Ediston Prop Inv - Net Asset Value(s)
26/04/2022 07:00
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RNS Number : 2589J Ediston Property Inv Comp PLC 26 April 2022
Ediston Property Investment Company plc
(LEI: 213800JRL87EGX9TUI28)
Net Asset Value ('NAV') as at 31 March 2022
And Trading Update
Ediston Property Investment Company plc (LSE: EPIC) (the 'Company') announces
its unaudited NAV at 31 March 2022, which will form part of the unaudited
interim accounts expected to be published in May 2022.
Quarter Summary
· NAV per share at 31 March 2022 of 96.08 pence (31 December 2021:
90.64 pence), an increase of 6.0% in the quarter.
· Fair value independent valuation of the property portfolio at 31
March 2022 of £238.8 million, a like-for-like increase of 6.5% on the
valuation at 31 December 2021.
· NAV total return (including dividends) for the quarter of 7.4% (31
December 2021: 2.5%).
· Fourth consecutive quarter of NAV growth.
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· Sale of St Philips Point, Birmingham completes successful period of
investment in office assets, with retail warehouses representing the focus of
the next phase of the Company's investment strategy.
· Four lease transactions completed, securing £377,500 of rent per
annum.
· Strong levels of rent collection maintained. Expected to be 99.9% for
Q1 2022.
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Net Asset Value
The unaudited NAV of the Company at 31 March 2022 was £203.05 million, or
96.08 pence per share, an increase of 6.0% on the Company's NAV per share as
at 31 December 2021.
Pence Per Share £ million
NAV at 31 December 2021 90.64 191.54
Valuation of retained property portfolio 6.85 14.47
Reduction in value of the property portfolio as a result of Birmingham sale (12.07) (25.50)
Capital proceeds 11.19 23.65
Capital expenditure (0.20) (0.43)
Income earned 1.93 4.09
Expenses & finance costs (1.01) (2.13)
Dividends paid (1.25) (2.64)
NAV at 31 March 2022 96.08 203.05
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 2022
and undistributed income for the quarter, but does not include a provision for
any accrued monthly dividend.
Investment activity
In seeking to identify and capitalise on attractive investment themes and
opportunities as they emerge in the UK commercial property sector, the
Investment Manager has been repositioning the portfolio to focus on the retail
warehouse sector. This followed a review in July 2021 which concluded that
this sector had the best prospects for asset value and income growth.
During the period, the Company completed the first phase of this change of
focus by selling its final office asset, St Philips Point, Birmingham, for a
headline price of £24.5 million.
The shift in focus coincides with a move from the office sector which has
provided positive performance for the Company since its launch in 2014, with
six office assets having been bought and sold during that time, delivering an
IRR of 10.1%.
On 13 April the Company announced the sale of its leisure asset at The
Lanyard, Hartlepool for a price of £2.6 million. The asset is let to Mecca
Bingo Limited. The Investment Manager had completed a lease extension with the
tenant in quarter four last year which extended the unexpired lease term by
seven years. The Company now has one leisure asset remaining in the property
portfolio.
The emphasis is now on redeploying the sale proceeds into retail warehouse
assets. According to the IPF Consensus Forecast, published in February 2022,
retail warehousing is forecast to be the top performing sub-sector, on a total
return basis, over the period 2022 to 2026.
Asset management update
During the period four lease transactions were completed, securing £377,500
of income per annum, which is marginally ahead of the ERV of the units.
· At Kingston Retail Park in Hull, Greggs completed a lease on a 2,000
sq. ft. unit. Greggs signed a 10-year lease with a five-year tenant break
option.
· At Widnes Shopping Park, Card Factory signed a five-year lease,
without break, on a 1,590 sq. ft. unit.
· At Barnsley, Jysk completed a 10-year lease with a five-year break
option on a 10,000 sq. ft. unit.
· At Stirling, Harry Corry signed a five-year lease extension on its
9,968 sq. ft. unit, meaning its lease will now expire in February 2027.
Post-period-end JD Sports completed a lease on a 7,623 sq. ft. unit, at
Prestatyn Shopping Park, which was previously occupied by New Look. New Look
was occupying the unit on a turnover rent basis, following the approval of its
Company Voluntary Arrangement (CVA). Under the terms of the CVA landlords are
entitled to break the leases.
The Investment Manager considered that the terms of the CVA were below market,
so it took the opportunity to exercise its break clause and identified JD
Sports as a more suitable tenant for the space. The rent from JD Sports is 44%
higher than the turnover rent which was being paid by New Look.
The EPRA Vacancy Rate, at 31 March 2022 was 7.3%. This figure has subsequently
fallen to 6.3% following the JD Sports letting mentioned above.
The Investment Manager is progressing other new lettings and lease
restructures across the portfolio, which will further improve the Company's
income stream. These will be reported on when completed.
Rent collection, cash and debt
Rent collection continues to be strong, with 99.9% of the rent due for quarter
one 2022 expected to be collected. The income received by the Company will
fluctuate over the coming months as the rent lost through office sales is
replaced by rent from new acquisitions.
At the date of this announcement, the Company has approximately £41.2 million
of cash available for investment and operational purposes. The Company also
has £36.3 million of cash held in its debt facility, which is subject to the
lender's LTV requirements being met for it to be released for investment
purposes. These figures include the Hartlepool sale proceeds.
At the date of the March valuation, the average loan-to-value across the
Company's two debt facilities was 32.4%. The Company is fully compliant with
all debt covenants and has significant headroom against income and asset value
covenants.
Summary
The Company has now had four consecutive quarters of NAV growth, driven by
continued valuation improvements in its retail warehouse portfolio. General
market movement, and the completion of asset management initiatives have
contributed to the positive direction of travel.
Good progress has been made with the revised strategy, with all offices assets
now sold. The priority is to reinvest the sales proceeds into suitable retail
warehouse stock.
Looking across the portfolio, there are other reasons to be positive. Rent
collection remains strong, the EPRA vacancy rate has fallen, and the
Investment Manager continues to identify and complete asset management
projects across multiple properties.
William Hill, Chairman, commented:
"Another strong quarter of performance from the Company's retail warehouse
portfolio provides further evidence of the merits of the Company's decision to
target this sector. Following the sale of St Philips Point, we are now
concentrating on reinvesting the proceeds into retail warehouse assets and
growing the Company with a focus on retail warehousing."
Portfolio sector weightings and tenant and locational exposure
Sector
Sector Exposure (%)
Retail warehouse 97.7
Other commercial/ Leisure 2.3
Geography
The portfolio is diversified across the regional markets.
Region Exposure (%)
Scotland 26.1
Wales 25.9
North West 16.3
Yorkshire 15.0
North East 9.2
East Midlands 6.2
West Midlands 1.3
Top five tenants
Tenant Exposure (%)
B&Q Limited 14.7
B&M Retail Limited 7.7
Marks & Spencer plc 6.3
Boots UK Limited 4.6
Pets at Home Limited 3.8
Forthcoming events
The Company expects to produce its unaudited interim results for the period to
31 March 2022 in May.
The next interim dividend announcement is expected to be made by 5 May 2022.
The next scheduled independent quarterly valuation of the property portfolio
will be conducted by Knight Frank LLP for 30 June 2022. The unaudited NAV per
share at that date is expected to be announced in July 2022.
The Company intends to publish its next factsheet shortly which will be made
available on the Company's website at www.ediston-reit.com
(http://www.ediston-reit.com) .
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 - Investec Bank plc
0207 597 5873
Calum Bruce - Ediston Investment Services Limited
0131 225 5599
Ruth Wright -
JTC
0203 893 1011
Ben Robinson - Kaso Legg Communications
0203 995 6672
Stephanie Ross - Kaso Legg Communications
0203 995 6676
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