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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Alternative Income Reit Plc | LSE:AIRE | London | Ordinary Share | GB00BDVK7088 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.20 | -0.30% | 66.30 | 66.00 | 66.60 | 67.00 | 66.30 | 67.00 | 0.00 | 08:00:05 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Investment Trust | 8.66M | -5.24M | -0.0651 | -10.22 | 53.53M |
From Apr 2022 to Apr 2024
TIDMAIRE
RNS Number : 9239R
Alternative Income REIT PLC
06 March 2023
THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION IN THE UNITED STATES OF AMERICA, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA, CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA.
6 March 2023
Alternative Income REIT plc
(the "Company" or the "Group")
INTERIM REPORT AND FINANCIAL STATEMENTS FOR THE HALF YEARED 31 DECEMBER 2022
Resilient portfolio providing secure, inflation-linked long-term income
Remain on track to deliver target annual dividend of at least 5.7 pence per share for the financial year ending 30 June 2023
The Board of Directors of Alternative Income REIT plc (ticker: AIRE), the owner of a diversified portfolio of UK commercial property assets predominantly let on long leases with index-linked rent reviews, is pleased to announce its interim report and financial statements for the half year ended 31 December 2022.
Simon Bennett, Non-Executive Chairman of Alternative Income REIT plc, comments:
"The half year results reflect the resilience of the Company's portfolio, and the Company remains on track to deliver the Board's previously announced target annual dividend of at least 5.7 pence per share(1) ("pps"), which is expected to be fully covered.
Whilst not immune from the headwinds affecting the UK and wider global economy at the present time, 96% of the Group's portfolio benefits from index-linked rent reviews. Combining this with a strong balance sheet, modest overheads and low fixed borrowing costs until 2025, helps ensure the Company is well positioned to ride-out successfully the current economic storm and to continue to deliver attractive, secure and progressive income to our shareholders."
Financial Highlights
At 31 December 2022 (the 'Period End')
Hot Features
Premium
31 December 2022 30 June 2022
(unaudited) (audited) Change
Net Asset Value ('NAV') GBP67.9 million GBP77.6 million -12.5%
------------------ ----------------- ---------
NAV per share 84.34p 96.40p -12.5%
------------------ ----------------- ---------
Share price 66.70p 82.10p -18.8%
------------------ ----------------- ---------
Share price discount to NAV
(A) 20.9% 14.8% +6.1%
------------------ ----------------- ---------
Investment property fair
value (based on external
valuation) GBP107.4 million GBP117.9 million -8.9%
------------------ ----------------- ---------
Loan to gross asset value
('GAV') (A) 36.8% 33.7%
------------------ ----------------- ---------
Loan facility (2) GBP41.0 million GBP41.0 million -
------------------ ----------------- ---------
For the half year ended 31 December 2022 (the 'Period')
2022 2021
(unaudited) (unaudited) Change
EPRA earnings per share ('EPS')
(A) 3.45p 3.28p +5.2%
----------------- --------------- --------
Adjusted EPS (A) 3.35p 2.79p +20.1%
----------------- --------------- --------
Dividend cover (A) 121.8% 107.3% +14.5%
----------------- --------------- --------
Dividends per share 2.75p 2.60p +5.8%
----------------- --------------- --------
Dividend yield (annual) (A) 8.3% 7.6% +0.7%
----------------- --------------- --------
Operating profit (including
gain on sale of investment
property but excluding fair
value changes) GBP3.5 million GBP3.4 million +2.9%
----------------- --------------- --------
(Loss)/profit before tax (GBP7.3 million) GBP6.2 million -217.3%
----------------- --------------- --------
EPS (loss)/profit (9.08p) 7.74p -217.3%
----------------- --------------- --------
Share price total return
(A) -15.4% +5.8%
----------------- --------------- --------
NAV total return (A) -9.6% +9.7%
----------------- --------------- --------
Annualised gross passing
rent (A) GBP7.5 million GBP6.6 million +13.6%
----------------- --------------- --------
Ongoing charges (A) 1.42% 1.44% -2 bps
----------------- --------------- --------
-- The NAV decreased in aggregate by GBP9.7 million to GBP67.9 million, equivalent to 84.34pps as at 31 December 2022 (30 June 2022: GBP77.6 million, equivalent to 96.40pps). The majority of the decrease is due to a GBP10.1 million reduction in the fair value of the investment properties impacted by upward yield movement across the wider real estate sector, driven primarily from rises in interest rates and inflation during 2022.
-- Dividends in respect of the Period totalled 2.75pps, a 5.8% increase on the first six months to 31 December 2021 and in line with the Board's target annual dividend of at least 5.7pps(1) , which is expected to be fully covered. Dividends in respect of the period were covered 121.8% by earnings.
-- EPS amounted to a loss of 9.08pps for the Period (half year ended 31 December 2021: profit of 7.74p). The majority of this arose from the GBP10.1 million reduction in the fair value of the investment properties in the Period.
-- The Group's loan matures in October 2025 and is fixed at a weighted average interest cost of 3.19%. The loan continues to have significant headroom to the lender's loan to value covenant of 60% and remains comfortably within the Group's stated borrowing limit of not exceeding 40% of GAV (measured at drawdown).
(A) Considered to be an Alternative Performance Measure. Further details can be found at the end of this section and full calculations are set out following the financial statements.
(1) This is a target only and not a profit forecast. There can be no assurance that the target will be met and it should not be taken as an indicator of the Company's expected or actual results.
(2) The loan facility at 31 December 2022 of GBP41.0 million (30 June 2022: same) is with Canada Life Investments, matures on 20 October 2025 and has a weighted average interest cost of 3.19%.
Operational Highlights
At the Group's Period End of 31 December 2022:
-- The Group's property portfolio had a fair value of GBP107.4 million across 19 properties (30 June 2022: GBP117.9 million across 19 properties). There were no property transactions in the Period.
-- The EPRA Net Initial Yield (A) ('NIY') increased to 6.5% at 31 December 2022 (30 June 2022: 5.7%).
-- 96% of the Group's income is inflation linked to the Retail Price Index ('RPI') or the Consumer Price Index ('CPI').
-- The assets were fully let at the Period End and throughout the Period.
-- The weighted average unexpired lease term ('WAULT') at the Period End was 17.0 years to the earlier of break and expiry (30 June 2022:17.5 years) and 18.8 years to expiry (30 June 2022: 19.4 years).
Income and expense during the Period
-- Rent recognised during the Period was GBP3.9 million (half year to 31 December 2021: GBP3.7 million), of which GBP0.2 million (31 December 2021: GBP0.3 million) was accrued debtors for the combination of minimum uplifts and rent-free period. The number of tenants at the half year was 21 (31 December 2021: 20).
-- All of the rent due in 2022 has been collected.
-- The portfolio had annualised gross passing rent(A) of GBP7.5 million across 19 properties (31 December 2021: GBP6.6 million across 18 properties), increasing by 13.6% due t o the acquisition of Volvo, Slough in Q1 2022 and various rent reviews during the 12 months to 31 December 2022.
-- A total of 7 rent reviews took place during the Period with a combined uplift of GBP247,000 representing an average of 8.38% growth in contracted rent across those properties affected and 3.43% across the portfolio.
-- Ongoing charges at the Period end was 1.42% a slight decrease from the comparable prior period.
-- The Group received GBP825,000 in the Period, in full and final settlement of litigation to recover costs incurred on work to replace defective cladding on the Travelodge Hotel, Swindon. This one-off receipt has been proportionally allocated as GBP606,000 to capital, as a reduction in acquisition costs and GBP219,000 to revenue, as other property income. Further detail is contained in Note 15.3 of the financial statements.
Post balance sheet highlights
-- On 1 February 2023, the Board declared an interim dividend of 1.375pps in respect of the quarter ended 31 December 2022. This was paid on 24 February 2023 to shareholders on the register as at 10 February 2023. The ex-dividend date was 9 February 2023.
-- A lease renewal for a further 5 years from 14 January 2023 has been agreed with Pets at Home for the Group's unit in Droitwich. Negotiations are in progress with Mears Group, in respect of Bramall Court, Salford, to change the use of the property from student accommodation to social housing, whilst entering a nomination agreement with Salford City Council.
-- Over the six month period to 30 June 2023, 26% of the Group's income will be reviewed ( five annual index-lin k ed rent reviews and three periodic index-linked rent reviews (5 years since the previous reviews)).
ENQUIRIES
Alternative Income REIT plc Simon Bennett - Chairman via H/Advisors Maitland below M7 Real Estate Ltd Richard Croft +44 (0)20 3657 5500 Panmure Gordon (UK) Limited +44 (0)20 7886 2500 Alex Collins Tom Scrivens Chloe Ponsonby H/Advisors Maitland (Communications Adviser) +44(0) 7747 113 930 James Benjamin Aire-maitland@h-advisors.global
The Company's LEI is 213800MPBIJS12Q88F71.
Further information on Alternative Income REIT plc is available at www.alternativeincomereit.com (3)
NOTES
Alternative Income REIT plc aims to generate a sustainable, secure and attractive income return for shareholders from a diversified portfolio of UK property investments, predominately in alternative and specialist sectors. The majority of the assets in the Group's portfolio are let on long leases which contain inflation linked rent review provisions.
The Company's investment adviser is M7 Real Estate Limited ("M7"). M7 is a leading specialist in the pan-European, regional, multi-tenanted real estate market. The company has 225 employees in 14 countries and territories. The team manages over 590 properties with a value of circa EUR5.9 billion.
(3) Neither the content of the Company's website, nor the content on any website accessible from hyperlinks on its website or any other website, is incorporated into, or forms part of, this announcement nor, unless previously published on a Regulatory Information Service, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company.
Chairman's Statement
Overview
I am pleased to present the unaudited half-yearly report of Alternative Income REIT plc (the "Company") together with its subsidiaries (the "Group") for the half year ended 31 December 2022.
During the period under review the real estate sector as a whole has seen an upward movement in property yields, which therefore results in a downward movement in valuations. The Company's portfolio was not immune to this adverse movement and for the half year ended 31 December 2022 the Group's net asset value showed a fall of GBP9.7 million to GBP67.9 million (30 June 2022: GBP77.6 million). That said, the portfolio has shown some resilience as the valuation fall has, in the main part, been materially lower than the benchmark property indices and the Company's peer group.
Whilst not immune from the headwinds affecting the UK economy at the present time, 96% of the Group's portfolio benefits from index-linked rent reviews. Combining this with a strong balance sheet, modest overheads and low fixed borrowing costs until 2025, helps ensure the Company is well positioned to ride-out successfully the current economic storm and to continue to deliver attractive, secure and progressive income to our shareholders.
Dividends & Earnings
The Company declared interim dividends of 2.75pps in respect of the half year ended 31 December 2022, an increase of 5.8% on the dividends declared for the half year ended 31 December 2021 of 2.60pps. Dividends declared for the Period are in line with the Board's target annual dividend of at least 5.7pps(1) , which is expected to be fully covered.
As set out in Note 8 to the Condensed Consolidated Financial Statements, these dividends were well-covered by both EPRA Earnings(A) of 3.45pps (31 December 2021: 3.28pps), and the Group's Adjusted EPS(A) (representing cash) of 3.35pps (31 December 2021: 2.79pps).
Financing
At 31 December 2022, the Group had fully utilised its GBP41.0 million loan facility with Canada Life Investments. The weighted average interest cost of the Group's facility is 3.19% and the loan is repayable on 20 October 2025. If repayment is made prior to this date, and the corresponding Gilt rate is lower than the contracted rate of interest, then the loan terms provide for an early redemption fee, which at 31 December 2022 would have been a GBPnil cost (31 December 2021: GBP2,551,803).
Environmental, Social and Governance ("ESG")
The Board recognises the importance of ESG to sustainable investment and to the wider business and investor community. In order to meet these expectations, the Group's Investment Adviser has adopted a number of strategies to maintain a conscientious approach to ESG in respect of the Group's property portfolio. With increasing energy costs there has been a renewed focus on sustainability and the Board will continue to maintain its focus on this and seek opportunities, wherever possible to reduce the Group's carbon footprint.
Future Growth and Outlook
Investment performance in the foreseeable future may be impacted by the headwinds currently effecting the UK and wider global economy which is experiencing high levels of inflation and low growth, with the UK economy teetering on the brink of a potential recession.
The Group's portfolio of 19 investment properties is resilient and continues to provide long-dated high-yielding rental income. Consequently, the Board remains confident, subject to any tenant defaults, that the Company continues to be on track to deliver its target annual dividend of at least 5.7pps(1) for the year ending 30 June 2023. This dividend is expected to be fully covered and takes account of the fact that over the six month period to 30 June 2023, 26% of the Group's income will be reviewed ( five annual index-lin k ed rent reviews and three periodic index-linked rent reviews (5 years since the previous reviews)). Over the next 12-month financial period, 63% of the Group's income will be reviewed (45% annual index-linked rent reviews, 16% periodic index-linked rent reviews, namely 5 years since the previous reviews with 2% on fixed uplifts).
I would like to thank our shareholders, my fellow Directors, the Investment Adviser and our other advisers and service providers who have provided professional support and services to the Group during the Period.
Finally, I would like to thank Alan Sippetts, my predecessor as Chairman, for his contribution to the success of the Company in recent years.
Simon Bennett
Chairman
6 March 2023
K ey Performance Indicators ('KPIs')
KPI AND DEFINITION RELEVANCE TO STRATEGY PERFORMANCE
1. Net Initial Yield The NIY is an indicator 6.47%
('NIY') (A) of the ability of the Company at 31 December 2022
Annualised rental income to meet its target dividend
based on the cash rents after adjusting for the (30 June 2022: 5.70%;
passing at the balance impacts of leverage and 31 December 2021: 5.71%)
sheet date, less non-recoverable deducting operating costs.
property operating expenses,
divided by the market
value of the property,
increased with purchasers'
costs estimated by the
Group's External Valuers.
----------------------------------- ------------------------------
2. Weighted Average Unexpired The WAULT is a key measure 17.0 years to break and
Lease Term ('WAULT') to of the quality of the portfolio. 18.8 years to expiry
break and expiry Long leases underpin the at 31 December 2022
The average lease term security of our future
remaining to expiry across income. (30 June 2022: 17.5 years
the portfolio, weighted to break and 19.4 years
by contracted rent. to expiry; 31 December
2021: 18.1 years to break
and 20.2 years to expiry)
----------------------------------- ------------------------------
3. Net Asset Value ('NAV') Provides stakeholders with GBP 67.90 million/ 84.34pps
per share (4) the most relevant information at 31 December 2022
NAV is the value of an on the fair value of the
entity's assets minus assets and liabilities (30 June 2022: GBP77.60
the value of its liabilities. of the Group. million, 96.40pps and
31 December 2021: GBP72.75
million, 90.38pps)
----------------------------------- ------------------------------
4. Dividend per share The Company seeks to deliver 2.75 pps
Dividends declared in a sustainable income stream for the half year ended
relation to the period from its portfolio, which 31 December 2022
are in line with the stated it distributes as dividends.
dividend target as set (year ended 30 June 2022:
out in the Prospectus 5.50pps; half year ended
at IPO. The Company targets 31 December 2021: 2.60pps)
a dividend of 5.50 pence
per Ordinary Share per
annum once fully invested
and leveraged(1) .
----------------------------------- ------------------------------
5. Adjusted EPS (A) This reflects the Company's 3.35 pps
Adjusted EPS from core ability to generate earnings for the half year ended
operational activities, from the portfolio which 31 December 2022
as adjusted for non-cash underpins dividends.
items. A key measure of (year ended 30 June 2022:
a company's underlying 5.57pps; half year to
operating results from 31 December 2021: 2.79pps)
its property rental business
and an indication of the
extent to which current
dividend payments are
supported by earnings.
See Note 7 to the Consolidated
Condensed Financial Statements.
----------------------------------- ------------------------------
6. Leverage (Loan-to-GAV) The Group utilises borrowings 36.78 %
(A) to enhance returns over at 31 December 2022
The proportion of the the medium term. Borrowings
Group's assets that is will not exceed 40% of (30 June 2022: 33.69%
funded by borrowings. GAV (measured at drawdown). and 31 December 2021:
35.22%)
----------------------------------- ------------------------------
EPRA Performance Measures
Detailed below is a summary table showing EPRA performance measures (which are all alternative performance measures) of the Group.
MEASURE AND DEFINITION PURPOSE PERFORMANCE
EPRA NIY (5) A comparable measure for 6.47 %
Annualised rental income portfolio valuations. This at 31 December 2022
based on the cash rents measure should make it
passing at the balance easier for investors to (30 June 2022: 5.70 %
sheet date, less non-recoverable judge themselves, how the and 31 December 2021:
property operating expenses, valuation of two portfolios 5.72%)
divided by the market compare.
value of the property,
increased with (estimated)
purchasers' costs.
---------------------------------- ------------------------------
EPRA 'Topped-Up' NIY A comparable measure for 7.08 %
(5) portfolio valuations. This at 31 December 2022
This measure incorporates measure should make it (30 June 2022: 6.41 %
an adjustment to the EPRA easier for investors to and 31 December 2021:
NIY in respect of the judge themselves, how the 6.68%)
expiration of rent-free valuation of two portfolios
periods (or other unexpired compare.
lease incentives such
as discounted rent periods
and step rents).
---------------------------------- ------------------------------
EPRA NAV (4) Makes adjustments to IFRS GBP67.90 million / 84.34pps
Net asset value adjusted NAV to provide stakeholders at 31 December 2022
to include properties with the most relevant
and other investment interests information on the fair (30 June 2022: GBP77.60
at fair value and to exclude value of the assets and million, 96.40pps and
certain items not expected liabilities within a real 31 December 2021: 72.75
to crystallise in a long-term estate investment company million, 90.38pps)
investment property business. with a long-term investment
strategy.
---------------------------------- ------------------------------
EPRA Net Reinstatement A measure that highlights GBP74.88 million/ 93.02pps
Value (4) the value of net assets EPRA NRV for the half
The EPRA NRV adds back on a long-term basis. year ended 31 December
the purchasers' costs 2022
deducted from the EPRA
NAV and deducts the break (30 June 2022: GBP84.78
cost of bank borrowings. million/105.31pps and
31 December 2021: GBP77.20
million/95.91pps)
---------------------------------- ------------------------------
EPRA Net Tangible Assets A measure that assumes GBP67.90 million/ 84.34pps
(4) entities buy and sell assets, EPRA NTA for the half
The EPRA NTA deducts the thereby crystallising certain year ended 31 December
break cost of bank borrowings levels of deferred tax 2022
from the EPRA NAV. liability. The Group has
UK REIT status and as such (30 June 2022: GBP77.11
As break costs were nil no deferred tax is required million/95.79pps and 31
at the period end, the to be recognised in the December 2021: GBP70.20
EPRA NTA is the same as accounts. million/87.21pps)
the EPRA NAV.
---------------------------------- ------------------------------
EPRA Net Disposal Value A measure that shows the GBP67.90 million/ 84.34pps
(4) shareholder value if assets EPRA NDV for the half
The EPRA NDV deducts the and liabilities are not year ended 31 December
break cost of bank borrowings held until maturity. 2022
from the EPRA NAV.
(30 June 2022: GBP77.11
million/95.79pps and 31
December 2021: GBP70.20
million/87.21pps)
---------------------------------- ------------------------------
EPRA Earnings/EPS (4) A key measure of a company's GBP2.78 million/ 3.45pps
Earnings from operational underlying operating results EPRA earnings for the
activities. and an indication of the half year ended 31 December
extent to which current 2022
dividend payments are supported
by earnings. (30 June 2022: GBP 5.05
million/ 6.27pps and 31
December 2021: GBP2.64
million/ 3.28pps)
---------------------------------- ------------------------------
EPRA Vacancy (5) A 'pure' percentage measure 0.00 %
Estimated Rental Value of investment property EPRA vacancy as at 31
('ERV') of vacant space space that is vacant, based December 2022
divided by ERV of the on ERV.
whole portfolio. (30 June 2022: 0.00 %
and 31 December 2021:
0.60%)
---------------------------------- ------------------------------
EPRA Cost Ratio (5) A key measure to enable 15.17 %
Administrative and operating meaningful measurement EPRA Cost Ratio as at
costs (including and excluding of the changes in a company's 31 December 2022. The
costs of direct vacancy) operating costs. ratio is the same both
divided by gross rental including and excluding
income. the vacancy costs.
(30 June 2022: 13.79 %
and 31 December 2021:
10.27%)
---------------------------------- ------------------------------
(4) The reconciliation of this APM is set out in Note 8 of the Notes to the Condensed Consolidated Financial Statements.
(5) The reconciliation of this APM is set out in the EPRA Performance Measures Calculations section following the Notes to the Condensed Consolidated Financial Statements.
Investment Adviser's Report
Market Outlook
UK Economic Outlook
The outlook for the UK economy has improved since the beginning of the year and many economists are now predicting that interest rates may now be at, or close to, their peak.
The February 2023 Bank of England base rate increase to 4% was the 10(th) consecutive hike in as many Monetary Policy Committee meetings and took rates to a 14-year high with a cumulative rise of 3.9%. This represents the fastest and largest rise in rates since the late 1980s and is a response to the fastest and largest rise in inflation since the early 1980s. Expectations are that any further rises are likely to be more measured 0.25% increases rather than the 0.5% hikes to which we have recently become accustomed although Capital Economics forecast that lingering domestic inflation pressures will force the Bank to keep interest rates at their peak for all of 2023 before falling to circa. 3.7% by the end of 2024. The impact on commercial property of this rapid change in the interest rate environment is considered further below.
It remains a matter of debate as to whether the economy is currently in recession with the National Institute of Economic and Social Research forecasting mild growth of 0.2% in 2023 and the economy therefore avoiding a technical recession. In contrast, the Bank of England are still predicting a shallow but protracted recession, with a 1% contraction over five quarters, highlighting that most of the drag from higher interest rates has yet to be felt. However, the IMF have recently weighed in with a more gloomy prediction - that Britain will be the only leading economy to suffer a contraction this year.
The significant increase in energy prices as a consequence of the Ukraine war and the emergence of the global economy from the Covid pandemic is now reversing with petrol prices approximately 25% lower than at their peak and average household bills predicted by both The Resolution Foundation and Cornwall Insight to fall below the government's GBP2,500 p.a. price cap by the summer.
The principal risks to the UK economy appear to be from the squeeze on disposable income, as a result of the increases in the cost of living, and the speed with which inflation will fall. Low-income households are estimated to have seen their disposable income fall by nearly 20% since the onset of Covid according to the National Institute of Economic and Social Research. With respect to inflation, the latest forecasts from the Bank of England have inflation falling from 10.5% to 3.9% by the end of this year, and to 1.4% by the end of 2024, albeit the Bank note that the "risks to inflation are skewed significantly to the upside".
However, the Bank of England's Financial Policy Committee in its most recent assessment judges that "households are more resilient now than in the run-up to the global financial crisis (GFC) in 2007 and that households are, in aggregate, less indebted compared to the peak that preceded the GFC.
UK Real Estate Outlook
The challenging economic circumstances in the UK are unsurprisingly impacting the commercial property sector and particularly the investment market at the present time. The occupier market will inevitably also be influenced by any recession although the extent of this will, of course, depend upon the length and depth of any period of economic decline.
Inflation and rising interest rates have brought about an increase in property yields as investors seek an appropriate yield gap between the risk-free rate and commercial property returns. Lower, and less certain expectations about future rental growth also add to pressure on the lowest yields, with the greatest impact seen so far on the industrial and warehouse sector. The ongoing yield shift has reduced values and returns for property investors particularly those with debt for whom the cost is increasing although not necessarily until expiration of their debt term.
In their outlook for the UK Real Estate Market in 2023, CBRE reached five key conclusions.
-- First, that real estate prices will stabilise in 2023. They suggest that the spread over gilt yields going forward will be tighter than in the last decade. CBRE argue that as a result of quantitative easing, implemented after the Global Financial Crisis, the spread between commercial real estate yields and those of UK government bonds was abnormally high in a historical context.
-- Income returns, rather than capital growth, will drive commercial real estate returns in the year ahead. The financial performance of occupiers and the success of asset management initiatives will be key.
-- The performance of other asset classes relative to real estate will affect investor demand particularly as institutions seek to rebalance portfolios as a consequence of the changes in investment performance and outlook in 2022.
-- Transaction volumes will fall although the impact of this will be limited on established portfolios.
-- Finally, CBRE forecast that the debt market will remain resilient as UK real estate is less leveraged than in the Global Financial Crisis. However, CBRE note that higher debt costs, together with lower asset values, will pose challenges for investors that need to refinance this year and that will inevitably lead to forced, or at least "lender-led", sales particularly by highly leveraged investors and those owning sub-prime assets particularly.
In some of the first analysis of actual transactions in 2023, it has been reported that capital values declined by 0.4% across all UK commercial property in January 2023 according to the latest CBRE Monthly Index. On a sector specific basis, CBRE report that the decline was higher for the Industrial sector across the UK at -0.7% whereas Retail Warehouse sector posted a fall of only -0.2% along with positive rental growth of 0.3% in the month.
In our opinion, as a further consideration, we see no let-up in the value placed by both occupiers and investors on assets and portfolios meeting sustainability criteria as global warming is increasingly being seen to impact upon our climate. Furthermore, more mandatory disclosure requirements are to be introduced in the UK and high energy prices will incentivise investment by reducing the payback period of energy saving measures.
It is worth noting that the fall in the share price of UK REITs in 2022 was some time ahead of the subsequent fall in values in the conventionally traded property market. Investors will be looking to see if an improvement in listed property prices acts again as an indicator of change in market traded values.
Portfolio Activity
The following asset management initiatives were undertaken during the Period:
-- Rent Reviews: A total of 7 rent reviews took place during the Period with a combined uplift of GBP247,330 representing an average of 8.38% growth in contracted rent across those properties affected and 3.43% across the portfolio.
-- Travelodge, Swindon: Litigation, lodged with the Court on 12 November 2021, in respect of cladding replacement works carried out by the Group to the top floors of the asset, was concluded with the GBP825,000 settlement received in the Period.
The following asset management initiatives were undertaken between the half year and the date of this report:
-- A lease renewal for a further 5 years from 14 January 2023 has been agreed with Pets at Home and is currently being documented.
-- Negotiations are in progress with Mears Group, in respect of Bramall Court, Salford, to change the use of the property from student accommodation to social housing, whilst entering a nomination agreement with Salford City Council.
NAV Movements
Half year ended Half year ended Year ended
31 December 2022 31 December 30 June 2022
2021
Pence Pence
Pence per per
per share GBP million share GBP million share GBP million
----------- ------------ ------- ------------ ------- ------------
NAV as at beginning of period/
year 96.40 77.60 85.58 68.89 85.58 68.89
Change in fair value of investment
property (12.53) (10.09) 4.34 3.49 9.97 8.02
Income earned for the period/year 5.41 4.36 4.75 3.83 9.81 7.90
Gain on sale of property - - 0.12 0.10 0.12 0.10
Finance costs for the period/year (0.88) (0.71) (0.88) (0.71) (1.77) (1.42)
Other expenses for the period/year (1.08) (0.86) (0.59) (0.48) (1.77) (1.43)
Dividends paid during the
period/year (2.98) (2.40) (2.94) (2.37) (5.54) (4.46)
NAV as at the end of the
year 84.34 67.90 90.38 72.75 96.40 77.60
----------- ------------ ------- ------------ ------- ------------
Valuation
At 31 December 2022 the Group owned 19 assets (30 June 2022: 19 assets). The 19 properties held for the Period were valued at GBP107.4 million at 31 December 2022 (30 June 2022: GBP117.9 million).
Summary by Sector at 31 December 2022
Annualised
gross
Market Occupancy WAULT to passing
Number of Valuation Value by ERV break rent ERV ERV
Sector Properties (GBPm) (%) (%) (years) (GBPm) (GBPm) (%)
------------------------ ----------- ---------- -------- ---------- --------- ----------- ------- --------
Industrial 4 24.0 22.3% 100.0% 23.3 1.55 1.56 22.3%
Hotel 3 20.7 19.3% 100.0% 13.4 1.69 1.45 20.7%
Healthcare 3 17.9 16.7% 100.0% 26.0 1.17 1.10 15.7%
Automotive & Petroleum 3 15.3 14.2% 100.0% 13.4 1.04 0.99 14.1%
Student Accommodation 1 12.0 11.2% 100.0% 18.6 0.73 0.67 9.6%
Leisure 2 5.4 5.0% 100.0% 6.8 0.42 0.39 5.5%
Power Station 1 4.8 4.5% 100.0% 9.2 0.33 0.33 4.8%
Retail 1 5.4 5.0% 100.0% 4.5 0.40 0.38 5.4%
Education 1 1.9 1.8% 100.0% 21.1 0.13 0.12 1.9%
----------- ---------- -------- ---------- --------- ----------- ------- --------
Total/Average 19 107.4 100.0% 100.0% 17.0 7.46 6.99 100.0%
----------- ---------- -------- ---------- --------- ----------- ------- --------
Summary by Geographical Area at 31 December 2022
Annualised
gross
Market Occupancy WAULT to passing
Geographical Number of Valuation Value by ERV break rent ERV ERV
Area Properties (GBPm) (%) (%) (years) (GBPm) (GBPm) (%)
---------------------------- ----------- ---------- -------- ---------- --------- ----------- ------- --------
West Midlands 4 26.1 24.3% 100.0% 11.9 1.91 1.85 26.5%
The North West & Merseyside 2 23.1 21.5% 100.0% 34.6 1.30 1.23 17.6%
Rest of South East 5 22.2 20.7% 100.0% 10.9 1.43 1.34 19.2%
South West 2 12.7 11.9% 100.0% 22.0 0.87 0.81 11.7%
Yorkshire and the
Humber 2 6.2 5.7% 100.0% 19.2 0.44 0.42 6.0%
Scotland 1 6.9 6.5% 100.0% 13.7 0.76 0.61 8.7%
London 2 5.4 5.0% 100.0% 6.8 0.42 0.39 5.6%
Eastern 1 4.8 4.4% 100.0% 9.2 0.33 0.34 4.7%
----------- ---------- -------- ---------- --------- ----------- ------- --------
Total/Average 19 107.4 100.0% 100.0% 17.0 7.46 6.99 100.0%
----------- ---------- -------- ---------- --------- ----------- ------- --------
Top Ten Occupiers at 31 December 2022
Tenant Property Annualised % of Portfolio
gross passing Total Annualised
rent (GBP'000) gross passing
rental
Jupiter Hotels Ltd Mercure City Hotel, Glasgow 761 10.2%
-------------------------------- ---------------- ------------------
Mears Group Plc Bramall Court, Salford 735 9.8%
-------------------------------- ---------------- ------------------
Lyndon Croft Care Centre,
Solihull and Westerlands Care
Prime Life Ltd Village, Brough 729 9.8%
-------------------------------- ---------------- ------------------
Grazebrook Industrial Estate,
Dudley and Provincial Park,
Meridian Steel Ltd Sheffield 716 9.6%
-------------------------------- ---------------- ------------------
Premier Inn Hotels
Ltd Premier Inn, Camberley 504 6.8%
-------------------------------- ---------------- ------------------
Motorpoint Ltd Motorpoint, Birmingham 500 6.7%
-------------------------------- ---------------- ------------------
Handsale Ltd Silver Trees, Bristol 438 5.9%
-------------------------------- ---------------- ------------------
Travelodge Hotels
Ltd Duke House, Swindon 403 5.4%
-------------------------------- ---------------- ------------------
Hoddesdon Energy
Ltd Hoddesdon Energy, Hoddesdon 333 4.5%
-------------------------------- ---------------- ------------------
Pure Gym Ltd Pure Gym, London 287 3.8%
-------------------------------- ---------------- ------------------
Top Ten Total 5,406 72.5%
---------------- ------------------
Lease Expiry Portfolio at 31 December 2022 - to the earlier of break or lease expiry
Year Expiring passing Cumulative (GBP'000)
rent pa (GBP'000)
2023 131 131
------------------- ---------------------
2024 50 181
------------------- ---------------------
2025 97 278
------------------- ---------------------
2026 - 278
------------------- ---------------------
2027 1,003 1,280
------------------- ---------------------
2028 262 1,542
------------------- ---------------------
2029 272 1,815
------------------- ---------------------
2030 - 1,815
------------------- ---------------------
2031 - 1,815
------------------- ---------------------
2032 863 2,678
------------------- ---------------------
2033 540 3,218
------------------- ---------------------
2034 - 3,218
------------------- ---------------------
2035 - 3,218
------------------- ---------------------
2036 761 3,979
------------------- ---------------------
2037 781 4,761
------------------- ---------------------
2038 - 4,761
------------------- ---------------------
2039+ 2,701 7,462
------------------- ---------------------
Interim Management Report and Directors' Responsibility Statement
Interim Management Report
The important events that have occurred during the period under review, the key factors influencing the financial statements and the principal risks and uncertainties for the remaining half year of the financial year are set out in the Chairman's Statement and the Investment Adviser's Report above.
The principal risks and uncertainties of the Company are set out in the Annual Report and Financial Statements for the year ended 30 June 2022 (the '2022 Annual Report') on pages 24 to 29 and in Note 18. Having reviewed these at the half-yearly meeting, the Board considers the principal risks to be unchanged at the period end, with the Board's perception of heightened uncertainty for many factors (for example changes to interest rates, inflation and costs, and probable UK recession) remaining.
Risks faced by the Company include, but are not limited to, tenant default, portfolio concentration, property defects, the rate of inflation, the property market, property valuation, illiquid investments, environment, breach of borrowing covenants, failure of service providers, dependence on the Investment Adviser, ability to meet objectives, Group REIT status, political and macroeconomic events, disclosure risk, regulatory change(including in relation to climate change).
The Board is of the opinion that these principal risks are equally applicable to the remaining six months of the Group's financial year, as they were to the six months being reported on.
Related Party Transactions
There have been no changes to the related parties shown in Note 20 of the 2022 Annual Report that could have a material effect on the financial position or performance of the Company or Group. Amounts payable to the Investment Adviser in the six months being reported are shown in the unaudited Condensed Consolidated Statement of Comprehensive Income.
Going Concern
This report has been prepared on a going concern basis. Note 2 sets out the Board's considerations in coming to this conclusion.
Directors' Responsibility Statement
The Directors confirm that to the best of our knowledge:
-- the condensed consolidated set of financial statements has been prepared in accordance with the UK-adopted IAS 34 'Interim Financial Reporting';
-- the interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated of financial statements; and a description of the principal risks and uncertainties for the remaining half of the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the 2022 Annual Report that could do so.
As at the date of this report the Directors of the Company are Simon Bennett, Stephanie Eastment and Adam Smith all of whom are non-executive Directors.
For and on behalf of the Board
Simon Bennett
Chairman
6 March 2023
Condensed Consolidated Statement of Comprehensive Income
For the half year ended 31 December 2022
Year
ended
Half year Half year
ended ended 30 June
31 December 31 December 2022
2022 (unaudited) 2021 (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Income
Rental and other income 3 4,350 3,826 7,901
Property operating (expense)/
income 4 (357) 48 (330)
Net rental and other income 3,993 3,874 7,571
Other operating expenses 4 (499) (526) (1,101)
Operating profit before
fair value change 3,494 3,348 6,470
Change in fair value of
investment
properties 10 (10,088) 3,494 8,023
Gain on disposal of investment
property 10 - 97 96
Operating (loss)/ profit (6,594) 6,939 14,589
Finance expense 6 (714) (711) (1,423)
(Loss)/ profit before
tax (7,308) 6,228 13,166
Taxation 7 - - -
(Loss)/ profit and total
comprehensive income attributable
to shareholders (7,308) 6,228 13,166
-------------------- -------------------- -------------
(Loss)/ earnings per share
(pence)
(basic and diluted) 8 (9.08p) 7.74p 16.36p
-------------------- -------------------- -------------
EPRA EPS (pence)
(basic and diluted) 8 3.45p 3.28p 6.27p
-------------------- -------------------- -------------
Adjusted EPS (pence)
(basic and diluted) 8 3.35p 2.79p 5.57p
-------------------- -------------------- -------------
All items in the above statement are derived from continuing operations.
The accompanying notes 1 to 19 form an integral part of these Condensed
Consolidated Financial Statements.
Condensed Consolidated Statement of Financial Position
As at 31 December 2022
As at
As at As at 30 June
31 December
2022 31 December 2022
(unaudited) 2021 (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Assets
Non-current Assets
Investment properties 10 104,430 105,220 115,124
104,430 105,220 115,124
--------------- -------------------- -------------
Current Assets
Receivables and prepayments 11 4,185 8,962 4,034
Cash and cash equivalents 2,854 2,243 2,542
7,039 11,205 6,576
--------------- -------------------- -------------
Total Assets 111,469 116,425 121,700
--------------- -------------------- -------------
Liabilities
Non-current Liabilities:
Interest bearing loans
and borrowings 13 (40,672) (40,568) (40,620)
Lease obligations 14 (282) (317) (299)
(40,954) (40,885) (40,919)
--------------- -------------------- -------------
Current Liabilities
Payables and accrued expenses 12 (2,585) (2,749) (3,146)
Lease obligations 14 (34) (37) (36)
(2,619) (2,786) (3,182)
--------------- -------------------- -------------
Total Liabilities (43,573) (43,671) (44,101)
--------------- -------------------- -------------
Net Assets 67,896 72,754 77,599
--------------- -------------------- -------------
Equity
Share capital 17 805 805 805
Capital reserve 75,417 75,417 75,417
(Deficit)/ retained earnings (8,326) (3,468) 1,377
Total equity 67,896 72,754 77,599
--------------- -------------------- -------------
Net Asset Value per share
(pence) 8 84.34p 90.38p 96.40p
--------------- -------------------- -------------
The accompanying notes 1 to 19 form an integral part of these Condensed
Consolidated Financial Statements.
The financial statements were approved by the Board of Directors on 2
March 2023 and were signed on its behalf by:
Simon Bennett
Chairman
Company number: 10727886
Condensed Consolidated Statement of Changes in Equity
For the half year ended 31 December 2022
Share Capital Retained Total
capital reserve earnings equity
Notes GBP'000 GBP'000 GBP'000 GBP'000
For the half year ended
31 December 2022 (unaudited)
Balance as at 30 June
2022 805 75,417 1,377 77,599
Total comprehensive loss - - (7,308) (7,308)
Dividends declared 9 - - (2,395) (2,395)
--------- --------- ---------- --------
Balance as at 31 December
2022 805 75,417 (8,326) 67,896
--------- --------- ---------- --------
For the half year ended
31 December 2021 (unaudited)
Balance as at 30 June
2021 805 75,417 (7,329) 68,893
Total comprehensive income - - 6,228 6,228
Dividends declared 9 - - (2,367) (2,367)
--------- --------- ---------- --------
Balance as at 31 December
2021 805 75,417 (3,468) 72,754
--------- --------- ---------- --------
For the year ended 30
June 2022 (audited)
Balance as at 30 June
2021 805 75,417 (7,329) 68,893
Total comprehensive income - - 13,166 13,166
Dividends declared 9 - - (4,460) (4,460)
--------- --------- ---------- --------
Balance as at 30 June
2022 805 75,417 1,377 77,599
--------- --------- ---------- --------
The accompanying notes 1 to 19 form an integral part of these Condensed
Consolidated Financial Statements.
Condensed Consolidated Statement of Cash Flows
For the half year ended 31 December 2022
Half year Year
Half year
ended ended ended
31 December 31 December 30 June
2022 2021 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
(Loss)/profit before tax (7,308) 6,228 13,166
Adjustment for:
Finance expenses 714 711 1,423
Gain on sale of investment property - (97) (96)
Change in fair value of investment
properties 10,088 (3,494) (8,023)
-------------- --------------------- -------------
Operating results before working
capital changes 3,494 3,348 6,470
Change in working capital
Increase in other receivables
and prepayments (151) (5,280) (352)
(Decrease)/increase in other
payables and accrued expenses (561) (297) 100
Net cash from / (used in) operating
activities 2,782 (2,229) 6,218
-------------- --------------------- -------------
Cash flows from investing activities
Purchase of investment property - - (5,375)
Disposal of investment property - 5,397 5,396
Reduction in acquisition costs
- note 15.3 606 - -
Net cash from / (used in) investing
activities 606 5,397 21
-------------- --------------------- -------------
Cash flows from financing activities
Finance costs paid (662) (659) (1,319)
Dividends paid (2,395) (2,362) (4,455)
Payment of lease obligations (19) (19) (38)
Net cash used in financing
activities (3,076) (3,040) (5,812)
-------------- --------------------- -------------
Net increase in cash and cash
equivalents 312 128 427
Cash and cash equivalents at
beginning of period/year 2,542 2,115 2,115
Cash and cash equivalents at
end of period/ year 2,854 2,243 2,542
-------------- --------------------- -------------
The accompanying notes 1 to 19 form an integral part of these Condensed
Consolidated Financial Statements.
Notes to the Condensed Consolidated Financial Statements
For the half year ended 31 December 2022
1.Corporate Information
Alternative Income REIT plc (the "Company") is a public limited company
and a closed ended Real Estate Investment Trust ('REIT') incorporated on
18 April 2017 and domiciled in the UK and registered in England and Wales.
The registered office of the Company is located at 1 King William Street,
London, United Kingdom, EC4N 7AF.
The Company's Ordinary Shares were listed on the Official List of the FCA
and admitted to trading on the Main Market of the London Stock Exchange
on 6 June 2017.
2. Accounting policies
2.1 Basis of preparation
These condensed consolidated interim financial statements for the
half year ended 31 December 2022 have been prepared in accordance
with International Accounting Standard ('IAS') 34 'Interim Financial
Reporting'. They do not include all the information required for
annual financial statements and should be read in conjunction with
the Group's last annual consolidated financial statements for the
year ended 30 June 2022 (the '2022 Annual Financial Report').
These condensed consolidated financial statements have been prepared
under the historical cost convention, except for investment properties
that have been measured at fair value. The condensed consolidated
financial statements are presented in Sterling, which is the Group's
presentational and functional currency, and all values are rounded
to the nearest thousand pounds, except where otherwise shown.
The financial information in this report does not constitute statutory
accounts within the meaning of sections 434-436 of the Companies
Act 2006 and has not been audited nor reviewed by the Company's
auditor. The financial information for the year ended 30 June 2022
has been extracted from the published accounts that have been delivered
to the Registrar of Companies, and the report of the auditor was
unqualified and did not contain a statement under section 498(2)
or (3) of the Companies Act 2006.
Basis of consolidation
The condensed consolidated financial statements incorporate the
financial statements of the Company and its subsidiaries (the 'Group').
Subsidiaries are the entities controlled by the Company, being Alternative
Income Limited and Alternative Income REIT Holdco Limited. IFRS
10 outlines the requirements for the preparation of consolidated
financial statements, requiring an entity to consolidate the results
of all investees it is considered to control. Control exists where
an entity is exposed to variable returns and has the ability to
affect those returns through its power over the investee.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation. Accounting policies of the subsidiaries
are consistent with the policies adopted by the Company.
New standards, amendments and interpretations
Standards effective from 1 July 2022
The Group has applied the following new standards and amendments
in this set of condensed consolidated financial statements:
-- Onerous contracts - Cost of Fulfilling a Contract (Amendments
to IAS 37) (effective 1 January 2022)
-- Annual Improvements to IFRS Standards 2018-2020 (effective 1
January 2022)
-- Property, Plant and Equipment: Proceeds before intended use (Amendments
to IAS 16) (effective 1 January 2022)
-- Reference to the Conceptual Framework (Amendments to IFRS 3)
(effective 1 January 2022)
The new standards and amendments listed above did not have any impact
on the amounts recognised in prior periods and are not expected
to significantly affect the current or future periods.
Forthcoming requirements
The following are new standards, interpretations and amendments,
which are not yet effective, and have not been early adopted in
this financial information, that will or may have an effect on the
Group's future financial statements:
-- Amendments to IAS 1 which clarifies the criteria used to determine
whether liabilities are classified as current or non-current (effective
1 January 2024). These amendments clarify that current or non-current
classification is based on whether an entity has a right at the
end of the reporting period to defer settlement of the liability
for at least twelve months after the reporting period. The amendment
is not expected to have an impact on the presentation or classification
of the liabilities in the Group based on rights that are in existence
at the end of the reporting period.
There are other new standards and amendments to standards and interpretations
which have been issued that are effective in future accounting periods,
and which the Group has decided not to adopt early. None of these
are expected to have a material impact on the condensed consolidated
financial statements of the Group.
Certain new accounting standards and interpretations have been published
that are not mandatory for annual periods beginning after 1 July
2022 and early application is permitted; however the Group has not
early adopted the new or amended standards in preparing these condensed
consolidated financial statements:
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12) (effective 1 January 2023)
-- IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance
Contracts (effective 1 January 2023)
-- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2) (effective 1 January 2023)
-- Definition of Accounting Estimates (Amendments to IAS 8) (effective
1 January 2023)
-- Initial Application of IFRS 17 and IFRS 9 - Comparative Information
(Amendments to IFRS 17) (effective 1 January 2023)
-- Classification of liabilities as current or non-current (Amendments
to IAS 1) (effective 1 January 2024)
-- Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
(effective 1 January 2024)
-- Non-current Liabilities with Covenants (Amendments to IAS 1)
(effective 1 January 2024)
-- Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture (Amendments to IFRS 10 and IAS 28) (Optional)
These standards, amendments or interpretations are not expected
to have a material impact on the entity in the current or future
reporting periods and on foreseeable future transactions.
2.2 Significant accounting judgements and estimates
The condensed consolidated financial statements have been prepared
on the basis of the accounting policies, significant judgements,
estimates and key assumptions as set out in the notes to the 2022
Annual Financial Report, and are expected to be applied consistently
for the year ending 30 June 2023.
No changes have been made to the Group's accounting policies as
a result of the amendments and interpretations which became effective
in the period as they do not have a material impact on the Group.
Full details can be found in the 2022 Annual Financial Report.
2.3 Segmental information
Each property held by the Group is reported to the chief operating
decision maker. In the case of the Group, the chief operating decision
maker is considered to be the Board of Directors. The review process
for segmental information includes the monitoring of key performance
indicators applicable across all properties. These key performance
indicators include Net Asset Value, Earnings per Share and valuation
of properties. All asset cost and rental allocations are also reported
by property. The internal financial reports received by the Directors
cover the Group and all its properties and do not differ from amounts
reported in the financial statements. The Directors have considered
that each property has similar economic characteristics and have
therefore aggregated the portfolio into one reportable segment under
the provisions of IFRS 8.
2.4 Going concern
The condensed consolidated financial statements have been prepared
on a going concern basis.
The robust financial position of the Group, its cash flows, liquidity
position and borrowing facilities are described in the financial
statements and the accompanying notes.
The Investment Adviser on behalf of the Board has projected the
Group's cash flows for the period up to 30 September 2023, challenging
and sensitising inputs and assumptions to ensure that the cash forecast
reflects a realistic outcome given the uncertainties associated
with the current economic environment. The scenarios applied were
designed to be severe but plausible, and to take account of the
availability of mitigating actions that could be taken to avoid
or reduce the impact or probability of the underlying risks.
The Group's debt of GBP41 million does not mature until 2025 and
the Group has reported full compliance with its loan covenants to
date. Based on cash flow projections, the Directors expect the Group
to continue to remain compliant. The headroom of the loan to value
covenant is significant and any reduction in property values that
would cause a breach would be significantly more than any reduction
currently envisaged.
Based on the above, the Board believes that the Group has the ability
and adequate resources to continue in operational existence for
the foreseeable future, being at least twelve months from the date
of approval of the financial statements.
3. Rental and other income
Year
Half year Half year
ended ended ended
31 December 31 December 30 June
2022 2021 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Gross rental income 3,696 3,484 7,036
Spreading of minimum contracted future
- rent indexation 209 291 541
Spreading of tenant incentives - rent
free periods (49) (44) (73)
Other property income 223 - 1
--------------- ---------------------- ----------------------
Gross rental income (adjusted) 4,079 3,731 7,505
Service charges and direct recharges
(see note 4) 271 95 396
--------------- ---------------------- ----------------------
Total rental and other income 4,350 3,826 7,901
--------------- ---------------------- ----------------------
All rental, service charges and direct recharges and other income are derived
from the United Kingdom.
Other property income for the half year ended 31 December 2022 mainly relates
to the allocation to revenue of GBP219,000 arising from a settlement of the
litigation in respect of replacement of defective cladding for Travelodge,
Swindon. Further detail is provided in Note 15.3.
4. Operating expenses
Half year Half year Year
ended ended ended
31 December 31 December 30 June
2022 2021 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Service charges and direct recharges
(see note 3) 271 95 396
Property operating expenses 80 54 136
Reversal of provision for impairment
of trade receivables * 6 (197) (202)
----
Property operating expenses /(income) 357 (48) 330
--------------- ---------------------- ----------------------
Operating costs **/*** 210 270 588
Investment management fee 191 180 368
Directors' remuneration
(note 5) *** 55 43 82
Auditor remuneration 43 33 63
Other operating expenses 499 526 1,101
--------------- ---------------------- ----------------------
Total operating expenses 856 478 1,431
--------------- ---------------------- ----------------------
Total operating expenses (excluding
service charges and direct recharges) 585 383 1,035
--------------- ---------------------- ----------------------
*Reversal of provision for impairment of trade receivables has been reclassed from other operating expenses to property operating (income)/expenses for the half year ended 31 December 2021.
**Included in the operating costs for the year ended 30 June 2022 is GBP1,250 of fees paid to Stephanie Eastment for due diligence incurred in advance of her appointment as a Director.
***Tax and social security costs have been reclassed from operating costs to directors' remuneration for the half year ended 31 December 2021.
Year
ended
Half year Half year
ended ended 30 June
31 December 31 December
2022 2021 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Audit
Statutory audit of Annual Report and
Accounts 38 28 53
Statutory audit of Subsidiary Accounts 5 5 10
Total fees due to auditor 43 33 63
--------------- --------------- --------------
Moore Kingston Smith LLP has not provided any non-audit services to the Group.
5. Directors' remuneration
Year
ended
Half year Half year
ended ended 30 June
31 December 31 December
2022 2021 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Directors' fees 50 39 75
Tax and social security * 5 4 7
Total directors remuneration 55 43 82
--------------- ---------------- ------------------
*Tax and social security has been reclassed from operating costs to directors remuneration for the half year ended 31 December 2021.
The Group had no employees during the period/ year.
6. Finance
expenses
Year
ended
Half year Half year
ended ended 30 June
31 December 31 December
2022 2021 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Interest payable on
loan 653 653 1,307
Amortisation of loan arrangement fee
(note 13) 52 52 104
Other finance costs 9 6 12
------------------- ----------------------- ------------------------------------
Total 714 711 1,423
------------------- ----------------------- ------------------------------------
7. Taxation
Year
ended
30 June
Half year Half year
ended ended 2022
31 December 31 December
2022 (unaudited) 2021 (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Tax charge
comprises:
Analysis of tax charge in
the period
(Loss)/profit before
tax (7,308) 6,228 13,166
------------------- ----------------------- ------------------------------------
Theoretical tax charge at UK corporation
average tax rate of 20.50% (31 December
21 and 30 June 2022: 19.00%) (1,498) 1,183 2,502
Effects of tax-exempt items under REIT
regime 1,498 (1,183) (2,502)
------------------- ----------------------- ------------------------------------
Total - - -
------------------- ----------------------- ------------------------------------
The Group maintained its REIT status and as such, no deferred tax asset
or liability has been recognised in the current period.
Factors that may affect future tax charges
Due to the Group's status as a REIT and the intention to continue meeting
the conditions required to retain approval as a REIT in the foreseeable
future, the Group has not provided deferred tax on any capital gains or
losses arising on the revaluation or disposal of investments.
8. (Loss)/ earnings per share (EPS)
and Net Asset Value (NAV) per share
Year
ended
30 June
Half year Half year
ended ended 2022
31 December 31 December
2022 (unaudited) 2021 (unaudited) (audited)
(Loss)/ earnings per
share:
Total comprehensive
(loss)/
income (GBP'000) (7,308) 6,228 13,166
------------------- ----------------------- ------------------------------------
Weighted average number of
shares (number) 80,500,000 80,500,000 80,500,000
(Loss)/ earnings per share (basic
and diluted) (9.08p) 7.74p 16.36p
------------------- ----------------------- ------------------------------------
EPRA EPS:
Total comprehensive
(loss)/
income (GBP'000) (7,308) 6,228 13,166
Adjustment to total comprehensive
(loss)/ income:
Change in fair value of investment
properties (GBP'000) 10,088 (3,494) (8,023)
Gain on disposal of investment
property (GBP'000) - (97) (96)
------------------- ----------------------- ------------------------------------
EPRA earnings (basic and
diluted) (GBP'000) 2,780 2,637 5,047
------------------- ----------------------- ------------------------------------
EPRA EPS (basic and diluted) 3.45p 3.28p 6.27p
------------------- ----------------------- ------------------------------------
Adjusted EPS:
EPRA earnings (basic and diluted) (GBP'000)
- as above 2,780 2,637 5,047
Adjustments:
Rental income recognised in respect
of guaranteed fixed rental uplifts
(GBP'000) (Note 3) (209) (291) (541)
Rental income recognised in respect
of rent free periods (GBP'000) (Note
3) 49 44 73
Amortisation of loan arrangement fee
(GBP'000) (Note 6) 52 52 104
Write-off of receivables 16 - 4
Reversal of provision for impairment
of trade receivables (Note 4) 6 (197) (202)
------------------- ----------------------- ------------------------------------
Adjusted earnings (basic and diluted)
(GBP'000) 2,694 2,245 4,485
------------------- ----------------------- ------------------------------------
Adjusted EPS (basic and diluted)** 3.35p 2.79p 5.57p
------------------- ----------------------- ------------------------------------
** Adjusted EPS is a measure used by the Board to assess the level of the
Group's dividend payments. This metric adjusts EPRA earnings for non-cash
items in arriving at an adjusted EPS as supported by cash flows.
Earnings per share are calculated by dividing profit/(loss) for the period/year
attributable to ordinary equity holders of the Company by the weighted average
number of Ordinary Shares in issue during the period/year.
Year
ended
Half year Half year
ended ended 30 June
31 December 31 December 2022
2022 (unaudited) 2021 (unaudited) (audited)
NAV per share:
Net assets (GBP'000) 67,896 72,754 77,599
Ordinary Shares (Number) 80,500,000 80,500,000 80,500,000
NAV per share 84.34p 90.38p 96.40p
EPRA NAV and EPRA NNNAV (refer to Glossary) are equal to the NAV presented
in the Condensed Consolidated Statement of Financial Position under IFRS
and there are no adjusting items. Accordingly, a reconciliation between
these measures does not need to be provided.
EPRA Net Reinvestment Value (NRV), EPRA Net Tangible Assets (NTA) and EPRA
Net Disposal Value (NDV)
EPRA NTA and EPRA
EPRA NRV NDV
At 31 December 2022
Net assets value (GBP'000) 67,896 67,896
Purchasers' cost (GBP'000) 6,983 -
Break cost on bank borrowings
(GBP'000) - -
74,879 67,896
Ordinary Shares (Number) 80,500,000 80,500,000
Per share measure 93.02p 84.34p
EPRA NTA and EPRA
EPRA NRV NDV
At 31 December 2021
Net assets value (GBP'000) 72,754 72,754
Purchasers' cost (GBP'000) 7,002 -
Break cost on bank borrowings
(GBP'000) (2,552) (2,552)
77,204 70,202
Ordinary Shares (Number) 80,500,000 80,500,000
Per share measure 95.91p 87.21p
EPRA NTA and EPRA
EPRA NRV NDV
At 30 June 2022
Net assets value (GBP'000) 77,599 77,599
Purchasers' cost (GBP'000) 7,664 -
Break cost on bank borrowings
(GBP'000) (486) (486)
84,777 77,113
Ordinary Shares (Number) 80,500,000 80,500,000
Per share measure 105.31p 95.79p
9. Dividends
All dividends are interim dividends
Year ended
Half year Half year
ended ended 30 Jun
31 Dec 31 Dec
2022 2021 2022
(unaudited) (unaudited) (audited)
Quarter Ended Dividend
Rate GBP'000 GBP'000 GBP'000
Dividends in respect of year ended 30 June 2021
4th dividend 30 Jun 2021 1.640p - 1,320 1,320
Dividends in respect of year ended 30 June 2022
1st dividend 30 Sep 2021 1.300p - 1,047 1,047
2nd dividend 31 Dec 2021 1.300p - - 1,046
3rd dividend 31 Mar 2022 1.300p - - 1,047
4th dividend 30 Jun 2022 1.600p 1, 288 - -
Dividends in respect of year ending 30 June
2023
1st dividend 30 Sep 2022 1.375p 1,107 - -
Total dividends paid 2,395 2,367 4,460
4th dividend for quarter
ended 30 Jun 2021 1.640p - (1,320) (1,320)
2nd dividend for quarter
ended 31 Dec 2021 1.300p - 1,047 -
4th dividend for quarter
ended 30 Jun 2022 1.600p (1,288) - 1,288
2nd dividend for quarter
ended 31 Dec 2022 1.375p 1,107 - -
Total dividends payable in respect of the period/year 2,214 2,094 4,428
Total dividends payable in respect of the period/year 2.75p 2.60p 5.50p
Dividends declared after the period/year end are not included in the Condensed
Consolidated Financial Statements as a liability.
Dividends paid as shown in the Condensed Consolidated Statement of Cash Flows
amount to GBP2,395,000 (31 December 2021: GBP2,367.000 and 30 June 2022:
GBP4,460,000), any difference to the amount disclosed above is due to withholding
tax.
10. Investment properties
Half year
ended
Year ended
31 December 30 June
2022 2022
Half year
ended 31
December
(unaudited) 2021 (unaudited) (audited)
Investment Investment
properties properties
freehold leasehold Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK Investment
properties
At the beginning of
the
period/year 80,980 36,925 117,905 109,230 109,230
Acquisitions - - - - 5,375
Reduction in
acquisition
costs - see note 15.3 (606) - (606) - -
Disposals (5,300) (5,300)
Change in value of
investment
properties (7,449) (2,425) (9,874) 3,800 8,600
Valuation provided by
Knight Frank LLP 72,925 34,500 107,425 107,730 117,905
Adjustment to fair value for
minimum rent indexation of lease
income (note 10) (3,367) (2,956) (3,177)
Adjustment for lease obligation 372 446 396
Total investment
properties 104,430 105,220 115,124
Change in fair value of investment properties
Change in fair value before adjustments
for lease incentives and lease obligations (9,874) 3,800 8,600
Movement in lease obligations (24) (59) (109)
Adjustment to spreading of contracted future
rent indexation and tenant incentives (190) (247) (468)
(10,088) 3,494 8,023
There were no disposals of properties in the period being reported. The property
known as Audi, Huddersfield was disposed of in August 2021 for GBP5.5 million
as shown in the reconciliation below of the gain recognised on disposal through
the Condensed Consolidated Statement of Comprehensive Income and the realised
gain on disposal in the period/ year; the latter includes changes in fair
value of the investment property and minimum rent indexation spreading recognised
in previous periods.
Year ended
30 June
Half year Half year
ended ended 2022
31 December 31 December
2022 (unaudited) 2021 (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Gross proceeds on disposal - 5,500 5,500
Selling costs - (103) (104)
Net proceeds on disposal - 5,397 5,396
Carrying value - (5,300) (5,300)
Gain on disposal of investment property - 97 96
Valuation of investment properties
Valuation of investment property is performed by Knight Frank LLP, an accredited
external valuer with recognised and relevant professional qualifications
and recent experience of the location and category of the investment property
being valued. The valuation of the Group's investment property at fair value
is determined by the external valuer on the basis of market value in accordance
with the internationally accepted RICS Valuation - Professional Standards
(incorporating the International Valuation Standards).
The determination of the fair value of investment property requires the use
of estimates such as future cash flows from assets (such as lettings, tenants'
profiles, future revenue streams, capital values of fixtures and fittings,
plant and machinery, any environmental matters and the overall repair and
condition of the property) and yield applicable to those cash flows.
Fair value measurement hierarchy
IFRS13 'Fair Value Measurement' specifies the fair value hierarchy and as
explained in Note 2.6 of the Company's 2022 Audited Financial Statements,
the Directors have classified the Company's property portfolio as Level 3.
This reflects the fact that inputs to the valuation are not based on observable
market data.
11. Receivables and prepayments
31 December 31 December 30 June
2022 (unaudited) 2021 (unaudited) 2022 (audited)
GBP'000 GBP'000 GBP'000
Receivables
Rent debtor 301 279 284
Less: Provision for impairment of trade
receivables (2) (16) (11)
Other debtors* 327 5,591 244
Sub total 626 5,854 517
Spreading of minimum contracted future
rent indexation 2,919 2,414 2,709
Spreading of tenant incentives - rent free
periods 448 542 468
Tenant deposit asset (note 12) 118 79 118
Other prepayments 74 73 222
Total 4,185 8,962 4,034
* Other debtors at 31 December 2021 mainly represent net proceeds from the
sale of Trident Business Park, Huddersfield being held by the external lender,
Canada Life Investments.
The aged debtor analysis of receivables which are past due but not impaired
is as follows:
31 December 31 December 30 June
2022 (unaudited) 2021 (unaudited) 2022 (audited)
GBP'000 GBP'000 GBP'000
Less than three months due 597 5,816 515
Between three and six months due 29 38 2
Between six and twelve months due - - -
Total 626 5,854 517
12. Payables and accrued expenses
31 December 31 December 30 June
2022 (unaudited) 2021 (unaudited) 2022 (audited)
GBP'000 GBP'000 GBP'000
Deferred income 1,542 1,406 1,501
Other creditors 396 453 642
Accruals 269 523 576
Bank interest payable 258 258 258
Tenant deposit liability (note 11) 118 79 118
Trade creditors 2 30 51
2,585 2,749 3,146
13. Interest bearing loans and borrowings
31 December 31 December 30 June
2022 (unaudited) 2021 (unaudited) 2022 (audited)
GBP'000 GBP'000 GBP'000
Facility drawn at the beginning of the
period/ year 41,000 41,000 41,000
Unamortised finance costs brought forward (380) (484) (484)
Amortisation of finance costs in the
period/year 52 52 104
At end of period/ year 40,672 40,568 40,620
Repayable between 1 and 2 years - - -
Repayable between 2 and 5 years 41,000 41,000 41,000
Repayable in over 5 years - - -
Total at end of the period/
year 41,000 41,000 41,000
As at 31 December 2022, the Group had utilised all of its GBP41 million fixed
interest loan facility with Canada Life Investments and was geared at a loan
to Gross Asset Value ('GAV') of 36.78% (31 December 2021: 35.22%, 30 June
2022: 33.73%). The weighted average interest cost of the Group's facility
is 3.19% and the facility is repayable on 20 October 2025.
31 December 31 December 30 June
2022 (unaudited) 2021 (unaudited) 2022 (audited)
GBP'000 GBP'000 GBP'000
Reconciliation to cash flows from financing
activities
At beginning of the period/ year 40,620 40,516 40,516
Non-cash changes
Amortisation of loan issue costs 52 52 104
Total at end of the period/ year 40,672 40,568 40,620
14. Lease obligations
At the commencement date, the lease liability is measured at the present
value of the lease payments that are not paid on that date.
The following table analyses the minimum lease payments under
non-cancellable leases:
31 December 31 December 30 June
2022 (unaudited) 2021 (unaudited) 2022 (audited)
GBP'000 GBP'000 GBP'000
Within one year 50 50 50
After one year but less than five years 150 150 150
More than five years 488 538 513
Total undiscounted lease liabilities
: 688 738 713
Less: Future finance charge on lease
obligations (372) (384) (378)
Present value of lease liabilities: 316 354 335
Lease liabilities included in the
statement of financial position:
Current 34 37 36
Non-current 282 317 299
Total: 316 354 335
15. Commitments
Operating lease commitments - as lessor
The Group has 19 commercial properties with 33 units in its investment property portfolio
as set out above. These non-cancellable leases have a remaining term of between 1 month and
112 years, excluding ground leases.
Future minimum rentals receivable under non-cancellable operating leases as at 31 December
2022 are as follows:
30 June
31 December 31 December 2022
2022 (unaudited) 2021 (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Within one year 7,094 7,039 7,071
After one year, but not more than two
years 6,838 7,723 7,015
After two years, but not more than three
years 6,558 7,341 6,754
After three years, but not more than
four years 7,023 7,279 7,011
After four years, but not more than five
years 6,685 7,307 7,045
After five years, but not more than
ten years 28,730 32,323 29,896
After ten years, but not more than
fifteen years 24,905 26,872 25,935
More than fifteen years 52,563 56,370 55,472
Total 140,396 152,254 146,199
During the period there were no (2021: nil) material contingent rents recognised as income.
15.2. Capital commitments
There were no capital commitments at the period end (2021: nil).
15.3. Financial commitments
In the 2022 Annual Report, it was disclosed that the Company was involved in litigation against two parties to recover GBP1.1 million of costs. The costs were incurred for work in the period September to December 2020 to replace defective cladding elements uncovered in the external walls of the top floors and rear lift core of the Travelodge Hotel, Swindon. The defective cladding was installed when the property was extended in 2007 and the Company's claims were against the architect and cladding sub-contractor involved. During the period, the Board engaged in mediation with both parties and agreed a full and final settlement of GBP825,000. Consequent to the resolution of that litigation, the Group have no financial commitments other than those arising from its normal business operations.
The settlement was in respect of the Group's costs to replace the defective cladding, which had been charged to capital, and the professional fees incurred by the Group to undertake the litigation, which had been charged to revenue. Accordingly, the settlement has been proportionally allocated GBP606,000 to capital, as a reduction in acquisition costs (see Note 10), and GBP219,000 to revenue, as other property income (see Note 3).
There are no other commitments other than those shown above at the period end (2021: nil).
16. Investments in subsidiaries
The Company has two wholly owned subsidiaries as disclosed below:
Country of
registration and Date of Ordinary Shares
Name and company number incorporation incorporation Principal activity of GBP1 held
Alternative Income REIT Holdco Limited (Company England and Real Estate
number 11052186) Wales 7 November 2017 Company 73,158,502
Alternative Income Limited England and Real Estate
(Company number 10754641) Wales 4 May 2017 Company 73,158,501
Alternative Income REIT plc at 31 December 2022 owns 100% controlling stake of Alternative
Income REIT Holdco Limited.
Alternative Income REIT Holdco Limited holds 100% of Alternative Income Limited.
Both Alternative Income REIT Holdco Limited and Alternative Income Limited are registered
at 1 King William Street, London, United Kingdom, EC4N 7AF.
17. Issued share capital
Ordinary Shares issued and fully paid of 80,500,000 shares at a nominal value of GBP0.01 per
share. This remains unchanged for all period presented.
18. Transactions with related parties
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.
Directors
Directors of the Group are considered to be related parties. Directors' remuneration is disclosed
in note 5.
Investment Adviser
M7 Real Estate Ltd
M7 Real Estate Ltd was appointed as Investment Adviser on 14 May 2020. The Interim Investment
Advisory agreement (amended with Deed of Variation dated 21 February 2021) specifies that
there were fees payable up to 30 September 2020. From 1 October 2020, the annual management
fee is calculated at a rate equivalent of 0.50% per annum of NAV (subject to a minimum fee
of GBP90,000 per quarter), payable quarterly in advance. During the period 1 July 2022 to
31 December 2022, the Group incurred GBP191,000 of which GBPnil was outstanding at period end (2021: GBP180,000 of which GBP90,000 was outstanding at period end). 19. Events after reporting date Dividend On 1 February 2023, the Board declared an interim dividend of 1.375p in respect of the period from 1 October 2022 to 31 December 2022. This will be paid on 24 February 2023 to shareholders on the register as at 10 February 2023. The ex-dividend date was 9 February 2023.
EPRA Performance Measures Calculations
At 31 December At 30 June
At 31 December
2022 2021 2022
(unaudited) (unaudited) (audited)
EPRA Yield calculations GBP'000 GBP'000 GBP'000
Investment properties wholly
owned:
* by Company 1,950 2,100 2,200
* by Alternative Income Limited 105,475 105,630 115,705
Total - note 10 107,425 107,730 117,905
Allowance for estimated purchasers'
costs 6,983 7,002 7,665
Gross up completed property
portfolio valuation B 114,408 114,732 125,570
Annualised gross passing rent 7,462 6,620 7,217
Annualised property outgoings (55) (55) (55)
Annualised net rents A 7,407 6,565 7,162
Add: notional rent expiration
of rent-free periods or other
lease incentives 688 1,100 893
Topped-up net annualised rent C 8,095 7,665 8,055
EPRA NIY * A/B 6.47% 5.72% 5.70%
EPRA "topped-up" NIY C/B 7.08% 6.68% 6.41%
*The NIY calculation is the same calculation as that for EPRA NIY
Half year
ended Year ended
Half year
ended 31 December 30 June
31 December
2022 2021 2022
(unaudited) (unaudited) (audited)
EPRA Cost Ratios GBP'000 GBP'000 GBP'000
Include:
EPRA Costs (including direct
vacancy costs)
- note 4 A 585 383 1,035
Direct vacancy costs - - -
EPRA Costs (excluding direct
vacancy costs) B 585 383 1,035
Gross rental income - note 3 C 3,856 3,731 7,504
EPRA Cost Ratio
(including direct vacancy costs) A/C 15.17% 10.27% 13.79%
EPRA Cost Ratio
(excluding direct vacancy costs) B/C 15.17% 10.27% 13.79%
Half year
ended Year ended
Half year
ended 31 December 30 June
31 December
2022 2021 2022
(unaudited) (unaudited) (audited)
EPRA Vacancy rate GBP'000 GBP'000 GBP'000
Annualised potential rental value
of vacant premises A - 40 -
Annualised potential rental value
for the completed property portfolio B 6,998 6,609 6,987
EPRA Vacancy rate A/B 0.00% 0.60% 0.00%
Alternative Performance Measure (APM) Calculations
APMs are numerical measures of the Group's current, historical or future
performance, financial position or cash flows, other than financial measures
defined or specified in the applicable financial framework. The Group's applicable
financial framework is IFRS. The Directors assess the Group's performance
against a range of criteria which are reviewed as particularly relevant for
a closed-end REIT.
Share Price and Net Asset Value (NAV) Total Return
Share price and NAV total returns show how the NAV and share price has performed
over a period of time in percentage terms, taking into account both capital
returns and dividends paid to shareholders. Share price and NAV total returns
are monitored against FTSE EPRA Nareit UK and FTSE Small Cap, respectively.
Share price NAV
Opening at 30 June 2022 A 82.10p 96.40p
Closing at 31 December 2022 B 66.70p 84.34p
Return C=(B/A)-1 (18.76%) (12.51%)
Dividend reinvestment * D 3.38% 2.88%
Total shareholder return C+D (15.38%) (9.63%)
Opening at 1 June 2021 A 71.00p 85.58p
Closing at 31 December 2021 B 72.20p 90.38p
Return C=(B/A)-1 1.69% 5.61%
Dividend reinvestment* D 4.15% 4.04%
Total shareholder return C+D 5.84% 9.65%
Opening at 1 June 2021 A 71.00p 85.58p
Closing at 30 June 2022 B 82.10p 96.40p
Return C=(B/A)-1 15.63% 12.64%
Dividend reinvestment* D 8.70% 9.88%
Total shareholder return C+D 24.33% 22.52%
* Share price total return involves reinvesting the net dividend in the share
price of the Company on the date on which that dividend goes ex-dividend.
NAV total return involves investing the net dividend in the NAV of the Company
with debt at fair value on the date on which that dividend goes ex-dividend.
Discount
The discount is the amount by which the share price is lower than the net
asset value per share, expressed as a percentage of the net asset value per
share.
31 December 31 December
2022 2021 30 June 2022
NAV per Ordinary share A 84.34pp 90.38p 96.40p
Share price B 66.70p 72.20p 82.10p
Discount (B-A)/A 20.92% 20.12% 14.80%
Dividend Cover
The ratio of Group's Adjusted EPS divided by the Group's dividends payable
for the relevant period/ year.
31 December 31 December
2022 2021 30 June 2022
Adjusted
EPS A 3.35p 2.79 p 5.57p
Dividend per share B 2.75p 2.60p 5.50p
Dividend
cover A/B 121.82% 107.31% 101.27%
Loan to GAV
Loan to GAV measures the value of loans and borrowings utilised (excluding
amounts held as restricted cash and before adjustments for issue costs) expressed
as a percentage of the Group's property portfolio (as provided by the valuer)
and the fair value of other assets.
31 December 31 December
2022 2021 30 June 2022
Borrowings (GBP'000) A 41,000 41,000 41,000
Total assets (GBP'000) B 111,469 116,425 121,700
Loan to GAV (A/B) 36.78% 35.22% 33.69%
Ongoing Charges
The ongoing charges ratio is the total for all operating costs expected to
be regularly incurred expressed as a percentage of the average quarterly
NAVs of the Group for the financial period. Note that the ratio for 31 December
is based on actual ongoing charges to 31 December and forecast ongoing charges
to the following June (shown as annualised in the below calculation).
31 December 31 December
2022 2021 30 June 2022
Other operating expenses
for the half year
/ year (GBP'000) A 499 526 1,101
Ongoing charges- annualised
where required (GBP'000) B 1,034 1012 1,037
Average net assets
(GBP'000) C 72,747 70,214 73,246
Ongoing charges ratio B/C 1.42% 1.44% 1.42%
Non-recurring legal and professional costs have been excluded in the annualised
amount for the period/year presented.
Annualised gross passing rent
The annualised gross passing rent is the rent roll at the reporting date,
taking account of any in-place rent free incentives or step rents annualised
on a straight-line basis over the following 12-month period.
Dividend Yield
The percentage ratio of the Company's declared dividends for the financial
year (or historic declared dividends if dividends are yet to be declared
for a year) per share divided by the Company's share price at the period/year
end.
31 December 31 December
2022 2021 30 June 2022
Annual dividend target/payable A 5.50p 5.50p 5.50p
Share price B 66.70p 72.20p 82.10p
Dividend yield A/B 8.2% 7.6% 6.7%
Company Information
Share Register Enquiries
The register for the Ordinary Shares is maintained by Computershare Investor Services PLC. In the event of queries regarding your holding, please contact the Registrar on 0370 707 1874 or email: web.queries@computershare.co.uk.
Changes of name and/or address must be notified in writing to the Registrar, at the address shown below. You can check your shareholding and find practical help on transferring shares or updating your details at www.investorcentre.co.uk. Shareholders eligible to receive dividend payments gross of tax may also download declaration forms from that website.
Share Information
Ordinary GBP0.01 shares 80,500,000 SEDOL Number BDVK708 ISIN Number GB00BDVK7088 Ticker/TIDM AIRE
Share Prices
The Company's Ordinary Shares are traded on the Main Market of the London Stock Exchange.
Frequency of NAV publication
The Group's NAV is released to the London Stock Exchange on a quarterly basis and is published on the Company's website www.alternativeincomereit.com .
Annual and Interim Reports
Copies of the Annual and Half-Yearly Reports are available from the Group's website.
Financial Calendar 2022
30 June 2023 Year end September 2023 Announcement of annual results November 2023 Annual General Meeting 31 December 2023 Half year end March 2024 Announcement of interim results
Glossary
Alternative Investment Langham Hall Fund Management LLP.
Fund Manager or AIFM or
Investment Manager
Company Alternative Income REIT plc.
Contracted rent The annualised rent adjusting for the inclusion
of rent subject to rent-free periods.
Earnings Per Share ('EPS') Profit for the period attributable to equity shareholders
divided by the weighted average number of Ordinary
Shares in issue during the period.
EPRA European Public Real Estate Association, the industry
body representing listed companies in the real
estate sector.
Equivalent Yield The internal rate of return of the cash flow from
the property, assuming a rise to Estimated Rental
Value at the next review or lease expiry. No future
growth is allowed for.
Estimated Rental Value The external valuer's opinion as to the open market
('ERV') rent which, on the date of the valuation, could
reasonably be expected to be obtained on a new
letting or rent review of a property.
External Valuer An independent external valuer of a property.
The Group's External Valuer is Knight Frank LLP.
Fair value The estimated amount for which a property should
exchange on the valuation date between a willing
buyer and a willing seller in an arm's length
transaction after proper marketing and where parties
had each acted knowledgeably, prudently and without
compulsion.
Fair value movement An accounting adjustment to change the book value
of an asset or liability to its fair value.
FCA The Financial Conduct Authority.
Gross Asset Value ('GAV') The aggregate value of the total assets of the
Group as determined in accordance with IFRS.
IASB International Accounting Standards Board.
IFRS International financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union. On 31 December
2020 EU-adopted IFRS was brought into UK law and
became UK-adopted international accounting standards,
with future changes to IFRS being subject to endorsement
by the UK Endorsement Board.
Investment Adviser M7 Real Estate Limited.
IPO The admission to trading on the London Stock Exchange's
Main Market of the share capital of the Company
and admission of Ordinary Shares to the premium
listing segment of the Official List on 6 June
2017.
Lease incentives Incentives offered to occupiers to enter into
a lease. Typically this will be an initial rent-free
period, or a cash contribution to fit-out. Under
accounting rules the value of the lease incentive
is amortised through the Consolidated Statement
of Comprehensive Income on a straight-line basis
until the lease expiry.
Net Asset Value ('NAV') Net Asset Value is the equity attributable to
shareholders calculated under IFRS.
Net Asset Value per share Equity shareholders' funds divided by the number
of Ordinary Shares in issue.
Net equivalent yield Calculated by the Group's External Valuers, net
equivalent yield is the internal rate of return
from an investment property, based on the gross
outlays for the purchase of a property (including
purchase costs), reflecting reversions to current
market rent and items as voids and non-recoverable
expenditure but ignoring future changes in capital
value. The calculation assumes rent is received
annually in arrears.
Net Initial Yield ('NIY') The initial net rental income from a property
at the date of purchase, expressed as a percentage
of the gross purchase price including the costs
of purchase.
Net rental income Rental income receivable in the period after payment
of ground rents and net property outgoings.
Ordinary Shares The main type of equity capital issued by conventional
Investment Companies. Shareholders are entitled
to their share of both income, in the form of
dividends paid by the Company, and any capital
growth.
pps Pence per share.
REIT A Real Estate Investment Trust. A company which
complies with Part 12 of the Corporation Tax Act
2010. Subject to the continuing relevant UK REIT
criteria being met, the profits from the property
business of a REIT, arising from both income and
capital gains, are exempt from corporation tax.
Reversion Increase in rent estimated by the Company's External
Valuers, where the passing rent is below the ERV.
Share price The value of a share at a point in time as quoted
on a stock exchange. The Company's Ordinary Shares
are quoted on the Main Market of the London Stock
Exchange.
Weighted Average Unexpired The average lease term remaining for first break,
Lease Term ('WAULT') or expiry, across the portfolio weighted by contracted
rental income (including rent-frees).
Shareholder Information
Directors
Simon Bennett (Independent non-executive Chairman)
Stephanie Eastment (Independent non-executive Director)
Adam C Smith (Non-executive Director)
Company Website
https://www.alternativeincomereit.com/
Registered Office
1 King William Street
London
EC4N 7AF
AIFM
Langham Hall Fund Management LLP
1 Fleet Place
8(th) Floor
London
EC4M 7RA
Investment Adviser and Administrator ('Investment Adviser')
M7 Real Estate Limited
3(rd) Floor
The Monument Building
11 Monument Street
London
EC3R 8AF
Property Manager
Mason Owen and Partners Limited
7(th) Floor
20 Chapel Street
Liverpool
L3 9AG
Depositary
Langham Hall UK Depositary LLP
8th Floor
1 Fleet Place
London
EC4M 7RA
Consultant Portfolio Manager
King Capital Consulting Limited
140a Tachbrook Street
London
SW1V 2NE
Company Secretary
Hanway Advisory Limited
1 King William Street
London
EC4N 7AF
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Auditor
Moore Kingston Smith LLP
Devonshire House
60 Goswell Road
Barbican
London
EC1M 7AD
Valuer
Knight Frank LLP
55 Baker Street
London
W1U 8AN
Corporate Broker
Panmure Gordon (UK) Limited
40 Gracechurch Street
London
EC3V 0BT
Legal Adviser to the Company
Travers Smith LLP
10 Snow Hill
London
EC1A 2AL
Communications Adviser
H/Advisors Maitland
3 Pancras Square
London
N1C 4AG
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(END) Dow Jones Newswires
March 06, 2023 02:00 ET (07:00 GMT)
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