TIDMAIRE
RNS Number : 1743S
Alternative Income REIT PLC
02 November 2023
2 November 2023
Alternative Income REIT PLC
(the " Company " or " Group " or " AIRE ")
NET ASSET VALUE, DIVID DECLARATION AND PORTFOLIO VALUATION
UPDATE
TO 30 SEPTEMBER 2023
Resilient portfolio well placed to continue to provide secure,
index-linked income with the potential for capital growth
New target annual dividend of at least 5.9 pence per share, a
3.5% increase on the prior year target of 5.7 pence per share
The Board of Directors of Alternative Income REIT PLC (ticker:
AIRE), the owner of a diversified portfolio of UK commercial
property assets, predominantly let on long leases with index-linked
rent reviews, provides a trading and business update and declares
an interim dividend for the quarter ended 30 September 2023.
Simon Bennett, Non-Executive Chair of Alternative Income REIT
plc, comments:
"AIRE completed the disposal of its hotel in Glasgow for GBP7.5
million in August 2023 at a 7.9% premium to its book value. The
Board has considered a number of attractive potential investment
opportunities and now expects to reinvest the net proceeds into two
alternative investments, with one of the acquisitions at an
advanced stage with completion expected prior to 31 December
2023.
The Company achieved its target dividend of 5.7 pence per share
("pps") last year, and subject to the reinvestment of the Glasgow
sale proceeds as anticipated and the continued collection of rent
from the Group's property portfolio as it falls due, the Board has
set a new dividend target of at least 5.9pps for the year ending 30
June 2024. This represents an increase of at least 3.5% over the
previous year and reflects the B oard's intention to pay a
progressive dividend.
The Group's portfolio has delivered income growth for the
quarter ended September 2023 of 2.5% (after discounting for the
conclusion of the rent-free period on Pets at Home) as a result of
its 96% index-linked rent review profile, with 40% of this rental
income reviewed annually. Contracted annualised rent increased by
4.2% this quarter. The portfolio continues to be actively managed
and during the quarter, three rent reviews were successfully
completed and regearing discussions have started with three
tenants, combining lease extensions with ESG initiatives and EPC
improvements.
During the quarter, the Group's portfolio valuation, portfolio
net initial yield and unaudited NAV remained broadly stable. The
Company delivered an unaudited NAV total return for the quarter of
1. 6 %.
The Group's portfolio is relatively insulated from market
fluctuations, benefiting from being 100% let, with 100% collection
of rent due and 96% index-linked rent review profile, and low
borrowing costs fixed at a weighted average interest rate of 3.19%
until October 2025, which together continue to provide a secure and
growing rental income stream.
The Board remains confident that the Company is well-positioned
to continue to deliver value to shareholders through a progressive
dividend policy and with a portfolio that has the potential for
capital growth. "
Overview of Key Financials
At 30 September At 30 June Change
2023 2023
(unaudited) (audited)
Net Asset Value ("NAV") GBP67.3million GBP67.8 million -0.7 %
----------------- ----------------- --------
NAV per share 83.6 p 84.2p -0.7%
----------------- ----------------- --------
Share price per share 59.6 p 64.7p -7.9%
----------------- ----------------- --------
Share price discount to
NAV 28.7 % 23.1% + 5.6 %
----------------- ----------------- --------
Investment property fair
value GBP107.0 million
(based on external valuation) GBP 99.6 million (C) -6.9 %
----------------- ----------------- --------
Loan to gross asset value
("GAV") (A) (B) 37.1 % 36.8%
----------------- ----------------- --------
Quarter ended Quarter ended Change
30 September
2023
(unaudited) 30 June 2023
(audited)
EPRA earnings per share
(A) 1.3 p 1.7p -23.5 %
---------------- --------------- ---------
Adjusted earnings per
share (A) 1.5 p 1.6p -6.3%
---------------- --------------- ---------
Dividend cover (A) 104.9% 81.8% 23.1%
---------------- --------------- ---------
Total dividends per share 1.425 p 1.92p -25.8 %
---------------- --------------- ---------
Dividend yield (A) 9.9 % 9.3% 0.6 %
---------------- --------------- ---------
Earnings per share 1.3 p 2.0p - 35.0 %
---------------- --------------- ---------
Share price total return
(A) -4.9 % -1.7%
---------------- --------------- ---------
NAV total return (A) 1.6 % +2.4%
---------------- --------------- ---------
Annualised passing rent GBP 7.1 million GBP7.6 million -6.6 %
---------------- --------------- ---------
Ongoing charges (A) (annualised) 1.5 % 1.4% 10 bps
---------------- --------------- ---------
(A) Considered to be an Alternative Performance Measure.
(B) The loan facility at 30 September 2023 of GBP41.0 million
(30 June 2023: GBP41.0 million) with Canada Life Investments,
matures on 20 October 2025 and has a weighted average interest cost
of 3.19%.
(C) On a like-for-like basis the remaining 18 properties were
valued at GBP100.1 million at 30 June 2023, a valuation decrease of
GBP0.5 million or 0.5%.
Property Portfolio
AIRE completed the disposal of the Group's hotel in Glasgow for
GBP7.5 million in August 2023 at a 7.9% premium to its book value.
Since then, the Board has looked at a number of attractive
investment opportunities to reinvest the proceeds, and expects to
reinvest the net proceeds into two alternative investments, with
one of the acquisitions at an advanced stage with completion
expected prior to 31 December 2023.
The value of the Group's remaining portfolio of 18 assets has
been relatively stable over the quarter to September 2023,
decreasing by GBP0.5 million or 0.5% to GBP99.6 million (30 June
2023: GBP107.0 million across 19 assets; on a like-for-like basis
GBP100.1 million across 18 assets) and the portfolio's net initial
yield remains almost unchanged at 6.7% (30 June 2023: 6.6%). This
quarter's marginal valuation decrease arose from the Healthcare
sector where capitalisation rates have weakened slightly.
At 30 September 2023, the Net Initial Yield on the Group's
portfolio remained stable at 6.7 % (30 June 2023: 6.6%).
The property investment market has been subdued for much of 2023
with ongoing economic uncertainty leaving investors cautious.
Despite concerns over rising interest rates and high levels of
inflation, there are some positive signs for the market with
pockets of strong occupational demand, particularly in the
industrial and logistics sector and growing demand for sustainable
properties. The Group's portfolio is relatively insulated from
market fluctuations, benefiting from being 100% let, with 100%
collection of rent due and 96% index-linked rent review profile,
which continue to provide a secure and growing rental income
stream.
Over the past year, the value of the Group's portfolio has
fallen by a total of GBP12 million or 10.75%. AIRE continues to
outperform relative to most other commercial real estate companies,
as demonstrated by CBRE which reported a fall in their Monthly
(All-Property) Index of 14.2 % over the same period.
The Group's portfolio has delivered income growth for the
quarter ended September 2023 of 2.5% (after discounting for the
conclusion of the rent-free period on Pets at Home) as a result of
its 96% index-linked rent review profile, with 40% of this rental
income reviewed annually. Contracted annualised rent increased by
4.2% this quarter. The portfolio continues to be actively managed
and during the quarter, three rent reviews were successfully
completed and regearing discussions have started with three tenants
combining lease extensions with ESG initiatives and EPC
improvements. During the quarter to 31 December 2023, 10% of the
Group's income will be reviewed with two annual index-linked rent
reviews.
Dividend Declaration, Earnings Per Share and Dividend Cover
The Company achieved its target dividend of 5.7pps last year,
and subject to the reinvestment of the Glasgow sale net proceeds as
anticipated and the continued collection of rent from the Group's
property portfolio as it falls due, the Board has set a new
dividend target of 5.9pps for the year ending 30 June 2024. This
represents an increase of 3.5% over the previous year and reflects
the B oard's intention to pay a progressive dividend.
The Board is pleased to declare an interim quarterly dividend of
1.425 pps for the quarter ended 3 0 September 2023. This dividend
will be distributed as Property Income Distribution ("PID") and
will be paid on 24 November 2023 to shareholders on the register on
10 November 2023. The ex-dividend date will be 9 November 2023.
The Adjusted EPS of 1.49 pps marginally decreased over the
quarter (30 June 2023: 1.57pps). The dividend cover for the quarter
was 104.9% (30 June 2023: 81.8%).
Net Asset Value, Share Price and Share Price discount to NAV
At 30 September 2023, the Group's unaudited NAV was GBP67.3
million, 83.6pps ( 30 June 2023: GBP67.8 million, 84.2pps),
representing a marginal 0.7 % decrease over the previous
quarter.
When combined with the 1.92 pps dividend paid in the quarter,
this produces an unaudited NAV total return for the quarter of 1. 6
% ( 30 June 2023: 2.4%).
The share price decreased by 7.9% to 59.6 pps and reflects the
increase in the discount from 23.1% to 28.7%. In general, discounts
in the sector have widened considerably in the quarter, although
AIRE's discount remains at less than the sector average.
The table below sets out the movement in NAV during the
quarter.
Pence per
share GBP million
NAV at 30 June 2023 84.2 67.8
---------- ------------
Valuation movement in property portfolio (0.7) (0.6)
---------- ------------
Income earned for the period 2.2 1.8
---------- ------------
Expenses for the period (0.5) (0.4)
---------- ------------
Net finance costs for the period (0.4) (0.4)
---------- ------------
Gain on sale of property 0.7 0.6
---------- ------------
Interim dividend paid during the quarter
ended 30 June 2023 (1.9) (1.5)
---------- ------------
NAV at 30 September 2023 83.6 67.3
---------- ------------
The NAV attributable to the ordinary shares has been calculated
under International Financial Reporting Standards as adopted by the
United Kingdom and incorporates both the Group's property portfolio
individually valued on a 'Red Book' basis at 30 September 2023 and
net income for the quarter but does not include a provision for the
interim dividend declared today (see above).
The income earned for the period includes an accrual for the
minimum contractual uplifts contained in the index-linked leases.
In the event that inflation is greater than these minimum
contractual uplifts, the actual income will be greater than the
income currently accrued.
Portfolio Update
At 30 September 2023, t he Group's assets were 100% let (30 June
2023: 100%). The weighted average unexpired lease term at 30
September 2023 was 17. 1 y ears to the earlier of break and expiry
( 30 June 2023: 17.0 years) and 19.2 years to expiry ( 30 June
2023: 18.9 years).
In aggregate 96 % (3 0 June 2023 : 97.0 %) of the portfolio's
income stream is reviewed periodically on an upward - only basis
and in line with inflation, subject to floors and caps, 40. 0 %
being annual reviews. T he majority of the portfolio 's income
stream, being 67.0%, is linked to RPI and 29.0% to CPI, with the
remaining 4 . 0% being subject to fixed uplifts or expiries.
Contracted annualised rent increased by 4.2% this quarter , due
to annual RPI rent reviews at Salford (+8.0%), income following the
rent free period on the Pets at Home lease of GBP112,500 per annum
and 5 yearly rent reviews in Birmingham (+13.6%) and Sittingbourne
(+17.3%)
Over the quarter to 31 December 2023, 10 % of the Group's income
will be reviewed (two annual index-linked rent reviews) .
Rent Collection
Rent collection remains resilient with 100 % expected for the
September 2023 quarter. The rents for the September 2023 quarter
are split 90.4 % payable quarterly in advance and 9.6 % payable
monthly in advance.
ENQUIRIES
Alternative Income REIT PLC
S imon Bennett - Chai rman via H/Advisors Maitland below
M7 Real Estate Ltd
Richard Croft
Jane Blore 020 3657 5500
Panmure Gordon (UK) Limited 020 7886 2500
Alex Collins
Tom Scrivens
H/Advisors Maitland (Communications
Advisor) 07747 113 930 / 020 7379 5151
James Benjamin aire-maitland@h-advisors.global
Rachel Cohen
The Company's LEI is 213800MPBIJS12Q88F71.
Further information on Alternative Income REIT PLC is available
at www.alternativeincomereit.com (1) .
(1) Neither the content of the Company's website, nor the
content on any website accessible from hyperlinks on its website or
any other website, is incorporated into, or forms part of, this
announcement nor, unless previously published on a Regulatory
Information Service, should any such content be relied upon in
reaching a decision as to whether or not to acquire, continue to
hold, or dispose of, securities in the Company.
NOTES
Alternative Income REIT PLC aims to generate a sustainable,
secure and attractive income return for shareholders from a
diversified portfolio of UK property investments, predominately in
alternative and specialist sectors. The majority of the assets in
the Group's portfolio are let on long leases which contain index
linked rent review provisions.
The Company's asset manager is M7 Real Estate Limited ("M7"). M7
is a leading specialist in the pan-European, regional,
multi-tenanted real estate market. It has over 230 employees in 14
countries and territories. The team manages over 610 assets with a
value of circa EUR6.9 billion (at 30 September 2023).
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END
DIVFZMGMVZLGFZG
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November 02, 2023 03:00 ET (07:00 GMT)
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