Net Asset Value ('NAV') as at 31 December 2020

RNS Number : 8362M

Ediston Property Inv Comp PLC

26 January 2021

 

Ediston Property Investment Company plc

(LEI: 213800JRL87EGX9TUI28)

Net Asset Value ('NAV') as at 31 December 2020

And Trading Update

Ediston Property Investment Company plc (LSE: EPIC) (the 'Company') announces its unaudited NAV at 31 December 2020.

Quarter Summary

· 96% of rents due for quarter 4 collected.

· Completed lease restructure with AXA Insurance UK plc at St Philips Point, Birmingham, securing £687,696 of income per annum.

· At Pallion Retail Park, Sunderland, upsized B&M from a unit of 20,000 sq. ft. to 30,000 sq. ft., on a lease which will expire in 2032.

· Monthly dividends maintained during the quarter at an annualised rate of 4.00 pence per share.

· Dividends for quarter 4 were fully covered at a rate of 139% (on a cash basis).

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· NAV total return (including dividends) for the quarter of -0.5%. 

· Fair value independent valuation of the property portfolio at 31 December 2020 of £272.5 million, a like-for-like decrease of 1.3% compared to the valuation at 30 September 2020. This takes into account the capital expenditure on the development project at Haddington.

· NAV per share at 31 December 2020 of 84.63 pence (30 September 2020: 86.01 pence), a decrease of 1.6%, reflecting the impact of capital expenditure and the Company's borrowings.

· Share price total return for the quarter of 39.7%. The discount to NAV narrowed from 41% to 19% at the end of the quarter.

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· Rent collection for quarter 1 2021 is projected to reach 90%, assuming those tenants paying monthly continue to do so. 

Net Asset Value

The unaudited NAV of the Company at 31 December 2020 was £178.8 million, or 84.63 pence per share, a decrease of 1.6% on the Company's NAV per share as at 30 September 2020.

	Pence Per Share	£ million
NAV at 30 September 2020	86.01	181.76
Valuation of property portfolio	(0.21)	(0.45)
Capital expenditure	(1.66)	(3.51)
Income earned	2.27	4.79
Expenses & finance costs	(0.78)	(1.65)
Dividends paid	(1.00)	(2.11)
NAV at 31 December 2020	84.63	178.83

The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards ('IFRS'); the EPRA NAV is not reported separately in this update as it is the same as the IFRS NAV.

The NAV incorporates the independent portfolio valuation as at 31 December 2020 and undistributed income for the quarter but does not include a provision for any accrued dividend.

Rent Collection for quarter 4 2020

As at 25 January 2021, 96% of the rent for quarter 4 2020 has been collected. To date, no rent forgiveness has been agreed unless the Company has received some benefit in return.  On a cash basis, the dividend cover for quarter 4 was 139%.

Update on rent collection for quarter 1 2021

As at 25 January, 88% of the rent due by 1 January has been collected across the portfolio. If the tenants who paid their rent monthly in January continue to do so for February and March, it is projected that the Company will collect 90% of the rent due for quarter 1, rising to 92% once rent deferment and repayment plans are factored in. The percentage of rent forecast to be collected has fallen this quarter and this can be attributed to the current lockdown restrictions. It is likely that some tenants will seek a degree of cash flow assistance. Any requests will be considered in the same way as during previous lockdowns.

If this projection is correct, on a cash basis, the current dividend level will be 126% covered by rent collected for quarter 1.

Asset management and development update

At St Philips Point in Birmingham, the Company completed a lease restructure with existing tenant AXA Insurance UK plc. The previous leases each had a tenant break option in June 2021. AXA has committed to 27,990 sq. ft. of space across three floors, including a new lease on the vacant refurbished first floor which extends to 14,208 sq. ft. AXA reduced the amount of floorspace it leases by 5,005 sq. ft. and will occupy three floors instead of five. One floor has a break option in June 2022, one has a break option in December 2023, and the largest floor is leased for a term certain of five years. The Company worked in collaboration with the tenant to identify an occupational solution which offered flexibility to deal with the challenges posed by COVID-19. This transaction secures £687,696 of rental income per annum.

At Pallion Retail Park in Sunderland, B&M has upsized from a unit of 20,000 sq. ft. into a vacant unit of 30,000 sq. ft. B&M will pay an annual rent of £400,000 and the lease will expire in 2032. This is the third time the Company has been able to accommodate B&M's expansion on its retail parks having completed similar deals at Barnsley and Hull in previous years.

The Company completed two pre-let developments during the quarter, at Coatbridge and Barnsley, which secured £232,500 of income per annum. The Company's development at Haddington Retail Park is progressing well. It remains on time and on budget and is expected to complete in June 2021.

Dividends

The Company continues to pay a monthly dividend at a rate of 0.3333 pence per share, equating to an annualised dividend of 4.00 pence per share. The dividend remains fully covered.

As shown in the monthly dividend announcements, the Company's rental income receipts have been sufficient for the Company to hold the reduced dividend, with a growing margin of cover during 2020.  The Board is looking for an opportunity to start the process of building the dividend back up again as soon as it is prudent to do so, and with regard to the REIT distribution requirements.

Cash and cash management

As at 25 January 2021, the Company had approximately £10.2m of cash for operational purposes. It also has £8.2m of cash under its debt facility ring fenced specifically for investment.

The Investment Manager continues to review the composition of the portfolio and will look for opportunities to sell assets where it believes the capital can be redeployed more favourably. As a result, cash levels could fluctuate during any sale and reinvestment process.

Debt and loan covenants

The Company's debt is provided by Aviva Commercial Finance Limited through two facilities, totalling £111.1 million of which £102.9 million is drawn. There are no imminent refinancing events as £56.9 million matures in 2025 and £54.2 million matures in 2027. The facilities have a blended all-in fixed rate of interest of 2.86%. At the date of the December valuation, the average loan-to-value across both facilities was 37.7%, based on portfolio asset values and in accordance with the loan agreements' covenants. The Company is fully compliant with all debt covenants and has significant headroom against income and asset cover covenants.

Summary

During the period, the restrictions intended to stop the spread of COVID-19 were tightened, including the reintroduction of full lockdown measures in various parts of the country, that prevented certain businesses from opening. Encouragingly, rent collection held up as businesses adapted to these conditions. Out of town retailers were better prepared than they had been for previous lockdowns and many stayed open for trade. Several retailers who were not classed as 'essential' by the Government offered click and collect, appointment only or delivery services to enable sales to be fulfilled.

Despite the local lockdown restrictions in place during November, 90% (by income) of the Company's retail warehouse portfolio was either open for trade or was offering a click and collect service.

As at 25 January, in the midst of another national lockdown, 73% (by income) of the retail warehouse portfolio is either open or offering a click and collect service. This compares favourably to the first lockdown in 2020 when 56% of the Company's income was from tenants who were allowed to open for trade.

The immediate focus remains on managing the Company's income through the current lockdown from all parts of the portfolio, and to ensure that the current dividend remains fully covered. The Investment Manager will continue with its hands-on approach to rent collection and arrears recovery, which delivered good levels of rent collection during 2020.

However, this focus will not be to the detriment of active asset management and the long-term strategy of the Company. The Investment Manager continues to look for ways to improve the portfolio from both a capital and income perspective.

Portfolio sector weightings and tenant and locational exposure

Sector 

Sector	Exposure (%)
Retail warehouse	59.8
Office	26.4
Supermarket	9.6
Development	2.3
Other commercial/ Leisure	1.9

Geography

The portfolio is diversified across the regional markets.

Sector	Exposure (%)
Wales	29.8
North East	15.1
West Midlands	13.2
Scotland	12.7
North West	11.7
Yorkshire	11.1
East Midlands	4.2
South West	2.2

Top five tenants

Tenant	Exposure (%)
B&Q plc	9.3
Tesco Stores Limited	7.5
B&M Retail Limited	6.2
AXA Insurance UK plc	5.8
Marks & Spencer plc	5.4

Forthcoming events

The next interim dividend announcement is expected to be made by 4 February 2021. The next scheduled independent quarterly valuation of the property portfolio will be conducted by Knight Frank LLP as at 31 March 2021, which will form part of the Company's interim report.

The Company intends to publish its next factsheet shortly which will be made available on the Company's website at www.ediston-reit.com.

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.

Enquiries

Will Barnett	- Investec Bank plc	0207 597 5873
Calum Bruce	- Ediston Properties Limited	0131 225 5599
Ruth Wright	- JTC	0203 893 1011
Ben Robinson	- Kaso Legg Communications	0203 995 6672
Stephanie Ross	- Kaso Legg Communications	0203 995 6676

 

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