TIDMEPIC
RNS Number : 3717W
Ediston Property Inv Comp PLC
23 April 2021
Ediston Property Investment Company plc
(LEI: 213800JRL87EGX9TUI28)
Net Asset Value ('NAV') as at 31 March 2021
And Trading Update
Ediston Property Investment Company plc (LSE: EPIC) (the
'Company') announces its unaudited NAV at 31 March 2021, which will
form part of the unaudited interim accounts expected to be
published in May 2021.
Quarter Summary
-- Dividend increased by 25% to 5.00 pence per share annualised
from May 2021, as announced earlier in the month.
-- Monthly dividends maintained during the quarter at an
annualised rate of 4.00 pence per share and were fully covered.
-- 93% of rents due for quarter 1 collected, rising to 97% when rent deferments are factored in.
-- The Tesco Superstore in Prestatyn was sold for GBP26.5m, a
5.22% initial yield, in line with valuation and above the 2017
acquisition price.
-- Extended a lease with an office tenant in Newcastle for a
further 10 years (break in year five). Rent secured is 9% ahead of
passing rent.
-- The development of Haddington Retail Park remains on time and
budget, with completion anticipated in June 2021.
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-- Like-for-like valuation increase of 0.45% for the retail
warehouse assets, which comprise 66.2% of the Company's
portfolio.
-- Fair value independent valuation of the property portfolio at
31 March 2021 of GBP246.9 million, a like-for-like increase of
0.34% compared to the valuation at 31 December 2020.
-- NAV per share at 31 March 2021 of 84.26 pence (31 December
2020: 84.63 pence), a decrease of 0.44% reflecting the impact of
capital expenditure and transaction costs for the Prestatyn
sale.
-- Share price total return for the quarter of 0.02%.
-- NAV total return (including dividends) for the quarter of 0.7%.
--------------------------------------------------------------------------------------
-- All types of retail warehouse tenant are now able to reopen
for trade. Occupational demand is picking up and investor sentiment
is improving towards the sector.
Net Asset Value
The unaudited NAV of the Company at 31 March 2021 was GBP178.04
million, or 84.26 pence per share, a decrease of 0.44% on the
Company's NAV per share as at 31 December 2020.
Pence Per Share GBP million
NAV at 31 December 2020 84.63 178.83
---------------- ------------
Valuation of property portfolio 0.39 0.82
---------------- ------------
Capital expenditure (1.04) (2.19)
---------------- ------------
Profit on sale of investment
properties 0.09 0.19
---------------- ------------
Income earned 2.04 4.31
---------------- ------------
Expenses & finance costs (0.85) (1.81)
---------------- ------------
Dividends paid (1.00) (2.11)
---------------- ------------
NAV at 31 March 2021 84.26 178.04
---------------- ------------
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
31 March 2021 and undistributed income for the quarter, but does
not include a provision for any accrued dividend.
Over the quarter, the valuation of the property portfolio
increased by 0.34% on a like-for-like basis. In the same period,
the Company's retail warehouse assets increased in value by 0.45%,
as sentiment for the sector improved.
The NAV decline is as a result of capital expenditure,
transaction costs for the sale of the Tesco Superstore at Prestatyn
and the impact of gearing.
Rent Collection update
As at 19 April 2021, 93% of the rent for quarter 1 2021 has been
collected. This will rise to 97% when rent deferments are factored
in. Similar levels of rent collection are anticipated for quarter
2. On a cash basis, the dividend cover for quarter 1 was 128%.
The Company's strong rent collection record during the pandemic
period has been assisted by the high quality of its office tenants,
and retail warehouse assets underpinned by tenants defined by the
UK Government as providing 'essential services', who have been
permitted to stay open for trade throughout the pandemic. Following
the easing of lockdown restrictions, 100% of the retail warehouse
portfolio (excluding vacant units) is open for trade.
For the 12 months to 31 March 2021, the Investment Manager has
collected 92% of the rent due, rising to 94% once rent deferment
and repayment plans are factored in. A more detailed analysis of
the Company's rental income will be included in the interim report
and accounts which are expected to be published in May 2021.
While this collection record is due in part to good
communication and a collaborative approach with tenants by the
Investment Manager, it is also because the retail warehouse sector
has shown greater resilience during the pandemic than other parts
of the retail market. Further, the sector's attributes have come to
the fore during this difficult trading period. It is anticipated
that the changes in retail patterns are likely to continue even
when lockdown restrictions are removed.
Dividends paid and 25% dividend increase from May 2021
Over the quarter, the Company continued to pay a monthly
dividend at a rate of 0.3333 pence per share, equating to an
annualised dividend of 4.00 pence per share. The dividend remains
fully covered.
The Company will increase its dividend by 25%, to 5.00 pence per
share annualised, with the first payment at the increased rate
being made in May 2021, for the month of April. This equates to 87%
of the dividend rate of 5.75 pence annualised that was paid up
until May 2020, when the dividend was reduced to 4.00 pence
annualised.
The 25% dividend increase takes into account the improving
outlook for income and rent collection and is not to the detriment
of the Company's investment and asset management activities.
Sale of Tesco Superstore at Prestatyn Shopping Park
During the period the Company disposed of the Tesco Superstore
which forms part of Prestatyn Shopping Park, for GBP26.5m (5.22%
initial yield). The sale price was in line with the property's
valuation as at 31 December 2020 and above the December 2017
acquisition price.
The Company will retain the remainder of the retail park, which
extends to c. 91,500 sq. ft. across 14 units. The retail park is
let to 13 tenants, with M&S as an anchor, and has various asset
management angles to exploit.
The sale of this asset is in line with the investment strategy
and provides the Company with the opportunity to recycle capital
from lower yielding assets into higher yielding properties which
are more suited to the Investment Manager's intensive style of
asset management. This will further improve the Company's income
stream.
Asset management and development update
At the office property in Newcastle, Citygate II, the Company
completed a lease restructure with N&D (London) Limited
('N&D'). N&D occupies c. 11,000 sq. ft. on the first floor
and has signed a ten-year reversionary lease, with a tenant break
option after five years. The lease will now expire in March 2032,
with the break option being in March 2027. The rent will increase
by c. 9.0%, which is 6.5% ahead of the independent valuer's
ERV.
The development of Haddington Retail Park continues on time and
budget and is expected to complete during June 2021. It is 97%
pre-let to Aldi, Home Bargains, Food Warehouse, Costa Coffee and
Euro Garages, with one unit of 1,500 sq. ft. available to let. Once
completed and fully occupied, the retail park will provide the
Company with new contracted rental income of GBP875,000 per
annum.
The Investment Manager is reporting improving occupational
demand from the Company's retail warehouse and office tenants and
is currently in discussions with tenants on new lettings and lease
regears. These will be reported on more fully in due course.
Cash and debt
As at 19 April 2021, the Company had approximately GBP16.7m of
cash for operational purposes. This includes GBP7.7m of the
Prestatyn sales proceeds. The Company also has GBP26.9m of cash
under its debt facility ring fenced specifically for investment.
GBP18.7m of this cash is from the sale of the Tesco Superstore at
Prestatyn.
At the date of the March valuation the average loan-to-value
across the Company's two debt facilities was 34.1%. The Company is
fully compliant with all debt covenants and has significant
headroom against income and asset cover covenants.
Summary
Full lockdown measures were put in place in various parts of the
country in December 2020 and remained in place for the entire first
quarter of 2021. These prevented certain businesses from being able
to open for trade and it was anticipated they might put pressure on
rent collection.
However, rent collection held up during the period and was ahead
of projections made at the start of the quarter. Throughout the
quarter c.73% (by income) of the Company's retail warehouse
portfolio was either open for trade or offered a click and collect
service which helped support rent collection.
Following the easing of lockdown restrictions in England and
Wales, 100% of the Company's retail warehouse portfolio (excluding
vacant units) is now open for trade.
As the economy re-opens, it is anticipated that rent collection
will improve and that any rent deferred over the past 12 months
will continue to be collected. There is ongoing asset management
activity in the portfolio which, on completion, will further
improve the income profile of the Company.
Occupational demand has improved, with several tenants in the
retail warehouse sector reactivating requirements for new stores
which had been put on hold during the pandemic. The Company is
benefiting from this and the Investment Manager is in discussions
with tenants looking to occupy units on the Company's retail
parks.
From an investment perspective, the sentiment towards retail
warehousing is improving and the sector is experiencing increased
investor demand. It is anticipated that this positive momentum will
continue as the year progresses and lockdown restrictions are eased
further.
The immediate focus is on delivering the ongoing asset
management initiatives which will help reduce the vacancy rate and
improve the Company's income stream. The Investment Manager is also
committed to reinvesting the Prestatyn sales proceeds in a higher
yielding asset suited to the Investment Manager's intensive style
of asset management.
William Hill, Chairman, commented:
"The continued high level of rent collection has enabled the
Company to increase the dividend by 25% from May 2021, which will
provide an attractive yield of 7.2%, based on the Company's last
published share price. If the economy continues to move in the
right direction the Board believes further dividend progression is
a realistic aspiration given the additional income expected from
the completion of its development at Haddington and other portfolio
activities in the pipeline."
Portfolio sector weightings and tenant and locational
exposure
Sector
Sector Exposure
(%)
Retail warehouse 66.2
---------
Office 28.6
---------
Development 3.2
---------
Other commercial/
Leisure 2.0
---------
Geography
The portfolio is diversified across the regional markets.
Region Exposure
(%)
Wales 22.4
---------
North East 16.7
---------
Scotland 14.7
---------
West Midlands 14.0
---------
North West 12.9
---------
Yorkshire 12.2
---------
East Midlands 4.7
---------
South West 2.4
---------
Top five tenants
Tenant Exposure (%)
B&Q plc 10.2
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B&M Retail Limited 7.1
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AXA Insurance UK
plc 6.4
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Marks & Spencer
plc 5.8
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Ernst & Young LLP 5.8
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Forthcoming events
The Company expects to produce its unaudited interim results for
the period to 31 March 2021 in May.
The next interim dividend announcement is expected to be made by
6 May 2021. The next scheduled independent quarterly valuation of
the property portfolio will be conducted by Knight Frank LLP as at
30 June 2021.
The Company intends to publish its next factsheet shortly which
will be made available on the Company's website at
www.ediston-reit.com.
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 - Investec Bank plc 0207 597 5873
Calum Bruce - Ediston Investment Services Limited 0131 225
5599
Ruth Wright - JTC 0203 893 1011
Ben Robinson - Kaso Legg Communications 0203 995 6672
Stephanie Ross - Kaso Legg Communications 0203 995 6676
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END
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