Net Asset Value as at 31 December 2014
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13 January 2015
Custodian REIT plc
("Custodian REIT" or "the Company")
Net Asset Value as at 31 December 2014
Custodian REIT (LSE: CREI), the UK commercial real estate investment company which listed on the main market of the London Stock Exchange on 26 March 2014 ("Admission"), today reports its unaudited Net Asset Value ("NAV") as at 31 December 2014 and highlights for the period from 1 October 2014 to 31 December 2014 ("the Period").
Financial highlights
· NAV per share 100.2p (30 September 2014: 99.6p)
· £22.5m of debt facilities deployed (30 September 2014: £12.6m) resulting in net gearing1 of 12.1% (30 September 2014: 7.7%)
· £25.0m raised from issue of equity and £10.0m term loan agreed and drawn down during the Period
· Q2 dividend paid 31 December 2014 at 1.25p per share
· NAV total return2 since Admission of 4.6%
Portfolio highlights
· Portfolio value of £180.2m (30 September 2014: £145.9m)
· Nine acquisitions completed during the Period for total consideration of £33.1m
1 Borrowings less cash divided by portfolio valuation
2 NAV movement including dividends paid
Net Asset Value
The unaudited NAV of the Company at 31 December 2014 was £156.2 million, reflecting approximately 100.2 pence per share, an increase of 0.6% since 30 September 2014:
|
|
Pence per share |
£m |
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|
|
|
|
NAV at 30 September 2014 |
99.6 |
131.4 |
|
Issue of equity |
0.6 |
24.7 |
|
|
100.2 |
156.1 |
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|
|
|
|
Valuation uplift in property portfolio |
1.0 |
1.6 |
|
Impact of acquisition costs |
(1.2) |
(1.8) |
|
|
|
|
|
Unrealised valuation movement |
100.0 |
155.9 |
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|
|
|
|
Income earned for the period |
2.0 |
3.0 |
|
Expenses for the period |
(0.5) |
(0.8) |
|
Dividends paid |
(1.3) |
(1.9) |
|
|
|
|
|
NAV at 31 December 2014 |
100.2 |
156.2 |
The NAV attributable to the ordinary shares is calculated under International Financial Reporting Standards and incorporates the independent portfolio valuation as at 31 December 2014 and income for the quarter, but does not include a provision for the third quarterly interim dividend, to be paid in March 2015.
Activity during the Period has continued to be focused on acquisitions with the aim of deploying placing monies and increasing gearing towards the target level of 25%. This investment impacts NAV to the extent that acquisition costs have largely offset the upward movement in valuations at the reporting date.
The quarterly portfolio valuation uplift of £1.6 million (0.9%) and improvement in NAV are in line with the Board's expectations. The percentage increase is impacted by £21.2 million of the £33.1 million of acquisitions during the Period being completed in December. The overall increase in valuation is due in part to market sentiment, coupled with the successful conclusion of various asset management strategies including rent reviews, new lettings and the retention of tenants beyond their contractual break clauses.
Financing
Equity
A share placing was completed on 3 October 2014, raising £25.0 million (before costs and expenses) through the issue of 23,866,349 new ordinary shares of 1p each in the capital of the Company ("the New Shares") under the Placing Programme established in the Company's February 2014 prospectus. The New Shares were issued at 104.75 pence per share, which represented a premium of 5.2% to the NAV per share as at 30 September 2014.
Debt
The Company operates a £25 million revolving credit facility with Lloyds Bank plc, which attracts interest of 2.45% above three month LIBOR and which expires on 26 March 2019. On 9 December 2014 the Company agreed and drew down a £10 million term loan with Lloyds Bank plc, which attracts interest of 2.00% above three month LIBOR and is repayable on 10 October 2019.
Dividends
The interim dividend for the period ended 30 September 2014 was paid on 31 December 2014 at 1.25 pence per share.
In the absence of unforeseen circumstances, the Board intends to pay further quarterly dividends to achieve the forecast annual dividend of 5.25 pence per share for the period ending 31 March 2015 and 6.25 pence per share in subsequent years, implying annualised dividend yields of 5.25% and 6.25% calculated by reference to the Company's issue price of 100p per share as set out in its February 2014 prospectus.
Portfolio analysis
During the Period the Company acquired the following properties:
Warrington - cost £6.0 million, comprising a 112,435 sq ft warehouse occupied by JTF Wholesale which operates 13 wholesale warehouses around the UK and has traded from the premises for the last eight years. The property is let on a 15 year lease expiring on 14 December 2023 with no breaks at a current rent of £485,000 per annum, reflecting a net initial yield of 7.64%
Gillingham - cost £3.05 million, comprising a petrol filling station and convenience store site at Beechings Way occupied by Somerfield Stores Limited (trading as the Co-operative) which has traded from the premises for the last eleven years. The property is let on a 25 year lease expiring on 15 April 2028 with no breaks at a current rent of £268,500 per annum, reflecting a net initial yield of 8.32%.
Redditch - cost £3.0 million, comprising a 59,618 sq ft industrial unit on the North Moons Moat Industrial Estate, Ravensbank Drive, occupied by Sapa Profiles, a world leader in aluminium profiling. The property is let on a 10 year lease expiring on 30 April 2020 (subject to a tenant-only break option on 1 May 2018) with current passing rent of £250,000 per annum, reflecting a net initial yield of 7.87%.
Portishead - cost £1.24 million, comprising 1.48 acres of development land adjacent to a site containing an existing holding in the Company's portfolio, a 60 bed Travelodge, together with a Lidl, Subway and a large format Waitrose. During an expected seven month build period development funding will attract an annualised coupon of 6.5% until completion. The units have been pre-let to JD Wetherspoon on a 25 year lease with a tenant only break option after 15 years, Majestic Wine on a 25 year lease with a tenant only break option after 10 years and Homebargains on a 15 year lease with no break option. On completion of the development for a total consideration of £3.93 million, the total passing rent will be £265,000 reflecting a net initial yield of 6.5%.
Leeds - cost £6.9 million, comprising two modern office buildings in Leeds city centre, Cardinal House and 40 David Street, occupying a combined 35,910 sq ft. The units are let to Enact which provides a full range of legal and conveyancing services for residential property. Both properties are let on four year leases expiring on 25 December 2018, with no break option. The current passing rent on Cardinal House is £339,000 per annum, reflecting a net initial yield of 8.43%, and £288,750 per annum on 40 David Street, reflecting a net initial yield of 8.76%.
Milton Keynes - cost £3.8 million, comprising a 52,532 sq ft industrial unit on the Tilbrook Industrial Estate occupied by Massmould, a manufacturer of plastic injection moulded products and part of the multinational Global Closure Systems Group. The property is let on a 15 year reversionary lease expiring on 27 February 2031, subject to a tenant only break option on 28 February 2026. The current passing rent is £280,000 per annum, reflecting a net initial yield of 6.96%.
Salford - cost £4.825 million, comprising a 69,842 sq ft modern industrial warehouse on Agecroft Commerce Park occupied by Cintas Document Management, a leading provider of integrated document management solutions including archiving, scanning and digitisation, and business process outsourcing. The property is let on a 14 year lease expiring on 30 September 2028, at a passing rent of £403,676 per annum, reflecting a net initial yield of 7.9%.
Grantham - cost £4.375 million, comprising the 24,322 sq ft Discovery Retail Park on London Road, with three retail warehouse units let to Carpetright, Poundstretcher and Laura Ashley. The units' leases expire on 11 April 2020, 24 December 2020 and 30 May 2021 with a total passing rent of £324,286 per annum, reflecting a net initial yield of 7.00%.
For details of all properties in the portfolio please see www.custodianreit.com/property/portfolio.php.
Sector and geographic analysis as at 31 December 2014
|
Sector |
Valuation 31 Dec 2014 £'000 |
Quarter valuation movement £'000 |
Weighting by income 31 Dec 2014 |
Weighting by income 30 Sept 2014 |
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|
|
|
|
|
|
Industrial |
71.2 |
1.1 |
41% |
38% |
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Retail |
45.5 |
(0.2) |
24% |
26% |
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Other3 |
42.5 |
0.5 |
21% |
24% |
|
Office |
21.0 |
0.2 |
14% |
12% |
|
|
|
|
|
|
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Total |
180.2 |
1.6 |
100% |
100% |
The Company continues to have a strong focus on industrial property, while retaining its investment objective to maintain a suitably balanced portfolio.
3 Includes leisure, education and motor trade.
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Location |
Valuation |
Quarter valuation movement |
Weighting by income 31 Dec 2014 |
Weighting by income 30 Sept 2014 |
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South-East |
40.5 |
0.1 |
22% |
22% |
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West Midlands |
31.4 |
0.9 |
16% |
18% |
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North-West |
28.0 |
0.1 |
15% |
11% |
|
East Midlands |
27.2 |
0.3 |
17% |
18% |
|
North-East |
19.0 |
0.1 |
11% |
8% |
|
South-West |
12.5 |
0.2 |
6% |
7% |
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Scotland |
10.4 |
0.2 |
6% |
7% |
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East Anglia |
9.6 |
(0.1) |
6% |
7% |
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Wales |
1.6 |
(0.2) |
1% |
1% |
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|
|
|
|
|
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Total |
180.2 |
1.6 |
100% |
100% |
The Company operates a geographically diversified portfolio across the UK, seeking to ensure that no one area represents the majority of the portfolio.
Pipeline
The pipeline of new properties meeting the Company's investment criteria remains strong, with more than £9.0 million of property currently under offer.
Commenting on the pipeline, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company's external fund manager), said:
"The completion of pipeline acquisitions in January 2015 will bring the Company close to the full deployment of existing cash and agreed debt facilities. We expect to maintain a strong pipeline of opportunities throughout 2015 and remain confident we can acquire further properties that meet our investment criteria.
"Through 2014 the greatest pressure on pricing was felt by larger lot sizes (£10m plus), with smaller assets, typical of those acquired by Custodian REIT, not experiencing the same price inflation. This allowed us to invest over £84m at an average net initial yield of 7.5% while maintaining both the quality of property and length of income. We believe market conditions in 2015 will allow us to take further advantage of there being less competition for our target properties, while still acquiring assets that will benefit from rental growth over the medium term. Our focus remains on income to ensure we can achieve the target dividend. We believe positive sentiment in the investment market, combined with a strengthening occupational market, will support our income growth objectives."
- Ends -
Further information:
Further information regarding the Company can be found at the Company's website www.custodianreit.com or please contact:
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Custodian Capital Limited |
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Richard Shepherd-Cross / Nathan Imlach / Ian Mattioli |
Tel: +44 (0)116 240 8740 |
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Numis Securities Limited |
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Nathan Brown / Hugh Jonathan |
Tel: +44 (0)20 7260 1000 |
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www.numis.com/funds |
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Camarco |
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Ed Gascoigne-Pees |
Tel: +44 (0)20 3757 4984 |
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www.camarco.co.uk |
Notes to Editors
Custodian REIT plc is a UK real estate investment trust ("REIT") listed on the London Stock Exchange. The Company launched on 26 March 2014, acquiring a portfolio of £95 million of UK commercial property. This was sourced from an existing portfolio of 48 properties held by clients of Mattioli Woods plc in a syndicated structure. The diverse portfolio consisted of properties let to institutional grade tenants on long leases throughout the UK.
The Company raised gross proceeds of £55 million through an initial public offering and raised a further £25 million via a subsequent placing. It invests in a diversified portfolio of UK commercial properties to achieve its investment objective of providing shareholders with an attractive level of income together with the potential for capital growth through a closed-ended fund.
The target portfolio is characterised by small lot sizes with individual property values of less than £7.5 million at acquisition. Custodian Capital Limited is the discretionary investment manager of the Company.
For more information visit www.custodianreit.com and www.custodiancapital.com.
Important notice
Forward looking statements: This announcement includes "forward-looking statements". All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's business strategy and plans are forward-looking statements.
Forward-looking statements are subject to risks and uncertainties and accordingly the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These factors include but are not limited to those that are described in the formal prospectus.
These forward-looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Financial Services Act 2012, the Listing Rules or Prospectus Rules of the Financial Conduct Authority or other applicable laws, regulations or rules.
Certain statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in this announcement should be construed as a profit forecast. Past share price performance cannot be relied on as a guide to future performance.
This information is provided by RNS
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