REG - Alternative Inc REIT - Rent collection, NAV and Dividend Declaration

Alternative Income REITAnnouncement

04/02/2021 07:00

RNS Number : 9386N
  
Alternative Income REIT PLC
  
04 February 2021
  
 

4 February 2021
Alternative Income REIT PLC
(the "Company" or "Group")
RENT COLLECTION, NAV AND DIVIDEND DECLARATION
The Board of Directors of Alternative Income REIT PLC (ticker: AIRE), the owner of a diversified portfolio of UK commercial property assets, predominantly let on long leases, provides a trading and business update and declares an interim dividend for the quarter ended 31 December 2020.
Rent collection
In respect of the March, June and September 2020 rent quarters, the Group has collected 91.4% of rents due and payment plans are in place in respect of the remaining 8.6%.
 
The current quarter's rents are split 80% quarterly and 20% monthly.  By the end of January 2021, the Group had collected 80.4% of its December 2020 quarter's rent and agreed, or is in the process of agreeing, rent concessions with the remaining 19.6%. 
 
Whilst the Group's stance on rent concessions has generally been to agree, where warranted, to deferrals, limited rent free periods now being considered on a case-by-case basis where value can be added to the property through lease extensions or regearing.  The Board recognises that the first half of 2021 is likely to be particularly challenging for the hotel and leisure industries.
Earnings per Share, Valuation and Net Asset Value
Unaudited EPRA earnings per share ("EPRA EPS") for the quarter ended 31 December 2020, were 1.32 pence per share, representing dividend cover for the quarter of 132% (quarter to 30 September 2020: 2.12 pence per share; 170% cover).  
 
The EPRA EPS includes accruals to reflect the minimum contracted uplifts, the spreading of rent free periods, an adjustment for the amortisation of loan arrangement fees and movement in the provision for impairment of trade receivables. Excluding these items from the Group's EPRA EPS, the unaudited adjusted cash earnings were 1.26 pence per share, reflecting 126% cash dividend cover for the quarter (quarter ended 30 September 2020: 1.92 pence per share; 154% cash dividend cover, but this included the gain on the disposal of the Wet 'n' Wild Water Park, North Shields ("Wet 'n' Wild"), which represented 0.39 pence per share).  
 
As at 31 December 2020, the independent fair valuation undertaken by Knight Frank of the Company's property portfolio was £108.53 million, including £4.75 million for the property at Droitwich Spa Retail Park ("Droitwich") acquired in early December 2020 (30 September 2020: £101.76 million).  The net initial yield on the Company's portfolio was 5.53% (30 September 2020: 5.76%). 
 
The Company's unaudited net asset value ("NAV") was £68.16 million, 84.68 pence per share at 31 December 2020, (30 September 2020: £67.52 million, 83.88 pence per share).  See the table below for NAV movement during the quarter.
Analysis of Movement in NAV




Movement during the quarter


Pence per share


£ million




NAV at 30 September 2020


83.88


67.52




Valuation change in property portfolio*


0.73


0.59




Income earned for the period


2.30


1.85




Expenses for the period


(0.40)


(0.32)




Provision for impairment of trade receivables


(0.14)


(0.11)




Net finance costs for the period


(0.44)


(0.36)




Interim dividend paid during the quarter ended 31 December 2020


(1.25)


(1.01)




NAV at 31 December 2020


84.68


68.16




*       The quarter's increase in the independent fair valuation of £0.76 million was reduced by £0.17 million to reflect the minimum contracted rental uplifts and the rent frees in the quarter, resulting in a net valuation change in the quarter of £0.59 million.
 
The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards as adopted by the European Union and incorporates both the Group's property portfolio individually valued on a 'Red Book' valuation basis at 31 December 2020 and net income for the quarter, but does not include a provision for the interim dividend (see below) for the quarter ended 31 December 2020.
 
The income earned for the period includes an accrual for the minimum contractual uplifts defined within the index linked leases. In the event that inflation is greater than these minimum contractual uplifts, the actual income will be greater than that currently accrued.
Dividend
The Board declares today an interim dividend of 1.00 pence per share for the quarter ended 31 December 2020.  The dividend will be paid on 26 February 2021 to shareholders on the register on 12 February 2021. The ex-dividend date will be 11 February 2021. The dividend will be a Property Income Distribution.
 
A quarter of the Group's rent is derived from the hotel and leisure industry, which has been particularly adversely affected by the COVID-19 related lockdown measures enforced during 2020 and, indeed, most remain closed. As a result, the Group currently has arrears from this sector equal to c.8.0% of its 2020 rents, which, when combined with the remedial work that the Group completed in December 2020 to ensure that its property in Swindon conforms with current Building Regulations, has impacted the Group's cash position, resulting in a lower dividend declared today in respect of the final quarter of 2020. The Board continues to target a resumption of a fully covered annual dividend of 5.5 pence per share1, all else being equal, by September 2022.
Portfolio
Following the acquisition of Droitwich in early December 2020, the Group is now fully invested, holding a diversified portfolio of UK commercial property assets that are currently fully let, with a weighted average unexpired lease term of 18.3 years (30 September 2020: 19.2 years) to the earlier of break and expiry and 20.3 years (30 September 2020: 21.4 years) to expiry.
 
The Droitwich acquisition reinvested the proceeds from the sale of Wet 'n' Wild, at a yield of 7.95%, materially higher than both the 6.0% exit yield on Wet 'n' Wild and the Group's latest portfolio valuation yield of 5.53%.
 
87% of the portfolio's income stream is reviewed periodically, on an upward only basis, in line with inflation; with 65% and 22% of the portfolio indexed (subject to floors and caps) to RPI and CPI, respectively.
Shareholder engagement
As announced on 1 December 2020, and in line with its commitment set out in the results of the Annual General Meeting announcement on 26 November 2020, the Board is continuing to engage in an open and transparent dialogue with shareholders and expects to provide an update later this month.
 
ENQUIRIES




Alternative Income REIT PLC


 




Steve Smith - Chairman 


via Maitland/AMO below




 


 




M7 Real Estate Ltd
Richard Croft


+44 (0)20 3657 5500




 


 




Panmure Gordon (UK) Limited


+44 (0)20 7886 2500




Alex Collins 


 




Tom Scrivens


 




Chloe Ponsonby


 




 


 




Maitland/AMO (Communications Adviser)


+44(0) 7747 113 930




James Benjamin


james.benjamin@maitland.co.uk




 
The Company's LEI is 213800MPBIJS12Q88F71.
 
Further information on Alternative Income REIT plc is available at www.alternativeincomereit.com2
 
NOTES
Alternative Income REIT PLC aims to generate a sustainable, secure and attractive income return for shareholders from a diversified portfolio of UK property investments, predominately in alternative and specialist sectors. The majority of the assets in the Group's portfolio are let on long leases which contain inflation linked rent review provisions.
 
The Company's investment adviser is M7 Real Estate Limited ("M7"). M7 is a leading specialist in the pan-European, regional, multi-tenanted real estate market. Majority owned by its senior managers, it has over 200 employees in 14 countries across Europe. The team manages over 835 properties with a value of circa €5.1 billion.
1   This is a target only and not a profit forecast. There can be no assurance that the target will be met and it should not be taken as an indicator of the Company's expected or actual results.
2   Neither the content of the Company's website, nor the content on any website accessible from hyperlinks on its website or any other website, is incorporated into, or forms part of, this announcement nor, unless previously published on a Regulatory Information Service, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company.

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