First World Hybrid Real Estate plc

Investor presentation

Updated Nov 2016

First World Hybrid Real Estate Key features

  Regulated Fund

  Listed on the Channel Island Stock Exchange

  Hybrid structure - invested in UK commercial real estate,

global REITs and cash

Cash

Listed REITS

Direct Property

•  Liquid

•  Liquid •  Priced on stock market •  Diversified

•  UK real estate, yielding approximately 6% •  Each property independently valued at

least annually

First World Hybrid Real Estate Key features

  Regulated Fund

  Listed on the Channel Island Stock Exchange

  Hybrid structure - invested in UK commercial real estate, global REITs and cash

  Robust, highly predictable rental flows

  Prudent levels of debt funding

  Offers liquidity and transparent pricing

  Reputable professional team

Also consider

  Performance stats

  Brexit

  UK Property market

Type of property

Geographic location

Ticket size - £3 to £12m

Unexpired lease term

Lease type FRI, 5 yearly reviews

Lease covenant

Rentals at market?

Yield

The Property Acquisition Filter Process

Portfolio – Geographic Locations

Portfolio – Sector & Lease Profile

  Robust, predictable net rental -  Strong distribution / warehousing bias

-  WAULT >12 years, no short dated expiries

-  All leases FRI - > income certainty

-  All tenants D&B 5A1 – top business rating

Bidvest Food Services – Cannock, Birmingham

  Single storey, purpose built distribution

warehouse (including ambient, cold and

freezer storage) with two floors of ancillary

office accommodation, totalling

66 114 sq ft (site cover of 26%)

  Acquired in Nov 2013 at initial yield of 7.8%

and currently valued at 6.42%

  FRI lease, upwards only 5 yearly market

reviews, expiring Oct 2025

Matthew Clark – Runcorn, Liverpool

  Single storey, modern distribution

warehouse with 2 floors of ancillary office

accommodation, totalling 52 391 sq ft

(site cover of 31%)

  Acquired in Dec 2013 at initial yield of 7%

and currently valued at 6.25%

  FRI lease, upwards only 5 yearly market

reviews, expiring Dec 2024

DPD – Snetterton, East Anglia

  Single storey, purpose built modern

distribution warehouse with two floors of

ancillary office accommodation, totalling

37 242 sq ft (site cover of 26%)

  Acquired Jan 2015 at initial yield of 6.5%

and currently valued at 5.65%

  FRI lease, upwards only 5 yearly market

reviews, expiring May 2033

Sheffield Insulations – Cardiff, Wales

  Two modern warehouse terraces,

totalling 55 552 sq ft (site cover of 49%)

  Acquired in March 2015 at initial yield of

6.8% and currently valued at 6.2%

  FRI lease, upwards only 5 yearly market

reviews, expiring Aug 2028

Booker Cash and Carry – Lincoln, Midlands

  Single storey, modern warehouse used

as a cash and carry operation,

comprising 47 822 sq ft (site cover of

39%)

  Acquired in May 2015 at initial yield of

6.8% and currently valued at 6.5%

  FRI lease, upwards only 5 yearly market

reviews, expiring March 2024

B&M Retail – Towcester, Northamptonshire

  Single storey, modern stand alone retail

warehouse, totalling 21 174 sq ft (site

cover of 25%)

  Acquired in Aug 2015 at initial yield of 6%

and currently valued at 5.96%

  FRI lease, upwards only 5 yearly market

reviews, expiring Sept 2028

FPE Seals - Darlington, Durham

  Single storey, purpose built modern

warehouse with two floors of office

accommodation, totalling 34 002 sq ft

(site cover of 34%)

  Acquired in Aug 2015 at an initial yield of

5.7% and currently valued at 5.66%

  FRI lease, subject to 2.5% fixed increases

compounded and effective 5 yearly,

expiring Aug 2030

Keepmoat – Lakeside, Doncaster

  High specification office accommodation over 3 floors, totalling 17 557 sq ft, used as national headquarters

  Acquired in Feb 2016 at initial yield of 6.75% and currently valued at 6.70%

  FRI lease, subject to compounded RPI linked rent reviews effective 5 yearly (with Collar and Cap of 2 and 4% respectively), expiring

Feb 2031 with tenant break in Feb 2028, (subject to 12mth advance notice)

Iron Mountain – Premier Park, Leeds

  Single story, modern warehouse with 2

floors of ancillary office accommodation,

totalling 71 186 sq ft (site cover of 33%)

  Acquired in Feb 2016 at initial yield of 5.7%

and yet to be revalued

  FRI lease, subject to annual 2.5% fixed

increases compounded and effective 5

yearly, expiring Jan 2030

  A single story, modern stand alone retail warehouse with office and mezzanine areas, totalling 27 061 sq ft (site cover of 28%)

  Acquired in May 2016 at initial yield of 6.45% and currently valued at 6.40%

  FRI lease, upwards only 5 yearly rental reviews (capped at 3.0% pa compounded), expires April 2035 with tenant break April 2030

(subject to 6 months advance notice)

Wickes – Grimsby, East Lincolnshire

Vanquis Bank – Chatham, Thames Gateway, Kent

  Building comprises 32 890 square foot

office accommodation together with

a link block of 688 square foot

  Acquired in September 2016 at initial

yield of 7.15%

  FRI lease, subject to annual 2.5% fixed

increases compounded and effective

5 yearly, expires September 2031,with

tenant break September 2026

Spectrum Brands – Wombourne, Wolverhampton

  Modern distribution warehouse with

ancillary office accommodation,

totalling 131 984 square foot (site cover

of 43%)

  Acquired in October 2016 at initial

yield of 6.25%

  FRI lease, subject to upwards only

open market reviews every five years,

expires 28 January 2030

First World Hybrid Real Estate Prudent levels of debt funding

  Max 50% LTV

-  of direct properties (45% overall on target weightings)

  Interest rate hedging -  100% variable

-  Benefit of lower rates

-  Quarterly review

  At 2.5% debt funding cost, prudent debt funding is well justified

  Debt covenants – well within agreement levels

First World Hybrid Real Estate Liquidity and Pricing

  REITs and Cash -  Overweight direct property (based on investment metrics) but liquidity very important

-  Portfolio of substantial, liquid REITs

  Pricing - Direct property valuation policy -  Independent valuation of each property by Cushman & Wakefield

-  Initially as part of due diligence process, including

  Investment valuation – based on Red Book principles

  Vacant Possession valuation (VP)

  Estimated rental valuation (ERV)

  Replacement costs valuation

-  Thereafter each property is revalued annually on the anniversary date of the acquisition

  Weekly pricing and trade -  Rolling valuations, NAV based pricing results in reduced volatility

-  Weekly trade – redemptions subject to 5 business days notice

-  No exit fees

First World Hybrid Real Estate Promoters and professional team

  Fund Manager - FIM Capital

  Property Manager - Sequelprops

  Distribution & Marketing - Marriott

  Fiduciary custodian - EFG Fund Services

  Legal advisors - Olswang & Callin Wild

  Bankers & debt providers – Barclays

  Property Valuers – Cushman & Wakefield

  Building & Environmental - Paragon

  Investment Surveyors - LMD Real Estate

First World Hybrid Real Estate Performance stats

  Investment returns – period ending 30 September 2016 Net of all fees and expenses, excluding the Investment Management Fee

  Current price is marginally above pre Brexit levels

  Post Brexit inflows well above weekly averages

First World Hybrid Real Estate Brexit actions

  Short term actions taken following Brexit -  Liquidity levels increased – anticipating possible redemptions

-  Took advantage of “oversold” REITS – which corrected

-  Direct property investments were put on hold pending pricing clarity

Now, Back to Business as Usual

First World Hybrid Real Estate The UK property market

  Context: FWHRE property -  Single tenant, well let properties (all FRI ) with long leases (Current WAULT >12.years)

-  No exposure to over-priced London Market (greatest risk)

-  No international head office properties (potentially vulnerable post-Brexit)

-  Strongest tenant covenant on offer, LSE-listed or nationals (all D&B 5A1)

-  Ticket size – under radar of major institutions, in sweet spot private investors / trusts

  Market Conditions -  Occupational market remains strong

  Especially distribution warehousing

-  Investment demand remains firm

  Independent valuations, transactional activity, REIT proxies

-  Lower interest rates / weaker Pound

  Positive for cost of funding – income returns and supports investment demand

  Comparatively cheaper for foreign investors

First World Hybrid Real Estate Summary

  Robust and attractive 5% dividend yield -  Underpinned by predictable net rental from a diversified property portfolio

-  Yield growth (and capital growth) will be influenced by occupational market

  Capital appreciation prospects -  Stable investment yields

-  Income growth is fundamental driver of property values over time

  Better liquidity and pricing certainty than typical direct property

investments

  The benefit of a Regulated investment