Drum Income Plus REIT PLC Net Asset Value as at 31 December 2018 (5552O)

TIDMDRIP

RNS Number : 5552O

Drum Income Plus REIT PLC

30 January 2019

30 January 2019

LEI: 213800FG3PJGQ3KQH756

Drum Income Plus REIT plc

("Drum" or the "Company")

Unaudited Net Asset Value as at 31 December 2018

Drum Income Plus REIT plc (LSE: DRIP) announces its unaudited net asset value ("NAV") as at 31 December 2018.

Highlights

Period from 30 September to 31 December 2018

-- Fair value independent valuation of property portfolio as at 31 December 2018 of GBP56.7m (30 September 2018: GBP57.4m).

   --           NAV per share at 31 December 2018 of 91.6p (30 September 2018: 93.8p). 

-- Earnings per share (excluding revaluation gains and losses on fair value of investments) for three months ended 31 December 2018 were 1.0p.

   --           Dividend paid during the quarter of 1.50p. 
   --           NAV total return (NAV movement plus dividend paid) of -0.7%. 

Introduction

The Company aims to provide shareholders with a regular dividend income plus the prospect of income and capital growth over the longer term. The Company invests in smaller UK commercial properties, principally in the office, retail (including retail warehouses) and industrial sectors, which have the potential to offer a secure income stream, to create value through active asset management and have strong prospects for future income and capital growth.

Unaudited NAV (As at 31 December 2018)

 
                                   GBPm  Pence per Share 
NAV as at 30 September 2018        35.8             93.8 
Valuation change in property 
 portfolio                        (0.6)            (1.7) 
Income earned for the period        1.1              2.9 
Expenses for the period*          (0.5)            (1.4) 
Interest paid                     (0.2)            (0.5) 
Dividend paid                     (0.6)            (1.5) 
Unaudited NAV as at 31 December 
 2018                              35.0             91.6 
--------------------------------  -----  --------------- 
 

The NAV has been calculated in accordance with International Financial Reporting Standards and incorporates the independent portfolio valuation as at 31 December 2018 and income for the period, but does not include a provision for the fourth interim dividend, which will be paid in February 2019. The earnings per share for the period from 1 October 2018 to 31 December 2018 (excluding revaluation gains and losses on fair value of investments and expenses charged to capital) were 1.0p.

* Prior to 30 September 2018 an unsolicited approach was made by a potential purchaser with a view to acquiring the entire share capital of the Trust. The initial terms discussed were deemed by both parties to be acceptable and diligence was instructed by both parties in October 2018. Following a period of extensive due diligence, satisfactory final terms could not be agreed between the parties and the transaction was aborted in November 2018. Costs of GBP252K were incurred by the Trust in the period October to November 2018 in relation to the aborted transaction.

As at 31 December 2018, the Company had cash balances of GBP1.4 million and borrowings of GBP22.7 million (loan to value of 40.0%).

Current Portfolio

 
                               Sep-18                        Dec-18 
 Location                    Value   % Weighting           Value   % Weighting 
 North East          GBP16,100,000        27.78%   GBP16,150,000        28.18% 
 Scotland            GBP18,850,000        32.53%   GBP18,250,000        31.85% 
 North West          GBP19,000,000        32.79%   GBP18,900,000        32.99% 
 South West           GBP4,000,000         6.90%    GBP4,000,000         6.98% 
                   ---------------                -------------- 
                     GBP57,950,000       100.00%   GBP57,300,000       100.00% 
 ---------------------------------                -------------- 
 
 Sector                      Value   % Weighting           Value   % Weighting 
 Office              GBP24,800,000        42.80%   GBP25,300,000        44.15% 
 Shopping Centre     GBP13,700,000        23.64%   GBP13,750,000        24.00% 
 Retail              GBP17,300,000        29.85%   GBP16,750,000        29.23% 
 Industrial           GBP2,150,000         3.71%    GBP1,500,000         2.62% 
                   ---------------                -------------- 
                     GBP57,950,000       100.00%   GBP57,300,000       100.00% 
 ---------------------------------                -------------- 
 

The properties were valued at GBP57,300,000 as at 31 December 2018 (30 September 2018: GBP57,950,000) by Savills (UK) Limited ('Savills'), in their capacity as external valuers adjusted for lease incentives of GBP574,000. (30 September 2018: GBP599,000).

 
 Key KPIs 
                      Sep-18    Dec-18 
                    --------  -------- 
 Total Number of 
  Units                  108       105 
 Total Number of 
  Tenants                 87        87 
 Total SQFT          336,303   336,303 
 Vacancy (% SQFT)     10.10%    10.80% 
 Vacancy (% ERV)       1.90%     4.50% 
 WAULT (Expiry)         6.14      6.25 
 WAULT (Breaks)         4.95      5.07 
                    --------  -------- 
 

Differentiated Investment Strategy

   --           Target lot sizes of GBP2m - GBP15m in regional locations. 
   --           Sector agnostic - opportunity driven. 
   --           Entrepreneurial asset management. 
   --           Risk-controlled development. 
   --           Dividend paid quarterly. 
   --           Fully covered dividend policy. 

Portfolio Attributes

In the context of the market uncertainty, the Board believes it is helpful to shareholders to highlight some key attributes of the Company's property portfolio:

   --           The Company has no exposure to Central London markets, which may take the brunt of any Brexit-related market weakness. 
   --           The weighted average unexpired lease term (WAULT) to expiry is 6.25 years. 
   --           The portfolio yield is 7.1% (based on 31 December 2018 valuation). 
   --           The occupancy rate is high at greater than 95% by ERV 

-- Gearing - the loan-to-value ratio of 40.0% is directly in line with the stated intended target of 40%.

   --           Further asset management angles to exploit. 

Asset Management Overview and Update

3 Lochside Way, Edinburgh

New tenant now in occupation which maintains the buildings occupancy at 100%. Rental on the new letting is GBP20psf which is a new level for the building.

Arthur House, Manchester

A letting of c 3,500sqft to IJ Tours Limited on the fifth floor has been concluded at a level of GBP18.50 per sqft for a period of 9 years with a break at the end of the 3(rd) and 6(th) years of the term.

The proposed refurbishment works of the 6(th) floor has been approved by the Board and these works will be instructed in the first quarter of 2019.

Eastern Avenue, Gloucester

An Agreement for Lease has been entered into with Home Bargains for the former Office Outlet unit on a subject to planning basis. The planning application is due to be determined in the first quarter of 2019.

There is interest in the former Maplin unit from two potential tenants.

Dividends

The Board is targeting a fully covered annual dividend of 6.0p per share in respect of the year ending 30 September 2019*. At the current share price of 94.5p this would represent an annualised dividend yield of 6.3%.

*Target returns only and not a profit forecast. There can be no assurance that these targets will be met and they should not be taken as an indication of expected or actual current or future results.

Enquiries:

 
Drum Real Estate Investment Management (Investment Manager) 
Bryan Sherriff                                                      0131 285 0050 
Cantor Fitzgerald Europe (Financial Adviser and Corporate Broker) 
Robert Peel (Corporate Finance)                                     0207 894 7719 
Richard Sloss (Sales)                                               0131 240 3863 
Dickson Minto W.S. (Sponsor) 
Douglas Armstrong                                                   020 7649 6823 
Weber Shandwick (Financial PR) 
Richard Bright                                                      0131 556 6649 
Nick Oborne                                                         020 7067 0721 
 

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January 30, 2019 06:10 ET (11:10 GMT)