31 July 2018
STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST LIMITED (LSE: SLI)
LEI: 549300HHFBWZRKC7RW84
Unaudited Net Asset Value as at 30 June 2018
Key Highlights
Solid Performance
Investment activity
Strong balance sheet with prudent gearing
Premium rating
Attractive dividend yield
*LTV calculated as Debt less cash divided by portfolio value
Net Asset Value (“NAVâ€)
The unaudited net asset value per ordinary share of Standard Life Investments Property Income Trust Limited (“SLIPITâ€) at 30 June 2018 was 90.1p. The net asset value is calculated under International Financial Reporting Standards (“IFRSâ€).
The net asset value incorporates the external portfolio valuation by Knight Frank LLP at 30 June 2018.
Breakdown of NAV movement
Set out below is a breakdown of the change to the unaudited NAV calculated under IFRS over the period 1 Apr 2018 to 30 June 2018.
Per Share (p) | Attributable Assets (£m) | Comment | |||||||||
Net assets as at 31 Mar 2018 | 89.4 | 360.2 | |||||||||
Unrealised increase in valuation of property portfolio | 1.6 | 6.3 | Mainly relates to like for like increase of 1.5% in property portfolio | ||||||||
CAPEX & purchase costs in the quarter | -0.6 | -2.1 | Predominantly acquisition costs plus CAPEX on ongoing asset management initiatives | ||||||||
Net income in the quarter after dividend | -0.2 | -1.0 | Dividend cover for the quarter of 79%. Recent acquisitions and utilisation of uncommitted cash resources of £10m plus £35m RCF will allow the Company to move back towards a covered dividend. | ||||||||
Interest rate swaps mark to market revaluation | -0.1 | -0.4 | Increase in swap liabilities in the quarter | ||||||||
Share issues | 0.0 | 1.2 | NAV accretive issue of 1.25m shares in the quarter raising £1.19m | ||||||||
Net assets as at 30 Jun 2018 | 90.1 | 364.2 | |||||||||
European Public Real Estate Association (“EPRAâ€)* |
30 Jun 2018 |
31 Mar 2018 |
|||||||||
EPRA Net Asset Value | £365.0m | £360.7m | |||||||||
EPRA Net Asset Value per share | 90.3p | 89.5p | |||||||||
The Net Asset Value per share is calculated using 404,365,419 shares of 1p each being the number in issue on 30 Jun 2018.
* 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
During the first half of 2018 we have seen continued tenant demand across the portfolio, but also an increasingly long period from initial interest to completed lease – hardly surprising given the political and economic uncertainty we face at the moment, but frustrating none the less.
The focus over the period has been to invest the higher than normal cash balance and to improve dividend cover. We remain disciplined in acquiring new investments; however, by just after the quarter end, we had deployed the majority of the available cash which will benefit the revenue account over the second half of the year.
While voids have increased to 7.2% we have good interest in a number of our existing vacancies. One of our largest voids is at an office in Epsom which became vacant at lease expiry for us to refurbish after which the previous tenant will take a new lease on part of the building (anticipated November this year). We also have two proposals out to other parties on the remainder of the space. Our new purchase in the City also has void accommodation, where we received a rental guarantee as a lump sum deducted from the purchase price.
There has been much attention given to the retail sector in the market and although the Company has managed to avoid any tenants going into a company voluntary arrangement (“CVAâ€) we have seen two smaller units suffer from tenants going into administration – although in both cases we have interest from good quality retailers in the space. We remain comfortable with our low exposure to the retail sector and were delighted to increase our exposure at the end of the quarter to the “other†or alternative sector with the purchase of a data centre in Birmingham. The property is let for 20 years (with a tenant right to break in 14 years) and the lease is subject to annual rental increases in line with RPI, collared and capped at 1 and 3%.
We also completed the purchase of an office in the heart of the City of London. This might seem contrary to our general outlook for that sub-sector, however the property receives 20% of its rent from two retail units and is located in a prime position close to Bank underground station, with asset management opportunities from two vacant floors where the Company received a rental guarantee. The entry price reflected a 7% yield on the topped up rent. The final purchase which completed just after the quarter end was a sale and leaseback on an industrial facility close to Kettering. The 20 year lease has index linked increases in rent every 5 years, with the purchase reflecting an attractive initial yield of 7.15%.
Market commentary
Investment outlook
Dividends
The Company paid total dividends in respect of the quarter ended 31 March 2018 of 1.19p per Ordinary Share, with a payment date of 31 May 2018.
Net Asset analysis as at 30 Jun 2018 (unaudited)
£m | % of net assets | |
Office | 133.1 | 36.6 |
Retail | 65.0 | 17.8 |
Industrial | 241.3 | 66.3 |
Other | 18.6 | 5.1 |
Total Property Portfolio | 458.0 | 125.8 |
Adjustment for lease incentives | -3.5 | -1.0 |
Fair value of Property Portfolio | 454.5 | 124.8 |
Cash | 23.2 | 6.4 |
Other Assets | 5.9 | 1.6 |
Total Assets | 483.6 | 132.8 |
Current liabilities | -8.7 | -2.4 |
Non-current liabilities (bank loans & swap) | -110.7 | -30.4 |
Total Net Assets | 364.2 | 100.0 |
Breakdown in valuation movements over the period 1 Apr 18 to 30 Jun 18
Portfolio Value as at 30 Jun 2018 (£m) | Exposure as at 30 Jun 2018 (%) | Like for Like Capital Value Shift (excl transactions & CAPEX) | Capital Value Shift (incl transactions (£m) | |
(%) | ||||
External valuation at 31 Mar 18 | 440.5 | |||
Retail | 65.0 | 14.2 | 0.2 | 0.2 |
South East Retail | 5.7 | 3.3 | 0.9 | |
Rest of UK Retail | 0.0 | 0.0 | 0.0 | |
Retail Warehouses | 8.5 | -1.8 | -0.7 | |
Offices | 133.1 | 29.1 | 0.5 | -0.4 |
London City Offices | 2.7 | 0.0 | 12.2 | |
London West End Offices | 3.0 | 0.0 | 0.0 | |
South East Offices | 19.1 | 0.6 | -12.8 | |
Rest of UK Offices | 4.3 | 0.8 | 0.2 | |
Industrial | 241.3 | 52.7 | 2.3 | 5.4 |
South East Industrial | 15.8 | 1.6 | 1.1 | |
Rest of UK Industrial | 36.9 | 2.6 | 4.3 | |
Other Commercial | 18.6 | 4.0 | 1.6 | 12.3 |
External valuation at 30 Jun 2018 | 458.0 | 100.0 | 1.5 | 458.0 |
Top 10 Properties
30 Jun 18 (£m) |
|
Denby 242, Denby | 15-20 |
Symphony, Rotherham | 15-20 |
Chester House, Farnborough | 15-20 |
The Pinnacle, Reading | 10-15 |
Hollywood Green, London | 10-15 |
New Palace Place, London | 10-15 |
Timbmet, Shellingford | 10-15 |
Howard Town Retail Park, High Peak | 10-15 |
Marsh Way, Rainham | 10-15 |
Atos,Birmingham | 10-15 |
Top 10 tenants
Name | Passing Rent | % of passing rent |
BAE Systems plc | 1,257,640 | 4.9% |
Technocargo Logistics Limited | 1,242,250 | 4.9% |
The Symphony Group PLC | 1,080,000 | 4.2% |
Timbmet Limited | 799,683 | 3.1% |
Bong UK Limited | 756,620 | 3.0% |
Euro Car Parts Limited | 736,355 | 2.9% |
Ricoh UK Limited | 696,995 | 2.7% |
CEVA Logistics Limited | 633,385 | 2.5% |
Thyssenkrupp Materials (UK)Ltd | 590,000 | 2.3% |
Public Sector | 559,148 | 2.2% |
Total | 8,352,076 | 32.7% |
Total Passing Rent | 25,605,667 |
Regional Split
South East | 40.6% |
East Midlands | 16.0% |
North West | 12.5% |
West Midlands | 10.0% |
North East | 7.8% |
South West | 3.7% |
Scotland | 3.7% |
London West End | 3.0% |
City of London | 2.7% |
The Board is not aware of any other significant events or transactions which have occurred between 30 Jun 2018 and the date of publication of this statement which would have a material impact on the financial position of the Company.
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.
Details of the Company may also be found on the Investment Manager’s website which can be found at: www.slipit.co.uk
For further information:-
Jason Baggaley – Real Estate Fund Manager, Standard Life Investments
Tel +44 (0) 131 245 2833 orjason.baggaley@aberdeenstandard.com
Graeme McDonald - Real Estate Finance Manager, Standard Life Investments
Tel +44 (0) 131 245 3151 orgraeme.mcdonald@aberdeenstandard.com
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Ltd
Trafalgar Court
Les Banques
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Tel: 01481 745001