Annual Report Financial Highl

RNS Number : 2066Y

Invista Foundation Property Tst Ltd

03 July 2008

 

Invista Foundation Property Trust Limited ("IFPT"/ the "Company"/ "Group")

Audited Annual Report for the year ended 31 March 2008

The Invista Foundation Property Trust has today announced its results for the year ended 31 March 2008 together with the outcome of a Strategic Review which has been undertaken by the Board.

Financial highlights

• Net Asset Value per share of 107.8 pence (2007: 142.2 p).

• Property assets of £592.3 million (2007: £717.4 million).

• Performance of Group's underlying property portfolio ranked 4th out of a peer group of 55 funds over the last three years in IPD.

• During the reporting period, the underlying portfolio return was -9.9%, compared with the peer group Benchmark of -11.0%.

• NAV total return of -19.8% in the year to 31 March 2008. Since inception, the Company's annualised net asset value total return has been 8.8% per annum.

• Total dividend for the year to 31 March 2008 of 6.75 pence per share.

• Financing for the Company's three joint ventures is secured solely against the assets in those JVs. It is without recourse to the rest of the Group and ring-fenced from it. As at 31 March 2008, the equity value of the JV investments was £29 million, representing 7.7% of NAV.

• The Board has made a decision not to make a further investment in Plantation Place in July 2008 should this be required. This may result in some dilution of the Company's stake in this joint venture holding.

• £47 million of property disposals have been secured post 31 March 2008 with £38 million realised during the period under review.

• Total cash held by the Company increases to £95 million after these disposals.

Results of Strategic Review 

The Board has conducted a strategic review of the Company's financial position.  Following this review, the Company is taking the following steps to strengthen the Company during this difficult economic period:

• Reduction of on-balance sheet borrowings by £50 million. This will enable the Company to reduce interest costs by £2.8 million per annum

• Dividend reduction from 1.6875 pence to 0.88 pence per quarter after July's payment, resulting in the dividend being fully covered by rental income after costs. The Company will seek to grow the dividend again once market conditions improve.

• Share repurchases - The Company will repurchase and cancel up to £20 million of its own shares as the dividend reduction releases the requirement to hold a significant proportion of the cash in reserves. This will deliver NAV enhancement and improved dividend cover

Following debt reduction and share buybacks, the Group's loan to value ratio will be reduced to approximately 35% on the basis of 31st March property valuations, and the Company will have a cash balance of £20 million to cover short term operating requirements.

Operational highlights

• Company's portfolio comprises well diversified, good quality assets mostly located in South East of England and in particular Central London.

• Company's exposure to strong office occupiers creates a robust, long-term core income stream, with an average unexpired lease length 7.8 years (2007: 7.5 years).

• Rental value of direct portfolio increased by 6% relative to the IPD peer group average of 3.1%.

• Void rate of only 4.6% of rental value compared to the peer group average of 7.8%.

• Active asset management initiatives continue to generate potential for capital and income growth.

Commenting, Andrew Sykes, Chairman of the Board, said:

"At this stage in the property investment cycle, short to medium term performance will be determined by the extent to which financial market problems contaminate the wider economy. The Board and the Investment Manager have adopted a strategy which takes account of a worsening economic outlook. Further to the activities we have set out today, we will continue to focus on the reduction of risk through disposals to reduce gearing and to ensure that the Company's liquidity is adequate for its operating requirements. At the same time, the Investment Manager's efforts to create value from intensive asset management should help to offset the rise in yields and consequent fall in capital values, and to grow the Company's income base over time."

Duncan Owen, Chief Executive of the Company's Investment Manager, added:

"We are currently experiencing very challenging market conditions. Appropriate steps have been taken to mitigate the negative impact on the Group's portfolio and significant work is still ongoing. The negative sentiment and uncertainty in the wider economy will impact on the occupational markets and, although there is little current evidence of this at the moment in the Company's portfolio, we are preparing for these challenges should they occur. The Company's portfolio is sound and well spread, and we will continue to add value to it through intensive asset management, with the objective of growing the Company's income and capital as markets and the economy recovers in due course."

For further information:

Duncan Owen 

Invista Real Estate Investment Management     020 7153 9345

Stephanie Highett / Dido Laurimore

Financial Dynamics                                                020 7831 3113

 

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