Secure Income REIT Plc Results for the year ended 31 December 2020 - www.SecureIncomeREIT.co.uk
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Secure Income REIT Plc Results for the year ended 31 December 2020 www.SecureIncomeREIT.co.uk
1. Introduction Nick Leslau 2. Results Sandy Gumm 3. Portfolio update Mike Brown 4. Outlook Nick Leslau Q&A
Secure Income REIT Plc
What we do
A specialist UK REIT investing in real estate assets with long term inflation protected rental income
Who we are
Experienced board chaired by Martin Moore with Leslie Ferrar, Ian Marcus & Jonathan Lane as
independent directors together with Nick Leslau, Mike Brown and Sandy Gumm representing the
Management Team
Externally managed by the Prestbury team with its successful track record in real estate and which
owns 12.4% of the Company and which invested £5.8m cash in further interests in SIR during 2020
Track record
Established in June 2014 building on a privately owned portfolio carefully selected for secure, long term
inflation protected income characteristics, we have built the business since then to deliver 1:
15.3% p.a. TAR to December 2020
12.8% p.a. TSR to 31 December 2020 closing price of 300.0p (and 15.1% p.a. to 354p close on 9
March 2021)
Compares to FTSE EPRA NAREIT UK index of 2.8% p.a. over the period
Dividends paid throughout the pandemic period
1 IRR over the period
3Secure Income REIT Plc
What we own
161 Key Operating Assets: 159 throughout the UK and 2 in Germany
£1.95bn portfolio valuation at December 2020 independent valuation
£1.2bn / 379.3p EPRA NTA and £192m uncommitted and unfettered cash
EPRA NTA per share (pence) at 31 December 2020
Uncommitted cash
(& 0.5p other NTA)
59.8
Budget Hotels
81.4
Leisure Healthcare
112.8 125.3
41. Introduction Nick Leslau 2. Results Sandy Gumm 3. Portfolio update Mike Brown 4. Outlook Nick Leslau Q&A
Results highlights
SIR’s robust balance sheet and strong liquidity enabled us to:
provide tailored support to four of our tenant companies whose businesses suddenly closed in
March 2020, providing breathing space for them to stabilise their businesses to better recover post
pandemic;
continue to pay dividends during the year; and
leave SIR well positioned to resume its own strong growth trajectory.
6Results summary: Balance sheet
31 December 2020 30 June 2020 31 December 2019
• Portfolio independent valuation £1,946.9m £1,958.7m £2,083.1m
• EPRA NTA £1,229.2m £1,252.0m £1,391.3m
• EPRA NTA per share 379.3p 386.4p 429.4p
• Net LTV 36.4% 35.3% 31.9%
• Uncommitted cash £192.0m £219.6m £234.2m
Pence per share EPRA NTA per share 2016 to 2020
440
420
400
380
360
340
320
300
Dec-16 Dec-17 Dec-18 Dec-19 Dec-20
7Results summary: Earnings and returns
2020 2019
• Adjusted EPRA EPS 3.5p 15.3p Principally concessions impact
• Dividends per share 15.7p 16.3p Maintained: concessions are temporary
• Annualised dividend / EPRA NTA 3.8% 3.9%
• Annualised dividend / share price 4.9% 3.9% 4.1% on 9 March 2021 price of 354p
• Returns since June 2014 Listing
• TAR (IRR over 30 June 2014 EPRA
15.3% p.a.
NTA)
• TSR (IRR over issue price at listing) 12.8% p.a. FTSE EPRA NAREIT UK 2.8% p.a.
Adjusted EPRA EPS Dividends and DPS
16.3p
14.7p 15.3p 15.7p
13.6p
11.3p
10.5p 13.9p
13.6p
2.6p 5.9p
0.0p 3.5p
£12.0m £31.2m £41.4m £52.5m £50.8m
2014 2015 2016 2017 2018 2019 2020
2016 2017 2018 2019 2020
Adjusted EPRA EPS Impact of rent concessions
8Adjusted EPRA EPS
2020 2019
pence per share pence per share
Like for like (LFL) taking account of 2019 hospitals sale and before
concessions
Rent net of property outgoings before concessions
34.2 33.9
Finance costs (net)
(14.9) (15.0)
Admin & tax (5.3) (5.3)
LFL earnings before concessions 14.0 13.6
Rent concessions (10.5) -
LFL portfolio after concessions 3.5 13.6
Earnings from Hospitals sold in 2019:
Rent net of property costs - 3.0
Finance costs - (1.3)
Adjusted EPRA EPS 3.5 15.3
Like for like earnings were impacted by the rent concessions:
Adjusted EPRA recognises the rent concessions in the period of cash impact
concessions not spread as required by IFRS which is exacerbated by SIR’s very long leases,
resulting in very small adjustments for a very long time
9Rent concession cash flow impact
Actual Contracted
H1 ‘20 H2 ‘20 2020 H1 ‘21 H2 ‘21 2021
£m £m £m £m £m £m
Hotels CVA reduction (4.8) (9.7) (14.5) (4.3) (4.6) (8.9)
Merlin six months rent
(8.9) (8.8) (17.7) - 17.7 17.7
deferred to Sept 2021
Pubs rent free for improved
(0.5) (0.6) (1.1) - - -
lease terms
Cash flow rent impact (14.2) (19.2) (33.3) (4.3) 13.1 8.8
Costs of concessions (0.7) -
Earnings impact £m (34.0) 8.8
Earnings impact p/share (10.5p) 2.7p
Assuming no further concessions, 2020 is the point of deepest impact of the concessions, with
that effect reversing to a positive contribution in 2021 and all rents returning to their original
contractual lease terms from January 2022
Since 30 June 2020, £3.3m of rents temporarily switched to monthly payment but no further rent
reductions granted
Collections of post concession rents remained very strong 1
1 Rent collections over the year are summarised at slide 39
10Rent concession cash flow: temporary impact
Contractual rents
£m p.a.
140
Merlin recovery exceeds
130 Travelodge concession in 2021
120
Contractual terms have us back
110 on track from January 2022
100
90
2020 cash flow and
80 Adjusted EPRA EPS
maximum concessions
70
2019 2020 2021 2022 2023 2024 2025
Annualised rent receivable ex concessions Annualised rent receivable post concessions
Expected rents on the basis of contractual terms at 10 March 2021; this is an illustration of contracted revenue, not a profit forecast
11EPRA NTA per share over the year
Distributions maintained as
surplus cash used to ride through
the concessions impact
EPRA NTA per share (pence)
Rent net of all outgoings
contributed 9.6p per share
31 Dec 2019
31 Dec 2020
An EPRA NTA bridge showing first and second half movements is included at slide 40
12Capital structure at 31 December 2020
£m
All debt is non recourse in
structurally ring fenced
Portfolio valuation 1,946.9 facilities
Gross debt (928.3)
Covenant levels designed
with suitable risk adjusted
Cash 219.7 headroom and cure rights
Lenders have supported all
Other net liabilities (inc rent in advance) (9.1) tenant support measures
EPRA NTA 1,229.2
Net LTV
36.4%
£192.0m Uncommitted Cash at 31 Dec
2020, outside of debt structures and net
of creditors:
created flexibility in supporting
tenants when needed; and
provides a platform for SIR’s return
to its growth trajectory
13Debt resilience: in built protections
Six ring fenced facilities – no recourse to the Uncommitted Cash balance and no cross
collateralisation
Financial covenants met throughout the period; consents and waivers granted as required to
accommodate rent concessions with full support of our lenders and no other changes to debt terms
In built cash cure rights available (surplus cash can be injected into secured structures to cure breaches)
but no need to deploy to date
Covenant headroom designed at loan inception:
Covenant ‘shock absorbers’ did their work in the year, without the need to inject cash or implement
any other cures during the year
Looking ahead, as the cash flow low point is now behind us, interest cover and debt service cover
covenant headroom at 31 December 2020 is at close to or in some cases better than pre pandemic
levels
14Covenant headroom at 31 December 2020
Value fall from latest valuation to Rent fall to trigger ICR
trigger LTV default default
Gross Gross
debt LTV 31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019
2 x Travelodge £65.4m 33% 33% 46% 59% 62%
facilities (10.6% NIY) (10.4% NIY)
(structurally 68% 71%
separate) £59.0m 31% 38% 51%
(11.4% NIY) (11.1%NIY)
Arena, Brewery, £60.0m 34% 32% 39% 57% 71%
Pubs (8.8% NIY) (9.0% NIY)
Merlin leisure £380.4m 62% No LTV default test No LTV 29% after 27%
default test waiver period
Healthcare £299.7m 48% 39% 38% 38% 35%
(Ramsay & (7.3% NIY) (7.1% NIY)
Orpea)
Healthcare £63.8m 44% 45% 44% 44% 42%
(Ramsay) (8.2% NIY) (8.0% NIY)
Sensitivities are before any mitigating action such as exercise of cash cure rights
Having passed the cash flow low point, headroom is in most cases at least at or near pre Covid
levels
Detailed covenant commentary is included at slides 42 to 46
15Debt cost and maturities
Interest cost fixed throughout the debt term
Weighted average maximum interest cost of 4.9% pa – level with 2019
Weighted average term to expiry 3.1 years with first maturity in Autumn 2022
£380 million leisure facility at 5.7% p.a. fixed rate
Continued exploration of optimal capital structure and refinancing approach
considering standalone or wider refinancing options
always seeking to balance protections and debt cost
expect an opportunity to increase cash flow and earnings and thereby increase dividends
16Cash reserves
Uncommitted cash at 31 December 2020 of £192.0 million is held for:
1. Reserves for application to debt management or tenant assistance
2. Acquisitions to provide ability to move quickly to take advantage of opportunities
3. Returns to shareholders special dividends and / or capital
The liquidity buffer declined by £42.2m in the year principally through:
£34.6 million in supporting the dividends through the cash flow low point after the rent
concessions, given their short term impact
£11.8 million used to cover finance costs during the Merlin rent deferral period (cash flow
which will be recovered on receipt of the deferred rent in September 2021)
The Investment Adviser, Prestbury, does not earn a fee on the undeployed surplus cash from
the Hospitals sale, saving the Company an annualised c. £0.9 million
171. Introduction Nick Leslau 2. Results Sandy Gumm 3. Portfolio update Mike Brown 4. Outlook Nick Leslau Q&A
Portfolio highlights
31 Dec 2020 30 June 2020 31 December 2019
• Portfolio independent valuation £1,946.9m £1,958.7m £2,083.1m
• Annualised passing rent before Covid
£113.3m £111.8m £110.7m
concessions
• Topped up Net Initial Yield 5.42% 5.32% 4.95%
• Running yield by January 2022 (RPI at
5.58% 5.58% 5.25%
valuer’s estimate)
• WAULT 20.2 years 20.8 years 21.0 years
Overall portfolio valuation down 6.5%, 91% of which occurred in the first half
H2 valuation down just £11.8m or 0.6%
Amongst longest WAULT in UK REITs
192020 property valuations
Healthcare Leisure Budget Hotels Total
31 Dec Change 31 Dec Change 31 Dec Change 31 Dec Change
2020 since Dec 2020 since Dec 2020 since Dec 2020 since Dec
£m 2019 £m 2019 £m 2019 £m 2019
Independent valuation:
31 Dec 2019 748.4 851.9 482.8 2,083.1
Revaluation, constant FX 20.7 2.8 % (65.2) (7.6)% (98.0) (20.3)% (142.5) (6.8)%
Euro FX - - 6.3 0.7 % - - 6.3 0.3 %
At 31 Dec 2020 769.1 2.8 % 793.0 (6.9)% 384.8 (20.3)% 1946.9 (6.5)%
Healthcare and Budget Hotels valuations unchanged since June 2020
Leisure down 1.5% in H2
Leisure and Hotels valuations subject to RICS standard Material Valuation Uncertainty at
December 2020, as they were at June 2020
20Property yields
Healthcare Leisure Budget Hotels Total
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2020 2019 2020 2019 2020 2019 2020 2019
Net Initial Yield (topped
up)* 4.46% 4.46% 5.54% 5.07% 7.10%* 5.50% 5.42%* 4.95%
Running Yield by Jan
22(1) 4.58% 4.71% 5.76% 5.35% 7.21% 5.83% 5.58% 5.25%
Topped up Net Initial Yield up 47bps to 5.42%
Running yield expected to rise to 5.6%(1) by January 2022 when rents should be restored to
originally contracted levels
(1) Using valuers’ RPI assessments (Dec 2020: 2.5% pa on average, Dec 2019: 2.6% pa on average) and taking no account of any open market uplift on Ramsay Hospitals. 21Contracted rents before temporary concessions
Healthcare Leisure Budget Hotels Total
Change
31 Dec Change 31 Dec Change 31 Dec since 31 Dec 31 Dec
2020 since Dec 2020 since Dec 2020 Dec 2020 2019
Passing rent: £m 2019 £m 2019 £m 2019 £m £m
Like for like 36.6 2.8% 47.1 0.7% 29.2 2.9% 112.9 110.7 + 2.0%
Euro FX - - 0.4 0.9% - - 0.4 - + 0.3%
Total 36.6 2.8% 47.5 1.6% 29.2 2.9% 113.3 110.7 + 2.3%
All £32.5m p.a. rent Reviewed on
healthcare with annual a staggered
Travelodge reviews
assets upwards only RPI five-yearly
by passing rent:
have fixed reviews in the year cycle with RPI
2020 22% } deferred
annual (1.5% increase) uplifts
2021 24% } deferred
uplifts 1 April 2020
2022 39%
£7.1m of fixed to 31 Dec
2023 11%
annual increases of 2021 rolling
2024 4%
3.34% each July up and
deferred to
£1.3m Arena car Jan 2022
park lease expired
in March
22Environmental, Social & Governance Policies
The Board is committed to holding high standards of diversity, inclusion, sustainability and social
responsibility for the Company. The Board has two female and five male directors; the Investment
Adviser’s Board has one female and four male directors and the Investment Adviser’s workforce as
a whole has a 50/50 gender split
Our hospitals serve a strong social purpose and have been at the forefront of the pandemic
response
In assessing any acquisition, agreeing the terms of any new letting or restructuring any of our
existing leases we aim to include new environmental standards to the extent practicable.
As the Group’s properties are held on long full repairing leases we do not have control over their
day to day use. However we are close to our tenants and working with them to support their own
considerable ESG efforts (further detail provided on slides 55 to 57).
23Tenant covenants: Hospitals (40% of values)
2% Ramsay Health Care Limited (30% of pre concession income)
ASX50 company: market cap £8.1 bn 1
A top 5 global private hospital operator and the largest private
provider in Australia, France and Scandinavia
Ramsay UK has provided more Covid support to NHS England
than any other independent sector provider with over 500,000
NHS patients
The Arena
New volume based agreement with NHSE from 1 January 2021
30%
provides surge capacity for Covid pressures on seven days’ notice
but also allows for return of private patients and routine NHS work
Ramsay looks to opportunities from the £10bn of NHS contracts
out to tender to ease very long waiting lists
Car Park
Nightingale Hospital, London NW1 (2% of total pre concession contractual rents)
Orpea: £5.7 billion market cap 1
Central London's only private psychiatric hospital
Martin House – Part Basement
1 at 9 March 2021 market price and FX rate
24Tenant covenants: Merlin Entertainments (32% of values)
The largest visitor attractions business in Europe and second
only to Disney globally
Taken private at £6bn EV mid 2019
31%
Over 130 attractions in 25 countries
Much of latest lockdown has occurred during the period when
UK and German theme parks are closed for the winter in the
The Arena
ordinary course
“After a very challenging year for the group, our
Merlin Entertainments
Kirkbi (50%):£12bn equity experience in between lockdowns and our exciting future
75% Lego owner
investment proposals for the UK and German theme
parks allows us to look forward to the future with
Blackstone Core Equity confidence that we can continue with our pre COVID-19
Partners: US$619bn growth trajectory.” Nick Varney, Merlin CEO, 3 March 2021
(£445bn) AUM Car Park
Manchester
StrongVictoria
market support of Merlin’s traded bonds, trading above
CPPIB: (Canada Pension par and at 4.5% yield to maturity 1
Station
Plan Investment Board)
C$476bn (£270bn) AUM Well capitalised owners with long term investment horizons
Martin House – Part Basement
1 at 9 March 2021
25Merlin 2026 bonds 1 since 1 Jan 2020
Trading at 4.5% Yield To Maturity
The Arena
Manchester
Victoria
Station
Martin House – Part Basement
1 at 9 March 2021
26Tenant covenants: Travelodge (20% of values)
Established brand with very strong brand recognition and a
national network of 586 hotels and over 44,500 rooms 1
78 of our 123 hotels and portfolio wide 395 of Travelodge’s UK
hotels are currently open, mainly for business customers.
Positive trade between lockdowns with summer occupancy
quickly building to over 60% (compared to 80-85% typically)
26%
Travelodge was able to access financingThe
inArena
the private
placement debt market for a £65 million issue in December 2020
and received £40m equity injection during 2020
SIR’s valuation reflects £58,000 per room, c.80% of replacement
June 2020 CVA - unique cost with zero land cost
features:
no assets handed back by Budget hotels show greater resilience than wider hotel market:
tenant – network largely Track record of faster recovery in recessionary times
preserved (over 98% of Less reliant on conferences and group bookings
Car Park
Manchester
Less reliant on international travellers
2019 EBITDA) Victoria
Rents not permanently Benefit
Station from cost conscious customers seeking better
reset: concession period value
expires Jan 2022
Martin House – Part Basement
1 at 31 December 2020
27Travelodge 2025 bonds 1 since 1 Jan 2020
Trading at 7.6% Yield To Maturity
The Arena
Manchester
Victoria
Station
Martin House – Part Basement
1 at 9 March 2021
28Other Leisure (9% of values)
ASM / SMG: Manchester Arena (4% of total pre concession contractual rents)
Arena operator SMG is part of ASM, the world’s largest venue management company with >300
venues in 21 countries
ASM’s credit is rated B1 by S&P noting that once live events begin to recover, ASM “will likely
benefit from its leading market position in the outsourced venue management business”
The offices are open; the Arena should be able to open from 21 June and expects to be fully
operational by September
The Brewery, Chiswell St, London EC1 (3% of total pre concession contractual rents)
The third largest catered event space in central London (after Grosvenor House and Park Lane
Hilton)
Plans to open from 21 June and expects to be fully operational by September 2021
Stonegate Pubs (2% of total pre concession contractual rents)
Stonegate is the UK's biggest operator of pubs and raised £1.2bn in 2020 in a bond issue to
refinance the Ei acquisition (issued at 96p and now trading at 105p 1 and a 7.0% yield to maturity)
and also raised £50 million in debt and a £50m RCF at that time
The pubs plan to open fully on 17 May with beer gardens to open from 12 April
1 at 9 March 2021
29Very long term income with no breaks
Weighted average term to expiry 20.2 years – no tenant breaks
98% of portfolio income has 16 years or more unexpired without break
Martin House – Part Basement
30Share price relative to EPRA NTA since 1 Jan 2020 Source: Thomson Reuters Datastream as at 9 March 2021; Company Documentation 31
1. Introduction Nick Leslau 2. Results Sandy Gumm 3. Portfolio update Mike Brown 4. Outlook Nick Leslau Q&A
Outlook
The huge number of people vaccinated bodes well for the Government’s announced relaxation of
Covid restrictions:
UK’s ‘coiled spring’ of pent up demand (Bank of England’s Andy Haldane)
SIR’s leisure & hospitality assets should be major early beneficiaries
Management and Board’s priority is to eliminate the share price discount to net assets
Prestbury management team has a proven track record in this area
SIR’s balance sheet has proved to be resilient in difficult times, positioning the business for a return to
growth
Low cost money alongside expansionary fiscal policy could be a catalyst for inflation, in which case
SIR’s assets with their inflation protection should be become even more valuable
Dividends have been maintained through a very challenging year and the dividend should increase
with our in built income growth through fixed and inflation linked rent reviews
Management has invested a further £5.8m of cash in its interests in SIR
Team interests worth c. £152m at December 2020 net asset value is the largest management
holding by value among UK REITs
Every member of the Management Team has a personally significant investment in the business
Holding 12.4% of the Company, our interests are closely aligned with all shareholders
331. Introduction Nick Leslau 2. Results Sandy Gumm 3. Portfolio update Mike Brown 4. Outlook Nick Leslau Q&A
Any further questions? Please contact Nick, Mike or Sandy at Enquiries@SecureIncomeREIT.co.uk
Appendices 37. Glossary 38. Features of income security Financial reporting 39. 2020 rent collections 40. EPRA NTA bridge first and second half 2020 41. Strict ring fencing of borrowing risk 42. Detailed debt covenant commentary by facility 47. Dividend policy 48. Summary of EPRA measures Portfolio 49. Portfolio by rental value 50. Leisure portfolio 51. Healthcare portfolio 52. Budget Hotels portfolio 53. Analysis of review basis 54. RPI methodology change ESG 55. ESG policies and tenant initiatives Management Team and Board 58. Management track record, team and contract terms 61. Independent directors Notes 62. Forward looking statements 63. Disclaimer
Glossary
Adjusted EPRA EPS EPRA EPS adjusted to exclude non-cash and non-recurring costs, calculated on the basis of time weighted shares in issue
DPS Dividends per share
Dividend Cover Adjusted EPS divided by DPS
EPRA European Public Real Estate Association
EPRA EPS A measure of EPS designed by EPRA to present underlying earnings from core operating activities
EPRA NTA A measure of NAV designed by EPRA to present the fair value of a company on a long term basis by excluding items such as interest rate
derivatives held for long term benefit, net of an adjustment to exclude 50% of any deferred tax
EPS Earnings per share, calculated as the earnings over a period, after tax, attributable to members of the parent company divided by the weighted
average number of shares in issue over the period
FRI Full Repairing and Insuring lease terms – where a tenant bears maintenance, repair and insurance costs
Key Operating Asset An asset where the operations conducted from the property are integral to the tenant’s business
Loan To Value or LTV The outstanding amount of a loan expressed as a percentage of property value
NAV Net asset value
Net Initial Yield Annualised net rents on investment properties expressed as a percentage of the investment property valuation, less purchasers’ costs
Net LTV LTV calculated as the gross loan amount, less cash balances, the net amount of which is dividend by property valuation
Prestbury Prestbury Investment Partners Limited, the investment adviser to the company
RevPAR Revenue per available room
Running yield The anticipated Net Initial Yield at a future date, taking account of any rent reviews in the intervening period
Topped Up Net Initial Yield Net Initial Yield adjusted to include notional rent in respect of let properties which are subject to a rent free period at the valuation date.
Total Accounting Return, or The movement in EPRA NTA per share over a period plus distributions paid in the period, expressed as a percentage of EPRA NTA per share
TAR at the start of the period
Total Shareholder Return, or The movement in share price over a period plus distributions per share paid in the period, expressed as a percentage of the share price at the
TSR start of the period
Weighted Average The term to the first break or expiry of a lease, weighted by rental value
Unexpired Lease Term, or
WAULT
37Features of income security
Our assets are let on individual leases with income protection at the site and tenant level
and the majority of rental income has the further protections of parent guarantees
Income security is assessed by reference either to the financial strength of the tenant or to the
extent of asset cover provided by way of residual asset value.
• Site profitability creates Tenant • Financial strength
attraction to alternative • Global spread
operators • May include added
• Financial strength
• Alternative use protection of public
• Assignment restrictions
• Residual value company
• Spread of operations transparency
• Rent payable even in
event of tenant’s business
interruption
Asset Guarantor
382020 Rent collections remained strong
March /
April June / July Sept / Oct Dec / Jan
£m £m £m £m
Originally contracted 27.3 27.5 27.6 27.8
Merlin deferral - (8.9) (8.9) -
Short term reductions (4.8) (4.9) (4.8) (2.2)
Rescheduled to monthly - (1.0) (1.6) (4.0)
Actually due 22.5 12.7 12.3 21.6
Received when or before due (20.2) (12.7) (12.3) (21.3)
Received after due date and before 31
(2.3) - - -
December
Rent arrears at 31 December 2020 - - - 0.3
(0.3)
Received by end of January 2021 - -
Rents from 2020 demand cycle still
- - - -
outstanding
39EPRA NTA per share (pence)
31 Dec 2019
30 June 2020
EPRA NTA per share: H1 and H2
31 Dec 2020
40Strict ring fencing of borrowing risk
Ring fenced groups by EPRA NTA Ring fenced
EPRA NTA
Merlin £246.0m
Arena,
Brewery, Healthcare 1 £323.4m
Pubs Merlin (Ramsay & Orpea)
11% 24%
Healthcare 2 £82.6m
Hotels 2 (Ramsay)
13%
Hotels 1 £132.2m
Hotels 2 £131.0m
Hotels 1
13% Arena, Brewery, Pubs £119.7m
Healthcare
1
31% Security groups £1,034.9m
Healthcare 2 Uncommitted Cash £192.0
8%
Net exposure £842.9
Four of the six facilities could individually be repaid in full from the Uncommitted Cash
41Covenant headroom at 31 Dec 2020: Budget Hotels
Value fall from latest valuation Rent fall to trigger ICR
to trigger LTV default default
Gross
Gross debt LTV 31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019
2 x Travelodge £65.4m 33% 33% 46% 59% 62%
facilities 10.6% NIY 10.4% NIY
£59.0m 31% 38% 51% 68% 71%
11.4% NIY 11.1% NIY
These two facilities are structurally separate, with the same arranger but different lender groups,
however they have the same tenant and the same loan terms so we present them together
Income cover has tightened through the rent concession period, however the significant lessening
of the rent reduction from the start of 2021 has returned the ICR headroom to close to its pre
Covid levels, and the return to originally contracted levels in 2022 should bring the headroom back
to or better than December 2019 levels
LTV has tightened with the valuation falls in the year. The portfolios are valued on average at a
Net initial Yield of 7.1% at 31 December 2020 from 5.5% pre Covid. Yields would need to shift to
more than 10.6% from December 2020 values before a default occurred, ignoring any mitigating
action taken through cash cures or otherwise
42Covenant headroom at 31 Dec 2020: Arena, Brewery,
Pubs
Value fall from latest valuation Rent fall to trigger ICR
to trigger LTV default default
Gross
Gross debt LTV 31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019
Arena, Brewery, £60.0m 34% 32% 39% 57% 71%
Pubs 8.8% NIY 9.0% NIY
The portfolio securing this debt was valued at a Net initial Yield of 6.0% at 31 December 2020 and
5.5 % pre Covid.
The ICR level is measured at 31 December 2020 at an unusually low point as we have excluded
the late rental payment by one tenant whose rent was overdue at the date of testing but received
very shortly afterwards, restoring income cover to 74%
In any case, while the covenants have tightened, their high levels of day one headroom result in
levels that remain significant at 31 December 2020 even though they have compressed through
the rent concession periods.
43Covenant headroom at 31 Dec 2020: Merlin leisure
Value fall from latest valuation Rent fall to trigger ICR
to trigger LTV default default
Gross
Gross debt LTV 31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019
Merlin leisure £380.4m 62% No LTV No LTV 29% after 27%% after
default test default test waiver period waiver period
While there is no LTV default covenant there are LTV cash sweep covenants:
>80% LTV would trigger a partial cash sweep of an additional 1% p.a. amortisation and
would require yields to shift to 7.0% to trigger it: 23% headroom at 31 December 2020 (28%
at 31 December 2019)
>85% would trigger a full cash sweep and would occur at a net initial yield of 7.4%: 27%
headroom at 31 December 2020 (32% at 31 December 2019)
While the percentage fall in valuation required to trigger these tests has tightened, the net initial
valuation yields at which they would occur has increased slightly as a result of the increases in
rent in the year and the scheduled debt amortisation reducing the loan balance
44Covenant headroom at 31 Dec 2020: Healthcare 1
Value fall from latest valuation Rent fall to trigger ICR
to trigger LTV default default
Gross
Gross debt LTV 31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019
Healthcare £299.7m 48% 39% 38% 38% 35%
(Ramsay & 7.3% NIY 7.1% NIY
Orpea)
Headroom on the LTV test has improved over the December 2019 level of 38% for the default test
with the trigger level valuation yield improving from 7.1% to 7.3%.
There is a full cash sweep LTV trigger at >74% LTV over which there is 35% headroom (NIY
6.8%)
ICR headroom has improved from 35% to 38% through the rental increases in the year and the
scheduled loan repayments
45Covenant headroom at 31 Dec 2020: Healthcare 2
Value fall from latest valuation Rent fall to trigger ICR
to trigger LTV default default
Gross
Gross debt LTV 31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019
Healthcare £63.8m 44% 45% 44% 44% 42%
(Ramsay) 8.2% NIY 8.0% NIY
Headroom on the LTV test has increased from 44% at December 2019 to 45% with the NIY trigger
point increasing from 8.0% to 8.2% following the increase in rents during the year
There is a cash sweep ICR trigger at 150% and headroom over that covenant has improved from
31% to 33%
The ICR default test headroom has improved from 42% to 44%
46Dividend policy
Dividend policy has historically been to pay out Adjusted EPRA EPS 1:1 in covered
quarterly cash dividend
In 2019, we undertook to top up the core dividend to compensate, short term, for the net
income on the sold hospitals: 2.75p per share annualised in 2019 and 3.0p per share in 2020.
Reassessment of dividend policy in light of the pandemic:
Discontinued dividend top-up from the hospitals sale
Given temporary nature of rent concessions, supported dividends from liquidity buffer
at the levels guided with the 2019 results: 3.65 pence per share per quarter currently,
expected to rise to 3.95 pence in July 2021 assuming no further concessions required
Policy remains under review to maintain a resilient balance sheet
2016 2017 2018 2019 2020 2021
Dividend per share (p)
year year year year Year Q1
Core dividend 5.9p 13.6p 13.9p 15.2p 14.4p 3.65p
Hospitals income top-up - - - 1.1p 1.3p -
Dividends paid 5.9p 13.6p 13.9p 16.3p 15.7p 3.65p
47Summary of EPRA measures
2020 2019
• EPRA Net Tangible Assets per share 379.3p 429.4p
• EPRA Net Reinstatement Value per share 421.7p 474.6p
• EPRA Net Disposal Value per share 364.3p 417.9p
• EPRA Net Asset Value per share * 381.2p 431.1p
• EPRA Net Initial Yield 4.44% 4.94%
• EPRA Topped Up Net Initial Yield 5.40% 4.94%
• EPRA Vacancy Rate 0% 0%
• EPRA EPS 16.3p 16.9p
• Adjusted EPRA EPS ** 3.5p 15.3p
• EPRA Capital Expenditure £0.5m £0.3m
• EPRA Cost Ratio inc direct vacancy costs 14.8% 17.5%
• EPRA Cost Ratio ex direct vacancy costs 15.1% 17.6%
• Adjusted EPRA Cost Ratio inc direct vacancy costs 18.4% 14.9%
• EPRA Cost Ratio ex direct vacancy costs 18.7% 15.0%
• drawn up on the EPRA guidelines applicable prior to 1 January 2020
** not an EPRA measure; calculation included in note 10 to the 31 December 2020 financial statements
Full details of calculations are included in supplementary information presented with the preliminary results announcement 48Tenant covenants by contractual rent
Covenant by Rent Before Concessions
Other, 2% Stonegate, 2%
Orpea SA, 2%
The Brewery, 3%
Merlin Entertainments
SMG, 4%
Limited, 31%
The Arena
Travelodge Hotels
Limited, 26%
Manchester
Victoria
Station
Ramsay Health Care
Limited, 30%
Martin House – Part Basement
49Leisure: £793m, 41% of total portfolio value
Valued at £793.1m
(1)
at 31 Dec 2020 on £47.5m of passing rent
(2) Sub-sector by value
• Merlin Theme Parks The Pubs
Brewery 4%
• Manchester Arena 8 acre complex 6%
Manchester
• The Brewery on Chiswell Street, London Arena
• 18 Stonegate Pubs 12%
Individual FRI leases with 22.1 year WAULT
Theme
Park Theme
Merlin – Theme Parks Hotels Parks
• 75% (£35.6m) of leisure portfolio rent - guaranteed by Merlin 15% 63%
Entertainments Ltd : taken private in 2019 at a £6bn valuation or
approx. 12x EBITDA multiple
• Second largest visitor attractions company in the world and largest Rent review type by rent
in Europe
• Alton Towers Park and Hotel, Thorpe Park, Warwick Castle and RPI - 5 Open Market Reviews
yearly
Heide Park and Hotel 8%
1%
Fixed
Uplifts, av.
SMG – Manchester Arena 3.06% pa
• 8.5% (£4.0m) of leisure portfolio rent 22%
• Now part of ASM, the world’s largest venue management company
with over 322 venues in 21 countries
RPI -
annual
Leisure Portfolio Net Initial Yield of 5.54% at 31 Dec 2020 69%
(1) Includes £123.4m of German assets valued in Euros and translated at the 31 Dec 2020 exchange rate
(2) Includes £7.1m of rent from German assets denominated in Euros and translated at the 31 Dec 2020 exchange rate
50Healthcare: £769m, 39% of total portfolio value
Ramsay Location by value
11 private hospitals valued at £716.4m at 31 Dec 2020,
generating £34.4m of passing rent South West
5%
Let on individual fully repairing and insuring leases with a North West
term to expiry of 16.3 years at Dec 2020 – no break clauses 9%
Rent increases by at least 2.75% p.a. throughout the lease term
in May each year
Guaranteed by Ramsay Health Care Limited, one of the top
Yorks
five private hospital operators in the world, an ASX 50 company 11%
with a market capitalisation of £8.1 bn (1);
Nightingale Hospital, London
Let to a UK subsidiary of Groupe Sinoué on a fully repairing South East
and insuring lease for 23.6 years from Dec 2020 59%
Central London’s only private psychiatric hospital – located in Midlands
Lisson Grove, near Marylebone station 16%
Rent increases by 3.0% each May
Valued at £52.7 m at 31 Dec 2020 generating £2.2m of passing
rent
Guaranteed by Orpea SA, mental health and aged care
specialists, listed on Euronext with c. £5.6bn 1 market
capitalisation
Healthcare Portfolio Net Initial Yield
4.46% at 31 Dec 2020
(1) Market data as at 9 March 2021
51Budget Hotels: £385m, 20% of total portfolio value
31 Dec 2020 valuation £384.8m generating £29.2m(1) of passing rent Location by value
123 Budget Hotels with 6,577 rooms West North
Midlands 6%
− Top three assets in Manchester, Oxford & Edinburgh: average 9%
lot size £19.4m
East
− Remaining 120 properties: average lot size £2.7m South East
Midlands
38%
9%
− Average rent of £4,435 per room including City Centre sites
21.4 year weighted average unexpired lease term
North West
− no unexpired lease shorter than 17.6 years
12%
− no break clauses
Five yearly upwards only uncapped RPI rent reviews Scotland &
Wales South West
Each hotel let to Travelodge Hotels Ltd – one of the UK’s leading hotel 11% 15%
brands. Trading in the UK, Ireland and Spain with 586 hotels and over
Tenure by value
44,500 rooms (2).
Short
Leasehold*
14%
Leasehold
19% Freehold &
Virtual
Freehold
67%
Hotel Portfolio Topped Up Net Initial Yield of 7.1% at 31 Dec 2020
* Leases with sub 80 years unexpired
(1) Includes August 2020 and October 2020 rent reviews payable from 1 Jan 2022 under CVA 52
(2) At 32 December 2020Rent reviews
Some reviews rolling up for payment after concession periods but remain a key feature
against background of muted returns on other long income products
31 December
31 December 2020 2019
Reviewed Reviewed three or
annually five yearly Total portfolio Total Portfolio
Uncapped RPI 25% 27% 52% 53%
Collared RPI 4% 2% 6% 6%
Total upwards only RPI-linked reviews 29% 29% 58% 59%
Fixed uplifts 38% 3% 41% 41%
Open market reviews - 1% 1%
67% 33% 100% 100%
Total portfolio
58% of portfolio income is subject to upwards only RPI-linked reviews, the vast majority of which is
uncapped RPI
67% of rents are reviewed annually
53RPI methodology change
Proposed changes to RPI from 2030
UK Government announced in November 2020 that the calculation of RPI will be amended from February
2030 to bring RPI in to line with CPIH in order to deal with mathematical flaws in its calculation
CPIH on average 0.8 percentage points lower than RPI over the past 10 years
Relevance to SIR
58% of SIR annual rent roll has RPI-linked reviews
41% of SIR annual rent roll contains fixed uplifts and will not be affected by any reduction in inflationary
increases
10% of SIR RPI-linked rent reviews have a collar averaging 1.64% providing additional protection against
a downward shift in the measure of inflation
Exact interpretation of the RPI clauses in our leases will depend on precisely how the UK Statistics Agency
implements the change: worst case view is switch from RPI to CPIH, but our lease provisions may provide
protection such that there is no change in some or all cases
To date long income transactions have demonstrated limited yield differential between leases with RPI or
CPI linked reviews, with other property characteristics and covenant carrying greater weight
54Environmental, Social & Governance Policies
The Company is committed to operating in a way that takes account of the interests of its broad range of
stakeholders, as set out in the Section 172 statement on the Company’s website
The Board is committed to holding high standards of diversity, inclusion, sustainability and social responsibility
for the Company. The Board has two female and five male directors; the Investment Adviser’s Board has one
female and four male directors and the Investment Adviser workforce as a whole has a 50/50 gender split
The Group’s properties are held on very long fully repairing and insuring leases. The vast majority of these
leases have been in place for over 12 years and, typically for leases of that time, they do not include any tenant
obligations for emissions reporting or improving environmental benchmarks, although they do include the usual
requirement for compliance with laws and regulations including those relating to environmental matters.
In assessing any acquisition and in agreeing the terms of any new letting we aim to include new environmental
standards to the extent practicable.
The nature of the contractual relationship with our tenants is such that we are not in a position to influence
environmental outcomes nor to report site CO2 emissions data and we are unlikely to be able to do so in the
near term, with 17 years yet to expire before the first material lease expiry, however we are close to our tenants
and working with them to support their own considerable ESG efforts
55ESG: Tenant progress
Rent p.a.
£m
Merlin 35.6
Merlin Entertainments Limited has a “Responsible Business” section on its website,
Entertainments
www.MerlinEntertainments.Biz. That includes reports on a range of ESG issues covering health,
Limited
safety & security, people & communities, animal care & conservation, the environment and
corporate governance.
The most directly relevant of these to the Company’s business is the Environmental Policy which
includes, among other things, a commitment to comply with and where appropriate and practicable
to exceed all relevant environmental legislation and a commitment to measure, monitor and make
public their annual carbon emissions with a carbon reduction target of at least 2% year on year.
Ramsay Health 34.4
Care Limited Ramsay Health Care Limited has published a Corporate Governance Statement on the “Investors”
section of their website, www.RamsayHealth.com. This covers in some detail their various
governance policies and includes, on page 14 of that statement, their Sustainability policy. That
report includes details of their Global Sustainability Committee and refers to the appointment during
the financial year ended 30 June 2020 of a Group Sustainability Officer, responsible, among other
things, for driving their sustainability programme.
Ramsay has been included in the FTSE4Good Global Index every year since 2011. That index
identifies companies demonstrating strong ESG practices, measured against globally recognised
standards. Every year since 2017, Ramsay received an MSCI ESG rating of AA. Ramsay also
publishes a Sustainability Impact Report, available on its website, covering the various aspects of
ESG including, in their 2020 report, specific commentary on their actions during the Covid-19
pandemic.
56ESG: Tenant progress
Rent
p.a.
£m
Travelodge Hotels 28.3
Limited
Travelodge Hotels Limited’s latest public statements on ESG matters are made in its annual report
for the year ended 31 December 2019, which is available at Companies House or on the Investors
section of its website www.Travelodge.co.uk/investors. This includes, on pages 23 to 27, their
sustainability reporting and social impact statement. That report includes the disclosure that their
gross GHG emissions in 2019 represented a 7.9% reduction on those in 2018 and a 12.2%
reduction in that period for the measure of emissions intensity relative to turnover. Travelodge’s
reports that its ‘Energy Governance Group’ is continuing to drive positive change in this area.
ASM Global (parent 4.0
entity of SMG) ASM Group’s Corporate Responsibility Statement is available on the ‘our story’ section of its
website, www.ASMGlobal.com. This includes an overview of their environmental policy, stating
their intention to be industry leaders in this area and confirming that they undertake the
measurement of GHG emissions, water consumption and waste reduction.
The Brewery on 3.4
The Brewery’s Corporate Social Responsibility statement is available within a dedicated section of
Chiswell Street
their website www.TheBrewery.co.uk. The tenant and venue have achieved ISO20121 certification
Limited
for sustainability in event management, incorporating socially and environmentally responsible
decision making.
57Proven track record of delivering shareholder returns
Prestbury Team Track Record
The Prestbury Team has a strong track record including, between them, the management of three listed real estate investment vehicles,
Burford Holdings Plc, Prestbury Group Plc and Max Property Group Plc
A Max Property Group Plc – Average Total Return of 17.1% p.a. (May-2009 – Sep-2014) vs. Peer Group1
17.1%
15.6%
Average NAV Total
return per Share
9.2% 8.2%
6.6% 6.1% 5.1%
Max London Metric London & Stamford LXB Metric Retail NewRiver Retail Conygar
(Jan-13 - Sep-14) (May-09 to Sep-12) (Mar-10 to Sep-12)
Prestbury Group Plc: Average Total Returns of 25% p.a. Burford Holdings Plc – Total Returns of 34% p.a.
B C
(1997 – 2003) (1987 – 1997)
100 De-listing and 1,500 14.6x
disposal of majority
1,250
Indices Rebased to
Rebased to 100
Prestbury NAV Per
of portfolio 25% p.a. returns
75 1,000 34% p.a returns
750
Share
50
500
8.2% p.a returns
25 250 2.0x
0
0 Dec-1986 Dec-1988 Dec-1990 Dec-1992 Dec-1994 Dec-1996
Dec-1997 Dec-1998 Dec-1999 Dec-2000 Dec-2001 Dec-2002 Dec-2003 Burford NAV Progression Peers NAV Progression
NAV per share Distributions Previous Distributions FTSE 350 Real Estate Index
1 Sources: Data compiled from company announcements and annual reports over the following periods: Max Property Group Plc (May 2009 to September 2014); London & Stamford Property Plc (May 2009 to
September 2012); Metric Property Investments Plc (March 2010 to September 2012); LXB Retail Properties Plc (October 2009 to September 2014); LondonMetric Property Plc (January 2013 to September
2014); New River Retail Ltd (September 2009 to September 2014); and Conygar Investment Company Plc (May 2009 – September 2014). LondonMetric Property Plc was not listed as a cash shell but created
through the merger of London & Stamford Property Plc and Metric Property Investments Plc which were listed in 2007 and 2010 respectively.
58Proven management team: 145+ yrs combined experience
Strong Management Team Track Record
Management team members have a strong track record of long-term investment in the companies they have managed (Burford,
Prestbury, Helical Bar, Max Property Group Plc)
Nick Leslau Mike Brown Sandy Gumm Tim Evans Ben Walford
Prestbury’s Chairman; Prestbury’s CEO; Prestbury’s COO; Prestbury’s Property Director Prestbury’s Senior Surveyor
SIR Director SIR Director SIR Director
Over 37 years’ real Over 36 years’ real Over 28 years’ Over 28 years’ real Over 16 years’
estate experience estate experience in experience in finance estate experience experience in property
(Secure Income REIT Plc, funds and listed with extensive Plc board (Secure Income REIT investment,
Max Property Group Plc, companies (Secure experience (Secure Plc, Prestbury, Jones refurbishment and
Prestbury Group Plc, Income REIT Plc, Max Income REIT Plc, Lang LaSalle, Hill design
Burford Holdings Plc) Property Group Plc, Prestbury Group Plc, Samuel Asset Over 18 years with
Extensive Plc board Helical Bar plc, Burford Holdings Plc) Management, MEPC) Prestbury
experience both as Threadneedle) 9 years with KPMG in Over 18 years with BSc (Hons) Est Man,
executive and non- Over 11 years with Sydney and London Prestbury MRICS
executive Prestbury Over 23 years with MA Hons (Cantab),
Over 23 years with BSc (Hons) Land Man, Prestbury MRICS
Prestbury MRICS BEc, CA (ANZ)
BSc (Hons) Est Man,
FRICS
Overseeing an experienced team of finance, property and administrative staff
59Management team strongly aligned with shareholders
Management Team’s £152m(1) shareholding the largest by value in the quoted UK Real Estate sector
Prestbury exclusively offers all qualifying long lease deals to the Company
Contract term to December 2025 – no renewal rights or termination payment at end of term; minimal
termination payments on change of control (up to 4x previous quarter’s advisory fee)
Incentive to achieve above target returns via incentive share awards of 20% of surplus after investor
priority returns:
• Target is 10% growth in EPRA NAV plus dividends above higher of (i) previous year end EPRA NAV and (ii) EPRA
NAV at time of last incentive share award (“high water `mark”)
• Paid in shares subject to lock-in with phased release over18 – 42 months
• High Water Mark established in 2019 – NAV fall in 2020 has not rebased the incentive fees. NAV per share growth
plus dividends paid would need to exceed 140.4 pence per share in 2021 before any incentive fee is earned
• Save in the event of a sale of the majority of the business, incentive fees capped at 5.0% of EPRA NAV
• Contract to be reviewed by Remuneration Committee again in December 2022 or in the event that it is proposed that
the Company moves to the Main List of the London Stock Exchange
Management meets overhead costs and receives advisory fee on sliding scale relative to EPRA NAV :
paid in cash quarterly 1.25% p.a. up to £500m, plus 1.0% p.a. between £500m to £1.0bn, plus 0.75% p.a.
between £1.0bn and £1.5bn, plus 0.5% thereafter
Surplus cash on hospitals sale excluded from fee entitlement – current saving approx. £0.9m per annum
60
(1) At 31 December 2020 EPRA NTAHighly experienced board: Independent Directors
Governance Structure Strongly Aligned with Shareholder Interests
• Chairman highly experienced in long lease sector and independent of managers
• 4 independent non-executive directors (including Chairman)
• 3 management representatives on Board (Nick Leslau, Mike Brown and Sandy Gumm) must be in minority for all decisions
Experienced Independent Directors
Ian Marcus Jonathan Lane Leslie Ferrar, CVO
Martin Moore
Remuneration Committee Chair and Nominations Committee Chair Audit Committee Chair
Chairman
Senior Independent Director
Senior Non-executive director of Town Centre Senior Advisor to Morgan Stanley & Non-Executive Director and Chair of
Senior advisor to KKR and Senior Audit Committee of Windmill Hill
Securities Plc. Lead Independent Director until 2019 Chairman of EMEA Real
Independent Non-Executive Director Asset Management and Member of
Shurgard Self Storage SA Estate Investment Banking
at SEGRO Plc and non-executive he Council of the Economy of the
director of BMO Commercial Senior Adviser to Eastdil Secured, Elysian Chairman of the board of Grosvenor Vatican and Chairman of its Audit
Property Trust Residences Limited, The Anschutz Europe Committee
Entertainment Group and Work.Life
Chairman of M&G Real Estate until Policy Committee member of the Advisor to the Diocese of
2013 and CEO from 1996 to 2012 Member of Redevco NV’s Advisory Board, British Property Federation, Westminster
Trustee of The Prince’s Foundation and member of the Bank of England
Chairman of the Guildhall School Former Non-Executive member of
Member of the European Advisory Board of the Commercial Property Forum
Trust HMRC Risk & Audit Committee
Wharton Business School Real Estate
Past President and board member of Faculty; President of Cambridge University Director, Trustee and chair of the
Development Board of Tenebrae Treasurer to TRH the Prince of
British Property Federation Land Society Wales and the Duchess of Cornwall
Choir
Past Chairman of the Investment Former Chairman of Bank of England’s 2005 to 2012
Property Forum, and Commissioner Commercial Property Forum. MD and Former member of the Government’s
Property Unit Advisory Panel, Formerly Non-Executive Chairman of
of The Crown Estate Chairman of the European RE Investment The Risk Advisory Group and Audit
Banking division of Credit Suisse; Past former member of the advisory board
Chartered Surveyor of Resolution Real Estate Advisors Committee member for the Sovereign
President of the British Property Federation; Grant; Former head of international
past Chairman of the Investment Property LLP and former Director of Songbird
Estates expatriate tax at KPMG
Forum, former Crown Commissioner
Chartered Accountant
61Important note on forward looking statements
This document includes forward looking statements which are subject to risks and
uncertainties. You are cautioned that forward looking statements are not guarantees of
future performance and that if risks and uncertainties materialise, or if the assumptions
underlying any of these statements prove incorrect, the actual results of operations and
financial condition of the Group may differ materially from those made in, or suggested by,
the forward looking statements. Other than in accordance with its legal or regulatory
obligations, the Company undertakes no obligation to review, update or confirm
expectations or estimates or to release publicly any revisions to any forward looking
statements to reflect events that occur or circumstances that arise after 10 March 2021.
62Disclaimer
The information contained in these slides and communicated verbally to you, including the speech(es) of the presenter(s) and any materials distributed at or in
connection therewith (together, the “Presentation”) is confidential. Reliance upon the Presentation for the purpose of engaging in any investment activity may
expose an individual to a significant risk of losing all of the property or other assets invested. If any person is in any doubt as to the contents of the Presentation,
they should seek independent advice from a person who is authorised for the purposes of the Financial Services and Markets Act 2000, as amended (the
“FSMA”) or otherwise suitably authorised if in another jurisdiction and who specialises in advising on investments of this kind. Any investment decision should not
be made based on the content of the Presentation but be made solely on the basis of the final announcement published by Secure Income REIT Plc (the
“Company”). The contents of the Presentation shall not be taken as any form of commitment on the part of any person to proceed with any transaction.
The Presentation has been prepared by, and is the sole responsibility of, the Company. No undertaking, representation, warranty or other assurance, expressed or
implied, is made or given by or on behalf of Stifel Nicolaus Europe Limited (“Stifel”), the Company or Prestbury Investment Partners Limited (the “Investment
Adviser”) or any of their respective shareholders, directors, employees, advisers, agents or affiliates or any other person as to the fairness, accuracy or the
completeness of the information or opinions contained herein, and to the extent permitted by law, no responsibility or liability is accepted by any of them for any
such information or opinions. Notwithstanding the aforesaid, nothing in this paragraph shall limit or exclude liability for any representation or warranty made
fraudulently.
The Presentation has not been approved by the Financial Conduct Authority (the “FCA”) and does not constitute, or form part of, an admission document, listing
particulars, a prospectus or a circular relating to the Company, nor does it constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any
offer to purchase or subscribe for any ordinary shares in the Company (the “Ordinary Shares”). Further, neither the Presentation nor any part of it, or the fact of its
distribution, shall form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract for Ordinary Shares. Any investment
in Ordinary Shares should only be made on the basis of definitive documentation in final form.
The Presentation may not be copied, reproduced or further distributed, in whole or in part, to any other person, or published, in whole or in part, for any purpose
without the prior written consent of the Company.
This Presentation is being distributed by the Company in the United Kingdom in accordance with Article 69 of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the “Financial Promotion Order”) made pursuant to section 21(5) of the FSMA. In addition, this Presentation is being
distributed in the United Kingdom only to, and is directed only at, those persons falling within the following articles of the Financial Promotion Order: Investment
Professionals (as defined in Article 19(5)); and High Net Worth Companies (as defined in Article 49(2)). Persons who do not fall within either of these definitions
should not rely on the Presentation nor take any action based upon it but should instead return it immediately to the Company. The Presentation is exempt from
the general restriction in section 21 of the FSMA relating to the communication of invitations or inducements to engage in investment activity on the grounds that it
is made only to certain categories of persons.
The distribution of the Presentation in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession the Presentation
comes should inform themselves about and observe any such restrictions. In particular, neither the Presentation nor any copy of it should be distributed, directly or
indirectly, by any means (including electronic transmission) to any persons in Australia, Canada, Japan or the Republic of South Africa. This Presentation should
not be distributed in or into the United States of America (or any of its territories or possessions) (together, the “US”) other than to “qualified institutional buyers”
(“QIBs”) as such term is defined in Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”).
The Ordinary Shares have not been, and will not be, registered under the Securities Act or under the securities laws of any other jurisdiction, and are not being
offered or sold (i) directly or indirectly, within or into the US, Australia, Canada, Japan or the Republic of South Africa or (ii) to, or for the account or benefit of, any
US persons or any national, citizen or resident of the US, Australia, Canada, Japan or the Republic of South Africa, unless such offer or sale would qualify for an
exemption from registration under the Securities Act and/or any other applicable securities laws.
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