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29 Nov 2016 15:21
AXA Property Trust Ltd - Net Asset Value 30 September 2016 (Unaudited)AXA Property Trust Ltd - Net Asset Value 30 September 2016 (Unaudited)
PR Newswire
London, November 29
To: Company Announcements
Date: 29 November 2016
Company: AXA Property Trust Limited
Subject: Net Asset Value 30 September 2016 (Unaudited)
SUMMARY
CAPITAL REDEMPTIONS
No capital was returned to shareholders during the quarter. Under the terms of the extension of the debt facility, disposal proceeds and rents will be allocated to repay the debt in priority to shareholder distribution.QUARTERLY RESULTS
Net Asset Value (“NAV”) as at 30 September 2016 was 71.40 pence per share, an increase of 6.3% compared to the prior quarter (30 June 2016: 67.20 pence per share). In the three months to 30 September 2016, the Group made a net profit after tax of £0.43m. The closing share price was 56.63 pence per share at 30 September 2016. Compared to the Net Asset Value per share at 30 September 2016, this represents a discount of 14.77 pence (-20.7%).MANAGED WIND-DOWN STATUS
The disposal strategy continues with the marketing of the Trust’s remaining assets. Post-quarter the Company, together with its joint venture partner, completed the sale of the property at Agnadello, Italy. The sales price of €23.2 million (at joint-venture level) reflects a discount of 1.3% below the asset’s independent valuation as at 30 September 2016. At Rothenburg, marketing continued and second-round bids were received during the quarter. A preferred bidder was selected and exclusivity was granted for the bidder to complete detailed due diligence. Post-quarter negotiations are being finalised with the aim of contracting for a sale by the end of December 2016, in which case completion is expected in early 2017. The remaining asset at Curno remains available for sale but interest has been limited despite the asset’s resilient cashflow.PORTFOLIO UPDATE
Country Allocation at 30 September 2016 (by asset value)
| Country | % of portfolio |
| Germany | 46% |
| Italy | 54% |
Sector Allocation at 30 September 2016 (by asset value)
| Sector | % of portfolio |
| Retail | 46% |
| Industrial | 24% |
| Leisure | 30% |
MARKET UPDATE
Eurozone – Economic environment
Eurozone GDP grew by 0.3% in Q2 2016, whilst growth in the first quarter was revised down slightly, to 0.5% (from 0.6%). The more subdued data reflects a slowdown in consumer spending, which has been the key driver of growth for much of the last eighteen months, as the oil boost fades. Investment has also remained lacklustre due to weak global trade and political uncertainty across Europe. Among major Eurozone economies, Spain remains a strong performer with GDP growth of 0.7% in Q2, followed by Germany (0.4%) but the divergence in growth among eurozone countries is a sign of concern, with growth flattening in Italy (0%) and faltering in France (-0.1%).
Political uncertainty – as we approach the Italian referendum in December and elections in the Netherlands, France and Germany in 2017 – continues to add some caution to spending by households and businesses. Political uncertainty also remains on-going in the wake of the UK’s vote to leave the EU. With respect to economic growth, the medium term effect is highly dependent upon future agreements between UK and EU countries, the outcomes of which are difficult to characterize at this stage. It has also added to political and financial risks across Europe, namely the stability of the Italian banking system.
The indicators so far received for Q3 point to more lacklustre growth in the second half of the year. Although PMIs have held up reasonably well, national survey data, as well as consumer confidence surveys, suggest a slowing in activity through July and August.
The German economy saw GDP grow by 0.4% Quarter on quarter (QoQ) in Q2, following a 0.7% increase in Q1, above consensus. Surprisingly weak imports and robust exports supported external trade balances. Private consumption increased by 0.2% QoQ, while government consumption grew by 0.6%. Investment fell sharply (-1.5% QoQ), mainly led by weakened investment in equipment, but supportive credit conditions and rising demand should result in a continuation of the previously commenced recovery in investment. Household consumption and industrial production should furthermore remain resilient and provide the main support for growth in Q3 2016.
Italy's GDP recorded positive growth in Q1 (0.3% QoQ), before flattening in Q2. Whilst this growth remains subdued, and Italy continues to lag the rest of Europe, the data does at least confirm a return to growth for the Italian economy after three consecutive years of decline. Italy's economy faces some severe headwinds and growth is likely to be further tested in the coming quarters. For sustained economic growth to manifest, structural reform is necessary within Italy. PM Renzi has backed a referendum on constitutional reform, taking place in December 2016, but the outcome of this is not certain. A period of uncertainty and a further delay in the implementation of crucial reforms would most likely dampen perspective economic growth. The fragility of the banking system is also adding to market jitters in Italy as a high stock of NPLs on Italian banks’ balance sheets may require a bail-in of retail investors.
Italian Industrial Market
Take-up increased quarter-on-quarter both in Milan and Rome, generating volumes of according to CBRE 91,200 sqm in Q3 2016, which is significantly more than the respective 86,000 sqm observed in Q1 and Q2 together. According to CBRE, prime rents continued to be stable year-on-year and quarter-on-quarter in both Milan and in Rome standing at €50/sqm/year and €52/sqm/year respectively. According to CBRE, year-to-date, industrial investment volumes amount to €231m, down 22.6% compared to the same period in 2015. According to CBRE, prime net yields fell however by 15 bps during Q3 both in Milan and Rome, reaching 6.25%.
German Retail Market
Q3 2016 saw 114,000 sqm of retail space signed, an increase of 10% compared by Q2 2016. The majority (57%) of all rental contracts were signed by international retailers. Berlin, Dusseldorf, Frankfurt, Hamburg, Hannover, Cologne, Leipzig, Munich, Nuremberg and Stuttgart jointly generated 35% of the overall take-up, down from 39% compared to Q2 2016. German prime retail rents have, according to JLL, continued to be largely stable with only Berlin recording some upward movement in prime rents. Overall retail investment volumes amounted to approximately €3.95bn in Q3 2016 according to CBRE, up from €2.9bn seen in Q2 2016, but down from €4.7bn in Q3 2015. According to JLL, prime high street yields are a peak prime level of 3.30% (Munich). Prime yields for shopping centres remained stable at 4.1%, according to CBRE.
CONSOLIDATED PERFORMANCE SUMMARY
| Audited | Unaudited | |||
| 3 months ended | 3 months ended | |||
| 30 June 2016 | 30 September 2016 | Quarterly Movement | ||
| Pence per share | Pence per share | Pence per share /(%) | ||
| Net Asset Value per share | 67.20 | 71.40 | 4.20 | 6.24% |
| Share price (mid market) | 55.13 | 56.63 | 1.50 | 2.72% |
| Share price discount to Net Asset Value | 18.0% | 20.7% | 2.7 percentage points | |
| Total Return per Share | Audited | Unaudited |
| 12 month ended | 12 month ended | |
| 30 June 2015 | 30 September 2016 | |
| Net Asset Value Total Return | 11.2% | 14.7% |
| Share Price Total Return | ||
| - AXA Property Trust | 29.6% | 16.5% |
| - FTSE All Share Index | 2.2% | 16.8% |
| - FTSE Real Estate Investment Trust Index | -8.3% | -8.8% |
| Source: AXA Investment Managers UK Limited and Stifel Nicolaus Europe Limited. | ||
| Audited | Unaudited | |
| 3 months ended | 3 months ended | |
| 30 June 2016 | 30 September 2016 | |
| £million | £million | |
| Net property income | 0.88 | 0.83 |
| Net foreign exchange (losses) / gains | 1.69 | 0.08 |
| Investment Manager's fees | (0.29) | (0.05) |
| Other income and expenses | 0.34 | (0.39) |
| Net finance costs | (0.07) | (0.11) |
| Revenue loss | 2.55 | 0.37 |
| Unrealised / gains on revaluation of investment properties | (0.18) | 0.01 |
| Net gain on disposal of investment properties | (1.40) | - |
| Net gains on derivatives | (0.01) | 0.07 |
| Share in losses of Joint Venture | (0.11) | 0.08 |
| Finance costs | (0.37) | - |
| Net foreign exchange losses | - | (0.02) |
| Deferred tax | (0.20) | (0.07) |
| Impairment loss | (0.45) | 0.00 |
| Capital profit | (2.72) | 0.07 |
| Total profit | (0.17) | 0.43 |
NET ASSET VALUE
| Audited | Unaudited | |
| 12 months ended | 3 months ended | |
| 30 June 2016 | 30 September 2016 | |
| £million | £million | |
| Opening Net Asset Value | 49.37 | 38.69 |
| Net (loss) / profit after tax | 1.41 | 0.43 |
| Unrealised movement on derivatives | 0.76 | - |
| Share Redemption | (16.19) | - |
| Foreign exchange translation losses | 3.35 | 1.99 |
| Closing Net Asset Value | 38.69 | 41.11 |
Net Asset Value per share as at 30 September 2016 was 71.40 pence (67.20 pence as at 30 June 2016).
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 and capital redemptions paid prior to 30 September 2016.
SHARE PRICE AND DISCOUNT TO NET ASSET VALUE
The closing share price was 56.63 pence per share at 30 September 2016. Compared to the Net Asset Value per share at 30 September 2016, this represents a discount of 14.77 pence (-20.7%).
FUND GEARING
During the quarter and following the sale of the asset in Dasing €6.48 million of debt was repaid. The outstanding debt reduced to £9.93 million (€11.48 million) as at end of September 2016.
| Audited | Unaudited | ||
| 30 June 2016 | 30 September 2016 | Movement | |
| £million /% | £million /% | £million /% | |
| Property portfolio * | 46.79 | 42.35 | -4.44 10.5% |
| Borrowings | 15.02 | 9.93 | -5.09 51.2% |
| Total gross gearing | 32.1% | 23.5% | -8.6 percentage points |
| Total net gearing ** | 26.6% | 10.0% | -16.6 percentage points |
| * Value based on independent valuation, Agnadello valuation included | |||
| ** Net Gearing is calculated as overall debt, net of unallocated cash held by the Goup over the portfolio at fair value | |||
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 (cash held in JV included) over property portfolio at fair value.
Following the post-quarter disposal of the Agnadello asset, the net disposal proceeds together with the existing cash reserves will be allocated to the full reimbursement of the outstanding loan.
CASH POSITION
The Company and its subsidiaries held total cash of £10.02 million (including cash held in Joint Venture) at 30 September 2016.
MATERIAL EVENTS
Except for those noted above, the Board of the Company is not aware of any significant event or transaction occurring between 30 September 2016 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 LimitedBroker Services7 Newgate StreetLondon EC1A 7NXTel: +44 (0)20 7003 2345Email: broker.services@axa-im.com
BrokerStifel Nicolaus Europe Limited150 CheapsideLondon EC2V 6ETNeil Winward / Mark BloomfieldTel: +44 (0)20 7710 7600
Company SecretaryNorthern Trust International Fund Administration Services (Guernsey) LimitedTrafalgar CourtLes BanquesSt Peter PortGY1 3QLTel: +44 (0)1481 745324