Net Asset Value as at 31 March 2018
Ediston Property Investment Company plc
(LEI: 213800JRL87EGX9TUI28)
Net Asset Value ("NAV") as at 31 March 2018
Ediston Property Investment Company plc (LSE: EPIC) (the "Company") announces its unaudited NAV as at 31 March 2018.
Quarter highlights
· NAV per share at 31 March 2018 of 112.48 pence (31 December 2017: 111.02 pence), an increase of 1.32%.
· Fair Value independent valuation of the property portfolio as at 31 March 2018 of £325.4 million, a like-for-like increase of 1.04% on the valuation at 31 December 2017.
· Acquired a development site in Haddington extending to c. seven acres for £2.75m.
· Completed a lease extension with Ernst & Young LLP ('EY') at the office building in Newcastle, increasing the rent on five floors by 20% to over £1m per annum and extending the lease until 31 December 2027.
· Signed an agreement for lease with Iceland on an 8,000 sq. ft. retail warehouse unit in Rhyl.
· Completed lease extensions with Pets at Home on retail parks in Rhyl and Wrexham, securing over £350,000 of income per annum, for an additional five years.
· Increased annualised dividend rate to 5.75 pence per share (from 5.5 pence per share) in January, with the first monthly payment made in February.
Net Asset Value
The unaudited NAV of the Company at 31 March 2018 was £236.59 million, or 112.48 pence per share, an increase of 1.32% on the Company's NAV per share as at 31 December 2017.
|
|
Pence Per Share |
£ million |
|
NAV at 31 December 2017 |
111.02 |
233.52 |
|
Valuation increase in property portfolio |
1.53 |
3.20 |
|
Capital expenditure |
(0.42) |
(0.88) |
|
Income earned |
2.52 |
5.31 |
|
Expenses & finance costs |
(0.75) |
(1.58) |
|
Dividends paid |
(1.42) |
(2.98) |
|
NAV at 31 March 2018 |
112.48 |
236.59 |
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 31 March 2018, and undistributed income for the quarter, but does not include a provision for any accrued dividend.
Dividends Paid
The Company paid a dividend of 0.4583 pence per share in January and of 0.4792 pence per share in February and March 2018, resulting in a cumulative dividend payment in the quarter of 1.4167 pence per share. The revised monthly dividend rate of 0.4792 pence per share equates to an annualised dividend of 5.75 pence per share.
The Board remains committed to paying a monthly dividend which is progressive and sustainable in its cover.
Acquisition of a development site
During the period the Company acquired a seven acre development site in Haddington, East Lothian, for £2,750,000 plus costs. The site, which is close to the A1, has planning permission for a supermarket and petrol filling station. It is the Company's intention to seek a new planning consent to permit a retail warehouse development. The Investment Manager is expecting to pre-let the majority of the development and has already commenced discussions with retailers who are keen for representation in the town.
Once completed, it is anticipated that the development will provide an attractive yield on cost and a robust income stream for the Company secured against national retailers.
Delivering Asset Management
The Investment Manager has completed four asset management initiatives during the quarter, which have positively impacted on capital values as reflected in the 31 March NAV.
The three lease restructurings and one new letting secure in excess of £1.5m of income per annum for the Company. The income is from tenants with good covenants and the deals extend the Company's weighted average unexpired lease term to 6.7 years. They also underline the attractiveness of the Company's assets to occupiers.
At Citygate II, the Company's multi-let office in Newcastle, EY has signed an extension to their existing leases. The expiry dates have moved out by 4.75 years to 31 December 2027 with the annual passing rent increasing by 20% to £1.04m. The Company provided an incentive to EY equivalent to 22 months' rent free. EY occupies 41,395 sq. ft. across five floors and will be undertaking a refurbishment of their accommodation.
The three other transactions have been in the Company's retail warehouse portfolio.
At Clwyd Retail Park in Rhyl an agreement for lease has been completed with Iceland Stores Limited. Iceland has agreed to lease unit 7, which extends to 8,000 sq. ft. and is currently under construction. The unit is being built on previously undeveloped land which was identified at purchase as a potential asset management opportunity. Completion is scheduled for May 2018, which is when the lease will commence. Iceland has agreed to sign a new 10 year lease at an annual rent of £128,000 and will receive a 12 month rent free period as part of the transaction. The income return on the development cost to the Company is expected to be over 11%.
In two further transactions, both in the retail warehouse portfolio, the Company has completed lease extensions with Pets at Home at Clwyd Retail Park in Rhyl and Plas Coch Retail Park in Wrexham.
Pets at Home occupies 21,900 sq. ft. across the two assets and has agreed to sign a five year lease extension on each unit in exchange for a six month rent free period. The lease in Wrexham will now expire in June 2027, and the lease in Rhyl will expire in March 2025.
The Investment Manager is working on a number of other asset management initiatives across the portfolio to protect and improve income and to move capital values forward.
Outlook
Investment demand is still strong from both UK and overseas investors and there are relatively low levels of investment stock available. As a consequence, during the quarter, pricing has remained firm and yields have been resilient.
Whilst there is no immediate sign of property markets taking a step back, there is more volatility and nervousness in public markets. We remain alert to this and believe delivering asset management strategies will be key to driving performance, in both capital and income terms. The Board is confident it has a well-structured portfolio and an Investment Manager capable of unlocking its potential.
Portfolio Composition
Sector
|
Sector |
Exposure (%) |
|
Retail warehouse |
74.34 |
|
Office |
21.75 |
|
Other commercial |
3.06 |
|
Development |
0.85 |
Geography
The portfolio is diversified across the regional markets and has no exposure to Central London assets.
|
Sector |
Exposure (%) |
|
Wales |
30.30 |
|
North East |
15.83 |
|
North West |
15.04 |
|
Yorkshire |
12.14 |
|
West Midlands |
10.85 |
|
Scotland |
9.89 |
|
East Midlands |
4.36 |
|
South West |
1.59 |
William Hill, Chairman, commented:
"Following the expansion of the Company's equity base by 60% in the last quarter, there has been no let up in activity with the delivery of some important value enhancing asset management initiatives during the last three months. The acquisition of the site in Haddington is another opportunity to deliver further value over the coming months."
Calum Bruce, Investment Manager, commented:
"Securing in excess of £1.5m of income per annum from new and existing tenants is hugely positive for the Company. It shows that there is still good demand for the right space from both office and retail tenants. We are working on other similar opportunities across the portfolio which should further improve the income profile and capital value of the Company's property assets."
Forthcoming Events
The next scheduled independent quarterly valuation of the property portfolio will be conducted by Knight Frank as at 30 June 2018 with the NAV per share at that date expected to be announced in July 2018.
The Company has shareholder approval for tap issuance of up to 21 million shares and for an annual equity placing programme of up to a further 60 million shares which could be used for significant property acquisitions, if appropriate to do so, further strengthening the equity base of the Company.
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 - 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
This information is provided by RNS
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