Worsley Inv Ltd Regulatory News (WINV)

5 Nov 2009 07:00



To: Company Announcements

Date: 5 November 2009

Company: AXA Property Trust Limited

Subject: Interim Management Statement and Net Asset Value 30 September 2009

CONSOLIDATED PERFORMANCE SUMMARY (UNAUDITED)

Source: Datastream; AXA REIM

Total net loss was £10.68 million (10.68 pence per share) for the three months to 30 September 2009, analysed as follows:

The total net loss for the 3 months ended 30 September 2009 of £10.68 million included £0.79 million of "revenue" profit and £11.47 million "capital" loss. The Company's net yield on current market valuation (after acquisition and operating costs) as at 30 September 2009 was 7.4% (7.5% as at 30 June 2009).

NET ASSET VALUE

The unaudited Company's Consolidated Net Asset Value per share of AXA Property Trust Limited (the "Company") as at 30 September 2009 was 78.14 pence (83.46 pence as at 30 June 2009).

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 2009, but does not include provision for the quarterly interim dividend of 0.75 pence per share announced in this Statement to be paid 27 November 2009.

The £5.32 million decline in Net Asset Value over the quarter ended 30 September 2009 can be analysed as follows:

During the quarter the Sterling valuation of the property portfolio increased by £4.95 million (3.4%) to £151.94 million. Excluding foreign exchange translation movements the portfolio valuation declined by £5.46 million (-3.7%).

SHARE PRICE AND DISCOUNT TO NET ASSET VALUE

As at close of business on 30 September 2009, the mid market price of the Company's shares on the London Stock Exchange was 54.0 pence, representing a discount of 30.9% on the Company's Net Asset Value at 30 September 2009.

As at close of business on 3 November 2009, the mid market price of the Company's shares was 62.75 pence, representing a discount of 19.70% on the Company's Net Asset Value at 30 September 2009.

DIVIDENDS

The first interim dividend of 0.75 pence per share in respect of the year ending 30 June 2010 was declared today, with an ex-dividend date of 11 November 2009, record date of 13 November 2009 and payment date of 27 November 2009. The quarterly dividend is fully covered by "Revenue" profits and by the operating cash flow (excluding capital expenditure and foreign exchange). 

STRATEGY AND MARKET

Country Allocation at 30 September 2009

Country % of portfolio

Germany 60%

Netherlands 21%

Italy 16%

Belgium 3%

Sector Allocation at 30 September 2009

Sector % of portfolio

Retail 58%

Industrial 18%

Office 15%

Leisure 9%

As attention in the market shifts from outward movements in yield levels to falls in rental value, the Investment Manager and Real Estate Adviser continue to maintain their focus on rental income as a first priority. 

The portfolio's income stream is well secured against strong tenant covenants and benefits from a low vacancy rate. The portfolio tenant base is weighted towards the defensive food retail sector and enjoys a weighted average lease length of 5.5 years.

AXA REIM, the Company's Real Estate Adviser, believes that the Continental European real estate market will continue to see a downward pressure in the final quarter of 2009 and into 2010, driven by both further outward movement of property yields, as well as declining rental values. A further valuation adjustment to the Company's portfolio is anticipated in the final quarter of 2009 and potentially into 2010. However, the defensive nature of the underlying properties and an established emphasis on prudent management should serve the Company well in this difficult economic environment. 

FUND GEARING

Fund gearing increased by 1.9 percentage points over the quarter to 52.7% as at 30 September 2009.

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 

\* The Investment Manager has negotiated a waiver from Calyon of further quarterly loan to value covenant testing pending completion of the main facility refinancing.

Interest Cover Ratio (ICR) is calculated as net financing expense payable as a percentage of gross rental income less movement in arrears. (In the case of Property Trust Agnadello, ICR is calculated as net financing expense payable as a percentage of net rental income less movement in arrears).

MAIN LOAN FACILITY

As noted in the Annual Financial Report (RNS dated 26 October 2009), the Investment Manager is currently discussing detailed terms with Calyon Corporate and Investment Bank ("Calyon") on the refinancing of the Company's £71.83 million (EUR 78.6 million) long term bank facility. Under the current terms of the Company's main loan facility, the maximum permitted Gross Loan to Value (LTV) is 50%. As at 30 September 2009 the LTV was 52.06%. The Investment Manager has negotiated a waiver from Calyon of further quarterly loan to value covenant testing pending completion of the refinancing, thereby avoiding a partial repayment of £2.84 million (EUR 3.11 million) based on the 30 September 2009 portfolio valuation. The Board and Investment Manager continue to seek to achieve finalisation of the refinancing as soon as possible.

The Company and its subsidiaries held total cash of £18.51 million (EUR 20.25 million) at 30 September 2009. The £18.51 million cash held by the Company at 30 September 2009 has been allocated between working capital and uncommitted capital expenditure, principally to develop the Company's retail asset in Fuerth, Germany. The £4.8 million (EUR 5.3 million) Fuerth capital expenditure is subject to Board approval of the final terms of the development. £11.9 million (EUR 13.0 million) cash has been invested in fixed term deposits which will be realised as required for the capital expenditure programme. If the cash allocated to uncommitted capital expenditure were utilised to repay part of the bank debt, the 50% Gross LTV would be met until property valuations declined by more than 13.1% from 30 September 2009 levels.

The Company's loans with Calyon are fully hedged at an average rate of 5.21% via interest rate swaps until July 2010 and then by interest rate caps at a strike rate of 4.5% until April 2011 when the loan facility expires.

PORTO KALI LOAN FACILITY

Sales and lettings have continued to be the focus of the business strategy for the Porto Kali portfolio in which the Company holds a 12% interest. The previously advised sales of the assets -s Gravendijkwal, Rotterdam for £3.4 million (EUR 3.7 million) and Hoofdstraat, Apeldoorn for £1.0 million (EUR 1.05 million) have been completed in the quarter. In addition, Brinkwal 3-5, in Nieuwegein, an 800 sq m office building let until July 2010, was sold in September 2009 to a Dutch Real Estate Company. The purchase price of £0.70 million (EUR 0.77 million is 26% higher than the latest independent valuation at 30 June 2009 of £0.57 million (EUR 0.62 million), which assumed complete vacancy for two and a half years. 

The portfolio is now clearly being impacted by the weakening occupational market, as a result of which no new lettings have been completed in the quarter, despite lengthy and ongoing negotiations for various premises. Tenant retention has been strong with six lease renewals for a total rent of £1.56 million (EUR 1.70 million) (7% above Estimated Rental Value) having been formally agreed in the quarter.

OUTLOOK

Property portfolio performance will be affected by an upcoming void at Bernau (from August 2010), as well as the outcome of the restructuring of the Porto Kali portfolio investment. Letting and lease renewal terms are currently being negotiated with tenants at Fuerth, Dasing, and Koethen, representing a total area of 33,650m² (21% of the portfolio by area). Once finalised over the coming months, these lettings are expected to have a positive impact on total rental income, as well as increasing the portfolio's weighted average lease length to in excess of eight years.

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 2009 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

Neil Winward 8th Floor 155 Bishopsgate London EC2M 3XJ

Tel: +44 (0)20 7330 6619 Email: broker.services@axa-im.com

Sponsor and Broker

Oriel Securities Limited

Tom Durie

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 745529

Fax: +44 (0)1481 745085