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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% | 122.50 | 115.00 | 130.00 | 122.50 | 122.50 | 122.50 | 0.00 | 00:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Real Estate Investment Trust | 6.65M | 631k | 0.0107 | 114.49 | 72.17M |
TIDMARTL
RNS Number : 1920H
Alpha Real Trust Limited
09 March 2018
9 March 2018
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 2017 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 focuses on high-yielding property, infrastructure and asset backed debt and equity investments in Western Europe that are capable of delivering strong risk adjusted cash flows, including build-to-rent investments. The current portfolio mix, excluding sundry assets/liabilities, is as follows:
High yielding debt: 4.7% High yielding equity in property investments: 21.3% Ground rent investments: 24.6% Other investments: 18.7% Build-to-rent investments: 25.0% Cash: 5.7%
The Company's Investment Manager is Alpha Real Capital LLP ("ARC").
Highlights
-- NAV per ordinary and A share 168.4p: 31 December 2017 (167.3p: 30 September 2017)
-- Basic earnings for the nine month period ended 31 December 2017 of 14.4p per ordinary share and of 18.9p per A share (13.3p per ordinary share and of 17.7p per A share for the six months ended 30 September 2017)
-- Adjusted earnings for the nine month period ended 31 December 2017 of 3.4p per ordinary and A share (3.0p per ordinary and A share for the six months ended 30 September 2017)
-- Declaration of a quarterly dividend of 0.6p per share, expected to be paid on 6 April 2018
-- Balanced portfolio: continued capital allocation to a mix of investments which balance income returns while creating potential for capital value growth, including a growing build-to-rent exposure
-- Mezzanine loan investment: four loans totalling GBP3.8 million were completed in the quarter ending 31 December 2017 with a further three loans totalling GBP5.2 million funded post period end
-- Data centre Frankfurt: following planning consent being secured, tendering for pre-development works is underway with a view to having a development-ready site
-- H2O shopping centre Madrid: record visitor numbers recorded in 2017, increasing 3.9% over 2016, with like for like tenant sales increasing 6.4% over the year.
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. The current portfolio mix, as at 31 December 2017 is outlined on the table below.
Portfolio overview as at 31 December 2017
Investment name Investment Investment Income Investment Property Investment % of type value return location type / notes portfolio(1) p.a. underlying security ---------------- --------------- --------- ---------- ---------------- ----------------- ------------- High yielding debt (4.7%) --------------------------------------------------------------------------------------------- ------------- Mezzanine Portfolio Diversified loan portfolio focussed 14.0% on real estate Mezzanine GBP5.3m to 16.9% investments Secured mezzanine loans (2) (3) UK and developments facilities 4.7% ---------------- --------------- --------- ---------- ---------------- ----------------- ------------- High yielding equity in property investments (21.3%) --------------------------------------------------------------------------------------------- ------------- H2O shopping centre High-yield, dominant Madrid shopping centre and 30% shareholding; separate 7 year term Indirect GBP16.7m 6.9% development bank finance property (EUR18.8m) (4) Spain site facility 14.6% Active UK Real Estate Fund plc 27.6% of High-yield ordinary commercial shares in Equity GBP6.0m n/a UK portfolio fund 5.3% ---------------- -------------- ---------- ---------- ---------------- ----------------- ------------- Cambourne Business Park High-yield Medium term business moderately Indirect 11.0% park located geared bank property GBP1.6m (4) UK in Cambridge finance facility 1.4% ---------------- --------------- --------- ---------- ---------------- ----------------- ------------- Ground rent investments (24.6%) --------------------------------------------------------------------------------------------- ------------- Freehold Income Authorised Fund Highly defensive Ground 3.7% income; freehold No gearing; rent fund GBP28.0m (5) UK ground rents monthly liquidity 24.6% ---------------- --------------- --------- ---------- ---------------- ----------------- ------------- Build-to-rent investments (25.0%) --------------------------------------------------------------------------------------------- ------------- Unity and Armouries, Birmingham Planning consent for Central 90,000 square Birmingham feet / 162 residential units plus PRS development GBP3.9m n/a UK build-to-rent commercial 3.4% ---------------- --------------- --------- ---------- ---------------- ----------------- ------------- Monk Bridge, Leeds Planning consent for 205,129 square feet / 307 units plus commercial Outline consent for further 193,071 square Central Leeds feet / 300 residential units plus PRS development GBP8.6m n/a UK build-to-rent commercial 7.6% ---------------- --------------- --------- ---------- ---------------- ----------------- ------------- Data centre, Frankfurt Site with planning consent for 40,338 square metre Industrial data centre site with and commitment secured consent for 35 MVA Direct GBP16.0m for data dual feed property (EUR18.0m) n/a Germany centre use power supply 14.0% ---------------- --------------- --------- ---------- ---------------- ----------------- ------------- Other investments (18.7%) --------------------------------------------------------------------------------------------- ------------- Galaxia Legal process underway to recover
Development investment GBP5.2m site located by enforcing Indirect (INR in NOIDA, arbitration property 450m) n/a India Delhi, NCR award 4.6% ---------------- --------------- --------- ---------- ---------------- ----------------- ------------- Indirect asset backed investment Indirect investment Short term in diversified investment real estate in fund with Elm Trading and renewables low external Limited GBP15.3m 5.0% UK portfolio gearing 13.3% ---------------- --------------- --------- ---------- ---------------- ----------------- ------------- Europip plc Awaiting final 47% of ordinary Indirect GBP0.4m shareholder shares in equity (EUR0.5m) n/a N/A distribution fund 0.4% ---------------- --------------- --------- ---------- ---------------- ----------------- ------------- Healthcare & Leisure Property Limited Indirect Leisure property No external property GBP0.4m n/a UK fund gearing 0.4% ---------------- --------------- --------- ---------- ---------------- ----------------- ------------- Cash and short term investments (5.7%) --------------------------------------------------------------------------------------------- ------------- Current or Cash (Company 'on call' only) GBP6.5m 0.1% UK accounts 5.7% ----------------- -------------- --------- ---------- ---------------- ----------------- -------------
(1) Percentage share shown based on NAV excluding the company's sundry assets/liabilities
(2) Including accrued coupon at the balance sheet date
(3) Annual coupon
(4) Yield on equity over 12 months to 31 December 2017
(5) 12 month income return; post tax
ART has a diversified portfolio of asset backed investments spread across different sectors and asset types. The Company's portfolio includes income producing assets, build-to-rent projects, secured debt and mezzanine loan investments. Each investment offers a different risk-return profile however the overall portfolio seeks to provide a balance of stable income returns and scope for capital growth.
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 creates the opportunity for capital allocation to new investments.
Further to the half year results announcement on 17 November 2017, the following are key investment updates.
High yielding equity in property investments
ART continues to remain focused on investments that offer the potential to deliver attractive risk-adjusted returns by way of value enhancement through active asset management, improvement of net rental income, selective deployment of capital expenditure and the ability to undertake strategic sales when the achievable price is accretive to returns.
H2O shopping centre, 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 asset management initiatives implemented during ART's ownership. The centre attracted record visitor numbers in the 2017 calendar, with an increase of 3.9% above 2016. Like-for-like sales performance from tenants increased strongly by 6.4% over the same period.
Mercadona supermarket, one of H2O's principal anchors, has undertaken a complete refurbishment of its store during February 2018. This major investment after only 7 years in occupation is a positive sign of the tenant's commitment to the shopping centre and provides H2O's customers with an enhanced shopping experience.
High yielding debt
ART continues to augment and diversify its portfolio of secured real estate loan and mezzanine loan investments. These loans are typically secured on real estate investment and development assets with high risk-adjusted income returns.
During the quarter ended 31 December 2017, a further four loans were completed for GBP3.8 million; the total loan investment at period end is GBP5.3 million. Post period end, a further three loans totalling GBP5.2 million were funded bringing the total secured debt portfolio to GBP10.5 million.
Further loan investments are continually being evaluated. Each loan will typically have a two year term and a maximum 75.0% loan to value ratio and is targeted to generate a double digit income return. Repayment proceeds will be rotated into new loans.
Ground rent investments
Freehold Income Authorised Fund ("FIAF")
ART invests in a fund which holds a diversified portfolio of UK residential property freehold ground rents with a view to achieving steady and predictable returns, a consistent income stream and prospects for growth. The Company has invested GBP28.0 million as at 31 December 2017 in FIAF, an open-ended fund that invests in UK freehold ground rents with a net asset value of GBP307.4 million as at 31 December 2017.
The following highlights were reported in the FIAF fact sheet as at 31 December 2017 (published in January 2018):
-- FIAF owns over 65,000 freeholds with a gross annual ground rent income of circa GBP8.7 million.
-- 85% of its freeholds have a form of inflation protection through periodic uplifts linked to Retail Price Index, property values or fixed uplifts.
-- FIAF's assets are defensive in nature, very long dated (with an average lease length in excess of 100 years).
The total return on ART's investment in FIAF was 8.9% (annualised post tax) for the 12 months ending 31 December 2017.
Build-to-rent investments
ART has achieved the significant milestone of securing planning consent for each of its build-to-rent investments. These investments offer the opportunity to create a higher yield on cost than is available from purchasing existing built investments of the same quality. The investments also offer scope for capital growth as the sites mature or planning is enhanced.
Build-to-rent investments provide the Company with flexibility to add value by either constructing the development, funded with either equity capital, joint venture capital or debt, and subsequently holding the completed assets as investments; or, alternatively, forward selling all or some of the developed property.
Residential Private Rented Sector ("PRS")
The Company's investments in the residential Private Rented Sector ("PRS") in central Leeds and central Birmingham are opportunities that were secured early in the build-to-rent process that offer potential to create an initial capital uplift in value through enhanced planning and the opportunity to develop and let in order to achieve resilient equity income returns at an attractive yield on cost.
Planning consent for both sites has been secured. The Birmingham project has implemented non-material amendments to its planning consent for 162 residential units and ground floor commercial space. The Leeds project has detailed planning consent for 307 residential units (which the Company intends to develop for PRS) plus commercial development within the adjacent existing railway arches and outline planning consent for a further 350 residential units, for which detailed planning consent is now being advanced.
Preferred construction partners have been selected. The project design team continues to review the existing detailed planning consent for possible enhancements to meet best in class PRS requirements and a value engineering process is underway to identify the most efficient and effective construction processes and potential cost savings.
The Company estimates that up to GBP23.7 million could be invested to undertake the development of its PRS sites alongside debt financing. The Company is exploring ways to optimise the returns from its PRS investments and is exploring joint development opportunities with potential partners.
Data centre investment
ART owns an industrial site in Frankfurt, Germany, for which it has secured detailed planning consent for a five-story data centre extending to 40,338 square metres and a commitment from the local utility provider to install a 35 MVA a dual feed power supply. The power supply will be installed, and funded by ART, on a phased basis over the coming three years, synchronised with local electricity substation and cable route upgrades.
ART is in the process of arranging tenders for the construction of an electricity receptor building on the site and pre-identified ground preparation works. ART's total investment into the data centre project is estimated to be approximately EUR28 million (GBP24.7 million).
Active marketing of the project to potential data centre occupiers is underway.
Other investments
Galaxia, India
On 2 February 2011, ART recommenced arbitration proceedings against its development partner Logix Group ("Logix") in order to protect its Galaxia investment, an 11.2 acre Special Economic Zone, in NOIDA, the National Capital Region, 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 450.0 million (equivalent to GBP5.2 million using the period end exchange rate as at 31 December 2017) 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 have since appealed the dismissal to the Supreme Court of India. The Supreme Court admitted the appeal and ordered Logix to deposit INR 200 million (GBP2.3 million) with the court, which is held on deposit to partially secure ART's claim. The Supreme Court also upheld the earlier order of the Delhi High Court attaching the residential property of Logix directors to secure ART's claim. The next hearing is scheduled for March 2018.
The sum awarded to the Company has now accrued to approximately GBP14.5 million at the period end exchange rate. ART continues to hold the indirect investment at INR 450.0 million (GBP5.2 million) in the accounts due to uncertainty over timing and final value.
Share buybacks
On 12 December 2017, the Company published a circular giving notice of an Extraordinary General Meeting on 5 January 2018. 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 4 January 2019. The shareholders approved the proposal.
On 24 January 2018, 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 24 January 2018 and share repurchases may be undertaken until the earlier of the maximum amount being repurchased and 4 January 2019. The maximum amount of money allocated for the share repurchases is GBP1 million.
During the quarter, the Company made no share buybacks.
Dividend
The Board announces the next dividend of 0.6p per share for the quarter ended 31 December 2017 which is expected to be paid on 6 April 2018 (ex dividend date 22 March 2018 and record date 23 March 2018).
Net asset value ('NAV')
As at 31 December 2017, the unaudited NAV per ordinary share of the Company was 168.4p (30 September 2017: 167.3p).
The movement in NAV reflects the earnings of the Company less the dividend paid in the period.
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:EUR1.127 or GBP1:INR86.359, 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.
The Company currently focuses on high-yielding property, infrastructure and asset backed debt and equity investments in Western Europe that are capable of delivering strong risk adjusted cash flows, including an increasing focus on build to own investments. The Company will consider investments and assets that offer scope to generate long term income streams off a lower entry cost through development. This approach provides ART with the flexibility to take advantage of new investment opportunities where ART sees best value.
ART has achieved the significant milestone of securing planning consent for each of its build-to-rent investments. These investments offer the opportunity to create a higher yield on cost than is available from purchasing existing built investments of the same quality. During the development period, a greater proportion of the Company's total return is likely to come from capital growth rather than earnings until its build-to-rent investments become income producing.
During the period the Company has increased its mezzanine loan investment portfolio. New investment opportunities that are capable of delivering strong risk adjusted cash flows are being actively pursued. ART's active investment approach means that short term investment positions will be considered when accretive to overall returns.
The Company remains well positioned to continue to deliver attractive returns through investing, realising and re-investing its capital in asset backed investment opportunities.
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/Andrew Potts +44 (0) 207 886 2500
This information is provided by RNS
The company news service from the London Stock Exchange
END
TSTFKFDQOBKDQNK
(END) Dow Jones Newswires
March 09, 2018 02:00 ET (07:00 GMT)
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