TIDMEPIC
RNS Number : 6119T
Ediston Property Inv Comp PLC
16 October 2017
Ediston Property Investment Company plc
(LEI: 213800JRL87EGX9TUI28)
Net Asset Value ("NAV") as at 30 September 2017
Ediston Property Investment Company plc (LSE: EPIC) (the
"Company") announces its unaudited NAV as at 30 September 2017.
Quarter highlights
-- NAV per share at 30 September 2017 of 111.32 pence (30 June
2017: 110.18 pence), an increase of 1.03%, after taking into
account capital expenditure and transaction costs.
-- The NAV total return (including dividends) was 2.3% for the
quarter and 9.3% for the 12 months to 30 September 2017.
-- Fair value independent valuation of the property portfolio as
at 30 September 2017 of GBP173.41 million, a like-for-like increase
of 1.20% on the valuation at 30 June 2017.
-- The office building in Reading was sold in August for
GBP20.51 million, in line with the 30 June 2017 valuation.
Net Asset Value
The unaudited NAV of the Company at 30 September 2017 was
GBP145.82 million, or 111.32 pence per share, an increase of 1.03%
on the Company's NAV per share as at 30 June 2017:
Pence Per Share GBP million
------------------------------ ---------------- ------------
NAV at 30 June 2017 110.18 144.33
------------------------------ ---------------- ------------
Gain on properties 1.53 2.01
------------------------------ ---------------- ------------
Capital expenditure in
the period (0.55) (0.73)
------------------------------ ---------------- ------------
Income earned for the period 2.32 3.04
------------------------------ ---------------- ------------
Expenses & finance costs
for the period (0.79) (1.03)
------------------------------ ---------------- ------------
Dividends paid in the period (1.37) (1.80)
------------------------------ ---------------- ------------
NAV at 30 September 2017 111.32 145.82
------------------------------ ---------------- ------------
The NAV attributable to the ordinary shares has been calculated
under International Financial Reporting Standards ("IFRS"); the
EPRA NAV is not reported separately in this update as it is the
same as the IFRS NAV.
The NAV incorporates the independent portfolio valuation as at
30 September 2017 and income for the quarter, but does not include
a provision for any accrued dividend.
Disposal
During the period, the Company completed its second sale from
the portfolio, disposing of its office property in Reading for
GBP20,510,602, which was in line with the valuation at 30 June
2017. The property extended to c.52,000 sq. ft., was multi-let to
four tenants, and had c. 6,000 sq. ft. of space vacant and to
let.
The asset was acquired by the Company, as part of the seed
portfolio, in October 2014. On acquisition, it had over 20,000 sq.
ft. vacant and to let. The Investment Manager leased 14,000 sq. ft.
of this space to two new tenants, and moved the rental tone of the
property from GBP25.00 per sq. ft. to in excess of GBP30.50 per sq.
ft.
The Investment Manager remains confident that the sales proceeds
will be invested in other assets which offer a greater potential
for income and capital growth, including the proposed transaction
announced on 6 October 2017.
Outlook
Investment and letting markets continue to shrug off the
uncertainties brought about by the Brexit process and the changed
political situation. Overseas investors are the largest buyers by
volume with the statistics distorted by some large central London
transactions.
Yields have generally remained static for the quarter. We do not
see significant yield change over the remaining part of the year.
However, it is likely the weight of money will push the pricing of
long lease properties up further and those assets with income
uncertainty will see some falls. The latter type of asset has the
greater scope for mispricing and could be attractive targets, with
well-founded knowledge of occupational markets backed up by
management capability.
We see greatest value in the retail warehouse sector for schemes
that are let on the correct rental levels. Yields are looking
attractive relative to other sectors, unexpired lease terms are
good, and the credit rating of the major occupiers is strong. It is
also the part of the retail sector that is more resilient to
internet penetration and is actually well-placed to help retailers
deliver both physical and online sales.
Portfolio Composition
Sector
Sector Exposure
(%)
------------------ ---------
Retail warehouse 55.07
------------------ ---------
Office 39.07
------------------ ---------
Other commercial 5.86
------------------ ---------
Geography
The portfolio is diversified across the regional markets and has
no exposure to Central London assets.
Sector Exposure
(%)
--------------- ---------
North East 27.96
--------------- ---------
Wales 22.60
--------------- ---------
West Midlands 20.09
--------------- ---------
Scotland 16.75
--------------- ---------
East Midlands 7.87
--------------- ---------
South West 2.94
--------------- ---------
North West 1.79
--------------- ---------
Dividends
The Company paid three dividends of 0.4583 pence per share in
July, August and September 2017, resulting in a cumulative dividend
payment for the quarter of 1.3749 pence per share. This brings the
total dividends paid during the year to 30 September 2017 to 5.50
pence per share. The annual dividend remains fully covered.
Proposed acquisition and fund raising
On 6 October, the Board announced that the Company and its
Investment Manager are in discussions to acquire a portfolio of
retail warehouse parks with an aggregate value of approximately
GBP146 million. The vendor will receive a material proportion of
the consideration in the form of new ordinary shares in the
Company. The balance of the consideration will be funded through a
combination of the Company's existing cash resources, the proceeds
of an open offer to existing shareholders, a placing, and an offer
of subscription, including an intermediaries' offer, of up to 100
million new ordinary shares, and through debt finance. The
acquisition has been favourably received by the major shareholders
in the Company and, if approved, will increase the Company's
property portfolio to over GBP315 million. The Company expects to
make a further announcement of progress on the transaction closer
to when the formal documentation is ready for publication.
William Hill, Chairman, commented:
"Over the quarter, the Company continued to build a record of
adding value through management activity and recycling cash where
assets reach maturity. Evidence of delivering on our growth
strategy is now visible with the proposed retail warehouse
portfolio acquisition announced on 6 October. The attraction of
this deal is not only the ability to add assets with potential to
add value through management, but also from an income perspective.
On completion the assets will be accretive to dividend cover and
will improve the quality of income in the enlarged portfolio."
Calum Bruce, Investment Manager, commented:
"We have always said that we will look to refresh the property
portfolio by selling our mature assets and reinvesting the proceeds
in properties with attractive asset management angles to exploit.
The sale of the office building in Reading was in line with this
objective.
Another objective is to grow the Company in a sustainable and
credible manner. The proposed portfolio transaction will allow us
to achieve this aim by acquiring assets in a sector in which the
Investment Manager has confidence and which offer a good income
stream, with the potential to improve the income further through
identified asset management initiatives."
Forthcoming events
The next scheduled independent quarterly valuation of the
property portfolio will be conducted by Knight Frank as at 31
December 2017 with the NAV per share at that date expected to be
announced in January 2018. Given the proposed transaction, the
Company also intends to announce its annual results for the year
ended 30 September 2017 in January 2018.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via Regulatory Information Service
this inside information is now considered to be in the public
domain.
Enquiries
Will Barnett - Canaccord Genuity 0207 523 8000
Calum Bruce - Ediston Properties Limited 0131 225 5599
Donald Cameron - Maitland Administration Services (Scotland)
Limited 0131 550 3763
David Masters - Lansons 0207 294 3687
Laura Cronin - Lansons 0207 294 3607
This information is provided by RNS
The company news service from the London Stock Exchange
END
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