17 Apr 2019 07:00
Drum Income Plus REIT plc("Drum" or the "Company")
Unaudited Net Asset Value as at 31 March 2019
Drum Income Plus REIT plc (LSE: DRIP) announces its unaudited net asset value ("NAV") as at
31 March 2019.
Highlights
Period from 31 December 2018 to 31 March 2019
· The independent valuation of the property portfolio as at 31 March 2019 was £57.3m
(31 December 2018: £57.3m).
· NAV per share at 31 March 2019 of 91.66p (31 December 2018: 91.60p).
· Earnings per share (excluding revaluation gains and losses on fair value of investments) for three months ended 31 March 2019 were 1.59p.
· Dividend paid during the quarter of 1.50p.
· NAV total return (NAV movement plus dividend paid) of 1.68%.
Introduction
The Company aims to provide shareholders with a regular dividend income plus the prospect of income and capital growth over the longer term. The Company invests in smaller UK commercial properties, principally in the office, retail (including retail warehouses) and industrial sectors, which have the potential to offer a secure income stream, to create value through active asset management and have strong prospects for future income and capital growth.
Unaudited NAV (As at 31 March 2019)
| £m | Pence per Share |
NAV as at 31 December 2018 | 34.99 | 91.60 |
Property portfolio valuation movement | 0.00 | 0.00 |
Capitalised costs and rent free debtor movement | (0.02) | (0.05) |
Income earned for the period | 1.08 | 2.82 |
Expenses for the period | (0.32) | (0.84) |
Interest paid | (0.15) | (0.40) |
Dividend paid | (0.56) | (1.47) |
Unaudited NAV as at 31 March 2019 | 35.02 | 91.66 |
The NAV has been calculated in accordance with International Financial Reporting Standards and incorporates the independent portfolio valuation as at 31 March 2019 and income for the period, but does not include a provision for the second interim dividend, which will be paid in May 2019. The earnings per share for the period from 1 January 2019 to 31 March 2019 (excluding revaluation gains and losses on fair value of investments and expenses charged to capital) were 1.59p.
As at 31 March 2019, the Company had cash balances of £1.06 million and borrowings of £22.7 million (loan-to-value of 39.4%).
Current Portfolio
| Dec-18 | Mar-19 | ||
Location | Value | % Weighting | Value | % Weighting |
North East | £16,150,000 | 28.18% | £16,150,000 | 28.19% |
Scotland | £18,250,000 | 31.85% | £18,350,000 | 32.02% |
North West | £18,900,000 | 32.99% | £18,800,000 | 32.81% |
South West | £4,000,000 | 6.98% | £4,000,000 | 6.98% |
| £57,300,000 | 100.00% | £57,300,000 | 100.00% |
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Sector | Value | % Weighting | Value | % Weighting |
Office | £25,300,000 | 44.15% | £25,400,000 | 44.33% |
Shopping Centre | £13,750,000 | 24.00% | £13,750,000 | 23.99% |
Retail | £16,750,000 | 29.23% | £16,650,000 | 29.06% |
Industrial | £1,500,000 | 2.62% | £1,500,000 | 2.62% |
| £57,300,000 | 100.00% | £57,300,000 | 100.00% |
The properties were valued at £57,300,000 as at 31 March 2019 (31 December 2018: £57,300,000) by Savills (UK) Limited ('Savills'), in their capacity as external valuers, adjusted for lease incentives of £529,227 (31 December 2018: £597,433). Capitalised costs for the quarter were £88,695
(31 December 2018: £43,916).
Key KPIs | ||
| Dec-18 | Mar-19 |
Total Number of Units | 105 | 105 |
Total Number of Tenants | 87 | 89 |
Total SQFT | 336,303 | 336,162 |
Vacancy (% SQFT) | 10.80% | 9.80% |
Vacancy (% ERV) | 4.50% | 6.90% |
WAULT (Expiry) | 6.25 | 6.04 |
WAULT (Breaks) | 5.07 | 4.74 |
Differentiated Investment Strategy
· Target lot sizes of £2m - £15m in regional locations.
· Sector agnostic - opportunity driven.
· Entrepreneurial asset management.
· Risk-controlled development.
· Dividend paid quarterly.
· Fully covered dividend policy.
Portfolio Attributes
In the context of the market uncertainty, the Board believes it is helpful to shareholders to highlight some key attributes of the Company's property portfolio:
· The Company has no exposure to Central London markets.
· The weighted average unexpired lease term (WAULT) to expiry is 6.04 years.
· The portfolio yield is 6.9% (based on 31 March 2019 valuation).
· The occupancy rate is high at 90% by ERV.
· Gearing - the loan-to-value ratio of 39.4% is in line with the stated intended target of 40%.
· Further asset management angles to exploit.
Asset Management Overview and Update
Duloch Park, Dunfermline
CHAS have extended their occupation for a further 5 years with a break at year 3. The rent has increased to £33,150 per annum.
Gosforth Shopping Centre, Gosforth
The Company has undertaken a new letting to Savers Health & Beauty Limited for a 10-year lease with a tenant break in year 5 at a rent of £35,000 per annum. Gosforth Shopping Centre is now 100% let.
Arthur House, Manchester
The proposed refurbishment works to the 6th floor have been approved by the Board and these works have now been instructed. Completion will be in Q2 2019. There are further letting discussions ongoing for c 10% of the total floor area.
Burnside Industrial Estate, Aberdeen.
Refurbishment works to one terrace have been instructed at a cost of c £300,000. This follows the successful lease renewal of unit 6 at £36,500 per annum for a 5-year term. Discussions are ongoing with other occupiers regarding renewals.
Eastern Avenue, Gloucester
An Agreement for Lease has been entered into with Home Bargains for the former Office Outlet unit on a subject to planning basis. The planning application is due to be determined imminently.
There is interest in the former Maplin unit from potential occupiers.
Dividends
The Board is targeting a fully covered annual dividend of 6.0p per share in respect of the year ending 30 September 2019*. At the current share price of 92.50p, this would represent an annualised dividend yield of 6.5%.
\* Target returns only and not a profit forecast. There can be no assurance that these targets will be met and they should not be taken as an indication of expected or actual current or future results.
Director Disclosure
Mr Alan Robertson, a Director of the Company, has assumed the role of Consultant with Drum Property Group and is working with them on the asset management and redevelopment of a number of property investments in Aberdeen. As a result, Mr Robertson, although non-executive, is no longer considered independent. The majority of the Board continue to be non-executive and independent Directors.
Enquiries:
Drum Real Estate Investment Management (Investment Manager) |
|
Bryan Sherriff | 0131 285 0050 |
Cantor Fitzgerald Europe (Financial Adviser and Corporate Broker) |
|
Robert Peel (Corporate Finance) | 0207 894 7719 |
Richard Sloss (Sales) | 0131 240 3863 |
Dickson Minto W.S. (Sponsor) |
|
Douglas Armstrong | 020 7649 6823 |
Weber Shandwick (Financial PR) |
|
Richard Bright | 0131 556 6649 |
Nick Oborne | 020 7067 0721 |