First World Hybrid Real Estate plc

Updated Feb 2017

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 >13 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 6.4%

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 6.1%

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 5.5%

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 6%

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 5.7%

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% and yet to be revalued

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% and yet to be revalued

FRI lease, subject to upwards only open market reviews every five years, expires 28 January 2030

SIG – Sheffield, Yorkshire

Building comprises 20 439 square foot office accommodation stretching over three floors

Acquired in January 2017 at initial yield of 6.0%

The property has a new 25 year lease, expiring 21 December 2041, with no tenant break

First World Hybrid Real Estate Prudent levels of debt funding

Terms and Pricing

- Max 50% LTV of direct properties (45% overall on target weightings)

- 1st renewal agreed, 3 year term

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

Interest rate hedging

- 100% variable

- Benefit of lower rates

- Quarterly review

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

Distribution & Marketing - Marriott: The Income Specialists

Property Manager - Sequelprops

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 31 December 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

Not long before it was ‘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 >13 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

First World Hybrid Real Estate The UK property market

Market Conditions - Occupational market remains strong

Especially distribution warehousing

Underpinning investment values

- Investment demand remains firm Weaker pound - simply comparatively cheaper for foreign investors

Lower interest rates - positive for cost of funding and supports investment demand

REITs as proxies

Transactional activity on the ground

Fund valuations – best evidence - 5 independent valuations post Brexit – flat or upwards

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