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SLI Standard Life Investments Property Income Trust Ld

79.00
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Standard Life Investments Property Income Trust Ld LSE:SLI London Ordinary Share GB0033875286 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 79.00 79.00 79.40 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Standard LifeInvProp Interim Results

07/09/2016 7:00am

UK Regulatory


 
TIDMSLI 
 
7 September 2016 
 
STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST 
 
RESULTS IN RESPECT OF THE PERIODED 30 JUNE 2016 
 
Financial Highlights 
 
  * Net asset value ("NAV") per share of 81.8p as at 30 June 2016 (31 December 
    2015: 82.2p) resulting in a NAV total return (incl. dividends) of 2.3% with 
    positive portfolio performance offset by movement in interest rate swaps; 
  * Strong performance over the longer term with NAV total return over five 
    years of 85.1% compared with the FTSE REIT Index (47.6%) and the FTSE 
    All-Share Index (35.5%); 
  * Dividend increased by 2.5% in the period with the yield on the Company's 
    shares being 5.9% as at 26 August 2016, significantly ahead of the yield on 
    the FTSE REIT Index (3.5%) and the FTSE All-Share Index (3.5%) and 
    underpinned by a diversified portfolio of properties and tenants; 
  * Dividend cover of 111% for the six month period compared to 98% for 2015 
    highlighting the income accretive nature of the portfolio acquired in 
    December 2015; 
  * Successful refinancing of loan facilities in the period with GBP110m seven 
    year term loan and GBP35m revolving credit facility ("RCF"), which introduces 
    flexibility into the capital structure, secured from The Royal Bank of 
    Scotland plc ("RBS") in April 2016; 
  * Blended interest rate on refinanced loan facilities of 2.5% as at 30 June 
    2016, one of the lowest in the Company's peer group with the prudent LTV of 
    28.4% as at 26 August 2016 providing significant headroom compared to a 
    covenant of 60%; 
  * Overall the Company is in a strong financial position. 
 
Property Highlights 
 
  * Portfolio valued at GBP450.1m, reflecting a capital return of 0.8% in the six 
    month period, comparing favourably to the IPD benchmark of 0.1% driven 
    mainly by industrial and office sectors; 
  * Income return for the period was 3.1% again outperforming the IPD benchmark 
    income return of 2.3%; 
  * Sales totalling GBP15.4m, including those made after the period end, which 
    was 4% above most recent 2016 valuations; 
  * A number of successful asset management initiatives completed in the period 
    including; 
 
    ·      Letting of three vacant units at Budbrooke industrial estate, 
    Warwick adding GBP92k in rent per annum after incentives; 
    ·      Rent review completed at Denby, above estimated rental value ("ERV") 
    and adding an additional GBP170k in rent; 
    ·      Seven lease renegotiations in the period securing GBP812,000 of rental 
    income; 
 
  * A void rate of 3.8% at 30 June 2016 compared with a benchmark figure of 
    7.1% plus strong rent collection rate of 99% after 28 days, underlining the 
    strong tenant base and the Investment Manager's commitment to maintaining 
    income in an environment where income will be the key driver of performance 
    going forward. 
 
PERFORMANCE SUMMARY 
 
Capital Values & Gearing                                                                                  31 
                                                                                          30 June   December 
                                                                                             2016       2015   % Change 
 
Total Assets                                                                               470. 6      467.3        0.7 
 
NAV per share (p)                                                                            81.8       82.2      (0.5) 
 
Ordinary Share Price (p)                                                                     79.3       84.5      (6.3) 
 
(Discount)/Premium to NAV (%)                                                               (3.1)        2.8          - 
 
LTV*                                                                                         29.4       28.1          - 
 
 
 
Total Return %                                                                 6 Month     1 Year     3 Year     5 Year 
 
NAV**                                                                              2.3       10.3       70.0       85.1 
 
Share Price**                                                                    (4.8)      (0.1)       56.4       66.6 
 
FTSE Real Estate Investment Trusts Index                                        (11.8)      (8.3)       35.7       47.6 
 
FTSE All-Share Index                                                               4.3        2.2       18.6       35.5 
 
 
 
Property Returns & Statistics %                                                                     6 months   6 months 
                                                                                                  to 30 June to 30 June 
                                                                                                        2016       2015 
 
Property income return                                                                                   3.1        3.1 
 
IPD property monthly index                                                                               2.3        2.5 
 
Property total return (property only)                                                                    3.9        5.8 
 
IPD property total return monthly index                                                                  2.5        6.3 
 
Void rate                                                                                                3.8        2.8 
 
 
 
Earnings & Dividends                                                                                 30 June    30 June 
                                                                                                        2016       2015 
 
Dividends declared per ordinary share (p)                                                              2.351      2.322 
 
Dividend Yield (%)***                                                                                    6.0        5.5 
 
FTSE Real Estate Investment Trusts Index Yield (%)                                                       3.7        2.8 
 
FTSE All-Share Index Yield (%)                                                                           3.7        3.5 
 
European Public Real Estate Association ("EPRA") NAV at 30 June 2016 (excluding 
swap liabilities) - 83.3p (31 Dec 2015 - 82.7p) 
 
* Calculated as bank borrowings less all offset cash as a percentage of the 
open market value of the property portfolio as at 30 June 2016. 
 
** Assumes re-investment of dividends excluding transaction costs. 
 
*** Based on an annual dividend of 4.76p (30 June 2015: 4.644p) and a share 
price of 79.3p (30 June 2015: 83.8p). 
 
Sources: Standard Life Investments, Investment Property Databank ("IPD") 
 
CHAIRMAN'S STATEMENT 
 
In what has been a volatile period for the UK, I present my first statement as 
Chairman of your Company. My predecessor, Dick Barfield, retired at the AGM in 
June after 13 years on the board, the last two as Chairman. He was a founding 
director and helped to steer the company successfully through the Global 
Financial Crisis. During his Chairmanship he oversaw the doubling of the gross 
value of your assets, the on-shoring of the company for tax purposes and the 
refinancing of all the debt leaving the company with low gearing and well 
positioned to meet the current challenges. 
 
I am pleased to welcome James Clifton-Brown to your board with effect from 17 
August 2016. He brings many years of experience in the real estate investment 
management field. He joined CBRE Global Investors in 1984 as a fund manager on 
one of their pension fund segregated accounts which focused on high income 
secondary real estate attaining strong results. He became the firm's UK Chief 
Investment Officer in 1996. Since 2004, he has also been a director on a number 
of boards relating to CBRE Global Investors Limited and is a voting member on 
the USA, European and Asian Investment Committees and Chairman of CBRE's Global 
Separate Accounts team. He has been appointed chairman of the Property 
Valuation Committee. 
 
At the time of writing there is an unusual level of uncertainty following the 
decision of the UK electorate to leave the EU. This uncertainty is likely to 
continue, and although the markets have shown some stabilisation since the 
election of a new Conservative prime minister, it is not yet possible to 
forecast what the impact of the decision to leave the EU will mean for UK 
growth, and in particular the UK commercial real estate market. In the short 
term at least the sentiments are negative. A number of the open ended property 
funds have either closed to redemptions or imposed pricing adjustments within 
days of the vote as retail investors quickly sought liquidity. The share prices 
of REITS and other closed ended companies were also affected by this negative 
sentiment with the FTSE All-Share REIT index falling by 12% in the first week 
after the referendum. Your own Company's share price has been volatile over 
this period, with a low of 68p on 6 July 2016, compared to 84.5p on the day of 
the vote. The price recovered quickly following the initial shock and the 
shares are now trading at 81.25p (as at 26 August 2016) - a discount to net 
assets of 0.7%. 
 
Performance 
 
Although asset valuations have been caveated for the June quarter end given 
their proximity to the referendum, your Company has performed well over the six 
month period to 30 June 2016 with a NAV total return of 2.3%. This performance 
was driven by continued growth in the property portfolio and strong income 
generation with both the capital and income performance of the Company 
exceeding that of the IPD benchmark. It was delivered even after allowing for a 
negative movement in the value of the interest rate swap, caused by interest 
rate movements as a result of the EU referendum result, resulting in a swap 
liability of GBP5.4m as at 30 June 2016. Performance has also been boosted by the 
sale of two assets in the period, both ahead of most recent valuations, raising 
GBP6.25m. This trend was continued post the period end with a further two assets 
sold for GBP9m. The proceeds of these sales have all been used to reduce the debt 
of the Company. 
 
Debt 
 
On 28 April 2016 the Company refinanced its existing debt facilities with RBS. 
A new GBP110m seven year facility was taken out which was hedged to fix the rate 
on this loan at 2.725%.  In addition, to introduce flexibility into the capital 
structure and allow the Company to act quickly should opportunities arise, a GBP 
35m RCF was also taken out with RBS. Securing these loan facilities as early as 
possible following the Pearl Portfolio acquisition was a clear Board strategy 
and the timing has turned out to be fortuitous given the current market 
environment. The Company is now in a good position of having low cost debt 
(all-in rate of 2.6% at the date of this report) along with a prudent LTV, net 
of cash, of 28.4%. 
 
Dividends 
 
As part of the fundraising exercise in December 2015 in order to acquire the 
Pearl portfolio of 22 assets, the Company announced that it would increase its 
dividend by 2.5%. Following the successful completion of this acquisition the 
dividend relating to the first quarter of this year, paid on 31 May 2016, was 
increased to 1.19p per share. Based on an annual dividend of 4.76p, the yield 
on the Company's shares as at 26 August 2016 was 5.9%. This compares favourably 
with the yield on the FTSE All-Share Index (3.5%) and the FTSE ALL-Share REIT 
Index of (3.5%) at a time when attractive, sustainable income returns are much 
sought after. It should also be highlighted that the Company's dividend cover 
for the first six months of the year, even given this increase in dividend, was 
111%. 
 
Outlook 
 
The UK economy has now entered a period of heightened uncertainty which most 
forecasters predict will impact on future growth. The International Monetary 
Fund, for example, recently cut their forecast for UK economic growth in 2017 
down to 1.3%, a fall of 0.9% from previous forecasts. One key measure that 
drives economic performance is confidence and there are early signs that 
businesses are now less confident than before the referendum which may have an 
impact on future investment plans. How the real economy reacts to any easing in 
monetary policy by the Bank of England will be key to the extent of any 
downturn as will the Government's ability to set out more clearly how the UK 
will interact with the EU going forward. 
 
The performance of the UK commercial property market has always been closely 
linked to that of the economy. Hence there can be no doubt that any economic 
downturn will impact capital values which were already deflated as a result of 
the 1% increase in stamp duty land tax in the March budget. However, unlike in 
previous downturns, the sector is in better shape with lower gearing, higher 
occupancy rates, lower levels of speculative development and a significant 
yield premium over other asset classes. 
 
Within this overall framework, the Company exhibits good defensive qualities. 
With a diversified portfolio both in terms of the sectors in which it invests 
and the area of the country where the assets are situated the portfolio will 
not be overly exposed to the potential underperformance of any one region or 
sector e.g. Central London offices. In addition, the Company has a secure 
tenant base and low void rate which, when combined with the proven ability of 
the asset manager to implement successful asset management initiatives, should 
ensure a sustainable income stream which underpins the high dividend yield. In 
an environment where attractive income returns are in demand this is positive 
for the Company. Finally, with the rollover of the debt facility and the 
introduction of flexibility into the capital structure through the RCF, the 
Investment Manager has the ability to reduce gearing while still having the 
resources to act quickly should suitable opportunities arise which is likely in 
such a volatile environment. Overall, I am optimistic that your company is well 
positioned for the current market. 
 
Robert Peto 
 
Chairman 
 
6 September 2016 
 
PRINCIPAL RISKS AND UNCERTAINTIES 
 
The Company's assets consist of direct investments in UK commercial property. 
Its principal risks are therefore related to the commercial property market in 
general, but also the particular circumstances of the properties in which it is 
invested, and their tenants. The Board and Investment Manager seek to mitigate 
these risks through a strong initial due diligence process, continual review of 
the portfolio and active asset management initiatives. All of the properties in 
the portfolio are insured, providing protection against risks to the properties 
and also protection in case of injury to third parties in relation to the 
properties. 
 
The Board has also identified a number of other specific risks that are 
reviewed at each Board meeting. These are as follows: 
 
  * The Company and its objectives become unattractive to investors. This is 
    mitigated through regular contact with shareholders, a regular review of 
    share price performance and the level of the discount or premium at which 
    the shares trade to NAV and regular meetings with the Company's broker to 
    discuss these points and address any issues that arise. 
  * Poor selection of new properties for investment. A comprehensive and 
    documented initial due diligence process, which will filter out properties 
    that do not fit required criteria, is carried out by the Investment 
    Manager. Where appropriate, this is followed by detailed review and 
    challenge by the Board prior to a decision being made to proceed with a 
    purchase. This process is designed to mitigate the risk of poor property 
    selection. 
  * Tenant failure or inability to let property. Due diligence work on 
    potential tenants is undertaken before entering into new lease 
    arrangements. In addition, tenants are kept under constant review through 
    regular contact and various reports both from the managing agents and the 
    Investment Manager's own reporting process. Contingency plans are put in 
    place at units that have tenants that are believed to be in financial 
    trouble. The Company subscribes to the Investment Property Databank Iris 
    Report which updates the credit and risk ranking of the tenants and income 
    stream, and compares it to the rest of the UK real estate market. 
  * Loss on financial instruments. The company has entered into an interest 
    rate swap arrangement. The swap instrument is valued and monitored on a 
    monthly basis by the counterparty bank. The Investment Manager checks the 
    valuation of the swap instrument internally to ensure it is accurate. In 
    addition, the credit rating of the bank that the swap is taken out with is 
    assessed regularly. 
 
Other risks faced by the Company include the following: 
 
  * Strategic - incorrect strategy, including sector and property allocation 
    and use of gearing, could all lead to poor returns for shareholders. 
  * Tax efficiency - the structure of the Company or changes to legislation 
    could result in the Company no longer being a tax efficient investment 
    vehicle for shareholders. 
  * Regulatory - breach of regulatory rules could lead to the suspension of the 
    Company's Stock Exchange Listing, financial penalties or a qualified audit 
    report. 
  * Financial - inadequate controls by the Investment Manager or third party 
    service providers could lead to misappropriation of assets. Inappropriate 
    accounting policies or failure to comply with accounting standards, 
    including valuations provided by independent valuers, could lead to 
    misreporting or breaches of regulations. 
  * Operational - failure of the Investment Manager's accounting systems or 
    disruption to the Investment Manager's business, or that of third party 
    service providers, could lead to an inability to provide accurate reporting 
    and monitoring, leading to loss of shareholder confidence. 
  * Economic - inflation or deflation, economic recessions and movements in 
    interest rates could affect property valuations and also bank borrowings. 
  * Geopolitical - geopolitical instability or change could have an adverse 
    affect on UK real estate and stock markets. 
 
The Board seeks to mitigate and manage all risks through continual review, 
policy setting and enforcement of contractual obligations. It also regularly 
monitors the investment environment and the management of the Company's 
property portfolio, levels of gearing and the overall structure of the Company. 
 
As a result of uncertainty following the UK's referendum decision to exit the 
EU, the Company's valuers, JLL Limited and Knight Frank LLP, included the 
following caveat with their valuations for the quarter ended 30 June 2016 as 
they did for all valuations they undertook at that date: 
 
"Following the Referendum held on 23 June 2016 concerning the UK's membership 
of the EU, a decision was taken to exit. We are now in a period of uncertainty 
in relation to many factors that impact the property investment and letting 
markets. Since the Referendum date it has not been possible to gauge the effect 
of this decision by reference to transactions in the market place. The 
probability of our opinion of value exactly coinciding with the price achieved, 
were there to be a sale, has reduced. We would, therefore, recommend that the 
valuation is kept under regular review and that specific market advice is 
obtained should you wish to effect a disposal." 
 
The company is aware that JLL Limited and Knight Frank LLP, in undertaking more 
current valuations for other organisations, continue to apply a similarly 
worded caveat based on a continued shortage of comparable evidence of arm's 
length transactions since the Referendum. 
 
Going Concern 
 
The Directors have reviewed detailed cash flow, income and expense projections 
in order to assess the Company's ability to pay its operational expenses, bank 
interest and dividends for the foreseeable future. The Directors have examined 
significant areas of possible financial risk including cash and cash 
requirements and the debt covenants, in particular those relating to LTV and 
interest cover. They have not identified any material uncertainties which cast 
significant doubt on the ability to continue as a going concern for a period of 
not less than 12 months from the date of the approval of the financial 
statements. The Directors have satisfied themselves that the Company has 
adequate resources to continue in operational existence for the foreseeable 
future and the Board believes it is appropriate to adopt the going concern 
basis in preparing the financial statements. 
 
INVESTMENT MANAGER'S REPORT 
 
UK Real Estate Market 
 
The implications of the Referendum have caused a complex interaction between 
politics, economics and markets which makes the situation difficult to predict. 
Given the political and financial uncertainties experienced so far, the UK 
economy is expected to be affected negatively, although as market volatility 
rises, safe haven assets will benefit. It would seem that the negative 
sentiment and heightened uncertainty is likely to impact adversely on UK real 
estate capital values although this is not reflected in the June valuations. 
Unclear messages are emerging in respect of post referendum transactions with a 
mixture of deal withdrawals, price renegotiations but also completions at 
previously agreed figures. 
 
Against that background, UK listed real estate equities total returns fell by 
nearly 13.3% over the six month period to 30 June 2016. This decline is in 
contrast to the FTSE All Share and the FTSE 100 total returns where the returns 
were a positive 4.7% and 6.5% respectively. REIT pricing since the referendum 
has been volatile, with discounts to NAV moving to over 25% for some of the 
majors, before recovering to around 10% on average. The Company has also 
suffered from share price volatility but, more recently, the Company's share 
price has recovered to a 0.7% discount to NAV as at 26 August 2016. 
 
Investment Outlook 
 
The slowdown in UK real estate that was materialising prior to the referendum 
has been exacerbated by the vote outcome. The heightened uncertainties 
following the result and the subsequent retreat in business and consumer 
confidence are likely to impact negatively on the outlook for the economy. This 
is likely to have detrimental consequences for UK real estate given the direct 
linkage to economic activity. We therefore anticipate increased downward 
pressure on UK commercial real estate capital values. The magnitude of any 
declines will depend on the impact on the domestic economy and the level of 
interest rates and yields from alternative investment classes. The impact will 
vary by sector and geography. From a sector perspective, we expect Central 
London offices to be the most negatively impacted in the near term given the 
linkages to European markets via cross border trading. We expect industrial, 
given its higher yield, and retail assets to be comparatively resilient, 
although not immune. Long income assets should provide most resilience in any 
downturn.  Despite the negative outlook, UK real estate continues to provide a 
higher yield than other assets and, unlike during the Financial Crisis, lending 
to the sector is at a much lower level than in 2007/2008. Furthermore, existing 
vacancy rates are at below average levels in most markets and development 
remains relatively constrained which should all help stabilise the market 
further out. The current "lower for even longer" interest rate environment 
coupled with an increasing investor global search for yield and the retention 
of the UK's safe haven status should all ensure the asset class is reasonably 
placed longer term. 
 
Performance 
 
Over the first six months of the year the Company had a NAV total return of 
2.3% and a share price total return (with dividends reinvested) of -4.8%. The 
difference in these figures illustrates the change in sentiment in the sector, 
particularly at the end of the period, when property shares were marked down. 
At an underlying property level the Company's portfolio has continued to 
deliver a relatively strong performance with a 3.9% total return for the 6 
months against the MSCI / IPD benchmark of 2.5%. 
 
Over the last 24 months the Company has witnessed increased levels of activity 
with the purchase of several portfolios (the largest being the Pearl Portfolio 
for GBP165m in December 2015) and sales of several assets that we did not believe 
would perform as well in the future. Despite the relatively high level of 
transaction costs associated with real estate, performance has been reasonably 
strong and is supported by a high income return (6% for the Company's portfolio 
versus the benchmark's 5%). 
 
In the short term, the share price performance has been disappointing as the 
Company moved from a premium to a discount but the performance is relatively 
strong compared to peers. 
 
Investment Strategy 
 
The Company remains focused on delivering an attractive income to investors 
through investing in a diversified portfolio of UK commercial real estate 
assets. We target assets that are well located, and are in good condition, 
which we believe will appeal to occupiers. We aim to actively manage the assets 
to renew and extend leases to give the Company a sustainable income for its 
covered dividend policy. 
 
It was apparent early in the reporting period that the UK commercial property 
market was nearing the end of the capital cycle, and that returns were not 
going to be as high in 2016 as they were in 2014 and 2015. We took the 
opportunity to sell several assets, detailed later, that we believed would not 
perform as well in the future or provided risk to the Company, and used the 
proceeds to reduce leverage. This cautious approach will continue into the 
second half of the year, a period with greater uncertainty. We believe the 
Company is well positioned for the next few years, with a relatively high 
exposure to industrial / logistics units, and a negligible exposure to core 
City of London, financial or recruitment tenants. 
 
Portfolio Valuation 
 
The investment portfolio is valued on a quarterly basis by two valuers, JLL 
Limited and Knight Frank LLP.  The investment portfolio comprised a total of 60 
assets as at 30 June 2016 valued at GBP450.1m, with cash of GBP18.3m. This compares 
with GBP288.4m and GBP27.3m respectively as at end June 2015. 
 
Given the proximity of the 30 June 2016 valuation date to the decision of the 
UK to leave the EU, and the lack of comparable evidence after that decision, 
the valuers issued a caveat with their valuations for the quarter ended 30 June 
2016. This is reproduced in Principal Risks and Uncertainties. 
 
Portfolio Allocation 
 
The Company is invested in Industrial, Office and Retail properties throughout 
the UK. With a focus on income the Company is structurally underweight to 
retail as prime retail assets are low yielding, and we believe that secondary 
retail is going to underperform generally given the structural shift from sales 
in retail premises to internet sales. Instead, we seek to buy logistics units 
that meet the needs of modern distribution networks for retailers, and retail 
warehouse units that are also efficient for "click and collect" retail. 
Although we have had a high exposure to Greater London offices we have modest 
exposure to core City offices or financial tenants as again that was a low 
yielding sector. 
 
The main geographic allocation changes since the first half of 2015 are an 
increase in exposure to the South East whilst reducing the exposure to Central 
London and Scotland. This has reflected our House View that Central London was 
approaching the end of the investment cycle ahead of the rest of the UK, whilst 
the South East would continue to benefit from demand from greater population 
density. 
 
 Investment Activity 
 
Purchases 
 
No purchases were undertaken in the first half of 2016. 
 
Sales 
 
The Company sold two assets in the six month period, and a further two assets 
in early July 2016. 
 
1.     Turin Court Stockport was sold in March for GBP2.9m (valuation at 31 Dec 
2015: GBP2.7m). The office property was due to become vacant in July 2016, and 
although we had been marketing it for a while had almost no demand for leasing. 
The sale was to a local occupier for their own occupation. 
 
2.     Perry Ellis Witham was sold in June for GBP3.4m (valuation at 31 Dec 2015: 
GBP3.5m). The industrial unit was let for a further 6 years, but we felt the 
value could fall as the building did not meet the occupier's current needs, and 
would be difficult to relet. 
 
3.     Causeway House Teddington was sold in July for GBP6.3m (valuation at 31 
Dec 2015: GBP6.0m). The property had lease expiries in 2017 and was in need of 
substantial capital expenditure to refurbish it, and even then we were 
concerned over the tenant demand. It was sold to an owner occupier. 
 
4.     Ceres Court Kingston was sold in July for GBP2.75m (valuation at 31 Dec 
2015: GBP2.5m). The retail parade with residential above was held on a long 
leasehold basis on unattractive terms with the sale being to the party who held 
the freehold interest in the asset. 
 
The proceeds from the sales were used to pay down debt under the RCF. 
 
Asset Management 
 
The Company has actively sought to renew and extend leases to ensure income 
continues, and grows, where possible.  In a period of uncertainty, or where 
capital values are slowing, income is the main driver of total return. 
 
Four rent reviews were settled, all above the rent passing, and a further four 
leases renegotiated to extend the term, along with three lease renewals and 
four new lettings. 
 
Voids increased to 3.8% (2.8% at 30 June 2015) on the expiry of a lease on an 
industrial unit in Oldham where the tenant vacated. The Company's void rate is 
roughly half the market average, and is concentrated in two industrial assets, 
one of which was bought vacant to be refurbished and has been available for 
rent since the end of May, and the other is still being refurbished. 
 
Debt 
 
In April 2016 the Company put in place a new debt facility with RBS which 
replaces the short term facility agreed as part of the Pearl portfolio 
acquisition in December 2015. The refinanced facility provides flexibility by 
having a term loan for 7 years for GBP110m, and a RCF for GBP35m. During the period 
the Company repaid GBP3.5m with a further GBP10.5m repaid in July 2016 resulting in 
the drawn amount on the RCF now being GBP21m. The refinanced facility was 
completed in April and the term loan was matched with an interest rate swap 
entered into at the same time. The swap was entered into to protect 
shareholders from the impact of higher interest rates and give certainty on the 
interest cost. The all in cost as at 30 June 2016 was 2.5% pa. However, the 
movement in the interest rate curve following the vote to leave the EU has led 
to a negative movement in the value of the interest rate swap resulting in a 
swap liability of GBP5.4m as at 30 June 2016. It should be highlighted however 
that at maturity the value of the swap will be zero. The current LTV is 28.4%, 
compared with the maximum LTV covenant in the debt facility of 60%. 
 
Jason Baggaley 
 
Fund Manager 
 
DIRECTORS' RESPONSIBILITY STATEMENT 
 
The Directors are responsible for preparing the Interim Management Report in 
accordance with applicable law and regulations. The Directors confirm that to 
the best of their knowledge: 
 
  * The condensed Unaudited Consolidated Financial Statements have been 
    prepared in accordance with IAS 34; and 
  * The Interim Management Report includes a fair review of the information 
    required by 4.2.7R and 4.2.8R of the Financial Conduct Authority's 
    Disclosure and Transparency Rules. 
  * In accordance with 4.2.9R of the Financial Conduct Authority's Disclosure 
    and Transparency Rules, it is confirmed that this publication has not been 
    audited, or reviewed by the Company's auditors. 
 
The Interim Report, for the six months ended 30 June 2016, comprises an Interim 
Management Report in the form of the Chairman's Statement, the Investment 
Manager's Report, the Directors' Responsibility Statement and a condensed set 
of Unaudited Consolidated Financial Statements. 
 
The Directors each confirm to the best of their knowledge that: 
 
a. the Unaudited Consolidated Financial Statements, prepared in accordance with 
IFRSs as adopted by the European Union, give a true and fair view of the 
assets, liabilities, financial position and profit or loss of the Group; and 
 
b. the Interim Report includes a fair review of the development and performance 
of the business and the position of the Group, together with a description of 
the principal risks and uncertainties faced. 
 
For and on behalf of the Directors of Standard Life Investments Property Income 
Trust Limited 
 
Robert Peto 
 
Chairman 
 
6 September 2016 
 
UNAUDITED FINANCIAL STATEMENTS 
 
Unaudited Consolidated Statement of Comprehensive Income 
 
for the period ended 30 June 2016                                                      1 Jan 16 to 1 Jan 15 to 1 Jan 15 to 
                                                                                         30 Jun 16   30 Jun 15   31 Dec 15 
 
                                                                                 Notes           GBP           GBP           GBP 
 
Rental income                                                                           14,918,244   9,739,210  20,142,180 
 
Surrender premium income                                                                         -           -     120,000 
 
Valuation gain from investment properties                                            3   2,716,962   7,529,522  17,636,973 
 
Costs of business acquisition                                                                    -           - (1,942,498) 
 
(Loss) on asset acquisition                                                                      -    (65,129)    (75,181) 
 
Profit/ (Loss) on disposal of investment properties                                         94,361   (796,363)   3,024,748 
 
Investment management fees                                                           2 (1,620,379) (1,121,035) (2,105,104) 
 
Other direct property operating expenses                                                 (526,659)   (504,924)   (929,165) 
 
Directors' fees and expenses                                                              (75,326)    (62,150)   (124,296) 
 
Valuers fees                                                                              (53,745)    (37,809)    (92,324) 
 
Auditor's fee                                                                             (45,714)    (23,008)    (82,308) 
 
Other administration expenses                                                            (226,067)   (163,143)   (376,776) 
 
Operating profit                                                                        15,181,677  14,495,171  35,196,249 
 
Finance income                                                                              16,103      26,256      68,186 
 
Finance costs                                                                          (2,341,813) (1,597,490) (3,324,782) 
 
Loss on derecognition of interest rate swaps                                        10 (2,735,000)           -           - 
 
Profit for the period                                                                   10,120,967  12,923,937  31,939,653 
 
Other Comprehensive Income 
 
Net change in fair value of the swap reclassified to profit and loss                10   2,735,000           -           - 
 
Valuation (loss)/gain on cash flow hedge                                               (6,078,345)     757,123     589,647 
 
Total Other Comprehensive Income                                                       (3,343,345)     757,123     589,647 
 
Total comprehensive income for the period, net of tax                                    6,777,622  13,681,060  32,529,300 
 
Earnings per share:                                                                          pence       pence       pence 
 
Basic and diluted earnings per share                                                          2.66        4.84       11.39 
 
Adjusted (EPRA) earnings per share                                                            1.92        2.34        4.05 
 
All items in the above Unaudited Consolidated Statement of Comprehensive Income 
derive from continuing operations. 
 
Unaudited Consolidated Balance Sheet 
 
as at 30 June 2016                                                                       30 Jun 16   30 Jun 15   31 Dec 15 
 
                                                                                 Notes           GBP           GBP           GBP 
 
ASSETS 
 
Non-current assets 
 
Investment properties                                                                3 437,297,884 272,669,703 448,616,754 
 
Lease incentives                                                                     3   3,267,928   2,471,229   3,457,588 
 
                                                                                       440,565,812 275,140,932 452,074,342 
 
Current assets 
 
Investment properties held for sale                                                  4   8,886,675  13,010,300           - 
 
Trade and other receivables                                                              2,900,839   4,884,695   2,858,851 
 
Cash and cash equivalents                                                               18,257,372  27,329,945  12,395,516 
 
                                                                                        30,044,886  45,224,940  15,254,367 
 
Total assets                                                                           470,610,698 320,365,872 467,328,709 
 
LIABILITIES 
 
Current liabilities 
 
Trade and other payables                                                                12,804,358   7,485,896  12,788,999 
 
Interest rate swap                                                                         990,627     832,034     908,751 
 
                                                                                        13,794,985   8,317,930  13,697,750 
 
Non-current liabilities 
 
Bank borrowings                                                                        140,389,061  84,036,866 139,048,848 
 
Interest rate swap                                                                       4,438,010   1,085,782   1,176,541 
 
Rent deposits due to tenants                                                               434,425     525,002     622,283 
 
                                                                                       145,261,496  85,647,650 140,847,672 
 
Total liabilities                                                                      159,056,481  93,965,580 154,545,422 
 
Net assets                                                                             311,554,217 226,400,292 312,783,287 
 
EQUITY 
 
Capital and reserves attributable to Company's equity holders 
 
Share capital                                                                          204,820,219 130,589,115 204,820,219 
 
Retained earnings                                                                        5,470,281   7,776,524   6,167,329 
 
Capital reserves                                                                         3,425,345 (9,803,719)   3,957,367 
 
Other distributable reserves                                                            97,838,372  97,838,372  97,838,372 
 
Total equity                                                                           311,554,217 226,400,292 312,783,287 
 
NAV per share 
 
NAV                                                                                  8       81.8p       78.5p       82.2p 
 
EPRA NAV                                                                             8       83.3p       79.2p       82.7p 
 
 
 
Unaudited Consolidated Statement of Changes in Equity 
 
for the period ended 30 June 2016                                       Share    Retained     Capital         Other       Total 
                                                                      Capital    earnings    reserves distributable      equity 
                                                                                                           reserves 
 
                                                            Notes           GBP           GBP           GBP             GBP           GBP 
 
Opening balance 1 January 2016                                    204,820,219   6,167,329   3,957,367    97,838,372 312,783,287 
 
Profit for the period                                                       -  10,120,967           -             -  10,120,967 
 
Other comprehensive income                                                  -           - (3,343,345)             - (3,343,345) 
 
Total comprehensive gain for the period                                     -  10,120,967 (3,343,345)             -   6,777,622 
 
Dividends paid                                                  7           - (8,006,692)           -             - (8,006,692) 
 
Valuation gain from investment properties                       3           - (2,716,962)   2,716,962             -           - 
 
Profit on disposal of investment properties                                 -    (94,361)      94,361             -           - 
 
Balance at 30 June 2016                                           204,820,219   5,470,281   3,425,345    97,838,372 311,554,217 
 
 
 
Unaudited Consolidated Statement of Changes in Equity 
 
for the period ended 30 June 2015                                       Share    Retained      Capital         Other       Total 
                                                                      Capital    earnings     reserves distributable      equity 
                                                                                                            reserves 
 
                                                            Notes           GBP           GBP            GBP             GBP           GBP 
 
Opening balance 1 January 2015                                     96,188,648   7,634,503 (17,294,001)    97,838,372 184,367,522 
 
Profit for the period                                                       -  12,923,937            -             -  12,923,937 
 
Other comprehensive income                                                  -           -      757,123             -     757,123 
 
Total comprehensive gain for the period                                     -  12,923,937      757,123             -  13,681,060 
 
Dividends paid                                                  7           - (6,048,757)            -             - (6,048,757) 
 
Ordinary shares issued net of issue costs*                         34,400,467           -            -             -  34,400,467 
 
Valuation gain from investment properties                                   - (7,529,522)    7,529,522             -           - 
 
Loss on disposal of investment properties                                   -     796,363    (796,363)             -           - 
 
Balance at 30 June 2015                                           130,589,115   7,776,524  (9,803,719)    97,838,372 226,400,292 
 
* this value represents both the nominal and the premium raised on issuing the 
ordinary shares. 
 
Unaudited Consolidated Statement of Changes in Equity 
 
for the year ended 31 December 2015                                     Share     Retained      Capital         Other Total equity 
                                                                      Capital     earnings     reserves distributable 
                                                                                                             reserves 
 
                                                            Notes           GBP            GBP            GBP             GBP            GBP 
 
Opening balance 1 January 2015                                     96,188,648    7,634,503 (17,294,001)    97,838,372  184,367,522 
 
Profit for the period                                                       -   31,939,653            -             -   31,939,653 
 
Other comprehensive income                                                  -            -      589,647             -      589,647 
 
Total comprehensive gain for the period                                     -   31,939,653      589,647             -   32,529,300 
 
Dividends paid                                                  7           - (12,745,106)            -             - (12,745,106) 
 
Ordinary shares issued net of issue costs*                        108,631,571            -            -             -  108,631,571 
 
Valuation gain from investment properties                                   - (17,636,973)   17,636,973             -            - 
 
Profit on disposal of investment properties                                 -  (3,024,748)    3,024,748             -            - 
 
Balance at 31 December 2015                                       204,820,219    6,167,329    3,957,367    97,838,372  312,783,287 
 
* this value represents both the nominal and the premium raised on issuing the 
ordinary shares. 
 
Unaudited Consolidated Cash Flow Statement 
 
for the period ended 30 June 2016                                                       1 Jan 16 to  1 Jan 15 to   1 Jan 15 to 
                                                                                          30 Jun 16    30 Jun 15     31 Dec 15 
 
                                                                                 Notes            GBP            GBP             GBP 
 
Cash generated from operating activities 
 
Profit for the period                                                                    10,120,967   12,923,937    31,939,653 
 
Movement in non-current lease incentives                                                  (189,660)       19,373       270,464 
 
Movement in trade and other receivables                                                    (41,988)  (2,224,255)     1,230,084 
 
Movement in trade and other payables                                                      (297,315)      324,462     3,735,996 
 
Finance costs                                                                             2,341,813    1,597,490     3,324,782 
 
Loss on derecognition of interest rate swaps                                        10    2,735,000            -             - 
 
Finance income                                                                             (16,103)     (26,256)      (68,186) 
 
Valuation gain from investment properties                                            3  (2,716,962)  (7,529,522)  (17,636,973) 
 
Loss on asset acquisition                                                                         -            -        75,181 
 
(Profit)/loss on disposal of investment properties                                         (94,361)      796,363   (3,024,748) 
 
Net cash inflow from operating activities                                                11,841,391    5,881,592    19,846,253 
 
Cash flows from investing activities 
 
Interest received                                                                            16,103       26,256        68,186 
 
Purchase of investment                                                                            - (21,441,843)  (52,198,123) 
 
Business acquisition net of cash acquired                                                         -            - (165,060,458) 
 
Capital expenditure on investment properties                                         3    (888,612)    (593,112)   (1,144,434) 
 
Net proceeds from disposal of investment properties                                       6,219,361   11,303,737    57,854,848 
 
Net cash used in investing activities                                                     5,346,852 (10,704,962) (160,479,981) 
 
Cash flows from financing activities 
 
Ordinary shares issued net of issue costs                                                         -   34,400,467   110,462,680 
 
Transaction costs of issues of shares                                                             -            -   (1,831,109) 
 
Bank borrowing                                                                            1,340,213            -    55,000,000 
 
Bank borrowing arrangement costs                                                                  -            -     (173,450) 
 
Interest paid on bank borrowing                                                         (1,476,865)    (988,882)   (1,869,338) 
 
Payments on interest rate swap                                                          (3,183,043)    (608,608)   (1,213,528) 
 
Dividends paid to the Company's shareholders                                         7  (8,006,692)  (6,048,757)  (12,745,106) 
 
Net cash used in financing activities                                                  (11,326,387)   26,754,220   147,630,149 
 
Net increase in cash and cash equivalents in the period                                   5,861,856   21,930,850     6,996,421 
 
Cash and cash equivalents at beginning of period                                         12,395,516    5,399,095     5,399,095 
 
Cash and cash equivalents at end of period                                               18,257,372   27,329,945    12,395,516 
 
Notes to the Unaudited Consolidated Financial Statements 
for the period ended 30 June 2016 
 
1 Accounting Policies 
 
The unaudited consolidated financial statements have been prepared in 
accordance with International Financial Reporting Standard ('IFRS') IAS 34 
'Interim Financial Reporting' and, except as described below, the accounting 
policies set out in the statutory accounts of the Group for the year ended 31 
December 2015. The condensed unaudited consolidated financial statements do not 
include all of the information required for a complete set of IFRS financial 
statements and should be read in conjunction with the consolidated financial 
statements of the Group for the year ended 31 December 2015, which were 
prepared under full IFRS requirements. 
 
2 Related Party Disclosures 
 
Parties are considered to be related if one party has the ability to control 
the other party or exercise significant influence over the other party in 
making financial or operational decisions. 
 
Investment Manager 
 
On 19 December 2003 Standard Life Investments (Corporate Funds) Limited ("the 
Investment Manager") was appointed as Investment Manager to manage the property 
assets of the Group. A new Investment Management agreement ("IMA") was entered 
into on 7 July 2014, appointing the Investment Manager as the AIFM 
("Alternative Investment Fund Manager"). 
 
Under the terms of the current IMA, the Investment Manager is entitled to 
receive fees of 0.75% of total assets up to GBP200 million; 0.70% of total assets 
between GBP200 million and GBP300 million; and 0.65% of total assets in excess of GBP 
300 million. The total fees charged for the period ended 30 June 2016 amounted 
to GBP1,620,379 (period ended 30 June 2015: GBP1,121,035). The amount due and 
payable at the period end amounted to GBP807,041, excluding VAT (period ended 30 
June 2015: GBP571,005 excluding VAT). 
 
3 Investment Properties 
 
Country                                                                              UK          UK          UK 
 
Class                                                                        Industrial      Office      Retail       Total 
 
                                                                              30 Jun 16   30 Jun 16   30 Jun 16   30 Jun 16 
 
                                                                                      GBP           GBP           GBP           GBP 
 
Market value as at 1 January 2016                                           187,070,000 164,065,000 100,850,000 451,985,000 
 
Capital expenditure on investment properties                                    707,905      47,372     133,335     888,612 
 
Carrying value of disposed investment properties                            (3,450,000) (2,675,000)           - (6,125,000) 
 
Valuation gain from investment properties                                       929,022   1,585,172     202,768   2,716,962 
 
Costs to sell for investment properties recognised as held for sale                   -     111,325     198,000     309,325 
 
Movement in lease incentives receivable                                         263,073    (67,869)      80,897     276,101 
 
Closing market value                                                        185,520,000 163,066,000 101,465,000 450,051,000 
 
Investment properties recognised as held for sale                                     - (6,296,000) (2,900,000) (9,196,000) 
 
                                                                            185,520,000 156,770,000  98,565,000 440,855,000 
 
Adjustment for lease incentives*                                              (600,347) (2,244,619)   (712,150) (3,557,116) 
 
Closing carrying value                                                      184,919,653 154,525,381  97,852,850 437,297,884 
 
*Lease incentives are split between non-current assets of GBP3,267,928 and 
current assets of GBP289,188. 
 
The valuations were performed by JLL Limited and Knight Frank LLP, both 
accredited independent valuers with recognised and relevant qualifications and 
recent experience of the location and category of the investment properties 
being valued. The valuation model in accordance with   Institute of Chartered 
Surveyors ('RICS') requirements on disclosure for Regulated Purpose Valuations 
has been applied (RICS Valuation - Professional Standards January 2014 
published by the Royal Institution of Chartered Surveyors). These valuation 
models are consistent with the principles in IFRS 13. 
 
The combined market value provided by JLL Limited and Knight Frank LLP at the 
period ended 30 June 2016 was GBP450,051,000 (30 June 2015: GBP288,390,000) however 
an adjustment has been made for lease incentives of GBP3,557,116 (30 June 2015: GBP 
2,195,297) that are already accounted for as an asset and for costs to sell of 
GBP309,325 for the two properties which are currently held for sale. The 
valuation at 30 June 2016 of GBP450,051,000 includes GBP2,900,000 in relation to 
Ceres Court, Kingston Upon Thames and GBP6,296,000 in relation to Causeway House, 
Teddington, two investment properties held for sale at the Balance Sheet date 
(see note 4). 
 
Valuation gains and losses from investment properties are recognised in profit 
and loss for the period and are attributable to changes in unrealised gains or 
losses relating to investment property (completed and under construction) held 
at the end of the reporting period. 
 
4 Investment Properties Held For Sale 
 
As at 30 June 2016 the Group held for sale Ceres Court, Kingston Upon Thames 
for GBP2,900,000 excluding related sale costs and Causeway House, Teddington for 
GBP6,296,000 excluding related sale costs. The independently assessed market 
value of each property held for sale at 30 June 2016 is detailed below: 
 
                                                                                        30 Jun 16  30 Jun 15  31 Dec 15 
 
                                                                                                GBP          GBP          GBP 
 
Portrack Interchange                                                                            -                     - 
                                                                                                   1,300,000 
 
Windsor Court and Crown Farm                                                                    -  3,550,000          - 
 
Units 2001 & 2002 Coal Road                                                                     -  3,725,000          - 
 
140 West George Street                                                                          -  4,950,000          - 
 
Ceres Court, Kingston Upon Thames                                                       2,900,000          -          - 
 
Causeway House, Teddington                                                              6,296,000          -          - 
 
                                                                                        9,196,000 13,525,000          - 
 
Less: costs to sell                                                                     (309,325)                     - 
                                                                                                   (514,700) 
 
                                                                                        8,886,675 13,010,300          - 
 
5 Earnings Per Share 
 
The earnings per Ordinary share are based on the net profit for the period of GBP 
10,120,967 (30 June 2015: GBP12,923,937 and 31 December 2015: GBP31,939,653) and 
380,690,419 (30 June 2015: 267,039,746 and 31 December 2015: 280,330,039) 
ordinary shares, being the weighted average number of shares in issue during 
the period. 
 
Earnings for the period to 30 June 2016 should not be taken as a guide to the 
results for the year to 31 December 2016. 
 
6 Investment In Subsidiary Undertakings 
 
The Company owns 100 per cent of the issued ordinary share capital of Standard 
Life Investments Property Holdings Limited, a company with limited liability 
incorporated and domiciled in Guernsey, Channel Islands, whose principal 
business is property investment. 
 
During the year to 31 December 2015 the Group acquired 100% of the units in 
Aviva Investors UK Real Estate Recovery II Unit Trust (the "Unit Trust" or 
"UT"), a Jersey Property Unit Trust "JPUT". The acquisition included the entire 
issued share capital of a General Partner which holds, through a Limited 
Partnership, the new portfolio of 22 UK real estate assets. The transaction 
completed on 23 December 2015 and the Group treated the acquisition as a 
Business Combination in accordance with IFRS 3. The Group Undertakings consist 
of the following entities at the Balance Sheet date: 
 
  * Standard Life Investments Property Holdings Limited, a company with limited 
    liability incorporated in Guernsey, Channel Islands. 
  * Standard Life Investments SLIPIT Unit Trust, a Jersey Property Unit Trust 
    domiciled in Jersey, Channel Islands (formerly Aviva Investors UK Real 
    Estate Recovery II Unit Trust). 
  * Standard Life Investments (SLIPIT) Limited Partnership, a limited 
    partnership established in England (formerly Aviva Investors UK Real Estate 
    Recovery II Limited Partnership). 
  * Standard Life Investments SLIPIT (General Partner) Limited, a company with 
    limited liability incorporated in the United Kingdom (formerly Aviva 
    Investors UK Real Estate Recovery II (General Partner) Limited). 
  * Standard Life Investments SLIPIT (Nominee) Limited, a company with limited 
    liability incorporated and domiciled in the United Kingdom (formerly Aviva 
    Investors UK Real Estate Recovery II (Nominee) Limited). 
  * Ceres Court Properties Limited, a company with limited liability 
    incorporated and domiciled in the United Kingdom (sold on 8 July 2016). 
 
7 Dividends And Property Income Distribution Gross Of Income Tax 
 
                                                                                        30 Jun 16  30 Jun 15  31 Dec 15 
 
                                                                                                GBP          GBP          GBP 
 
Non Property Income Distributions 
 
1.161p per ordinary share paid in February relating to the quarter ending 31                    -  2,835,350  2,835,350 
December 2014 
 
0.391p per ordinary share paid in November relating to the quarter ending 30                    -          - 
September 2015                                                                                                1,127,594 
 
0.561p per ordinary share paid in March relating to the quarter ending 31               1,679,848          -          - 
December 2015 
 
Property Income Distributions 
 
1.161p per ordinary share paid in May relating to the quarter ending 31 March                   -             3,213,406 
2015                                                                                               3,213,407 
 
1.161p per ordinary share paid in August relating to the quarter ending 30 June                 -          -  3,348,175 
2015 
 
0.770p per ordinary share paid in November relating to the quarter ending 30                    -          -  2,220,581 
September 2015 
 
0.600p per ordinary share paid in March relating to the quarter ending 31               1,796,628          -          - 
December 2015 
 
1.19p per ordinary share paid in May relating to the quarter ending 31 March            4,530,216          -          - 
2016 
 
                                                                                        8,006,692  6,048,757 12,745,106 
 
A property income dividend of 1.19p per share was declared on 09 August 2016 in 
respect of the quarter to 30 June 2016 - a total payment of GBP4,530,216. This 
was paid on 31 August 2016. 
 
8 Reconciliation of Consolidated NAV To Published NAV 
 
The NAV attributable to ordinary shares is published quarterly and is based on 
the most recent valuation of the investment properties and calculated on a 
basis which adjusts the underlying reported IFRS numbers. The adjustment made 
is to include a provision for payment of a dividend in respect of the quarter 
then ended. 
 
                                                                                                   30 Jun 16              30 Jun 15   31 Dec 15 
 
                                                                                            Number of shares              Number of   Number of 
                                                                                                                             shares      shares 
 
Number of ordinary shares at the reporting date                                        380,690,419               288,387,160        380,690,419 
 
                                                                                                   30 Jun 16              30 Jun 15   31 Dec 15 
 
                                                                                                           GBP                      GBP           GBP 
 
Total equity per consolidated financial statements                                               311,554,217      226,400,292       312,783,287 
 
NAV per share                                                                                          81.8p 78.5p                        82.2p 
 
The EPRA publishes guidelines for calculating adjusted NAV. EPRA NAV represents 
the fair value of an entity's equity on a long-term basis. Items that EPRA 
considers will have no impact on the long term, such as fair value of 
derivatives, are therefore excluded. 
 
                                                                                         30 Jun 16         30 Jun 15   31 Dec 15 
 
                                                                                                 GBP                 GBP           GBP 
 
Total equity per consolidated financial statements                                     311,554,217 226,400,292       312,783,287 
 
Adjustments: 
 
Add: fair value of derivatives                                                                             1,917,816   2,085,292 
                                                                                         5,428,637 
 
Published adjusted EPRA NAV                                                            316,982,854       228,318,108 314,868,579 
 
Published adjusted EPRA NAV per share                                                        83.3p             79.2p       82.7p 
 
9 Financial Instruments And Investment Properties 
 
Fair values 
 
The fair value of financial assets and liabilities is not materially different 
from the carrying value in the annual financial statements. 
 
Fair value hierarchy 
 
The following table shows an analysis of the fair values of investment 
properties recognised in the balance sheet by the level of the fair value 
hierarchy: 
 
30 June 2016                                                               Level 1     Level 2              Level 3                 Total fair value 
 
Investment properties                                                      -           -                    437,297,884             437,297,884 
 
The lowest level of input is the underlying yields on each property which is an 
input not based on observable market data. 
 
The following table shows an analysis of the fair values of financial 
instruments recognised in the balance sheet by the level of the fair value 
hierarchy: 
 
30 June 2016                                                               Level 1     Level 2     Level 3    Total fair 
                                                                                                              value 
 
Loan Facilities                                                            -           144,775,064 -          144,775,064 
 
The lowest level of input is the interest rate payable on each borrowing which 
is a directly observable input. 
 
30 June 2016                                                               Level 1     Level 2    Level 3    Total fair 
                                                                                                             value 
 
Interest rate swap                                                         -           5,428,637  -          5,428,637 
 
The lowest level of input is the three month LIBOR yield curve which is a 
directly observable input. 
 
There were no transfers between levels of the fair value hierarchy during the 
six months ended 30 June 2016. 
 
Explanation of the fair value hierarchy: 
 
Level 1 - Quoted (unadjusted) market prices in active markets for identical 
assets or liabilities. 
 
Level 2 - Valuation techniques for which the lowest level input that is 
significant to the fair value measurement is directly or indirectly observable. 
 
Level 3 - Valuation techniques for which the lowest level input that is 
significant to the fair value measurement is unobservable. 
 
The fair value of investment properties is calculated using unobservable inputs 
as described in the annual report and accounts for the year ended 31 December 
2015. 
 
Sensitivity of measurement to variance of significant unobservable inputs: 
 
A decrease in the estimated annual rent will decrease the fair value. 
 
An increase in the discount rates and the capitalisation rates will decrease 
the fair value. 
 
There are interrelationships between these rates as they are partially 
determined by the market rate conditions. 
 
The fair value of the derivative interest rate swap contract is estimated by 
discounting expected future cash flows using current market interest rates and 
yield curves over the remaining term of the instrument. 
 
The fair value of the loan facilities are estimated by discounting expected 
future cash flows using the current interest rates applicable to each loan. 
 
10 Bank Borrowings 
 
On 22 December 2015 the Company completed the drawdown of an additional GBP 
55,000,000 loan with RBS. The new facility and the existing facility was then 
repayable on 27 June 2017, which applied to the fully drawn down balance of GBP 
139,432,692. Interest from 22 December 2015 was payable at a rate equal to the 
aggregate of 3 month Libor, a margin of 1.25%. 
 
On 28 April 2016 the Company entered into an agreement to extend GBP145 million 
of its existing GBP155 million debt facility with RBS. The debt facility consists 
of a GBP110 million seven year term loan facility (the "Term Loan") and a GBP35 
million five year RCF. The RCF may by agreement be extended by one year on two 
occasions. GBP145 million has been drawn down by the Group. Interest is payable 
on the Term Loan at LIBOR plus 1.375% and on the RCF at LIBOR plus 1.2%. This 
equates to a rate of 2.725% on the Term Loan and 1.78% on the RCF which 
together give an attractive current blended rate of 2.5% (based on the RCF 
being fully drawn). As part of this refinancing the existing swaps that were in 
place were repaid at a cost of GBP2.735 million and one new seven year swap was 
entered into that covers the GBP110 million Term Loan. 
 
The restated facility agreement includes terms that are typical for a facility 
of this nature, including LTV (a maximum of 60% for the first five years and 
55% thereafter) and interest cover ratio covenants (not less than 175% for the 
term of the facility) and the ability to substitute properties in the security 
pool. 
 
11 Events After The Balance Sheet Date 
 
Property Sales and Purchases 
 
On 1 July 2016 the Company completed the sale of Causeway House, Teddington for 
GBP6.3 million excluding costs. 
 
On 8 July 2016 the Company completed the sale of Ceres Court, Kingston Upon 
Thames for GBP2.75 million excluding costs. 
 
Shares and Dividends 
 
A property income dividend of 1.19p per share was declared on 09 August 2016 in 
respect of the quarter to 30 June 2016 - a total payment of GBP4,530,216. This 
was paid on 31 August 2016. 
 
End of Notes to the Unaudited Consolidated Financial Statements for the period 
ended 30 June 2016 
 
ADDITIONAL NOTES TO THE INTERIM FINANCIAL REPORT 
 
The Interim Report and Unaudited Consolidated Condensed Financial Statements 
for the period from 1 January 2016 to 30 June 2016 will shortly be available 
for download from the Company's website hosted by the Investment Manager 
(www.standardlifeinvestments.co.uk/its). 
 
Please note that past performance is not necessarily a guide to the future and 
that the value of investments and the income from them may fall as well as 
rise. Investors may not get back the amount they originally invested. 
 
All enquiries to: 
 
The Company Secretary 
Northern Trust International Fund Administration Services (Guernsey) Limited 
Trafalgar Court 
Les Banques 
St Peter Port 
Guernsey 
GY1 3QL 
 
Tel: 01481 745001 
Fax: 01481 745051 
 
Jason Baggaley 
Standard Life Investments Limited 
Tel: 0131 245 2833 
 
Graeme McDonald 
Standard Life Investments Limited 
Tel: 0131 245 3151 
 
END 
 
 
 
END 
 

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