INTERIM RESULTS November 2018 - Urban Logistics REIT
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INTERIM RESULTS November 2018
IMPORTANT
LEGAL NOTICE
The information contained in these slides and the presentation made to you verbally has been prepared solely by Urban Logistics REIT plc (the "Company") and is for information purposes
only. The information in these slides and the presentation made to you verbally is subject to updating, completion, revision, further verification and amendment without notice.
These slides and the presentation are not a financial promotion, and nor have they been approved as such for the purposes of section 21 of the Financial Services and Markets Act 2000
("FSMA"). These slides and the presentation have not been approved by the United Kingdom Listing Authority as a prospectus under the Prospectus Rules (made under Part VI of the
FSMA) or by London Stock Exchange plc, nor is it intended that they will be. These slides and the presentation do not constitute or form part of any prospectus, admission document,
invitation or offer for sale or solicitation or any offer to buy or subscribe for any securities nor will they or any part of them form the basis of, or be relied on in connection with, or act as any
inducement to enter into, any contract or commitment. No reliance may be placed for any purpose on the information or opinions contained in these slides or the presentation or on their
completeness, accuracy or fairness. The merits and suitability of any investment action in relation to securities of the Company should be considered carefully and involve, among other
things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of such securities.
No undertaking, representation, warranty or other assurance, express or implied, is made or given by or on behalf of the Company or any of its respective directors, officers, partners,
employees, agents or advisers, or any other person, as to the accuracy or completeness of the information or opinions contained in these slides or the presentation. In addition, in issuing
these slides, the Company does not undertake any obligation to update or to correct any inaccuracies which may become apparent in these slides. Accordingly, no responsibility or liability
is accepted by any of them for any such information or opinions or for any errors, omissions, misstatements, negligence or otherwise for any other communication, written or otherwise, but
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These slides and the presentation contain certain forward looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this
document, including statements regarding the Company’s future financial position, business strategy and plans, business model and approach and objectives of management for future
operations, are forward-looking statements. Generally, the forward-looking statements in this document use words like “anticipate”, “believe”, “could”, “estimate”, “expect”, “future”, “intend”,
“may”, “opportunity”, “plan”, “potential”, “project”, “seek”, “will” and similar terms. The Company’s actual results could differ materially from those anticipated in the forward looking
statements as a result of many factors. The forward looking statements in these slides and the presentation are based on the beliefs and assumptions of the Company’s directors and
information only as of the date of this document, and the forward looking events discussed in this document might not occur. Therefore, investors should not place any reliance on any
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By accepting this document you will be taken to have warranted, represented and undertaken to the Company that: (a) you agree to be bound by the limitations and restrictions set out
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not use this presentation or the information contained herein in any manner detrimental to the Company.
AGENDA PAGE
THE COMPANY 3
HIGHLIGHTS 6
THE OPPORTUNITY 12
KEY TERMS 15
SUMMARY 17
APPENDIX 19
2
THE COMPANY
3
INVESTMENT STRATEGY
REGIONAL LOGISTICS, ESSENTIAL GOODS
Single-let assets up to 200,000 sq. ft. (< £10m)
‒ Not multi-let or large distribution centres
‒ Strong demand v. limited supply
‒ Targeting e-commerce fulfilment Regional distribution
Stringent acquisition criteria
‒ Assets bought at 30-70% replacement cost
‒ Below market rents with reversionary potential
‒ Skilled team sources off-market, focusing on core locations
Value creation through asset management (not yield compression) Urban logistics centre
‒ Focus on tenants in staple and essential goods sectors (not fashion)
‒ Collaborate with tenants, lease event focus
‒ Transform reversionary potential into contracted income
Targeting 10-15% total return
‒ Recycle capital following asset management Local distribution
£ ‒ Focus on resource deployment
‒ Maintain flexible funding with low debt to equity ratio (35-40% LTV)
Parcel delivery
4
PROGRESS SINCE IPO
PROVEN INCOME AND TOTAL RETURN STRATEGY
Active engagement with shareholders IPO 6M to
‒ Name changed to Urban Logistics REIT plc (April 2016) FY17 FY18 Sep 18
‒ New broker appointed – N+1 Singer
‒ Market capitalisation > £100m, improved scale and liquidity
Dividend 6.23p 6.32p 2.98p
‒ Ambitious to grow Company and capitalise on opportunity
‒ Supportive institutional and private client shareholder register NAV growth +16.1% +5.5% +5.4%
Proven track record Property valuation* +9.8% +12.9% +6.6%
‒ Compelling returns generated since IPO in April 2016
(annualised NAV + dividends return 16.9%)
Av volume 11,390 75,142 45,955
‒ On track to deliver against objectives in FY19
*LIKE FOR LIKE ACROSS PERIOD
Average volumes (000s)
50 Volume (LHS) 135
Share Price (RHS) 130
Share Price (p)
40
125
30 120
20 115
110
10
105
0 100
Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18
5
HIGHLIGHTS
6
HIGHLIGHTS – 6M TO SEPTEMBER
STRONG UNDERLYING PERFORMANCE
Supportive results to 30 September 2018 Valuation uplift across
underlying portfolio
‒ EPRA NIY 6.1% (Mar-18: 5.9%)
‒ EPRA NAV of 129.21p per share (Mar-18: 122.49p) H118:
‒ EPRA EPS of 3.13p (H1 17: 0.5p) +6.6% +7.5%
‒ EPRA vacancy rate 1.1% (Mar-18: 6.7%)
Portfolio value
Momentum through portfolio growth
‒ £20.4m fundraising in April 2018 supported £36.0m
of asset acquisitions at a blended NIY of 5.9%
£173.8m Mar-18:
£131.9m
‒ £174m portfolio of well located logistics assets W.A.U.L.T.
Successful asset management driving results
‒ Recent lettings to Alliance Boots and RPC Group following site 5.0 YEARS Mar-18:
5.0 years
refurbishments in Leigh and Chesterfield
‒ Sale of Victoria Road, Leeds (+17% profit on cost) EPRA cost ratio1
‒ Average rents £4.84 sq ft H118:
‒ Lease events driving value across portfolio +17.9% 20.1%
Loan to value
37.1% Mar-18:
36.9%
1EXCLUDING VACANCY COSTS
7
FINANCIAL HIGHLIGHTS
STRONG UNDERLYING PERFORMANCE
30 SEP 2017 30 SEP 2018
EPRA Earnings per share (p) 0.5 3.1
Reported profit (£m) 3.1 9.3
EPRA NAV per share (p) 116.12 129.21
Gross borrowing (£m) (18.4) (64.4)
Interim dividend per share (p) 1.0 3.0
8PORTFOLIO
HIGH QUALITY TENANTS Top 10 sites*
Other sites
*By market value
Contracted Rent Portfolio WAULT Tenant Diversity
Top 10 0-3 yrs 3PL
Other sites 4-5 yrs 27%
35% 32% 6+ yrs SME
44%
49% 51%
Large
Corporate
33% 29%
Top 10 assets by market value (Sept-18)
Mkt value Wault Cap value Rent
# Tenant Location Sector (£) (yrs) (£/sq ft) (£/sq ft)
1 Culina Logistics Haverhill Logistics 17,070,000 5.10 85 4.89
2 DHL Alfreton Logistics 9,230,000 3.00 68 4.35
3 Hilary’s Blinds Nottingham Logistics 9,000,000 8.76 69 4.37
4 Manitowoc Buckingham Logistics 9,000,000 5.93 108 5.50
5 DHL Runcorn Logistics 8,050,000 1.25 65 4.73
6 OTC Direct Leigh Logistics 7,740,000 4.76 75 4.76
7 VACANT Nuneaton* 6,700,000 51 4.92
8 DHL Leicester Logistics 6,575,000 1.92 101 6.45
9 Winit Bardon Logistics 6,425,000 5.48 87 4.82
10 XPO Normanton Logistics 6,330,000 1.97 67 5.10
*Rental income guarantee to September 2019 provided as part of recent acquisition, site undergoing extensive refurbishment
9PORTFOLIO HIGHLIGHTS (1 OF 2)
DISPOSAL OF VICTORIA ROAD, LEEDS
1. KOMORI / PHARMACY2U, LEEDS
The site was sold on 8 October 2018 for £3.4m, representing
+17% on cost.
Rationale
The property is located at Victoria Road, Leeds. It consists
of two units in an established strategic location with good
access which in total represent 41,420 sq ft of logistics
space.
As well as securing rental increases, the lease terms on
both units were extended by 5 years in September 2018.
The site was subsequently sold +17% profit on cost as no
further asset management initiatives were available and an
attractive price was offered by purchaser
Disposal price Rent per sq ft Tenure Annual passing rent Size (sq ft)
£3.4m @ 5.8% NIY £5.21 Freehold £216,000 41,420
10PORTFOLIO HIGHLIGHTS (2 OF 2)
LEASING OF LEIGH AND CHESTERFIELD
2. BOOTS, MANCHESTER Book value
Annual
Site purchased December 2017. Following passing rent
extensive refurbishment it was let to Alliance
Boots on a 10 year term £7.7m @ 6.0% NIY £510,000
Rationale
This unit was purchased vacant as part of a Size (sq ft) Rent per sq ft Tenure
portfolio. Following extensive refurbishment
it was offered to the market. After a number
of approaches, it was let on a 10 year lease 103,268 £4.94 Freehold
to OTC Direct (Alliance Boots)
3. STRATA, CHESTERFIELD
Site purchased January 2017. Following Annual
refurbishment it was let to Strata Products Book value passing rent
in September 2018
Rationale £5.9m @ 6.2% NIY £432,204
This unit was purchased vacant with a rental
guarantee. Following refurbishment it was offered
to the market and let by Strata Products on a Size (sq ft) Rent per sq ft Tenure
5 year lease with reversion after 3 years
108,873 £3.97 Freehold
11THE
OPPORTUNITY
12IPO SEED PORTFOLIO CASE STUDY
LEASE EVENT OPPORTUNITIES DRIVING VALUE
APRIL 2016 AUGUST 2017 APRIL 2018
Acquired the ‘M1 Portfolio’ of 11 P W Gates, Bedford: 10 year lease £6.29 sq ft Price’s Candle’s, Bedford: rent
properties for £27m representing Winit, Bardon: break removal and lease extension review and new head lease, sold for
net initial yield of 7.3% BSS, Northampton: rent review +11% £3.2m representing an IRR of 56%
2016 2017 2018
MARCH 2017 NOVEMBER 2017
BSS, Bedford: rent review +38% Disposal of Hammond Road,
Jas Bowman, Bedford: new 20 Bedford for £5.8m,
year lease representing an IRR of 43%
Seed Portfolio values - April 2016 to September 2018 (£m)
3.0
2.9
2.3
2.4 40.4 *
2.9
27.0
IPO H1 17 H2 17 H1 18 H2 18 H1 19 Sep 18
*Includes disposed properties at NBV at disposal (BSS and Price’s Candles)
13MARKET BACKDROP
SUPPLY CHAIN REVOLUTION
Limited supply leading to rental growth Demand driven by online sales Stable, consistent returns and
‒ New space is predominantly build-to-suit ‒ Take up in H1 2018 already surpassing compelling capital growth
(due to evolving occupier demands) whole of 20172 ‒ Smaller properties outperforming due to higher
‒ Supply restricted with UK availability c. 6% at ‒ E-fulfilment driving 62% of distribution demand for smaller urban logistics assets4
June 20181 warehouse take up (online and third party ‒ Focussed on income-led total return
logistics operators3)
‒ Planning control is restrictive and new build ‒ Yields tightening and rental growth coming
costs are high ‒ East Midlands region accounted for 40% through
of total take up in H1 2018
‒ Focus on XXL warehouses with speculative ‒ Rental growth through experienced
building returning (average size > 200,000 sq ft) ‒ Internet sales up 15.3% y-o-y to July 2018 asset management
(online sales now 18.2% of all retail)4
‒ Supply restrictions leading to secondary ‒ Essential goods and consumer staples holding
rental growth2 ‒ 3x more warehousing space typically up well in Brexit environment despite some
required for online5 retailer concerns
Distribution Warehouses – Investment Volumes H1 2018 Take up SHED: Share Price & Volumes
£billions
5,000 140
12 100% Volumes Share Price
10 4,000 130
80%
8 32% 3,000
60% 33% Online 120
6 2,000
40% 3PLs 110
4 1,000
2 20% Other 0 100
0 0%
Dec-16
Jun-17
Jun-18
Oct-16
Apr-17
Oct-17
Dec-17
Aug-17
Apr-18
Aug-18
Feb-17
Feb-18
'09 '10 '11 '12 '13 '14 '15 '16 '17
32%
Distribution Other % Distribution
Source: Property Data
1. Gerald Eve Prime Logistics Bulletin Q2 2018; 2. LSH 2018 Industrial 3. ONS government analysis July 2018; 4.Logistics Property Perspective H1 2018;
5.Real estate industry research CMS
14KEY TERMS
15MANAGEMENT ARRANGEMENTS
URBAN LOGISTICS REIT PLC
Annual Management Fee First Calculation Date: Share Price Element and NAV
0.95% EPRA NAV per annum, paid in cash quarterly in Element calculated by reference to the capital raise placing
arrears price in August 2017 – 115p
Long Term Incentive Plan (“LTIP”) Second Calculation Date: If a payment is made
The LTIP has a NAV Element and a Share Price Element. It is at the First Calculation Date under either element, the hurdle
assessed on (i) 30 September 2020 (the “First Calculation for that element at the Second Calculation Date shall be re-set
Date”); and (ii) 30 September 2023 (the “Second Calculation to the prevailing EPRA NAV per share/share price as at the
Date”) First Calculation Date (as applicable). If no payment is made
under an element, then that element shall continue to be
NAV Element: 10% of excess of NAV Per Share Return calculated by reference to the capital raise placing price
over an annualised 9% hurdle, multiplied by the number of
shares in issue at the relevant calculation date If there is a change of control, the LTIP will be assessed
by applying the relevant offer price to the NAV Element
Share Price Element: 10% of excess of Share Price and the Share Price Element calculations at the Change of
Element (including dividends) over an annualised 9% hurdle, Control Date
multiplied by the number of shares in issue at the relevant
calculation date The LTIP will be paid, at the plc Board’s discretion, in shares
or cash
16SUMMARY
17SUMMARY
SPECIALIST IN SUB £10M LOT SIZE MARKET
Attractive opportunity
Delivering strong returns since IPO in April 2016
Timely investment of capital proceeds, adding value and recycling capital
Target assets with potential for higher rents and longer leases
Grow a portfolio with a diverse tenant mix and broad geographic spread
Compelling income characteristics
Rental growth through experienced asset management
Experienced management team
Long term track record within logistics market
Manager’s access to off-market transactions
Leverage off knowledge of key sector tenants and investors
Supportive economic case
Significant supply constraint v. strong demand
Focus on acquisitions at 30 – 70% of replacement cost
Demand and capital values underpinned by structural development
and lack of speculative development (sub 200,000 sq ft)
18APPENDIX
19PORTFOLIO METRICS
SIGNIFICANT OPPORTUNITY TO DRIVE VALUES
Expiry/ renewal/ Rent £ ERV/
Current Tenant Sector Market Value Lease Start rent review per sq ft achieved
Bardon (1 asset)
Winit UK Logistics £6,425,000 21/02/2014 24/03/2019 £4.82 £6.00
Elms Farm Industrial Estate,
Bedford (4 assets)
Jas Bowman & Sons Food production £3,900,000 24/06/2015 24/06/2020 £4.24 £6.00
ACO Technologies Equipment supplier £3,500,000 24/04/2008 23/04/2023 £5.03 £6.25
Ball and Young/Prima Foam Logistics £1,800,000 01/01/1996 31/12/2022 £3.99 £6.50
Blackburn Metals Logistics £2,330,000 25/10/2010 24/12/2020 £5.50 £6.25
Woburn Industrial Estate, Bedford
(2 assets)
Ideal Industries Ltd Logistics £3,875,000 26/02/1999 25/02/2019 £5.43 £7.90
Professional Fulfilment Services (unit Logistics 25/03/2017 24/03/2022 £6.25 £6.25
A)
£7,790,000
Postley Road (unit B) - VOID Logistics £6.25
Arqadia (unit C & D) Logistics 25/03/2009 24/03/2020 £4.45 £6.25
Dunstable (1 asset)
Dymatec Logistics £1,260,000 25/12/2003 24/12/2018 £5.97 £6.85
Northampton (4 assets)
BSS Group Logistics £910,000 25/03/2011 24/03/2021 £5.24 £5.25
Panther Logistics Logistics £3,250,000 24/08/2017 23/08/2022 £4.88 £5.25
Encon Logistics £3,900,000 01/09/2008 31/08/2023 £4.97 £5.50
NNR Logistics £4,410,000 19/05/2014 18/05/2024 £3.66 £5.00
Leeds (1 asset)
Puma / NewDay Logistics £6,250,000 22/12/2016 22/12/2021 £4.73 £4.75
20PORTFOLIO METRICS
SIGNIFICANT OPPORTUNITY TO DRIVE VALUES
Expiry/ renewal/ Rent £ ERV/
Current tenant Sector Market Value Lease Start rent review per sq ft Achieved
Chesterfield (1 asset)
Strata Products Logistics £5,925,000 17/07/2018 16/07/2023 £3.97 £4.75
Haverhill (2 assets)
HID Corporation Logistics £5,150,000 06/03/2008 06/03/2023 £8.58 £8.50
Culina Logistics Logistics £17,070,000 04/11/2008 04/11/2018 £4.89 £5.50
Leigh (2 assets)
XPO Logistics £3,760,000 18/09/2025 17/09/2020 £7.05 £4.50
OTC Direct Logistics £7,740,000 02/07/2018 02/07/2028 £4.94 £4.95
Motherwell (1 asset)
XPO Logistics £3,100,000 22/09/2006 17/09/2020 £3.32 £3.50
Nuneaton (1 asset)
Void £6,700,000 £5.00
Hinckley (1 asset)
XPO Logistics £3,280,000 10/12/2016 09/12/2021 £4.67 £4.50
Normanton (1 asset)
XPO Logistics £6,330,000 18/09/2015 17/09/2020 £5.10 £4.25
Hoddesdon (2 assets)
Sainsbury’s plc Logistics £4,940,000 24/06/1990 23/06/2020 £5.22 £6.50
Travis Perkins Logistics £1,600,000 03/02/2006 03/02/2021 £5.12 £8.25
21PORTFOLIO METRICS
SIGNIFICANT OPPORTUNITY TO DRIVE VALUES
Expiry/renewal Rent £ ERV/
Current tenant Sector Market Value Lease start rent review per sq ft achieved
Buckingham (1 asset)
Manitowoc Logistics £9,000,000 04/09/2008 04/09/2018 £17.15 £17.00
Newport (1 asset)
GoCompare Office £4,250,000 08/02/2013 07/02/2028 £15.00 £15.00
Hebburn (1 asset)
DHL Logistics £3,320,000 21/12/2015 21/12/2020 £2.97 £3.55
Norwich (1 asset)
DHL Logistics £2,250,000 21/12/2015 21/12/2020 £4.46 £4.75
Runcorn (1 asset)
DHL Supply Chain Logistics £8,050,000 01/10/2006 31/09/2021 £4.73 £4.75
Alfreton (1 asset)
DHL Supply Chain Logistics £9,230,000 01/10/2006 31/09/2021 £4.35 £4.75
Leicester (1 asset)
DHL Supply Chain Logistics £6,575,000 01/09/2010 31/08/2020 £6.45 £6.50
Nottingham (1 asset)
Hillary’s Blinds Logistics £9,000,000 02/10/2007 02/07/2027 £4.37 £4.35
Sheffield (1 asset)
Cogne Logistics £3,520,000 20/19/2016 19/09/2026 £4.21 £4.25
22THE BOARD
EXPERIENCE AND EXPERTISE
Nigel Rich Jonathan Gray
Richard Moffitt Christopher Turner Independent Independent
CEO Asset Manager Non-Executive Non-Executive
Chairman Director
Former Head of UK Qualified Chartered Surveyor
Distribution at CBRE Nigel brings a wealth of Board Jonathan has considerable
> 25 years’ experience of UK experience, having operated financial services experience
25 years of experience in across the globe in senior having worked in senior roles
Industrial and Logistics markets acquisition, performance and positions, most recently at Segro at HSBC, UBS and NCB
Transaction history includes: disposal of investments through plc where he was Chairman for
• Goodman acquisition of all sectors 10 years
Rosemound for £650m + Experience includes:
• Scaling up and subsequent • Acquired, managed and
disposal by London & Stamford traded £175 million balanced
Plc for in excess of £350m asset portfolio
• Disposal of £300m of assets to Mark Johnson Bruce Anderson
• Acquired and repositioned
Logicor by Anglesea €135 million industrial and Non Independent Independent
• Founding partner of M3 Agency office portfolio in Germany Non-Executive Non-Executive
LLP (logistics property Director Director
consultancy).
• Sold to CBRE in 2010 Co-founded Pacific Investments Bruce has considerable real
with Sir John Beckwith estate, REIT and financial
services experience having
worked in senior roles at Lloyds,
HBoS and Bank of Scotland
23FINANCIAL HIGHLIGHTS
NAV BRIDGE
EPRA NAV Bridge – March 2018 to September 2018
134.00
1.44p
129.00
8.24p 129.21p
124.00 3.13p 3.20p
119.00
114.00
122.49p
109.00
104.00
EPRA NAV EPRA Dividends FV gain on inv. Share issue EPRA NAV
Mar 18 earnings paid Properties costs Sep 18
*Proforma NAV 121.21p, adjusting for April’s capital raise
and londonmetric acquisition, proforma LTV 37.4%
24FINANCIAL HIGHLIGHTS
RENTAL INCOME PROGRESSION
Rental Income Progression (£M)
12.00
£0.74m £11.41m
10.00 £2.28m £10.68m
£0.2m
8.00 £1.07m
6.00
£7.60m
4.00
2.00
0.00
Contracted Hudson Rd Rent review/ Property Contracted Full Fully invested
Rent Disposal net lettings acquisitions rent at occupancy contracted
at 31 Mar 18 30 Sep 2018 rent
25FINANCIAL HIGHLIGHTS
INCOME STATEMENT TO SEPTEMBER 2018
SEP 17 SEP 18
Rental income £1.5m £4.9m
Admin costs £(0.4)m £(0.8)m
Property revaluation £2.8m £6.7m
Finance costs £(0.3)m £(0.9)m
Change in FV of swap £0.1m £0.1m
Dividend per share 1.0p 3.0p
EPRA EPS (diluted)* 0.50p 3.13p
*DILUTED FOR 2M WARRANTS ISSUED AT IPO AT 97P 26FINANCIAL HIGHLIGHTS
BALANCE SHEET AT SEPTEMBER 2018
SEP 17 SEP18
Property portfolio £93.4m £173.8m
Cash £8.1m £6.0m
Net debt £(19.1)m £(64.3)m
Other liabilities £(2.9)m £(3.7)m
Net assets £79.6m £112.0m
EPRA NAV per share 116.12p 129.21p
2728
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