Ediston Prop Inv - Net Asset Value(s)
02/11/2022 07:00
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RNS Number : 9943E Ediston Property Inv Comp PLC 02 November 2022
Ediston Property Investment Company plc
(LEI: 213800JRL87EGX9TUI28)
Net Asset Value ('NAV') as at 30 September 2022
And Trading Update
Ediston Property Investment Company plc (LSE: EPIC) (the 'Company') announces
its unaudited NAV at 30 September 2022, which will form the basis for the year
end accounts.
Quarter Headlines
· NAV per share at 30 September 2022 of 94.86 pence (30 June 2022:
98.35 pence), a decrease of 3.5% in the quarter.
· Fair value independent valuation of the property portfolio at 30
September 2022 of £231.4 million, a like-for-like decrease of 2.5% on the
valuation at 30 June 2022.
· NAV total return (including dividends) for the quarter of -2.5%
(30 June 2022 quarter: 3.7%).
· NAV total return of 11.5% for the year ended 30 September 2022.
· Portfolio weighted average unexpired lease length of 4.5 years
and EPRA vacancy rate of 6.5%.
· Dividends totalling 1.25 pence per share (5.00 pence per share
annualised) paid in the quarter.
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· Last remaining non-retail warehouse asset sold for £5.0 million. The
Company now only holds retail warehouse assets and has cash available for
further investment in the retail warehouse sector.
· Two asset management deals completed, securing £1.25 million of
rental income per annum.
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Net Asset Value
The unaudited NAV of the Company at 30 September 2022 was £200.48 million, or
94.86 pence per share, a decrease of 3.5% on the Company's NAV per share as at
30 June 2022.
Pence Per Share £ million
NAV at 30 June 2022 98.35 207.82
Valuation of retained property portfolio (3.66) (7.74)
Reduction in value of the property portfolio as a result of Telford sale (1.58) (3.35)
Sale proceeds 2.37 5.00
Capital expenditure (0.45) (0.92)
Income earned 1.89 4.00
Expenses & finance costs (0.81) (1.69)
Dividends paid (1.25) (2.64)
NAV at 30 September 2022 94.86 200.48
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 30 September
2022 and undistributed income for the quarter, but does not include a
provision for any accrued monthly dividend.
Investment and asset management activity
During the period, the Company sold its leisure unit at Southwater Square,
Telford, its final non-retail warehouse property, for £5.0 million. The
Company is now only invested in retail warehouse assets, in line with its
revised strategy.
In the quarter, the Investment Manager completed two asset management deals
securing £1.25 million of rental income per annum.
At Coatbridge, Glasgow, an Agreement for Lease (AFL) was completed with the
existing tenant, B&Q, keeping it on the park for a further 10 years.
B&Q had a lease expiry in December this year. As part of the transaction,
B&Q will downsize from 102,000 sq. ft. to 79,960 sq. ft. Aldi, has signed
an AFL for a 20,000 sq. ft. unit which will be created in the space vacated by
B&Q. Planning permission has been obtained for the change to food use. On
completion of the landlord works, Aldi will enter into a 20-year lease without
break, subject to five-yearly rent reviews linked to RPI. This transaction
will be reflected in the NAV when the condition relating to the landlord works
has been discharged and the leases have completed.
At Springkerse Retail Park, Stirling, Pets at Home agreed to the removal of
its lease break option, which was due in June 2024. The lease will now expire
in June 2029. The passing rent is unchanged but will benefit from an upwards
only rent review in June 2024.
The Investment Manager continues to progress lettings and lease restructures
across the portfolio, with the aim of further improving the Company's income
stream.
Potential new acquisitions continue to be reviewed. However, this is in the
context of ensuring that terms reflect market conditions, and that the
financial resilience of the Company is secure.
Cash and debt
At the date of this announcement, the Company has approximately £51.2 million
of cash available for investment and operational purposes. The Company also
has £31.2 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.
At the date of the September valuation, the average loan-to-value across the
Company's two debt facilities was 34.7%. The Company is fully compliant with
all debt covenants.
Summary
The Company's NAV decreased by 3.5%, following five consecutive quarters of
NAV growth. Values reduced across the UK commercial property market, with some
sub sectors more affected than others.
The cost-of-living crisis, rising energy costs, high inflation, rising
interest rates, political instability and wider geo-political events eroded
the confidence of consumers and investors alike and have created headwinds,
not just for property, but also for the wider economy. However, it was the
material increase in gilt yields which caused the biggest recent shift in
property values, particularly for the lower yielding sub-sectors such as
industrial and logistics. How the gilt market responds to the switch in
government economic policy will be important for real estate markets going
forward.
However, the fundamentals of retail warehousing remain attractive, and it is
likely to continue to be the most resilient and flexible of the retail
sub-sectors, able to adapt to the changing needs of consumers and tenants as
well as accommodating many convenience-led retailers.
There will be challenges to contend with, but with a reshaped portfolio (with
no office or leisure exposure), a good tenant line up, a low vacancy rate
(6.5%) an attractive WAULT (4.5 years) and ongoing asset management
opportunities, the Company has a robust platform on which to build. Further,
the Company has cash available for investment into a re-priced market, at the
appropriate time.
Portfolio sector weightings and tenant and locational exposure as at 30
September 2022
Sector
Sector Exposure (%)
Retail warehouse 100.0
Geography
The portfolio is diversified across the regional markets.
Region Exposure (%)
Scotland 27.2
Wales 26.1
North West 16.9
Yorkshire 15.2
North East 8.4
East Midlands 6.2
Top five tenants (contracted income) 30 September
2022
Tenant Exposure (%)
B&Q Limited 15.0
B&M Retail Limited 7.9
Marks & Spencer plc 7.6
Boots UK Limited 4.7
Pets at Home Limited 3.9
Forthcoming events
The next interim dividend announcement is expected to be made by 3 November
2022. The next scheduled independent quarterly valuation of the property
portfolio will be conducted by Knight Frank LLP for 31 December 2022. The
unaudited NAV per share at that date is expected to be announced in January
2023.
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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