EPIC.L Regulatory News (EPIC)

Ediston Property Investment Company plc

(LEI: 213800JRL87EGX9TUI28)

Net Asset Value ('NAV') as at 30 September 2021

And Trading Update

Ediston Property Investment Company plc (LSE: EPIC) (the 'Company') announces its unaudited NAV at 30 September 2021, which will form the basis for the year end accounts.

Quarter Summary

· NAV per share at 30 September 2021 of 89.61 pence (30 June 2021: 87.19 pence), an increase of 2.78% in the quarter.

· Fair value independent valuation of the property portfolio at 30 September 2021 of £283.35 million, a like-for-like increase of 2.4% compared to the valuation at 30 June 2021.

· Retail warehouse values continued to improve, but these gains were partially offset by a reduction in value of the office portfolio.

· NAV total return (including dividends) for the quarter of 4.2% (30 June 2021, 4.9%). 

--------------------------------------------------------------------------------------

· In line with the strategy to focus the next phase of investment in the retail warehouse sector, the Company acquired Springkerse Retail Park in Stirling for £21.85 million, a 9.54% net initial yield.

· Springkerse Retail Park provides £2.23 million of additional income per annum.

· Completed a new letting to Superdrug at Widnes, with the park now 100% let.

· Post period end, a further three lease transactions have either exchanged or completed.

--------------------------------------------------------------------------------------

· In line with the investment strategy announced by the Company last quarter, discussions are at an advanced stage with regards to the sale of the office assets.

· Rent collection continues to improve and the dividend is still well-covered. It remains the Board's expectation that it should be able to increase the dividend further in the coming months.

Net Asset Value

The unaudited NAV of the Company at 30 September 2021 was £189.40 million, or 89.61 pence per share, an increase of 2.78% on the Company's NAV per share as at 30 June 2021.

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 2021 and undistributed income for the quarter, but does not include a provision for any accrued monthly dividend.

Acquisition of Springkerse Retail Park, Stirling

During the period, the Company acquired Springkerse Retail Park, Stirling, for £21.85 million, in an 'off market' transaction. The price reflects an initial yield of 9.54%.

Stirling is in central Scotland, 26 miles from Glasgow and 35 miles from Edinburgh. The Stirling Council area has a population of just under 100,000, which is forecast to grow at an above average rate, and draws on a primary retail catchment of 228,000 people. The asset is the dominant retail park in Stirling and extends to 162,593 sq. ft. across 12 units. It is let to 10 tenants and produces a passing rent of £2.23 million per annum.

The Park is anchored by B&Q, with other tenants including Wren Kitchens, DFS, Pets at Home and Halfords represented on the site. The asset will benefit from the intensive asset management style of the Investment Manager. The planned upgrades should improve the letting potential of the two vacant units (13% by ERV), providing an opportunity to increase the income stream and drive capital value upwards. On completion of the letting of these two vacant units, the yield is expected to rise to 10.8%.

The acquisition was funded using the proceeds from the sale of the Tesco Superstore in Prestatyn, which was sold for £26.5 million (5.2% initial yield). The net operating income from the new acquisition is 35% higher than the rent received from Tesco, and is therefore accretive to dividend cover.

Asset management update

Widnes Shopping Park is now 100% let following a new letting to Superdrug Stores plc. Superdrug has leased a 6,280 sq. ft. unit on a five-year lease. Post period end, a further three lease transactions have either exchanged or completed.

At Kingston Retail Park in Hull, the letting to the Range has completed. The Range has signed a 15-year lease on a 14,500 sq. ft. unit which was vacated by Outfit (Arcadia) earlier this year. Also at Hull, Greggs has exchanged an Agreement for Lease on a 2,000 sq. ft. unit which is leased to, but not occupied by, The Carphone Warehouse. A lease surrender has been agreed with Carphone Warehouse. At Prestatyn Shopping Park, The Tech Edge has leased a vacant unit of 1,300 sq. ft. on a five-year lease. In total, all these transactions secure £322,000 of rent per annum.

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 update and dividend

Rent collection continues to improve, with 99.9% of the rent due for Q3 2021 expected to be collected. The new acquisition and asset management deals have further increased the Company's income stream. Against this backdrop, it remains the Board's expectation that the dividend will be increased further in the coming months.

Cash and debt

As at 18 October 2021 the Company had approximately £12.8 million of cash available for investment and operational purposes. The Company also has £6.7 million of cash under its debt facility, ring fenced specifically for investment.

At the date of the September valuation the average loan-to-value across the Company's two debt facilities was 36.1%. The Company is fully compliant with all debt covenants and has significant headroom against income and asset value covenants.

Summary

The positive momentum in the retail warehouse sector last quarter has continued. Retail warehouse valuations have increased again, which has helped drive the Company's NAV forward.

The Investment Manager is implementing the new strategy announced last quarter. It has acquired a retail park in Stirling and is in advanced discussions with regards to the sale of the office assets. It is also reviewing various suitable retail warehouse assets to purchase. Repositioning the property portfolio remains a key focus, along with continuing to deliver asset management transactions to add to the Company's income stream. Further updates will be given in due course, and a more detailed description of activity will be given in the year end accounts.

William Hill, Chairman, commented:

"The increase in the NAV and completion of more asset management initiatives continues the positive momentum from the prior quarter. More investors are coming back into the retail warehouse sector and if this continues it should enable the NAV progression to continue."

Portfolio sector weightings and tenant and locational exposure

Sector

Geography

The portfolio is diversified across the regional markets.

Top five tenants

Forthcoming events

The next interim dividend announcement is expected to be made by 4 November 2021. The next scheduled independent quarterly valuation of the property portfolio will be conducted by Knight Frank LLP for 31 December 2021, with the unaudited NAV per share at that date expected to be announced in January 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.

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.