NAV, Dividend Declaration & Portfolio Valuation

RNS Number : 3698K

Alternative Income REIT PLC

05 May 2022

 

5 May 2022

Alternative Income REIT PLC

(the " Company " or " Group " or " AIRE ")

NET ASSET VALUE, DIVIDEND DECLARATION AND PORTFOLIO VALUATION UPDATE

The Board of Directors of Alternative Income REIT PLC (ticker: AIRE), the owner of a diversified portfolio of UK commercial property assets, predominantly let on long leases with inflation-linked rent reviews, provides a trading and business update and declares an interim dividend for the quarter ended 31March 2022.

Alan Sippetts, Non-Executive Chairman of Alternative Income REIT plc, comments:

"Our quarterly update today underlines, once again, that Alternative Income REIT has an attractive, well managed and resilient portfolio that is continuing to increase in value with growing contracted rents, 93% of which are linked to inflation.

Together with our track record of continuing to collect 100% of rents due, this helps ensure that AIRE continues to provide our shareholders with attractive, secure, long dated income, including a potentially progressive dividend and capital growth.

At 31 March 2022, the Company's unaudited net asset value per was 93.30 pence per share, representing a 3.23% increase over the period, due to increases in portfolio valuation and income earned during the period.  When combined with the 1.3 pps dividend paid for the quarter, this produces an unaudited NAV total return for the quarter of 4.83%.

Our portfolio is very well positioned to deliver further income and capital enhancement to our shareholders from our predominantly inflation-linked leases as well as asset management initiatives, opportunistic transactions and as the market continues to improve."

Highlights (unaudited)

	At 31 March 2022	At 31 December 2021	Change
Net Asset Value ("NAV")	£75.11 million	£72.75 million	+3.2%
NAV per share	93.30 p	90.38 p	+3.2%
Share price	77.6p	72.2 p	+7.5%
Loan to gross asset value("GAV") AB	34.55%	35.22%
	Quarter ended 31 March 2022	Quarter ended 31 December 2021	Change
EPRA earnings per share A	1.51 p	1.68 p	-10.1%
Adjusted earnings per share A	1.40 p	1.37 p	+2.1%
Dividend cover A	107.69%	105.38%	+2.2%
Total dividends	1.30 p	1.30 p	0.00%
Earnings per share	4.22 p	3.88 p	+8.8%
Share price total return A	9.27%	9.65%
NAV total return A	4.83%	5.84%
Investment property fair value	£115.38 million	£107.73 million	+7.1%
Annualised contracted rent	£7.22 million	£6.62 million	+9.0% (like for like +4.8%)
Ongoing charges A (annualised)	1.44%	1.48%	-4 bps

^A Considered to be an Alternative Performance Measure.

^B   The loan facility at 31 March 2022 of £41.0 million (31 December 2021: same) is with Canada Life Investments, matures on 20 October 2025 and has a weighted average interest cost of 3.19%.

Dividend declaration and update on Earnings per share

The Board is pleased to declare an interim quarterly dividend of 1.30 pence per share for the quarter ended 31 March 2022 (quarter ended 31 December 2021: 1.30 pence per share; quarter ended 31 March 2021: 1.25 pence per share) . This quarter's interim dividend will be paid as a Property Income Distribution ("PID") on 27 May 2022 to shareholders on the register on 13 May 2022. The ex-dividend date will be 12 May 2022.  

The Board confirms that the Company remains on track to deliver on its target annual dividend of 5.5 pence per share with full dividend cover expected, all else being equal, by September 2022¹.  

T he Adjusted EPS was 1.40 pence per share, reflecting 107 .69 % cash dividend cover for the quarter (q uarter ended 31 December 2021: 1.37 pence per share, 105.38% cash dividend cover; year ended 30 June 2021: 5.07 pence per share, 99% cash dividend cover).

Property valuation

On 28 January 2022, the Group completed the acquisition of the Volvo showroom in Slough for £5.34 million. At 31 March 2022, the Group's property portfolio had a fair value of £115.38 million across 19 properties.

At 31 December 2021, the Group held 18 properties valued at £107.73 million. On a like-for-like basis, the fair value of those 18 properties as at 31 March 2022 was £110.13 million, representing a 2.2% increase quarter on quarter.

At 31 March 2022, the net initial yield on the Group's portfolio was 5.72%, compared with 5.71% at 31 December 2021.

Valuations have increased across the Group's retail warehousing, industrial and car showroom assets during the quarter driven by asset management initiatives, annual index-linked rent reviews and market demand for retail warehouses extending into the car showroom sector. 

Net asset value

At 31 March 2022, the Company's unaudited net asset value ("NAV " ) was £75.11 million, 93.30 pence per share, (31 December 2021: £72.75 million, 90.38 pence per share), representing a 3.2% increase over the period, due to increases during the quarter in portfolio valuation and income earned.  

When combined with the 1.3 pps dividend paid for the quarter, this produces an unaudited NAV total return for the quarter of 4.83% (31 December 2021: 5.84%).

The table below sets out the movement in NAV during the quarter.

	Pence per share	£ million
NAV at 1 January 2022	90.38	72.75
Valuation movement in property portfolio*	2.71	2.19
Income earned for the period	2.45	1.98
Expenses for the period	(0.50)	(0.41)
Net finance costs for the period	(0.44)	(0.35)
Interim dividend paid during the quarter ended 31 December 2021	(1.30)	(1.05)
NAV at 31 March 2022	93.30	75.11

*   The quarter's increase in the independent fair valuation of £2.30 million has been reduced by £0.11 million to reflect the minimum contracted rental uplifts, resulting in a net valuation increase of £2.19 million.

The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards as adopted by the United Kingdom and incorporates both the Group's property portfolio individually valued on a 'Red Book' basis at 31 March 2022 and net income for the quarter, but does not include a provision for the interim dividend declared today (see above) for the quarter ended 31 March 2022.

The income earned for the period includes an accrual for the minimum contractual uplifts contained in the index-linked leases. In the event that inflation is greater than these minimum contractual uplifts, the actual income will be greater than the income currently accrued.

Portfolio update

At 31 March 2022, t he Group's assets were 100% let (31 December 2021: 99.7%). This increase in occupancy is due to the letting with Bgen Ltd for an area of land at St Helens which was vacated during Q4 2021. The rent for this land was 59.4% higher than the previously contracted amount.

The weighted average unexpired lease term at 31 March 2022 was 17.6 years to the earlier of break and expiry (31 December 2021: 18.2 years) and 19.6 years to expiry (31 December 2021: 20.2 years).

9 3 % (3 1   December 2021: 93 %) of the portfolio's income stream is reviewed periodically on an upward only basis, in line with inflation (44% annually); with 7 0 % and 2 3 % of the portfolio index-linked (subject to floors and caps) to RPI and CPI, respectively. The remaining 7% of the portfolio's income stream is subject to Open Market Value Reviews.

Contracted annualised rent increased by 9.0% this quarter to £7.22 million, reflecting the acquisition of Slough in January 2022,or 4.8% on a like-for-like basis, due to 5 rent reviews and the letting in St Helens. In the next 12 months, 58% of the Group's incomes will be reviewed (8 annual index-linked rent reviews and 5 periodic index-linked rent reviews (3 or 5 years since the previous reviews)).

Rent collection

The rents for the June 2022 quarter are split 8 4 % payable quarterly in advance and 1 6 % payable monthly in advance. Rent collection remains resilient with 100% expected for the June 2022 quarter (March 2022 quarter: collected 100% of rent due; each quarter of 2021: collected 100% of rent due).

ENQUIRIES

Alternative Income REIT PLC
Alan Sippetts - Chairman	via Maitland/amo below
M7 Real Estate Ltd Richard Croft	[phone]
Panmure Gordon (UK) Limited	[phone]
Alex Collins
Tom Scrivens
Chloe Ponsonby
Maitland/amo (Communications Adviser)	[phone]
James Benjamin	[e-mail]

The Company's LEI is 213800MPBIJS12Q88F71.

Further information on Alternative Income REIT plc is available at www.alternativeincomereit.com ² .

1 This is a target only and not a profit forecast. There can be no assurance that the target will be met and it should not be taken as an indicator of the Company's expected or actual results.

2 Neither the content of the Company's website, nor the content on any website accessible from hyperlinks on its website or any other website, is incorporated into, or forms part of, this announcement nor, unless previously published on a Regulatory Information Service, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company.

NOTES

Alternative Income REIT PLC aims to generate a sustainable, secure and attractive income return for shareholders from a diversified portfolio of UK property investments, predominately in alternative and specialist sectors. The majority of the assets in the Group's portfolio are let on long leases which contain index linked rent review provisions.

The Company's investment adviser is M7 Real Estate Limited ("M7"). M7 is a leading specialist in the pan-European, regional, multi-tenanted real estate market. It has over 220 employees in 15 countries across Europe. The team manages over 570 properties with a value of circa €4.9 billion.

 

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