TIDMEPIC
RNS Number : 8817M
Ediston Property Inv Comp PLC
19 October 2016
Ediston Property Investment Company plc
NAV Update for the quarter 1 July 2016 to 30 September 2016
Ediston Property Investment Company plc (LSE: EPIC) (the
"Company") announces its unaudited Net Asset Value ("NAV") for the
quarter ended 30 September 2016.
Quarter highlights
-- NAV per share at 30 September 2016 of 107.07 pence (30 June
2016: 107.79 pence), a decrease of 0.67%, resulting in an NAV total
return (including dividends) of 0.61% for the quarter
-- Fair value independent valuation of the property portfolio as
at 30 September 2016 of GBP181.4 million, a 0.51% like-for-like
decrease on the valuation at 30 June 2016
-- For the year to 30 September 2016, the NAV per share has increased by 0.54% and
the value of the property portfolio on a like-for-like basis has
increased by 2.21%
-- Annualised dividend yield of 5.32% based on an annual
dividend per share of 5.5 pence and share price of 103.38 pence (30
September 2016)
-- Fully-covered dividend now achieved
-- Independent valuer has removed its 'Brexit caveat' from the quarterly valuation
Net Asset Value
The Company's unaudited NAV per share as at 30 September 2016
was 107.07 pence. As at 30 September 2016, the Company owned
investment properties with a fair value of GBP181.4 million and had
cash and cash equivalent balances of approximately GBP9.97 million.
Over the quarter, there has now been sufficient transaction
activity for Knight Frank to remove the caveat it included within
the June 2016 valuation.
The unaudited NAV of the Company at 30 September 2016 was
GBP137.33 million, or 107.07 pence per share, a decrease of 0.67%
on the Company's NAV as at 30 June 2016:
Pence GBP million
Per Share
------------------------ -------------------- ------------------------------------
NAV at 30 June
2016 107.79 138.26
------------------------ -------------------- ------------------------------------
Valuation decrease
in property portfolio (0.72) (0.92)
------------------------ -------------------- ------------------------------------
Capital expenditure
in the period (0.29) (0.37)
------------------------ -------------------- ------------------------------------
Income earned
for the period 2.39 3.05
------------------------ -------------------- ------------------------------------
Expenses for
the period (0.73) (0.93)
------------------------ -------------------- ------------------------------------
Dividends paid
in the period (1.37) (1.76)
------------------------ -------------------- ------------------------------------
NAV at 30 September
2016 107.07 137.33
------------------------ -------------------- ------------------------------------
The NAV attributable to the ordinary shares has been calculated
under International Financial Reporting Standards ("IFRS"); the
EPRA NAV is not reported separately in this update as it is the
same as the IFRS NAV.
The NAV incorporates the independent portfolio valuation as at
30 September 2016 and income for the quarter, but does not include
a provision for any accrued dividend.
Resilient Portfolio
In the immediate aftermath of the EU referendum result, the
property sector experienced a period of volatility as the market
reacted to the uncertainties of Brexit. This was exacerbated by the
liquidity problems faced by the daily dealt open-ended real estate
vehicles, many of which were forced to close to manage redemptions
and sell assets to increase cash levels.
Property values were under downward pressure after the outcome
of the vote, with commentators speculating on a 10% post Brexit
adjustment. Encouragingly a post Brexit market has now been
established with transactions providing sufficient evidence for the
Company's valuer to remove its post Brexit qualifications. It would
also appear that over the quarter valuations have on average fallen
less than was first feared. However, there has been a shift in
investor behaviour to risk off. As a consequence some low risk
assets have increased in value and those with short leases, credit
risk and voids have seen some significant mark downs.
The Company's portfolio has fared well in relative terms as it
benefits from the majority of assets being in prime locations,
coupled with good secure and above average lease lengths. Some
assets have very long leases to strong covenants giving very
defensive qualities and resulting in valuation resilience in
troubled markets. In addition the investment manager has again
added value through asset management. A recent example is the
previously reported reconfiguration of space and letting to David's
Bridal at St Philips Point in Birmingham. This generated further
valuation gains during the quarter. The combination of defensive
stock and asset management has resulted in only a small reduction
in NAV over the quarter of 0.67% and a positive year on year growth
in NAV of 0.54% during the financial year.
Adding value to the portfolio is the responsibility of the
investment manager's well-resourced asset management team. The team
has had the time and expertise to identify, implement and execute
asset management initiatives which have improved the income stream,
secured a covered dividend and enhanced capital values. This
activity has provided solid foundations for the growth of the
Company.
Growth of the Company
The Board remains committed to growing the Company, provided it
is achieved in a sustainable way and in the interest of
shareholders. The Board intends to publish a new prospectus for a
12-month placing programme when market conditions allow.
It should be noted that the Company has the ability to issue up
to 12.8 million shares on an ad hoc basis under its tap
authority.
Outlook
The real estate market is in an interesting phase following the
EU referendum result. The volatility that will occur as the Brexit
process proceeds will ensure attractive buying opportunities will
continue to appear. A repriced market in a sector which offers a
good income return compared to other asset classes, combined with
the Ediston style of asset management, make a compelling investment
case. Against this backdrop, it is the investment manager's
intention to speak with investors in the coming weeks about the
Company's strategy for growth.
Portfolio attributes
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 market weakness
-- The weighted average unexpired lease term of the portfolio is
7.9 years, which reduces the impact of any uncertainty in
occupational markets
-- Low EPRA void rate of 4.7%
-- Low gearing - the loan-to-value ratio of 28.9% provides
resilience against the risk of covenant breach from significant
market falls
-- Further asset management angles to exploit
Portfolio Composition
Sector
Sector Exposure
------------------ ---------
Office 57.5%
------------------ ---------
Retail warehouse 36.9%
------------------ ---------
Other commercial 5.6%
------------------ ---------
Geography
The portfolio is diversified across the regional markets and has
no exposure to Central London assets.
Sector Exposure
--------------- ---------
North East 12.2%
--------------- ---------
North West 1.7%
--------------- ---------
West Midlands 17.9%
--------------- ---------
South West 2.6%
--------------- ---------
Scotland 15.4%
--------------- ---------
South East 11.9%
--------------- ---------
Yorkshire 10.6%
--------------- ---------
East Midlands 6.6%
--------------- ---------
Wales 21.1%
--------------- ---------
Dividends
The Company paid three dividends of 0.4583 pence per share each
in July, August and September 2016 in respect of the three-month
period ended 31 August 2016, resulting in a cumulative dividend
payment for the quarter of 1.375 pence per share. The Board intends
to continue paying monthly dividends of 0.4583 pence per share,
implying an annualised dividend yield of 5.5%, calculated by
reference to the Company's issue price of 100p per share as set out
in its October 2014 prospectus. The dividend is now fully covered
as a result of the completion of the investment programme and
implementation of asset management initiatives.
Calum Bruce, Investment Manager, commented:
"The Company's property portfolio has proved to be resilient in
challenging market conditions. Our stock selection and
entrepreneurial approach to asset management has improved the
income stream and enhanced the portfolio. It has many defensive
qualities as well as further opportunities to exploit, which
provide solid foundations on which the Company can grow".
Forthcoming events
The next scheduled independent quarterly valuation of the
property portfolio will be conducted by Knight Frank as at 31
December 2016, with the NAV per share at that date expected to be
announced in January 2017.
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
Will Barnett - Canaccord Genuity, 0207 523 8000
Calum Bruce - Investment Manager, Ediston Properties Limited,
0131 225 5599
Donald Cameron - Company Secretary, R&H Fund Services
Limited, 0131 550 3763
James Whitmore/ Jeremy Carey - Tavistock, 0207 920 3150
This information is provided by RNS
The company news service from the London Stock Exchange
END
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