TIDMEPIC
RNS Number : 3660B
Ediston Property Inv Comp PLC
11 February 2022
Ediston Property Investment Company plc
(LEI: 213800JRL87EGX9TUI28)
Net Asset Value ('NAV') as at 31 December 2021
And Trading Update
Ediston Property Investment Company plc (LSE: EPIC) (the
'Company') announces its unaudited NAV at 31 December 2021 and a
trading update for a quarter of considerable asset management
activity.
Quarter Summary
-- Fair value independent valuation of the property portfolio at
31 December 2021 of GBP249.85 million, a like-for-like increase of
2.03% compared to the valuation at 30 September 2021.
-- The uplift was reduced by the sale of the office assets below
the 30 September valuation and by a fall in the value of the
remaining office asset.
-- Retail warehouse values continued to improve with a 4.4%
like-for-like increase in the quarter.
-- NAV per share at 31 December 2021 of 90.64 pence (30
September 2021: 89.69 pence), an increase of 1.06% in the
quarter.
-- NAV total return (including dividends) for the quarter of 2.5% (30 September 2021, 4.2%).
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-- In line with the revised strategy, during the period, sold
three of the four offices realising GBP36.4 million.
-- Completed ten lease transactions, securing GBP1.2 million of rent per annum.
-- EPRA vacancy rate has reduced from 8.6% to 8.2%.
--------------------------------------------------------------------------------------
Net Asset Value
The unaudited NAV of the Company at 31 December 2021 was
GBP191.5 million, or 90.64 pence per share, an increase of 1.06% on
the Company's NAV per share as at 30 September 2021.
Pence Per Share GBP million
NAV at 30 September 2021 89.69 189.55
---------------- ------------
Valuation of property portfolio (15.39) (32.53)
---------------- ------------
Capital proceeds net of capital
expenditure 14.53 30.70
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Profit on sale of investment
properties 1.94 4.10
---------------- ------------
Income earned 2.10 4.44
---------------- ------------
Expenses & finance costs (0.98) (2.08)
---------------- ------------
Dividends paid (1.25) (2.64)
---------------- ------------
NAV at 31 December 2021 90.64 191.54
---------------- ------------
The NAV attributable to the ordinary shares has been calculated
under International Financial Reporting Standards ('IFRS'); the
EPRA NAV is not reported separately in this update as it is the
same as the IFRS NAV.
The NAV incorporates the independent portfolio valuation as at
31 December 2021 and undistributed income for the quarter, but does
not include a provision for any accrued monthly dividend.
Sale of the office portfolio and reinvestment strategy
During the period, in line with the revised strategy announced
in quarter three last year, the Company disposed of three of its
four office assets. It sold Midland Bridge House, Bath; 145
Morrison Street Edinburgh; and Citygate II Newcastle. The sales
realised GBP36.4 million before costs. This was below the 30
September 2021 valuation and reflected the general weakness in
office markets outside London. However, the sale price was above
the book cost of GBP29.9 million. The net income received from
these properties was GBP2.4 million per annum.
The Company found that there was not a significant depth of
investor demand for office assets. This affected the prices
achieved and consequently had a negative impact on the NAV.
The Investment Manager believes that selling the office assets
was the correct decision as the effects of the COVID-19 pandemic
and increasing ESG requirements have not yet had full impact on the
office occupational market or are reflected in the current
valuation of office properties.
With the sale of the three offices, the Company has made good
progress with the implementation of the revised investment
strategy. The remaining office will be sold in due course. The
Investment Manager remains focused on the redeployment of capital
into retail warehouses and is pursuing several opportunities. It is
targeting the completion of the reinvestment programme over the
next four months.
For the foreseeable future the Company will concentrate its
investment in the retail warehouse sector. The Investment Manager
believes the prospects are attractive for retail warehouses, both
in absolute terms, and relative to other sectors of the real estate
market.
Asset management update
During the period ten lease transactions were completed, which
secured GBP1.2 million of income per annum. The EPRA vacancy rate
reduced from 8.6% to 8.2%.
Eight of the ten deals were in the retail warehouse portfolio
and there was one in each of the office and leisure portfolios.
At Kingston Retail Park in Hull, the letting to The Range
completed. The Range signed a 15-year lease on a 14,500 sq. ft.
unit which was vacated by Outfit (Arcadia) in Q2 2021. Also at
Hull, Greggs exchanged an Agreement for Lease (AFL) on a 2,000 sq.
ft. unit which is leased to, but not occupied by, Carphone
Warehouse. A lease surrender has been agreed with Carphone
Warehouse.
At Prestatyn Shopping Park, The Tech Edge leased a vacant unit
of 1,300 sq. ft. on a five-year lease. At Clwyd Retail Park, Rhyl,
Now to Bed leased 8,017 sq. ft. on a three-year lease.
At Barnsley, three deals completed across 20,000 sq. ft. of
space. Bensons downsized from a unit of 10,000 sq. ft. into one of
5,036 sq. ft. and signed a five-year lease. Jysk signed an AFL on
the unit vacated by Bensons. On completion of some landlord works,
Jysk will enter into a new ten-year lease with a five-year tenant
break option. Lastly at Barnsley, One Below, who was occupying a
4,996 sq. ft. unit on a short-term lease, has committed to the park
for five years.
In the office portfolio, at Citygate II in Newcastle, UNW LLP
signed an extension to its leases to expire in March 2032, with a
tenant break option in March 2027. Subsequent to this deal
completing, the asset was sold.
Finally, in the leisure portfolio, at Hartlepool, Mecca Bingo
signed a 10-year reversionary lease with a seven-year tenant break
option on its unit which extends to 31,284 sq. ft. The lease will
expire in September 2032, with a break option in September
2029.
The Investment Manager is progressing other new lettings and
lease restructures across the portfolio, which will further improve
the Company's income stream. These will be reported on when
completed.
Rent collection and dividend
Rent collection continues to be strong, with 99.9% of the rent
due for quarter four 2021 expected to be collected. The income
received by the Company will fluctuate over the coming months as
the rent lost through office sales will be replaced by rent from
new acquisitions. Against this backdrop, it remains the Board's
expectation that the dividend will be increased further in the
coming months, with the timing influenced by when the available
capital is reinvested and becomes income producing.
Cash and debt
At the date of this announcement, the Company has approximately
GBP30.4 million of cash available for investment and operational
purposes. The Company also has GBP23.25 million of cash held in its
debt facility.
At the date of the December valuation, the average loan-to-value
across the Company's two debt facilities was 35.2%. The Company is
fully compliant with all debt covenants and has significant
headroom against income and asset value covenants.
Summary
Three of the Company's offices have now been sold, but the
weakness in the office market negatively affected the sale price
and consequently the Company's NAV. However, the positive momentum
in the retail warehouse sector has continued to build and looks set
to improve further given increased tenant demand and attractive
pricing, relative to other sectors of the market. Retail warehouse
valuations increased again in the period and contributed to the
third consecutive quarter of NAV growth for the Company.
The immediate focus is now on reinvesting the sales proceeds
into suitable retail warehouse stock and on continuing to identify
and execute asset management initiatives to improve both income and
capital values across the portfolio.
William Hill, Chairman, commented:
"This is the third consecutive quarter of NAV growth for the
Company which has been delivered despite the frictional costs of
disposing of its offices. For the foreseeable future the Company
will specialise in the retail warehouse market, a sector that has
strong positive momentum and looks attractively priced relative to
other property types."
Portfolio sector weightings and tenant and locational
exposure
Sector
Sector Exposure
(%)
Retail warehouse 87.7
---------
Office 10.2
---------
Other commercial/
Leisure 2.1
---------
Geography
The portfolio is diversified across the regional markets.
Region Exposure
(%)
Wales 23.9
---------
Scotland 22.9
---------
North West 14.2
---------
Yorkshire 13.4
---------
West Midlands 11.4
---------
North East 8.7
---------
East Midlands 5.5
---------
Top five tenants
Tenant Exposure (%)
B&Q Limited 13.3
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B&M Retail Limited 7.0
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Marks & Spencer
plc 5.7
-------------
Boots UK Limited 4.1
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AXA Insurance UK
plc 3.8
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Forthcoming events
The next interim dividend announcement is expected to be made by
3 March 2022. The next scheduled independent quarterly valuation of
the property portfolio will be conducted by Knight Frank LLP for 31
March 2022, which will form part of the Company's interim report.
The unaudited NAV per share at that date is expected to be
announced in April 2022.
The Company intends to publish its next factsheet shortly which
will be made available on the Company's website at
www.ediston-reit.com.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via Regulatory Information
Service, this inside information is now considered to be in the
public domain.
Enquiries
Will Barnett Investec Bank plc 0207 597 5873
Ediston Investment Services
Calum Bruce Limited 0131 225 5599
Ruth Wright JTC 0203 893 1011
Ben Robinson Kaso Legg Communications 0203 995 6672
Stephanie Ross Kaso Legg Communications 0203 995 6676
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END
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