Net Asset Value(s)

RNS Number : 8372L

AXA Property Trust Ld

05 August 2011

To: Company Announcements

Date: 5 August 2011

Company: AXA Property Trust Limited

Subject: Net Asset Value

CORPORATE SUMMARY

- The Company's unaudited Consolidated Net Asset Value at 30 June 2011 was £74.74 million (74.74 pence per share) (£74.06 million (74.06 pence per share) as at 31 March 2011), an increase of £0.68 million;

- The interim dividend of 0.75 pence per share in respect of the quarter ending 30 June 2011 was declared on 5 August 2011 and is due for payment on 2 September 2011;

- Construction works for the new Edeka unit at Fuerth have been completed and the store has been trading since the 27 June 2011. C&A has signed a new 10 year lease and will take an enlarged unit. Terms have been agreed with an international furniture retailer to take the unit previously occupied by the bowling alley operator;

- The capital expenditure requirements in relation to these recently agreed lettings, combined with the costs of the recent refinancing, will significantly impact the Company's cash reserves for the remainder of 2011. In order to prudently manage the Company's cash there is a strong likelihood that the dividend will need to be materially reduced for the next two quarters to build a sufficient cash buffer. This dividend reduction is expected to be a temporary measure and it is the Company's intention to restore the 0.75 pence per share dividend by March 2012;

- The Board is of the view that the increased occupancy and higher income as a result of the lettings at Fuerth will provide long term benefits to the Company and that the necessary reduction to the dividend in the short term will lead to longer term benefits to shareholders;

- As per the announcement of 4 July via RNS, the Company has entered into a new facility with Credit Agricole CIB and a new co-lender, Credit Foncier;

- Following the signing of a 15 year lease at Koethen and the completion of the fit out works the unit opened to the public at the end of May.

STRATEGY AND MARKET

Country Allocation at 30 June 2011

Country % of portfolio

Germany 59%

Netherlands 19%

Italy 18%

Belgium 4%

Sector Allocation 30 June 2011

Sector % of portfolio

Retail 59%

Industrial 19%

Office 13%

Leisure 9%

The successful implementation of asset management objectives at Fuerth are now the main focus of the Investment Manager. The development of the new Edeka unit is now complete and the tenant commenced trading on the 27 June 2011. Meanwhile current tenant C&A has signed a new 10 year lease and will move during Q1 2012 to the unit previously occupied by ROFU. This represents an increase of 356 sqm compared to their current unit. A new 15 year lease has also been agreed with an international furniture retailer to take the unit previously occupied by the bowling alley operator. The lease is expected to be signed in the coming weeks and the tenant is expected to take occupation early December, following the successful change in use and necessary refurbishment. This is a significant achievement and is in line with the strategy to enhance the Centre's profile by attracting new tenants after the expansion undertaken by existing tenants Edeka and C&A.

At Koethen, following the signing of a 15 year lease with a franchisee of the national DIY retailer Hagebau and the completion of the necessary refurbishment, the tenant has taken occupation and started trading at the end of May.

As previously advised the completion of the sale of the asset at Bernau took place at the end of April. Three further assets located in Germany have been put on the market for sale.

OUTLOOK

Although the first half of the year has been overshadowed by the accelerating euro crisis, GDP in Q1 2010 experienced an uplift of 0.8% in both the EU27 and eurozone, This was a significant and expected recovery from the rates of 0.2% and 0.3%, respectively in Q4 2010. GDP in Germany in the first quarter was 1.5% and 5.2% over the year. The first quarter's growth was driven by both higher fixed investment and increased activity in the construction sector following the weather related slump in Q4 2010.

In Europe household consumption will remain subdued and indicates the fragility of the recovery, given that it represents between two-thirds and three-quarters of GDP in European economies, and would be expected to be a leading growth factor in this phase of the cycle. Germany's public finance is in a better shape and overall austerity measures are less pronounced than in other European countries. Overall economic growth as well as a low unemployment rate will likely trigger wage growth making consumption a more important component of GDP growth.

Germany's economy continues to improve and it has seen the largest growth in prime retail rents in Q2 2011 (2.2%) and this was fairly distributed amongst the main cities. This is a significant shift in Germany's retail sector, after zero growth since mid-2008, and is largely driven by international retailers being willing to pay higher rents to ensure to get hold of the best possible location.

Whilst wider investor confidence is stabilising, risk aversion continues to be a feature in investors' minds. This has resulted in fierce competition for prime property assets whilst secondary assets remain outside of the radar, a result of the high tenancy related risks. Germany will remain a main target for investments due to investor's perception of it being a safe haven, at least in relative terms. The occupier market in German secondary locations is expected to recover faster than in most western European countries which should trigger an increase in appetite for this kind of assets.

As the general prospects for rental growth and yield compression remain weak across Europe, we anticipate income returns to be the main driver of the Company's returns. The implementation of identified asset management initiatives, particularly at Fuerth, to reduce vacancy and improve the Company's income profile remains the focus and should be the main driver of performance in the medium term.

CONSOLIDATED PERFORMANCE SUMMARY

	Unaudited	Unaudited
	9 months ended	12 months ended
	31 March 2011	30 June 2011	Quarterly Movement
	Pence per share	Pence per share	Pence per share /(%)
Net Asset Value per share	74.06	74.74	+0.68 (+0.92%)
Earnings per share	-9.06	-4.38	+4.68
Dividend declared in the period	2.25	3.00	+0.75
Share price (mid market)	57.00	50.13	-6.87 (-12.1%)
Share price discount to Net Asset Value	23.0%	32.9%	+9.9 percentage pts.

Total return	Unaudited	Unaudited
	9 months ended	12 months ended
	31 March 2011	30 June 2011
Net Asset Value Total Return	-2.2%	-0.4%
Share Price Total Return
- AXA Property Trust	28.0%	14.2%
- FTSE All Share Index	23.3%	25.6%
- FTSE Real Estate Investment Trust Index	23.4%	43.8%

Source: Datastream; AXA Real Estate

Total net loss was -£4.38 million (-4.38 pence per share) for the twelve months to 30 June 2011, including £4.04 million of "revenue" profit (excluding capital items such as revaluation of property) and -£8.42 million "capital" loss analysed as follows:

	Unaudited	Unaudited	Unaudited
	9 months ended	12 months ended	3 months ended
	31 March 2011	30 June 2011	30 June 2011
	£million	£million	£million
Net property income	7.58	10.33	2.75
Net foreign exchange losses	-0.77	-1.07	-0.29
Investment Manager's fees	-1.02	-1.35	-0.33
Other income and expenses	-1.04	-1.48	-0.44
Net finance costs	-1.54	-2.06	-0.53
Current tax	-0.20	-0.33	-0.13
Revenue profit	3.01	4.04	1.03

Unrealised gains/(losses) on revaluation of property	0.57	-1.19	-1.75
Gain on disposal of investment property	0.00	0.41	0.41
Unrealised losses on revaluation of Porto Kali investment (loan receivable)	-7.22	-7.29	-0.07
Losses on derivatives (hedging interest rate and foreign exchange exposures)	-4.67	-5.82	-1.15
Finance costs	-0.83	-0.92	-0.10
Net foreign exchange gains	0.11	6.37	6.26
Deferred tax	-0.03	0.02	0.05
Capital loss	-12.07	-8.42	3.65

Total net loss	-9.06	-4.38	+4.68

NET ASSET VALUE

The Company's unaudited Consolidated Net Asset Value per share as at 30 June 2011 was 74.74 pence (74.06 pence as at 31 March 2011), an increase of 0.68 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 2011, but does not include provision for the quarterly interim dividend of 0.75 pence per share announced on 5 August 2011 and to be paid on 2 September 2011.

The £0.68 million increase in Net Asset Value over the quarter ended 30 June 2011 can be analysed as follows:

	Unaudited	Unaudited
	3 months ended	3 months ended
	31 March 2011	30 June 2011
	£million	£million
Opening Net Asset Value	73.52	74.06

Net loss	(2.64)	+4.68
Unrealised gains on other derivatives	+1.14	+1.40
Dividends paid	(0.75)	(0.75)
Foreign exchange translation gains/(losses)	+2.79	(4.65)
Closing Net Asset Value	74.06	74.74

After disposing of the property asset at Bernau, Germany, the sterling valuation of the property portfolio decreased to £145.9 million (including the effects of foreign exchange movements and capital expenditure) (30/03/2011: £146.10 million).

The Company's net property yield on current market valuation (after acquisition and operating costs) as at 30 June 2011 was 7.08% (6.88% as at 31 March 2011).

SHARE PRICE AND DISCOUNT TO NET ASSET VALUE

As at close of business on 30 June 2011, the mid market price of the Company's shares on the London Stock Exchange was 50.13 pence, representing a discount of 32.9% on the Company's Net Asset Value at 30 June 2011 and a 6.0% annual dividend yield.

As at close of business on 4 August 2011, the mid market price of the Company's shares was 51.88 pence, representing a discount of 30.6% on the Company's Net Asset Value at 30 June 2011 and a 5.7% annual dividend yield.

DIVIDENDS

The interim dividend of 0.75 pence per share in respect of the quarter ending 30 June 2011 was declared on 5 August 2011, with an ex-dividend date of 17 August 2011, record date of 19 August 2011 and payment date of 2 September 2011. Dividends will be paid from the Company's cash resources of £4.15 million at the quarter end.

The capital expenditure requirements in relation to recently agreed lettings, combined with the costs of the recent refinancing, will significantly impact the Company's cash reserves for the remainder of 2011. In order to prudently manage the Company's cash there is a strong likelihood that the dividend will need to be materially reduced for the next two quarters to build a sufficient cash buffer.

This dividend reduction is expected to be a temporary measure and it is the Company's intention to restore the 0.75 pence per share dividend by March 2012.

The cumulative dividends of £3.00 million declared in respect of the 12 months period ended 30 June 2011 were 135.0% covered by "revenue" profits.

FUND GEARING

	Unaudited	Unaudited
	31 March 2011	30 June 2011	Movement
	£million /%	£million /%	£million /%
Property portfolio	146.10	145.90	-0.2 (-0.14%)
Borrowings	76.38	72.59*	-3.8 (-4.96%)
Total gross gearing excluding Porto Kali	52.3%	49.8%	-2.5 percentage pts
Total net gearing excluding Porto Kali	47.3%	46.9%	-0.4 percentage pts

*Net of capitalised issue costs.

Fund gearing decreased by -2.5 percentage points over the quarter to 49.8% as at 30 June 2011, mainly due to an increase in capitalised issue cost of the main loan facility.

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 (LTV) Covenants	Unaudited	Unaudited
	31 March 2011	30 June 2011	Maximum
Main loan facility	55.0%*	55.0%*	65.0%
Joint venture Property Trust Agnadello S.r.l.	59.6%*	59.6%*	65.0%

*Portfolio value based on lenders valuation.

Unaudited
Interest Cover Ratio at 30 June 2011	Historic	Minimum	Projected	Minimum	Net rental income headroom
Main loan facility covenant	n/a	200.0%	249.2%	185.0%	25.78%
Joint venture Property Trust Agnadello S.r.l.	668.0%	125.0%	493.7%	125.0%	74.7%

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.

MAIN LOAN FACILITY

As per the announcement to the London Stock Exchange on 4 July, the refinancing of the Main Facility of €75,759,750 with Credit Agricole Corporate and Investment Bank and Credit Foncier de France was executed on 28 June 2011. Drawdown was completed on 1 July 2011. Signed terms are at a margin of 240bps, arrangement fee of 1.00%, and all-in rate at 4.89%.

CASH POSITION AND CAPITAL EXPENDITURE

The Company and its subsidiaries held total cash of £4.15 million (€4.59 million) at 30 June 2011. The anticipated capital expenditure over the next twelve months is £1.1 million.

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 2011 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/Bobby 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

Joe Winkley

Tel: +44 (0)20 7710 7600