Last checked at 
9 Feb 2010 07:00
To: Company Announcements
Date: 9 February 2010
Company: AXA Property Trust Limited
Subject: Net Asset Value 31 December 2009
CONSOLIDATED PERFORMANCE SUMMARY (UNAUDITED)
|
| Unaudited | Unaudited |
|
|
| 3 months ended | 6 months ended |
|
|
| 30 September 2009 | 31 December 2009 | Quarterly Movement |
|
| Pence per share | Pence per share | Pence per share /(%) |
| Net Asset Value per share | 78.14 | 76.13 | -2.01 (-2.6%) |
| Earnings per share | -10.68 | -10.65 | 0.03 |
| Dividend declared in the period | 0.75 | 1.50 | 0.75 |
| Share price (mid market) | 54.0 | 53.0 | -1.0 (-1.85%) |
| Share price discount to Net Asset Value | 30.9% | 30.4% | -0.5 percentage pts |
| Total return | Unaudited | Unaudited |
|
| 3 months ended | 6 months ended |
|
| 30 September 2009 | 31 December 2009 |
| Net Asset Value Total Return | -5.5% | -7.0% |
| Share price Total Return |
|
|
| - AXA Property Trust | 35.5% | 34.7% |
| - FTSE All Share Index | 22.4% | 29.1% |
| - FTSE Real Estate Investment Trust Index* | 29.5% | 36.3% |
*FTSE Real Estate Index is not available
Source: Datastream; AXA REIM
Total net profit was £0.03 million (0.03 pence per share) for the three months to 31 December 2009, analysed as follows:
|
| Unaudited | Unaudited | Unaudited |
|
| 3 months ended | 6 months ended | 3 months ended |
|
| 30 September 2009 | 31 December 2009 | 31 December 2009 |
|
| £million | £million | £million |
| Net property income | 3.08 | 5.94 | 2.86 |
| Investment Manager's fees | -0.42 | -0.64 | -0.22 |
| Other income and expenses | -0.83 | -1.57 | -0.74 |
| Net finance costs | -0.97 | -2.02 | -1.05 |
| Unrealised losses on revaluation of property | -5.46 | -7.70 | -2.24 |
| Unrealised gain on revaluation of Porto Kali investment (loan receivable) | - | 0.86 | 0.86 |
| Unrealised (losses)/gains on derivatives (hedging interest rate and foreign exchange exposures) | -6.13 | -5.38 | 0.75 |
| Deferred tax | 0.13 | 0.05 | -0.08 |
| Current tax | -0.08 | -0.19 | -0.11 |
| Total net (loss)/profit | -10.68 | -10.65 | 0.03 |
The total net profit for the 3 months ended 31 December 2009 of £0.03 million included £0.72 million of "revenue" profit and £0.69 million "capital" loss. The Company's net property yield on current market valuation (after acquisition and operating costs) as at 31 December 2009 was 7.50% (7.4% as at 30 September 2009).
NET ASSET VALUE
The unaudited Company's Consolidated Net Asset Value per share of AXA Property Trust Limited (the "Company") as at 31 December 2009 was 76.13 pence (78.14 pence as at 30 September 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 31 December 2009, but does not include provision for the quarterly interim dividend of 0.75 pence per share announced 3 February 2010 to be paid 26 February 2010.
The £2.01 million decline in Net Asset Value over the quarter ended 31 December 2009 can be analysed as follows:
|
| Unaudited | Unaudited |
|
| 6 months | 3 months |
|
| £million | £million |
| Opening Net Asset Value | 1 July 2009 | 1 October 2009 |
|
| 83.46 | 78.14 |
| Net (loss)/profit | -10.65 | 0.03 |
| Unrealised gains on derivatives | 0.72 | 1.42 |
| Dividends paid | -1.50 | -0.75 |
| Foreign exchange translation gains/(losses) | 4.10 | -2.71 |
| Closing Net Asset Value 31 December 2009 | 76.13 | 76.13 |
During the quarter the Sterling valuation of the property portfolio decreased by £6.25 million (4.1%) to £145.69 million. Excluding foreign exchange translation movements the portfolio valuation declined by £2.24 million (1.5%).
As a result of the new financing terms agreed in December 2009 on the Porto Kali portfolio and an update to the business plan, the estimated recoverable value of the Company's loan receivable on a discounted cash flow basis increased by £0.86 million.
SHARE PRICE AND DISCOUNT TO NET ASSET VALUE
As at close of business on 31 December 2009, the mid market price of the Company's shares on the London Stock Exchange was 53.0 pence, representing a discount of 30.4% on the Company's Net Asset Value at 31 December 2009.
As at close of business on 5 February 2010, the mid market price of the Company's shares was 57.0 pence, representing a discount of 25.1% on the Company's Net Asset Value at 31 December 2009.
DIVIDENDS
The second interim dividend of 0.75 pence per share in respect of the year ending 30 June 2010 was declared on 3 February 2010, with an ex-dividend date of 10 February 2010, record date of 12 February 2010 and payment date of 26 February 2010. The quarterly dividend is 96% covered by "revenue" profits and fully covered by operating cash flow (excluding capital expenditure and foreign exchange).
STRATEGY AND MARKET
Country Allocation at 31 December 2009
Country % of portfolio
Germany 60%
Netherlands 20%
Italy 17%
Belgium 3%
Sector Allocation 31 December 2009
Sector % of portfolio
Retail 58%
Industrial 18%
Office 15%
Leisure 9%
AXA REIM, the Company's Real Estate Adviser, believes that the Continental European real estate market is approaching the trough in many territories, although downward pressure on values may still be witnessed in the first quarter of 2010, driven partly by further outward movement of property yields, but largely by declining market rental values.
In this environment, the Real Estate Adviser and AXA Investment Managers UK Limited (the Company's Investment Manager) 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. The Fund has signed a lease for fifteen years and six months with the anchor supermarket tenant, Edeka, at Fuerth retail centre which, upon commencement, will extend the portfolio's weighted average lease length to 5.9 years. As a result it is anticipated that further tenants at the retail centre will extend their leases over the coming years.
FUND GEARING
|
| Unaudited | Unaudited |
|
|
| 30 September 2009 | 31 December 2009 | Movement |
|
| £million /% | £million /% | £million /% |
| Property portfolio | 151.94 | 145.69 | 6.25 (4.1%) |
| Borrowings | 80.01 | 77.87 | 2.14 (2.7%) |
| Total gross gearing excluding Porto Kali | 52.7% | 53.4% | 0.7 percentage pts |
| Total net gearing excluding Porto Kali | 40.5% | 41.3% | 0.8 percentage pts |
| Total gross gearing including Porto Kali | 56.2% | 56.6% | 0.4 percentage pts |
Fund gearing increased by 0.7 percentage points over the quarter to 53.4% as at 31 December 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
| Gross Loan to Value Covenants | Unaudited | Unaudited |
|
|
| 30 September 2009 | 31 December 2009 | Maximum |
| Main loan facility | 52.06% | 52.86% | 50.0% |
| Joint venture Property Trust Agnadello S.r.l. | 59.6% | 59.6% | 65.0% |
| Consortium investment Porto Kali | 72.83% | 74.32% | 80.0% |
|
| Unaudited | Unaudited | Unaudited | Unaudited |
| Interest Cover Ratio at 31 December 2009 | Historic | Minimum | Projected | Gross rental income headroom |
| Main loan facility covenant | 366.3% | 250.0% | 483.6% | 52.8% |
| Joint venture Property Trust Agnadello S.r.l. | 257.0% | 125.0% | 379.1% | 67.0% |
| Consortium investment Porto Kali | 212% | 120% | 266% | 45.44% |
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). Gross rental income headroom is based on projected interest cover.
MAIN LOAN FACILITY
The ongoing discussions with Credit Agricole Corporate & Investment Bank ("Credit Agricole", formerly Calyon Corporate and Investment Bank) on the refinancing of the Company's £71.83 million (€78.6 million) long term bank facility have been protracted. The waiver noted in the most recent Interim Management Statement RNS (dated 5 November 2009) has lapsed. Following the lapse of the waiver, the Investment Manager is seeking the best solution to resolve an LTV in excess of covenant as at 31 December 2009.
The Board and the Investment Manager continue to seek the best financing strategy for the Fund going forward. Finalisation of the current refinancing negotiations has been delayed beyond the expected timetable. With one exception, all major points of negotiation between Credit Agricole and the Fund have largely been resolved. The delaying factor has been and continues to be the current negative mark to market value of the long term forward rate hedging agreements. Activities revolve around the resolution of this issue. Despite this, the Investment Manager remains confident of the efficiency of this hedging strategy in the long term.
Although the Company has sufficient free cash at 31 December 2009 to reduce the LTV below the covenant level, it is currently discussing alternative solutions with Credit Agricole. To further clarify, the Company and its subsidiaries held total cash of £17.64 million (EUR 19.85 million) at 31 December 2009. £11.6 million (EUR 13.0 million) cash is held on short term deposit to be realised as required for the capital expenditure programme and other cash requirements. The £17.64 million cash has been allocated between working capital and capital expenditure. £4.8 million (EUR 5.3 million) capex is committed for the development of the Company's retail asset in Fuerth, Germany which was announced in December 2009 (RNS dated 15 December 2009). The remaining capex is uncommitted. 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 8.2% from 31 December 2009 levels (assuming a 1:1 valuation increase at Fuerth as a result of the committed capex).
The Company's loans with Credit Agricole 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.
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. Following the successful signing of a lease with the supermarket anchor at Fuerth, further letting and lease renewal terms are being negotiated with other tenants at Fuerth as well as Dasing and Koethen, representing a total area of 30,000 sqm (20% 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 significantly increasing the portfolio's weighted average lease length.
The Company's Half Year Report and Financial Statements will be announced by 26 February 2010.
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 December 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 745604
Fax: +44 (0)1481 745085