TIDMEPIC
RNS Number : 2589J
Ediston Property Inv Comp PLC
26 April 2022
Ediston Property Investment Company plc
(LEI: 213800JRL87EGX9TUI28)
Net Asset Value ('NAV') as at 31 March 2022
And Trading Update
Ediston Property Investment Company plc (LSE: EPIC) (the
'Company') announces its unaudited NAV at 31 March 2022, which will
form part of the unaudited interim accounts expected to be
published in May 2022.
Quarter Summary
-- NAV per share at 31 March 2022 of 96.08 pence (31 December
2021: 90.64 pence), an increase of 6.0% in the quarter.
-- Fair value independent valuation of the property portfolio at
31 March 2022 of GBP238.8 million, a like-for-like increase of 6.5%
on the valuation at 31 December 2021.
-- NAV total return (including dividends) for the quarter of 7.4% (31 December 2021: 2.5%).
-- Fourth consecutive quarter of NAV growth.
--------------------------------------------------------------------------------------
-- Sale of St Philips Point, Birmingham completes successful
period of investment in office assets, with retail warehouses
representing the focus of the next phase of the Company's
investment strategy.
-- Four lease transactions completed, securing GBP377,500 of rent per annum.
-- Strong levels of rent collection maintained. Expected to be 99.9% for Q1 2022.
--------------------------------------------------------------------------------------
Net Asset Value
The unaudited NAV of the Company at 31 March 2022 was GBP203.05
million, or 96.08 pence per share, an increase of 6.0% on the
Company's NAV per share as at 31 December 2021.
Pence Per GBP million
Share
NAV at 31 December 2021 90.64 191.54
---------- ------------
Valuation of retained property
portfolio 6.85 14.47
---------- ------------
Reduction in value of the property
portfolio as a result of Birmingham
sale (12.07) (25.50)
---------- ------------
Capital proceeds 11.19 23.65
---------- ------------
Capital expenditure (0.20) (0.43)
---------- ------------
Income earned 1.93 4.09
---------- ------------
Expenses & finance costs (1.01) (2.13)
---------- ------------
Dividends paid (1.25) (2.64)
---------- ------------
NAV at 31 March 2022 96.08 203.05
---------- ------------
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 March 2022 and undistributed income for the quarter, but does
not include a provision for any accrued monthly dividend.
Investment activity
In seeking to identify and capitalise on attractive investment
themes and opportunities as they emerge in the UK commercial
property sector, the Investment Manager has been repositioning the
portfolio to focus on the retail warehouse sector. This followed a
review in July 2021 which concluded that this sector had the best
prospects for asset value and income growth.
During the period, the Company completed the first phase of this
change of focus by selling its final office asset, St Philips
Point, Birmingham, for a headline price of GBP24.5 million.
The shift in focus coincides with a move from the office sector
which has provided positive performance for the Company since its
launch in 2014, with six office assets having been bought and sold
during that time, delivering an IRR of 10.1%.
On 13 April the Company announced the sale of its leisure asset
at The Lanyard, Hartlepool for a price of GBP2.6 million. The asset
is let to Mecca Bingo Limited. The Investment Manager had completed
a lease extension with the tenant in quarter four last year which
extended the unexpired lease term by seven years. The Company now
has one leisure asset remaining in the property portfolio.
The emphasis is now on redeploying the sale proceeds into retail
warehouse assets. According to the IPF Consensus Forecast,
published in February 2022, retail warehousing is forecast to be
the top performing sub-sector, on a total return basis, over the
period 2022 to 2026.
Asset management update
During the period four lease transactions were completed,
securing GBP377,500 of income per annum, which is marginally ahead
of the ERV of the units.
-- At Kingston Retail Park in Hull, Greggs completed a lease on
a 2,000 sq. ft. unit. Greggs signed a 10-year lease with a
five-year tenant break option.
-- At Widnes Shopping Park, Card Factory signed a five-year
lease, without break, on a 1,590 sq. ft. unit.
-- At Barnsley, Jysk completed a 10-year lease with a five-year
break option on a 10,000 sq. ft. unit.
-- At Stirling, Harry Corry signed a five-year lease extension
on its 9,968 sq. ft. unit, meaning its lease will now expire in
February 2027.
Post-period-end JD Sports completed a lease on a 7,623 sq. ft.
unit, at Prestatyn Shopping Park, which was previously occupied by
New Look. New Look was occupying the unit on a turnover rent basis,
following the approval of its Company Voluntary Arrangement (CVA).
Under the terms of the CVA landlords are entitled to break the
leases.
The Investment Manager considered that the terms of the CVA were
below market, so it took the opportunity to exercise its break
clause and identified JD Sports as a more suitable tenant for the
space. The rent from JD Sports is 44% higher than the turnover rent
which was being paid by New Look.
The EPRA Vacancy Rate, at 31 March 2022 was 7.3%. This figure
has subsequently fallen to 6.3% following the JD Sports letting
mentioned above.
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, cash and debt
Rent collection continues to be strong, with 99.9% of the rent
due for quarter one 2022 expected to be collected. The income
received by the Company will fluctuate over the coming months as
the rent lost through office sales is replaced by rent from new
acquisitions.
At the date of this announcement, the Company has approximately
GBP41.2 million of cash available for investment and operational
purposes. The Company also has GBP36.3 million of cash held in its
debt facility, which is subject to the lender's LTV requirements
being met for it to be released for investment purposes. These
figures include the Hartlepool sale proceeds.
At the date of the March valuation, the average loan-to-value
across the Company's two debt facilities was 32.4%. The Company is
fully compliant with all debt covenants and has significant
headroom against income and asset value covenants.
Summary
The Company has now had four consecutive quarters of NAV growth,
driven by continued valuation improvements in its retail warehouse
portfolio. General market movement, and the completion of asset
management initiatives have contributed to the positive direction
of travel.
Good progress has been made with the revised strategy, with all
offices assets now sold. The priority is to reinvest the sales
proceeds into suitable retail warehouse stock.
Looking across the portfolio, there are other reasons to be
positive. Rent collection remains strong, the EPRA vacancy rate has
fallen, and the Investment Manager continues to identify and
complete asset management projects across multiple properties.
William Hill, Chairman, commented:
"Another strong quarter of performance from the Company's retail
warehouse portfolio provides further evidence of the merits of the
Company's decision to target this sector. Following the sale of St
Philips Point, we are now concentrating on reinvesting the proceeds
into retail warehouse assets and growing the Company with a focus
on retail warehousing."
Portfolio sector weightings and tenant and locational
exposure
Sector
Sector Exposure
(%)
Retail warehouse 97.7
---------
Other commercial/
Leisure 2.3
---------
Geography
The portfolio is diversified across the regional markets.
Region Exposure
(%)
Scotland 26.1
---------
Wales 25.9
---------
North West 16.3
---------
Yorkshire 15.0
---------
North East 9.2
---------
East Midlands 6.2
---------
West Midlands 1.3
---------
Top five tenants
Tenant Exposure
(%)
B&Q Limited 14.7
---------
B&M Retail Limited 7.7
---------
Marks & Spencer
plc 6.3
---------
Boots UK Limited 4.6
---------
Pets at Home
Limited 3.8
---------
Forthcoming events
The Company expects to produce its unaudited interim results for
the period to 31 March 2022 in May.
The next interim dividend announcement is expected to be made by
5 May 2022. The next scheduled independent quarterly valuation of
the property portfolio will be conducted by Knight Frank LLP for 30
June 2022. The unaudited NAV per share at that date is expected to
be announced in July 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
Calum Bruce - Ediston Investment Services 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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