time; ? Share price total return - reflects the movement in share price and dividends payable to shareholders; ? EPS and EPRA EPS - reflect the Company's ability to generate recurring earnings from the property portfolio which

underpin dividends; ? Dividends per share and dividend cover - to provide an attractive, sustainable level of income to shareholders,

fully covered from net rental income. The Board reviews target dividends in conjunction with detailed financial

forecasts to ensure that target dividends are being met and are sustainable; ? Target dividend per share - an expectation of the Company's ability to deliver an income stream to shareholders for

the forthcoming year; ? Premium or discount of the share price to NAV - the Board closely monitors the premium or discount of the share

price to the NAV and believes a key driver of this is the Company's long-term investment performance. However,

there can be short-term volatility in the premium or discount and the Board therefore seeks limited authority at

each AGM to issue or buy back shares with a view to trying to manage this volatility; ? Net gearing - measures the Company's borrowings as a proportion of its investment property, balancing the

additional returns available from utilising debt with the need to effectively manage risk; ? OCR - measures the annual running costs of the Company and indicates the Board's ability to operate the Company

efficiently, keeping costs low to maximise earnings from which to pay fully covered dividends; ? EPRA vacancy rate - the Board reviews the level of property voids within the Company's property portfolio on a

quarterly basis and compares this to its peer group average; and ? Weighted average EPC rating - measures the overall environmental performance of the Company's property portfolio

The Board considers the key performance measures over various time periods and against similar funds. A record of these measures is disclosed in the Financial highlights and performance summary, the Chairman's statement and the Investment Manager's report.

EPRA performance measures

EPRA Best Practice Recommendations have been disclosed to facilitate comparison with the Company's peers through consistent reporting of key real estate specific performance measures. 


                                                  2021  2020  Change 
 
EPRA EPS (p)                                      5.6   7.0   (20.0%) 
EPRA Net Tangible Assets ("NTA") per share (p)    97.6  101.6 (3.9%) 
EPRA net initial yield ("NIY")                    6.0%  6.2%  (0.2%) 
EPRA 'topped up' NIY                              6.4%  6.6%  (0.2%) 
EPRA vacancy rate                                 8.4%  4.1%  4.3% 
EPRA cost ratio (including direct vacancy costs)  26.1% 16.6% 9.5% 
EPRA cost ratio (excluding direct vacancy costs)  23.9% 14.5% 9.4% 
EPRA capital expenditure (GBPm)                     14.5  27.5  (47.3%) 
EPRA like-for-like rental growth (GBPm)             37.5  40.0  (6.3%)   ? EPRA EPS - a key measure of the Company's underlying operating results and an indication of the extent to which

current dividend payments are supported by earnings ? EPRA NAV per share metrics - make adjustments to the NAV per the IFRS financial statements to provide stakeholders

with the most relevant information on the fair value of the assets and liabilities of a real estate investment

company, under different scenarios. EPRA Net Tangible Assets - assumes that entities buy and sell assets, thereby

crystallising certain levels of unavoidable deferred tax; ? EPRA NIY and 'topped up' NIY - alternative measures of property portfolio valuation based on cash passing rents at

the reporting date and once lease incentive periods have expired, net of ongoing property costs; ? EPRA cost ratios - alternative measures of ongoing charges based on expenses, excluding operating expenses of

rental property recharged to tenants, but including increases in the doubtful debt provision, compared to gross

rental income; ? EPRA capital expenditure - capital expenditure incurred on the Company's property portfolio during the year; ? EPRA like-for-like rental growth - a measure of rental growth of the property portfolio by sector, excluding

acquisitions and disposals; and ? EPRA Sustainability Best Practice Recommendations - environmental performance measures focusing on emissions and

resource consumption which create transparency to potential investors by enabling a comparison against peers and

set a direction towards improving the integration of ESG into the management of the Company's property portfolio.

Debt financing

Since the onset of the COVID-19 pandemic we have maintained a regular dialogue with our lenders, proactively reporting on rent collection and discussing individual asset performance on a timely basis. These positive actions have reinforced the excellent relationships we have built with our lenders.

The Company operates with a conservative level of net gearing, with target borrowings over the medium-term of 25% of the aggregate market value of all properties at the time of drawdown. The Company's net gearing increased from 22.4% LTV last year to 24.9% at the year end due to GBP11.4m of acquisitions made during the year and a GBP19.6m decrease in the property portfolio valuation.

The Company has the following facilities available: ? A GBP35m revolving credit facility ("RCF") with Lloyds Bank plc ("Lloyds") with interest of between 1.5% and 1.8%

above three-month LIBOR, determined by reference to the prevailing LTV ratio of a discrete security pool of assets,

and expiring on 17 September 2022. The RCF limit can be increased to GBP50m with Lloyds' consent; ? A GBP20m term loan facility with Scottish Widows Limited ("SWIP") repayable in August 2025, with fixed annual

interest of 3.935%; ? A GBP45m term loan facility with SWIP repayable in June 2028, with fixed annual interest of 2.987%; and ? A GBP50m term loan facility with Aviva Real Estate Investors ("Aviva") comprising: ? A GBP35m tranche repayable on 6 April 2032, with fixed annual interest of 3.02%; and ? A GBP15m tranche repayable on 3 November 2032 with fixed annual interest of 3.26%.

Each facility has a discrete security pool, comprising a number of the Company's individual properties, over which the relevant lender has security and the following covenants: ? The maximum LTV of each discrete security pool is between 45% and 50%, with an overarching covenant on the

Company's property portfolio of a maximum 35% LTV; and ? Historical interest cover, requiring net rental receipts from each discrete security pool, over the preceding three

months, to exceed 250% of the facility's quarterly interest liability.

The Company has GBP165.0m (30% of the property portfolio) of unencumbered assets which could be charged to the security pools to enhance the LTV on the individual loans. During the year the Company charged five unencumbered properties valued at GBP21.1m to add additional headroom to certain facilities.

In the expectation that interest cover covenants on some individual loans could have come under short-term pressure due to COVID-19 pandemic restrictions, the Company obtained waivers of interest cover covenants until 31 March 2021. These waivers were not utilised and the Company complied with all loan covenants during the year.

The weighted average cost of the Company's agreed debt facilities at 31 March 2021 was 3.0% (2020: 3.0%) with a Weighted Average Maturity ("WAM") of 7.4 years (2020: 7.8 years) and 82% (2020: 77%) of the Company's drawn debt facilities are now at fixed rates. This high proportion of fixed rate debt significantly mitigates long-term interest rate risk for the Company and provides shareholders with a beneficial margin between the fixed cost of debt and income returns from the property portfolio.

LIBOR, the London Inter Bank Offer Rate interest rate benchmark used for setting the interest rate charged on the Company's RCF facility is expected to be discontinued after the end of 2021. In its place, a replacement 'risk free' rate, the Sterling Overnight Index Average ("SONIA") will generally be used. We are working with Lloyds to prepare for a smooth transition in preparation for the cessation of LIBOR and do not expect the transition to have a material impact on the interest rate on the RCF. We expect to complete this process during the year ending 31 March 2022.

Outlook

The Company's business model has remained resilient during the year. Although we took pre-emptive action at the beginning of the pandemic to arrange debt covenant waivers, these waivers were not utilised and the Company's lenders remain supportive of our ambition for continued growth. We have a scalable cost structure and flexible capital structure to be on the front foot when opportunities present themselves to raise new equity and exploit acquisition opportunities.

Ed Moore

Finance Director

for and on behalf of Custodian Capital Limited

Investment Manager

15 June 2021

Property portfolio

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