Medium-term opportunity from capturing reversionary rents, particularly 11m from expiring leases on peppercorn rents in 2019 Future development potential Development underway at North Feltham Trading Estate 7,300 sq m of urban warehouses, 1.2m potential rent (c 7m cost to complete) Further opportunities from land owned or under option Significant longer-term potential from redevelopment of Heathrow Cargo Centre Heathrow Airport expansion Support from UK government for a third runway significantly increases likelihood of airport expansion in longer-term 87% of properties by value are in vicinity of Heathrow, including on-airport cargo facilities Expansion should drive demand for cargo facilities, as well as space required by airlines, industrial users and other airport service companies Rent, m APP annualised rent at 31 Dec Passing Rent free Vacancy Reversion ERV In line with SEGRO s strategy of building scale in its core markets, improving operational efficiency and delivering attractive returns 37

38 Forward-looking statements and Disclaimer This presentation may contain certain forward-looking statements with respect to SEGRO s expectations and plans, strategy, management s objectives, future performance, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. The statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in this presentation should be construed as a profit forecast. Past share performance cannot be relied on as a guide to future performance. The securities referred to in this presentation and which are to be offered in the rights issue also referred to herein (the Rights Issue ) will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or under the securities laws of any state or other jurisdiction of the United States, and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. This presentation is for information purposes only. This presentation does not constitute an offer or invitation to underwrite, buy, subscribe, sell or issue or the solicitation of an offer to buy, sell, acquire, dispose or subscribe for securities or to take up entitlements in any jurisdiction. Nothing in this presentation should be interpreted as a term or condition of the Rights Issue. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities must be made only on the basis of the information contained in and incorporated by reference into the prospectus to be published in connection with the Rights Issue. This presentation contains (or may contain) certain forward-looking statements with respect to certain of SEGRO plc s current expectations and projections about future performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which sometimes use words such as aim, anticipate, believe, intend, plan estimate, expect and words of similar meaning, include all matters that are not historical facts and reflect the directors beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. These statements are subject to unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this presentation is subject to change without notice and, except as required by applicable law, neither SEGRO plc, BofA Merrill Lynch, UBS, Barclays, BNP Paribas nor HSBC assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein. You should not place undue reliance on forward-looking statements, which speak only as of the date of this presentation. Any indication in this presentation of the price at which securities have been bought or sold in the past cannot be relied upon as a guide to future performance. No statement in this presentation is or is intended to be a profit forecast or profit estimate or to imply that the earnings of SEGRO plc for the current or future financial years will necessarily match or exceed the historical or published earnings of SEGRO plc. The price of shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the shares. Past performance is no guide for future performance. This presentation is directed only at persons: (i) who are investment professionals as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the Order ); (ii) who fall within Article 49(2)(a) to (d) of the Order; or (iii) to whom the presentation may otherwise lawfully be communicated (all such persons together being referred to as Relevant Persons ). The presentation is not intended to be distributed or passed on, directly or indirectly, to any other class of persons and may not be relied upon by such persons and is therefore not intended for private individuals. The presentation is only for Relevant Persons and must not be acted on, reviewed or relied on by persons who are not Relevant Persons. 38

39 Contact details Harry Stokes Head of Investor Relations and Research +44 (0) November