NAV and Interim Management St

RNS Number : 9135Q

Standard Life Invs Property Inc Tst

21 April 2009

 



STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST LIMITED

31 March 2009

Key Highlights

• Net asset value per ordinary share was 52.5p as at 31 March 09, a decrease of 15.0% from 31 December 08

• Cash held by the Trust of £44.7m as at 31 March 09

• Loan to value of 38.5% after assuming cash balances are used to repay debt

• Dividend yield of 10.8% using the share price as at 20 April 2009 of 37p

• The purchase that completed 1 April 2009 adds considerably to the revenue account, such that the dividend cover is expected to increase to 126% for the year to 31 December 2009

Net Asset Value 

The unaudited net asset value per ordinary share of Standard Life Investments Property Income Trust Limited at 31 March 2009 was 52.5 pence. This is a decrease of 15.0 percentage points over the net asset value of 61.7 pence per share at 31 December 2008.  

The net asset value is calculated under International Financial Reporting Standards ('IFRS') and includes a provision for payment of a proposed interim dividend of 1.00p per ordinary share for the quarter to 31 March 2009.

The net asset value incorporates the external portfolio valuation by Jones Lang LaSalle at 31 March 2009. The property portfolio will next be valued by an external valuer during June 2009 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 net asset value per share calculated under IFRS over the period 31 December 2008 to 31 March 2009.

	Pence per share	% of opening NAV
Net Asset Value per share as at 31 December 2008	61.7	-
Unrealised loss following revaluation of property portfolio (including the effect of gearing)	(9.2)	(14.9%)
Decrease in interest rate swap valuation	(0.3)	(0.6%)
Other movement in reserves	0.3	0.5%
Net Asset Value per share as at 31 March 2009	52.5	(15.0%)

The ungeared decrease in the valuation of the property portfolio over the quarter to 31 March 2009 was 7.71% (IPD Monthly Index was -8.9%).  

Cash position

As at 31 March 2009 the Company had borrowings of £84.4m and a cash position of £44.7m (excluding rent deposits) therefore cash as a percentage of debt was 53.0%.

Loan to value ratio

As at 31 March 2009 the loan to value ratio was 38.5% - calculated as borrowings less the full cash balance (excluding tenant deposits and adjusted for expected loan break costs) as a percentage of the open market value of the investment property. Under the terms of the Company's loan agreement, loan to value is calculated as borrowings over secured assets. The Company is entitled to place deposits with its lender which then qualify as secured assets.  As at 31 March 2009 the Company's loan to value percentage calculated using this method was 55% and the covenant level is also 55%. As at 31 March 09 the value of the Company's investment property could fall by 30% before the Company would be unable to comply with its loan covenant (prior to taking account of the purchase which completed on 1 April 2009).

Purchase of Capital Court, Uxbridge 

On 1 April 2009 the Company completed the purchase of Capital Court Uxbridge for £10.98m.  JLL valued this property at £11.35m upon purchase.

The Grade A office extends to just over 55,000sqft and is let to Manpower, IBB, and a Chinese restaurant on 7 leases with an average unexpired term of 8 years. There is also a vacant suite of 7,500sqft. The purchase reflects an initial yield of 9.95% on the contracted income of £1,157,000pa. Letting the vacant suite will add a further £180,000pa to the rents receivable based on current ERVs. 

Effect of purchase on key financial information:

• The purchase was made from cash held by the Company, thereby reducing cash from £44.7m to £33.7m

• Following the purchase the loan to value became 43.8% - calculated as borrowings less the remaining cash balance (excluding tenant deposits and adjusted for expected loan break costs) as a percentage of the open market value of investment property

• The value of the Company's investment property could now fall by 20% before the Company would be unable to comply with its loan to value covenant

• The purchase adds considerably to the revenue account, such that the dividend cover increases to 126% for the year to 31 December 2009

Total asset analysis as at 31 March 2009 (unaudited)

	£m	%
Office	35.1	22.0
Retail	23.8	14.9
Industrial	39.4	24.7
Other	15.2	9.4
Total Property Portfolio	113.5	71.0
Cash	44.7	28.0
Other Assets	1.6	1.0
Total Gross Assets	159.8	100.0

Total asset analysis as at 31 March 2009 adjusted for property purchase 1 April 2009 (unaudited)

	£m	%
Office	46.4	29.0
Retail	23.8	14.9
Industrial	39.4	24.6
Other	15.2	9.4
Total Property Portfolio	124.8	77.9
Cash	33.7	21.1
Other Assets	1.6	1.0
Total Gross Assets	160.1	100.0

Breakdown in valuation movements over the period 31 December 2008 to 31 March 2009

	Exposure as at 31 March 2009 (%)	Capital Value Movement on Standing Portfolio (%)	£m
External Valuation at 31/12/08			123.0
Sub Sector Analysis:
RETAIL
South East Standard Retail	5.0	(3.8)	(0.2)
Retail Warehouses	15.9	(11.8)	(2.4)
OFFICES
Central London Offices	10.6	(6.5)	(0.8)
South East Offices	7.2	(5.5)	(0.5)
Rest of UK Offices	13.1	(6.7)	(1.1)
INDUSTRIAL
South East Industrial	7.5	(7.4)	(0.7)
Rest of UK Industrial	27.2	(7.7)	(2.6)
OTHER	13.5	(7.4)	(1.2)
External Valuation at 31/03/09	100	(7.7)	113.5

Investment Manager Commentary 

Although capital values fell again in 2009 by 8.9% in Q1 according to the IPD Monthly Index, this did show a slight improvement on the 15% fall in Q4 2008. The Company saw a 7.7% fall in the value of its property portfolio, once again outperforming the Monthly index. Over the quarter the occupier market continued to weaken with low levels of take up and falling rental values, however during the same period there was a noticeable improvement in sentiment in the investment market, with transaction levels increasing through the quarter. Pricing for well let prime assets appears to have stabilised, and there is even evidence of competitive bidding for some assets.

In March, the Company exchanged contracts for the purchase of a 54,000sqft office building in Uxbridge for £10.98m at a yield of 9.95% on the contracted income. The grade A office, built in 2001 is let to Manpower and IBB solicitors and has 7,500sqft vacant which when let will further enhance the level of income. The purchase adds over £1m to the revenue account, increasing the dividend cover to 126% and interest cover to 240%. The investment was bought at an attractive price (£200psf) that gives scope for strong future growth. The valuation on purchase was £11.35m. The purchase was made from cash resources held by the Company, with the result that post purchase the net LTV is 40% against a bank covenant of 55%. The Company still holds £33.7m cash following the purchase, which completed on 1st April.

Asset management continued over the quarter, with a lease renewal completed £35,000pa above ERV, terms agreed on another renewal due in September on a retail warehouse, and a central London office rent review completed £50,000 above ERV. The void level fell slightly over the quarter to 4.8%, however following the purchase has risen to 6.1%.

Tenant retention remains key in this market, and we continue to negotiate on a number of lease renewals due over the next 18 months and break options over the next 24 months. We had no tenant failures over the quarter.

All Enquiries:

The Company Secretary

Northern Trust International Fund Administration Services (Guernsey) Ltd

Trafalgar Court

Les Banques

GY1 3Q1

Tel: [phone]

Fax: [phone]

APENDIX 1

Historical adjusted IFRS NAVs per Ordinary Share are as follows:

31/03/09	52.49p
31/12/08	61.65p
30/09/08	87.24p
30/06/08	101.59p
31/03/08	102.71p
31/12/07	111.60p
30/09/07	130.70p
30/06/07	137.16p
31/03/07	134.42p
31/12/06	132.68p
30/09/06	129.51p
30/06/06	130.20p
31/03/06	124.28p
31/12/05	116.46p
30/09/05	107.12p
30/06/05	103.88p
31/03/05	101.34p
31/12/04	99.00p

 

END

 

 

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