Dividend Declaration and Net
29 April 2009
Invista Foundation Property Trust Limited (the 'Company' / 'Group')
ANNOUNCEMENT OF NAV AND INTERIM DIVIDEND
Net Asset Value
Invista Foundation Property Trust Limited today announces a Net Asset Value ('NAV') of £141.78 million or 43.8 pence per share ('pps') as at 31 March 2009. Excluding the marked to market value of the Group's interest rate swaps results in a NAV of 53.3 pps. The Company has cash of £81.4 million, which will increase to approximately £84.1 million on completion of contracted disposals.
The Company also announces an interim dividend of 0.88 pps in respect of the period 1 January 2009 to 31 March 2009. The dividend payment will be made on 20 May 2009 to shareholders on the register on 6 May 2009. The ex-dividend date will be 4 May 2009.
The fall in the underlying property portfolio of -7.3% on a like for like basis excluding disposals contributed to a decline in the Company's NAV of -9.7 pps or -18.2% over the quarter. A summary is set out below:
|
|
31/03/2009 (£m) |
31/12/2008 (£m) |
3 month (£m) |
3 month change (%) |
|
Direct property independent valuation |
308.1 |
370.9 |
(62.8) |
(16.9) |
|
|
|
|
|
|
|
Valuation of sales |
|
(38.5) |
|
|
|
Capital expenditure during the quarter |
|
0.6 |
|
|
|
Like for like direct property |
308.1 |
333.0 |
(24.9) |
(7.5) |
|
|
|
|
|
|
|
Joint venture investments |
0 |
0 |
- |
- |
|
Market value of interest rate swap |
(30.8) |
(29.5) |
(1.3) |
(4.2) |
|
Net current assets |
74.8 |
42.0 |
32.8 |
78.1 |
|
On-balance sheet loan |
(210.2) |
(210.0) |
(0.2) |
(0.1) |
|
Net Asset Value |
141.8 |
173.3 |
(31.5) |
(18.2) |
|
Net Asset Value per share (pps) |
43.8 |
53.5 |
(9.7) |
(18.1) |
|
Net Asset Value per share excluding swaps (pps) |
53.3 |
62.7 |
(9.4) |
(15) |
Transactions and Asset Management
On 12 March 2009 the Company announced that it had exchanged contracts to dispose of two properties for a combined consideration of £34.9 million, and both of these have now completed.
The larger of the two disposals, National Magazine House, London W1, comprised an office and residential building mainly let for 9.5 years. The disposal completed on 9 April 2009 and the base purchase price of £31.4 million was adopted for the purposes of calculating the net asset value as at 31 March 2009. There is the potential for the Company to receive up to a further £2 million of overage linked to the settlement of an outstanding rent review dating from September 2008. The price including overage reflects a 6.4% discount to the 31 December 2008 independent valuation.
The second disposal completed during the quarter to 31 March 2009 was a retail and office property in Brighton let to Royal Bank of Scotland for a further 12.5 years. The disposal price of £3.5 million reflects a net initial yield of 5.7% and a premium of 25% above the 31 December 2008 independent valuation.
Since the quarter end the Company has exchanged unconditional contracts to sell two further properties for a combined consideration of £2.75 million.
The first is a small retail property in York where the Company had previously paid £45,000 to take back a lease from Jessops who were paying £90,000 per annum with four years unexpired. The property was then simultaneously re-let to Vodafone on a new 10 year lease at £110,000 per annum reflecting a rental uplift of 22.2%. Having completed the business plan the property has been sold to take advantage of strong private investor demand for small, well-let investments. The purchase price of £1.9 million reflects an initial yield of 5.48% and is 9.8% above the 31 March 2009 valuation.
Secondly, the Company disposed of a small vacant industrial property in Burgess Hill. The purchase price of £850,000 is in line with the 31 March 2009 valuation and 13% above the December 2008 valuation. The sale means the Company will avoid a liability of approximately £40,000 per annum on empty rates and other void costs.
Following completion of these two disposals the Company will have sold almost £110 million of property since the announcement of the strategic review in July 2008, leaving the Company with £84.1 million of cash. Although further disposals will be considered, the Company will be very selective and will focus on opportunities where value can be realised following successful execution of business plans.
Progress is being made on asset management across the portfolio. To illustrate, the second major rent review at Portman Square House, London W1 has been settled, where the Company has a 21.6% share. Having settled the Cushman rent review at £78.50 per sq ft or £1.18 million per annum (the Company's share), the Regus rent reviews dated June 2008 have been settled at £182,000 per annum, an uplift of 89% reflecting £80 per sq ft on the majority of the space. Including minimum fixed uplifts this increases the total rent at Portman Square House to £1.86 million per annum by the end of 2009, an increase of 81% on the rent generated by the asset at the time of purchase in 2006. These uplifts are helping to off-set the significant value falls that are now being seen in the West End of London.
Property Portfolio and Performance
The Company's direct property portfolio is valued at £305.5 million (excluding contracted sales) as at 31 March 2009 and comprises 60 assets with an average lot size of £5.1 million. The like for like fall in the capital value of the underlying property portfolio excluding capital expenditure and disposals over the quarter was -7.3% which compares with -14.2% for the quarter ending 31 December 2008. The Group's three joint venture investments continue to be carried at nil value.
The portfolio rental income on completion of contracted disposals is £24.4 million reflecting a net initial yield of 7.4% based on the 31 March 2009 valuation. This will rise to £25.7 million equating to a net initial yield of 7.8% following expiry of rent free periods during 2009. The net reversionary yield of the portfolio is 8.95%.
Pro-active asset management has helped to maintain a low void rate of 5.4% calculated as a percentage of total rental value, as at 31 March 2009. This compares with 4.3% in December 2008 and the IPD Benchmark of 10.4%. In addition the average unexpired lease term has been held at 8.5 years to the earlier of lease expiry or tenant break compared with the latest available IPD Benchmark at 8.8 years.
The following tables reflect the position following contracted disposals based on the 31 March 2009 valuation:
Sector weightings
|
Sector |
Weighting |
|
Retail |
25.4% |
|
Offices |
45.1% |
|
Industrial |
25.1% |
|
Other |
4.3% |
|
Total |
100% |
Regional weightings
|
Region |
Weighting |
|
Central London |
13.2% |
|
South East excl. Central London |
46.3% |
|
Rest of South |
12.7% |
|
Midlands and Wales |
18.4% |
|
North and Scotland |
9.4% |
|
Total |
100% |
Top ten properties
|
|
|
Value (£) |
% |
|
1 |
Portman Square House, 43/45 Portman Square, London W1 (21.6% share) |
20,540,000 |
6.7% |
|
2 |
Minerva House, Montague Close, London SE1 (50% share) |
19,650,000 |
6.4% |
|
3 |
Victory House, Trafalgar Place, Brighton |
15,750,000 |
5.2% |
|
4 |
The Galaxy, Luton |
13,150,000 |
4.3% |
|
5 |
Reynard Business Park, Brentford |
12,280,000 |
4.0% |
|
6 |
Retail Park, Churchill Way West, Salisbury, Wiltshire |
10,550,000 |
3.5% |
|
7 |
Olympic Office Centre, Fulton Road, Wembley |
10,150,000 |
3.3% |
|
8 |
106 Oxford Road, Uxbridge |
9,850,000 |
3.2% |
|
9 |
The Gate Centre, Syon Gate Way, Brentford |
9,250,000 |
3.0% |
|
10 |
Union Park, Fifers Lane, Norwich |
8,850,000 |
2.9% |
|
|
Total as at 31 March 2009 |
130,020,000 |
42.5% |
Top ten tenants
|
|
|
Rent per annum (£) |
% |
|
1 |
Mott MacDonald Ltd1 |
1,307,148 |
4.9% |
|
2 |
Cushman & Wakefield Finance Limited |
1,183,617 |
4.4% |
|
3 |
Wickes Building Supplies Limited |
1,092,250 |
4.1% |
|
4 |
Synovate Limited2 |
950,000 |
3.6% |
|
5 |
The Buckinghamshire New University3 |
900,000 |
3.4% |
|
6 |
The British Broadcasting Corporation |
863,100 |
3.3% |
|
7 |
Recticel SA |
713,538 |
2.7% |
|
8 |
Winkworth Sherwood LLP4 |
663,095 |
2.5% |
|
9 |
Motorhouse 2000 Limited5 |
570,150 |
2.2% |
|
10 |
Tucker, Crossland Darke (Irwin Mitchell) |
555,000 |
2.1% |
|
|
Total as at 31 March 2009 |
8,797,898 |
33.2% |
1 Rent will fall to £940,000 per annum in June 2009 following surrender and granting of new lease over Ground to third floors (approximately 60% of original space). Mott MacDonald Group Limited will remain guarantor
2 Synovate Limited will begin paying this rent in June 2009. Aegis Group plc are guarantor. Figures based on 50% ownership of Minerva House
3 The Buckinghamshire New University will begin paying 50% of their rent from March 2009 and will increase to full rent in June 2012
4 On assignment from Reed Smith Ramboud Charot LLP. Figures based on 50% ownership of Minerva House
5 Six month rental deposit held
Market Background
With economic output contracting by 1.9% in the first quarter of 2009 the UK economy continues to move deeper into recession. As a result, the impact of weaker occupational markets and tenant default is becoming increasingly important. Over the 12 months to 31 March 2009 the UK commercial property market recorded a total return of -25.5%, the worst in the series 23 year history. Whilst the pace of decline in capital values decelerated from the record levels seen in the fourth quarter of 2008, the IPD Monthly Index reported an 8.9% fall in values, the third worst quarterly fall on record. Declines in value were increasingly driven by falling rental values which fell at an annualised rate of 11% over the first quarter. The average net initial yield on commercial property stood at 7.7% in March 2009, an increase of 221 basis points over the last 12 months.
Finance and Interest Rate Swaps
The Group has two interest rate swaps that fully hedge the Group's interest payments for the duration of the principal securitised loan term that matures in July 2014. Details of the two swaps are set out in the table below:
|
Amount (£) |
Fixed rate |
Expiry |
Mark to Market 31/03/2009 (£) |
Mark to Market 31/12/2008 (£) |
|
102,500,000 |
5.099% |
15/07/2014 |
(11,703,275) |
(10,653,145) |
|
111,000,000 |
5.713% |
15/07/2016 |
(19,126,572) |
(18,895,740) |
|
|
|
|
|
|
|
213,500,000 |
5.420% |
|
(30,829,847) |
(29,548,885) |
As at 31 March 2009 the Group had securitised on-balance sheet debt of £213.5 million at a total cost of funds, including a margin of 20 basis points, of 5.62%. The loan to value ratio covenant is 60%. Adopting the 31 March 2009 valuation and on completion of contracted disposals the Company has cash of approximately £84.1 million and a loan to value ratio, net of all cash, of 42.33%.
Strategy
Significant progress has been made in relation to the main objective of the strategic review, namely to reduce the Company's net loan to value ratio. The UK economy and wider property market continues to be extremely challenging and this will have a further depressing effect on values and perhaps now more significantly, rental income. Good progress continues to be made on asset management initiatives with the objective of protecting and enhancing portfolio rental income, but these initiatives are becoming increasingly difficult and it is prudent to assume that there may be some further increases in both rental arrears and vacancies within the portfolio. The cash position within the Group provides operational flexibility, and the Board and the Manager continue to focus on reducing the risks to which the Company is exposed.
-ENDS-
For further information:
|
Invista Real Estate Investment Management Duncan Owen |
020 7153 9300 |
|
Northern Trust David Sauvarin |
01481 745529 |
|
Financial Dynamics Dido Laurimore / Rachel Drysdale |
020 7831 3113 |
This information is provided by RNS
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