LSR.L Regulatory News (LSR)

6 Feb 2008 07:01

Local Shopping REIT (The) PLC06 February 2008 The Local Shopping REIT plc Interim Management Statement (London: 6 February 2008) - The Local Shopping REIT ("LSR" or the "Company"), aUK real estate investment trust focused on investments in local shopping assets,is pleased to provide the following update on trading for the four months to 31January 2008. Highlights • 29 properties acquired for a total consideration of £6.69 million, bringing total portfolio to 651 properties, comprising more than 2,000 letting units • Annual rental increased by over £153,000 through active asset management, producing uplifts above market rent • 22 vacant units successfully let at over 10% above market rent - increasing annual rent by £211,625 per annum • Average initial yield on new purchases of 7.46% • Successful sale of 10 ex-growth properties for a total of £3.97 million, in line with their September 2007 valuation • Five change of use planning consents granted, increasing asset values • Planning applications submitted for a further 13 flats and two retail units • Changing market conditions expected to provide further acquisition opportunities. Market Outlook As stated in our preliminary results announcement on 6 December 2007, we haveadapted our business model to put the Company in the best position to operate inand take advantage of a changing marketplace. While we believe that the currentdownturn in the property market is likely to provide us with more accretiveacquisition opportunities in the future, particularly in buying parades andsmaller neighbourhood centres, we are currently seeing very few opportunities atsufficiently attractive prices (possibly because our vendors are typically lowlygeared private investors rather than institutions and other more highlyleveraged property companies). In the meantime, we will continue to createvalue for our shareholders through active asset management, which is currentlysuccessfully delivering shareholder value, together with selective purchases,share buybacks where appropriate and the sale of our lower yielding ex-growthproperties. Asset Management Since 30 September 2007, the Company has successfully implemented the followingasset management initiatives: - carried out rent reviews on 53 units, increasing the rent by £81,833 per annum (an average uplift of 11.3%, and 0.6% above Market Rent) - renewed leases on 16 units adding a total of £40,830 per annum (an average uplift of 24.4% and 9.7% above Market Rent) - the surrender and re-let of 13 units, adding £30,628 per annum (an average uplift of 14.8% and 10.7% above market rent) - let 22 vacant units at a rent of £211,625 per annum (10.1% above Market Rent). In line with our drive to deliver value from the under-used upper parts of someproperties and adjacent unused land, we have submitted planning applications for13 flats and two retail units. In addition, we were granted three consents fora change of use from A1 (shops) to A2 (financial and professional services), onefrom A1 to A5 (hot food take-aways) and one from offices to residential. During the period our commercial void rate has risen to 4.7% (September 2007 -3.4%) in line with our expectations. If the units under offer are let the voidrate will fall back to 3.85%. Residential voids remained broadly level at 1.7%(September 2007 - 1.5%) Acquisitions and Sales Since 30 September 2007 (when the portfolio was valued at £249.3 million) theCompany has acquired a further 29 properties, in 29 separate transactions, for atotal consideration of £6.69 million. The average initial yield of thesepurchases is 7.46%. In line with our stated strategy of selling ex-growth and lower yieldingproperties we have sold 10 properties for £3.97 million, at an initial yield of5.62% (September 2007 valuation £3.96 million). We have unconditionallyexchanged contracts to sell a further property in Northampton for £0.66 million,at an initial yield of 6.83% (September 2007 valuation £0.67 million). Inaddition, the Company has sold two flats above retail units for £0.15 million(September 2007 valuation £0.13 million), and the previously unused upper floorsof a shop in Goole for £0.10 million having obtained planning permission for adevelopment of five flats. Further sales of retail properties and residentialflats above retail units are planned. As a result of these acquisitions and sales, the Company now has a portfolio of651 properties comprising more than 2,000 letting units. Financing The Company's total debt stands at £114.23 million. It has an additionalcommitted and undrawn long term facility of £105 million from HSBC, with afurther £10 million undrawn short term facility from RBS. In addition to being100% hedged on existing loans, the Company has further interest rate swapstotalling £35 million. LSR's blended interest rate for loans that have beendrawn and committed, at the current loan to value ratio, up to the limit of thecurrent hedging level is 5.68% for eight years. Share buybacks Since 30 September 2007 the Company has undertaken share buybacks totalling4,600,000 ordinary shares at a weighted average price per share of £1.2137.These shares were placed in Treasury. In January 2008, 25,000 shares weretransferred to the Employee Benefit Trust for the purpose of satisfying LTIPawards. Nick Gregory, LSR's Joint Chief Executive Officer, said: "Our asset management continues to deliver good levels of growth in rent acrossthe portfolio. While delays in the planning system remain frustrating we arealso pleased to have realised the profit on the sale of our first residentialdevelopment project." Mike Riley, LSR's Joint Chief Executive Officer, added: "We are monitoring the market closely to identify buying opportunities and weare well positioned to use our financial strength to make purchases atadvantageous prices as they arise. " For more information please contact: The Local Shopping REIT plc Tel: 020 7187 4444Mike Riley/Nick Gregory Financial Dynamics Tel: 020 7831 3113Stephanie Highett/Richard Sunderland/Jamie Robertson About The Local Shopping REIT The Local Shopping REIT plc ("LSR") is the first specialist start-up Real EstateInvestment Trust ("REIT") to launch in the UK. Already a major owner of local retail property, the Company is building aportfolio of local shops in urban and suburban areas, investing in neighbourhoodand convenience properties throughout the UK. Typical of the portfolio areshops in local shopping parades and neighbourhood venues for convenience or 'top-up' shopping. As at 31 January 2007 the Company's portfolio comprised651properties, with over 2000 letting units. For further information on LSR, please visit www.thelocalshoppingreit.co.uk.For further information on REITS, please visit www.reita.org. This information is provided by RNS The company news service from the London Stock Exchange