REG - Alternative Inc REIT - NAV, Dividend Declaration and Portfolio Valuation

Alternative Income REITAnnouncement

31/10/2024 07:00

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RNS Number : 3174K  Alternative Income REIT PLC  31 October 2024

31 October 2024

Alternative Income REIT PLC

(the "Company" or "Group" or "AIRE")

NET ASSET VALUE, DIVIDEND DECLARATION AND PORTFOLIO VALUATION UPDATE

TO 30 SEPTEMBER 2024

New target annual dividend of 6.2 pence per share ("pps") for the year ending
30 June 2025(†),

an increase of 5.1% on the prior year target of 5.9pps

Unaudited NAV total return for the quarter of 2.5%

Resilient portfolio well-placed to continue to provide secure, index-linked
income with the potential for capital growth

 

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 with index-linked rent reviews, provides a
trading and business update and declares an interim dividend for the quarter
ended 30 September 2024.

 

Simon Bennett, Non-Executive Chair of Alternative Income REIT plc, comments:

 

"Having achieved the Company's target dividend of 5.9pps last year, subject to
the continued collection of rent from the Group's portfolio as it falls due,
the Board has set a new dividend target of 6.2pps for the year ending 30 June
2025(†), which represents an increase of 5.1% over the previous year.

 

At 30 September 2024, the Group's unaudited NAV was £65.4 million, 81.3pps,
representing a 0.5% increase over the previous quarter. When combined with the
1.625pps dividend paid in the quarter, this produces an unaudited NAV total
return for the quarter of 2.5%.

 

The Group's portfolio remains relatively insulated from market fluctuations,
benefiting from being 100% let, achieving 100% collection of rent due, and a
95.9% index-linked rent review profile. The Board continues to actively seek
properties to invest the remaining proceeds from the sale of the hotel in
Glasgow which amounts to £2.2 million, which has taken longer than originally
anticipated.

 

The Group produces a secure and increasing income stream and this is the
second quarter where the valuation of the portfolio has risen, albeit
modestly, and  the Group will continue to benefit from low borrowing costs
until October 2025. I look forward to reporting on AIRE's continued progress
in the coming months."

 

Overview of Key Financials

                                            At 30 September  At 30 June       Change

                                            2024             2024

                                            (unaudited)      (audited)
 Net Asset Value ("NAV")                    £65.4 million    £65.1 million    +0.5%
 NAV per share                              81.3p            80.9p            +0.5%
 Share price per share                      72.5p            66.0p            +9.8%
 Share price discount to NAV                10.8%            18.4%            -7.6%
 Investment property fair value             £103.1 million   £102.7 million   +0.4%

 (based on external valuation)
 Loan to gross asset value ("GAV") (A) (B)  37.6%            37.7%

 

                                   Quarter ended         Quarter ended    Change

                                   30 September 2024     30 June 2024

                                   (unaudited)           (unaudited)
 EPRA earnings per share (A)       1.6p                  1.6p             -
 Adjusted earnings per share (A)   1.6p                  1.6p             -
 Dividend cover (A)                100.7%                98.0%            +2.7%
 Total dividends per share         1.55p                 1.625p           -4.6%
 Dividend yield (annualised)(A)    8.6%                  8.9%             -0.3%
 Earnings per share                2.0p                  1.7p             +17.4%
 Share price total return (A)      12.3%                 -0.8%
 NAV total return (A)              2.5%                  2.1%
 Annualised passing rent           £7.8 million          £7.7 million     +1.1%
 Ongoing charges (A) (annualised)  1.5%                  1.5%             -

(A) Considered to be an Alternative Performance Measure.

(B) The loan facility at 30 September 2024 of £41.0 million (30 June 2024:
£41.0 million) with Canada Life Investments, matures on 20 October 2025 and
has a weighted average interest cost of 3.19%.

 

Dividend Declaration, Earnings Per Share and Dividend Cover

 

The Board has set a new dividend target of 6.2pps for the year ending 30 June
2025(†), which represents an increase of 5.1% over the previous year.

 

The Board is pleased to declare an interim quarterly dividend of 1.55pps for
the quarter ended 30 September 2024. This dividend will be distributed as
Property Income Distribution ("PID") and will be paid on 22 November 2024 to
shareholders on the register on 7 November 2024. The ex-dividend date will be
8 November 2024.

 

The Adjusted EPS was 1.6pps for the quarter (30 June 2024: 1.6pps). The
dividend cover for the quarter was 100.7% (30 June 2024: 98.0%).

 

Property Portfolio

 

The Group's portfolio is relatively insulated from market fluctuations,
benefiting from being 100% let, with 100% collection of rent due and 95.9%
index-linked rent review profile which continues to provide a secure and
growing rental income stream.

 

The anticipated increase in the UK commercial property investment market
activity, fueled by interest rate cuts, lower inflation and enhanced debt
financing opportunities has been slow to materialise.

 

At 30 September 2024, the Group held 19 properties valued at £103.1million
(30 June 2024: £102.7 million). The Company's property values increased by
£0.4 million or 0.4% for the quarter ended 30 September 2024.

 

At 30 September 2024, the Net Initial Yield on the Group's portfolio was 7.1%
(30 June 2024: 7.1%) and the Group's assets remained 100% let (30 June 2024:
100%). The weighted average unexpired lease term at 30 September 2024 was 16.2
years to the earlier of break and expiry (30 June 2024: 16.5 years) and 18.1
years to expiry (30 June 2024: 18.4 years).

 

The Group's contracted annualised rent increased by 1.3% during the quarter to
30 September 2024 (30 June 2024: 0.8%). This was due to annual indexation of
one lease and a five yearly index-linked rent review on another. 95.9% of
leases within our portfolio are index-linked, with 37.3% of this rental income
reviewed annually. The portfolio continues to be actively managed: one tenant
has agreed to remove their lease break; and discussions continue with four
other tenants considering re-gearing leases, removing tenant breaks and
extending lease lengths. The Estimated Rental Value of the Group's property
assets has risen by 3.1% as compared to the previous quarter driven by growth
in rents in the industrial and social housing sectors.

 

For the upcoming quarter to 31 December 2024, 9.6% of the Group's income will
be reviewed with two annual index-linked rent reviews.

 

Net Asset Value, Share Price and Share Price Discount to NAV

 

At 30 September 2024, the Group's unaudited NAV was £65.4 million, 81.3pps
(30 June 2024: £65.1million, 80.9pps), representing a 0.5% increase over the
previous quarter.

 

When combined with the 1.625pps dividend paid in the quarter, this produces an
unaudited NAV total return for the quarter of 2.5% (30 June 2024: 2.1%). The
Company's share price increased by 9.8% to 72.5pps, reflecting the increase in
the NAV and the decrease in the discount from 18.4% to 10.8%.

 

The table below sets out the movement in NAV during the quarter.

 

                                                              Pence per share  £ million
 NAV at 30 June 2024                                          80.9             65.1
 Valuation movement in property portfolio                     +0.5             +0.4
 Income earned for the period                                 +2.4             +1.9
 Expenses for the period                                      -0.5             -0.3
 Net finance costs for the period                             -0.4             -0.4
 Interim dividend paid during the quarter ended 30 June 2024  -1.6             -1.3
 NAV at 30 September 2024                                     81.3             65.4

 

The NAV attributable to the ordinary shares has been calculated under
International Financial Reporting Standards as adopted by the United Kingdom
and incorporates both the Group's property portfolio individually valued on a
'Red Book' basis at 30 September 2024 and net income for the quarter but does
not include a provision for the interim dividend declared today (see above).

 

The income earned for the period includes an accrual for the minimum
contractual uplifts contained in the index-linked leases. In the event that
inflation is greater than these minimum contractual uplifts, the actual income
will be greater than the income currently accrued.

 

Rent Collection

 

Rent collection remains resilient with 100% collection of rent due for the
quarter ended 30 September 2024. 83.6% of the portfolio's rent is payable
quarterly in advance and 16.40% payable monthly in advance.

 

† This is a target and not a formal dividend forecast or a profit forecast

 

ENQUIRIES

 Alternative Income REIT PLC
 Simon Bennett - Chair                                  via H/Advisors Maitland below

 Martley Capital Real Estate Investment Management Ltd  020 4551 1240

 Richard Croft

 Jane Blore

 Panmure Liberum Limited                                020 3100 2000
 Alex Collins
 Tom Scrivens

 H/Advisors Maitland (Communications Advisor)           07747 113 930 / 020 7379 5151
 James Benjamin                                         aire-maitland@h-advisors.global

 Rachel Cohen

 Billy Moran

 

The Company's LEI is 213800MPBIJS12Q88F71.

 

Further information on Alternative Income REIT PLC is available at
www.alternativeincomereit.com (http://www.alternativeincomereit.com) (1).

 

(1) 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.

 

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, with a particular focus on alternative and specialist
real estate sectors. The majority of the assets in the Group's portfolio are
let on long leases which contain index linked rent review provisions.

 

The Company's asset manager is Martley Capital Real Estate Investment
Management Limited ("Martley Capital"). Martley Capital is a full-service real
estate investment management platform whose activities cover real estate
investing, lending, asset management and fund management. It has over 40
employees across five offices in the UK and Europe. The team manages assets
with a value of circa £900 million across 19 mandates (at 30 September 2024).

 

 

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