Dividend Update

RNS Number : 4885S

ING UK Real Estate Income Trust Ltd

19 May 2009

 



ING UK Real Estate Income Trust Limited ('IRET')

FOR IMMEDIATE RELEASE

19 May, 2009

ING UK Real Estate Income Trust Limited ('IRET') 

(the 'Company')

Dividend Update Following the Securitised Loan Facility Restructuring

The Company today provides an update on its dividend policy, following the successful renegotiation of its securitised loan facility (the 'Facility'), as announced on Friday, 15 May.

Dividend update 

Following the restructuring of the Facility, the Board has consulted with the Company's investment manager in respect of the Company's dividend policy given the continued weakness in the property market.  To minimise the asset sales required to fund the prepayment of £35 million of notes due under the Facility restructuring (together with associated interest rate swap break costs), the Board has decided to pass the dividend it would ordinarily have paid in respect of the first quarter of 2009.   The Board and the investment manager, however, believe that a dividend equivalent to 1 pence per share per quarter remains appropriate and should enable the Company to operate from a fully covered position.  Therefore the Board expects the Company to resume paying quarterly dividends in respect of the second quarter of 2009. This payment would ordinarily be made in August. 

Successful restructuring of the Facility and prepayment of £35 million of notes 

The successful restructuring of the Facility, which, inter alia, increases the loan to value ('LTV') covenant from 50 per cent. to 60 per cent. until January 2012, has been achieved without any increase in margin to the Company or associated loan arrangement fees. The increase in the Company's LTV covenant is critical given the current weak commercial property market environment.  

As part of the restructuring proposal, the Company has agreed to pre-pay £35 million of the loan outstanding by January 2010, with a minimum prepayment of £15 million in July 2009. The Company currently has approximately £24 million of cash available to meet this prepayment and further property sales 'under offer', which, once completed, would meet the balance of the target.

As a result of the prepayment, there will be a one off cost associated with the break costs of the interest rate swap, which is estimated to be in the order of £2 million. However, the Company will benefit from a lower finance charge, which will be reduced by approximately £1.7 million per annum. In addition, it will remove the 'negative carry' of the current cash balance being used to reduce the net debt LTV ratio, which earns a minimal interest rate, which will further enhance dividend cover going forward. 

Since June 2007 the Company has repaid £87.3 million of debt, including all of the Company's higher rate non securitised borrowings, and reduced the weighted average cost of debt from 5.4% to 4.9%. It has achieved this through asset disposals of over £107 million representing a 20% premium against their purchase price and only a 8% discount against their June 2007 valuation, despite the market falling by over 40% since that time.

Nicholas Thompson, Chairman, said:

'We are pleased that following the dramatic fall in values suffered by the UK property market we have been able to achieve a stable footing for the Company in these new conditions. With reduced financing costs and a fully covered dividend the Company is now well positioned to manage the existing portfolio, as well as consider opportunities that will arise as a result of this price correction.' 

Michael Morris, Fund Manager added:

'This is a very good result for the Company. As a result of these amendments, the Company has significantly greater operational flexibility with regard to its LTV covenant, which has been achieved in manner which will also reduce annual financing costs and improve the dividend cover.' 

For further information:

ING Real Estate Investment Management (UK) Limited

Helen Stott

Tel: [phone]

Email: [e-mail]

Northern Trust International Fund Administration Services (Guernsey) Limited

The Company Secretary

Trafalgar Court

Les Banques

St Peter Port

Guernsey

GY1 3QL

Tel: [phone]

Fax: [phone]

Financial Dynamics

Dido Laurimore/Laurence Jones

Tel: [phone]

 

END

 

 

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