Interim Management Statement

RNS Number : 5304S

ING UK Real Estate Income Trust Ltd

19 May 2009

 



ING UK Real Estate Income Trust Limited ('IRET')

Date 19 May 2009

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 31 December 2008 to 31 March 2009:

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

Q1 Interim Management Statement

Facts & Figures (as at 31 March 2009)

Launch Date	25 October 2005
Shares in issue	330.4 million
Share Price	19 pence
Dividend	1 pence per share paid 27/2/09
Market Capitalization	GBP 62.78 million
Net Asset Value	GBP 173.1 million
Property Value	GBP 393.85 million
Net Asset Value per Share	52.4 pence
Number of Properties	50
Average Lot Size	GBP 7.88 million
Average Lease Length	8.97 years
Current Debt	GBP 225 million
Net Gearing*	49.4%
Weighted Average Cost of Debt**	4.86%
Financial Year End	31 December 2009
Half Year	30 June 2009
Dividend Payment Dates	Aug/Nov/Feb/May
Total Expense Ratio	1.33% Annualised to 31/03/2009

*      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 52 pence per share.

GBP 7.25 million of disposals over the quarter with a further GBP 11.1 million following the quarter end.

Successful renegotiation of loan covenants following the quarter end, increasing the LTV covenant.

Q1 dividend passed to minimise asset sales and fund break costs associated with loan restructuring.

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 property 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 can 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 31st March 2009 the Net Asset Value of the Company was GBP 173.1 million, reflecting approximately 52 pence per share. In line with the underlying real estate market, the underlying property portfolio saw a capital decline of 7.8%, which combined with the mark to market movement in the swap valuation, resulted in a reduction to the NAV of approximately 12 pence per share or a decrease of c.18% over the quarter.

IRET - NAV & Share Price
Date	NAV	Share Price (as at quarter end)
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
31 December 2008	64 pence	22.5 pence
31 March 2009	52 pence	19 pence

Changes in Capital Structure

There were no changes in the capital structure over the quarter. 

Diversification

Sector	Weighting (%)
Retail	12.0%
Offices	46.6%
Industrial	29.9%
Leisure	4.7%
Retail Warehouse	6.8%

Geographical	Weighting (%)
Central London	8.6%
Greater London	4.8%
South East	24.4%
East	10.8%
Midlands	19.4%
South West	5.2%
North	15.6%
Wales	5.9%
Scotland	3.4%
Offshore UK	1.9%

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	35.2%
5 - 10 years	38.9%
10 - 15 years	15.6%
15 - 25 years	6.7%
25 + years	3.6%

The covenant strength, based as a percentage of current passing rent by risk rating, is shown in the chart below. The Company also holds GBP 1.36 million in rental deposits.

Risk Rating
	Negligible (%)	Low  (%)	Low-Med (%)	Med-High (%)	High  (%)	Max  (%)	Un-Scored + Ineligible (%)
ING UK REIT	47.48	30.54	7.69	2.68	4.86	4.85	1.9
IPD Benchmark	39.78	25.94	11.67	6.32	4.47	7.23	4.59

Acquisitions and Disposals

Over the quarter the Company completed on the disposals of the Welwyn Garden City asset for GBP 6 million and the car park at Scots Corner, Birmingham for GBP 1.25 million. Further disposals of GBP 11.1 million have completed following the quarter end.

Fund Managers Commentary

Over the quarter the IPD Quarterly Index showed a capital decline of 8.7%, taking the total decline since the market peak in June 2007 to approximately 40%. The Company, with an ungeared total return over the quarter of -6.0%, continued to outperform the IPD benchmark. The asset disposal programme is ongoing, with over GBP 18.4 million of asset sales completing since the start of the year. With an occupancy rate of approximately 91 percent, the underlying cashflow of the Company remains robust. 

The main focus of the Company over the quarter has been on the proposed restructuring of the Securitised Loan Facility which was approved by Noteholders on the 15th May. The principal amendments include a relaxation of the LTV Covenant from 50% to 60% and a tightening of the interest cover ratio from 1.5 times to 1.75 times. Furthermore, the Company will pre-pay GBP 35 million of the loan by January 2010.

These changes have been achieved without increased margin costs.

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. 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. 

Contact Information

Fund Administration

Stephanie Saunders

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

All Enquiries

The Company Secretary

Northern Trust International Fund Administration Services (Guernsey) Limited

Trafalgar Court

Les Banques

St Peter Port

Guernsey

GY1 3QL

Tel:    [phone]

Fax:    [phone]

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