TIDMDRIP
RNS Number : 3869D
Drum Income Plus REIT PLC
26 April 2017
26 April 2017
Drum Income Plus REIT plc
("Drum" or the "Company")
Unaudited Net Asset Value as at 31 March 2017
Drum Income Plus REIT plc (LSE: DRIP) announces its unaudited
net asset value ("NAV") as at 31 March 2017.
Highlights
Period from 1 January to 31 March 2017
-- Fair value independent valuation of property portfolio as at
31 March 2017 of GBP49.2m (31 December 2016: GBP48.8m).
-- NAV per share at 31 March 2017 of 96.5p (31 December 2016: 95.3p).
-- Earnings per share (excluding revaluation gains and losses on
fair value of investments) for three months ended 31 March 2017
were 1.5p.
-- Dividend paid during the quarter of 1.375p fully covered by earnings for the period.
-- NAV total return (NAV movement plus dividend paid) of 2.4%.
-- 1.6m shares issued at GBP1.00 per share.
Introduction
The Company aims to provide shareholders with a regular dividend
income plus the prospect of income and capital growth over the
longer term. The Company invests in smaller UK commercial
properties, principally in the office, retail (including retail
warehouses) and industrial sectors, which have the potential to
offer a secure income stream, to create value through active asset
management and have strong prospects for future income and capital
growth.
Unaudited NAV (As at 31 March 2017)
GBPm Pence per
Share
NAV as at 31 December
2016 34.9 95.3
Fundraising proceeds 1.6 0.2
Portfolio capital expenditure (0.1) (0.3)
Valuation change in property
portfolio 0.4 1.2
Income earned for the
period 1.0 2.6
Expenses for the period (0.3) (0.8)
Interest paid (0.1) (0.3)
Dividend paid (0.5) (1.4)
Unaudited NAV as at 31
March 2017 36.9 96.5
------------------------------ ----- ---------
The NAV has been calculated in accordance with International
Financial Reporting Standards and incorporates the independent
portfolio valuation as at 31 March 2017 and income for the period,
but does not include a provision for the second interim dividend,
which will be paid in May 2017. The earnings per share for the
period from 1 January 2017 to 31 March 2017 (excluding revaluation
gains and losses on fair value of investments and expenses charged
to capital) were 1.5p. Acquisition costs on new property purchases
have been written-off.
As at 31 March 2017, the Company had cash balances of GBP2.6
million and borrowings of GBP14.5 million (loan to value of
29.4%).
Market Overview
Prime yields in February sharpened slightly reaching an average
of 4.79%. This was the sixth month in a row where pricing improved
and we are now in the longest sustained period of lowering yields
since early 2014. The main shift was in the City office market,
where falling supply and continued international investor demand
saw yields move to 4.00%. The pricing arbitrage between Prime and
Regional assets continues to support the acquisition strategy.
A current barrier to liquidity in the market is the lack of
investment stock being considered for sale. As Article 50 has now
been triggered further dates for the diary include the EU Summit on
April 29th, which will outline the negotiating terms, and the
French Presidential Election on May 7th. Following these events the
expectation was to see greater deal churn across all sectors and
geographies, however, the Prime Minister's call for a snap General
Election may have an adverse effect on the quantum of deals.
Whilst some investors are adopting a wait and see attitude this
has not led to inertia in the market as most sectors are reporting
steady, if not spectacular, investment volumes.
Overseas investors deployed GBP5.8 billion into the UK's
regional commercial property market in 2016, growing to account for
almost 29% of the total investment outside of London with
particular interest in Edinburgh, Manchester and Cardiff. This was
a rise from 27% in 2015 and well above the long term average of
19%.
This has been driven forward by continued strength in regional
business space markets with 4.3m sq. ft. of office space transacted
in the key big six regional markets, 17% above the long term
average. The logistics market saw almost 36m sq ft of space
transacted, making it the best year ever for occupier demand. For
this trend to continue, opportunities to deploy significant amounts
of capital will need to emerge. However, with very little
speculative development in the office or logistics sector, and with
continued occupational demand, pre-let fundings or refurbishment
opportunities will push investment volumes forward.
Investors will continue to examine the regions for the
foreseeable future as, according to RealFor, total returns between
2017 through to 2021 will reach up to 8.4% per annum for some
regional office markets, outpacing what is forecast for many
Central London sub-markets.
Current Portfolio
Dec-16 Mar-17
Location Value % Weighting Value % Weighting
North
East GBP15,625,000.00 32% GBP15,725,000.00 32%
Scotland GBP18,050,000.00 37% GBP18,050,000.00 37%
North
West GBP9,800,000.00 20% GBP10,150,000.00 21%
South
West GBP5,300,000.00 11% GBP5,300,000.00 10%
GBP48,775,000.00 100% GBP49,225,000.00 100%
Sector Value % Weighting Value % Weighting
Office GBP23,075,000.00 47% GBP23,425,000.00 48%
Shopping
Centre GBP13,000,000.00 27% GBP13,100,000.00 27%
Retail GBP10,100,000.00 21% GBP10,100,000.00 21%
Industrial GBP2,600,000.00 5% GBP2,600,000.00 4%
GBP48,775,000.00 100% GBP49,225,000.00 100%
------------------------------- ------------ ----------------- ------------
Key KPIs
Dec-16 Mar-17
Total Number
of Units 94 94
Total Number
of Tenants 82 82
Total SQFT 282,651 282,651
Vacancy (%
SQFT) 8.40% 8.00%
Vacancy (%
ERV) 9.20% 8.70%
WAULT (Expiry) 6.03 5.83
WAULT (Breaks) 4.99 4.44
---------------- -------- --------
Differentiated Investment Strategy
-- Target lot sizes of GBP2m - GBP15m in regional locations.
-- Sector agnostic - opportunity driven.
-- Entrepreneurial asset management.
-- Risk-controlled development.
-- 5.67% dividend yield on 31 March 2017 share price.
-- Dividend paid quarterly.
-- Covered dividend policy - growing incrementally.
Portfolio Attributes
In the context of the market uncertainty, the Board believes it
is helpful to shareholders to highlight some key attributes of the
Company's property portfolio:
-- The Company has no exposure to Central London markets, which may take the brunt of any Brexit-related market weakness.
-- The weighted average unexpired lease term (WAULT) to expiry
of the portfolio is 5.87 years, which reduces the impact of any
uncertainty in occupational markets.
-- The portfolio yield is 8.7% (based on 31 March 2017 valuation).
-- The occupancy rate is high at greater than 90%.
-- Low gearing - the loan-to-value ratio of 29.4% provides
resilience against the risk of covenant breach from significant
market falls.
-- Further asset management angles to exploit.
Asset Management Update
Gosforth Shopping Centre
-- A new 10 year lease was granted on Unit 18 at a rent of GBP21,500pa
-- Three new kiosks have been created and initial interest is strong from local retailers.
Arthur House, Manchester
-- Tony Gee have entered into an Agreement for Lease to relocate
from part of the 6(th) floor to 4,000 sqft on the 4(th) floor for a
term of 10 years with a break option in year 5. The rent agreed
represents GBP17.50 per square foot, which is a significant
increase in the ERV for the building.
-- The remodelling of the reception is underway and is
anticipated to complete toward the end of June.
Lakeside 5500, Cheadle
-- Micron have entered into a new 5 year lease, for a unit size
of 8,745 sqft, at a new rent of GBP177,200 per annum which is ahead
of the previous passing rent of GBP153,457.50. An increase of c
15%.
Dividends
The Board is targeting fully covered aggregate quarterly
dividends of at least 5.5p per share in respect of the year ending
30 September 2017 and at least 6.0p per share in respect of the
year ending 30 September 2018*.
[*Target returns only and not a profit forecast. There can be no
assurance that these targets will be met and they should not be
taken as an indication of expected or actual current or future
results.]
Enquiries:
Drum Real Estate Investment Management (Investment Manager)
Bryan Sherriff 0131 285 0050
Cantor Fitzgerald Europe (Financial Adviser and Corporate Broker)
Sue Inglis (Corporate Finance) 020 7894 8016
Richard Sloss (Sales) 0131 240 3863
Dickson Minto W.S. (Sponsor)
Douglas Armstrong 020 7649 6823
Weber Shandwick (Financial PR)
Richard Bright 0131 556 6649
Nick Oborne 020 7067 0721
This information is provided by RNS
The company news service from the London Stock Exchange
END
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