NAV and Interim Dividend (3779A)

TIDMIRET

RNS Number : 3779A

ING UK Real Estate Income Trust Ltd

31 January 2011

ING UK Real Estate Income Trust Limited

31 January 2011

ING UK Real Estate Income Trust Limited (IRET) - Net Asset Value as at 31 December 2010 and Interim Dividend

The unaudited Net Asset Value ('NAV') of ING UK Real Estate Income Trust Limited (the "Company") as at 31 December 2010 increased by 1.7% over the quarter to GBP 206.9m, reflecting approximately 60 pence per share.

The Company also announces an interim dividend of 1 pence per share in respect of the period 1 October 2010 to 31 December 2010. The dividend payment will be made on 28 February 2011 to shareholders on the register on 11 February 2011. The ex-dividend date will be 9 February 2011.

The NAV attributable to the Ordinary Shares is calculated under International Financial Reporting Standards ('IFRS') and reflects an increase of 1 pence per share compared to the previous quarter. At an underlying property level there has been a like for like 0.5% increase in the property portfolio valuation over the period.

This NAV figure incorporates the external portfolio valuation as at 31 December 2010. It includes income for the current quarter and is calculated after the deduction of dividends paid prior to 31 December 2010, but it does not include provision for the next quarterly dividend which is expected to be paid in February 2011.

The unaudited NAV is as follows:

 
                              31 Dec    30 Sept   30 Jun    31 Mar 
                                2010      2010     2010      2010 
                                GBPm      GBPm      GBPm      GBPm 
 Investment properties         424.3     422.6     422.7     351.7 
 Other assets                  42.4      49.1      56.0      49.9 
 Other liabilities            (15.6)    (18.2)    (20.2)    (15.8) 
 Borrowings: Securitised 
  loan                        (171.6)   (171.6)   (175.0)   (175.0) 
  Liquidity facility           (10.7)    (10.7)    (10.9)    (10.9) 
  RBS loan                     (20.4)    (20.4)    (20.3)      - 
  Loan stock                   (2.6)     (2.6)     (3.3)       - 
  ZDP's                        (27.6)    (31.0)    (30.5)      - 
 Market value of interest 
  rate swaps                  (11.3)    (13.8)    (15.5)    (13.6) 
 Net Asset Value (IFRS)        206.9     203.4     203.0     186.3 
 Net Asset Value per share 
  (IFRS)                        60p       59p       59p       56p 
 Net Asset Value (EPRA)        218.2     217.2     218.5     199.9 
 Net Asset Value per share      63p       63p       63p       60p 
  (EPRA) 
 

The European Public Real Estate Association (EPRA) NAV ignores mark to market swap liability or gains.

The movements in the NAV can be summarised as follows;

 
                              Total   Per share   movement 
                              GBPm      Pence        % 
 NAV at 30 September 2010     203.4      59 
 
 Gains in property values 
  (realised and unrealised 
  )                            1.9       0.5        1.0 
 Movement in swap value        2.5       1.0        1.5 
 Net income for the period 
  (after distributions)       (0.9)     (0.5)      (0.5) 
 
 NAV at 31 December 2010      206.9      60         2.0 
 

An external valuer will next value the property portfolio during March 2011 and the NAV per share as at 31 March 2011 will be issued in April 2011.

Investment Manager Commentary

BACKGROUND

Considering the wider UK Real Estate Market, the IPD Monthly Index recorded capital growth of 0.09%, 0.11% and 0.30% for October, November and December respectively, at similar levels recorded during Q3 2010.

Rental value growth at 0.08% over the period, whilst positive, remains inconsistent across sectors (Retail -0.02%, Office 0.51%, Industrial -0.39%). In particular there was a strong positive bias towards Central London offices and Southern retail warehousing.

Occupancy rates have remained stable over the last three months and stand at c. 90%.

PORTFOLIO COMPOSITION

 
                                  Weighting 
 Sector                        31 December 2010 
 
 Retail                             19.8% 
 Offices - Central/Greater 
  London                            12.8% 
 Offices - Rest of UK               21.5% 
 Industrial                         34.2% 
 Leisure                            4.5% 
 Retail Warehouse                   7.2% 
 Total                              100% 
 

GEOGRAPHICAL WEIGHTINGS

 
                               Weighting 
 Geography                  31 December 2010 
 
 Central London                  12.9% 
 Greater London                  7.0% 
 South East                      31.3% 
 South West                      4.7% 
 East Midlands                   12.5% 
 West Midlands                   4.6% 
 Yorkshire & the Humber          4.8% 
 North West                      11.2% 
 North East                      2.4% 
 Scotland                        2.5% 
 Wales                           5.5% 
 Northern Ireland                0.6% 
 Total                           100% 
 

TOP TEN ASSETS

 
                                             Weighting 
 Asset                                    31 December 2010 
 Unit 5320, Magna Park, Lutterworth            7.0% 
 River Way Industrial Estate, 
  Harlow                                       6.3% 
 Stanford House, Long Acre, 
  London                                       4.6% 
 Phase II, Parc Tawe, Swansea                  4.2% 
 Colchester Business Park, Colchester          3.5% 
 Angouleme Way Retail Park, 
  Bury                                         3.0% 
 1 Chancery Lane, London                       2.6% 
 Boundary House, Jewry Street, 
  London                                       2.6% 
 Crown & Mitre Hotel Complex, 
  Carlisle                                     2.5% 
 50 Farringdon Road, London                    2.5% 
 Total                                         38.8% 
 

PORTFOLIO UPDATE

The valuation movements across the portfolio remained consistent with the wider market and activity on the portfolio.

The Company continues to dispose of non-core assets and made two disposals over the quarter and one following the quarter end for combined proceeds of GBP 1.55m, at an average 13% premium to valuation. Two of the assets were non income producing.

In terms of other activity, the Company also completed ten new lettings, which following the expiry of rent free periods, will provide an annualised rent roll of GBP 0.5m.

Good progress has been made at 50 Farringdon Road where the Company is due to complete the refurbishment of approximately 30,000 sq ft of office space next month. Strong occupier interest has been shown ahead of Practical Completion of the scheme.

As at 31 December 2010 the portfolio had a net initial yield of 6.9% and a net reversionary yield of 7.8%. The occupancy rate is 90.3% and the average lease length is 7.9 years.

DEBT

During the period, the Company achieved a listing of its Zero Dividend Preference Shares ('ZDP'), which were issued as part of the acquisition financing of Rugby Estates Investment Trust Plc.

The Preference shares, which have a coupon of 6.875% and mature in October 2012, are listed under the ticker IREZ.

The Company took the opportunity as part of the listing process to acquire GBP 4m of ZDPs, utilising existing cash proceeds from previous disposals and thereby continuing to reduce overall indebtedness of the group, and improving dividend cover further.

MANAGEMENT CHANGES

During the quarter, the Company announced its intention to internalise the investment management function of the Company with effect from 31 December 2011. Michael Morris, the current Fund Manager who has been involved since launch, and who is a senior director of ING REIM the Company's investment manager has agreed that he will oversee the implementation of the Board's internalisation plan to ensure continuity in the management of the Company's assets. He will be appointed Chief Executive of the Company's wholly owned investment management subsidiary once it has been established. This will be an ongoing process during the course of 2011 and the Company will make further announcements to shareholders in due course.

Commenting, Nick Thompson, Chairman of the Company, said:

"During this quarter we have progressed two key strategic activities, the continued reduction in overall indebtedness of the Group ahead of any refinancing and the decision to internalise the management. In respect of the internalisation, we expect this will bring a number of benefits to the Company, including delivering a significant cost saving over the short to medium term and an aligned management team which will be focussed soley on the assets of the Company. Our opportunistic acquisition of GBP 4m ZDPs not only reduced the Company's overall cost of debt but further enhances dividend cover.

"We regard all these activities as extremely positive to the Company's aim of continuing to deliver shareholder value."

For further information:

All Enquiries

David Sauvarin

The Company Secretary

Northern Trust International Fund Administration Services (Guernsey) Limited

Trafalgar Court

Les Banques

St Peter Port

Guernsey

GY1 3QL

Tel: [phone]

Fax: [phone]

ING Real Estate Investment Management (UK) Limited

Helen Stott, 020 7767 5648 [e-mail]

Financial Dynamics

Dido Laurimore, 020 7831 3113, [e-mail]

Laurence Jones, 020 7831 3113, [e-mail]

This information is provided by RNS

The company news service from the London Stock Exchange

END

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