3 May 2013 07:30
STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST LIMITED
31 March 2013
Key Highlights
·; Dividend yield of 7.5% based on share price of 60.5p (29 April 2013)
·; Cash held by the Trust was £15.2m at 31 March 2013
·; Net asset value per ordinary share was 54.5p as at 31 March 2013, a decrease of 3.7% from 31 December 2012
Net Asset Value
The unaudited net asset value per ordinary share of Standard Life Investments Property Income Trust Limited at 31 March 2013 was 54.5 pence. This is a decrease of 3.7% over the net asset value of 56.6 pence per share at 31 December 2012.
The net asset value is calculated under International Financial Reporting Standards ("IFRS") and includes a provision for payment of an interim dividend of 1.133p per ordinary share for the quarter to 31 March 2013.
The net asset value incorporates the external portfolio valuation by Jones Lang LaSalle at 31 March 2013. The property portfolio will next be valued by an external valuer during June 2013 and the next quarterly net asset value will be published thereafter.
Breakdown of NAV movement
Set out below is a breakdown of the change to the unaudited net asset value per share calculated under IFRS over the period 31 December 2012 to 31 March 2013.
Pence per share | % of opening NAV | |
Net Asset Value per share at 31 December 2012 | 56.6 | - |
Loss - realised and unrealised following revaluation of property portfolio (including the effect of gearing) |
(2.2) |
(3.9)% |
Increase in interest rate swap valuations | 0.3 | 0.5% |
Other movement in reserves | (0.2) | (0.3)% |
Unaudited Net Asset Value per share at 31 March 2013 | 54.5 | (3.7)% |
European Public Real Estate Association ("EPRA") | 31 Mar 2013 | 31 Dec 2012 |
Net Asset Value per share | 59.0 | 61.5 |
The EPRA net asset value measure is to highlight the fair value of net assets on an on going, long-term basis. Assets and liabilities that are not expected to crystallise in normal circumstances, such as the fair value of financial derivatives, are therefore excluded.
Investment Manager Commentary
The Company had a disappointing Q1 with its first tenant failure in over 15 months, with Dreams going into Administration. Dreams were the tenant in one unit in Hull, of 25,000 sqft. Although Dreams has now been subject of a pre-pack purchase from the Administrator the Company's unit was not on the list of stores purchased.
As a result, voids increased to 12.2% of the fund at the quarter end. Since the quarter end some progress has been made, with the sale of a vacant retail warehouse unit (Wardley Industrial Estate) and the signing of an agreement for a lease one of the Company's units in Mansfield with lease completion due early May 2013. Following these two transactions the void level will fall to 10.9%. Of the remaining voids, the office in Staines is the largest. We have already received all the rent for this property to lease expiry in 2016, and are working up a planning consent for a refurbishment. In the meantime we are "soft marketing" the property, which has already been short listed by one company looking to relocate. We also have several expressions of interest for the recently refurbished 4th floor in Cheltenham.
We have continued with our active approach to renewing leases with short terms remaining, with a lease on an industrial unit in Witham due to expire in 2016 regeared to give 10 years term certain, and a new 7 year lease agreed to the subtenant of an industrial unit where the head lease was due to expire in 2014.
We are aware that cash levels in the Company have risen, and are looking at suitable investments, with several under consideration, as well as funding a 10,000 sqft extension for one of our tenants.
During the quarter the valuers continued to reduce the value of shorter let properties. This has been a continuous theme, although we are beginning to see market transaction prices stabilise for this style of stock.
Cash position
As at 31 March 2013 the Company had borrowings of £84.4m and a cash position of £15.2m (excluding rent deposits) therefore cash as a percentage of debt was 18.0%.
Loan to value ratio
As at 31 March 2013 the loan to value ratio (assuming all cash is placed with RBS as an offset to the loan balance) was 43.7% (31 December 2012: 43.9%). The covenant level is 65%.
Interest Rate Swaps
The interest rate swaps had a positive impact on the NAV of 0.3p per share or 0.4% over the quarter, and the fair value liability is £6.5m as at 31 March 2013. The Company has one interest rate hedge maturing in December 2013 with a current liability of £2.5m (31 December 2012: £3.3m). This will have a value of £0 by maturity in December 2013. The other interest rate hedges mature in December 2018, and have a current liability of £4.0m (31 December 2012: £3.6m).
Total asset analysis as at 31 March 2013 (unaudited)
£m | % | |
Office | 78.3 | 44.6 |
Retail | 36.4 | 20.7 |
Industrial | 44.0 | 25.1 |
Total Property Portfolio | 158.7 | 90.4 |
Cash | 15.2 | 8.7 |
Other Assets | 1.6 | 0.9 |
Total Gross Assets | 175.5 | 100.0 |
Breakdown in valuation movements over the period 31 Dec 2012 to 31 Mar 2013
Exposure as at 31 Mar 2013 (%) | Capital Value Movement on Standing Portfolio (%) | £m | |
External Valuation at 31/12/2012 | 161.6 | ||
Sub Sector Analysis: | |||
RETAIL | |||
South East Retail | 6.4 | 0.0 | 0.0 |
Retail Warehouses | 16.5 | (5.8) | (1.6) |
OFFICES | |||
Central London Offices | 10.5 | 4.0 | 0.6 |
South East Offices | 14.4 | (3.7) | (0.9) |
Rest of UK Offices | 24.5 | (1.0) | (0.4) |
INDUSTRIAL | |||
South East Industrial | 4.6 | (1.7) | (0.1) |
Rest of UK Industrial | 23.1 | (1.5) | (0.5) |
External Valuation at 31/03/2013 | 100 | (1.8) | 158.7 |
All Enquiries:
Jason Baggaley - Real Estate Fund Manager Standard Life Investments
Tel 0131 245 2833
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Ltd
Trafalgar Court
Les Banques
GY1 3Q1
Tel: 01481 745324
Fax: 01481 745085