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21 Mar 2017 08:50
Edison Investment Research Limited / Key word(s): Research Update Edison issues update on Secure Income REIT (SIR) 21-March-2017 / 09:49 GMT/BST London, UK, 21 March 2017 Edison issues update on Secure Income REIT (SIR) Secure Income REIT's (SIR) FY16 results show income in line with expectations and 14.4% NAV growth per share. SIR has some of the longest leases in the sector, on either fixed or uncapped, upward-only RPI-linked rent reviews. Fixed debt and formulaic advisory costs lead to high predictability and lock in profits to support a rising and dependable dividend. Despite a material valuation gain, portfolio net initial yield was flat year-on-year as yield tightening on existing assets was offset by the acquisition of the Travelodge portfolio in October at a 7% yield. While the market appears to value SIR in line with long-lease peers on an earnings yield basis, the strong likelihood of NAV appreciation driven by rising rents may not be fully recognised. Our forecasts support the manager's expectation of 11% compounded annual NAV and dividend returns to 2021. Secure income streams and predictable costs enable SIR to pay a dependable and growing dividend, with a current prospective yield of 4.0%. Stable rent growth should also translate into capital growth if valuation yields remain stable, as we assume. The shares trade at a c 5% premium to reported EPRA NAV, close to our FY17e EPRA NAV/share forecast and in line with peers on an earnings yield basis.Click here to view the full report. All reports published by Edison are available to download free of charge from its websitewww.edisoninvestmentresearch.com About Edison: Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities. Contact details: Learn more at www.edisongroup.com and connect with Edison on:
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556175 21-March-2017
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