Last checked at 
17 May 2013 15:28
To: Company Announcements
Date: 17 May 2013
Company: AXA Property Trust Limited
Subject: Net Asset Value 31 March 2013 (Unaudited)
CORPORATE SUMMARY
- The Company's unaudited Consolidated Net Asset Value at 31 March 2013 was £60.48 million and 60.48 pence per share which has increased by 3.3% (31 December 2012: £58.56 million and 58.56 pence per share).
- The Company and its subsidiaries made a net loss after tax of -£3.91 million in the nine month period to 31 March 2013;
- Contracts have been exchanged for the sale of two assets in Germany whilst offers have been received on two more;
- At the General Meeting held on 26 April 2013, all resolutions put to shareholders on the amendments to the investment policy and objective, articles of incorporation, and management fee arrangements were duly passed. The Company has commenced the managed wind-down of its portfolio with a view to realising its investments by December 2015 in a manner that achieves a balance between maximising the value from the Company's investments and making timely returns of capital to shareholders.
- No dividend was declared in respect of the quarter ending 31 March 2013. The Company has suspended dividends from June 2012 for the short term in order to more prudently manage its cash and debt positions.
PORTFOLIO UPDATE
Country Allocation at 31 March 2013 (by asset value)
Country % of portfolio
Germany 66%
Netherlands 6%
Italy 22%
Belgium 6%
Sector Allocation at 31 March 2013 (by asset value)
Sector % of portfolio
Retail 66%
Industrial 21%
Office 0%
Leisure 13%
Negotiations with two tenants each to take a lease of the ex-Edeka unit at Fuerth, Germany, are in the final stages. The preparations for the necessary works to divide the unit into two self-contained units are also underway.
Terms to extend the lease have not been agreed so far with the tenant Xerox at Venray, The Netherlands. The Advisor will continue the dialogue with the tenant whilst exploring other alternatives.
The Advisor is in advanced discussions with a tenant to potentially take a lease of the entire vacant space (7,300m²) at the logistics unit at Dasing, Germany.
Following the sale of four assets during 2012 a further five assets have been identified for sale during the first half of 2013, these being Keyser Centre in Belgium and Dresden, Montabaur, Koethen and Braunschweiger Strasse, Berlin all in Germany.
Contracts have been exchanged on the sale of two assets in Germany. The asset located at Dresden for a consideration of €2.1m and Braunschweiger Strasse, Berlin, for €1.63m. The sales are expected to complete in June and July respectively.
Offers were also received for the assets at Koethen and Montabaur, both in Germany. Negotiations to agree a final price on each are on-going. A further asset in Germany, Karben, has been introduced to the market and has attracted significant interest. Offers are expected shortly.
Keyser Centre, Belgium, has been re-introduced to the market following the withdrawal of the previous buyer from the agreed transaction. The sales mandate to Cushman & Wakefield has been terminated and CBRE Belgium has been appointed in their place on a non-exclusive basis. Initial feedback to the renewed marketing has been positive.
MARKET UPDATE
The 0.5% fall in European GDP in the fourth quarter of last year was both below consensus expectations and a disappointment to the markets, leading economists and analysts to revise down their forecasts for 2013 and, in some instances, for 2014. For the five previous quarters, net exports have been almost the only positive contributor to output growth, but they failed to fulfil that role in the final quarter of the year. One of the largest country GDP falls was that of Germany (-0.6% over the quarter), and that was largely due to a -0.9% point contribution from net exports. While its exports to non-EU states rose, those to eurozone countries fell, illustrating how the falling demand from the austerity programme countries is increasingly affecting the non-austerity countries. Although there was further evidence of poor growth in German net exports in the first two months of 2013, that was still an improvement on the fourth quarter, suggesting that the extent of the fall at the end of last year was more of an aberration than an indicator for the future.
Despite the poor retail sales growth, European prime retail rental values are still rising, illustrating the increasing divergence between prime and 'the rest'. Even so, while it is too early to call a trend, the quarterly growth sequence for Europe as a whole is declining: Q3 2012 produced a rise of 0.7%, followed by 0.6% and, in Q1 2013, 0.4%. Whereas in the fourth quarter of 2012, almost all of the growth was attributable to German cities (which outperformed in the year as a whole), these locations produced no growth in the first quarter of this year such volatility suggesting a very thin market. In the previous quarter, the one fall was in Amsterdam, however this quarter it was in Utrecht; The Netherlands is demonstrating almost continuous, but gradual, falls even in prime retail rental values.
While in 2012, prime industrial rental values fell by 0.8% for Europe as a whole, this was more than compensated by a 1.4% rise in the first quarter of 2013. The German logistics rental values remained unchanged in the first quarter.
The first quarter investment transaction volume was €27bn, a 35% fall on the previous quarter that was largely due to the seasonal effect (mainly institutions, funds and government purchasing/selling to complete their transaction in the final quarter of the previous year). However, this volume was a 14% rise on the corresponding quarter of the previous year, suggesting a modest improvement in purchaser confidence and, possibly, vendor realism over pricing. Falls in transaction volumes were evident in all three of the main markets, but greatest in France and least in the UK.
The dominance of foreign purchasers in Germany in the fourth quarter of last year (56% compared to a more typical 20% to 30%) proved to be just a blip, with a 27% representation in the first quarter of this year. The exceptionally large number of larger lot-size transactions in the fourth quarter had not been repeated. For foreign investors, office is the sector of choice, while demand by domestic purchasers is closer to being evenly balanced (with a previous preference for offices), with a marginally increasing demand for industrial.
CONSOLIDATED PERFORMANCE SUMMARY
Unaudited | Unaudited | ||
6 months ended | 9 months ended | ||
31 December 2012 | 31 March 2013 | Quarterly Movement | |
Pence per share | Pence per share | Pence per share /(%) | |
Net Asset Value per share | 58.56 | 60.48 | +1.92 (+3.3%) |
Earnings per share | -2.57 | -3.91 | -1.34 |
Dividend paid in the period | nil | nil | nil |
Share price (mid market) | 36.75 | 38.75 | +2.00 (+5.4%) |
Share price discount to Net Asset Value | 37.24% | 35.93% | 1.3 percentage points |
Total return | Unaudited | Unaudited |
6 months ended | 9 months ended | |
31 December 2012 | 31 March 2013 | |
Net Asset Value Total Return | -2.4% | 0.8% |
Share Price Total Return | ||
- AXA Property Trust | 15.8% | 22.0% |
- FTSE All Share Index | 8.7% | 19.9% |
- FTSE Real Estate Investment Trust Index | 13.2% | 14.9% |
Source : Datastream, AXA Real Estate
Total net loss was -£3.91 million (-3.91 pence per share) for the nine months to 31 March 2013, including £1.94 million of "revenue" profit (excluding capital items such as revaluation of property) and -£5.85 million of "capital" loss, analysed as follows:
Unaudited | Unaudited | Unaudited | |
6 months ended | 3 months ended | 9 months ended | |
31 December 2012 | 31 March 2013 | 31 March 2013 | |
£million | £million | £million | |
Net property income | 4.44 | 2.29 | 6.73 |
Net foreign exchange losses/(gains) | (0.33) | (0.44) | (0.77) |
Investment Manager's fees | (0.51) | (0.18) | (0.69) |
Other income and expenses | (0.73) | (0.38) | (1.11) |
Net finance costs | (1.31) | (0.75) | (2.06) |
Current tax | (0.27) | 0.11 | (0.16) |
Revenue profit | 1.28 | 0.67 | 1.94 |
Unrealised losses on revaluation of investment properties | (2.16) | (1.77) | (3.93) |
Losses on disposal of investment properties | (0.33) | (0.01) | (0.33) |
Losses on derivatives (hedging interest rate and currency exposures) | (0.97) | (0.07) | (1.04) |
Finance costs | (0.68) | (0.19) | (0.87) |
Net foreign exchange losses | (0.02) | (0.00) | (0.02) |
Deferred tax | 0.31 | 0.02 | 0.34 |
Capital loss | (3.84) | (2.01) | (5.85) |
Total net loss | (2.57) | (1.34) | (3.91) |
NET ASSET VALUE
The Company's unaudited Consolidated Net Asset Value per share as at 31 March 2013 was 60.48 pence (58.56 pence as at 31 December 2012), an increase of 1.92 pence.
The Net Asset Value attributable to the Ordinary Shares is calculated under International Financial Reporting Standards. It includes all current year income after the deduction of dividends paid prior to 31 March 2013.
The £460k increase in Net Asset Value over the nine months ended 31 March 2013 can be analysed as follows:
Unaudited | Unaudited | Unaudited | |
6 months ended | 3 months ended | 9 months ended | |
31 December 2012 | 31 March 2013 | 31 March 2013 | |
£million | £million | £million | |
Opening Net Asset Value | 60.02 | 58.56 | 60.02 |
Net loss after tax | (2.57) | (1.34) | (3.91) |
Unrealised movement on derivatives | 0.58 | 0.31 | 0.89 |
Dividends paid | - | - | - |
Foreign exchange translation losses | 0.53 | 2.95 | 3.47 |
Closing Net Asset Value | 58.56 | 60.48 | 60.48 |
On a like-for-like basis the Euro valuation of the property portfolio decreased by 1.6% to €133.9 million for the quarter. In Sterling currency terms, the property valuation was £113.3 million (including the effects of valuation movements, capital expenditure and foreign exchange movements). The £/€ foreign exchange rate applied to the Company's Euro investments in its subsidiary companies at 31 March 2013 was 1.183 (31 December 2012: 1.233).
The Company's net property yield on current market valuation (after acquisition and operating costs) as at 31 March 2013 was 7.70% (7.61% as at 31 December 2012).
SHARE PRICE AND DISCOUNT TO NET ASSET VALUE
As at close of business on 31 March 2013, the mid-market price of the Company's shares on the London Stock Exchange was 38.75 pence, representing a discount of 35.93% on the Company's Net Asset Value at 31 March 2013.
As at close of business on 16 May 2013, the mid-market price of the Company's shares was 37.5 pence, representing a discount of 38.0% on the Company's Net Asset Value at 31 March 2013.
FUND GEARING
Unaudited | Unaudited | ||
31 December 2012 | 31 March 2013 | Movement | |
£million /% | £million /% | £million /% | |
Property portfolio * | 110.40 | 113.34 | +2.94 (+2.7%) |
Borrowings (net of capitalised issue costs) | 48.95 | 51.01 | +2.07 (+4.2%) |
Total gross gearing | 44.3% | 45.0% | +0.7 percentage points |
Total net gearing | 41.8% | 42.2% | +0.3 percentage points |
*Portfolio value based on the Company's independent valuation.
Fund gearing increased by 0.7 percentage points over the quarter to 45.0% as at 31 March 2013.
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 (LTV) Covenants | Unaudited | Unaudited | |
31 December 2012 | 31 March 2013 | Maximum | |
Main loan facility | 46.54% | 47.40% | 60.00% |
Joint venture Property Trust Agnadello S.r.l. | 43.56% | 42.19% | 65.00% |
As at 31 March 2013, the loan-to-value ratio on the main loan facility was 47.40% based on the Company's independent valuation.
The loan has an LTV covenant of 60% through to its expiry in July 2016.
Interest Cover Ratio at 31 March 2013 | Historic | Minimum | Projected | Minimum | Net rental income |
Unaudited | Unaudited | headroom | |||
Main loan facility covenant | 314.6% | 200.00% | 333.7% | 185.00% | 44.56% |
Joint venture Property Trust Agnadello S.r.l. | 503.5% | 125.00% | 722.6% | 125.00% | 82.7% |
Interest Cover Ratio (ICR) is calculated as net financing expense payable as a percentage of net rental income less movement in arrears. Net rental income headroom is based on projected interest cover.
CASH POSITION AND CAPITAL EXPENDITURE
The Company and its subsidiaries held total cash of £3.21 million (€3.80 million) at 31 March 2013. The anticipated capital expenditure over the next twelve months is £1.1 million.
MATERIAL EVENTS
Except for those noted above, the Board of the Company is not aware of any significant event or transaction which occurred between 31 March 2013 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
Broker Services
7 Newgate Street
London EC1A 7NX
Tel: +44 (0)20 7003 2345Email: broker.services@axa-im.com
Broker
Oriel Securities Limited
Neil Winward
Tel: +44 (0)20 7710 7600
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