www.londonmetric.com
South Africa roadshow
6-7th March 2017
AGENDA
2
Overview & Strategy
Investment & Occupier Markets
Property
Financial
Summary
OVERVIEW
History Creation of a leading UK REIT
2015 - 16
FURTHER REPOSITIONING
AND REFINANCING
Portfolio repositioning takes
distribution to c60% of portfolio
Significant retail disposals and sale of
last remaining London office
Development of four distribution
warehouses across 2.7m sq ft
Significant financing activity:
• Refinancing of debt secured
against various distribution assets
• New 5 year £400m unsecured
debt facility with 5 lenders
• £130m private debt placement
2013 - 14
£830M MERGER AND
REPOSITIONING
London & Stamford and
Metric Property merge
£100m returned to
shareholders at time of
merger
Significant retail
warehouse and
distribution acquisitions
Disposal of London
office and residential
assets
2010
METRIC PROPERTY
£190M IPO
Metric Property
raises £190m at IPO
London & Stamford
converts to a REIT
and lists on Main
Market
Out of town retail
portfolio assembled
by Metric Property
2007 - 09
LONDON &
STAMFORD £246M IPO
London & Stamford
raised £246m at IPO
Raised further equity
of £225m in July 2009
Significant investments
in central London
residential, City of
London & M25 office
and distribution
warehousing
4
Overview Actively generating long term secure and sustainable income with value upside
5
1. Including developments
Portfolio positioned around strong fundamentals:
Logistics and convenience retail benefiting from structural support
Growing income with security and reliability
Occupier relationships providing superior intelligence
Delivering de-risked developments
Finance and costs aligned to our real estate strategy
Distribution Exposure1
58.5% Up from 35.7% two years’ ago
Retail Park Exposure1
16.8% Down from 30.1% two years’ ago
WAULT
12.6 years Core portfolio 12.9 years
Contractual rental uplifts
50.7% Of rent roll
Debt Maturity
5.7 years Up from 3.6 years two years’ ago
Investment Strategy Income growth with structural support
6
Income
Asset
Management
Development
In a yield starved environment, compounding income will be the largest
contributor of total returns
Repetitive and dependable income is increasingly attractive
Look to durable/sustainable cash flows with growth opportunities and high
terminal value – not all income is the same
Income compounding strategies will outperform hyper active ones
Working with our key customers to deliver fit for purpose real estate
Investing opportunistically to deliver income growth and capital appreciation
Delivering de-risked short cycle developments
Access structural growth sectors at attractive entry levels
Rental Income Profile1 Delivering long term repetitive & dependable income
7
98%
2%
Net Income Income Leakage
28.5%
22.2%
45.9%
3.1%
0.3%
Fixed Indexed Linked
Market Review No review
Turnover linked
1.0%
38.7%
33.2%
13.1%
14.0%
0-3 yrs 4-10 yrs 11-15 yrs
16-20 yrs >20 yrs
Contractual Rent Reviews Unexpired Lease Terms Income Leakage
11.6
12.7 13.1
12.8 12.6
12.2
10.5
11.0
11.5
12.0
12.5
13.0
13.5
2013 2014 2015 2016 1H17 Jan-17
95.0%
99.6% 99.7% 99.3% 98.5%
99.1%
92.0%
93.0%
94.0%
95.0%
96.0%
97.0%
98.0%
99.0%
100.0%
2013 2014 2015 2016 1H17 Jan-17
Historical Occupancy Rate (% rent roll) Historical WAULT (years)
1. As at 30 September 2016 unless otherwise stated
INVESTMENT & OCCUPIER
MARKETS
Investment Market
9
Real estate returns to be dominated by income & income growth
Compounding income delivering attractive long term returns
Income strategies to outperform hyper-active
Performance will continue to polarise
Risk appetite is diminishing
Over-rented & shortening leases being re-priced
Yields tightening for assets with structural support
Investment demand attracted to fundamentals
Assets generating stable, consistent returns with potential for capital appreciation
Income as % of
Total Returns1
2016: 142%
2017: 102%
2018: 94%
2019: 87%
2020: 75%
1. Source: Capital Economics
Occupier Market
10
Polarisation of shopping patterns continues, driven by consumer
demands
Internet shopping is growing market share
Legacy retail remains exposed
Logistics demand accelerating
Retailers account for c.65% of demand
Rental trajectory positive
Last mile demand/supply dynamics highly attractive
Current headwinds & economic uncertainty likely to accelerate
occupier trends
Non food Retail Sales
20% from 13% in 2011
Online Sales Growth
+47% to 26% of all non food sales by 2020
Amazon’s take up
c20% of total logistics take up
Take up in 20161
34.6m sq ft Highest on record
Availability as at end 20161
27.6m sq ft c15% down y-o-y
1. Source: Savills, warehouse sizes >100,000 sq ft
PROPERTY
Our Portfolio Income growth with structural support
12
30 September 2016 Net
Initial
Yield1
WAULT
(Years)
Income
Uplifts4
Total H1
Property
Return
Distribution
£867m2 5.2% 12.7 57% +2.8%
Convenience & leisure
£141m 5.5% 19.4 88% +3.3%
Retail parks
£249m2 5.7% 10.3 23% 0.0%
Long Income JVs
£104m 6.8% 11.7 16% +2.1%
Office & Residential
£121m - - - -6.2%
Total Portfolio3
£1,482m 5.4% 12.6 51% +1.5%
58.5%
9.5%
16.8%
7.1%
8.1%
1. Topped up NIY
2. Including developments
3. NIY, WAULT and Income uplifts are for investment portfolio
4. Fixed and RPI contractual uplifts
Sept
2016
21.0%
29.0%
2.5%
47.5% Mar
2013
Distribution Portfolio1 58.5% of portfolio providing end to end logistics
13
Regional Distribution Mega Distribution
7 assets, 4.7m sq ft
£24.7m rent (av £5.25 psf)
Average NIY 4.9%2
WAULT 14.7 years
‘Last Mile’
19 assets, 1.2m sq ft
£7.7m rent (av £6.30 psf)
Average NIY2 6.1%
WAULT 7.8 years
1. As at 30 September 2016, adjusted for PPE transactions and development completions. Excludes pipeline developments
2. Topped up net initial yield
3. 5 yearly equivalent uplift
3 rent reviews settled (1PPE)
+9.1%3 ahead of previous passing
3 rent review settled
+9.8%3 ahead of previous passing
2 rent reviews settled (1PPE)
+17.0%3 ahead of previous passing
11 assets, 2.7m sq ft
£15.6m rent (av £5.70 psf)
Average NIY2 5.4%
WAULT 11.0 years
Retail Portfolio Highly income generative and secure
14
Convenience Retail Retail Parks
13 assets, 0.9m sq ft
£15.7m rent (av £17.15 psf)
Average NIY2 5.7%
WAULT 10.3 years
JV Long Income
26 assets, 1.0m sq ft
£7.5m rent (av £17.40 psf)
Average NIY2 6.8%
WAULT 11.7 years
1. As at 30 September 2016
2. Topped up net initial yield
3. 5 yearly equivalent
19 assets, 0.6m sq ft
£8.7m rent (av £15.85 psf)
Average NIY2 5.5%
WAULT 19.4 years
8 rent reviews (2 PPE)
+5.4%3 ahead of previous passing
12 lettings (2 PPE)+£1.0m of rent
9 rent reviews
+8.2%3 ahead of previous passing
Convenience & Leisure Retail Parks JV Long Income
4 rent reviews settled (3 PPE)
+4.8%3 ahead of previous passing
2 letting (1PPE) +£0.2m of rent
12 disposals for £6.9m1
9 under offer
79 sold / under offer
70 remaining
Disposal activity Monetising mature assets to reinvest into higher growth opportunities
15
Newry
Retail and Leisure
Kings Lynn MIPP
Retail
Sold Sept 16
£30.7m
7.4% NIY
Retail
Sold Sept 16
£24.0m
5.8% NIY
Taunton
Leisure
Sold Apr 16
£9.1m
5.5% NIY
£84.2m1 of retail park and leisure disposals
7 retail parks for £75.1m, NIY 6.5%
1 leisure asset for £9.1m, NIY 5.5%
Newry and Kings Lynn represented two of our larger retail parks
Continue to engage on further retail disposals
Residential
Moore House JV
Residential
LM Share:
40%
1. As at 31 December 2016. Investment values shown are LondonMetric’s share
Retail
Sold Various
£8.0m
5.7% NIY
Acquisition activity Focus on ‘last mile’ distribution acquisitions
16
‘Last Mile’ H1 17 - £32.2m, 3 locations
Hemel Hempstead Basildon
£8.3m
6.4% NIY
ITAB
8.5 yrs WAULT
£3.8m,
6.5% NIY
Modular Heating
4.0 yrs WAULT
£104.3m1 of acquisitions at 6.3% NIY:
£85.6m of ‘last mile’ distribution, NIY 6.2%
£9.5m of regional distribution, NIY 5.6%
£9.2m of retail acquisitions for long income JV, NIY 6.8%
Last mile grown from 7 to 20 assets - c70% off market
Stevenage Crawley Portfolio of 6 assets
£26.0m
6.5% NIY
Various tenants
7.0 yrs WAULT
£10.7m (development)
5.2% YOC
Barker & Stonehouse
15.0 yrs WAULT
£7.3m
6.25% NIY
Carphone Warehouse
8.7 yrs WAULT
‘Last Mile’ PPE - £53.5m, 10 locations
20 ‘Last Mile’ Assets
Acquired since March 16
1. As at February 2017. Investment values shown are LondonMetric’s share
>1.0m sq ft
6.7% YOC2
Additional rent of £7.2m2
Development Activity De-risked short cycle developments
17
Bedford Stoke
Convenience
Crawley
Wakefield
112,000 sq ft
6.3% YOC2
Planning received
527,000 sq ft
6.3% YOC
Completed Sept 16
Omega, Warrington
660,000 sq ft
7.0% YOC2
Planning received
58,000 sq ft (3 assets)
5.7% YOC
Various Completions
270,000 sq ft
6.3% YOC2
Planning received
357,000 sq ft
7.0% YOC
Completed Nov 16
0.6m sq ft completed in H1
6.3% YOC
Addition rent of £4.0m
0.6m sq ft under development or
committed in H2
7.2% YOC1
Additional rent of £5.8m1
Committed
Pipeline
1. Includes expected rent from Warrington
2. YOC based on expected rental income
Let Let Let
FINANCIAL
Rental Income Progression
19
Warrington
1. £0.5m reduced income from net investments, £0.5m income uplift from asset management and £2.1m income uplift from expected letting of Omega, Warrington
2. Other near term expected lettings
Net
Renta
l In
com
e
84.1 84.1 84.1 86.2
94.6
Contracted
2.0 5.0
2.1 1.2 4.0
7.2
50.0
55.0
60.0
65.0
70.0
75.0
80.0
85.0
90.0
95.0
100.0
£77.7
31 March 16
Reported Net Rent to
Contracted Income
Future Contracted
Rent Potential
(£m)
Net Divestment
30 Sept 16
Contracted Rent
PPE Activity1
Completed Developments
H1 Asset Management
Pipeline developments
Expected Lettings2
Finance Metrics1
20
30 Sept 2016 31 Mar 2016
Gross Debt £649.9m £637.9m
Undrawn facilities £183.8m £69.9m
Loan to Value 36%2 38%
Weighted average cost of finance 3.3% 3.5%
Weighted average maturity 5.7 years 5.6 years
Hedging3 82% 84%
1. Proportionally consolidated basis
2. LTV includes deferred consideration on sales at Kings Lynn and Hut Warrington
3. Assuming existing facilities are fully utilised
Historical Financial Data
Debt Maturity
(years)
21
3.0
3.7
4.2
5.6 5.7
0.00
1.00
2.00
3.00
4.00
5.00
6.00
FY 13 FY 14 FY 15 FY 16 HY 17
Interest Cover Ratio
(x)
Cost of Debt
(%)
2.2
2.9
4.0
5.0 5.0
-
1.00
2.00
3.00
4.00
5.00
6.00
FY 13 FY 14 FY 15 FY 16 HY 17
4.0% 3.9%
3.7% 3.5%
3.3%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
FY 13 FY 14 FY 15 FY 16 HY 17
Loan to Value Ratio
(%)
43%
32%
36%
38%
36%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
FY 13 FY 14 FY 15 FY 16 HY 17
Summary Actively generating long term secure and sustainable income with value upside
22
1
Growing
Reliable Rental
Income
Sustainable earnings and income growth
Grow contracted income
EPS growth to allow dividend progression with cover
Focus on gross to net ratios
2
Efficient
Capital
Allocation
Disciplined capital allocation with secure capital structure
Continue rotation into distribution
Capex delivering attractive yield on cost
3
Total
Return
Outperformance
Total return delivered predominantly through income & income growth
Capture income growth through contractual uplifts and rent reviews
Development to add incremental returns
23
Revaluation Rent Fixed
Area
Valuation (Share)
Surplus/ (Deficit) Occupancy NIY1 WAULT (years) roll uplifts
Average
rent
(£ psf)
As at 30-Sept-16 (m sq ft) (£m) (£m) (%) (%) (%) expiry break (£m) (%) Existing
Mega distribution 5.4 519.0 (3.8) (0.7) 100.0 5.1 14.6 14.4 28.5 64 5.25
Regional distribution 2.4 240.0 (0.1) (0.0) 100.0 5.3 10.4 8.8 13.5 56 5.70
Local distribution 0.7 73.0 (0.8) (1.1) 100.0 6.1 7.4 7.3 4.6 16 6.30
Distribution 8.5 832.0 (4.7) (0.6) 100.0 5.2 12.7 12.1 46.6 57.1 5.60
Retail – wholly owned 0.9 244.9 (8.0) (3.2) 97.3 5.7 10.3 9.1 15.7 22.9 17.15
Retail - convenience 0.3 80.0 (1.1) (1.3) 98.1 5.0 18.3 17.9 4.8 78.6 17.10
Retail - MIPP JV 0.7 73.7 (1.1) (1.5) 100.0 6.2 10.7 10.4 4.9 24.8 14.15
Retail - DFS JV 0.3 30.7 (1.0) (3.1) 100.0 8.0 13.5 13.5 2.6 0.0 30.30
Retail Subtotal 2.2 429.3 (11.2) (2.6) 98.1 5.8 12.1 11.2 28.0 30.6 17.20
Leisure 0.3 60.7 0.6 1.0 100.0 6.1 20.7 20.7 3.9 100.0 15.10
Core portfolio 11.0 1,322.0 (15.3) (1.1) 99.3 5.4 12.9 12.2 78.5 49.7 7.70
Office 0.2 72.3 (7.6) (9.6) 85.9 5.5 7.7 7.7 4.4 68.3 21.50
Investment portfolio 11.2 1,394.3 (22.9) (1.6) 98.5 5.4 12.6 12.0 82.9 50.7 8.00
Residential - 48.8 (2.9) (5.7) 0.7
Developments 0.8 39.3 2.8 7.8 0.5
Total 12.0 1,482.4 (23.0) (1.5) 84.1
Portfolio Metrics
1. Topped up NIY
24
Top 10 tenants account for 52%
of contracted rent3
80 tenants comprise the
remaining 48%3
Contractual rental uplifts on
50.7% of portfolio
Market intelligence through our
relationships allows us to better
understand trends and make the
right asset decisions
Our Income Metrics Our occupier-led approach at the centre of our decision making
Income exposure to retailers
79% of total rental income
Income exposure to PLCs
74% of total rental income
Within next 3 years
1.0% of income expires
11.0%
7.2%
6.3%
4.7%
4.1%
4.0%
3.8%
3.6%
3.5%
3.2%
0%
10%
20%
30%
40%
50%
60%
£58.7bn mkt cap. Pharmaceuticals
Mkt cap n/a. Logistics operator
£0.5bn mkt cap. Furniture retailer
£3.7bn mkt cap2. Cinema operator
£5.5bn mkt cap2. Multi-channel retailer
£5.4bn mkt cap. Food & GM retailer
£3.9bn mkt cap. Electricals retailer
£21.3bn mkt cap2. Value retailer.
£4.5bn mkt cap. Parcel delivery
Contracted rental income
£86.8m per annum
1. Top 10 Tenants as at 31 December 2016
2. Market Capitalisation of parent company
3. Commercial portfolio
Top 10 tenants1
£33.6bn Parcel delivery
Retail Market Consumer habits have changed supported by online and more frequent top up shops
25
Share of online non food retail sales to
grow to £50bn by 2020 from £21bn in
2011
Online sales grown consistently by c.£3.5bn
p.a. since 2005 – Online growth is stable in
absolute terms
ASOS 117m website visits per month
versus super regional shopping centres of
c.25m per year
26 million households received c. 1.1 billion
parcels in 2015 - next day delivery is up
16% year on year
Internet Only Convenience
Convenience food market share grown
from 14.6% to 17.8% in last 5 years
Sector expected to grow 5% p.a., significantly
ahead of all retail sales growth forecasts
New entrants (Aldi, Lidl, B&M etc) are taking
sizeable market share
Aldi & Lidl account for c.10.5%+ of UK grocery
market
Marks & Spencer to close GM stores & convert
to Simply Food. M&S Simply Food to grow
stores by 250
Omni Channel
Internet sales make up c.30%+ of established omni
channel retailers (eg Next = c.40%; Dixons Carphone =
c.30%; John Lewis = c.40%; Argos = c.55%)
Established omni channel retailers seeing store sales fall with
internet sales rising (eg John Lewis, Argos, M&S)
The need for physical remains – click & collect and internal
showrooming
Retailers continue to re-position their store portfolio (eg
DixonsCarphone from 402 stores to 323 stores by end
2016/17) giving access to 80% of population within 20 min
drive time
Sources: Javelin, IMRG, Verdict, Experian, Mintel, Company disclosures
H1 17 Financial Highlights
26
EPRA Earnings
+8.1%
Increases to 4.0p
Net Rental Income¹
+7.6% +£2.8m
Dividend progression
+2.9% 112% dividend cover
EPRA NAV
143p -3% since March 16
Debt refinancing
£130m 8.3 year term at 2.7%
1. Including JV rental income
2. LTV includes deferred consideration on sales at Kings Lynn and Warrington
3. Based on annual EPRA earnings and opening NAV
4. March 2016 numbers used as comparative
Sept 2016 Sept 2015
EPRA Earnings £25.3m £23.4m
EPRA Earnings per share 4.0p 3.7p
Dividend per share 3.60p 3.50p
EPRA NAV per share 143p 148p4
Earnings yield3 5.5% 5.3%
Reported (Loss)/ Profit £(13.1)m £64.3m
LTV 36%2
38%4
Total Accounting Return (0.5)% 8.2%
Post Merger Strategy Delivering Long Term Value1 Our key focus is to drive earnings
Distribution
Exposure (%)
27
20%
28%
40%
52%
0%
10%
20%
30%
40%
50%
60%
2013 2014 2015 2016
Lfl Income
Growth (%)
Earnings
Growth (pps)
3.5% 3.4%
2.9% 3.1%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
2013 2014 2015 2016
3.9 4.2
6.6
7.8
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2013 2014 2015 2016
Net Rental
Income (£m)
45.5
58.5
70.9
77.7
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
2013 2014 2015 2016
1. Numbers to March year ends
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