REG - Value & Index Prop - Portfolio Update

Value and Indexed Property Income TrustAnnouncement

27/10/2023 07:15

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RNS Number : 4489R  Value and Indexed Prop Inc Tst PLC  27 October 2023

27 October 2023

Value and Indexed Property Income Trust PLC - VIP

Portfolio Update as at 30 September 2023

The Board of Value and Indexed Property Income Trust PLC ("VIP"), the
specialist trust investing directly in UK commercial property to deliver long,
strong, indexed income, announces a portfolio update ahead of its results for
the half year ended 30 September 2023, which will be released in mid-November
2023.

 

Portfolio Update

Savills' independent valuation as at period ended September 2023 totalled
£135.45 million (31 March 2023: £150.50 million) with a running yield of
6.5% (31 March 2023: 6.2%) reflecting a net initial yield of 6.1% (31 March
2023: 5.8%) after deducting notional purchase costs.   The average lot size
is £3.9 million.

 

The valuation reflects a 5.0% like-for-like reduction in capital value, of the
35 properties held over the six months, due to the impact of rising interest
rates across the property investment market and economic and political
turbulence.  The total return, taking capital and income together was
-1.8%.  This is likely to be slightly behind VIP's MSCI Quarterly Index
Benchmark, as VIP's portfolio outperformed on the income front but
underperformed on capital.

 

Four overrented properties were sold over the six month period, two pubs, a
supermarket and a petrol filling station for a gross total of £8.08 million
(+2.9% on March 2023 valuation).  Several acquisitions are under negotiation
to reinvest the proceeds of these sales in properties at higher yields with
longer leases and better long term growth prospects.

 

Contracted income from the 35 properties is now £8.795 million (31 March
2023: £9.338 million from 39 properties). 65% of rental income comes from the
top six tenants - Marks & Spencer, Government/Local Authorities, Ten
Entertainment Group, Premier Inn, Sainsbury's, and Parkdean Resorts.

 

The portfolio remains fully let with 100% of rent collected.  VIP has no
exposure to offices, high street retail or shopping centres.  The seven
sectors by rental value are: supermarkets, industrials, bowling, other
(caravan park plus a library), hotels, pubs and roadside in that order.

 

Annual rent increases were completed at five properties over the six months,
with an average uplift of +3.8% on their passing rents (three with RPI-linked
increases and two with fixed uplifts).  Nine further rent reviews are due up
to the period ending 31 March 2024.

 

VIP has a resilient, diversified portfolio with strong tenants and long
leases. The weighted average unexpired lease is 11.9 years (if all breaks are
exercised), with 69% of the rental income linked to RPI, 12% linked to CPI,
15% with fixed increases and 4% with open market upward only rent reviews.

 

97% of the portfolio now has EPC ratings of A to C (31 March 2023: 96%) and we
continue to work with our tenants to upgrade properties and improve energy
efficiency.

 

Savills independently revalue the property portfolio on a half-yearly basis at
31 March and 30 September.

 

Enquiries:

OLIM Property Limited, Investment Manager

Tel: 020 7846 3252

Matthew.oakeshott@olimproperty.co.uk
(mailto:Matthew.oakeshott@olimproperty.co.uk)

Louise.cleary@olimproperty.co.uk

 

Berenberg

Gillian Martin / Richard Bootle

Tel: +44 (0)20 3207 7800

 

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