Interim Management Statement

 

TIDMKEIF 
 
RNS Number : 1482M 
Kenmore Euro Industrial Fund Ltd 
19 May 2010 
 

              Kenmore European Industrial Fund ("Company"/ "Fund') 
                          Interim Management Statement 
                      and Announcement of Net Asset Value 
 
This interim management statement ('IMS') relates to the period from 1 January 
2010 to 31 March 2010, and contains information that covers this period, and up 
to the date of the publication of this IMS, unless otherwise specified. 
 
Giles Weaver, Chairman, commented: 
 
"During the period to 31 March 2010, the Fund has realised GBP3.9 million from 
its active disposal programme, with further sales in April of GBP4.3m.  These 
sales have released surplus equity which will provide the Fund with additional 
flexibility during the forthcoming refinancing discussions. 
 
"The ongoing leasing performance within the portfolio secured new and retained 
leases during the period equating to 7.67% of the Fund's gross income.  Over the 
quarter, the current portfolio yield has increased to 7.40% with occupancy 
increasing to 86.97%." 
 
Net Asset Value 
The Company's Net Asset Value ('NAV') at 31 March 2010, adjusted to add back 
deferred tax, was 80.9 pence per share.  This represents an increase of 1.4% 
over the equivalent NAV at 31 December 2009. 
 
The table below sets out the movement in the adjusted NAV in the quarter: 
+-------------------------------------------+--------------+ 
|                                           |    Pence per | 
|                                           |        share | 
+-------------------------------------------+--------------+ 
| Adjusted NAV at 31 December 2009          |        79.8p | 
+-------------------------------------------+--------------+ 
| Movement in portfolio valuations          |       (0.2)p | 
+-------------------------------------------+--------------+ 
| Retained profits for the period           |         1.8p | 
+-------------------------------------------+--------------+ 
| Movement from mark to market of           |       (0.1)p | 
| derivatives                               |              | 
+-------------------------------------------+--------------+ 
| Foreign exchange movements                |       (0.3)p | 
+-------------------------------------------+--------------+ 
| Movement on deferred tax compensated for  |       (0.1)p | 
| at acquisition                            |              | 
+-------------------------------------------+--------------+ 
| Adjusted NAV at 31 March 2010             |        80.9p | 
+-------------------------------------------+--------------+ 
 
After deducting all deferred tax, whether recognised on the balance sheet or 
not, NAV at 31 March 2010 was 54.4 pence per share (53.7 pence at 31 December 
2010). 
 
Portfolio 
The value of the portfolio as at 31 March 2010 (excluding the impact of 
acquisitions, disposals and exchange rate movements) increased by 0.15% from 
GBP296,485,000 (EUR332,182,000) to GBP296,941,000 (EUR332,693,000). Occupancy as at 
31 March 2010 increased marginally to 86.97%. Total new leases signed during the 
period represented 3.99% of the Fund's gross income (19,930 sqm of total area) 
and total tenants vacating represented 6.76% of the Fund's gross income (34,295 
sqm).  Tenants retained represented 4.45% of the Fund's gross income (21,887 
sqm).  The current portfolio yield is 7.40%, which has increased by 0.37% in the 
quarter. 
 
As previously announced, during the period the Company sold one asset Belgium 
for GBP3,859,000 (EUR4,350,000).  This brings the total number of assets held in 
the Fund's portfolio as at 31 March 2010 to 73. 
 
Portfolio Summary 
Geographical Analysis 
The geographic spread by value of the Fund's portfolio at 31 March 2010 is: 
+-------------------+----------------+ 
| France            |            34% | 
+-------------------+----------------+ 
| Norway            |            23% | 
+-------------------+----------------+ 
| Belgium           |            13% | 
+-------------------+----------------+ 
| Sweden            |            11% | 
+-------------------+----------------+ 
| Germany           |             8% | 
+-------------------+----------------+ 
| Finland           |             8% | 
+-------------------+----------------+ 
| The Netherlands   |             3% | 
+-------------------+----------------+ 
 
 
 
Dividend 
The final results for 2009 were announced on 16 March 2010 together with the 
announcement of an interim dividend of 0.75p per Ordinary share to shareholders 
on the register on 16 April 2010.  This was paid on 30 April 2010. 
 
Financing 
As at 31 March 2010, the Fund had debt levels representing gearing, on total 
property value of 65.5%.  If all cash balances within the Fund were to be 
applied to reduce the drawn debt facilities it would reduce gearing to 59.9%. 
The Board continues to monitor this whilst entering into discussions with its 
lenders to secure longer term financing solutions.  Furthermore, the Company had 
interest rate swaps in place for 98% of its drawn debt, at a weighted average 
rate of 3.77% for a weighted average period of 1.4 years. 
 
Market Review 
Investment activity in Europe remained buoyant in the first quarter of 2010, 
totalling EUR20bn in direct transactions however total volumes reflected a 20% 
decline quarter-on-quarter. This decline is in line with the typical slowdown in 
the first quarter of the year, which on average is normally some 20-30% below 
the previous fourth quarter. 
 
Germany, France and Sweden were the strongest investment markets in Continental 
Europe in terms of Q1 volumes and each recorded an increasing transaction volume 
compared to the previous quarter (Source: Jones Lang LaSalle). 
 
Despite a fragile economic recovery, business confidence is generally rising and 
with improving credit conditions demand for real estate from core investors is 
driving down yields. Prime warehousing yields recorded compression in a large 
number of markets. In Q1 2010 the Jones Lang LaSalle European weighted average 
yield index showed weighted prime net initial office yields at 5.70%, retail 
unit shop yields at 5.60% and warehousing yields at 7.80%. 
 
Occupier demand for distribution warehousing space in Europe remained in line 
with the levels recorded in 2009, however sentiment has strongly improved in the 
first months of 2010 with a number of markets reporting an increase in 
enquiries. Improving economic growth and world trade is expected to sustain 
accelerating occupier demand in the later part of the year. 
 
The Fund's performance reflects these underlying general market trends, with 
both value and occupancy beginning to show signs of improvement. The Fund's 
combination of diversification and strong asset management makes it well placed 
to benefit from further market improvements. 
 
                                     -ENDS- 
 
 
For further information: 
 
Rob Brook, Tamar Financial Services Limited 
Tel: [phone] 
 
Stephanie Highett/Dido Laurimore/Olivia Goodall, Financial Dynamics 
Tel: [phone] 
 
www.kenmoreeifund.com 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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