Interim Management Statement

RNS Number : 4084I

ING UK Real Estate Income Trust Ltd

18 November 2008

 



ING UK Real Estate Income Trust Limited

Interim Management Statement

Please find attached via the link below, the Interim Management Statement for ING UK Real Estate Income Trust Limited for the period 1 July 2008 to 30 September 2008:

http://www.ingreit.co.uk/default.aspx?page=investor-relations-quarterly&folder=1

With recent guidance from the FSA/AIC we have included the unedited full text of the announcement below:-

ING UK Real Estate Income Trust Limited

Q3 Interim Management Statement

Facts & Figures (At 30 September 2008)

Launch Date	25 October 2005
Shares in issue	330.4 million
Share Price	46 pence
Dividend	4 pence (annual) *
Market Capitalization	GBP 151.98 million
Net Asset Value	GBP 276.9 million
Property Value	GBP 486.9 million
Net Asset Value per Share	83.8 pence
Number of Properties	52
Average Lot Size	GBP 9.4 million
Average Lease Length	8.76 years
Current Debt	GBP 282.2 million
Net Gearing **	42.3%
Weighted Average Cost of Debt ***	5.09%
Financial Year End	31 December 2008
Half Year	30 June 2009
Dividend Payment Dates	Aug/Nov/Feb/May
Total Expense Ratio	1.31% Annualised to 30 September 2008

       *      With effect from 04/11/08

**      Net gearing is calculated as total debt less cash deposits as a proportion of gross property asset value.

     ***      Excluding loan arrangement costs

Source: ING Real Estate

Key Highlights

>  NAV of approximately 83.8 pence per share.

>  GBP 15 million of disposals completed over the quarter. 

>  Following quarter end repayment of £57.2 million of non-securitised debt.

>  Revised Annual Dividend of 4 pence per share.

About the Company

The Company is a closed-ended, Guernsey registered investment company. The Company was launched on the London and Channel Islands' Stock Exchanges on 25 October 2005. The investment portfolio is managed by ING Real Estate Investment Management (UK) Limited, a member of the ING Group.

Investment Objectives and Process

The Company's aim is to provide shareholders with an attractive level of income together with the potential for capital growth.

The Company will invest both directly and indirectly in UK commercial real estate. The Manager's investment process is research-led, guided by an interactive top-down and bottom-up approach. 

Performance

As at 30 September 2008 the Net Asset Value of the Company was GBP 276.9 million, reflecting approximately 83.8 pence per share. In line with the underlying real estate market, the underlying property portfolio saw a capital decline of -6.4%, which resulted in a reduction to the NAV of approximately 12.9 pence per share or a decrease of 13.3% over the quarter.

IRET - NAV & Share Price
Date	NAV	Share Price (as at quarter end)
31 March 2006	110 pence	120.25 pence
30 June 2006	117 pence	114.75 pence
30 September 2006	123 pence	122.5 pence
31 December 2006	126 pence	118 pence
31 March 2007	129 pence	121 pence
30 June 2007	133 pence	106.25 pence
30 September 2007	124 pence	101.5 pence
31 December 2007	112 pence	69.5 pence
31 March 2008	102 pence	69 pence
30 June 2008	97 pence	47.5 pence
30 September 2008	84 pence	46 pence

Changes in Capital Structure

There were no changes to the capital structure over the quarter. Following the Quarter End, the company repaid GBP 57.2 million of non-securitised debt, reducing the overall level and cost of debt to GBP 225 million and 4.86% respectively.  

Diversification

Sector	Weighting (%)
Retail	12.7%
Offices	48.1%
Industrial	28.5%
Leisure	4.0%
Retail Warehouse	6.8%

Geographical	Weighting (%)
Central London	9.7%
Greater London	6.0%
South East	24.2%
East	11.1%
Midlands	17.8%
South West	5.2%
North	15.1%
Wales	6.2%
Scotland	2.9%
Offshore UK	1.7%

Security of Income

As a percentage of current net annual rent, the length of the lease to the first termination is summarised below. 

Lease Length	%
0 - 5 years	39.8%
5 - 10 years	32.2%
10 - 15 years	17.4%
15 - 25 years	6.9%
25 + years	3.6%

The covenant strength, based as a percentage of current passing rent by risk rating, is shown in the table below. The Company also holds GBP 1.38 million in rental deposits.

Risk Rating
	Negligible (%)	Low (%)	Low-Med (%)	Med-High (%)	High (%)	Max (%)	Un-Scored + Ineligible (%)
ING UK REIT	48.63	25.32	9.1	4.8	2.39	7.01	2.76
IPD Benchmark	40.79	24.98	13.59	5.12	4.01	5.27	6.25

Acquisitions and Disposals

Over the quarter the company completed on the disposal of assets in Balham and Mitcham for GBP 15 million. It also exchanged contracts on the disposal of an asset in Fulham for GBP 4.7 million.  

Fund Managers Commentary

The quarter witnessed the failure of major financial institutions, which has resulted in a systematic shock to capital markets and required central bank and government intervention.  

Amidst this turbulence, the UK commercial real estate market has seen yields continue to rise across all sectors and an increased rate of capital value decline with transaction volumes quarter on quarter continuing their decrease. IPD monthly Capital Growth Index showed a decline of -6.2% over the quarter and a decline of approximately 25% since its peak in June 2007.

With the changes announced to the level of dividend, the Company now operates a fully covered position (approximately 125%) which will strengthen its ability to withstand the challenging economic climate. The portfolio remains well balanced and diversified across assets, sectors and geographically. The Manager remains focussed on the need to ensure the net debt position is maintained in light of continued weakness in underlying market.

Important Information

This newsletter is issued by ING UK Real Estate Income Trust Limited ('IRET'). It is based on information supplied by the Investment and Property Manager, ING Real Estate Investment Management (UK) Limited. This newsletter is intended for shareholders of IRET only. The provision of the information herein is permitted under Article 43 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. It is not a recommendation to deal or refrain from dealing in the shares of IRET. This newsletter should not be passed to any person other than an existing shareholder in IRET or their professional adviser. Any shareholder who requires advice on their investment in IRET should contact their stock broker, bank or independent financial adviser. This newsletter has been approved by ING Real Estate Investment Management (UK) Funds Ltd which is authorised and regulated by the Financial Services Authority.

Contact Information

Fund Administration

Mark Vidamour

Northern Trust International Fund

Administration Services (Guernsey) Limited

P.O. Box 255, Trafalgar Court, Les Banques, 

St Peter Port, Guernsey GY1 3QL

T: 01481 745 001

Broker

William Simmonds

JP Morgan Cazenove

20 Moorgate, London, EC2R 6DA

T: 020 7588 2828

Investment and Property Manager

Michael Morris

ING Real Estate Investment Management (UK) Limited

2nd Floor, 25 Copthall Avenue, London, EC2R 7BP

T: 020 7767 5600

Website

www.ingreit.co.uk

 

END

 

 

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