Net Asset Value

11 May 2016

STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST LIMITED (LSE: SLI)

Unaudited Net Asset Value as at 31 March 2016

Key Highlights

• Net asset value per ordinary share was 82.3p as at 31 March 2016, an increase of 0.1% from 31 December 2015 resulting in a NAV total return of 1.5% for Q1;
• The portfolio increased by 0.1% on a like for like basis which compares favourably to the quarterly capital return on the monthly IPD Monthly Index capital return over the quarter (fall of 0.2%);
• The increase in stamp duty land tax announced in the March 2016 budget resulted in a £3.5 million reduction in valuations across the portfolio; excluding this the portfolio showed a like for like increase of 0.8%;
• On 28 April 2016, the Company announced a debt refinancing resulting in a new seven year term loan facility of £110 million and a revolving credit facility of £35 million at a current blended rate of interest of 2.5%, and a LTV of 29.5%;
• Share price total return of 2.2% over the quarter as the Company’s shares continue to trade at a premium to NAV. This return compares favourably to the total return on both the FTSE All-Share Index (-0.4%) and the FTSE REIT Index (-5.7%);
• Based on new dividend rate of 1.19p per quarter, dividend yield of 5.5% based on share price of 86.25p (31 March 2016) comparing favourably to the yield on the FTSE All-Share REIT Index (3.3%) and the FTSE All Share Index (3.8%) as at the same date.

Net Asset Value (“NAV”)

The unaudited net asset value per ordinary share of Standard Life Investments Property Income Trust Limited (“SLIPIT”) at 31 March 2016 was 82.3p. The net asset value is calculated under International Financial Reporting Standards (“IFRS”).

The net asset value incorporates the external portfolio valuation by Jones Lang LaSalle and Knight Frank at 31 March 2016.

Breakdown of NAV movement

Set out below is a breakdown of the change to the unaudited NAV per share calculated under IFRS over the period 31 December 2015 to 31 March 2016.

	Per  Share (p)	Attributable Assets (£m)	Comment
Net assets as at 1 January 2016	82.2	312.8
Unrealised increase in valuation of property portfolio	0.1	0.3	Like for like increase of 0.1% in property portfolio
Net income in the quarter after dividend	0.4	1.6	Strong net income in the quarter as full quarters rent from Dec 15  portfolio acquisition included but dividend paid in quarter related mainly to pre-acquisition shareholders
Interest rate swaps mark to market revaluation	-0.3	-0.9	Increase in swap liabilities as  a result of a decrease in the expectation for future interest rates
Other movement in reserves	-0.1	-0.5	Movement in lease incentives and capital expenditure in the quarter
Net assets as at 31 March 2016	82.3	313.3

European Public Real Estate Association (“EPRA”)*	31 Mar 2016	31 Dec 2015
EPRA Net Asset Value	£316.3m	£314.9m
EPRA Net Asset Value per share	83.1p	82.8p

The Net Asset Value per share is calculated using 380,690,419 shares of 1p each being the number in issue on 31 March 2016.

* The EPRA net asset value measure is to highlight the fair value of net assets on an on-going, long-term basis. Assets and liabilities that are not expected to crystallise in normal circumstances, such as the fair value of financial derivatives, are therefore excluded.

Investment Manager Commentary  

The first quarter of 2016 felt very different to the last half of 2015. The “Brexit” debate has come to centre stage, the low oil price has cut confidence and dividends and the combination of all these factors has resulted in stock market volatility. The Chancellor then added further pressure to the real estate market in the budget with a 1% increase in Stamp Duty Land Tax (“SDLT”) for larger commercial properties.

Despite this challenging environment tenant activity has remained robust. We have seen continued demand from occupiers on vacant space and have undertaken a number of successful asset management initiatives in the quarter as follows:

• Letting of three vacant units at Budbrooke industrial estate, Warwick adding £92k in rent per annum after incentives;

• Successful lease regear at Broadoak, Manchester, one of the assets acquired in December as part of the portfolio acquisition, with solicitors instructed on two further regears at the same investment

• Rent review completed at Denby, above ERV and adding an additional £170k in rent.

Overall voids have increased slightly to 3.7% due to an expiry at the end of the quarter on an industrial unit in Oldham with the other large void being an industrial unit in Bristol which is currently being refurbished.

Although uncertainty will remain elevated until the second half of the year we remain optimistic that tenant demand for smaller buildings outside Central London will remain robust and that income will continue to dominate total return.  

Cash position

As at 31 March 2016 the Company had cash of £14.1 million.  

Dividends

The Company paid total dividends in respect of the quarter ended 31 December 2015 of 1.161p per Ordinary Share, with a payment date of 31 March 2016. As previously announced the first interim dividend for 2016 will be 1.19p per Ordinary share, an increase of 2.5%.

Net Asset analysis as at 31 March 2016 (unaudited)

	£m	% of net assets
Office	163.7	52.3
Retail	100.8	32.2
Industrial	187.8	59.9
Total Property Portfolio	452.3	144.4
Adjustment for lease incentives	(3.5)	(1.1)
Fair value of Property Portfolio	448.8	143.3
Cash	14.1	4.5
Other Assets	6.0	1.9
Total Assets	468.9	149.7
Non-current liabilities	(142.1)	(45.4)
Current liabilities	(13.5)	(4.3)
Total Net Assets	313.3	100.0

Breakdown in valuation movements over the period 1 Jan 16 to 31 Mar 2016

	Portfolio Value as at 31 Mar 2016 (£m)	Exposure as at 31 Mar 2016 (%)	Like for Like Capital Value Shift	Capital Value Shift (£m)
			(%)
Valuation as of 31 Dec 2015				452.0
Retail	100.8	22.3	0.0	0.0
South East Retail		6.8	1.9	0.6
Rest of UK Retail		1.1	-1.0	-0.1
Retail Warehouses		14.4	-0.8	-0.5
Offices	163.7	36.2	-0.2	-0.4
London City Offices		4.7	-0.7	-0.2
London West End Offices		2.4	-0.9	-0.1
South East Offices		23.5	-0.1	-0.1
Rest of UK Offices		5.6	-0.1	0.0
Industrial	187.8	41.5	0.4	0.7
South East Industrial		11.3	-0.6	-0.3
Rest of UK Industrial		30.2	0.7	1.0
External valuation at 31 Mar 2016	452.3	100.0	0.1	452.3

Top 10 Properties

	31 Mar 16 (£m)
White Bear Yard, London	20-25
Elstree Tower, Borehamwood	15-20
Denby 242, Denby	15-20
DSG, Preston	15-20
Symphony, Rotherham	15-20
Chester House, Farnborough	15-20
Charter Court, Slough	10-15
3B - C Michigan Drive, Milton Keynes	10-15
Ocean Trade Centre, Aberdeen	10-15
Bourne House, Staines	10-15

The Board is not aware of any other significant events or transactions which have occurred between 31 March 2016 and the date of publication of this statement which would have a material impact on the financial position of the Company.

Details of the Company may also be found on the Investment Manager’s website which can be found at: www.standardlifeinvestments.com/its

For further information:-

Jason Baggaley – Real Estate Fund Manager Standard Life Investments
Tel [phone] or [e-mail]


The Company Secretary
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