TIDMDRIP
RNS Number : 5399U
Drum Income Plus REIT PLC
19 January 2017
19 January 2017
Drum Income Plus REIT plc
("Drum" or the "Company")
Unaudited Net Asset Value as at 31 December 2016
Drum Income Plus REIT plc (LSE: DRIP) announces its unaudited
net asset value ("NAV") as at 31 December 2016.
Highlights
Period from 1 October 2016 to 31 December 2016
-- Fair value independent valuation of property portfolio as at
31 December 2016 of GBP48.8m (30 September 2016: GBP48.2m).
-- NAV per share at 31 December 2016 of 95.5p (30 September 2016: 93.5p).
-- Earnings per share (excluding revaluation gains and losses on
fair value of investments) for three months ended 31 December 2016
were 2.1p.
-- Dividend paid during the quarter of 1.3125p fully covered by earnings for the period.
-- NAV total return (NAV movement plus dividend paid) of 3.3%.
Introduction
The Company aims to provide shareholders with a regular dividend
income plus the prospect of income and capital growth over the
longer term. The Company invests in smaller UK commercial
properties, principally in the office, retail (including retail
warehouses) and industrial sectors, which have the potential to
offer a secure income stream, to create value through active asset
management and have strong prospects for future income and capital
growth.
Unaudited NAV (As at 31 December 2016)
GBPm Pence per
Share
[Audited] NAV as at 30
September 2016 34.2 93.5
Fundraising proceeds - -
Portfolio acquisition
costs (0.1) (0.3)
Valuation change in property
portfolio 0.6 1.5
Income earned for the
period 1.1 3.0
Expenses for the period (0.2) (0.6)
Interest paid (0.1) (0.3)
Dividend paid (0.5) (1.3)
Unaudited NAV as at 31
December 2016 35.0 95.5
----------------------------- ----- ---------
The NAV has been calculated in accordance with International
Financial Reporting Standards and incorporates the independent
portfolio valuation as at 31 December 2016 and income for the
period, but does not include a provision for the first interim
dividend, which will be paid in February 2017. The earnings per
share for the period from 1 October 2016 to 31 December 2016
(excluding revaluation gains and losses on fair value of
investments and expenses charged to capital) were 2.1p. Acquisition
costs on new property purchases have been written-off.
As at 31 December 2016, the Company had cash balances of GBP1.3
million and borrowings of GBP14.5 million (loan to value of
29.7%).
Market Overview
In the absence of a clear sense of economic direction, the UK
real estate market appears to have tentatively resumed where it
left off before the referendum, with a broadly flat market
punctuated by patches of strong growth. In the absence of any
distressed selling, some investors have come to the conclusion that
they may not get the discounts that they were hoping for and have
started to bid more aggressively. Many owners are seemingly
reluctant to sell at reduced post-referendum values, and therefore
market yields have stabilised and in some cases have shown signs of
hardening. The first quarter of 2017 may be a better indicator of
the direction of pricing once the push to hit year-end targets has
passed.
Current Portfolio
Sep-16 Dec-16
Location Value % Weighting Value % Weighting
North East GBP15,375,000.00 32% GBP15,625,000.00 32%
Scotland GBP17,850,000.00 37% GBP18,050,000.00 37%
North West GBP9,712,500.00 20% GBP9,800,000.00 20%
South West GBP5,300,000.00 11% GBP5,300,000.00 11%
------------------ -----------------
GBP48,237,500.00 100% GBP48,775,000.00 100%
------------------------------- ------------ ----------------- ------------
Sector Value % Weighting Value % Weighting
Office GBP22,787,500.00 47% GBP23,075,000.00 47%
Shopping
Centre GBP12,750,000.00 27% GBP13,000,000.00 27%
Retail GBP10,100,000.00 21% GBP10,100,000.00 21%
Industrial GBP2,600,000.00 5% GBP2,600,000.00 5%
------------------ -----------------
GBP48,237,500.00 100% GBP48,775,000.00 100%
------------------------------- ------------ ----------------- ------------
Key KPIs
--------------------------------------
Sep-16 Dec-16
--------
Total Number of
Units 94 94
Total Number of
Tenants 83 83
Total SQFT 282,651 282,651
Vacancy (% SQFT) 7.60 8.40
Vacancy (% ERV) 8.60 9.20
WAULT (Expiry) 6.18 6.03
WAULT (Breaks) 5.13 4.99
------------------ -------- --------
Differentiated Investment Strategy
-- Target lot sizes of GBP2m - GBP15m in regional locations.
-- Sector agnostic - opportunity driven.
-- Entrepreneurial asset management.
-- Risk-controlled development.
-- 5.15% dividend yield on 31 December 2016 share price.
-- Dividend paid quarterly.
-- Covered dividend policy - growing incrementally.
Portfolio Attributes
In the context of the market uncertainty, the Board believes it
is helpful to shareholders to highlight some key attributes of the
Company's property portfolio:
-- The Company has no exposure to Central London markets, which may take the brunt of any Brexit-related market weakness.
-- The weighted average unexpired lease term (WAULT) to expiry,
including rental guarantees, of the portfolio is 6.03 years, which
reduces the impact of any uncertainty in occupational markets.
-- The portfolio yield is 8.7% (based on 31 December 2016 valuation).
-- The occupancy rate is high at greater than 90%.
-- Low gearing - the loan-to-value ratio of 29.7% provides
resilience against the risk of covenant breach from significant
market falls.
-- Further asset management angles to exploit.
Asset Management Update
Significant asset management updates across the portfolio
continue to be worked upon which we believe will improve the
quality of the income and the portfolio returns. The Asset
Management strategy for Arthur House is now firmly under way, with
a planning application consented and works due to commence on site
in the spring. Arthur House has also delivered a strong
occupational market with a new 5 year lease completed over 2,500
sqft with a further 4,000 sqft in legals. The occupational market
is strong in other locations also, notably at Monteith House in
Glasgow where Land Securities Buchan have not exercised a break
option over 6,400 sqft and at Gosforth Shopping Centre where WH
Smith have signed a new 5 year lease at GBP69,500 pa.
Dividends
The Board is targeting fully covered aggregate quarterly
dividends of at least 5.5p per share in respect of the year ending
30 September 2017 and at least 6.0p per share in respect of the
year ending 30 September 2018*.
[*Target returns only and not a profit forecast. There can be no
assurance that these targets will be met and they should not be
taken as an indication of expected or actual current or future
results.]
Equity Issuance
A 12-month placing programme opened on 24 March 2016. Any
capital raising under the placing programme will be subject to
prevailing market conditions.
Under the placing programme, shares will only be issued at a
premium to the most recent NAV per share at the time of issue
(adjusted, where appropriate, for any dividends subsequently paid).
The premium will be intended to cover the direct costs of issue and
will seek to contribute to the financial impact of investing the
net proceeds. The price at which new shares are issued will also
take into account the prevailing price of the existing shares in
the market.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014). Upon the
publication of this announcement via Regulatory Information Service
this inside information is now considered to be in the public
domain.
Enquiries:
Drum Real Estate Investment Management (Investment Manager)
Bryan Sherriff 0131 285 0050
Cantor Fitzgerald Europe (Financial Adviser and Corporate Broker)
Sue Inglis (Corporate Finance) 020 7894 8016
Ben Heatley / Richard Sloss (Sales) 020 7894 8529 / 0131 240 3863
Dickson Minto W.S. (Sponsor)
Douglas Armstrong 020 7649 6823
Weber Shandwick (Financial PR)
Richard Bright 0131 556 6649
Nick Oborne 020 7067 0721
This information is provided by RNS
The company news service from the London Stock Exchange
END
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