EPIC Ediston Property Investment Company Plc

TIDMEPIC

RNS Number : 9943E

Ediston Property Inv Comp PLC

02 November 2022

Ediston Property Investment Company plc

(LEI: 213800JRL87EGX9TUI28)

Net Asset Value ('NAV') as at 30 September 2022

And Trading Update

Ediston Property Investment Company plc (LSE: EPIC) (the 'Company') announces its unaudited NAV at 30 September 2022, which will form the basis for the year end accounts.

Quarter Headlines

-- NAV per share at 30 September 2022 of 94.86 pence (30 June 2022: 98.35 pence), a decrease of 3.5% in the quarter.

-- Fair value independent valuation of the property portfolio at 30 September 2022 of GBP231.4 million, a like-for-like decrease of 2.5% on the valuation at 30 June 2022.

-- NAV total return (including dividends) for the quarter of -2.5% (30 June 2022 quarter: 3.7%).

   --      NAV total return of 11.5% for the year ended 30 September 2022. 

-- Portfolio weighted average unexpired lease length of 4.5 years and EPRA vacancy rate of 6.5%.

-- Dividends totalling 1.25 pence per share (5.00 pence per share annualised) paid in the quarter.

--------------------------------------------------------------------------------------

-- Last remaining non-retail warehouse asset sold for GBP5.0 million. The Company now only holds retail warehouse assets and has cash available for further investment in the retail warehouse sector.

   --      Two asset management deals completed, securing GBP1.25 million of rental income per annum. 

--------------------------------------------------------------------------------------

Net Asset Value

The unaudited NAV of the Company at 30 September 2022 was GBP200.48 million, or 94.86 pence per share, a decrease of 3.5% on the Company's NAV per share as at 30 June 2022.

 
                                       Pence Per   GBP million 
                                           Share 
 NAV at 30 June 2022                       98.35        207.82 
                                      ----------  ------------ 
 Valuation of retained property 
  portfolio                               (3.66)        (7.74) 
                                      ----------  ------------ 
 Reduction in value of the property 
  portfolio as a result of Telford 
  sale                                    (1.58)        (3.35) 
                                      ----------  ------------ 
 Sale proceeds                              2.37          5.00 
                                      ----------  ------------ 
 Capital expenditure                      (0.45)        (0.92) 
                                      ----------  ------------ 
 Income earned                              1.89          4.00 
                                      ----------  ------------ 
 Expenses & finance costs                 (0.81)        (1.69) 
                                      ----------  ------------ 
 Dividends paid                           (1.25)        (2.64) 
                                      ----------  ------------ 
 NAV at 30 September 2022                  94.86        200.48 
                                      ----------  ------------ 
 

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 30 September 2022 and undistributed income for the quarter, but does not include a provision for any accrued monthly dividend.

Investment and asset management activity

During the period, the Company sold its leisure unit at Southwater Square, Telford, its final non-retail warehouse property, for GBP5.0 million. The Company is now only invested in retail warehouse assets, in line with its revised strategy.

In the quarter, the Investment Manager completed two asset management deals securing GBP1.25 million of rental income per annum.

At Coatbridge, Glasgow, an Agreement for Lease (AFL) was completed with the existing tenant, B&Q, keeping it on the park for a further 10 years. B&Q had a lease expiry in December this year. As part of the transaction, B&Q will downsize from 102,000 sq. ft. to 79,960 sq. ft. Aldi, has signed an AFL for a 20,000 sq. ft. unit which will be created in the space vacated by B&Q. Planning permission has been obtained for the change to food use. On completion of the landlord works, Aldi will enter into a 20-year lease without break, subject to five-yearly rent reviews linked to RPI. This transaction will be reflected in the NAV when the condition relating to the landlord works has been discharged and the leases have completed.

At Springkerse Retail Park, Stirling, Pets at Home agreed to the removal of its lease break option, which was due in June 2024. The lease will now expire in June 2029. The passing rent is unchanged but will benefit from an upwards only rent review in June 2024.

The Investment Manager continues to progress lettings and lease restructures across the portfolio, with the aim of further improving the Company's income stream.

Potential new acquisitions continue to be reviewed. However, this is in the context of ensuring that terms reflect market conditions, and that the financial resilience of the Company is secure.

Cash and debt

At the date of this announcement, the Company has approximately GBP51.2 million of cash available for investment and operational purposes. The Company also has GBP31.2 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.

At the date of the September valuation, the average loan-to-value across the Company's two debt facilities was 34.7%. The Company is fully compliant with all debt covenants.

Summary

The Company's NAV decreased by 3.5%, following five consecutive quarters of NAV growth. Values reduced across the UK commercial property market, with some sub sectors more affected than others.

The cost-of-living crisis, rising energy costs, high inflation, rising interest rates, political instability and wider geo-political events eroded the confidence of consumers and investors alike and have created headwinds, not just for property, but also for the wider economy. However, it was the material increase in gilt yields which caused the biggest recent shift in property values, particularly for the lower yielding sub-sectors such as industrial and logistics. How the gilt market responds to the switch in government economic policy will be important for real estate markets going forward.

However, the fundamentals of retail warehousing remain attractive, and it is likely to continue to be the most resilient and flexible of the retail sub-sectors, able to adapt to the changing needs of consumers and tenants as well as accommodating many convenience-led retailers.

There will be challenges to contend with, but with a reshaped portfolio (with no office or leisure exposure), a good tenant line up, a low vacancy rate (6.5%) an attractive WAULT (4.5 years) and ongoing asset management opportunities, the Company has a robust platform on which to build. Further, the Company has cash available for investment into a re-priced market, at the appropriate time.

Portfolio sector weightings and tenant and locational exposure as at 30 September 2022

Sector

 
 Sector              Exposure 
                      (%) 
 Retail warehouse       100.0 
                    --------- 
 

Geography

The portfolio is diversified across the regional markets.

 
 Region           Exposure 
                   (%) 
 Scotland             27.2 
                 --------- 
 Wales                26.1 
                 --------- 
 North West           16.9 
                 --------- 
 Yorkshire            15.2 
                 --------- 
 North East            8.4 
                 --------- 
 East Midlands         6.2 
                 --------- 
 

Top five tenants (contracted income) 30 September 2022

 
 Tenant                Exposure 
                        (%) 
 B&Q Limited               15.0 
                      --------- 
 B&M Retail Limited         7.9 
                      --------- 
 Marks & Spencer 
  plc                       7.6 
                      --------- 
 Boots UK Limited           4.7 
                      --------- 
 Pets at Home 
  Limited                   3.9 
                      --------- 
 

Forthcoming events

The next interim dividend announcement is expected to be made by 3 November 2022. The next scheduled independent quarterly valuation of the property portfolio will be conducted by Knight Frank LLP for 31 December 2022. The unaudited NAV per share at that date is expected to be announced in January 2023.

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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November 02, 2022 03:01 ET (07:01 GMT)