CAPITAL

PRESENTATION5TH JUNE 2018

MARKETS DAY

2

CONTENTS

1. EXECUTING STRATEGY

2. WEST & WALES REGION

3. IMPROVING RETURNS

4. SUMMARY & OUTLOOK

5. Q&A

EXECUTING STRATEGY

• Medium term pipeline represents >15 years of development

• Grow industrial/logistics development volume by up to 25% pa

• Reduce exposure to non-core land

ACCELERATE COMMERCIAL DEVELOPMENT ACTIVITY

CHANGING PLACES. CREATING BETTER FUTURES

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DELIVERING ON OUR STRATEGIC OBJECTIVES

OBJECTIVE

• Land bank with over 25k plots represents >10 years of activity

• Grow St Modwen Homes housebuilding volumes by up to 25% pa

• Accelerate disposal of land to third party housebuilders

GROW OUR RESIDENTIAL & HOUSEBUILDING BUSINESS

OBJECTIVE

• Build on strong track-record in regeneration

• Deliver on remaining potential in existing major projects

• Unlock next generation of regeneration schemes in capital light way

CEMENT & GROW OUR REGENERATION REPUTATION

OBJECTIVEOBJECTIVE

PORTFOLIO FOCUS AND CAPITAL DISCIPLINE

• Focus on fewer, larger assets in sectors with best growth prospects

• Reduce retail exposure • Sell c.100 smallest assets

valued at only c.£100m• Grow industrial/logistics

portfolio by retaining majority of pipeline

• Reduce LTV to <40% (excl. residential land)

• Continued to shift our portfolio towards areas with higher structural growth prospects

– Longbridge and Wembley disposals put us at lower end of target to sell £100m - £150m of retail and smaller assets this year

– Currently marketing a portfolio of small assets and are confident of achieving target for the full year

– Substantial improvement in returns to come from reinvesting in pipeline

• Residential land sales of £27m in line with book value (1H17: £14m)

• Accelerated industrial/logistics pipeline– Agreed terms on more than £2m ERV of

lettings in H1– Secured planning for 1.2m sq ft at two key

sites with over £8m ERV

• St. Modwen Homes sales volumes up 31% vs 1H17 to 302 units sold, with Persimmon activity continuing to reduce in line with plan

• Publication of H1 results on 3rd July 2018

TRADING UPDATE FOR SIX MONTHS; CONTINUED GOOD PROGRESS

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What we have done so far

• Sold assets for more than £600m over the past year, on average in line with book value

– £260m residential land– £139m student housing– £95m retail– £140m small/PRS/other assets

What to expect next

• Recycle majority of capital out of remaining c.£250m retail and c.£70m small assets over next two years

– Half of remaining retail is London/leisure– Agreed terms on further c.£70m disposals

• Increase proportion of income producing assets from c.45-50% historical average

• Retain majority of industrial/logistics pipeline to build up high quality, efficient income portfolio

PORTFOLIO FOCUS AND CAPITAL DISCIPLINE

Portfolio at Nov-16 (£1.75bn)

Current pro-forma portfolio (£1.37bn)*

* Nov-17 book value adjusted for acquisitions/disposals, excl. capex or valuation movements

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Smaller assets 5%

Industrial/Logistics

19%

Retail18%

Other3%

Commercialland/WIP

15%

Residential land/WIP

40%

Smaller assets6%

Industrial/Logistics

13%

Retail19%

Other8%

Commercialland/WIP

12%

Residentialland/WIP

42%

What we have done so far

• Delivered 0.7m sqft industrial/logistics space to retain in 2017 and on site with further 0.9m sqft

• Prepared pipeline to deliver on target of doubling development volume by 2020

What to expect next

• Focus on delivering key strategic sites– Potential size >10m sqft with >£60m ERV – Potential delivery over next 5-8 years– Partly subject to planning– Core of long-term income portfolio

• Additional medium-term income potential– Smaller sites for potential >5m sqft space,

supporting near-term income replacement

• Yield on cost of c.8% and yield on incremental capex c.9%

• Monetise sites with less near-term upside

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ACCELERATE COMMERCIAL DEVELOPMENT ACTIVITY

Key strategic sites Potential sq ft

Quedgeley East / Gateway 12 1.0m

Access 18, Avonmouth 1.3m

Chippenham 1.0m

Burton Gateway 0.9m

Copthorne 0.2m

Other strategic sites >6m

Total >10m

Achieved and indicative growth –Industrial/Logistics (m sq ft)

0.0

0.5

1.0

1.5

2.0

2015 2016 2017 2018 2019 2020

Retained Sold

What we have done so far

• Delivered growth in St. Modwen Homes volumes of 43% in 2017 and a further 31% in 1H18

• Operating margin up 0.5ppt to 13.9% in 2017

What to expect next

• On track to deliver up to 25% growth in volume and improvement in operating margin similar to 2017 this year

• Pipeline secured to deliver similar annual growth in volumes over 2019-2021

• Rolling out initiatives to improve operating margin by c.2-3ppt in medium term

• Maintain focus on quality and safety

• Wind-down of Persimmon JV over next 2 years

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GROW OUR HOUSEBUILDING BUSINESS

Residential profit (£m)

Achieved and target SMH volume growth (units)

315

485

694

0

200

400

600

800

1,000

1,200

1,400

1,600

FY15 FY16 FY17 FY18 FY19 FY20 FY21

1015

23

1612

8

0

5

10

15

20

25

30

35

FY15 FY16 FY17

SMH Profit JV Profit

What we have done so far

• Sold £246m of residential land in 2017 and further £27m in 1H18, in line with book value

• Reduced London exposure in land bank from 46% to 10%

• Forward-sold Uxbridge PRS for £75m (207 units)

What to expect next

• Accelerate crystallisation of value in residential land bank to reduce share of land in portfolio

• Sell at least £56m of residential land this year

• Progress PRS/student housing opportunities– Unlikely to build up long term asset

management platform ourselves

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MONETISE VALUE IN OUR RESIDENTIAL PIPELINE

Residential land bank (£m)

0

100

200

300

400

500

600

700

Nov-16 Nov-17 Pro Forma

London Other

What we have done so far

• Released £331m of capital out of first phases at three main sites NCGM, Swansea & Longbridge

• Secured new development agreements for 3,000 homes in Buckover and 1,500 homes in Wantage in 2017, of which latter started on site in 1H18

What to expect next

• Deliver further opportunities at existing schemes– Enhancing vision for Longbridge, which is

now c.50% developed– On site in Swansea with next phase of

student housing and academic facilities

• Pursuing further large scale residential-led and mixed use opportunities in capital-light way

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CEMENT AND GROW OUR REGENERATION REPUTATION

WEST & WALES

WEST & WALES REGIONKEY COMMERCIAL AND RESIDENTIAL SITES

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WEST & WALES REGION COMMERCIAL POTENTIAL

Key strategic sitesPotential

ERV(£m)

1 Quedgeley East 6

2 Gateway 12 1

3 Access 18 9

4 Chippenham 6

• Focus on key strategic sites

– Potential for growth and income retention

• Market remains strong in short to medium term/locational factors

• Continued investment to prepare sites for development

– Planning, remediation, infrastructure

– Ensure balance between the level of speculative development and pre-let

– More defined pipeline and standard specification to partner supply chain

– Understanding and monitoring of market trends

– Continued review of new strategic sales/opportunities

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CHIPPENHAM GATEWAY

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CHIPPENHAM GATEWAY

15

16

CHIPPENHAM GATEWAY

• 67 acres

• Potential of up to 1m sq ft development

• Entered into development agreement –May 2016

• Resolution to Grant – February 2018

• Obtained Outline Planning Consent subject to S.106

• Earthworks to commence – Late 2018

• Delivery of 1st unit – End of 2019

• ERV - £6.50 per sq ft

• Yield on incremental capex of c.8.5%

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WEST & WALES REGION RESIDENTIAL POTENTIAL

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Key sites

1 Coed Darcy, South Wales

2 Glan Llyn, Newport

3 Buckover, Gloucestershire

4 Ashchurch, Gloucestershire

5 Locking Parklands, Weston-super-Mare

6 Meon Vale, Stratford-upon-Avon

7 Taylors Lane, Worcester

8 Langford Mead, Taunton

9 Littlecombe, Dursley

10 Hendrefoilan, Swansea

• Focus on key residential opportunities across the W&W region

• Good supply of land and outlets for St. Modwen Homes

• Demand from 3rd party housebuilders for ready to go serviced plots

• Identified potential for 5,400 plots, evenly split between St. Modwen Homes and 3rd party housebuilders

• Dedicated team to progress the opportunities

– Planning, ground preparation and infrastructure

– Review of S106 obligations

– Programme to ensure continuity on sales

– Delivery of green environment and community facilities to provide attractive location to buyers

LOCKING PARKLANDS

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19

LOCKING PARKLANDS, WESTON-SUPER-MARE

• Development Agreement with Homes England October 2010

• Commencement (2011) with two early phases totalling 250 homes by St. Modwen Homes (SMH)

• Subsequent Outline Consent for 1,200 homes, employment & Primary School – July 2015

• Up to 50% of homes by SMH with potential for more

• Quality design and specification has driven up values

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20

MEON VALE, STRATFORD-UPON-AVON

COED DARCY, SWANSEA

• 479 acres

• Outline Planning Consent for total of 1,050 residential units to include primary school and leisure facilities

• Homes developed / being developed -Persimmon 451 homes, SMH 200 homes plus current application for a further 116

• 283 units remaining to be developed by SMH and 3rd party housebuilders

• 1,060 acres

• Mixed use development of 4,000 homes, employment space, retail and education, community facilities

• First phase nearing completion by Persimmon of 302 residential dwellings

• 3,698 units remaining to be developed by SMH and 3rd party housebuilders

20

21

LITTLECOMBE, DURSLEY

BUCKOVER, THORNBURY

• 92 acres

• Outline Planning Consent for 452 homes, employment area and opening up of River Cam

• Homes developed / being developed –Bloor Homes 74 homes and SMH 165 homes

• 213 homes remaining - all to be developed by SMH

• 536 acres

• 3,000 homes, 1,500 to be delivered in the plan period (up to 2036), alongside employment and community facilities

• Based on Garden Village principles being driven by sole landowner

• SMH has the right to develop 50% of the homes

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SWANSEA UNIVERSITY BAY CAMPUS

• Sale of student accommodation (2,005 rooms) in February 2018 to UPP for £139m (£87m net)

• Construction of Navitas academic building (approx. 40,000 sq ft) and further student accommodation (411 rooms) in 2018/19

• Progressing plans with University for Law School, next phase of School of Management and up to 900 further student rooms

• Creation of Joint Venture with Swansea University to develop out remaining site (approx. 23 acres)

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SUMMARY – WEST & WALES KEY PRIORITIES

• Key strategic commercial and residential sites across the region

• Develop our key commercial sites to support movement to high structural growth

• Long term potential ERV of over £25m

• Grow our housebuilding and residential business

• Identified potential for 5,400 plots across the region to 2023

• Up to 2,750 plots to be transferred to St. Modwen Homes to support continued growth of the business

• Remaining 2,650 plots to be sold to third party housebuilders

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IMPROVINGRETURNS

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GROWING OUR RENTAL INCOME

• Capital recycling to drive strong income growth– Yield on total cost (incl. land) c.8%– Yield on incremental capex c.9%– Gross yield on disposals c.7%

• Gross rental income on c.£500m small/retail/ student housing assets of £36m in 2017 *

– Sold £238m of this during 1H18 with gross rental income of £13m in 2017

• Potential ERV on reinvesting c.£500m proceeds in industrial/logistics capex of c.£45m

– Completed projects to retain with £5m ERV during 2017

– On site with projects to retain with £6m ERV– Total capex of c.£110m on these

developments

• Significant further upside in income from reduction in property outgoings

* As of Nov-17 and excl. Trentham

0%

2%

4%

6%

8%

10%

Yield ondisposals

Yield on totalcost

Yield onincremental

capex

Initial yields

Indicative potential ERV(£m cumulative)

0

10

20

30

40

50

60

2018 2019 2020 2021 2022

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IMPROVING OUR EFFICIENCY

• Existing income producing portfolio relatively expensive to manage

– c.70 small assets valued at c.£70m– Large number of small tenants– Older retail assets with higher vacancy and

higher obsolescence

• Marked differences in property outgoings– c.£10m of £15m total outgoings in 2017

related to small/retail/student housing assets *

• Retained pipeline more efficient to manage– Larger assets – Fewer tenants– New buildings requiring less maintenance

capex

• Driving performance of retained assets via newly created asset management function

* Adjusted for £1m surrender premium received and excl. Trentham

Property outgoings as % of gross rent*

* 2017 actual adjusted for £1m surrender premium received

(40%)

(30%)

(20%)

(10%)

0%

Industrial Retail(excl.

Trentham)

Other Smallassets

Total

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BUILDING UP OUR INCOME RETURNS

• Focus on adjusted EPRA earnings instead of trading profit/added value gains

• More than 30% upside in net rental income from existing opportunities without having to add any debt

• Growth in St. Modwen Homes profits driven by increase in volumes and improvement in margins

• Monetising value in land bank to reduce holding cost of non-income producing land

• Substantial earnings upside in medium term

• Near term earnings growth sensitive to disposals

Indicative impact of capital recycling on net rental income (£m)

0

20

40

60

80

2017 actual Rent lost fromdisposals

Rent from newdevelopments

Medium termpotential

Industrial Retail (excl. Trentham) Other Small assets

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INCREASING OUR TOTAL RETURN

• Total accounting return of 6.0% in 2017 and 5.6% in 2016

• Building blocks in place to substantially increase total accounting return over time

– Increase in net rental income– Increase in housebuilding profits– Further upside from change in portfolio mix,

asset management, efficiency and improved growth prospects

• Improvement deliverable from existing resources– No need to acquire– No need to attract new funding– No reliance on general market growth

• Dividend larger part of total shareholder return– Dividend to grow in line with adjusted EPRA

earnings under new policy

Indicative upside potential in total accounting return *

* Assuming stable property market values

5.6% 6.0%

2016 2017 Net rent Residentialprofits

Furtherupside

Mediumterm

potential

SUMMARY& OUTLOOK

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WELL ON TRACK TO DRIVE FUTURE GROWTH

• A year of substantial progress– Sold over £600m of assets, on average in

line with book value– Invested c.£180m in new developments– Strong growth in St. Modwen Homes– Simplified organisational structure– Prepared pipeline for future growth

• Market remains supportive in our key sectors

• Good start to 2018 operationally

• Future growth drivers within our control

• Well-positioned to significantly grow income and improve return on capital over time

APPENDICES

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CAPITAL RECYCLING –DISPOSALS OVER LAST 12 MONTHS

H2 2017 £m

Nine Elms Square, NCGM 190

Residential land 43

Commercial land 3

Industrial 16

Retail -

Small / PRS / other assets 33

Total H2 2017 285

H1 2018

Swansea University 139

Residential land 27

Commercial land 1

Industrial 12

Retail 95

Small / PRS / other assets 75

Total H1 2018 349

Total over past 12 months 634

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RETAIL PORTFOLIO - RESIDUAL EXPOSURE

* Based on Nov-17 book values

Retail portfolio after disposal of Longbridge & Wembley *c.£250m (incl. number of assets)

1

1

6

16

London Leisure Town Centre Retail Park Assets <£5m

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COMMERCIAL PIPELINE

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RESIDENTIAL PIPELINE

This presentation does not contain or constitute an invitation or inducement to any person to underwrite, subscribe for, or otherwise acquire or dispose of any shares in St. Modwen Properties PLC or other securities and should not be relied on for such purposes.

This presentation may contain certain forward looking statements. By their nature, forward looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward looking statements.

Any forward looking statements made by or on behalf of St. Modwen Properties PLC speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. St. Modwen Properties PLC does not undertake to update forward looking statements to reflect any changes in St. Modwen Properties PLC's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Statements are made in this presentation about the price and past performance of shares in St. Modwen Properties PLC. Past performance cannot be relied upon as a guide to future performance.’’

DISCLAIMER

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