Net Asset Value(s)

RNS Number : 5080A

AXA Property Trust Ld

02 February 2011

 

To:                    Company Announcements

Date:                02 February 2011

Company:         AXA Property Trust Limited

Subject:            Net Asset Value 31 December 2010

CORPORATE SUMMARY

-     The interim dividend of 0.75 pence per share in respect of the quarter ending 30 December 2010 was declared on 1 February 2011 and is due for payment on 28 February 2011;

-     The Company's unaudited Consolidated Net Asset Value at 31 December 2010 was £73.52 million (73.52 pence per share) (£78.09 million (78.09 pence per share) as at 30 September 2010).

-     The NAV decrease is driven primarily by the Porto Kali investment as a result of an impairment charge of £6.27 million in the Company's income statement. This impairment will have no impact on the forecast annualised dividend of 3.0 pence per share. Further details on the Porto Kali investment are discussed below;  

-     Documentation of the new loan facility is reaching the final stages and the Company anticipates to finalise all documentation by the first quarter of this year;

-     Construction works for the new Edeka unit at Fuerth are progressing on schedule and within budget. Good progress has been made regarding the re-letting of the unit to be vacated by Edeka.

-     A new 15 year lease has been signed at Koethen with a franchisee of Hagebau, a national DIY retailer.

STRATEGY AND MARKET

Country Allocation at 31 December 2010

Sector Allocation 31 December 2010

The Investment Manager's focus remains on increasing rental income and good progress has been made so far. The portfolio's income is well secured against strong tenant covenants and a tenant base that is weighted towards the defensive food retail sector.

The development of the new Edeka unit in Fuerth is underway and is expected to be delivered by 1 May 2011. Meanwhile negotiations with Fressnapf, a national pet food retailer, to occupy the majority of the unit currently occupied by Edeka, are at an advanced stage. Discussions with another national retailer for the remaining space are underway.

At Koethen a new 15 year lease on the entire property of 7,183m² has been signed with a franchisee of Hagebau, a national DIY retailer, and the tenant has started their fit out works. The tenant is expected to be in operation by end of June 2011.

A positive result was also been achieved at Dasing, a logistics unit, with the leasing of over 7,000m² on a short term lease to DB Schenker Logistics, a leading European logistics service provider.

The Investment Manager is currently undertaking a strategic review in terms of future investment strategy. A geographic re-allocation of assets is underway with the active marketing of four assets in Germany. Two of the assets, in Bernau and Treuchlingen, are currently under offer.

OUTLOOK

Investors remain cautious as they observe the impact of austerity measures across Europe restricting occupational demand, and as a result rents are expected to remain largely stable.

The negative outlook for the European economy and property market, as well as the continued undersupply of debt will continue to limit the performance of the property market. Despite this negative outlook investment activity is expected to improve. A large amount of equity is chasing property and whilst so far prime properties have been the main target, investors may soon be under pressure to spend and could relax their strict investment criteria, turning to secondary assets.

Despite a challenging outlook the Investment Manager believes that the Company portfolio's performance will remain resilient and strong asset management will continue to yield results. Also, the portfolio's exposure to German retail is expected to continue to produce positive results.

With the successful completion of the new loan documentation expected during the first quarter of the year, the Company's focus will turn to renewing and extending leases expiring in 2011, to maximise income and support the Company's intentions of growing the dividend.

CONSOLIDATED PERFORMANCE SUMMARY

	Unaudited	Unaudited
	3 months ended	6 months ended
	30 September 2010	31 December 2010	Quarterly Movement
	Pence per share	Pence per share	Pence per share /(%)
Net Asset Value per share	78.09	73.52	-4.57 (-5.85%)
Earnings per share	-1.52	-6.42	-4.90
Dividend declared in the  period	0.75	1.50	+0.75
Share price (mid market)	50.25	46.75	-3.5 (-7.0%)
Share price discount to Net Asset Value	35.6%	36.4%	+0.8 percentage pts.

Total return	Unaudited	Unaudited
	3 months ended	6 months ended
	30 September 2010	31 December 2010
Net Asset Value Total Return	2.3%	-3.8%
Share price Total Return
- AXA Property Trust	9.7%	3.6%
- FTSE All Share Index	13.6%	22.0%
- FTSE Real Estate Investment Trust Index	13.8%	23.4%

Source: Datastream; AXA Real Estate

Total net loss was -£6.42 million (-6.42 pence per share) for the six months to 31 December 2010, including £2.29 million of "revenue" profit (excluding capital items such as revaluation of property) and -£8.71 million "capital" loss analysed as follows:

	Unaudited	Unaudited	Unaudited
	3 months ended	6 months ended	3 months ended
	30 September 2010	31 December 2010	31 December 2010
	£million	£million	£million
Net property income	2.51	5.07	2.56
Net foreign exchange losses	-0.09	-0.27	-0.18
Investment Manager's fees	-0.34	-0.68	-0.34
Other income and expenses	-0.29	-0.61	-0.32
Net finance costs	-0.64	-1.10	-0.46
Current tax	-0.04	-0.12	-0.08
Revenue profit	1.11	2.29	1.18
Unrealised (losses)/gains on revaluation of property	-0.19	0.82	1.01
Unrealised losses on revaluation of Porto Kali investment (loan receivable)	-0.95	-6.27	-5.31
Losses on derivatives (hedging interest rate and foreign exchange exposures)	-0.89	-2.70	-1.82
Finance costs	-0.53	-0.65	-0.12
Net foreign exchange gains	0.02	0.08	0.06
Deferred tax	-0.09	0.01	0.10
Capital loss	-2.63	-8.71	-6.08
Total net loss	-1.52	-6.42	-4.90

NET ASSET VALUE

The unaudited Company's Consolidated Net Asset Value per share of AXA Property Trust Limited (the "Company") as at 31 December 2010 was 73.52 pence (78.09 pence as at 30 September 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 31 December 2010, but does not include provision for the quarterly interim dividend of 0.75 pence per share announced on 1 February 2011 and to be paid on 28 February 2011.

The £4.57 million decrease in Net Asset Value over the quarter ended 31 December 2010 can be analysed as follows:

	Unaudited	Unaudited
	3 months ended	3 months ended
	30 September 2010	31 December 2010
	£million	£million
Opening Net Asset Value	78.01	78.09
Net loss	-1.52	-4.90
Unrealised (losses)/gains on derivatives	-2.22	+2.17
Dividends paid	-0.75	-0.75
Foreign exchange translation gains/(losses)	4.57	-1.09
Closing Net Asset Value	78.09	73.52

During the quarter, the portfolio valuation increased by £1.01 million (€1.19 million) after capital expenditure of £0.69 million (€0.80 million). After foreign exchange movements the sterling valuation of the property portfolio increased by £0.18 million (0.12%) to £141.0 million (net of capital expenditure).

The Company's net property yield on current market valuation (after acquisition and operating costs) as at 31 December 2010 was 6.74% (7.10% as at 30 September 2010).

Porto Kali Investment

The investment in the Porto Kali portfolio of Dutch office buildings continues to face difficult market conditions as reported in the Company's most recent annual report. As such, the forecast performance of the investment (in the form of a loan to the Porto Kali vehicle) has been revised to reflect the continuing weak market conditions, resulting in an impairment charge of £6.27 million in the income statement for the 6 months ended 31 December 2010. This impairment will have no impact on the forecast annualised dividend of 3.0 pence per share. The total value of the investment in the Company's balance sheet has been reduced to £0.95 million (including foreign exchange translation movements) as at 31 December 2010.

SHARE PRICE AND DISCOUNT TO NET ASSET VALUE

As at close of business on 31 December 2010, the mid market price of the Company's shares on the London Stock Exchange was 46.75 pence, representing a discount of 36.4% on the Company's Net Asset Value at 31 December 2010 and a 6.4% annual dividend yield.

As at close of business on 1 February 2011, the mid market price of the Company's shares was 50.50 pence, representing a discount of 31.3% on the Company's Net Asset Value at 31 December 2010 and a 6.0% annual dividend yield.

DIVIDENDS

The interim dividend of 0.75 pence per share in respect of the quarter ending 31 December 2010 was declared on 1 February 2011, with an ex-dividend date of 9 February 2011, record date of 11 February 2011 and payment date of 28 February 2010. The interim dividends of £0.75 million declared in respect of the 3 months period ended 31 December 2010 were 157% covered by "revenue" profits. Dividends will be paid from the Company's cash resources of £12.74 million at the quarter end. 

FUND GEARING

	Unaudited	Unaudited
	30 September 2010	31 December 2010	Movement
	£million /%	£million /%	£million /%
Property portfolio	140.82	141.0	+0.18 (+0.12%)
Borrowings	75.72	75.05	-0.67 (-0.88%)
Total gross gearing excluding Porto Kali	53.8%	53.23%	-0.57 percentage pts
Total net gearing excluding Porto Kali	43.8%	44.19%	+0.39 percentage pts
Total gross gearing including Porto Kali	57.2%	57.3%	+0.1 percentage pts

Fund gearing decreased by -0.57 percentage points over the quarter to 53.23% as at 31 December 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 (LTV) Covenants	Unaudited	Unaudited
	30 September 2010	31 December 2010	Maximum
Main loan facility	53.5%	52.8%*	55.0%
Joint venture Property Trust Agnadello S.r.l.	58.8%	58.1%*	65.0%
Consortium investment Porto Kali	77.5%	84.7%**	80.0%

*Portfolio value based on external independent valuation performed by the valuers to the Company, Knight Frank LLP.

**Following the LTV breach as at 31 December 2010, negotiations with the lender of the Porto Kali portfolio, HSH Nordbank, has commenced.

	Unaudited	Unaudited	Unaudited	Unaudited
Interest Cover Ratio at 31 December 2010	Historic	Minimum	Projected	Gross rental income headroom
Main loan facility covenant	316.7%	250.0%	442.1%	43.45%
Joint venture Property Trust Agnadello S.r.l.	633.0%	125.0%	493.8%	80.3%
Consortium investment Porto Kali	198.0%	120.0%	251.0%	60.0%

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 (or in the case of the main facility, 3 months). Gross rental income headroom is based on projected interest cover.

MAIN LOAN FACILITY

As mentioned above, documentation of the new loan facility is reaching the final stages and the Company anticipates to finalise this by the first quarter of this year. As part of the refinancing the Company is implementing new hedging arrangements to mitigate interest rate and foreign currency exposures.

CAPITAL EXPENDITURE AND CASH POSITION

The Company and its subsidiaries held total cash of £12.74 million (€14.86 million) at 31 December 2010. Cash of £8.0 million (€9.33 million) is held on short-term deposit to be realised as required for the capital expenditure programme and other cash requirements.

MATERIAL EVENTS

Except for those noted above, the Board of the Company is not aware of any significant event or transaction which occurred between 31 December 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/Bobby Owen
7 Newgate Street

London EC1A 7NX

Tel: [phone]
Email: [e-mail]

Sponsor and Broker

Oriel Securities Limited

Joe Winkley

Tel: [phone]

Email: [e-mail]

Neil Winward

Tel: [phone]

Email: [e-mail]

Company Secretary

Northern Trust International Fund Administration Services (Guernsey) Limited

Trafalgar Court

Les Banques

St Peter Port

GY1 3QL

Tel: [phone]

Fax: [phone]

 

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