Invesco Property Income Trust Limited
HEADLINE: Net Asset Value and Interim Management Statement
The unaudited Adjusted Net Asset Value per share of Invesco Property Income
Trust Limited as at 31 December 2008 was 14.73 pence (30 September 2008:
43.54p). The unaudited Net Asset Value per share was 1.12 pence (30 September
2008: 37.43p).
The Net Asset Value per Ordinary Share is calculated under International
Financial Reporting Standards, and the Adjusted Net Asset Value per share in
accordance with the prospectus.
The net asset values incorporate the external valuation of the Group's property
assets as at 31 December 2008.
Analysis of movement in net asset value.
At 31 December At 30 September Change (%)
2008 2008
Investment Properties
UK (£m) 130.1 159.3
Europe (£m) 167.3 144.4
Investment Properties (total) 297.4 303.7 -2.1%
Other assets (£m) 21.4 21.5
Other liabilities (£m) (42.6) (29.9)
Bank borrowings (£m) (253.7) (228.6)
Adjusted Net Asset Value (£m) 22.5 66.6
Adjusted Net Asset Value per share 14.73 43.54 -66.2%
(p)
Goodwill (£m) 10.7 8.9
Interest rate swaps (£m) (13.4) (0.3)
Deferred taxation (£m) (18.1) (17.9)
Net Asset Value (£m) 1.7 57.3
Net Asset Value per share (p) 1.12 37.43
The quarter saw significant changes in the sterling value of the Company's bank
borrowings, currency swaps (included in other liabilities in the table above),
which contributed £11.7m of the reduction in Adjusted Net Asset Value, and its
interest rate swaps (excluded from the calculation of Adjusted Net Asset
Value).
Portfolio Valuation
As announced on 8 January 2009, the Company's property portfolios were valued
in aggregate at £297,427,382 as at 31 December 2008, with approximately 44% by
value of assets located in the UK and 56% in continental Europe. The underlying
changes in values over periods to 31 December 2008 are shown below:
Periods to 31 December 2008
3m 6m 12m
UK portfolio (in Sterling) -18.3% -25.3% -32.0%
European portfolio (in -5.4% -10.4% -15.3%
Euros)
Total (in Sterling) -2.1% -8.8% -12.7%
The portfolio analysis as at 31 December 2008 is shown below:
UK France Belgium Spain Germany Total
Industrial 23.6% 10.9% - 4.5% - 39.0%
Offices 17.4% 26.1% 8.7% - 6.1% 58.3%
Retail 2.7% - - - - 2.7%
Total 43.7% 37.0% 8.7% 4.5% 6.1% 100%
The top ten investments by value are set out below:
Ranking Investment % of Ranking at
Portfolio
Now 30 September
2008
1 Le Directoire, St-Cloud, France 15.6% 1
2 St-Michel sur Orge, France 8.2% 2
3 Le Diapason, France 6.8% 4
4 SchickardSt, Boeblingen, Germany 6.1% 8
5 Colonel Bourg, Belgium 5.8% 6
6 Finsgate House, London EC1, UK 4.0% 7
7 11 Old Jewry London EC2, UK 4.0% 3
8 Priory Business Park, Bedford, UK 3.8% 5
9 San Esteve Sesrovires, Barcelona, Spain 4.5% 9
10 Pegasus Building, Peterborough, UK 3.3% 10
The gross portfolio yield as at the end of December 2008 was 8.62%, with a
weighted average unexpired lease term of 4.8 years overall, compared to 4.3
years as at the end of September 2008. The vacancy rate was 6.78% (which
differs from the figure of 7.25% as reported in the Company's announcement of 8
January 2009 due to the subsequent completion of retrospective lease
amendments). This compares with 5.13% at the end of September 2008 and 7.12% at
the end of December 2007.
Transactions
No transactions were completed in the period. The Company is continuing to seek
buyers for specific assets within the portfolio in order to reduce borrowings
but the market remains challenging with very few transactions taking place in
either the UK or continental European markets.
In deciding whether to proceed with further disposals, the Board will have
regard to the impact of any proposed transactions on the Group's banking
covenants.
Asset Management
Further progress continues to be made across the Company's property portfolio,
As previously announced on 8 January 2009, during the reporting period
completion took place of the lease extension at Colonel Bourg, Brussels, where
the tenant agreed to an extension of the current lease from the current expiry
date of July 2013 to December 2015. In addition the tenant benefits from an
option to extend the lease by a further 7 years. The rent for the 110,000 sqft
building remains unchanged at €1.665m p.a., and is subject to annual
indexation.
Since the period end completion took place of the previously announced lease
renewal at Le Directoire where the tenant signed a new lease of 2,383 sq m
(25,600 sq ft) of offices for a least term of 9 years (with break options at
the 4th and 6th years) at a total rent of €613,000 p.a.. The tenant was granted
an initial rent free period of 4 weeks and the rent will be subject to annual
indexation of at least 1.5% p.a. (capped at 3.5% p.a.). In addition, a lease
extension has been completed for the property at Hellaby Lane, Rotherham, where
the tenant has agreed to extend its lease on the 178,000 sqft warehouse by 10
years from the current expiry date of June 2010, retaining the current rent
passing of £760,000 p.a., The tenant has been granted a 10 months rent free
period, with 5 months from completion, and a further 5 months from June 2010.
The completion of these two transactions alone increased the average weighted
unexpired lease term to 5.2 years (on a like for like basis).
Completion has also taken place of the first phase of refurbishment works at
Boeblingen, where the tenant Daimler AG has taken occupation of 70,000 sqft of
office space, along with 420 car spaces, one month ahead of schedule and on
budget. Rent commenced for this first phase on 1 February 2009, at a rate of €
760,000 p.a. Phase 2, comprising a further 32,300 sq ft and 120 car spaces, is
due for handover by the end of May 2009. Upon completion the total net rent
payable by Daimler will rise to €1.1m p.a.
Negotiations continue across the portfolio with a view to further reducing the
vacancy rate, increasing net rental receipts and enhancing the average
unexpired lease term.
Financing
Sterling and Euro Bank borrowings at 31 December 2008 were £118.9m and €140.2m
respectively, unchanged for the quarter. The loan to value ratio under the
Group's banking agreement was 84.7%, which exceeds the limit of 70% under the
Company's current banking facility. The Company remains compliant with its
interest cover covenant, which stood at 155.4% against a minimum of 145%.
Before the period end £1m was drawn on the Group's working capital facility
provided by the investment manager. No shares were issued or bought back in the
period.
The Company's discussions with its lending bank regarding its future financing
arrangements are continuing and the Company expects to provide an up-date on
these discussions in the near future.
Dividends
While the discussions with the Company's lending bank continue the Directors
believe it is inappropriate to declare a dividend for the period.
All enquiries:
Angus Pottinger
Invesco Asset Management Limited
020 7065 3714
Rory Morrison
Invesco Real Estate
020 7543 3500
Sue Inglis
Intelli Corporate Finance
020 7653 6300
26 February 2009