Unaudited Net Asset Value

20 October 2015

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

Unaudited Net Asset Value as at 30 September 2015

Key Highlights

• Net asset value per ordinary share was 80.9p as at 30 September 2015, an increase of 3.1% from 30 June 2015 resulting in a NAV total return of 4.5% for Q3;
• The property portfolio produced a total return of 4.3%, significantly outperforming the 3.4% total return on the MSCI (formerly IPD) Monthly Index over the same period;
• In Q3, four office properties purchased for £18.0m excluding costs, two industrial properties purchased for £6.0m excluding costs and one retail property purchased for £5.1m excluding costs;
• Three industrial properties sold during Q3 for £7.7m excluding costs, as well as one retail property sold for £5.3m excluding costs and one office property sold for £5.5m excluding costs;
• Dividend yield of 5.4% based on share price of 86.5p (15 October 2015) comparing favourably to the yield on the FTSE All-Share REIT Index (2.7%) and the FTSE All Share Index (3.6%) 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 30 September 2015 was 80.9p. This is an increase of 3.1% over the net asset value of 78.5p per share at 30 June 2015. 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 at 30 September 2015. The property portfolio will next be valued by the external valuer during December 2015 and the next quarterly net asset value will be published thereafter.  

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 30 June 2015 to 30 September 2015.

	£m	Pence per share	% of opening NAV
Unaudited Net Asset Value at 30 June 2015	226.4	78.5	-
Gain - unrealised on the standing portfolio following revaluation of property portfolio	7.8	2.7	3.5%
Gain - on sale of properties	0.8	0.3	0.4%
Costs on the purchase of investment property	(0.8)	(0.3)	(0.4%)
Increase in unrealised interest rate swap liability	(0.7)	(0.2)	(0.3%)
Other movement in reserves	(0.3)	(0.1)	(0.1%)
Unaudited Net Asset Value at 30 September 2015	233.2	80.9	3.1%

European Public Real Estate Association (“EPRA”)*	30 Sep 2015	30 Jun 2015
EPRA Net Asset Value	£235.8m	£228.3m
EPRA Net Asset Value per share	81.8p	79.2p

The Net Asset Value per share is calculated using 288,387,160 shares of 1p each being the number in issue on 30 September 2015.

* 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 UK commercial real estate market continues to benefit from strong investment and improving tenant demand. Given the lack of new construction over the last 8 years, the supply of good quality accommodation is low in most markets and this is leading to rental growth momentum starting to build. The relatively high margin of real estate yields over UK Gilts means the sector remains popular with investors, both overseas and domestic.

During the third quarter we were able to complete a number of asset management initiatives, the main one being two lease regears and a new lease at White Bear Yard London – the new leases have moved the rents up in the building and provide a greater ability for us to extend the building in the future by having all lease expiries at the same time. We also completed the lease at Ocean Trade Centre to CCF (part of Travis Perkins) and, after the quarter end, signed the Scottish Ministers on the remaining vacant units – all on 10 year leases. In order to maximise income we granted a short term lease expiry on an industrial unit in Oldham taking the rent from £4.50psf to £8.50psf for a 12 month extension.

Following the completion of the purchase of three offices and a retail warehouse at the beginning of the quarter (reported with the Q2 NAV), we also completed the purchase of two single let logistics units and an office for a total of £10.7m, the sale of an office in Glasgow for £5.7m and of a standalone retail warehouse for £5.3m.

As already notified to the market, the Company has signed heads of terms to acquire a portfolio of 22 UK commercial properties for a cash consideration of approximately £165m. We are making good progress on our due diligence and hope to update further through the publication of a prospectus in early November.

Cash position

As at 30 September 2015 the Company had borrowings of £84.4m and a cash position of £16.3m (excluding rent deposits) therefore cash as a percentage of debt was 19.3%.

Dividends

The Company paid an interim property income dividend in respect of the quarter ended 30 June 2015 of 1.161p per Ordinary Share, with ex-dividend and payment dates of 6 August 2015 and 21 August 2015 respectively.

Loan to value and interest rate

As at 30 September 2015 the loan to value ratio (assuming all cash is placed with RBS as an offset to the loan balance) was 22.1% (30 June 2015: 19.8%). The bank covenant level is 65%. As a result of interest rate swaps the weighted average interest rate on the loan is fixed at 3.7% until the loan matures in December 2018.

Net Asset analysis as at 30 September 2015 (unaudited)

	£m	% of net assets
Office	129.5	55.5
Retail	64.0	27.4
Industrial	115.3	49.4
Total Property Portfolio	308.8	132.3
Adjustment for lease incentives & sales costs on assets held for sale	(2.3)	(0.9)
Fair value of Property Portfolio	306.5	131.4
Cash	16.3	7.0
Other Assets	4.6	2.0
Total Assets	327.4	140.4
Non-current liabilities	(86.7)	(37.2)
Current liabilities	(7.5)	(3.2)
Total Net Assets	233.2	100.0

Breakdown in valuation movements over the period 1 Jul 2015 to 30 Sep 2015

	Exposure as at 30 Sept 2015 (%)	Capital Value Movement on Standing Portfolio (%)	Capital Value Movement on Portfolio (£m)
External Property Valuation at 30 Jun 2015			288.4
IPD Sub Sector Analysis:
RETAIL
South East Retail	5.4	0.8	0.1
Retail Warehouses	15.3	1.2	0.3*
OFFICES
London City Offices	6.6	13.6	2.4
London West End Offices	3.4	1.8	0.2
South East Offices	22.6	2.6	15.7*
Rest of UK Offices	9.3	2.7	0.1*
INDUSTRIAL
South East Industrial	9.8	4.2	4.5*
Rest of UK Industrial	27.6	2.3	(2.9)*
External Property Valuation at 30 Sep 2015	100.0	3.0	308.8

*Inclusive of Q3 purchases and sales

Top 10 Properties

	30 Sep 15 (£m)
White Bear Yard, London	20-25
DSG, Preston	15-20
Chester House, Farnborough	15-20
Symphony, Rotherham	15-20
Denby 242, Denby	10-15
Hertford Place, Rickmansworth	10-15
St James's House, Cheltenham	10-15
3B - C Michigan Drive, Milton Keynes	10-15
Hollywood Green, London	10-15
Bourne House, Staines Upon Thames	10-15

The Board is not aware of any other significant events or transactions which have occurred between 30 September 2015 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]

Gordon Humphries – Head of Investment Companies Standard Life Investments
Tel [phone] or [e-mail]

The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Ltd
Trafalgar Court
Les Banques
St Peter Port
GY1 3QL
Tel: [phone]
Fax: [phone]