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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Alpha Real Trust Limited | LSE:ARTL | London | Ordinary Share | GB00B13VDP26 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 137.50 | 130.00 | 145.00 | 137.50 | 137.50 | 137.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Investment Trust | 6.65M | 631k | 0.0107 | 128.50 | 81M |
From May 2019 to May 2024
TIDMARTL
RNS Number : 9456S
Alpha Real Trust Limited
15 March 2019
15 March 2019
ALPHA REAL TRUST LIMITED ("ART" OR THE "COMPANY")
TRADING UPDATE and dividend announcement
ART today publishes its trading update for the period ended 31 December 2018 and the period up until the date of this announcement. The information contained herein has not been audited.
About the Company
Alpha Real Trust Limited ("the Company" or "ART") targets investment, development, financing and other opportunities in real estate, real estate operating companies and securities, real estate services, infrastructure, infrastructure services, other asset-backed businesses and related operations and services businesses that offer attractive risk-adjusted total returns. ART currently focusses on high-yielding property, infrastructure and asset backed debt and equity investments that are capable of delivering strong risk adjusted cash flows. The portfolio mix at 31 December 2018, excluding sundry assets/liabilities, was as follows:
High return equity in property investments: 25.6% High return debt: 17.2% Build-to-rent investments: 41.9% Other investments: 3.2% Cash: 12.1%
The Company's Investment Manager is Alpha Real Capital LLP ("ARC").
Highlights
-- NAV per ordinary and A share 205.6p: 31 December 2018 (178.4p: 30 September 2018)
-- Basic earnings for the nine-month period ended 31 December 2018 of 31.9p per ordinary and A share (6.5p per ordinary and A share for the six-month period ended 30 September 2018)
-- Adjusted earnings for the nine-month period ended 31 December 2018 of 3.0p per ordinary and A share (2.5p per ordinary and A share for the six-month period ended 30 September 2018)
-- Declaration of an increased quarterly dividend of 0.8p per ordinary share, expected to be paid on 26 April 2019
-- Scrip dividend alternative for the next dividend available to shareholders who elect by 12 April 2019
-- Total shareholder return: NAV growth of 19% over the twelve-month period to 31 December 2018, principally driven by realised sales.
-- Portfolio profit taking and de-risking: material post period end sales of the Company's build-to-rent investments; sale of the Frankfurt data centre site for EUR44.8 million (reflected in period end NAV) and the Monk Bridge, Leeds Private Rented Sector residential site for GBP15.2 million
-- Capital recycling: the sale proceeds of the Frankfurt and Leeds projects are to be primarily redeployed into the Company's growing secured senior and mezzanine debt portfolio.
-- Growing secured loan portfolio: eight loans were completed during the three months to 31 December 2018 with GBP23.5 million invested at period end; post period end, further loans totalling GBP1.1 million have been funded
-- H2O shopping centre Madrid: record visitor numbers recorded in 2018.
Investment summary
The Company's investments have benefited from an active management approach with successes evident in both the Company's directly and indirectly held investments. ART continues to recycle capital from the sale of selected assets. Recent capital recycling has focussed on reducing exposure to development and leasing risk, as well as profit-taking and portfolio optimisation.
ART is currently planning to allocate the proceeds from its recycled capital to augment and diversify its portfolio of secured real estate senior and mezzanine loan investments. This is expected to increase the company's current earnings.
Portfolio overview as at 31 December 2018
Hot Features
Premium
Investment name
Investment Carrying Income Investment Property type Investment notes % of
type value return location / underlying portfolio(1)
p.a. security
----------------- ------------------- ----------- ---------- ---------------- ----------------- -------------
High return debt (17.2%)
---------------------------------------------------------------------------------------------------- -------------
Secured senior
finance
Diversified
loan portfolio
focussed on
7.5% real estate
Senior secured GBP7.4m to 9.0% investments Senior secured
loans (2) (3) UK and developments debt 5.4%
Secured mezzanine finance
Diversified
loan portfolio
focussed on Secured mezzanine
Second charge 6.5% real estate debt and
mezzanine GBP16.1m to 25.0% investments subordinated
loans (2) (3) UK and developments debt 11.8%
----------------- ------------------- ----------- ---------- ---------------- ----------------- -------------
High return equity in property investments (25.6%)
---------------------------------------------------------------------------------------------------- -------------
H2O shopping centre
Dominant Madrid 30% shareholding;
shopping centre medium term
and separate moderately geared
Indirect GBP19.9m 6.1% development bank finance
property (EUR22.2m) (4) Spain site facility 14.6%
----------------- ------------------- ----------- ---------- ---------------- ----------------- -------------
Long leased industrial facility, Hamburg
Long leased Long term
industrial moderately
GBP6.4m* 6.7% complex geared bank
Equity (EUR7.1m) (5) Germany in major finance facility 4.7%
----------------- ------------------- ----------- ---------- ---------------- ----------------- -------------
Active UK Real Estate Fund plc
High-yield
8.7% commercial 27.8% of ordinary
Equity GBP6.8m (4) UK UK portfolio shares in fund 5.0%
----------------- ------------------- ----------- ---------- ---------------- ----------------- -------------
Cambourne Business Park
Medium term
High-yield moderately
business geared bank
Indirect 9.9% park located finance
property GBP1.8m (4) UK in Cambridge facility 1.3%
----------------- ------------------- ----------- ---------- ---------------- ----------------- -------------
Build-to-rent investments (41.9%)
---------------------------------------------------------------------------------------------------- -------------
Unity and Armouries, Birmingham
Central Planning consent
Birmingham for 90,000 square
residential feet / 162 units
PRS development GBP4.8m n/a UK build-to-rent plus commercial 3.5%
----------------- ----------------------- ------- ---------- ---------------- ----------------- -------------
Monk Bridge, Leeds
Central Leeds Sale completed
residential post period
PRS development GBP15.2m n/a UK build-to-rent end. 11.2%
----------------- ----------------------- ------- ---------- ---------------- ----------------- -------------
Data centre, Frankfurt
Site with
planning
and committed
GBP37.0m** power for data Sale completed
Direct property (EUR41.3m) n/a Germany centre use post period end. 27.2%
----------------- ----------------------- ------- ---------- ---------------- ----------------- -------------
Other investments (3.2%)
---------------------------------------------------------------------------------------------------- -------------
Galaxia
Legal process
underway to
recover
Development investment
GBP3.9m site located by enforcing
Investment (INR in NOIDA, Delhi, arbitration
receivable 350m) n/a India NCR award 2.9%
----------------- ------------------- ----------- ---------- ---------------- ----------------- -------------
Europip plc
Awaiting final 47% of the total
Indirect GBP0.3m shareholder ordinary shares
equity (EUR0.3m) n/a N/A distribution in fund 0.2%
----------------- ------------------- ----------- ---------- ---------------- ----------------- -------------
Healthcare & Leisure Property Limited
Indirect Leisure property No external
property GBP0.2m n/a UK fund gearing 0.1%
----------------- ------------------- ----------- ---------- ---------------- ----------------- -------------
Cash and short-term investments (12.1%)
---------------------------------------------------------------------------------------------------- -------------
Current or 'on
Cash GBP17.0m 0.1% UK call' accounts 12.1%
------------------------ ------------ ----------- ---------- ---------------- ----------------- -------------
* Property value net of associated debt including sundry assets/liabilities
** Property value net of provision for deferred tax
(1) Percentage share shown based on NAV excluding the company's sundry assets/liabilities
(2) Including accrued interest/coupon at the balance sheet date
(3) Annual interest/coupon
(4) Yield on equity over 12 months to 31 December 2018
(5) Annualised income return; post tax
Further to the annual results announcement on 16 November 2018, the following are key investment updates.
Total shareholder returns
ART actively manages its investment portfolio which continues to be replenished via capital recycling from the sale of non-core assets, loan repayments or strategic full or partial disinvestment from assets that allow for profit-taking and portfolio optimisation. This is demonstrated by the post period end sale of the Frankfurt data centre and the Leeds residential site.
This investment policy has helped ART deliver a significant increase in total shareholder return, with NAV growth per ordinary share of 19% achieved over the twelve-month period to 31 December 2018.
Positioning for continued investment
The Company continues to maintain a pipeline of new investment opportunities under active review which compete for capital allocation. ART is currently planning to primarily allocate the proceeds from its recycled capital to augment and diversify its portfolio of secured senior and mezzanine loan investments. This is expected to increase the company's current earnings. ART continues to evaluate equity investments that offer attractive risk-adjusted returns.
ART benefits from the depth of experience, strength and size of its Investment Manager. Alpha Real Capital has a team of over 100 investment, asset management and debt professionals based throughout the UK and Europe. ART's active management approach has helped deliver improvements in underlying asset values, in both directly and indirectly held investments across our investment markets.
Sale of Frankfurt data centre site
As announced on 14 February 2019, the sale of the Company's data centre site in Frankfurt completed for a cash consideration of EUR44.8 million. The sale price was above the Company's latest published value for the site.
ART originally acquired an interest in the site by way of an option to acquire, subject to obtaining power and planning enhancements, which the Company funded during the option period. ART site enhancement strategy involved the undertaking of a detailed design and pre-development process for the building and its mechanical and electrical systems that led to the grant of planning consent for a five-storey data centre extending to over 40,000 square metres. In parallel, an agreement was reached with the local utility provider who contracted to upgrade the power supply to the site to deliver a 35 Mega Volt Ampere ('MVA') dual feed power supply on a phased basis to 2020, synchronised with local electricity substation and cable route upgrades. The Company also undertook site enabling works to complete pre-identified ground remediation works and create an electricity receptor building capable of accommodating the upgraded power supply.
Sale of Leeds PRS
On 1 March 2019, the Company announced the sale of its private rental sector residential development site, 'Monk Bridge' in Leeds for a total transaction value of GBP15.4 million.
The Company acquired the development site in December 2015 at which time the site had implemented planning consent for 269 residential units.
Detailed consent was subsequently granted for a further 395 residential units in the development over 5 buildings of up to 21 storeys. Full planning permission was obtained for the site which has a residential and commercial net lettable area of around 386,000 square feet and 16,000 square feet respectively.
The sale price is above the Company's latest published value for the site. ART has sold the site with the benefit of full detailed planning permission and completed final stage plans.
Proceeds from the sale are to be deployed in line with the Company's investment strategy.
New secured lending investment
ART has a portfolio of secured senior and mezzanine loan investments which continues to increase in scale and diversity. These loans are typically secured on real estate investment and development assets with attractive risk-adjusted income returns. As at 31 December 2018, ART had invested a total amount of GBP23.5 million across 28 loans, of which 8 loans were completed during the quarter to 31 December 2018. Post period end, a further GBP1.1 million of loans were granted.
During the quarter to 31 December 2018, one mezzanine loan was repaid generating an annualised return of circa 18.8%. Post period end, part repayment of a senior loan was received amounting to GBP0.7 million.
Each loan will typically have a term of up to two years, a maximum 75% loan to value ratio and be targeted to generate attractive risk-adjusted income returns. Repayment proceeds will be reinvested into new facilities. The Company is developing a strong pipeline of opportunities.
H2O, Madrid
ART has a 30% stake in joint venture with CBRE Global Investors in the H2O shopping centre in Madrid. H2O continues to benefit from ongoing asset management initiatives. The centre attracted record visitor numbers in 2018, despite one of the main anchor tenants, the Mercadona supermarket, closing for a month to undertake a complete refurbishment and upgrade of the store. Like-for-like sales performance from tenants increased by 3.0% over the same period.
Other investments
Galaxia, India
The Galaxia project is a joint venture with Logix Group, to develop a site extending to 11.2 acres with the potential to develop 1.2 million square feet. Galaxia is located in NOIDA, an established, well planned suburb of Delhi that continues to benefit from new infrastructure projects and is one of the principal office micro-markets in India. The Company has a 50.0% shareholding in the SPV which controls the Galaxia site. There are no bank borrowings on the asset.
In February 2011, ART recommenced arbitration proceedings against Logix Group ("Logix") in order to protect its Galaxia investment, an 11.2 acre development site, in NOIDA, the National Capital Region (NCR), India. In January 2015, the ICC Arbitral Tribunal decreed that Logix and its principals had breached the terms of the shareholders agreement and has awarded the Company:
-- Return of its entire capital invested of INR 450 million (equivalent to GBP5.0 million using the period end exchange rate as at 30 June 2018) along with interest at 18% per annum from 31 January 2011 to 20 January 2015.
-- All costs incurred towards the arbitration.
-- A further 15% interest per annum on all sums was awarded to the Company from 20 January 2015 until the actual date of payment by Logix of the award.
Logix challenged the validity of the arbitration award in the Delhi High Court and latterly to the Division Bench of the Delhi High Court. Both courts dismissed the respective appeals and upheld the award declared in favour of the Company. Logix appealed the dismissal before the Supreme Court of India. The Supreme Court admitted the appeal and ordered Logix to deposit GBP2.2 million (INR 200 million). In May 2018, the Supreme Court permitted the Company to unconditionally withdraw INR 100 million (GBP1.1 million). The remaining INR 100 million (GBP1.1 million) deposited by Logix maybe released against a bank guarantee suitable to the Supreme Court. The next Supreme court hearing is scheduled for April 2019.
ART has commenced execution of the award and the Delhi High Court has issued a warrant of attachment against the primary residential property owned by Shakti Nath and Meena Nath, promoters of Logix Group. The Court has also restrained Logix from alienating their immovable assets. ART continues to actively pursue Logix directors for the recovery of the award.
The sum awarded to ART, including the recovered deposits, has now accrued to GBP14.2 million at the period end exchange rates.
The Directors, taking into consideration legal advice received following Logix's challenge of the Award and following the recovery of INR 100 million (GBP1.1 million) noted above, consider it appropriate to carry this joint venture in its accounts at INR 350 million (GBP3.9 million). The amount recognised in the accounts does not include the additional compensation awarded by the courts due to uncertainty over timing and final value of the award.
Share buybacks
On 18 December 2018, the Company published a circular giving notice of an Extraordinary General Meeting on 8 January 2019. Consistent with the Company's commitment to shareholder value, the Company asked its shareholders to approve a general authority allowing the Company to acquire up to 24.99% of the Voting Share Capital during the period expiring on 7 January 2020. Shareholders approved the proposal.
On 19 January 2019, the Company announced its intention to buy back its ordinary shares using its existing cash resources, pursuant to the general authority granted by shareholders.
The share repurchase programme commenced with effect from 19 January 2019 and share repurchases may be undertaken until the earlier of the maximum amount being repurchased and 7 January 2020. The maximum amount of money allocated for the share repurchases is GBP1 million.
During the quarter, 1,584,564 ordinary shares were tendered under a Tender Offer announced by the Company on 5 October 2018. The Tender Price was 138 pence per ordinary share.
Conversion of A shares
On 24 January 2019 all outstanding A shares were mandatorily converted to ordinary shares. This followed the payment of the final special dividend to holders of A shares from the Company's investment in The Romulus High Income Trust.
Scrip dividend alternative
In the circular published on 18 December 2018 the Company sought Shareholders' approval to enable a scrip dividend alternative to be offered to ordinary Shareholders whereby they could elect to receive additional ordinary shares in lieu of a cash dividend, at the absolute discretion of the Directors, from time to time. This was approved by Shareholders at the Extraordinary General Meeting on 8 January 2019.
The number of ordinary shares that an Ordinary Shareholder will receive under the Scrip Dividend Alternative will be the average of the closing middle market quotations of an ordinary share for five consecutive dealing days after the day on which the ordinary shares are first quoted "ex" the relevant dividend.
The Board has elected to offer the scrip dividend alternative to Shareholders for the dividend for the period. The Scrip Mandate form must be returned by 12 April 2019 to receive the scrip alternative for the next dividend.
Dividend
The Board announces the next dividend of 0.8p per share for the quarter ended 31 December 2018 which is expected to be paid on 26 April 2019 (ex-dividend date 28 March 2019 and record date 29 March 2019): this date has changed from 5 April 2019, as previously announced, due to timing of dividend procedures related to the scrip dividend alternative.
Revised financial calendar
Financial Reporting Dividend Ex-dividend Record Last date Share Payment
reporting dates period date date for election certificates date
to scrip posted
dividend (if applicable)
(if applicable)
-------------- ---------- --------- ------------ --------- ----------------- ----------------- ---------
Trading 15 March Quarter 28 March 29 March 12 April 25 April 26 April
update 2019 ending 2019 2019 2019 2019 2019
(Qtr 3) 31 Dec
2018
-------------- ---------- --------- ------------ --------- ----------------- ----------------- ---------
Annual report 14 June Quarter 27 June 28 June 5 July 18 July 19 July
and dividend 2019 ending 2019 2019 2019 2019 2019
announcement 31 Mar
2019
Net asset value ('NAV')
As at 31 December 2018, the unaudited NAV per ordinary share of the Company was 205.6p (30 September 2018: 178.4p).
The movement in NAV mainly reflects the earnings of the Company less the dividend paid in the period plus other investments' fair value uplift (mainly the Frankfurt data centre) and positive foreign currency movements.
Foreign currency
The Company monitors foreign exchange exposures and considers hedging where appropriate. Foreign currency balances have been translated at the period end rates of GBP1:EUR1.117 or GBP1:INR89.111, as appropriate.
Strategy and outlook
ART's diversified portfolio provides a balance of investments that offer scope to deliver strong cashflows, capital value growth and attractive risk adjusted total returns.
ART continues to recycle capital from the sale of selected assets. Recent capital recycling has focussed on reducing exposure to development and leasing risk, as well as profit-taking and portfolio optimisation. Post period end the sale of the Company's data centre site in Frankfurt and its residential site in Leeds were completed, following the securing of significant enhanced planning consents under the Company's ownership. The realisation of these sales has helped deliver 19% growth in ART's NAV per ordinary share over the twelve-month period to 31 December 2018.
ART is currently planning to allocate the proceeds from its recycled capital to augment and diversify its portfolio of secured real estate loan and secured mezzanine loan investments which is expected to increase the Company's current earnings. During the quarter to 31 December 2018 a further GBP3.1 million was invested into the secured loan portfolio, with an additional GBP1.1 million of loans granted post period end.
The Company remains well positioned to continue to deliver attractive returns through investing, realising and re-investing its capital in asset backed investment opportunities and maintains an active pipeline of potential new secured senior and mezzanine loans and other investment opportunities under review.
Contact:
Alpha Real Trust Limited
David Jeffreys, Chairman, ART +44 (0)1481 231 100
Brad Bauman, Joint Fund Manager, ART +44 (0) 20 7391 4700
Gordon Smith, Joint Fund Manager, ART +44 (0) 20 7391 4700
Panmure Gordon, Broker to the Company
Richard Gray +44 (0) 207 886 2500
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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March 15, 2019 03:00 ET (07:00 GMT)
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