Net Asset Value(s) and Divide
STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST LIMITED
30 June 2008
Statement re: NAV and Dividend
The Directors of Standard Life Investment Property Income Trust Limited ('the Directors') have declared that an interim dividend be payable in respect of the quarter ended 30 June 2008 as follows;
Ex-Dividend Date - 13 August 2008
Record Date - 15 August 2008
Payment Date - 31 August 2008
Dividend per Share - 1.690 p
Net Asset Value Announcement
The unaudited net asset value per ordinary share of Standard Life Investments Property Income Trust Limited at 30 June 2008 was 101.6 pence. This is a decrease of 1.1 percentage points over the net asset value of 102.7 pence per share at 31 March 2008.
The net asset value is calculated under International Financial Reporting Standards ('IFRS') and includes a provision for payment of a proposed interim dividend of 1.69p per ordinary share for the quarter to 30 June 2008.
The net asset value incorporates the external portfolio valuation by Jones Lang LaSalle at 30 June 2008. The property portfolio will next be valued by an external valuer during September 2008 and the next quarterly net asset value will be published thereafter.
Breakdown of NAV movement
Set out below is a breakdown of the change to the unaudited net asset value per share calculated under IFRS over the period 31 March 2008 to 30 June 2008.
|
|
Pence per share |
% of opening NAV |
|
Net Asset Value per share as at 31 March 2008 |
102.7 |
- |
|
Unrealised loss following revaluation of property portfolio (including the effect of gearing) |
(3.9) |
(3.9%) |
|
Increase in interest rate swap valuation |
3.2 |
3.2% |
|
Other movement in reserves |
(0.4) |
(0.4%) |
|
Net Asset Value per share as at 30 June 2008 |
101.6 |
(1.1%) |
The ungeared decrease in the valuation of the property portfolio over the quarter to 30 June 2008 was 2.0%. The unrealised loss noted above includes the effect of a £900,000 payment made to a tenant in order to extend lease length.
Total asset analysis as at 30 June 2008 (unaudited)
|
|
£m |
% |
|
Office |
46.0 |
22.8 |
|
Retail |
35.6 |
17.6 |
|
Industrial |
55.0 |
27.3 |
|
Other |
20.1 |
10.0 |
|
Total Property Portfolio |
156.7 |
77.7 |
|
Cash |
44.4 |
22.0 |
|
Other Assets |
0.7 |
0.3 |
|
Total Gross Assets |
201.8 |
100.0 |
Cash position
As at 30 June 2008, the Company has borrowings of £84.4m and a cash position of £44.4m (excluding rent deposits) therefore cash as a percentage of debt was 52.6%.
Loan to value ratio
As at 30 June 2008 the loan to value ratio after taking account of the cash offset was 25.5%. The gearing level was 30.5% (bank borrowings plus zero dividend preference share liability less cash divided by property portfolio).
Breakdown in valuation movements over the period 31 March 2008 to 30 June 2008
|
|
Exposure as at 30 June 2008 (%) |
Capital Value Movement on Standing Portfolio (%) |
£m |
|
External Valuation at 31/03/08 |
|
|
159.9 |
|
Sub Sector Analysis: |
|
|
|
|
RETAIL |
|
|
|
|
South East Standard Retail |
4.3 |
-3.6 |
-0.2 |
|
Retail Warehouses |
18.4 |
-0.3 |
-0.1 |
|
|
|
|
|
|
OFFICES |
|
|
|
|
Central London Offices |
10.8 |
-1.2 |
-0.2 |
|
South East Offices |
6.4 |
-2.5 |
-0.3 |
|
Rest of UK Offices |
12.2 |
-1.3 |
-0.3 |
|
|
|
|
|
|
INDUSTRIAL |
|
|
|
|
South East Industrial |
7.1 |
-4.2 |
-0.5 |
|
Rest of UK Industrial |
28.0 |
-1.8 |
-0.8 |
|
|
|
|
|
|
OTHER |
12.8 |
-3.9 |
-0.8 |
|
|
|
|
|
|
External Valuation at 30/06/08 |
100 |
-2.0 |
156.7 |
Investment Manager Commentary
After the modest falls in values in Q1 the rate of fall accelerated again in Q2, with total returns in June of -1.5%, against -0.5% in April. It is likely that continued strains in the credit markets coupled with heightened inflationary pressures and consequently higher funding costs may lead to recovery in the UK commercial property market being more delayed than was widely anticipated at the start of last quarter. It seems probable that current pace of capital decline will persist through the second half of 2008 resulting in a further difficult year for UK property investors.
The FTSE EPRA/NAREIT UK listed sector fell sharply this quarter recording -24.6% from the end of March. The sector continues to be valued with significant discounts to current NAV of approximately 35% reflecting the ongoing negative sentiment towards the sector. Returns from the offshore sector also fell markedly in Q2, retreating 20.9% on average with a large variation in returns across the sector. The lowest returns were generally recorded by the most highly geared funds in the sector.
The trend of office sector returns falling at a faster rate than the retail sector reversed in June. Despite limited transactional evidence, valuers marked down the value of retail property more significantly than in the other two sectors over the quarter. Retail total returns fell by 3% over the three months to end June compared to -2.7% for All Property over the same timeframe. Offices marginally underperformed the sector at -2.8% whilst industrials provided the strongest sector performance with returns of -1.6% in quarter two. In line with the sector returns, capital values fell by the least amount in the industrials sector at -3.2% over the quarter. This compares to offices and retail which fell by -4.1% and -4.4% respectively in this period. Tenant demand has softened further in all the sectors over the quarter and at the same time occupiers are becoming increasingly selective in their location decisions. The divergence between prime and secondary assets generally increased over the quarter and we expect this trend to become more accentuated going forward as the economic fundamentals weaken further. Recent economic news has by and large been worse than the market was expecting. The housing market is falling at a faster rate than in the 90's slowdown and we anticipate a significant correction ahead. Asset values falling along with low levels of consumer confidence that we have not witnessed since the last economic slowdown coupled with rationed credit likely to be constrained further suggest that there may be some challenging economic times ahead. Furthermore, with savings ratio's at their lowest levels since the 1950's, consumers are likely to retrench and strengthen their balance sheets as the economy slows this is likely to compound the weakening occupier markets. We expect several challenging quarters ahead before the economy strengthens once again.
Investment Outlook
As the economic environment looks likely to continue to deteriorate and credit market problems look likely to persist for some time yet, we anticipate another year of negative returns for UK commercial property again this year. There continues to be significant buyer interest focusing on the UK commercial property sector looking to take advantage of the pricing correction, however, due to other assets being re-priced by the market in the context of higher inflation expectations, the yield from property assets looks less attractive compared to these assets than it did at the end of last quarter and investors continue to sit on their hands. It is likely that it may be some time yet before UK commercial property sustains a solid floor for capital values.
The downside risks to our forecast outlook for the UK look to have crystallized somewhat over the quarter. Survey data and data on manufacturing along with other indicators such as a sharp increase in announced job losses suggest that some parts of the economy are weakening markedly. With credit remaining constrained and likely to be rationed further going forward as corporate and consumer problems increase, investment and expansion are likely to be put on hold or curtailed. These factors are likely to impact on occupier demand and this looks to be materialising in the form of significantly enhanced incentives and elevated vacancy rates in some sectors. We expect the market to provide healthy single digit returns over the next few years mainly resulting from properties stable income return and economic recovery towards the latter part of 2009.
Although the general environment is negative at the moment the Company is in good shape, due to its high level of cash, to not only weather the storm, but also to exploit attractive opportunities.
Portfolio Activity
Purchases and Sales:
No investment transactions were undertaken over the quarter.
Asset Management:
Clough Rd Hull: A payment was made to DSG on the two 20,000sqft units they occupy to remove the break clauses in 2011. This has secured the income on the two units until 2021.
Innovate Scunthorpe: The tenant went into Administration over the quarter. This was especially disappointing given the company had a 5A1 D&B rating. A six month licence has been agreed with a potential purchaser of the business, securing the income for a while.
Ocean Trade Centre Aberdeen: A new lease and lease renewal were completed over the quarter, maintaining the estates fully let position.
Chancellors Place Chelmsford: One of the buildings was vacated in June following the lease expiry and we have commenced marketing and a refurbishment in of the unit. Supply is limited in the Town Centre and we expect good interest in the space.
Storage Land Witham: Terms have been agreed to sell a small (0.4acre) site to the adjoining owner for a sum approximately £100,000 above valuation. Completion is expected by the end of July.
31/32 Queen St Bristol: Solicitors have been instructed on a lease extension of the top two floors at a rent well ahead of ERV. The new lease has a term certain of 5 years.
All Enquiries:
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Ltd
Trafalgar Court
Les Banques
GY1 3Q1
Tel: 01481 745529
Fax: 01481 745085
APENDIX 1
Historical adjusted IFRS NAVs per Ordinary Share are as follows:
|
30/06/08 |
101.59p |
|
|
31/03/08 |
102.71p |
|
|
31/12/07 |
111.60p |
|
|
30/09/07 |
130.70p |
|
|
30/06/07 |
137.16p |
|
|
31/03/07 |
134.42p |
|
|
31/12/06 |
132.68p |
|
|
30/09/06 |
129.51p |
|
|
30/06/06 |
130.20p |
|
|
31/03/06 |
124.28p |
|
|
31/12/05 |
116.46p |
|
|
30/09/05 |
107.12p |
|
|
30/06/05 |
103.88p |
|
|
31/03/05 |
101.34p |
|
|
31/12/04 |
99.00p |
|
This information is provided by RNS
Latest directors dealings
- 1 hour ago Tertiary Minerals
- 1 hour ago Hargreaves Services
- 14 hours ago ASOS
- 14 hours ago MJ Gleeson
- 14 hours ago Rolls-Royce Holdings