Ediston Property Inv Comp PLC Net Asset Value as at 30 September 2018 (8102E)

TIDMEPIC

RNS Number : 8102E

Ediston Property Inv Comp PLC

23 October 2018

Ediston Property Investment Company plc

(LEI: 213800JRL87EGX9TUI28)

Net Asset Value ("NAV") as at 30 September 2018

Ediston Property Investment Company plc (LSE: EPIC) (the "Company") announces its unaudited NAV as at 30 September 2018.

Quarter highlights

-- NAV per share at 30 September 2018 of 115.30 pence (30 June 2018: 114.19 pence), an increase of 1.0%.

-- The NAV total return (including dividends) for the quarter was 2.2%, resulting in a NAV total return for the Company's financial year to 30 September 2018 of 8.9%.

-- Fair Value independent valuation of the property portfolio as at 30 September 2018 of GBP333.9 million, an increase of 0.8% compared to the valuation at 30 June 2018.

   --     Lease extension agreed on the office building, Midland Bridge House, Bath. 

Net Asset Value

The unaudited NAV of the Company at 30 September 2018 was GBP243.67 million, or 115.30 pence per share, an increase of 1.0% on the Company's NAV per share as at 30 June 2018.

 
                                   Pence Per Share   GBP million 
 NAV at 30 June 2018                        114.19        241.32 
                                  ----------------  ------------ 
 Valuation increase in property 
  portfolio                                   1.03          2.17 
                                  ----------------  ------------ 
 Capital expenditure                        (0.18)        (0.38) 
                                  ----------------  ------------ 
 Income earned                                2.51          5.31 
                                  ----------------  ------------ 
 Expenses & finance costs                   (0.81)        (1.71) 
                                  ----------------  ------------ 
 Dividends paid                             (1.44)        (3.04) 
                                  ----------------  ------------ 
 NAV at 30 September 2018                   115.30        243.67 
                                  ----------------  ------------ 
 

The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards ("IFRS"); the EPRA NAV is not reported separately in this update as it is the same as the IFRS NAV.

The NAV incorporates the independent portfolio valuation as at 30 September 2018 and undistributed income for the quarter but does not include a provision for any accrued dividend.

Dividends Paid

The Company paid a dividend of 0.4792 pence per share in each of July, August and September 2018, resulting in a cumulative dividend payment in the quarter of 1.4376 pence per share. The monthly dividend rate of 0.4792 pence per share equates to an annualised dividend of 5.75 pence per share.

The Board remains committed to paying a monthly dividend which is covered and sustainable, and looks to grow dividends over the longer term. The annual dividend is fully covered.

Asset Management Activity

During the quarter the Company restructured its lease terms with its tenant, Royds Withy King, at Midland Bridge House, Bath.

Royds Withy King occupy the entire property, which extends to c. 18,500 sq. ft., on a lease which had been due to expire in March 2023. During the quarter the Company signed an agreement to extend the term of the lease by six years to expire in March 2029. The tenant will receive an incentive equivalent to 5.8 months rent free. The rent will remain at GBP360,000 per annum which was agreed following the rent review in March 2018, when an increase of 11.5% on the previous passing rent was secured. As a result of this transaction the value of the property has increased in value by 13.4%.

The lease restructure with Weightmans LLP at St Philips Point, Birmingham, as announced previously, became effective from 1 August 2018, resulting in a further increase in the value of this property. Over the six months to 30 September 2018, the capital value of St Philips Point has increased by 11.8%.

Outlook

There is still good demand from a wide range of investors for UK real estate. However, the main sectors of the property market are moving in different directions, driven by sector specific reasons.

Prospects of rental growth and a lack of supply have seen yields remain firm in office markets. Industrial yields have tightened but look very expensive relative to other sectors.

In retail, the high street and shopping centre markets remain challenging, with all but the best assets likely to decline in value. There is more opportunity in the retail warehouse market as yields, relative to other sectors, are looking attractive. The sector has not been immune from retailer failure but a number of tenants are taking advantage to progress expansion plans in units that have become available. Retail parks with flexible planning consents, which trade well and are let off affordable rents are proving resilient and many units which are vacated by tenants are being re-let. The Investment Manager believes that the Company's retail warehouse assets have these positive attributes.

The implications of Brexit remain the biggest unknowns at the moment and, regardless of whether or not it is a 'hard-Brexit', the UK property market will be impacted in some way. There is no consensus view as to what will happen, but it is likely that there will be a pause and more subdued property market activity. This occurred immediately after the EU referendum in 2016, when investors and tenants alike considered where the market was heading, but the recovery was quite quick thereafter. Central London offices remain the most vulnerable and the Company has no exposure to this market.

The Investment Manager will continue to intensively manage the property portfolio to protect income, grow it where possible and create new income streams from underdeveloped assets. A number of asset management initiatives are well advanced, and these will be reported on when complete.

Portfolio Composition

Sector

 
 Sector              Exposure 
                      (%) 
 Retail warehouse       73.33 
                    --------- 
 Office                 22.93 
                    --------- 
 Other commercial        2.92 
                    --------- 
 Development             0.82 
                    --------- 
 

Geography

The portfolio is diversified across the regional markets and has no exposure to Central London assets.

 
 Sector           Exposure 
                   (%) 
 Wales               29.51 
                 --------- 
 North East          15.69 
                 --------- 
 North West          15.35 
                 --------- 
 Yorkshire           11.95 
                 --------- 
 West Midlands       11.65 
                 --------- 
 Scotland             9.63 
                 --------- 
 East Midlands        4.25 
                 --------- 
 South West           1.97 
                 --------- 
 

William Hill, Chairman, commented:

"The quarter's results, showing a further increase in the NAV, brings the Company's financial year to a satisfactory close - a year in which the equity base of the Company has increased by over 60%, the total assets have risen by 75%, the dividend per share advanced by 4.5%, the ongoing charges (excluding direct property costs) reduced from 1.5% to 1.3% and a NAV total return of 8.9% has been delivered."

Calum Bruce, Investment Manager, commented:

"The continued growth in the NAV illustrates that our intensive approach to asset management is delivering results. With Brexit on the horizon, there will be challenges ahead, but with a portfolio which has defensive qualities we are well placed to deal with them, and to capitalise on any opportunities which may appear."

Forthcoming Events

The next scheduled independent quarterly valuation of the property portfolio will be conducted by Knight Frank as at 31 December 2018 with the unaudited NAV per share at that date expected to be announced in January 2019.

The Company has shareholder approval for 'tap issuance' for up to approximately 20 million shares, if issuance is appropriate.

The Company intends to publish a factsheet during October 2018 which will be made available on the Company's new website at www.ediston-reit.com. The audited year-end accounts are likely to be published in December 2018.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via Regulatory Information Service this inside information is now considered to be in the public domain.

Enquiries

Will Barnett - Canaccord Genuity

0207 523 8000

Calum Bruce - Ediston Properties Limited 0131 225 5599

Donald Cameron - Maitland Administration Services (Scotland) Limited 0131 550 3763

Ben Robinson - Kaso Legg Communications 0203 137 7821

Stephanie Ross - Kaso Legg Communications 0203 137 7784

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October 23, 2018 02:00 ET (06:00 GMT)