TIDMIERE
RNS Number : 0329T
Invista European Real Estate Trust
30 November 2011
INVISTA EUROPEAN REAL ESTATE TRUST SICAF ("IERET" or the
"Company")
ANNOUNCEMENT OF UNAUDITED NAV
30 November 2011
Net Asset Value
As at 30 September 2011, the Company's unaudited Net Asset Value
calculated using International Financial Reporting Standards and
adjusted to add back the change in fair value of the warrants and
deferred tax was EUR0.523 (45.5p) per share, reflecting a decrease
of EUR0.054 or 9.4% over the quarter and 6.3p or 12.2% in Sterling.
Over the 12 months to 30 September 2011, the Adjusted NAV per share
decreased slightly by 0.8p or 1.8% in Sterling.
As at 30 September 2011, the unaudited Net Asset Value,
calculated under International Financial Reporting Standards, was
EUR0.505 per share.
A breakdown of the unaudited Net Asset Value is set out
below:
As at As at 3 month 3 month
In EUR million 30 Sep 11 30 Jun 11 change change (%)
-------------------------------- ----------- ----------- ------- -----------
Property portfolio
Independent valuation 451.1 466.8 -15.7 -3.4%
Valuation of assets sold - 6.4 -6.4 -100%
Like for like direct property 451.1 460.4 -9.3 -2.0%
Net current assets(1) 33.0 43.7 -10.7 -24.5%
Market value of swaps/FX (20.1) (17.9) -2.2 +12.3%
Interest bearing loans
and liabilities (295.9) (311.7) +15.8 -5.1%
Preference shares (30.3) (29.2) -1.1 +3.8%
Market value of warrants (2.3) (2.8) +0.5 -17.9%
Net deferred tax liabilities(2) (4.3) (4.4) +0.1 -2.3%
-------------------------------- ----------- ----------- ------- -----------
Net Asset Value 131.2 144.5 -13.1 -9.1%
-------------------------------- ----------- ----------- ------- -----------
Adjusted Net Asset Value(3) 136.1 150.0 -13.9 -9.3%
Adjusted Net Asset Value(3)
per ordinary share EUR 0.523 0.577 -0.054 -9.4%
Adjusted Net Asset Value
per ordinary share fully
diluted EUR3, 4 0.504 0.551 -0.047 -8.5%
Net Asset Value per preference
share EUR(5) 1.18 1.11 +0.07 +6.3%
Number of ordinary shares 259,980,739 259,980,739 0 -
-------------------------------- ----------- ----------- ------- -----------
(1) As at 30 June 2011 the net current assets included one
property located in Trappes, France which was valued at EUR20.9
million and was sold in the last quarter (classified as asset held
for sale as at 30 June 2011).
(2) As at 30September 2011, deferred tax liabilities of EUR24.9
million, based upon temporary differences at the time of initial
recognition arising from transactions treated as asset acquisitions
have not been recognised in accordance with IAS 12. The Group has
deferred tax assets of EUR14.2 million which also have not been
recognised.
3 Net Asset Value adjusted to add back deferred tax (both
current and non-current liabilities) and change in fair value of
the warrants from book value
4 Assumes all warrants are exercised at 29p per share and that
the fully diluted number of ordinary shares is 289,086,083
5 The NAV for preference shares is equal to the nominal value
plus accrued interest divided by the total number of preference
shares
The unaudited Net Asset Value incorporates a number of events
and key factors during the quarter ended 30 September 2011
including:
-- The sale of two properties, located in Trappes and Vitrolles,
France previously valued at EUR27.4 million as at 30 June 2011;
-- Accessing lower margin financing of 2.25% pa on the Company's
senior debt following a reduction in Company borrowings of EUR30.0
million or EUR0.12 per share;
-- A decrease in the value of the property portfolio on a like
for like basis by 2.03% (EUR9.3 million or EUR0.04 per share);
-- A reduction in the marked-to-market valuation of the
Company's interest rate swaps of EUR2.5 million, equating to EUR
0.01 per share.
-- A movement in the valuation of the preference shares due to
fluctuation in the STG/EUR exchange rate fluctuation; this amounted
to a loss of EUR1.1 million or EUR0.004 per share, as well as a
minor movement in the fair value of the warrants of EUR0.7
million.
The Company's unaudited Net Asset Value figure incorporates the
independent property portfolio valuation as at 30 September 2011.
The property portfolio will next be valued on 31 December 2011.
Figures converted into sterling assume a EUR per STG exchange
rate of 1.1492 as at 30 September 2011.
Property Portfolio
As at 30 September 2011, the Company's property portfolio was
valued at EUR451.1 million and comprised 39 assets across 6
countries. This compares with the property portfolio as at 30 June
2011, which comprised 41 assets valued at EUR487.7 million in 7
countries. The like-for-like decrease in the property valuation
over the quarter (excluding two disposals over the three month
period to 30 September 2011) was 2.03%, a decrease of EUR9.3
million and reflects the marked downgrade in sentiment in Euro zone
markets since June 2011.
The Company sold two logistics properties in France located at
Trappes and Vitrolles having a total value of EUR27.4 million, with
net proceeds from the sales being used to reduce borrowings and
reimburse the Credit Foncier senior debt facility in full.
As at 30 September 2011, the Company's portfolio generated gross
income of EUR36.8 million per annum, representing a Gross Income
Yield ("GIY") of 8.16% and a Net Initial Yield ("NIY") of 7.53%.
The portfolio had a void level of 10.2% as at 30 September 2011
which increased by 4.10% over the quarter as a result of sales of
fully let investments and tenants vacating three properties in
France and the Netherlands.
The portfolio's credit rating as measured by the Investment
Property Databank's M-IRIS credit analysis system in October 2011
was 73 out of 100, which is classified in the "low to medium risk
band".
As at 30 September 2011 the portfolio composition was as
follows:
Sector Weightings
Sector %*
----------- -------
Office 31.1%
----------- -------
Logistics 50.2%
----------- -------
Retail 18.7%
----------- -------
Total 100.0%
----------- -------
*Percentage of aggregate asset value as at 30 September 2011
Country Weightings
Country %*
---------------- -------
Germany 43.7%
---------------- -------
France 42.6%
---------------- -------
Spain 4.7%
---------------- -------
Netherlands 3.6%
---------------- -------
Belgium 3.3%
---------------- -------
Czech Republic 2.1%
---------------- -------
Total 100.0%
---------------- -------
*Percentage of aggregate asset value as at 30 September 2011
Top 10 Properties
Property Location Sector %*
------------------------- ----------- ------
Heusenstamm, Frankfurt,
Germany Office 14.3%
------------------------- ----------- ------
Riesa, Germany Retail 10.6%
------------------------- ----------- ------
Lutterberg, Germany Logistics 6.1%
------------------------- ----------- ------
Cergy, Paris, France Office 5.9%
------------------------- ----------- ------
Grenoble, France Office 3.7%
------------------------- ----------- ------
Roth, Germany Retail 3.6%
------------------------- ----------- ------
Miramas, France Logistics 3.4%
------------------------- ----------- ------
Monteux, France Logistics 3.4%
------------------------- ----------- ------
Marseille, France Logistics 3.1%
------------------------- ----------- ------
Madrid, Spain Logistics 3.1%
------------------------- ----------- ------
Total 57.2%
-------------------------------------- ------
*Percentage of aggregate asset value plus cash as at 30
September 2011
Top 10 Tenants
Tenant Name %*
----------------------- ------
Deutsche Telekom 15.6%
----------------------- ------
Norbert Dentressangle 12.0%
----------------------- ------
DHL 10.1%
----------------------- ------
Valeo 5.8%
----------------------- ------
Schenker Logistics 4.8%
----------------------- ------
Carrefour 4.3 %
----------------------- ------
AVA Marktkauf 3.3%
----------------------- ------
SDV Logistique 2.8%
----------------------- ------
Tech Data 2.8%
----------------------- ------
Real SB-Warenhaus 2.8%
----------------------- ------
Total 64.3%
----------------------- ------
* Percentage of aggregate gross rent as at 30 September 2011
Market Context
Signs of economic recovery in the first half of 2011 in the Euro
zone, which had supported the region's property markets over the
past year, began to lose some of its momentum over the summer and
as a result GDP growth forecasts for the region have been reduced
in recent months.
Within the property market, the 'prime' sub-markets have,
according to CB Richard Ellis, experienced rental growth of 2.7% in
the 12 months to Q3 2011 (source: CB Richard Ellis Prime Eurozone
Index). By contrast, rents in secondary and tertiary sub-markets
generally remain weak as a result of high rates of availability in
older stock. Overall, investors and tenants are cautious and this
has constrained the volume of property leasing and investment
activity, particularly in countries on the Eurozone's
Periphery.
Property investment turnover has held up best in Europe's most
liquid markets (Germany and France) and its strongest economies
(Sweden and Central & Eastern Europe), which together accounted
for 73% of investment turnover in the 12 months to Q3 2011,
compared to a long-term average of 64% (source: CB Richard Ellis,
Continental European investment turnover). By contrast, in Benelux,
Italy and Iberia, where economic growth is most at threat from
public and private sector deleveraging, property investment volumes
in the year to Q3 2011 accounted for only 16% of the European total
(compared to a long-term average of 22%).
Events in the European sovereign debt market since the end of Q3
2011 have underlined that a sovereign default within the Euro zone
remains the most significant risk to economic growth and by
extension to future performance in the property market. While the
exact consequences of such an event are difficult to predict, the
immediate damage to economic growth would inevitably lead to
heightened risk aversion among investors, emphasising the need to
protect rental income through tenant retention.
Asset Management Results
During the quarter, the Company successfully completed the
disposals of two logistics warehouses in France, located in Trappes
and Vitrolles. The total sale consideration of EUR27.3 million was
0.4% below the June 2011 valuation. Asset management initiatives
were completed on both assets prior to sale, enabling the Company
to maximise capital value and equity return on disposal. Total
equity proceeds of EUR12.6 million were generated which was used to
pay down debt and contributed to achieving an LTV ratio below 65%
and a reduction in loan margin from 2.50% to 2.25% per annum.
Executing business plan initiatives to maximise income return
and stabilise or improve capital value has been core to preserving
Group earnings as well as positioning assets for disposal. During
the last quarter, the Company negotiated three leases with new and
existing retail tenants in Germany, including undertaking
refurbishment and development projects on two sites. These
negotiations resulted in securing an average lease term of 8.6
years, leasing 750 sqm of additional retail space and generating an
additional EUR78,000 pa of gross rent.
A further 16.5% of portfolio income is under negotiation with
existing tenants, mainly in France and Germany, for an average
fixed lease length of 7.5 years. Heads of terms have been agreed on
two leases representing 28,774 sqm of warehouse in France and 3,744
sqm of offices in Brussels.
Borrowings
As at 30 September 2011, the Company had drawn down a total of
EUR298.0 million of senior debt in respect of its EUR359.3 million
facility with the Bank of Scotland. In addition, the Company had
cash balances of EUR36.2 million (excluding tenant deposits of
EUR4.2 million and escrow accounts of EUR3.6 million) at that date,
giving a net debt position of EUR261.8 million.
In July 2011, the proceeds from the sale of the logistics assets
in Trappes, Paris and Vitrolles, France plus EUR4.6 million of cash
from the Company's balance sheet were applied to paying down a
total of EUR20.6 million of debt with the Bank of Scotland and all
of the outstanding EUR9.5 million of debt with Credit Foncier. As
at the Interest Payment Date on 25 July 2011 therefore, and based
on valuations of the property portfolio as at 30 June 2011, the
Loan To Value ("LTV") ratio was 64.99% and accordingly the margin
on the debt reduced from 2.50% to 2.25% pa. This reduced margin
will apply at least until the next Interest Payment Date on 25
January 2012 at which point the LTV will be tested using property
valuations as at 31 December 2011.
The Company's gross Loan To Value ("LTV") ratio as at 30
September 2011 was 66.1% and the net debt LTV was 58.0%. As at 30
September 2011, the Company's gross LTV under the Finance Documents
with the Bank of Scotland was 64.7%, against an LTV covenant of
82.5% in 2011.
All debt is fully hedged against changes in European interest
rates until December 2013, giving a total interest cost of 6.29%
per annum at current LTV levels.
For further information, please contact:
Citco REIF Services (Luxembourg) SA
Marta Kozinska +352 47 23 23 267
Hudson Sandler
Michael Sandler +44 20 7796 4133
This information is provided by RNS
The company news service from the London Stock Exchange
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