Ediston Property Inv Comp PLC Net Asset Value as at 30 September 2017 (6119T)

TIDMEPIC

RNS Number : 6119T

Ediston Property Inv Comp PLC

16 October 2017

Ediston Property Investment Company plc

(LEI: 213800JRL87EGX9TUI28)

Net Asset Value ("NAV") as at 30 September 2017

Ediston Property Investment Company plc (LSE: EPIC) (the "Company") announces its unaudited NAV as at 30 September 2017.

Quarter highlights

-- NAV per share at 30 September 2017 of 111.32 pence (30 June 2017: 110.18 pence), an increase of 1.03%, after taking into account capital expenditure and transaction costs.

-- The NAV total return (including dividends) was 2.3% for the quarter and 9.3% for the 12 months to 30 September 2017.

-- Fair value independent valuation of the property portfolio as at 30 September 2017 of GBP173.41 million, a like-for-like increase of 1.20% on the valuation at 30 June 2017.

-- The office building in Reading was sold in August for GBP20.51 million, in line with the 30 June 2017 valuation.

Net Asset Value

The unaudited NAV of the Company at 30 September 2017 was GBP145.82 million, or 111.32 pence per share, an increase of 1.03% on the Company's NAV per share as at 30 June 2017:

 
                                 Pence Per Share   GBP million 
------------------------------  ----------------  ------------ 
 NAV at 30 June 2017                      110.18        144.33 
------------------------------  ----------------  ------------ 
 Gain on properties                         1.53          2.01 
------------------------------  ----------------  ------------ 
 Capital expenditure in 
  the period                              (0.55)        (0.73) 
------------------------------  ----------------  ------------ 
 Income earned for the period               2.32          3.04 
------------------------------  ----------------  ------------ 
 Expenses & finance costs 
  for the period                          (0.79)        (1.03) 
------------------------------  ----------------  ------------ 
 Dividends paid in the period             (1.37)        (1.80) 
------------------------------  ----------------  ------------ 
 NAV at 30 September 2017                 111.32        145.82 
------------------------------  ----------------  ------------ 
 

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 2017 and income for the quarter, but does not include a provision for any accrued dividend.

Disposal

During the period, the Company completed its second sale from the portfolio, disposing of its office property in Reading for GBP20,510,602, which was in line with the valuation at 30 June 2017. The property extended to c.52,000 sq. ft., was multi-let to four tenants, and had c. 6,000 sq. ft. of space vacant and to let.

The asset was acquired by the Company, as part of the seed portfolio, in October 2014. On acquisition, it had over 20,000 sq. ft. vacant and to let. The Investment Manager leased 14,000 sq. ft. of this space to two new tenants, and moved the rental tone of the property from GBP25.00 per sq. ft. to in excess of GBP30.50 per sq. ft.

The Investment Manager remains confident that the sales proceeds will be invested in other assets which offer a greater potential for income and capital growth, including the proposed transaction announced on 6 October 2017.

Outlook

Investment and letting markets continue to shrug off the uncertainties brought about by the Brexit process and the changed political situation. Overseas investors are the largest buyers by volume with the statistics distorted by some large central London transactions.

Yields have generally remained static for the quarter. We do not see significant yield change over the remaining part of the year. However, it is likely the weight of money will push the pricing of long lease properties up further and those assets with income uncertainty will see some falls. The latter type of asset has the greater scope for mispricing and could be attractive targets, with well-founded knowledge of occupational markets backed up by management capability.

We see greatest value in the retail warehouse sector for schemes that are let on the correct rental levels. Yields are looking attractive relative to other sectors, unexpired lease terms are good, and the credit rating of the major occupiers is strong. It is also the part of the retail sector that is more resilient to internet penetration and is actually well-placed to help retailers deliver both physical and online sales.

Portfolio Composition

Sector

 
 Sector              Exposure 
                      (%) 
------------------  --------- 
 Retail warehouse       55.07 
------------------  --------- 
 Office                 39.07 
------------------  --------- 
 Other commercial        5.86 
------------------  --------- 
 

Geography

The portfolio is diversified across the regional markets and has no exposure to Central London assets.

 
 Sector           Exposure 
                   (%) 
---------------  --------- 
 North East          27.96 
---------------  --------- 
 Wales               22.60 
---------------  --------- 
 West Midlands       20.09 
---------------  --------- 
 Scotland            16.75 
---------------  --------- 
 East Midlands        7.87 
---------------  --------- 
 South West           2.94 
---------------  --------- 
 North West           1.79 
---------------  --------- 
 

Dividends

The Company paid three dividends of 0.4583 pence per share in July, August and September 2017, resulting in a cumulative dividend payment for the quarter of 1.3749 pence per share. This brings the total dividends paid during the year to 30 September 2017 to 5.50 pence per share. The annual dividend remains fully covered.

Proposed acquisition and fund raising

On 6 October, the Board announced that the Company and its Investment Manager are in discussions to acquire a portfolio of retail warehouse parks with an aggregate value of approximately GBP146 million. The vendor will receive a material proportion of the consideration in the form of new ordinary shares in the Company. The balance of the consideration will be funded through a combination of the Company's existing cash resources, the proceeds of an open offer to existing shareholders, a placing, and an offer of subscription, including an intermediaries' offer, of up to 100 million new ordinary shares, and through debt finance. The acquisition has been favourably received by the major shareholders in the Company and, if approved, will increase the Company's property portfolio to over GBP315 million. The Company expects to make a further announcement of progress on the transaction closer to when the formal documentation is ready for publication.

William Hill, Chairman, commented:

"Over the quarter, the Company continued to build a record of adding value through management activity and recycling cash where assets reach maturity. Evidence of delivering on our growth strategy is now visible with the proposed retail warehouse portfolio acquisition announced on 6 October. The attraction of this deal is not only the ability to add assets with potential to add value through management, but also from an income perspective. On completion the assets will be accretive to dividend cover and will improve the quality of income in the enlarged portfolio."

Calum Bruce, Investment Manager, commented:

"We have always said that we will look to refresh the property portfolio by selling our mature assets and reinvesting the proceeds in properties with attractive asset management angles to exploit. The sale of the office building in Reading was in line with this objective.

Another objective is to grow the Company in a sustainable and credible manner. The proposed portfolio transaction will allow us to achieve this aim by acquiring assets in a sector in which the Investment Manager has confidence and which offer a good income stream, with the potential to improve the income further through identified asset management initiatives."

Forthcoming events

The next scheduled independent quarterly valuation of the property portfolio will be conducted by Knight Frank as at 31 December 2017 with the NAV per share at that date expected to be announced in January 2018. Given the proposed transaction, the Company also intends to announce its annual results for the year ended 30 September 2017 in January 2018.

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 - Canaccord Genuity 0207 523 8000

Calum Bruce - Ediston Properties Limited 0131 225 5599

Donald Cameron - Maitland Administration Services (Scotland) Limited 0131 550 3763

David Masters - Lansons 0207 294 3687

Laura Cronin - Lansons 0207 294 3607

This information is provided by RNS

The company news service from the London Stock Exchange

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October 16, 2017 02:00 ET (06:00 GMT)