Net Asset Value(s)

To:                    Company Announcements

Date:                28 August 2015

Company:         AXA Property Trust Limited

Subject:            Net Asset Value 30 June 2015 (Unaudited)

CAPITAL REDEMPTION

• The company paid a capital redemption of £1.8 million on 26 May 2015 and £5.2 million on 30 July 2015, bringing the total capital returned to Shareholders to £13.1 million.

CORPORATE SUMMARY

• The Company’s unaudited Consolidated Net Asset Value at 30 June 2015 was £49.46 million (57.73 pence per share), an increase of £1.87 million (4.17 pence per share) since 31 March 2015 when the Consolidated Net Asset Value was £47.60 million (53.56 pence per share);

• The Company and its subsidiaries made a profit after tax of £8.03 million (9.37 pence per share) in the twelve month period to 30 June 2015;

MANAGED WIND-DOWN STATUS

• The Company continues to progress the managed wind-down of its portfolio with a view to realising its investments by December 2015 in a manner that achieves a balance between maximising the value from the Company's investments and making timely returns of capital to shareholders.

• The sales of Altenstadt-Lindheim and Kraichtal have been completed during the quarter.

• Marketing of the properties at Curno and Agnadello was progressed as part of an Italian portfolio including a third asset owned by European Added Value Fund S.à.r.l. (a subsidiary of European Added Value Fund Limited) which is also the Company’s 50% Joint Venture partner in Agnadello.

• Marketing of Venray and Fuerth is ongoing, while at Dasing and Rothenburg asset management initiatives are being finalised before approaching potential purchases.

• Year end 2015 remains the target for the completion of all sales, however at present it is considered that the completion of the sale of certain assets may not occur until early 2016.

PORTFOLIO UPDATE

Country Allocation at 30 June 2015 (by value)

Country                         % of portfolio

Germany                                   63%

Italy                                          30%

Netherlands                                 7%

Sector Allocation at 30 June 2015 (by value)

Sector                           % of portfolio

Retail                                        55%

Industrial                                   28%

Leisure                                      17%

MARKET UPDATE

German Retail

The performance of monthly retail sales support the view that consumption remains a strong pillar of the German economy as they continued to increase in May 2015 by 0.5%. One of the main reasons behind the recent rise in retail sales had been the positive effect of falling oil prices, leading to enhanced spending on other items.  As oil prices are likely to firm over the coming months, this effect could weaken.

In the first half of 2015, investments in German retail soared  to €9.8bn. Volumes have more than doubled in comparison to H1 2014.  Portfolio sales contributed strongly to the overall investment volume and were responsible for 65% of all sales. Also regional centres and second-tier cities have gained in popularity which reflects the higher risk affinity of investors. High street investment volumes were boosted by the takeover of 43 Galeria Kaufhof department stores by Canada based Hudson’s Bay Company.

Prime yields have remained flat in all markets with the exception of Munich and Hamburg, where yields fell  by 10bps and 9bps respectively. Yields in all German markets are at their lowest level on record. Prime rents have been flat over the last quarter in all markets. 

Italian Industrial

The take-up of industrial space in Italy in Q2 2015 reached 204,650 sq m, an increase of almost 250% on the previous quarter and a 1% decrease on same period of 2014. Quarterly take-up involved existing buildings and no pre-let transactions have been recorded. With 27% of quarterly take-up, 3PL operators were once again the most active occupiers, followed by retailers which are increasingly gaining influence as a driver of demand. Milan and its environs continued to be the region with the  strongest letting activity. Overall, prime rents increased in the first quarter to €50/sq  m/year in Milan, up from €48/sq m/year of the previous quarter, according to CBRE. In the second quarter of 2015, no significant investment transactions have been recorded in the Logistics sector. Half-yearly volume remained slightly below € 90m.

Netherlands Logistics

In the Netherlands, the industrial market is continuing to benefit most from the country’s economic recovery, due to its central location along the European logistics corridor. The Central and East Brabant and Limburg regions, which are focused on European distribution and high-tech sectors, continue to benefit from cheaper rents and good accessibility to the rest of Europe. Occupiers are actively looking to relocate to more modern facilities with good accessibility but overall demand growth looks set to remain weak over the next few quarters, given the current uncertainty in the Eurozone. Following strong growth in  along the European corridor (up 4.2% in Rotterdam) in the first quarter, prime rents have remained stable in the second quarter of 2015 at €75/sq m/year. The investment market has, however,  revived in the second quarter, with €408m invested into industrial property, which represents a 8% year-on-year increase. While anticipated improvement in demand had pushed prime yields down in Q1 2015, prime yields remained stable in Q2 2015. In Amsterdam and Rotterdam, they now stand at 6%.

CONSOLIDATED PERFORMANCE SUMMARY

	Unaudited	Unaudited
	9 months ended	12 months ended
	31 March 2015	30 June 2015	Quarterly Movement
	Pence per share	Pence per share	Pence per share /(%)
Net Asset Value per share	53.56	57.73	4.17 7.8%
Earnings per share	3.84	9.37	5.53
Share price (mid market)	43.38	44.75	1.37 3.2%
Share price discount to Net Asset Value	19.0%	22.5%	3.5 percentage points

Total Return per Share	Unaudited	Unaudited
	9 months ended	12 months ended
	31 March 2015	30 June 2015
Net Asset Value Total Return	-1.7%	-4.0%
Share Price Total Return
- AXA Property Trust	6.1%	10.5%
- FTSE All Share Index	4.2%	2.6%
- FTSE Real Estate Investment Trust Index	23.6%	19.5%

Source: Datastream; AXA Real Estate

Total net profit was £8.03 million (9.37 pence per share) for the twelve months to 30 June 2015, including £1.53 million of “revenue” profit (excluding capital items such as revaluation of property) and £6.49 million “capital” gain, analysed as follows:

	Unaudited	Unaudited	Unaudited
	9 months ended	3 months ended	12 months ended
	31 March 2015	30 June 2015	30 June 2015
	£million	£million	£million
Net property income	3.53	1.17	4.71
Net foreign exchange (losses) / gains	(0.36)	(0.06)	(0.42)
Investment Manager's fees	(0.33)	(0.09)	(0.43)
Other income and expenses	(1.28)	0.27	(1.01)
Net finance costs	(1.06)	(0.26)	(1.32)
Revenue profit	0.50	1.03	1.53
Unrealised (losses) / gains on revaluation of investment properties	1.91	4.79	6.70
Net losses on disposal of investment properties	-	(0.71)	(0.71)
(loos) / Gain on disposal of shares in subsidiary	-	-	-
Net (Losses) / gains on derivatives	0.59	0.13	0.72
Share in (losses) / Profit of Joint Venture	1.41	0.05	1.45
Finance costs	(0.46)	(0.09)	(0.56)
Net foreign exchange losses	(0.13)	(0.06)	(0.19)
Deferred tax	(0.40)	(0.52)	(0.92)
Capital loss	2.91	3.58	6.49
		-
Total (net loss) / profit	3.41	4.61	8.03

NET ASSET VALUE

The Company’s unaudited Consolidated Net Asset Value per share as at 30 June 2015 was 57.73 pence (53.56 pence as at 31 March 2015), an increase of 4.17 pence.

The Net Asset Value attributable to the Ordinary Shares is calculated under International Financial Reporting Standards. It includes all current year income after the deduction of dividends paid prior to 30 June 2015.

The £1.87 million increase in Net Asset Value over the quarter ended 30 June 2015 can be analysed as follows:

	Unaudited	Unaudited	Unaudited
	9 months ended	3 months ended	12 months ended
	31 March 2015	30 June 2015	30 June 2015
	£million	£million	£million
Opening Net Asset Value	50.43	47.59	50.43
Net (loss) / profit after tax	3.41	4.62	8.03
Unrealised movement on derivatives	6.48	(6.31)	0.17
Share Redemption	(2.00)	(1.80)	(3.80)
Foreign exchange translation losses	(10.73)	5.37	(5.36)
Closing Net Asset Value	47.59	49.47	49.46

On a like-for-like basis the Euro valuation of the property portfolio increased by 6.11% to EUR 95.55 million for the quarter. In Sterling currency terms, the property valuation was £67.69 million (including the effects of valuation movements, capital expenditure and foreign exchange movements). The £/EUR foreign exchange rate applied to the Company’s Euro investments in its subsidiary companies at 30 June 2015 was 1.41 (31 March 2015: 1.38).

SHARE PRICE AND DISCOUNT TO NET ASSET VALUE

As at close of business on 30 June 2015, the mid market price of the Company’s shares on the London Stock Exchange was 44.75 pence, representing a discount of 22.5% on the Company’s Net Asset Value at 30 June 2015.

As at close of business on 27 August 2015, the mid market price of the Company’s shares was also 44.75 pence, representing a discount of 22.5% on the Company’s Net Asset Value at 30 June 2015.

FUND GEARING

	Unaudited	Unaudited
	31 March 2015	30 June 2015	Movement
	£million /%	£million /%	£million /%
Property portfolio *	72.01	67.76	-4.26 6.3%
Borrowings (net of capitalised issue costs)	27.11	24.22	-2.89 11.9%
Total gross gearing	37.6%	35.7%	-1.9 percentage points
Total net gearing	30.1%	23.5%	-6.6 percentage points

*Portfolio value based on the Company's independent valuation

Fund net gearing decreased by 6.6 percentage points over the quarter to 23.51% as at 30 June 2015.

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.

As the wind down progresses, the level of gearing will continue to decrease as proceeds from sales are used to reduce debt over the next 6 to 9 months. 

LOAN FACILITIES

Gross Loan to Value (LTV) Covenants	Unaudited	Unaudited
	31 March 2015	30 June 2015	Maximum
Main loan facility	43.6%	39.3%	60.00%

As at 30 June 2015, the loan-to-value ratio on the main facility was 39.3% based on the Company’s independent valuation of the property portfolio.

Interest Cover Ratio at 30 June 2014	Historic	Minimum	Projected	Minimum	Net rental income
	Unaudited		Unaudited		headroom
Main loan facility covenant	300.2%	200.0%	314.8%	185.00%	41.2%

Interest Cover Ratio (ICR) is calculated as net financing expense payable as a percentage of net rental income less movement in arrears. Net rental income headroom is based on projected interest cover.

CASH POSITION AND CAPITAL EXPENDITURE

Of the £8.29 million cash held by the Group including the cash in the Agnadello JV at 30 June 2015, £1.5 million was held in bank accounts pledged to the financing banks.

The anticipated capital expenditure over the next twelve months is £1.59 million (EUR 2.2 million).

Post-quarter £5.2m were distributed to shareholder on 30 July 2015.

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 2015 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
Broker Services
7 Newgate Street
London EC1A 7NX
Tel: [phone]
Email:[e-mail]

Broker
Oriel Securities Limited
Neil Winward / Mark Bloomfield / Matthew Marshall
Tel: [phone]
 
Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
GY1 3QL
Tel: [phone]