REG - M7 Regional E-Whse. - Dividend Declaration

FTI ConsultingAnnouncement

09/02/2023 08:15

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RNS Number : 3551P  M7 Regional E-Warehouse REIT PLC  09 February 2023

 

M7 Regional E-Warehouse REIT plc

("M7 Regional E-Warehouse REIT" or the "Company")

9 February 2023

 

Q4 BUSINESS UPDATE

STRONG OPERATIONAL PERFORMANCE CONTINUES TO SUPPORT DIVIDEND

 

The Board of Directors of M7 Regional E-Warehouse REIT, which owns a
diversified portfolio of e- warehouses across the UK (ticker: REW), provides a
business update and declares an interim dividend for the quarter ended 31
December 2022.

 

James Max, Non-Executive Chairman of M7 Regional E-Warehouse REIT plc,
commented:

"Our fourth quarter performance and continued strong rent collection helped
drive further growth in operating profit and a further interim dividend, which
provides investors with an attractive 7.2% dividend yield for the financial
year (8 pence per share), in line with expectations.

"In our Q3 update we noted the significant headwinds facing the economy and
the resultant impact on the commercial real estate sector. This led to a
rerating of UK commercial property and a fall in values across the sector in
general during Q4. However, the broad composition and strong income
characteristics of M7 Regional E-Warehouse REIT's portfolio mitigate this with
the Company reporting a 6% fall in the valuation over the period. We continue
to closely monitor the financial performance of our tenants and to explore
every opportunity to reduce costs and drive income as well as opportunistic
disposals of particular assets."

"We have maintained the attractive dividend in 2022 and in light of
anticipated increased cost of debt post refinancing in August 2023 will pay
careful attention to the feasibility of maintaining this level of dividend in
the short term. Despite this the portfolio has a strong income return and cash
flow which in the current economic situation is a positive differentiating
factor for the portfolio, which gives us confidence about the future prospects
of the business."

 

Financial and operational highlights (unaudited)

                                                               At 31 December 2022  At 30 September 2022  Change

                                                               (unaudited)          (unaudited)
 Net Asset Value                                               £33.85 million       £41.33 million        -18.10%
 Net Asset Value per share                                     88.71p               108.31p               -18.10%
 Share price                                                   111p                 111p                  -
 Investment property fair value (based on external valuation)  £106.05 million      £112.78 million       -5.97%

 

 

                                             Quarter ended 31 December 2022 (unaudited)   Quarter ended 30 September 2022

                                                                                          (unaudited)                       Change
 Operating profit( )                         £1.70 million                                £1.59 million                     +6.92%
 Loss before tax( )                          -£6.69 million                               -£0.1 million                     -6,790.00%
 Adjusted EPS (1)                            1.41p                                        1.80p                             -21.67%
 Dividend cover based on Adjusted EPS (1)    70.50%                                       86.96%                            -16.46%
 Dividend (per share)                        2.00p                                        2.07p                             -3.38%
 Dividend yield (1)                          1.80%                                        1.87%                             -0.07%

(1) Considered to be an Alternative Performance Measure.

 

•   Dividend 2.00 pence per share ("pps") for the quarter to 31 December
2022, in line with the annual 8 pence, or 8%, target dividend stated in the
Company's Admission document.

 

•   Decrease in portfolio valuation to £106.05 million in the quarter to
31 December 2022, reflecting a net initial yield of 7.89%(2) compared with
7.36% at 30 September 2022.

 

•    6.9% increase in operating profit to £1.7 million, with an IFRS loss
before tax of £6.69 million primarily resulting from the market wide
reduction in property value as discussed above.

 

•    Senior loan facility of £54.3 million and an unsecured loan note
balance of £19.7 million, totalling £74.0 million, reflecting a combined
loan to value ratio of 69.82% as at 31 December 2022 (30 September 2022:
66.65%). The Senior loan facility will mature in August 2023 and refinancing
discussions are underway.

 

•    £2.17 million of rent recognised during the quarter in line with
passing rent (quarter ended 30 September 2022: £2.10 million). Rent
collection was 95.82% to 31 December 2022 (97.37% total collection rate from
Admission).

 

•    As at 31 December 2022, there were 54 tenants with a weighted average
unexpired lease term of 5.83 years to break and 6.16 years to expiry (30
September 2022: 4.94 years to break and 5.81 years to expiry).

 

•   Occupancy across the portfolio remained at 98.17% at 31 December 2022
(30 September 2022: 98.17%)

( 2) (Including purchaser's costs of 6.65%.
                      )

Net Asset Value

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

 

                                              Pence per share    £ million
 NAV at 1 September 2022                      108.31             41.33
 Valuation movement in property portfolio     (17.64)            (6.73)
 Fair value movement in financial instrument  5.68               (0.34)
 Income earned for the period                 (1.07)             2.17
 Expenses for the period                      (1.21)             (0.53)
 Net finance costs for the period             (3.29)             (1.26)
 Interim dividend paid                        (2.07)             (0.79)
 NAV at 31 December 2022                      88.71              33.85

 

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 31 December 2022 and net income for the quarter, but does
not include a provision for the interim dividend declared today (see below)
for the quarter ended 31 December 2022.

 

Valuation

The value of the portfolio decreased by £6.73 million, in the quarter to
£106.5 million as at 31 December 2022. This represents a 5.97% reduction
against the property valuation at 30 September 2022 (£112.78 million). This
reflects a rerating of UK commercial property values, primarily as a result of
the interest rate increases in 2022 and wider economic situation. The
independent fair valuation of the property was undertaken by Avison Young.

 

At 31 December 2022, the net initial yield of the property was 7.89% (30
September 2022: 7.36%).

 

Dividend

The Board declares today a quarterly dividend of 2.00pps for the three months
to 31 December 2022 (quarter ended 30 September: 2.07pps). On a pro-rata
basis, the dividend is in line with the annual 8 pence target per share, or 8%
target dividend, as stated in the Company's Admission document. The dividend,
which will be a Property Income Distribution, will be paid on or around
3 March 2023. The ex-dividend date will be 16 February 2023 and the record
date will be 17 February 2023.

 

Debt Covenant

There continues to be significant headroom in the debt covenants. The senior
debt loan to value is 49.09% (default level is greater than 70%) and the
interest cover ratio is 316.30% (default level is less than 225%). The Group
is therefore well within its covenants at the latest interest payment date.

The current senior debt facility matures in August 2023 and refinancing
discussions are underway.

 

ENQUIRIES

 M7 Regional E-Warehouse REIT plc
 James Max - Chairman                     via FTI Consulting below

 M7 Real Estate Ltd                       +44 (0) 20 3657 5500

 Richard Croft

 Dickson Minto (Lead Adviser)             +44 (0) 131 2254455

 FTI Consulting (Communications Adviser)  +44 (0) 20 3727 1000
 Richard Sunderland                       M7regionale-warehousereit@FTIConsulting.com

 Eve Kirmatzis

 Alter Domus (UK) Limited                 +44 (0) 207 645 4800

 (Company Secretary)

 

 

The Company's ISIN is GB00BLN7H037.

Further information on M7 Regional E-Warehouse REIT plc is available at
www.rewreit.co.uk(1).

 

NOTES

M7 Regional E-Warehouse REIT plc is a property investment company, listed on
the International Property Securities Exchange offering shareholders with a
sustainable level of income together with the potential for income and capital
growth by investing in diversified portfolio of enhanced warehouse
(e-warehouse) properties across the United Kingdom.

 

An enhanced warehouse (e-warehouse) is defined, by M7, as a warehouse with
enhanced planning uses which means there is the flexibility to change the use
of the warehouse in the future. They are typically large regular shaped
industrial units with retail frontages that could easily be converted to pure
industrial use and they are typically located with good accessibility and
sufficient car parking that could be used for yard space in the event of
conversion. It is these types of characteristics which in M7's opinion
underpin the value of the asset.

 

The Company's asset manager is M7 Real Estate Limited ("M7"), a leading
specialist in the pan-European, regional, multi-tenanted real estate market.
M7 has over 220 employees in 15 countries across Europe. The team manages over
600 properties with a value of circa €5.9 billion.

(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.

 

 

 

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