Net Asset Value as at 30 June 2017

RNS Number : 5164K

Ediston Property Inv Comp PLC

10 July 2017

 

Ediston Property Investment Company plc

(LEI: 213800JRL87EGX9TUI28)

Net Asset Value ("NAV") as at 30 June 2017

Ediston Property Investment Company plc (LSE: EPIC) (the "Company") announces its unaudited NAV as at 30 June 2017.

Quarter highlights

·     NAV per share at 30 June 2017 of 110.18 pence (31 March 2017: 109.67 pence), an increase of 0.47%, after taking into account capital expenditure and transaction costs.  The NAV total return (including dividends) was 1.7% for the quarter

·     Fair value independent valuation of the property portfolio as at 30 June 2017 of £191.91 million, a like-for-like increase of 0.82% on the valuation at 31 March 2017

·     The office at Cutlers Gate, Sheffield was sold for £20,165,000, a 2.0% premium to the March 2017 valuation

·     The Sheffield sales proceeds were immediately reinvested in the acquisition of Pallion Retail Park in Sunderland for £25,600,000

·     The transaction activity has added £0.6m of net income per annum to the portfolio, a 4.5% increase

Net Asset Value

As at 30 June 2017, the Company owned investment properties with a fair value of £191.91 million and had cash and cash equivalent balances of approximately £11.08 million.

The unaudited NAV of the Company at 30 June 2017 was £144.33 million, or 110.18 pence per share, an increase of 0.47% on the Company's NAV per share as at 31 March 2017:

	Pence Per Share	£ million
NAV at 31 March 2017	109.67	141.22
Valuation increase in property portfolio	0.70	0.92
Capital expenditure in the period	(0.47)	(0.61)
Income earned for the period	2.36	3.09
Expenses & finance costs for the period	(0.74)	(0.97)
Dividends paid in the period	(1.35)	(1.77)
Equity raised in the period	0.01	2.45
NAV at 30 June 2017	110.18	144.33

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 June 2017 and income for the quarter, but does not include a provision for any accrued dividend.

Disposal and acquisition

During the period the Company completed the sale of its office property at Cutlers Gate, Sheffield for £20,165,000, reflecting a net initial yield of 5.0%.  This price represented a 2.0% premium to the March 2017 valuation.  The property comprises 61,638 sq. ft. of modern offices and is let to Capita Business Services Limited, with a guarantee from Capita plc, until December 2039.

The asset was acquired at the launch of the Company in October 2014 as part of the seed portfolio.  During the holding period, the Investment Manager made use of its relationship with the tenant to extend the lease term from 11 years to 25 years, improve the rent review provisions to annual RPI uplifts, and secure the Capita plc guarantee, all of which enhanced the value of the asset.   

The Company immediately re-invested the sales proceeds by acquiring Pallion Retail Park in Sunderland.  The Company acquired 100% of the units in a Jersey Property Unit Trust (JPUT) for £25,600,000.  Taking into account the reduced costs involved in acquiring a JPUT, and a rental guarantee on one vacant unit, the net initial yield to the Company is 6.74%. 

Pallion Retail Park has an open A1 (part food) planning consent and occupies a prominent position to the North West of the city centre.  It extends to 131,349 sq. ft. across nine units and is let to tenants including B&M, Dunelm, Matalan, Iceland and Poundstretcher.  It has a weighted average unexpired lease term (WAULT) in excess of eight years.

The property, which is reversionary, offers a number of asset management opportunities including lease re-gears, lettings, and the potential to build a Costa Coffee 'drive-thru'.  These initiatives will enhance the tenant line-up, will improve the already robust income stream and offer the potential for capital growth.

Impact of transactions

These transactions are consistent with the Company's objective of selling mature assets and re-investing the proceeds in properties with potential to add value through the Investment Manager's entrepreneurial and intensive style of asset management.  By arranging them simultaneously, the Company has avoided any negative impact of cash drag from the sale proceeds of Sheffield.

In addition, the transactions are accretive to the income position of the Company.  As a net result, the contracted rental income of the Company has increased by 4.5%, equivalent to c. £0.6 million per annum.

In making the purchase, the Company extended its existing debt provisions by adding a further £4.5 million under the existing facility.  The Company's gearing level after the transactions remains just below 30 per cent of gross assets.

Outlook

Overseas investors continue to be active buyers and, provided sterling remains relatively weak against the euro and US dollar, this is likely to continue in the near term.  This, with continued interest from the domestic market, has pushed prices ahead in the first half of the year for prime assets let on long leases.

The Investment Manager believes there is more value in assets that suit their intensive and entrepreneurial approach to asset management and will continue to look to rotate assets to take advantage.

Portfolio Composition

Sector

Sector	Exposure (%)
Office	45.66
Retail warehouse	49.04
Other commercial	5.30

Geography

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

Sector	Exposure (%)
North East	25.08
North West	1.62
West Midlands	18.02
South West	2.57
Scotland	15.01
South East	10.71
East Midlands	6.77
Wales	20.22

Dividends

The Company paid three dividends of 0.4583 pence per share in April, May and June 2017, resulting in a cumulative dividend payment for the quarter of 1.3749 pence per share. The Board intends to continue paying monthly dividends of 0.4583 pence per share, implying an annualised dividend yield of 5.5%, calculated by reference to the Company's initial issue price of 100p per share, as set out in its October 2014 prospectus.

The annual dividends remain fully covered as a result of the completion of the investment of the Company's available equity and debt, and through the implementation of asset management initiatives.

Issuance

During the period the Company issued 2,230,000 new ordinary shares at a premium to the prevailing net asset value under the tap stock issuance authority.  The Board would like to be able to continue to issue tap stock to increase the equity base of the Company.  In order to help facilitate such issuance, the Company has successfully applied for a block listing for an additional 10,369,393 ordinary shares. Shares will be issued under the block listing to satisfy continuing demand that cannot be met through the secondary market.

Calum Bruce, Investment Manager, commented:

"We have always said we would dispose of the more mature assets in our property portfolio and recycle the capital back into 'Ediston style' properties with attractive asset management angles to exploit.  Pallion Retail Park is well suited to our intensive approach to asset management and allows us to recommence the value add process with a new property."

Forthcoming events

The next scheduled independent quarterly valuation of the property portfolio will be conducted by Knight Frank as at 30 September 2017 with the NAV per share at that date expected to be announced in October 2017.

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 - Investment Manager, Ediston Properties Limited                                      0131 225 5599

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

David Masters - Lansons                                                                                                            0207 294 3687

Laura Cronin - Lansons                                                                                                               0207 294 3607

 

END

 

 

NAVRRMPTMBTMBLR