June 2017

First World Hybrid Real Estate plc

First World Hybrid Real Estate plc

• Fund overview • Steady expansion • Key portfolio features • Acquisition filter process • Portfolio overview • Performance & volatility

• Is UK property expensive or cheap? • Against UK parameters • Relative to SA property

• Potential concerns & actions • Redemptions and liquidity • Debt funding risks • Concentration risks & diversification • Brexit

First World Hybrid Real Estate plc Steady expansion

Dec 2014 Dec 2015 Dec 2016 June 2017

No. of properties 2 7 12 15

Gross asset value £15m £37m £75m £96m

Net asset value £10m £21m £44m £58m

No. of investors 25 160 475 600

First World Hybrid Real Estate plc Robust income from the property portfolio

• All leases FRI - > income certainty • All tenants D&B 5A1 – top business rating

54% 22%

24%

Portfolio analysis: property sector type by value LT Target: 75% warehousing 25% regional offices

distribution warehousing

retail warehousing

regional offices

21%

59%

20%

Portfolio analysis: lease expiry profile by value WAULT target >10 yrs, Actual >13 yrs

>5 years and <10 years

>10 years and <15 years

>15 years

First World Hybrid Real Estate plc Key features

• Regulated Fund, listed on The International Stock Exchange (TISE)

• 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 property portfolio, yielding approx 6% • Each property independently valued at least annually

Type of property

Geographic location

Ticket size - £3 to £15m

Unexpired lease term

Lease type FRI, 5 yearly reviews

Lease covenant Rentals at market?

Yield

The Property Acquisition Filter Process

6

Portfolio – Geographic Locations

7

B&M Retail – Leek, Staffordshire

Single storey, modern stand alone retail warehouse, totalling 26 675 square foot and a 10 000 square foot garden centre

Acquired in June 2017 at initial yield of 6.25%

Lease expiry 24th March 2028

BDW Trading Ltd – Gateshead, Newcastle

Office building (21 626 sqft)

Acquired in June 2017 (initial yield of 6.7%)

FRI lease (expires 1 July 2027, no tenant break)

First World Hybrid Real Estate plc Performance – Total Return as at 30 June 2017

Total Return 1 year 2 years* 3 years*

FWHRE 8.1% 8.4% 10.2%

NAREIT UK REITs (TRGBP) 9.8% -0.6% 9.3%

Source: Bloomberg

*annualised

£1 358 700

£1 271 793

£900000.0

£1000000.0

£1100000.0

£1200000.0

£1300000.0

£1400000.0

£1500000.0

£1600000.0

£1700000.0

Jan

14

Mar

14

May

14

Jul 1

4

Sep

14

Nov

14

Jan

15

Mar

15

May

15

Jul 1

5

Sep

15

Nov

15

Jan

16

Mar

16

May

16

Jul 1

6

Sep

16

Nov

16

Jan

17

Mar

17

May

17

First World Hybrid Real Estate(FWHRE) vs. Listed UK Property

First World Hybrid Real Estate NAREIT UK REITs TRGBP

First World Hybrid Real Estate plc Performance compared to UK Listed REITS as at 30 June 2017

9% higher TR, low volatility

Volatility

UK Bond Yields up

EU vote

Source: Bloomberg and Marriott

First World Hybrid Real Estate plc Performance – Risk Statistics as at 30 June 2017

Source: Bloomberg

Risk Stats (3 year annualised)

Standard Deviation

Downside Risk

Sharpe Ratio

FWHRE 7.7% 2.8% 1.3%

NAREIT UK REITs (TRGBP) 19.4% 14.7% 0.4%

UK property vs govt bonds vs corporate bonds A compelling investment case – double return from corporate bond?

– Red graph – income return from SIG property (FTSE 250 co) – Green line the income derived from 10 year bond – flat lining – Blue line, FTSE 250 corporate bond

Source: Bloomberg & Marriott, Note: Monthly returns as at month end.

£-

£20 000

£40 000

£60 000

£80 000

£100 000

£120 000

£140 000

£160 000

£180 000

£200 000

£-

£500 000

£1 000 000

£1 500 000

£2 000 000

£2 500 000

0 1 2 3 4 5 6 7 8 9 10

Using SIG Sheffield property metrics 25 year FRI lease, 6% initial yield,

RPI linked 5 yearly reviews (1-3% pa), assumed 2%

UK Government Bond (10yr) - Income UK Corporate Bond (10yr) - Income UK Property - IncomeUK Government Bond (10yr)- Capital UK Corporate Bond (10yr) - Capital UK Property - Capital

£109K

£12K

£42K £60k

£32k

£11k

UK property vs govt bonds vs corporate bonds A compelling investment case? What the capital investment would look like with income reinvested over the period

Source: Bloomberg & Marriott, Note: Monthly returns as at month end.

£-

£20 000

£40 000

£60 000

£80 000

£100 000

£120 000

£140 000

£160 000

£180 000

£200 000

£-

£500 000

£1 000 000

£1 500 000

£2 000 000

£2 500 000

0 1 2 3 4 5 6 7 8 9 10

UK Government Bond (10yr) - Income UK Corporate Bond (10yr) - Income UK Property - Income

UK Government Bond (10yr)- Capital UK Corporate Bond (10yr) - Capital UK Property - Capital

£1.4 Million

£1.1 Million

£2.1 Million

£109K

£12K

£42K £60k

£32k

£11k

UK property vs SA property Trends and risks?

UK SA

Lease structures Income certainty

Long leases, upwards only reviews

Less predictable Shorter lease duration,

reviews to market

Occupational mkt (rental growth)

Despite Brexit, firm Good demand, low

vacancies, rental growth

Worrying signs Weak economic growth

Negative reversions

Investment mkt (yields)

Firm Diverse investor demand

Deal and Valuation evidence

Worrying SA REITs weaker

Red flags

SA Prime Office yields vs LT Trends vs govt bond yields (source MSCI / IPD) Red flags?

First World Hybrid Real Estate plc Redemptions and liquidity

Years 2016 2017 ytd

Fund net asset value (end of period) £44m £58m

Average monthly liquidity £8m £15m

Redemptions (period) £1.8m £3.6m

Average of monthly redemptions / monthly liquidity 2% 3%

• Liquidity = Cash and REITs, benchmarked on equity excl Marriott funds: target of 25% (minimum of 15%)

• 5 REITs identified for investment - BritLand, Hammerson, Segro, LM, TriBox

• Large, diversified, readily tradeable and liquid - Yield 4% plus

First World Hybrid Real Estate plc Prudent debt funding well justified

• 100% variable, at 2.5% debt funding cost, 3 year term

• LTV restricted to 50% on direct properties

• Low effective 45% overall Fund LTV (based on target weightings)

• Debt covenants well within agreement levels

– Approx. 20% property devaluation headroom to 60% LTV covenant

– Interest charge covered > 5 times (the ultimate test)

First World Hybrid Real Estate plc Concentration risk & currency

• Property portfolio increasingly diversified

– 15 properties

– Spread between distribution & retail warehousing and regional offices (Long term targets: 50/25/25 respectively)

– Lease expiries (with strong WAULT)

– Tenants (companies and industries) - all 5A1

• This is a UK Sterling denominated investment (multi currency risk avoided)

First World Hybrid Real Estate plc Brexit risk

• Uncertainty remains but UK economy has performed far better than many have speculated

• The UK is and surely will remain an important 1st world economy and one which will be a desirable destination for investment and wealth

• FWHRE targeted investments (long lease warehousing & regional offices) – No evidence of softer yields when buying (actually firmer!) – Independent valuations of FWHRE properties best evidence

• 9 valuations post Brexit – 4 confirmed at same levels and 5 at lower yields (higher prices) – Recent trend - 4 of the 5 this calendar year at lower yields

First World Hybrid Real Estate plc Summary

• Robust attractive dividend yield

• Capital growth in line with rental growth

• Better liquidity and pricing certainty than typical direct property investments but less volatility than publicly quoted and traded property

• With the benefit of a Regulated investment