Net Asset Value(s)

RNS Number : 8129C

Custodian REIT PLC

20 October 2015

 

20 October 2015

Custodian REIT plc

("Custodian REIT" or "the Company")

Unaudited Net Asset Value as at 30 September 2015

Custodian REIT (LSE: CREI), the UK commercial real estate investment company, today reports its unaudited net asset value ("NAV") as at 30 September 2015 and highlights for the period from 1 July 2015 to 30 September 2015 ("the Period").  

Financial highlights

·     EPRA NAV¹ per share of 103.0p (30 June 2015: 101.3p)

·     NAV per share of 102.6p (30 June 2015: 101.3p)

·     NAV total return² of 2.8%

·     £20.0m term loan agreed and drawn down increasing gross borrowings to £40.0m (30 June 2015: £39.4m) resulting in net gearing³ of 13.7%

·     FY16 Q1 dividend paid on 30 September 2015 of 1.5p per share

·     £10.6m of new equity raised at average premium of 8.0% to adjusted⁴ NAV

Portfolio highlights

·     Portfolio value of £232.8m (30 June 2015: £224.4m)

·     £2.4m (1.1%) portfolio valuation uplift

·     Two assets acquired during the Period for total consideration of £3.6m

·     Occupancy 97.6% (30 June 2015: 97.7%)

·     £16.8m pipeline of committed funds

¹ NAV excluding fair value adjustment for fixed rate loan

² NAV movement plus dividends paid 

³ Gross borrowings less unrestricted cash divided by portfolio valuation

⁴ Premium adjusted to deduct dividends earned but not paid post ex-dividend date

Net asset value

The unaudited NAV of the Company at 30 September 2015 was £195.7 million, reflecting approximately 102.6 pence per share, an increase of 1.3% since 30 June 2015:

	Pence per share	£m
NAV at 30 June 2015	101.3	183.4
Issue of equity (net of costs)	0.3	10.4
	101.6	193.8
Valuation uplift in property portfolio	1.3	2.4
Profit on disposal of investment properties	0.1	0.1
Impact of acquisition costs	(0.2)	(0.3)
Net valuation movement	1.2	2.2
Income earned for the Period	2.3	4.4
Expenses and net finance costs for the Period	(0.6)	(1.1)
Dividends paid	(1.5)	(2.8)
EPRA NAV at 30 September 2015	103.0	196.5
Fair value adjustment on fixed rate loan	(0.4)	(0.8)
NAV at 30 September 2015	102.6	195.7

The NAV attributable to the ordinary shares of the Company is calculated under International Financial Reporting Standards and incorporates the independent portfolio valuation as at 30 September 2015 and income for the quarter, but does not include any provision for the interim dividend for the quarter, to be paid in December 2015.

Activity during the Period has focused on pro-active asset management initiatives, directly accounting for £0.7m of the £2.4m valuation uplift.  A total of £3.6 million was spent on two acquisitions during the Period, comprising an industrial unit at Glasgow Airport let to DHL and a modern builders' merchant unit in Lincoln let to MKM Building Supplies.  In addition, practical completion was achieved on the Portishead pre-let development funding of two retail warehouse units let to Majestic Wine and TJ Morris (t/a Home Bargains), and one leisure unit let to JD Wetherspoon, which saw a valuation uplift from completion.

In the forthcoming quarter, the Company intends to continue its asset management activities and complete on the current acquisition pipeline, with the aim of deploying debt facilities to increase gearing towards the target level of 25%. 

At 30 September 2015 the committed pipeline consisted of £6.1 million of development fundings in Cannock and Stevenage, plus two acquisition opportunities in Birmingham and Torquay totalling £10.7 million. 

Commenting on performance, Richard Shepherd-Cross, Managing Director of Custodian Capital Limited (the Company's external fund manager), said:

"The valuation increase is in no small part due to the successful conclusion of various asset management strategies including rent reviews, new lettings, lease extensions and the retention of tenants beyond their contractual break clauses.  The acquisitions during the Period maintain the quality of property and security of income demanded by our investment strategy. 

"We have a strong pipeline including pre-let development funding projects which, once complete, will improve the portfolio's weighted average unexpired lease term.

"Following the Period end we achieved practical completion of the development of a 27,400 sq ft industrial unit in Warwick, acquired the 39,800 sq ft Lancaster House office building in central Birmingham and completed a forward funding agreement for a pre-let development in Stevenage."

For details of all properties in the portfolio please see www.custodianreit.com/property/portfolio.php. 

Financing

Equity

The Company issued 9,800,000 new ordinary shares of 1p each in the capital of the Company ("the New Shares") during the Period raising £10.6 million (before costs and expenses).  The New Shares were issued at an average premium of 8.0% to the NAV per share at 30 June 2015, after adjusting the NAV to recognise the first quarter dividend of 1.5 pence per share paid to shareholders on the register at the close of business on 7 August 2015.

Debt

The Company operates a £25 million revolving credit facility with Lloyds Bank plc, which attracts interest of 2.45% above three month LIBOR and expires on 26 March 2019.  The Company also operates a £20 million term loan with Lloyds Bank plc, which attracts interest of 1.95% above three month LIBOR and is repayable on 10 October 2019.

On 14 August 2015 the Company agreed and drew down a £20 million term loan with Scottish Widows plc, which attracts interest fixed at 3.935% and is repayable on 14 August 2025.

Dividends

An interim dividend of 1.5 pence per share for the quarter ended 30 June 2015 was paid on 30 September 2015.  The Board expects to propose an interim dividend relating to the Period of 1.5 pence per share.  

In the absence of unforeseen circumstances, the Board intends to pay further quarterly dividends to achieve the target dividend of 6.25 pence per share for the financial year ending 31 March 2016 and in subsequent financial years. 

Sector and geographic analysis as at 30 September 2015

Sector	Valuation  30 Sept  2015  £m	Quarter valuation movement £m	Weighting by income 30 Sept  2015	Weighting by income 30 Jun  2015
Industrial	105.8	1.6	45%	46%
Retail	58.7	0.5	25%	24%
Other5	44.2	0.2	18%	17%
Office	24.1	0.1	12%	13%
Total	232.8	2.4	100%	100%

⁵ Includes leisure, education, trade counter and motor trade. 

The Company continues to have a strong focus on industrial property, while retaining its investment objective to maintain a suitably balanced portfolio.

Location	Valuation  30 Sept  2015  £m	Quarter valuation movement £m	Weighting by income 30 Sept  2015	Weighting by income 30 Jun  2015
South-East	47.3	0.2	20%	20%
West Midlands	38.0	0.5	14%	15%
North-West	30.9	0.4	13%	13%
North-East	28.0	(0.1)	12%	13%
East Midlands	27.7	0.4	17%	16%
South-West	27.1	1.1	10%	9%
Scotland	16.2	(0.1)	7%	7%
East Anglia	16.2	0.1	6%	6%
Wales	1.4	(0.1)	1%	1%
Total	232.8	2.4	100%	100%

The Company operates a geographically diversified portfolio across the UK, seeking to ensure that no one area represents the majority of the portfolio. 

- Ends -

Further information:

Further information regarding the Company can be found at the Company's website www.custodianreit.com or please contact:

Custodian Capital Limited
Richard Shepherd-Cross / Nathan Imlach / Ian Mattioli	Tel: [phone]
	www.custodiancapital.com

Numis Securities Limited
Nathan Brown / Hugh Jonathan	Tel: [phone]
	www.numis.com/funds

Camarco
Ed Gascoigne-Pees	Tel: [phone]
	www.camarco.co.uk

Notes to Editors

Custodian REIT plc is a UK real estate investment trust, which listed on the main market of the London Stock Exchange on 26 March 2014.  Its portfolio comprises properties predominantly let to institutional grade tenants on long leases throughout the UK and is characterised by small lot sizes, with individual property values of less than £7.5 million at acquisition. 

The Company offers investors the opportunity to access a diversified portfolio of UK commercial real estate through a closed-ended fund.  By targeting smaller lot size properties, the Company intends to provide investors with an attractive level of income with the potential for capital growth. 

Custodian Capital Limited is the discretionary investment manager of the Company. 

For more information visit www.custodianreit.com and www.custodiancapital.com.

Important notice

Forward looking statements: This announcement includes "forward-looking statements".  All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's business strategy and plans are forward-looking statements. 

Forward-looking statements are subject to risks and uncertainties and accordingly the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements.  These factors include but are not limited to those that are described in the February 2014 prospectus and December 2014 supplementary prospectus. 

These forward-looking statements speak only as at the date of this announcement.  The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Financial Services Act 2012, the Listing Rules or Prospectus Rules of the Financial Conduct Authority or other applicable laws, regulations or rules. 

Certain statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment.  Nothing in this announcement should be construed as a profit forecast.  Past share price performance cannot be relied on as a guide to future performance. 

 

END

 

 

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