Unaudited Net Asset Value

30 July 2015

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

Unaudited Net Asset Value as at 30 June 2015

Key Highlights

• Net asset value per ordinary share was 77.3p as at 30 June 2015 which is arrived at after deducting the Q2 dividend due to be paid in August 2015. This is an increase of 2.2% from 31 March 2015 representing a NAV total return of 3.8% for Q2.

• Successful placing of approximately 11.6m ordinary shares at 80.3p per share under the Company’s authority to issue shares pursuant to the disapplication of pre-emption rights approved by shareholders at the Company’s AGM on 27 May 2015, raising gross proceeds of approximately £9.3m.

• One industrial property purchased in June 2015 for £4.6m excluding costs. Two office properties sold during Q2 for £4.9m excluding costs and one industrial property sold during Q2 for £3.5m excluding costs.

• Dividend yield of 5.5% based on share price of 84.25p (28 July 2015).

Net Asset Value (“NAV”)

The unaudited net asset value per ordinary share of Standard Life Investments Property Income Trust Limited (“SLIPIT”) at 30 June 2015 was 77.3 pence including the adjustment for the Q2 dividend payment due in August 2015. This is an increase of 2.2% over the net asset value of 75.6 pence (including the adjustment for the Q1 dividend) per share at 31 March 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 June 2015. The property portfolio will next be valued by the external valuer during September 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 31 March 2015 to 30 June 2015.

	£m	Pence per share	% of opening NAV
Unaudited Net Asset Value at 31 March 2015	212.5	76.8	-
Gain - unrealised on the standing portfolio following revaluation of property portfolio	4.5	1.6	2.1%
Loss - on sale of properties	(0.5)	(0.2)	(0.2%)
Costs on the purchase of investment property	(0.3)	(0.1)	(0.2%)
Decrease in unrealised interest rate swap liability	1.0	0.4	0.5%
Increase in share capital (net)	9.2
Unaudited Net Asset Value at 30 June 2015 before
adjustment for dividend	226.4	78.5	2.2%
Adjustment for Q2 dividend	(3.3)	(1.2)
Unaudited Net Asset Value at 30 June 2015 after
adjustment for dividend	223.1	77.3

European Public Real Estate Association (“EPRA”)*	30 Jun 2015	31 Mar 2015
EPRA Net Asset Value before adjustment for dividend	£228.3m	£215.5m
EPRA Net Asset Value after adjustment for dividend	£225.0m	£212.2m
EPRA Net Asset Value per share before adjustment for dividend	79.2p	77.9p
EPRA Net Asset Value per share after adjustment for dividend	78.0p	76.7p

The Net Asset Value per share is calculated using 288,387,160 shares of 1p each being the number in issue on 30 June 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 Company had a busy Q2 with both asset management and investment transactions. The agreement for lease on the letting of four units at Ocean Trade Centre was completed (the refurbishment completes end July) and the Company has put the remaining units available there under offer which are all on 10 year leases to very good covenants. The Company also agreed terms (but has not yet completed) lease re-gears on several large expiries due in Q4 this year.

The Company undertook a number of sales of smaller investments that it felt offered poorer prospects for the future including an industrial asset in Swindon for £3.5m, offices in Swansea for £1.3m and Chelmsford for £3.6m. The Company exchanged contracts on the sale of a small industrial unit in Stockton on Tees for £1.3m with completion due in mid-August. Since the quarter end the Company completed the sale of an industrial unit in Mansfield for £2.6m, and the sales of two other investments, an office and an industrial unit, are in solicitors’ hands.

At the same time the Company has recycled the available cash into a number of new investments. During the quarter the Company completed the purchase of two industrial units in Bristol, close to the junction of the M4 and M5 for £4.6m. One unit is currently vacant and will be refurbished before re-letting. Since the quarter end the Company has also completed the purchase of a retail warehouse investment in Bradford for £5.1m excluding costs and a small portfolio of three offices for £13.25m excluding costs. Purchases of three other investments totalling £10.8m are in solicitors’ hands.

These transactions utilise all the capital available to invest, including the equity raised in June 2015. 

The Company provided a total NAV return of 3.8% over the quarter, and at a real estate portfolio level provided a total return of 2.9% (on investments held through the whole period the return was 3.2%). This compares to the IPD monthly index return of 3.6% for the quarter.

Cash position

As at 30 June 2015 the Company had borrowings of £84.4m and a cash position of £27.3m (excluding rent deposits) therefore cash as a percentage of debt was 32.3%.

Dividends

The Company paid an interim property income dividend in respect of the quarter ended 31 March 2015 of 1.161p per Ordinary Share, with ex-dividend and payment dates of 7 May 2015 and 22 May 2015 respectively. The Company declared a second interim property income dividend on 27 July 2015 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. The Q2 property income dividend has been deducted from the NAV above.   

Loan to value and interest rate

As at 30 June 2015 the loan to value ratio (assuming all cash is placed with RBS as an offset to the loan balance) was 19.8% (31 March 2015: 23.4%). 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.

The Company has two interest rate hedges which mature in December 2018 and have a current liability of £1.9m (31 March 2015: £2.9m). These had a positive impact on the NAV of 0.4p per share or 0.5% over the quarter.

Net Asset analysis as at 30 June 2015 (unaudited)

	£m	% of net assets
Office	110.8	49.0
Retail	63.6	28.1
Industrial	113.5	50.1
Total Property Portfolio	287.9	127.2
Adjustment for lease incentives	(2.2)	(1.0)
Fair value of Property Portfolio	285.7	126.2
Cash	27.3	12.1
Other Assets	7.1	3.1
Total Assets	320.1	141.4
Non-current liabilities	(86.0)	(38.0)
Current liabilities	(7.7)	(3.4)
Total Net Assets	226.4	100.0

Breakdown in valuation movements over the period 1 Apr 2015 to 30 Jun 2015

	Exposure as at 30 Jun 2015 (%)	Capital Value Movement on Standing Portfolio (%)	Capital Value Movement on Portfolio (£m)
External Property Valuation at 31 Mar 2015			286.7
IPD Sub Sector Analysis:
RETAIL
South East Retail	5.7	0.3	0.0
Retail Warehouses	16.3	0.4	0.2
OFFICES
London City Offices	6.2	1.3	0.2
London West End Offices	3.6	9.0	0.8
South East Offices	18.8	2.7	(2.1)*
Rest of UK Offices	10.0	1.7	(0.7)*
INDUSTRIAL
South East Industrial	8.9	3.1	0.8
Rest of UK Industrial	30.5	1.8	2.5*
External Property Valuation at 30 Jun 2015	100.0	1.7	288.4**

*Due to purchase of one industrial investment, the sale of one industrial investment and the sale of two office investments.   

**Adjusted to exclude sales costs of properties held for sale at 30 June 2015.

Top 10 Properties

	30 Jun 15 (£m)
White Bear Yard, London	15-20
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

On 15 July the Company completed a part sale of Windsor Court & Crown Farm, an industrial investment in Mansfield for £2.6m excluding costs.

On 23 July the Company completed the purchase of a retail investment in Bradford for £5.1m excluding costs.

On 24 July the Company completed the purchase of an office portfolio of 3 properties for £13.25m excluding costs.

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