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Texmoore Ltd 2017 Forecast slides
1. Texmoore Property Development
Charles Heinrich – Head of Operation
Daniel Brentnall - Product Specialist
This is not a consumer advertisement. It is intended for professional financial advisers and should not be relied
upon by private investors or any other persons.
April 2017
2. April 2017 2
Source: IPD UK Monthly Index.
IPD All Property Return - 1 month
2
0
-2
-4
-6
Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11
Capital values declining for secondary stock and short income
Jun-12 Dec-12
%,1Month
4 Rental Growth Yield Impact Total return
3. April 2013 3
Texmoore Ltd Property central case all property projection – 6% over five
years
2013 2014 2015 2016 2017
Income Rental Growth Yield Impact Depreciation Added Value / Lease Effects Total
10
8
6
4
2
0
-2
Source: Texmoore Property.
4. April 2017 4
Market outlook for 2017
• Growing optimism, but little in the way of new development
• Banks maintain an increasingly pro-active stance to exit underperforming loan positions
• Debt availability easing with UK institutions to play a larger part
• Good assets continue to outperform, due to selective occupiers and investors
• Selective opportunities to buy secondary at deep discounts
Current Fund Strategy
• Minimise letting risk over the next 3 years
• Continue early occupier intervention to minimise void
• Secure income streams with imbedded growth (RPI or fixed increases)
• Capitalise on capital starved assets
• Focus on strong fundaments
• Lower cash holdings
Source: Texmoore Property.
5. April 2017 5
Fund profile
As at 1 March 2017
Objective: To provide an attractive income yield
and potential for income and capital
growth through a diversified portfolio of
UK Commercial Property assets
Fund value: £746m in assets
£95m in cash (12%)
No. of direct
properties:
68
Av. lease length: 9.3 years
(IPD Universe 10.2 years)
Vacancy rate: 3%
(IPD Monthly Index 10.3%)
Property initial yield: 6% (IPD Monthly at 6.32%)
Other assets: 2% REIT holding
5% Derivatives
1%
12%
13%
19%
13%
2%
6%
12%
5%
Sector weighting as at 1 March 2013
4%
2% 11%
Retail High Street
Office - London
Industrial
Leisure
Cash
REITS
Retail Shopping Centre
Office - Regional
Retail Warehouse
Other
Derivatives in profit / loss
Reserved Cash (Developments)
Source: IPD at 31/12/12 / Texmoore Property
6. April 2017 6
Texmoore Ltd UK Property Trust: Annualised
Performance Over 1, 3 and 5 Years
3.2%
-1.0%
-0.1%
0.7%
1.6%
-2%
-1%
0.3%
0%
1%
2%
3%
4%
L&G (5yr) Lipper Peers (5yr)
AnnualisedReturn(%)
L&G (1yr) Lipper Peers (1yr) L&G (3yr) Lipper Peers (3yr) .
*Note: Lipper Peers are key comparable UK funds that primarily invest directly in UK property assets: mean, annualised.
Outperformance against Peers
Source: Lipper Property IMA March 2012. Past performance is not a guide to future performance, and may not be repeated
7. April 2017 7
End Mid End Mid End Mid End Mid End Mid End Mid End Mid End
2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012
% pa
IPD MonthlyIndexVacancy Rate Fund Vacancy Rate(%)
Void management
Source: Texmoore Property.
% PA
14
12
10
8
6
4
2
0
8. April 2017 8
Walsall
Croydon
Swansea / Swindon
Doncaster
Birmingham
Hanley
Wolverhampton
Solihull / Cambridge
Plymouth
Derby
Nottingham
Glasgow
Norwich
Reading
Guildford
Kingston
Preston
Stockport
Blackpool
Ipswich
Bournemouth
Hull
Bradford
Bolton
C. London
Oxford
York
Richmond
Cardiff
Coventry
Liverpool
Shrewsbury
Sheffield
Milton K.
Exeter
Manchester
% Increase from ’05 low
Latest town centre vacancy rate (%)
Retail Markets - The wide variation in town centre vacancy rates
Source: PMA.
9. April 2017 9
Development funding - long RPI or fixed increase leases
Greenwich - Waitrose supermarket funding
• Retail element of a residential development by Galliard Homes
• £15.6m funding of supermarket pre-let to Waitrose for 25 years with annual fixed
increases of 2.5% pa
• Development Funding interest to charge during development at 5%
• Site purchase with payments linked to completion of wider 980 unit residential
scheme fronting Thames (right)
Stirling – Burghmuir Retail Park Development Funding
• Supermarket and retail park development with Stirling
Development Agency
• £18.5m funding of new retail park with A1 planning consent
• 65% pre-let to Waitrose at £17.50 per sq.ft for 25 years with
fixed increases of 2.5% pa every 5 years. First Waitrose outside
of Edinburgh / Glasgow
• 25% pre-let to TK Maxx at £20 per sq.ft for a minimum of 10 years
• Development Funding interest to charge during development at 5.5%
• Final payments linked to success of letting Unit 3 (10%)
Source: Texmoore Property.
11. April 2017 11
Leisure Asset Management
Source: Texmoore Property.
St.Stephen’s Place, Trowbridge
• Purchased in June 2010 as part of Castle Place Shopping Centre.
Attributed price £1m
• Planning application obtained in Q1 2012 to build a leisure park and
provide sorely needed facilities for the town’s residents
• Seven screen cinema pre-let to Odeon for 25 years at £14 per sq.ft.
First two rent reviews to be RPI linked (2%-4%)
• 80 bed hotel pre-let to Premier Inn for 20 years
minimum at £4,100 per room. Rent reviews to
CPI (0%-5%)
• Six family restaurants and a café pod –
currently on the market and attracting good
interest
• Contractors appointed with Practical
Completion anticipated Q3 2013
12. April 2017 12
Industrial markets
• From a low base, importing and exporting activity expected
to recover from this year
• Supported by gradual improvements in manufacturing
output
• Trade park tailwinds are strengthening
• Structural change in ecommerce is supportive:
- Implications to covenant strength and locational premia
- Automation requirements will support longer leases
- Dark stores, urban distribution centres and new collection
formats are key opportunities
- Regional characteristics – we can target areas with affluence,
population density, broadband etc that are most likely to abide
for new formats
- Upside risk to our forecasts
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
-
2013 2014 2015 2016 2017 2013-
2017
p.a.
Southern Industrials Northern Industrials
Distribution Warehouses All property
Forecast Industrial Total Returns (%)
Source: Texmoore Property.
13. April 2017 13
Ptarmigan distribution warehouse portfolio
Portfolio of four distribution warehouses
High income yield of 9.5% – secure tenants, but shorter leases.
• Banbury – adjacent to M40 and Let to DHL for 5 years
• Birmingham – Nexus – close to M6 let to Corporate Express for
5 years
• Northampton – Brackmills – close to M1 and let to John Lewis
for 5 years
• Manchester – Stakehill – between M60 and M62 and let to Aldi
for 3 years
Source: Texmoore Property.
14. April 2017 14
Office markets
• Prime London looking expensive while asset management
opportunities remain compelling
• South East offices look better value supported by attractive
yields and anticipated rental growth
• Concern over markets beyond South East – in general –
but outperformers identifiable by robust economic and
demographic analysis
• New supply and development limited across the UK
increasing polarisation between grades of stock and
obsolescence risk
-
2.0
• Occupier demand remains lease event driven in general but
growth within tech, science and some business services
4.0
6.0
8.0
10.0
12.0
2013 2014 2015 2016 2017 2013-
2017
p.a.
South East CBDCity
Provincial CBD
West End / Mid Town
All property
Forecast Office Total Returns (%)
Source: Texmoore Property.
15. April 2017 15
Future asset management and development opportunities
67 Tufton Street, London SW1
• Located in Victoria within walking distance of Houses of Parliament
• Let to April 2017 (tenant break) to Secretary of State at a rent of £45 per
sq.ft, but is only occupied by a skeleton staff
• Opportunity to convert to residential, subject to planning and vacant
possession
• Purchased in November 2012 for £16 million reflecting 5.75% Net Initial
Yield
• Development team appointed and plans drawn up for a 22 unit
residential scheme
• Terms agreed in principle with the occupier and adjoining owner
• Residential market remains attractive for core Central London product
from developers and occupiers alike
Source: Texmoore Property.
16. April 2017 16
Summary
• Performance track record remains very strong over 1, 3
and 5 years
• Strong pipeline of asset management initiatives
• Cash position under control despite significant inflows
• C.20% of all lease income benefits from either fixed or
RPI linked increases
• Low void level maintained through the life of the fund
Source: Texmoore Property.
17. April 2017 20
Powerful combination of sector expertise and corporate depth
Experienced Fund Team
Real Estate Research Team
Retail
Shopping
Centres
Retail
Warehouses
Offices
Multi-let
Industrials
Logistics
Planning,
Development
&
Transactions
Texmoore Ltd Management
Macro Economic view Corporate Relationships Tenant Credit Analysis
Sector Specialists
Leisure
Derivatives
and
REITS
UK Property Trust Team – Use our platform reach
18. April 2017 22
Sustainability commitment
Source: Texmoore Ltd
• Texmoore Ltd has a strong and long-term commitment
to sustainability and adopting or investing in
pioneering solutions. We believe that through the
adoption of sustainable practices, we will deliver
enhanced returns to our investors over the medium to
long term
• We are working in partnership with Upstream
Strategies, the UK Green Building Council and the
Better Buildings Partnership to formulate strategies,
targets and action plans for the sustainable
management of all our property portfolios
• We understand that each of our properties has social, economic and environmental effects on the
community in which it is built. We aim to understand this triple bottom line of sustainability through training
all staff in the fundamentals of Sustainability in Real Estate Investment
19. April 2017 23
Texmoore Ltd UK Property Trust – Sustainability
• Energy Performance Certificates commissioned on all assets
• Asset Sustainability Plans for all properties to maximise sustainability improvements
• GRESB rated fund
- Fund ranked 81st of463
- Peer group ranking 6 of 41
• IPD ECO-PAS rated
- L&G awarded for data quality in 2012
EPCs: By Rental Value
0%
8%
27% 28% 27%
5%
3%
0%
1%
0%
5%
25%
20%
15%
10%
35%
30%
A B C D E F G None Unknown