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 Limited
Broker Services
7 Newgate Street
London EC1A 7NX
Tel: +44 (0)20 7003 2345
Email: broker.services@axa-im.com
Broker
Stifel Nicolaus Europe Limited
150 Cheapside
London EC2V 6ET
Neil Winward / Mark Bloomfield
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 745324