Net Asset Value(s)

RNS Number : 2950R

AXA Property Trust Ld

19 August 2010

To: Company Announcements

Date: 19 August 2010

Company: AXA Property Trust Limited

Subject: Net Asset Value 30 June 2010

CORPORATE SUMMARY

- The Company's unaudited Consolidated Net Asset Value at 30 June 2010 was £78.01 million (78.01 pence per share);

- The fourth interim dividend of 0.75 pence per share in respect of the year ending 30 June 2010 was declared on 5 August 2010 and is due for payment on 27 August 2010;

- Documentation regarding the waiver of the existing Loan to Value breach of the loan facility with Credit Agricole (announced in the most recent Interim Management Statement RNS dated 19 May 2010) has now been completed and the loan facility is no longer in breach of any covenants ;

- With the waiver finalised, discussions have advanced on the refinancing with the main activity revolving around due diligence and site visits by prospective lenders;

- A new currency hedging strategy is in place in order to (i) more closely match the foreign currency exposures of the fund with short term instruments, (ii) allow the Company to be more proactive if exchange rates remain volatile and (iii) ease the refinancing of the main loan facility;

- Planned construction works have commenced at Fuerth to provide a new Edeka supermarket with completion due early 2011.

CONSOLIDATED PERFORMANCE SUMMARY (UNAUDITED)

	Unaudited	Unaudited
	9 months ended	12 months ended
	31 March 2010	30 June 2010	Quarterly Movement
	Pence per share	Pence per share	Pence per share /(%)
Net Asset Value per share	78.49	78.01	-0.48 (-0.61%)
Earnings per share	-8.77	-1.07	+7.70
Dividend declared in the period	2.25	3.00	+0.75
Share price (mid market)	50.5	46.5	-4.0 (-7.92%)
Share price discount to Net Asset Value	35.7%	40.4%	+4.7 percentage pts

Total return	Unaudited	Unaudited
	9 months ended	12 months ended
	31 March 2010	30 June 2010
Net Asset Value Total Return	-3.3%	-3.0%
Share price Total Return
- AXA Property Trust	30.1%	21.6%
- FTSE All Share Index	37.4%	21.1%
- FTSE Real Estate Investment Trust Index*	35.3%	18.0%

*FTSE Real Estate Index is not available

Source: Datastream; AXA Real Estate

Total net profit was £7.70 million (7.70 pence per share) for the three months to 30 June 2010, including £1.22 million of "revenue" profit (excluding capital items such as revaluation of property) and £6.48 million "capital" profit analysed as follows:

	Unaudited	Unaudited	Unaudited
	9 months ended	12 months ended	3 months ended
	31 March 2010	30 June 2010	30 June 2010
	£million	£million	£million
Net property income	8.83	11.60	2.77
Net foreign exchange (losses)/gains	-0.94	-0.66	0.28
Investment Manager's fees	-1.01	-1.35	-0.34
Other income and expenses	-1.09	-1.46	-0.37
Net finance costs	-2.97	-3.98	-1.01
Current tax	-0.47	-0.58	-0.11
Revenue profit	2.35	3.57	1.22

Unrealised losses on revaluation of property	-7.76	-9.39	-1.63
Unrealised gains/(losses) on revaluation of Porto Kali investment (loan receivable)	0.86	-0.55	-1.41
Unrealised (losses)/gains on derivatives (hedging interest rate and foreign exchange exposures)	-3.94	5.83	9.77
Net foreign exchange gains/(losses)	0.01	-0.10	-0.11
Deferred tax	-0.29	-0.43	-0.14
Capital (loss)/profit	-11.12	-4.64	6.48

Total net (loss)/profit	-8.77	-1.07	7.70

NET ASSET VALUE

The unaudited Company's Consolidated Net Asset Value per share of AXA Property Trust Limited (the "Company") as at 30 June 2010 was 78.01 pence (78.49 pence as at 31 March 2010).

The Net Asset Value attributable to the Ordinary Shares is calculated under International Financial Reporting Standards. It includes all current year income and is calculated after the deduction of dividends paid prior to 30 June 2010, but does not include provision for the quarterly interim dividend of 0.75 pence per share announced on 5 August 2010 and to be paid on 27 August 2010.

The £0.48 million decrease in Net Asset Value over the quarter ended 30 June 2010 can be analysed as follows:

	Unaudited	Unaudited
	12 months	3 months
	£million	£million
Opening Net Asset Value	1 July 2009	1 April 2010
	83.46	78.49
Net (loss)/profit	-1.07	7.70
Unrealised gains on derivatives	2.05	0.46
Dividends paid	-3.00	-0.75
Foreign exchange translation losses	-3.43	-7.89
Closing Net Asset Value 30 June 2010	78.01	78.01

During the quarter, the portfolio valuation declined by £1.28 million (€1.57 million) (0.96 %). Taking account of foreign exchange movements in addition to this fall the sterling valuation of the property portfolio decreased by £13.29 million (9.1%) to £132.95 million.

The Company's net property yield on current market valuation (after acquisition and operating costs) as at 30 June 2010 was 7.50% (7.52% as at 31 March 2010).

SHARE PRICE AND DISCOUNT TO NET ASSET VALUE

As at close of business on 30 June 2010, the mid market price of the Company's shares on the London Stock Exchange was 46.5 pence, representing a discount of 40.4% on the Company's Net Asset Value at 30 June 2010 and a 6.5% annual dividend yield.

As at close of business on 17 August 2010, the mid market price of the Company's shares was 49.50 pence, representing a discount of 36.5% on the Company's Net Asset Value at 30 June 2010 and a 6.1% annual dividend yield.

DIVIDENDS

The fourth interim dividend of 0.75 pence per share in respect of the year ending 30 June 2010 was declared on 5 August 2010, with an ex-dividend date of 11 August 2010, record date of 13 August 2010 and payment date of 27 August 2010. The cumulative interim dividends of £3.00 million declared in respect of the 12 months period ended 30 June 2010 were 119% covered by "revenue" profits and 134% covered by operating cash flow (excluding capital expenditure and foreign exchange).

STRATEGY AND MARKET

Country Allocation at 30 June 2010

Country % of portfolio

Germany 60%

Netherlands 19%

Italy 17%

Belgium 4%

Sector Allocation 30 June 2010

Sector % of portfolio

Retail 58%

Industrial 18%

Office 15%

Leisure 9%

AXA Real Estate, the Company's Real Estate Adviser, anticipates that while there remains downward pressure on rents in occupational markets, this is expected to have largely come to an end by mid-2011.

The portfolio's income stream is well secured against strong tenant covenants and a tenant base that is weighted towards the defensive food retail sector maintaining a low vacancy rate. The focus on rental income, comprehensive management of tenants, leases and the physical assets remain a priority for the portfolio.

The Investment Manager continues to monitor the markets with a view to undertaking a measure of geographic re-allocation of assets. As a first stage in the process one property is currently under offer for sale in Germany.

FUND GEARING

	Unaudited	Unaudited
	31 March 2010	30 June 2010	Movement
	£million /%	£million /%	£million /%
Property portfolio	146.25	132.95	-13.3 (-9.1%)
Borrowings	78.20	71.52	-6.68 (-8.5%)
Total gross gearing excluding Porto Kali	53.5%	53.8%	+0.3 percentage pts
Total net gearing excluding Porto Kali	41.4%	42.3%	+0.9 percentage pts
Total gross gearing including Porto Kali	56.6%	57.2%	+0.6 percentage pts

Fund gearing increased by 0.3 percentage points over the quarter to 53.8% as at 30 June 2010.

Fund gearing is included to provide an indication of the overall indebtedness of the Company and does not relate to any covenant terms in the Company's loan facilities. Gross gearing is calculated as debt over property portfolio at fair value. Net gearing is calculated as debt less cash over property portfolio at fair value.

LOAN FACILITIES

Gross Loan to Value Covenants	Unaudited	Unaudited
	31 March 2010	30 June 2010	Maximum
Main loan facility	53.1%	53.5%	55.0%
Joint venture Property Trust Agnadello S.r.l.	57.1%	58.8%	65.0%
Consortium investment Porto Kali	74.6%	77.5%	80.0%

	Unaudited	Unaudited	Unaudited	Unaudited
Interest Cover Ratio at 30 June 2010	Historic	Minimum	Projected	Gross rental income headroom
Main loan facility covenant	315.0%	250.0%	655.7%	61.9%
Joint venture Property Trust Agnadello S.r.l.	371.5%	125.0%	494.1%	74.7%
Consortium investment Porto Kali	197.0%	120.0%	329.0%	52.0%

Interest Cover Ratio (ICR) is calculated as net financing expense payable as a percentage of gross rental income (or in the case of Property Trust Agnadello, net rental income) less movement in arrears. Projected net financing expense payable assumes prevailing floating interest rates for the majority of the year. Gross rental income headroom is based on projected interest cover.

MAIN LOAN FACILITY

Having finalised the waiver the Investment Manager has stepped-up negotiations with potential lenders in respect of a full refinancing of the loan facility. Prospective lenders are at differing stages in their credit approval processes and are currently undertaking due diligence and site visits. It is expected to achieve full credit approval with preferred banks during September. The board continuesto review and monitor progress on the planned refinancing closely.

The Company's loans with Credit Agricole have been fully hedged at an average rate of 5.21% via interest rate swaps which matured during July 2010 and are now hedged via interest rate caps at a strike rate of 4.50% until April 2011 when the loan facility expires.

FOREIGN CURRENCY HEDGE OF NET INVESTMENT (FRA)

The Board, following advice from the Investment Manager, has approved a new hedging strategy which more closely offsets short term foreign currency fluctuations, matches the net assets exposed to foreign currency and allows the Company to be more proactive if exchange rates remain volatile. This new strategy will be implemented through the use of derivatives with maturities of between three months and twelve months with a nominal value approximate to the Company's net asset value.

The further benefit of this new hedging strategy will be to smooth the continuing refinancing negotiations to ensure its successful completion due to the less onerous security required for shorter term instruments.

As such, on 12 August 2010, the Investment Manager closed out two of the original three FRAs in place with Credit Agricole for a total face value of €80 million of the total €120 million. The cash impact of closing these two trades was €633,000 in favour of the bank and this was met from the Company's cash resources. The trades are NAV neutral as the cash outflow of €633,000 extinguishes the liability of the same value. The third FRA is planned to be closed in the coming weeks.

CAPITAL EXPENDITURE AND CASH POSITION

The Company and its subsidiaries held total cash of £15.47 million (€18.90 million) at 30 June 2010 (31 March 2010: £17.56, €19.68). The decrease in cash over the quarter to 30 June 2010 is mainly due to the weakening of the Euro against Sterling and some capital expenditure. £9.95 million (€12.16 million) cash is held on short term deposit to be realised as required for the capital expenditure programme and other cash requirements including £4.30 million (€4.8 million) committed for the development of the Company's retail asset in Fuerth.

OUTLOOK

The portfolio's income stream remains well protected with a low vacancy rate of 2.6% in respect to the directly held portfolio. AXA Real Estate in-territory asset management teams are currently in the process of renewing lease contracts with several tenants where leases are due to expire in 2011. Although rental values are coming under pressure across Europe, rents paid in particular by German supermarkets, an important sub-sector for the Company, are expected to remain stable or decline only marginally in the coming year. In addition to the development project at Fuerth, limited and highly targeted landlord investment is budgeted to facilitate letting and renewal projects where improved value can be captured. Expenditure is only undertaken once a new lease has been signed.

We believe that investment yields are now stabilising following significant re-pricing across the continent. With strong property fundamentals and a conservative financing approach, we are confident that the Company remains well positioned as European economies emerge from recession. In the new market environment which is emerging the Investment Manager, supported by AXA Real Estate local teams across Europe, plan to dispose of selected properties from its German portfolio. Proceeds will be reinvested in territories where the Investment Manager sees value growth potential.

MATERIAL EVENTS

Except for those noted above, the Board of the Company is not aware of any significant event or transaction which occurred between 30 June 2010 and the date of the publication of this Statement which would have a material impact on the financial position of the Company.

Company website:

http://www.axapropertytrust.com

All Enquiries:

Investment Manager

AXA Investment Managers UK Limited

Simon Hopper/Bonny Owen
7 Newgate Street

London EC1A 7NX

Tel: +44 (0)20 7 330 6619
Email: broker.services@axa-im.com

Sponsor and Broker

Oriel Securities Limited

Tom Durie

Tel: +44 (0)20 7710 7600