Last checked at 
9 Nov 2010 07:00
To: Company Announcements
Date: 09 November 2010
Company: AXA Property Trust Limited
Subject: Interim Management Statement 30 September 2010
CORPORATE SUMMARY
- The interim dividend of 0.75 pence per share in respect of the quarter ending 30 September 2010 was declared on 3 November 2010 and is due for payment on 29 November 2010;
- The Company's unaudited Consolidated Net Asset Value at 30 September 2010 was £78.09 million (78.09 pence per share);
- Further to the signed heads of terms to refinance the main loan facility announced via RNS on 1 October 2010, due diligence and full documentation are being finalised by respective legal counsels of the Company and the lenders;
- Construction works have commenced and are progressing well at Fuerth, Germany, to provide a new Edeka supermarket by May 2011.
CONSOLIDATED PERFORMANCE SUMMARY
Audited | Unaudited | ||
12 months ended | 3 months ended | ||
30 June 2010 | 30 September 2010 | Quarterly Movement | |
Pence per share | Pence per share | Pence per share /(%) | |
Net Asset Value per share | 78.01 | 78.09 | +0.08 (+0.10%) |
Earnings per share | -1.07 | -1.52 | n/a |
Dividend declared in the period | 3.00 | 0.75 | n/a |
Share price (mid market) | 46.5 | 50.25 | +3.75 (+8.06%) |
Share price discount to Net Asset Value | 40.4% | 35.6% | -4.8 percentage pts. |
Total return | Audited | Unaudited |
12 months ended | 3 months ended | |
30 June 2010 | 30 September 2010 | |
Net Asset Value Total Return | -3.0% | 2.3% |
Share price Total Return | ||
- AXA Property Trust | 21.6% | 9.7% |
- FTSE All Share Index | 21.1% | 13.6% |
- FTSE Real Estate Investment Trust Index | 18.0% | 13.8% |
Source: Datastream; AXA Real Estate
Total net loss was -£1.52 million (-1.52 pence per share) for the three months to 30 September 2010, including £1.11 million of "revenue" profit (excluding capital items such as revaluation of property) and -£2.63 million "capital" loss analysed as follows:
Audited | Unaudited | |
12 months ended | 3 months ended | |
30 June 2010 | 30 September 2010 | |
£million | £million | |
Net property income | 11.60 | 2.51 |
Net foreign exchange losses | -0.66 | -0.09 |
Investment Manager's fees | -1.35 | -0.34 |
Other income and expenses | -1.46 | -0.29 |
Net finance costs | -3.98 | -0.64 |
Current tax | -0.58 | -0.04 |
Revenue profit | 3.57 | 1.11 |
Unrealised losses on revaluation of property | -9.39 | -0.19 |
Unrealised losses on revaluation of Porto Kali investment (loan receivable) | -0.55 | -0.95 |
Gains/(losses) on derivatives (hedging interest rate and foreign exchange exposures) | 5.83 | -0.89 |
Finance costs | -0.18 | -0.53 |
Net foreign exchange gains | 0.90 | 0.02 |
Deferred tax | -0.43 | -0.09 |
Capital loss | -4.64 | -2.63 |
Total net loss | -1.07 | -1.52 |
NET ASSET VALUE
The unaudited Company's Consolidated Net Asset Value per share of AXA Property Trust Limited (the "Company") as at 30 September 2010 was 78.09 pence (78.01 pence as at 30 June 2010).
The Net Asset Value attributable to the Ordinary Shares is calculated under International Financial Reporting Standards. It includes all current year income and is calculated after the deduction of dividends paid prior to 30 September 2010, but does not include provision for the quarterly interim dividend of 0.75 pence per share announced on 3 November 2010 and to be paid on 29 November 2010.
The £0.08 million increase in Net Asset Value over the quarter ended 30 September 2010 can be analysed as follows:
Audited | Unaudited | |
12 months ended | 3 months ended | |
30 June 2010 | 30 September 2010 | |
£million | £million | |
Opening Net Asset Value | 83.46 | 78.01 |
Net loss | -1.07 | -1.52 |
Unrealised gains/(losses) on derivatives | 2.05 | -2.22 |
Dividends paid | -3.00 | -0.75 |
Foreign exchange translation (losses)/gains | -3.43 | 4.57 |
Closing Net Asset Value | 78.01 | 78.09 |
During the quarter, the portfolio valuation decreased by £0.19 million (€0.23 million) after capital expenditure of £0.35 million (€0.40 million). Taking account of foreign exchange movements in addition to this decrease the sterling valuation of the property portfolio increased by £7.87 million (5.9%) to £140.82 million.
The Company's net property yield on current market valuation (after acquisition and operating costs) as at 30 September 2010 was 7.10% (7.60% as at 30 June 2010).
SHARE PRICE AND DISCOUNT TO NET ASSET VALUE
As at close of business on 30 September 2010, the mid market price of the Company's shares on the London Stock Exchange was 50.25 pence, representing a discount of 35.6% on the Company's Net Asset Value at 30 September 2010 and a 6.0% annual dividend yield.
As at close of business on 5 November 2010, the mid market price of the Company's shares was 48.75 pence, representing a discount of 37.5% on the Company's Net Asset Value at 30 September 2010 and a 6.1% annual dividend yield.
DIVIDENDS
The interim dividend of 0.75 pence per share in respect of the quarter ending 30 September 2010 was declared on 3 November 2010, with an ex-dividend date of 10 November 2010, record date of 12 November 2010 and payment date of 29 November 2010. The interim dividends of £0.75 million declared in respect of the 3 months period ended 30 September 2010 were 148% covered by "revenue" profits. Dividends will be paid from the Company's cash resources of £14.03 million at the quarter end.
STRATEGY AND MARKET
Country Allocation at 30 September 2010
Country % of portfolio
Germany 60%
Netherlands 19%
Italy 17%
Belgium 4%
Sector Allocation 30 September 2010
Sector % of portfolio
Retail 59%
Industrial 18%
Office 14%
Leisure 9%
AXA Real Estate, the Company's Real Estate Adviser, anticipates that while there remains downward pressure on rents in occupational markets, this is expected to have largely come to an end by mid-2011.
The portfolio's income stream is well secured against strong tenant covenants and a tenant base that is weighted towards the defensive food retail sector maintaining a low vacancy rate. The focus on rental income, comprehensive management of tenants, leases and the physical assets remain a priority for the portfolio.
The Investment Manager continues to monitor the markets with a view to undertaking a measure of geographic re-allocation of assets. As a first stage in the process terms have been agreed for the sale of one property in Germany.
FUND GEARING
Audited | Unaudited | ||
30 June 2010 | 30 September 2010 | Movement | |
£million /% | £million /% | £million /% | |
Property portfolio | 132.95 | 140.82 | +7.87 (+5.9%) |
Borrowings | 71.42 | 75.72 | +4.30 (+6.0%) |
Total gross gearing excluding Porto Kali | 53.7% | 53.8% | +0.1 percentage pts |
Total net gearing excluding Porto Kali | 42.1% | 43.8% | +1.7 percentage pts |
Total gross gearing including Porto Kali | 57.1% | 57.2% | +0.1 percentage pts |
Fund gearing increased by 0.1 percentage points over the quarter to 53.8% as at 30 September 2010.
Fund gearing is included to provide an indication of the overall indebtedness of the Company and does not relate to any covenant terms in the Company's loan facilities. Gross gearing is calculated as debt over property portfolio at fair value. Net gearing is calculated as debt less cash over property portfolio at fair value.
LOAN FACILITIES
Gross Loan to Value Covenants | Audited | Unaudited | |
30 June 2010 | 30 September 2010 | Maximum | |
Main loan facility | 53.5% | 53.6% | 55.0% |
Joint venture Property Trust Agnadello S.r.l. | 58.8% | 57.3% | 65.0% |
Consortium investment Porto Kali | 77.5% | 79.0% | 80.0% |
Unaudited | Unaudited | Unaudited | Unaudited | |
Interest Cover Ratio at 30 September 2010 | Historic | Minimum | Projected | Gross rental income headroom |
Main loan facility covenant | 322.8% | 250.0% | 437.6% | 42.9% |
Joint venture Property Trust Agnadello S.r.l. | 470.3% | 125.0% | 494.1% | 74.7% |
Consortium investment Porto Kali | 175.0% | 120.0% | 270.0% | 46.0% |
Interest Cover Ratio (ICR) is calculated as net financing expense payable as a percentage of gross rental income (or in the case of Property Trust Agnadello, net rental income) less movement in arrears. Projected net financing expense payable assumes prevailing floating interest rates for the majority of the year (or in the case of the main facility, 3 months). Gross rental income headroom is based on projected interest cover.
MAIN LOAN FACILITY
Having signed heads of terms to refinance the main loan facility of €78.64 million announced via RNS on 1 October 2010, due diligence and full documentation are being finalised by respective legal counsels of the Company and the lenders. As part of the refinancing the Company is implementing new hedging arrangements to mitigate interest rate and foreign currency exposures. The Board continues to review and monitor progress on the completion of the refinancing.
CAPITAL EXPENDITURE AND CASH POSITION
The Company and its subsidiaries held total cash of £14.03 million (€16.19 million) at 30 September 2010 (30 June 2010: £15.47 million (€18.90 million)). The decrease in cash over the quarter to 30 September 2010 is mainly due to capital expenditure costs at Fuerth, and tax payments in some German and Italian subsidiaries of the Company. Cash of £9.29 million (€10.72 million) is held on short-term deposit to be realised as required for the capital expenditure programme and other cash requirements.
OUTLOOK
The successful negotiations to secure the refinancing of the debt facility places the Company in a sound financial position, enabling AXA Real Estate asset management teams to focus on renewing and extending leases expiring in 2011 across the portfolio, to maximise income and to support and grow the dividend.
The development of the new Edeka unit in Fuerth is underway and is expected to be delivered by May 2011. Meanwhile negotiations with potential interested retailers for the unit currently occupied by Edeka are progressing well.
Despite deterioration in investor sentiment in recent months there is evidence of yield stabilisation. The Company believes that despite fragile market fundamentals, strong asset management will yield results.
The strategy to dispose of a number of properties in Germany is currently being implemented, with terms having been agreed for the sale of the asset in Bernau. The proceeds will be reinvested in territories where Shareholder value can be obtained.
MATERIAL EVENTS
Except for those noted above, the Board of the Company is not aware of any significant event or transaction which occurred between 30 September 2010 and the date of the publication of this Statement which would have a material impact on the financial position of the Company.
Company website:
http://www.axapropertytrust.com
All Enquiries:
Investment Manager
AXA Investment Managers UK Limited
Simon Hopper/Bobby Owen7 Newgate Street
London EC1A 7NX
Tel: +44 (0)20 7 330 6619Email: broker.services@axa-im.com
Sponsor and Broker
Oriel Securities Limited
Tom Durie
Tel: +44 (0)20 7710 7600
Email: tom.durie@orielsecurities.com
Neil Winward
Tel: +44 (0)20 7710 7460
Email: neil.winward@orielsecurities.com
Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
GY1 3QL
Tel: +44 (0)1481 745604
Fax: +44 (0)1481 745085