REAL ESTATE INVESTORS PLC Real Estate Investors Plc
Results for the year ended 31 December 2023
Investor and Analyst Presentation
REAL ESTATE INVESTORS PLC
MAXIMISING SHAREHOLDER RETURNS
Active Asset Management
• Gross property assets of £145.5 million
• Internally managed portfolio
• Multi-sector diversification, no material reliance on any sector, asset or occupier
• Break up opportunities within assets to satisfy strong private investor demand
• Banked across 3 lenders
• Uninterrupted and
Fully Covered dividend policy
• 100+ years of combined Board experience
• 183 tenants & 41 assets
• Value creation rent reviews, lease renewals, lettings, change of use
• Net LTV of 32.4% providing certainty and security
• Persistent and substantial discount between share price and NAV
• Dividend paid quarterly
• Embarking on a 3-
• Bank covenant compliant
• £50.6 million
• Board alignment - 12.2% shareholding
• Resilient subsectors of convenience, government and out of town offices
• Disposals at/above book value maximising returns
• Ongoing Debt repayment
programme
declared/paid to shareholders since commencement of dividend policy in 2012
year orderly strategic sale of portfolio assets to maximise value
• Receipts of disposals will be used to pay
down debt and return cash to shareholders
REI Portfolio TodayDiversified Portfolio
HIGHLY EXPERIENCED BOARD
ALIGNED WITH SHAREHOLDERS
• Joined REI Board in 2010, appointed Chairman in 2021
• Joined REI Board in 2014
• Joined REI Board in 2021
• Joined REI Board in 2006
• Joined REI Board in 2006
• 0.15% shareholder in REI
• 0.06% shareholder in REI
• 9.57% shareholder in REI
• 2.25% shareholder in REI
• 0.18% shareholder in REI
• Joined Caledonia in 1997 from Close Brothers Group Plc. He was appointed a director in 2005 and served as Chief Executive from 2010 until becoming non-executive in 2022
• Consultant for a leading firm of Independent Financial Advisers
• Chartered Surveyor with nearly 40 years' experience
• Non-executive Chairman of Bond Wolfe
• Peter has a lifetime of experience in providing IFA services to HNW individuals and sold his IFA company to a Swiss Bank in 2007
• Previous Regional Managing Director for GVA, serving over 22 years on the Board
• Non-executive Chairman of Likewise Plc (listed)
• Current Principal of Avison Young following its acquisition of Bilfinger GVA
• Former Non-executive Chairman of CP Bigwood
• Chartered Accountant with over 30 years' experience in advising on strategic matters and corporate planning, particularly in the property sector
• Non-executive Director of Cobehold, and a Trustee of The Rank Foundation
• Non-Executive Chairman of a number of property related companies
• Former Regional Chairman & Strategy Advisor to Coutts Bank (West Midlands)
• Former non-executive director of CP Bigwood Chartered Surveyors
• Awarded a CBE in 2010 for services to business and the community
• Former non-executive Chairman of the Tipton & Coseley Building Society
WITH EFFECT FROM 1 JANUARY 2024 - EXECUTIVE SALARIES & NON-EXECUTIVE FEES REDUCED BY ONE THIRD / REDUCTION IN LTIP AWARDS OF C.£1.2 MILLION &
INTRODUCTION OF NEW 'SHORTER TERM INCENTIVE PLAN' TO BETTER ALIGN EXECUTIVE MANAGEMENT TO DISPOSAL STRATEGY
Non-Executive
Executive
William Wyatt | Peter London | Ian Stringer | Paul Bassi CBE | Marcus Daly FCA |
Non-Executive Chairman | Non-Executive Director | Non-Executive Director | Chief Executive Officer | Finance Director |
A RESILIENT RECORD
THROUGHOUT CHALLENGING TIMES
IN LINE WITH THE COMPANY'S COVERED DIVIDEND POLICY
SINCE 2012 TOTAL DIVIDENDS DECLARED/PAID TO SHAREHOLDERS = £50.6 MILLION
3-YEAR DISPOSAL STRATEGY ANNOUNCED IN JANUARY 2024
FY 2023
OPERATIONAL HIGHLIGHTS
• Strong overall rent collection for 2023 of 99.82%
Contracted Rental Income £m
• Contracted rental income: £10.9 million p.a. (FY 2022: £12.6 million p.a.) due to disposals
• Gross property assets: £145.5 million (FY 2022: £175.4 million)
• Net LTV reduced to 32.4% (FY 2022: 36.8%) despite valuation reduction of 8.44%
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
• On a like for like basis the portfolio valuation has reduced by 8.44% to £143.1 million, (FY 2022: £156.3 million)
• £10.9 million like-for-like rental income due to portfolio asset management, despite loss of income associated with sales
Gross Property Assets £m
• Completed £17.97 million of disposals (before costs)
• Active asset management with 90 lease events during the period
• Occupancy: 83.03% (FY 2022: 84.54%)
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
• Improved WAULT of 5.24 years to break / 6.01 years to expiry (FY 2022: 4.98 years / 6.29 years)
Post period activity:
Occupancy %
• Additional sales of £1 million with significant pipeline in legals
• Further £2.7 million debt repaid, reducing total drawn down debt to £51.7 million
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
FY 2023
FINANCIAL HIGHLIGHTS
• EPRA NTA per share of 54.9p (FY 2022: 62.2p) after 2 years of growth
EPRA NTA
• EPRA EPS of 2.6p (FY 2022: 2.7p)
• Final dividend per share of 0.625p (Final Q4 2022: 0.4375p) paid as an Ordinary Dividend, representing a total fully-covered dividend for 2023 of 2.5p per share (FY 2022: 2.5p)
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
• Reduction in holding costs of void space and direct costs to £2.2 million (due to sale of void and part-void assets) (FY 2022: £2.5 million)
EPRA EPS
• Administrative costs/ overhead expenses reduced by £640,000 to £2.6 million (FY 2022: £3.3 million), due to no bonuses for executive directors and staff (FY 2022: £280,000), no Long Term Incentive Plan provision following the Group strategic review and introduction of the STIP (FY 2022: £150,000), and targeting services no longer required as the size of the portfolio reduces
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
• The Group expects further savings in 2024 of £500,000 (predominantly from executive salary reductions and national insurance contribution savings amounting to £330,000, combined with void cost savings)
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
FY 2022
FY 2023
*underlying profit excludes profit/loss on revaluation, sale of properties and interest rate swaps
2.7
2.6
FY 2023 FINANCIALS
ROBUST UNDERLYING PROFITS
• Revenue of £11.5 million (FY 2022: £13.3 million) reduction due to sales
Income StatementFY 2023 £mFY 2022 £m
• Underlying profit before tax* of £4.5 million (FY 2022: £4.6 million)
Revenue
11.5 13.3
• Loss before tax of £9.4 million (FY 2022: £10.9 million profit) including:
Cost of sales
(2.2) (2.5)
− £13.2 million loss on property revaluations (FY 2022: £3.2 million gain) - non-cash item
Admin expenses
(2.6) (3.3)
− a deficit of £182,000 on the sale of investment properties (FY 2022: £948,000 gain)
Property revaluation and sales
(13.4) 4.2
− and a deficit in the market value of our interest rate hedging instrument of £499,000 (FY 2022: gain of £2.2 million) (non-cash item)
EBIT
(6.7) 11.7
Underlying profit before tax
4.5 4.6
(Loss)/profit on ordinary activities before tax
(9.4) 10.9
EPRA EPS
2.6p 2.7p
DPS
2.5p 2.5p
*Adjusted for movement on property revaluations, sales and hedge revaluation
FY 2023 FINANCIALS
STRONG BALANCE SHEET
FY 2023 FINANCIALS
SIMPLIFIED DEBT POSITION
• Cost of debt 3.7% (FY 2022: 3.7%) & 100% of debt was fixed to 30 November 2023
Debt Profile
• Net LTV 32.4% (FY 2022: 36.8%) & Interest cover of 2.9x (FY 2022: 2.5x)
• Total drawn debt of £54.4 million (FY 2022: £71.5 million)
• Multi-banked across 3 lenders - all covenants continue to be met
• £17.1 million of debt repaid with disposal proceeds in 2023
• £8 million cash at bank as at 31 December 2023
• Deficit in market value of Hedge facility of £499,000 (FY 2022: gain of £2.2m) (non-cash item)
Post period activity:
• Additional sales of £1 million with healthy pipeline of sales in legals
• Further £2.7 million debt repaid
• Total drawn debt now reduced post period to £51.7 million
Debt Repayment
• In March 2024, the Group extended the £20 million facility with Lloyds Banking Group Plc for a further 12 months to 31 May 2025, the £28 million facility with National Westminster Bank Plc for a further 12 months to June 2025 and the £7 million facility with Barclays Bank PLC for a further 6 months to 30 June 2025
• As a result, following the multiple increases in interest rates by the Bank of England, the new average cost of debt is now 6.5% & 19% of debt is fixed
• It is the Group's intention to prioritise the repayment of debt from property sales proceeds, as reflected by the short-term nature of the facilities
Lender | Debt Facility (£m) | Debt Maturity |
National Westminster Bank | 28 | June 2025 |
Lloyds Banking Group | 20 | May 2025 |
Barclays | 7 | June 2025 |
2021 | 2022 | 2023 | 2024 to date | Total | |
Sales | £17.6m | £20.9m | £18.m | £1m | £57.5m |
Debt Repaid | £11.9m | £18m | £17.1m | £2.7m | £49.7m |
Total Drawn Debt | £89.5m | £71.5m | £54.4m | £51.7m | £51.7m |
MOVEMENT IN
EPRA NTA PER SHARE (P)
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Disclaimer
Real Estate Investors plc published this content on 25 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 March 2024 08:15:08 UTC.
