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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’


£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


2 rent reviews settled (1PPE)



£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


£15.7m rent (av £17.15 psf)

Average NIY2 5.7%

WAULT 10.3 years

JV Long Income


£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


£8.7m rent (av £15.85 psf)

Average NIY2 5.5%

WAULT 19.4 years

8 rent reviews (2 PPE)


12 lettings (2 PPE)+£1.0m of rent

9 rent reviews


Convenience & Leisure Retail Parks JV Long Income

4 rent reviews settled (3 PPE)


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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south africa roadshow - londonmetric property · south africa roadshow ... raises £190m at ipo...

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