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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 |
TIDMSLI 2 August 2016 STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST LIMITED (LSE: SLI) Unaudited Net Asset Value as at 30 June 2016 Key Highlights * Net asset value per ordinary share was 81.8p ( March 2016 - 82.3p), a fall of 0.6%, resulting in a NAV total return, including dividends, of +0.8% for Q2; * The portfolio valuation increased by 0.9% on a like for like basis which compares favourably to the quarterly capital return on the monthly IPD Monthly Index of -0.1% * This valuation increase, however, was more than offset by adverse movements in the valuation of the Company's swap as a result of movements in interest rates following the EU referendum result; * Sale of four assets in the period from 1 April up to date of this announcement for a combined GBP15.4million which was 4% above most recent valuations; * Proceeds from the sales were used to reduce the revolving credit facility ("RCF") resulting in a LTV at the date of this announcement of 28.4%; * Successful asset management initiatives up to the date of this announcement included: * Three rent reviews completed securing GBP698,000 per annum of income which is above ERV; * Two new lettings completed generating GBP79,000 of income; * Six lease regears/renewals resulting in GBP667,000 of income being secured; * Low void rate of 3.8% as at 30 June 2016; * Dividend yield of 6.1% based on a quarterly dividend of 1.19p and a share price of 78.5p (29 July 2016), comparing favourably to the yield on the FTSE All-Share REIT Index (3.5%) and the FTSE All Share Index (3.5%) as at the same date. Net Asset Value ("NAV") The unaudited net asset value per ordinary share of Standard Life Investments Property Income Trust Limited ("SLIPIT") at 30 June 2016 was 81.8p. The net asset value is calculated under International Financial Reporting Standards ("IFRS"). The net asset value incorporates the external portfolio valuation by Jones Lang LaSalle and Knight Frank at 30 June 2016. Both valuers have included the following caveat when issuing its valuations for the quarter ended 30 June 2016. "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." Breakdown of NAV movement Set out below is a breakdown of the change to the unaudited NAV per share calculated under IFRS over the period 1 April 2016 to 30 June 2016. Per Share (p) Attributable Comment Assets (GBPm) Net assets as at 31 March 82.3 313.3 2016 Unrealised increase in 1.0 3.9 Like for like increase of valuation of property 0.9% in property portfolio portfolio Net income in the quarter 0.1 0.2 Continued strong income after dividend generation with dividend remaining fully covered. Interest rate swaps mark to -1.4 -5.2 Increase in swap market revaluation liabilities as a result of a decrease in the expectation for future interest rates following the EU referendum result Other movement in reserves -0.2 -0.6 Movement in lease incentives and capital expenditure in the quarter Net assets as at 30 June 81.8 311.6 2016 30 Jun 2016 31 Mar 2016 European Public Real Estate Association ("EPRA")* EPRA Net Asset Value GBP317.0m GBP316.3m EPRA Net Asset Value per share 83.3p 83.1p The Net Asset Value per share is calculated using 380,690,419 shares of 1p each being the number in issue on 30 June 2016. * The EPRA net asset value measure is to highlight the fair value of net assets on an on-going, long-term basis. Assets and liabilities that are not expected to crystallise in normal circumstances, such as the fair value of financial derivatives, are therefore excluded. Investment Manager Commentary During Q2 the focus remained on improving resilience in the portfolio as we saw the UK commercial real estate market approaching the end of the capital growth cycle. As well as securing a number of lease regears and renewals to give greater certainty of income flow, we also sold three assets that we believed would not perform in line with our expectations going forward. Even given the decision to leave the EU, we believe the Company is relatively well placed to continue to offer an attractive level of income to investors. During Q2 the Company put in place a new debt facility with The Royal Bank of Scotland which replaces the short term facility agreed as part of the Pearl portfolio acquisition in December 2015. The new facility provides flexibility by having a term loan for 7 years for GBP110m, and a RCF for GBP35m. During the quarter the Company repaid GBP3.5m with a further GBP11.5m repaid in July 2016 resulting in the drawn amount on the RCF now being GBP20.0m. The new facility was completed in April and the term loan was matched with an interest rate swap entered into at the same time. 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 GBP5.5m as at 30 June 2016. The current LTV is 28.4%, compared with the maximum LTV covenant in the debt facility of 60%. Market Commentary The implications of the Referendum have caused a complex interaction between politics, economics and markets which makes the situation very difficult to predict. Given the political uncertainty and increased financial stress 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 UK real estate capital values although this is not reflected in the June valuations and has yet to materialize significantly in the index level data. 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 7% over the period 31/03/16 to 30/06/16. This decline is in contrast to the FTSE All Share and the FTSE 100 total returns where the returns rose by 4.7% and 6.5% respectively as at the quarter end. 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. SLIPIT has also suffered from share price volatility but, more recently, the Company's share price has recovered to a 4 - 6% discount to NAV. Investment Outlook The slowdown in UK real estate that was materializing 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 will 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. In the short term, there is likely to be pessimistic sentiment in the market place, which will further affect capital values until there is clarity on the timing and nature of the exit from the EU and real estate's medium-term prospects. The impact will vary on the different sectors and geographies. 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 and retail assets to be comparatively resilient, although not immune, given their higher yields. Long income assets should provide most resilience in any downturn. Despite the negative outlook, UK real estate continues to provide an elevated yield compared to other assets and, unlike in 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 all should 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 better placed longer term. Cash position As at 30 June 2016 the Company had cash of GBP18.3million. Dividends The Company paid total dividends in respect of the quarter ended 31 March 2016 of 1.19p per Ordinary Share, with a payment date of 31 May 2016. Net Asset analysis as at 30 June 2016 (unaudited) GBPm % of net assets Office 163.1 52.3 Retail 101.5 32.6 Industrial 185.5 59.5 Total Property Portfolio 450.1 144.4 Adjustment for lease incentives (3.9) (1.3) Fair value of Property Portfolio 446.2 143.1 Cash 18.3 5.9 Other Assets 6.5 2.1 Total Assets 471.0 151.1 Non-current liabilities (bank (145.8) (46.8) loans & swap) Current liabilities (13.6) (4.3) Total Net Assets 311.6 100.0 Breakdown in valuation movements over the period 1 Apr 16 to 30 Jun 2016 Portfolio Exposure as Like for Like Capital Value Value as at at 30 Jun Capital Value change (GBPm) 30 Jun 2016 2016 (%) Shift (GBPm) (%) Valuation as of 31 452.3 Mar 2016 Retail 101.5 22.6 0.6 0.7 South East Retail 7.0 1.6 0.5 Rest of UK Retail 1.1 0.0 0.0 Retail Warehouses 14.5 0.3 0.2 Offices 163.1 36.2 1.3 2.0 London City Offices 4.7 0.0 0.0 London West End 2.5 3.2 0.4 Offices South East Offices 23.6 0.0 0.0 Rest of UK Offices 5.4 7.3 1.6 Industrial 185.5 41.2 0.7 1.2 South East Industrial 10.6 0.5 0.2 Rest of UK Industrial 30.6 0.7 1.0 Sale of Turin Court -6.1 and Witham External valuation at 450.1 100.0 0.9 450.1 30 Jun 2016 Top 10 Properties 30 Jun 16 (GBPm) White Bear Yard, London 20-25 Elstree Tower, Borehamwood 15-20 Denby 242, Denby 15-20 DSG, Preston 15-20 Symphony, Rotherham 15-20 Chester House, Farnborough 15-20 Charter Court, Slough 10-15 3B - C Michigan Drive, Milton Keynes 10-15 Ocean Trade Centre, Aberdeen 10-15 Bourne House, Staines 10-15 Top 10 tenants: Tenant group Passing rent As % of total rent (GBP) 1 Sungard Availability Services 1,320,000 4.6 % (UK) Ltd 2 BAE Systems 1,257,640 4.3 % 3 Techno Cargo Logistics Ltd 1,242,250 4.3 % 4 DSG 1,177,677 4.1 % 5 The Symphony Group Plc 1,080,000 3.7 % 6 Bong UK 727,240 2.5 % 7 Royal Bank of Scotland Plc 700,000 2.4 % 8 Ricoh UK Limited 696,995 2.4 % 9 Matalan 696,778 2.4 % 10 Grant Thornton 680,371 2.3 % 9,578,951 33.0 % Total Fund Passing Rent 29,025,646 Regional Split: Region Region Weighting South East 41.0% Scotland 4.9% South West 6.1% North West 11.6% London West End 2.5% East Midlands 14.9% London City 4.7% North East 8.5% West Midlands 5.8% The Board is not aware of any other significant events or transactions which have occurred between 30 June 2016 and the date of publication of this statement which would have a material impact on the financial position of the Company. Details of the Company may also be found on the Investment Manager's website which can be found at: www.standardlifeinvestments.com/its For further information:- Jason Baggaley - Real Estate Fund Manager, Standard Life Investments Tel +44 (0) 131 245 2833 or jason_baggaley@standardlife.com Graeme McDonald - Real Estate Finance Manager, Standard Life Investments Tel +44 (0) 131 245 3151 or graeme_mcdonald@standardlife.com The Company Secretary Northern Trust International Fund Administration Services (Guernsey) Ltd Trafalgar Court Les Banques St Peter Port GY1 3QL Tel: 01481 745001 END
(END) Dow Jones Newswires
August 02, 2016 02:00 ET (06:00 GMT)
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