Net Asset Value(s)

RNS Number : 9406F

ING UK Real Estate Income Trust Ltd

21 January 2010

 



ING UK Real Estate Income Trust Limited

21 January 2010

ING UK Real Estate Income Trust Limited (IRET) - Net Asset Value as at 31 December 2009

The unaudited Net Asset Value ('NAV') per share of ING UK Real Estate Income Trust Limited (the "Company") as at 31 December 2009 was GBP 181.1m, reflecting approximately 55 pence per share.  

The NAV attributable to the Ordinary Shares is calculated under International Financial Reporting Standards ('IFRS') and reflects an increase of approximately 6 pence per share, or 12%, compared to the previous quarter. At an underlying property level there has been a GBP 20.4m increase in the property portfolio valuation, representing a 6.1% increase over the period. It also includes an upwards adjustment in respect of the mark to market value of the interest rate swaps of GBP 0.8m.  

This NAV figure incorporates the external portfolio valuation as at 31 December 2009. It includes income for the current quarter and is calculated after the deduction of dividends paid prior to 31 December 2009, but it does not include provision for the next quarterly dividend which is expected to be paid in February 2010.

The unaudited NAV is as follows:

	31 Dec 2009 £m	30 Sept 2009 £m	30 Jun 2009 £m	31 Mar 2009 £m
Investment properties	352.5	333.4	357.3	395.6
Other assets*	59.4	45.1	56.7	36.2
Other liabilities	(15.2)	(15.3)	(15.8)	(17.0)
Borrowings*	(204.0)	(190.0)	(225.0)	(225.0)
Market value of interest rate swaps	(11.6)	(12.4)	(11.2)	(16.7)
Net Asset Value	181.1	160.8	162.0	173.1

The movements in the NAV can be summarised as follows;

	Total	Per share	movement
	£'000	pence	%
NAV at 30 September 2009	160.8	49
Gains in property values (realised and unrealised )	19.1	6	12%
Movement in swap value	0.8	-	-
Net income for the period (after distributions)	0.4	-	-
NAV at 31 December 2009	181.1	55	12%

*The company's securitised debt facility has a liquidity facility of GBP 14m provided by Barclays Bank plc ('The Provider') attached to it. As a result of the Provider falling below the minimum credit rating it was a requirement that the liquidity facility was drawn down in full. This has a neutral impact on the Company's NAV with the increase in borrowings offset by the increase in cash albeit net interest costs will rise by approximately £100,000 pa to reflect the ongoing cost of the drawn facility.

An external valuer will next value the property portfolio during March 2010 and the NAV per share as at 31 March 2010 will be issued in April 2010. The Company will be preparing its next Annual Report to 31 December 2009, and this will be issued to shareholders in April 2010. 

Investment Manager Commentary

The UK Commercial Property Market experienced a rapid improvement in pricing over Q4 2009. This recovery has principally been driven by the high demand for real estate, coupled with a lack of suitable product available on the market. The IPD Monthly Index delivered positive capital growth in October, November, and December of 1.9%, 2.4%, and 3.0% respectively. The December figure was the largest monthly increase in IPD's 23-year history. 

Set against this backdrop, the majority of the Company's assets saw significant positive revaluation movements over the period which was primarily driven by yield compression. As with the IPD results, Retail Warehouse was the best performing sector.

The underlying movements in the property valuation and the current sector weightings are set out in more detail below:

Sector	Capital Valuation Movement	Weighting 31 December 2009
Retail	7.2%	13.7%
Offices - Central/Greater London	6.1%	13.3%
Offices - Rest of UK	4.4%	27.2%
Industrial	4.7%	32.3%
Leisure	2.8%	5.1%
Retail Warehouse	19.5%	8.4%
Total	6.1%	100.0%

The portfolio's Net initial yield and the Net reversionary yield both moved inwards over the period.  As at 31 December 2009, the portfolio had a Net initial yield of 7.54% and a Net reversionary yield of 8.50%. The occupancy rate was approximately 93% and the average lease length was 8.6 years.

Notable transactions over the quarter included a new letting at Broadmead, Bristol to Barclays Bank for a term of 15 years at a rent of £415,000 pa; the letting of the 4th floor at Boundary House, London to Holman Fenwick Willan LLP at a rent of £113,470 pa; and the regear of the Texas Instruments Ltd lease at Northampton Business Park at a rent of £346,178 pa.

The Company remains compliant with its principal banking covenants, with a current LTV for its securitised pool of 48.0% and an Interest Cover Ratio of 2.55 as at the Q4 2009 test date. The Company continues to have operational funds outside the securitised pool.

For further information:

All Enquiries

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]

 

END

 

 

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