18 September
2019
STANDARD LIFE INVESTMENTS PROPERTY
INCOME TRUST
RESULTS IN RESPECT OF THE HALF YEAR
ENDED 30 JUNE 2019
Financial Highlights
- NAV total return of 2.7% for the period ended 30 June 2019, generated by like for like
portfolio growth combined with profits on sales of assets and
strong income generation.
- Share price total return of 18.9% in period compared to FTSE
All Share REIT Index total return of 9.7% and FTSE All-Share Index
total return of 13.0%.
- Prudent LTV of 23.4% at period end remains one of the lowest in
the peer group and wider REIT sector.
- Dividend cover of 101% over the period which equates to EPRA
earnings per share of 2.42p, an increase of 22% compared to first
six months of 2018.
- The Company has unutilised Revolving Credit Facility of £37
million available for investment in opportunities that may
arise.
- Dividend yield of 5.1% based on a period end share price of
94.2p compares favourably to FTSE All-Share REIT Index yield of
4.5% and FTSE All-Share Index yield of 4.1%
Property Highlights
- Property total return for the period was 3.3%, significantly
ahead of the MSCI IPD benchmark total return of 0.9% as strategic
overweight position to industrial sector
and successful asset management initiatives continued to drive
strong portfolio outperformance.
- Portfolio had a 52.8% weighting to the outperforming industrial
sector at the period end with only 9% of the portfolio being in
retail assets.
- Occupancy rate of 93.7%, as successful asset management
initiatives and strategic sales continued to maintain high
occupancy levels compared to benchmark occupancy of
92.8%.
- Six new lettings securing £970,000 per annum in rent and
restructured four leases to secure longer tem income on £242,000
per annum of rent
- Positive rent collection rates of 99% within 21 days (excluding
tenants in administration and on repayment plans) for first six
months of 2019.
PERFORMANCE SUMMARY
Earnings & Dividends |
|
|
|
30 June
2019 |
30 June
2018 |
EPRA earnings per share (excluding
capital items & swap movements) (p) |
|
|
|
2.42 |
1.98 |
Dividends declared per ordinary
share (p) |
|
|
|
2.38 |
2.38 |
Dividend cover (%)* |
|
|
|
101.5 |
82.8 |
Dividend yield (%)** |
|
|
|
5.1 |
5.1 |
FTSE All-Share Real Estate
Investment Trusts Index Yield (%) |
|
|
|
4.5 |
3.9 |
FTSE All-Share Index Yield (%) |
|
|
|
4.1 |
3.6 |
Capital Values
& Gearing |
|
30 June 2019 |
31 December 2018 |
Change % |
Total Assets (£million) |
|
514.3 |
512.2 |
0.4 |
Net asset value per share (p) |
|
91.1 |
91.0 |
0.1 |
Ordinary Share Price (p) |
|
94.2 |
81.1 |
16.2 |
Premium/ (Discount) to NAV (%) |
|
3.4 |
(10.9) |
|
Loan to value (%)*** |
|
23.4 |
24.4 |
|
|
|
|
|
|
|
Total Return
|
6 months %
return |
1 Year %
return |
3 Year %
return |
5 Year %
return |
NAV**** |
2.7 |
6.5 |
31.4 |
71.6 |
Share Price**** |
18.9 |
6.5 |
39.4 |
61.6 |
FTSE All-Share Real Estate
Investment Trusts Index |
9.7 |
(5.2) |
13.6 |
24.5 |
FTSE All-Share Index
|
13.0 |
0.6 |
29.5 |
35.8 |
Property Returns & Statistics
% |
|
|
30 June
2019 |
30 June
2018 |
Property income return
|
|
|
2.7 |
2.4 |
MSCI IPD benchmark income return
|
|
|
2.3 |
2.3 |
Property total
return |
|
|
3.3 |
4.7 |
MSCI IPD benchmark total return |
|
|
0.9 |
4.2 |
Void rate |
|
|
6.3 |
7.2 |
* Calculated as revenue earnings per share (excluding capital
items & swaps breakage costs) as a percentage of dividends
declared per ordinary share.
** Based on an annual dividend of 4.76p and the share price at
30 June 2019.
*** Calculated as bank borrowings less all cash (including cash
held at solicitors) as a percentage of the open market value of the
property portfolio as at the end of each year.
**** Assumes re-investment of dividends excluding transaction
costs.
Sources: Aberdeen Standard Investments, MSCI Investment Property
Databank (“IPD”)
CHAIRMAN’S STATEMENT
Background
In what has been the theme for over three years, the UK
continues to be gripped by political uncertainty. The Conservative
Party election of a new leader, and therefore Prime Minister, and
his promise to leave the European Union by 31 October 2019 may at least clarify matters one
way or another. However, there remains uncertainty as at to how
this situation will evolve.
Despite all of the uncertainty, the economy has proved
remarkably resilient through this period but the holding back of
planned investment until the political situation becomes clearer,
combined with headwinds caused by the US/China trade dispute, has resulted in an
economy that is now stagnating and on the verge of technical
recession.
Against this background, UK commercial real estate, even with a
continuing fall in investment volumes, has held up well producing
positive returns over the first half of 2019. The Company’s
benchmark (Quarterly version of MSCI IPD Monthly Index Funds)
produced a total return of 0.9% over this six month period as
declining capital values of 1.3% were more than offset by the
attractive income returns of 2.3% that the UK commercial real
estate market continues to generate. The polarisation of the
industrial and retail sectors continued apace with industrials
producing a total return of 3.3% compared to the retail total
return of -2.5%, a trend that suits your Company given its
overweight position to industrials and low weighting to retail.
Offices also produced a positive total return of 1.9% underpinned
by take up from flexible office providers.
Continued Portfolio and Corporate
Outperformance
The Company continued to produce positive performance during the
six months to 30 June 2019 at both a
portfolio and corporate level. The portfolio delivered a total
return of 3.3%, significantly above that of the benchmark. The
portfolio also delivered positive capital performance of 0.6%, as
the 52.8% exposure to the industrial sector (benchmark – 29.5%) and
9.0% exposure to the poorly performing retail sector (benchmark –
30.2%) provided a structural tailwind to performance with the
Company’s office portfolio broadly static. On the income side, the
portfolio delivered an income return of 2.7%, again in excess of
the benchmark, underpinned by a strong tenant base that has paid
99% of rent due within 21 days.
These returns, combined with the prudent use of the Company’s
flexible gearing in the period helped deliver a NAV total return of
2.7% (the EPRA NAV total return excluding the movement in the swap
liability was higher at 3.2%).
The Company’s share price also improved over the six month
period as the shares traded at a premium to NAV of 3.4% as at
30 June 2019 compared to a 10.9%
discount as at 31 December 2018. This
resulted in a share price total return of 18.9% over the period
compared to 13.0% from the FTSE All- Share Index and 9.7% from the
FTSE All-Share REIT Index.
Over the longer term the Company has also delivered
outperformance with a NAV total return over five years of 71.6%, in
excess of the AIC Direct Property sector weighted average return of
52.6%. The share price total return of 61.6% compares to the FTSE
All- Share Index return of 35.8% and the FTSE All-Share REIT Index
of 24.5%.
Earnings and Dividends
As mentioned in the Annual Report to 31
December 2018, a key focus of the Board is income generation
in order to support dividend cover. It is therefore pleasing to
report that EPRA earnings per share for the six month period were
2.42p compared to 1.98p at this point in 2018. This equates to
dividend cover for the six months of 101% as a number of successful
asset management initiatives were completed with the occupancy rate
of the portfolio now standing at 93.7%. While there will
undoubtedly be fluctuations in earnings as assets are bought and
sold and leases expire, the Board is encouraged that earnings and
hence dividend cover has improved in the period.
Dividends totalling 2.38p per share were paid to shareholders in
the period. Based on an annualised dividend of 4.76p and the share
price at 30 June 2019 of 94.2p, the
Company’s shares yielded 5.1%. This yield compares favourably to
the yield on the FTSE All-Share and FTSE All-Share REIT Indices
(4.1% and 4.5% respectively).
Financial Resources
As at 30 June 2019, the Company’s
LTV was a prudent 23.4% which is towards the lower end of the
Company’s peer group and also the wider REIT sector. The Company’s
debt profile is now made up of a £110 million term loan and
revolving credit facilities (“RCF”) of up to £55 million following
the decision to increase the RCF with The Royal Bank of Scotland
International Limited by £20million, as announced in June 2019. As at 30 June
2019, the Company had drawn £18 million of its RCF,
resulting in a blended rate of interest of 2.65%. Given the
portfolio net initial yield is 5.2%, the use of debt is highly
income accretive and supportive of dividend cover. In addition, it
provides flexible resources to take advantage of opportunities
which will inevitably arise in the current uncertain environment.
With cash of £11.7 million as at 30 June, the Company continues to
be in a strong financial position with significant firepower to
invest at the opportune time.
Board Changes
In line with the strategy of refreshing the Board composition on
a regular basis and having been on the Board since 2014 and Chair
since 2016, it is my intention to retire from the Board of the
Company at the Annual General Meeting in June 2020. I will be succeeded as Chairman by
James Clifton-Brown who was
appointed to the Board in August 2017
and has considerable real estate experience. I am confident that
James will provide wise leadership of the Board during these
uncertain times.
The Board has commenced a search to recruit an additional
non-executive director and I hope to be in a position to provide an
update on the search in due course. It is expected that the new
Director will succeed James as Chair of the Property Valuation
Committee.
Investment Management Fee
The Board, through its Management Engagement Committee, conducts
an annual exercise to benchmark its management fees against various
comparators. As a result of this exercise the Board has agreed a
change in its management fee with Aberdeen Standard Investments.
From 1 July 2019 the annual
management fee will be calculated on a tiered basis as follows:
- 0.70% per annum on total assets up to £500 million
- 0.60% per annum on total assets over £500 million
This compares to the current management fee of 0.75% on total
assets up to £200 million, 0.70% on total assets between £200
million and £300 million and 0.65% on total assets in excess of
£300 million. This revised arrangement simplifies the fee structure
and will result in a lower fee should the Company continue to
grow.
Investment Outlook
The UK economy continues to be affected by political and
macroeconomic uncertainty centred around Brexit, which looks likely
to persist in the near term, holding back investment and therefore
growth. The Company’s Investment manager is forecasting GDP growth
of 1.4% in both 2019 and 2020 in its base case, although it should
be highlighted that downside risks exist and leading indicators
have weakened in recent months.
Overall, the UK commercial property market is holding up well
with positive total returns still forecast. The investment market
has been, and will continue to be, muted in 2019 until progress is
made on the Brexit conundrum. However, occupier markets are
generally faring well, apart from the retail sector which is under
severe pressure as the growth in e-commerce continues which,
inversely, is boosting the industrial sector. The property market
also continues to be underpinned by strong fundamentals– relatively
high yields in an environment where there is a suggestion of
interest rate cuts, limited development and high occupancy
rates.
Given this background, the Board believes that your Company is
strategically set to continue producing relative outperformance.
The Company is well diversified in both geographic and sector terms
but, importantly, has a strategic overweight position to the
industrial sector, which is forecast to be the strongest driver of
returns over the next three years. Combined with the low retail
weighting, the portfolio is appropriately structured to continue
delivering positive relative returns albeit secondary assets can be
more volatile in nature. With income likely to be the main driver
of performance in the medium term, the Company’s above benchmark
income return will continue to be crucial to future returns,
underpinned as it is by a strong tenant base. Linked to this is the
proven track record of the Company’s Investment Manager in
implementing successful asset management initiatives to ensure the
Company’s occupancy rate remains high. Finally, the Company is in a
healthy financial position with a strong balance sheet, prudent,
low cost flexible gearing and financial resources to allow it to
take advantage of opportunities as and when they arise. Overall, I
believe your Company is well positioned to continue delivering
value for shareholders.
Robert
Peto
Chairman
17 September
2019
STRATEGIC REPORT
Principal Risks and Uncertainties
The Company’s assets consist of direct investments in UK
commercial property. Its principal risks are therefore related to
the commercial property market in general, but also the particular
circumstances of the properties in which it is invested, and their
tenants. The Board and Investment Manager seek to mitigate these
risks through a strong initial due diligence process, continual
review of the portfolio and active asset management initiatives.
All of the properties in the portfolio are insured, providing
protection against risks to the properties and also protection in
case of injury to third parties in relation to the properties.
The Board have carried out an assessment of the risk profile of
the Company which concluded that the risks as at 30 June 2019 were not materially different from
those detailed in the statutory accounts for the Group for the year
ended 31 December 2018.
INVESTMENT MANAGER’S REPORT
Economic Background
Although UK GDP recorded steady growth in Q1, inventory building
was key to this, as companies stockpiled resources ahead of
the anticipated disruption to supply chains caused by a
potential “cliff edge” withdrawal from the EU at the
end of March. The eventual six-month extension to Article 50
averted this and Q2 GDP fell as some of that inventory building
unwound. With the potential October
31 Brexit deadline looming one can expect further volatility
in short term numbers given business investment will remain subdued
until there is more clarity.
In spite of a relatively tight labour market, accommodative
monetary policy and high corporate profit margins, inflation
remains remarkably low. Although the Bank of England has given hawkish signals, it is
expected interest rates will remain lower for longer if they
are to support the backdrop of decelerating growth, particularly
until greater clarity on the UK’s future relationship with
the EU emerges. Indeed, we no longer have modest tightening cycles
in our UK and Eurozone forecasts, with the US Federal Reserve
expected to cut interest rates once more this year and monetary
policy easing also expected in other major economies. Low inflation
globally, slowing growth and trade war uncertainty, on top of the
more UK-specific risks, are pointing towards a longer period of
ultra-low interest rates.
UK Real Estate Market
According to MSCI, UK real estate capital values are now falling
but managed to deliver a positive total return of 0.9% for the
first six months of 2019. While retail returns have been negative
as expected, and have borne the brunt of the capital decline,
growth in the industrial sector has moderated after a period of
record capital value gains, but remain positive, resulting in
a 3.5% total return within MSCI’s index over the six month
period.
The second quarter saw a fall in transaction activity to levels
last seen in 2012. Overseas investors have been net sellers of the
UK office market with Chinese capital controls now appearing to
have a significant effect on global real estate markets. Although
New York has perhaps borne the
brunt of Chinese disinvestment, London is not immune, and there are
indications that other global investors are displaying more caution
towards London too, which see
London office pricing could could
soften in the second half of the year. The retail sector has a very
shallow pool of buyers tending to be opportunistic in nature with a
large amount of stock being quietly marketed. The lack of demand in
the occupier market and uncertainty about where rental values will
settle mean investors are, in many retail sub-sectors,
demanding discounts to valuation. The share price discount to net
asset value for listed stocks with a high retail weighting also
provides an indication of sentiment towards this sector.
Take-up in the office sector remains robust and central
London take-up has recovered,
following a muted period around the EU referendum, and is now back
close to the high watermark set in 2015. However, this is largely
driven by flexible office providers; traditional take-up has been
broadly flat since early 2016. The now roughly 20% of take-up
accounted for by flexible office providers does not actually absorb
supply, as it must all be re-let into the market.
Regionally, office headline rents are steadily rising in the big
six office markets, boosted by the trend towards consolidation
among some of the largest corporate occupiers, as well as the
public sector’s shift towards large regional hubs. Vacancy rates
have been steadily falling in these markets since 2017, with high
net absorption pushing rents up and virtually no new construction
in the last two years. While supply has tightened, the economic
backdrop is expected to affect demand going forward and, therefore,
rents. A similar dynamic has been playing out in the South East
office markets. While vacancy has not fallen as dramatically,
demand has gravitated towards those markets with critical mass,
limited new stock and good infrastructure, such as Reading.
A wave of company voluntary arrangements (CVAs) in retail has
put downward pressure on rental values in the sector, and on risk
premia requirements, and so also on certain valuations. Industrial
demand, however, remains especially high in London and the South East, while logistics has
had another strong start to the year with a number of significant
lettings of speculatively developed space in core markets.
Performance
The Company considers performance at several levels – that of
the investment portfolio against the MSCI IPD quarterly index (i.e.
like for like property performance), and the NAV Total Return
against the MSCI IPD quarterly index, so that the impact of gearing
and the costs of running the Company can be seen. The NAV is also
compared to the peer group, as is the share price total return, and
dividend yield.
Portfolio Level Performance
The underlying portfolio has continued to perform well against
the MSCI IPD index, with outperformance over the half year (3.3% v
0.9%), which continues the trend over one, three, and five
years, as shown across. The portfolio weightings, with very low
(9%) exposure to retail and a high (52%) exposure to industrials
have contributed to the outperformance. Over the 12 months to end
June, the wider retail market fell in value by 9.6% according to
MSCI, whilst industrial values grew by 5.8% (offices 1.3%),
demonstrating the importance of portfolio structure as well as
asset selection. The top five contributors to the Company’s
performance were all industrial and three of the five had been
subject to asset management, with the other two being longer term
secure income assets benefitting from indexation linked reviews.
Retail assets dominated the poorer performers, along with an office
subject to refurbishment and reletting.
NAV Performance
Over most time periods gearing has been accretive to
performance, with the NAV total return being greater than the asset
level total return. This has reversed in the first half of 2019,
mainly due to the increased liability of the interest rate swap as
interest rate yields fell. This movement will reverse by maturity
of the debt in April 2023.
NAV total return for the Company continues to compare favourably
to the peer group as well as the open ended funds sector, as seen
in the NAV Total Returns table.
NAV
Total Returns to 30 June 2019 |
|
|
|
|
|
6 months
(%) |
1 year (%) |
3 year (%) |
5 year (%) |
Standard Life
Investments Property Income Trust |
2.7 |
6.5 |
31.4 |
71.6 |
AIC UK Commercial
Property sector (weighted average) |
1.2 |
4.0 |
22.2 |
52.6 |
Investment Association
Open Ended Commercial Property Funds sector |
0.8 |
1.9 |
15.9 |
29.6 |
|
|
|
|
|
Company's ranking
in AIC UK Commercial Property sector |
6 |
6 |
4 |
2 |
Source: Aberdeen
Standard Investments, Association of Investment Companies
(“AIC”) |
|
|
|
|
|
|
|
|
|
|
|
Share Price Return
In many ways share price return is something the Company can
influence the least as it is impacted by changes in demand for the
Company’s shares; however it is an important measure as it
best represents the performance to the investor. The table below
shows the Company performance against some comparators.
Share Price Total
Returns to 30 June 2019 |
|
6 months
(%) |
1 year (%) |
3 year (%) |
5 year (%) |
Standard Life
Investments Property Income Trust |
|
18.9 |
6.5 |
39.4 |
61.6 |
FTSE All-Share
Index |
|
13.0 |
0.6 |
29.5 |
35.8 |
FTSE All-Share REIT
Index |
|
9.7 |
-5.2 |
13.6 |
24.5 |
AIC UK Commercial
Property sector (weighted average) |
|
8.4 |
-0.3 |
27.2 |
32.3 |
Source: Aberdeen Standard Investments, Association of
Investment Companies
Dividend Yield
The Company’s clear objective, and therefore the Investment
manager’s main focus, is to provide investors with an attractive
level of income. The dividend is paid quarterly and, based on a
June 30 share price of 94.2p, the
dividend yield was 5.1%. The Board and Investment Manager seek to
maintain a covered dividend and, for the first half, achieved this
with cover of 101%.
Portfolio Valuation
The investment portfolio is valued quarterly by Knight Frank. As
at 30 June 2019 the portfolio
comprised 57 assets valued at a total of £496.8 million, with a
cash balance of £11.7m. This compares to 56 properties valued at
£458 million and cash of £23.2 million as at 30 June 2018.
Portfolio Strategy
The Company remains focused on delivering an attractive income
to shareholders through investing in a diversified portfolio of UK
commercial real estate assets. We target assets that are well
located and in good condition, which we believe will appeal to
occupiers. We actively manage the assets with the aim of renewing
and extending leases to give the Company a sustainable and
predictable income stream.
Given the continued uncertainty in capital markets we have taken
a reducing risk approach, with the focus being on asset management
of existing assets. We will look to take further risk off the table
through working with our tenants to ensure we maximise occupancy,
however we will consider sales of selective assets if we believe
they provide too great a risk of voids in income. Subsequent
reinvestment will be in assets that will provide the opportunity to
grow or secure longer term income.
Portfolio Allocation
The Company is invested in a portfolio of UK commercial real
estate assets that provide it with diversity of type, location, and
income source. We take a top down approach to consider the
macro overlay for the fund which takes into account sector
exposures i.e. the strategic decision taken some years ago to be
underweight retail and overweight industrial / logistics given the
structural change in those sectors. In addition there is a
conscious effort to diversify the tenant base with our top ten
tenants’ only accounting for 32.6% of the total rent roll. Finally,
once we have taken macro considerations into account, we take a
bottom up approach to selecting individual assets that we believe
will meet the Company’s needs.
As at 30 June 2019, the Company
had a 53% exposure to industrial (which includes logistics), a 31%
exposure to offices, a 9% exposure to retail, and a 7% exposure to
“other” (leisure and a data centre). The geographical weighting is
not something we concentrate on per se, however the South East
provides stronger land values and concentration of people and so
often has better prospects for rental growth and tenant demand. 37%
of the fund is invested in the South East, with a further 5.6%
invested in Central London.
Investment Activity - Purchases
No new purchases were undertaken during the reporting period.
The Company was in effect fully invested, and the investment
manager did not see stock that it felt was sufficiently attractive
to utilise debt from the RCF to invest in. After the period end the
Company did however complete on two purchases:
Trafford
Park, Manchester
The Company acquired a small industrial unit for £3.5m with a
5.7% yield. The unit is adjacent to an existing holding, and
provides opportunity in the future for a reconfiguration of the
site. Although the yield is lower than we normally buy at we
believe the asset to be reversionary, so a greater yield will be
available in the future.
Causewayside, Edinburgh
The Company acquired a mixed use office and retail unit on the
South side of Edinburgh. The
ground floor is let to Tesco and a pharmacy, whilst the upper parts
provide four floors of multi let offices. The purchase price of
£8.7m reflects a yield of 3.5%, however once rent frees have
expired and the vacant suite (4,700 sq ft out of the 33,000 sq ft
total) is let the yield is expected to be 7.7%.
Sales
The Company only completed one sale during the first half of
2019, that of a single let office in Milton Keynes for £6 million. The property was
subject to a lease expiry in 2021 and the tenant was expected to
vacate with the property requiring capex to upgrade it. The sale
enabled the Company to take profit whilst reducing risk in 2021.
After the period end the Company completed on the sale of an
industrial asset in Milton Keynes
for £9.3 million. The asset was let to a company engaged in
manufacturing envelopes, and the sale was undertaken to reduce
exposure to a covenant that we felt to be deteriorating, and we did
not want to hold the unit vacant if the tenant failed.
Asset Management
Actively engaging with our tenants, and investing in our assets
to ensure they appeal to occupiers is a central part of how we
create value and a sustainable income. We aim to meet with our
tenants regularly to understand their needs, and make sure our
assets appeal to them. In the office space this generally means
providing good quality shower / changing / bike storage facilities,
but also trying to create an environment where people want to work.
In the industrial / logistics sector we have been discussing the
potential for installing PV cells on the roof to provide energy for
the tenant – we can generally sell it for the duration of their
lease at a lower cost than the grid, and still receive a sufficient
return on our investment. This is one of our ESG initiatives, and
has enabled some good conversations with tenants.
Given the very uncertain outlook many occupiers have with the
ongoing Brexit saga, let alone the wider global trade tensions, it
is not surprising that companies are delaying making decisions
about the property they occupy if they can. We are finding deals
with tenants taking longer and longer, although the level of
enquiries and viewings on vacant accommodation remains encouraging.
During the reporting period we completed six new lettings for a
total rent of £970,750pa, three rent reviews were settled
increasing the rent by £135,000pa (an increase of 24% on the
previous rent), and extended a lease with Tesco on small unit for a
further 10 years, securing a rent of £107,250pa.
The Company had a vacancy rate of 6.3% as at 30 June 2019 (7.2% June
2018). The largest vacancy is an industrial unit in
Rugby that became void during the
first half of 2019 and is currently being refurbished. The other
two largest voids are offices with vacancy at Kirkgate, Epsom and
Basinghall Street, London. These
three buildings account for over half of the current voids.
Debt
The Company has two debt facilities with RBS. It has a term loan
of £110m, which is due to expire in April
2023 and is fully hedged by way of an interest rate swap.
The interest rate swap is held as a liability on the balance sheet
(£2.4m liability as at 30 June 2019).
This liability will revert to £0 on maturity of the swap. The
Company also has a Revolving Credit Facility (RCF). This was
originally for £35m, with £18m drawn at the end of June (none of
the RCF was drawn down 30 June 2018).
During the reporting period the Company extended the RCF by £20m
and it is co-terminous with the term loan. As at 30 June 2019 the LTV was 23.4% (19.0%
June 2018). The all in cost of the
debt is 2.7%, which compares favourably to the portfolio income
yield of 5.2%.
Investment Outlook
The UK economy continues to be affected by political and
macroeconomic uncertainty which looks likely to persist in the near
term, holding back growth. Aberdeen Standard Investments has
revised its GDP growth expectations downwards from 1.9% to 1.4% in
both 2019 and 2020 in its base case, although downside risks exist
and leading indicators have weakened in recent months. Occupier
markets are holding up relatively well with office demand being
supported by the rapid expansion of flexible office providers and,
in the regions, by corporate and public sector consolidation. The
polarisation of retail is an ongoing trend and weaker locations are
under increasing pressure, however, the twin engines of
urbanisation and the rise of e-commerce continue to propel the
industrial sector.
Whilst the investment market has slowed this year, and with
political uncertainty causing many to adopt a cautious approach to
investment, there remains considerable capital with potential for
deployment attracted to UK real estate’s income yield and, retail
sector aside, good occupational fundamentals. This capital is
likely to remain on the side-lines however until greater clarity
over Brexit is reached.
Jason
Baggaley
Fund Manager
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
The Directors are responsible for preparing the Interim
Management Report in accordance with applicable law and
regulations. The Directors confirm that to the best of their
knowledge:
- The condensed Unaudited Consolidated Financial Statements
have been prepared in accordance with IAS 34; and
- The Interim Management Report includes a fair review of
the information required by 4.2.7R and 4.2.8R of the Financial
Conduct Authority’s Disclosure and Transparency Rules.
- In accordance with 4.2.9R of the Financial Conduct
Authority’s Disclosure and Transparency Rules, it is confirmed that
this publication has not been audited or reviewed by the Company’s
auditors.
The Interim Report, for the six months ended 30 June 2019, comprises an Interim Management
Report in the form of the Chairman’s Statement, the Investment
Manager’s Report, the Directors’ Responsibility Statement and a
condensed set of Unaudited Consolidated Financial Statements. The
Directors each confirm to the best of their knowledge that:
a. the Unaudited Consolidated Financial Statements are
prepared in accordance with IFRSs as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Group; and
b. the Interim Report includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties faced.
For and on behalf of the Directors of Standard Life Investments
Property Income Trust Limited
Approved by the Board on
17 September
2019
Robert
Peto
Chairman
FINANCIAL STATEMENTS
Consolidated Statement of
Comprehensive Income |
|
|
|
|
for the period ended 30 June
2019 |
Notes |
1 Jan
19
to
30 Jun 19
£ |
1 Jan 18 to
30 Jun 18 £ |
1 Jan 18
to
31 Dec 18 £ |
Rental income |
|
15,360,183 |
13,402,210 |
27,773,205 |
Service charge income |
|
1,196,706 |
906,711 |
1,665,737 |
Valuation surplus from investment
properties |
3 |
958,500 |
8,628,067 |
12,057,044 |
Surplus on disposal of investment
properties |
|
867,550 |
995,922 |
1,861,161 |
Investment management fees |
2 |
(1,754,640) |
(1,661,767) |
(3,381,779) |
Valuers fees |
|
(50,346) |
(38,184) |
(91,396) |
Auditor’s fees |
|
(40,125) |
(37,250) |
(78,500) |
Directors fees and expenses |
|
(117,006) |
(100,999) |
(202,298) |
Service charge expenditure |
|
(1,196,706) |
(906,711) |
(1,665,737) |
Other direct property expenses
|
|
(1,397,144) |
(1,788,188) |
(3,154,578) |
Other administration expenses |
|
(363,770) |
(211,758) |
(426,768) |
Operating profit |
|
13,463,202 |
19,188,053 |
34,356,091 |
|
|
|
|
|
Finance income |
|
7,656 |
51,302 |
58,411 |
Finance costs |
|
(1,841,277) |
(1,670,862) |
(3,468,125) |
Surplus for the period before
taxation |
|
11,629,581 |
17,568,493 |
30,946,377 |
|
|
|
|
|
Taxation |
|
|
|
|
Tax charge |
|
- |
- |
- |
Surplus for the period, net of
tax |
|
11,629,581 |
17,568,493 |
30,946,377 |
|
|
|
|
|
Other Comprehensive
Income |
|
|
|
|
Valuation (deficit)/gain on cash
flow hedge |
|
(1,593,258) |
1,373,850 |
1,440,836 |
Total other comprehensive
surplus |
|
(1,593,258) |
1,373,850 |
1,440,836 |
|
|
|
|
|
Total comprehensive surplus for
the period, net of tax |
|
10,036,323 |
18,942,343 |
32,387,213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
(p) |
(p) |
(p) |
Basic and diluted
earnings per share |
5 |
2.87 |
4.38 |
7.68 |
Adjusted (EPRA) earnings per
share |
|
2.42 |
1.98 |
4.22 |
|
|
|
|
|
|
|
All items in the above Unaudited Consolidated Statement of
Comprehensive Income derive from continuing operations.
The notes are an integral part of these Consolidated Financial
Statements.
Consolidated Balance
Sheet |
|
|
|
|
as at 30 June 2019 |
|
|
|
|
|
Notes |
30 Jun 19 £ |
30 Jun
18
£ |
31 Dec
18
£ |
ASSETS |
|
|
|
|
Non-current
assets |
|
|
|
|
Investment
properties |
3 |
493,897,366 |
443,256,957 |
495,245,556 |
Lease incentives |
3 |
3,898,149 |
3,478,043 |
2,896,409 |
Rent deposits held on behalf of
tenants |
|
966,657 |
961,978 |
840,633 |
|
|
498,762,172 |
447,696,978 |
498,982,598 |
Current assets |
|
|
|
|
Investment properties held for
sale |
4 |
- |
11,250,000 |
- |
Trade and other receivables |
|
3,834,177 |
1,401,392 |
4,939,071 |
Cash and cash equivalents |
|
11,699,447 |
23,203,967 |
8,264,972 |
|
|
15,533,624 |
35,855,359 |
13,204,043 |
|
|
|
|
|
Total assets |
|
514,295,796 |
483,552,337 |
512,186,641 |
|
|
|
|
|
LIABILITIES |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
12,249,103 |
8,416,847 |
11,906,363 |
Interest rate swap |
8 |
595,528 |
252,383 |
451,714 |
|
|
12,844,631 |
8,669,230 |
12,358,077 |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Bank borrowings |
9 |
127,203,418 |
109,148,606 |
129,249,402 |
Interest rate swap |
8 |
1,801,693 |
618,566 |
352,249 |
Rent deposits due to tenants |
|
966,657 |
961,978 |
840,633 |
Obligations under finance
leases |
|
1,716,391 |
- |
- |
|
|
131,688,159 |
110,729,150 |
130,442,284 |
|
|
|
|
|
Total liabilities
|
|
144,532,790 |
119,398,380 |
142,800,361 |
|
|
|
|
|
Net
assets |
|
369,763,006 |
364,153,957 |
369,386,280 |
|
|
|
|
|
EQUITY |
|
|
|
|
Capital and reserves attributable
to Company’s equity holders |
|
|
|
|
Share capital |
|
227,431,057 |
226,001,857 |
227,431,057 |
Retained earnings |
|
6,300,815 |
6,714,960 |
6,156,881 |
Capital reserves |
|
38,192,762 |
33,598,768 |
37,959,970 |
Other distributable reserves |
|
97,838,372 |
97,838,372 |
97,838,372 |
Total equity |
|
369,763,006 |
364,153,957 |
369,386,280 |
|
|
|
|
|
NAV per share |
|
91.1 |
90.1 |
|
91.0 |
EPRA NAV per share |
|
91.7 |
90.3 |
|
91.2 |
|
|
|
|
|
|
|
|
The notes are an integral part of these Consolidated Financial
Statements.
Consolidated Statement of Changes in Equity
for the period ended 30 June
2019
|
|
|
|
|
|
|
|
|
Share Capital |
Retained
earnings |
Capital reserves |
Other distributable
reserves |
Total equity |
|
Notes |
£ |
£ |
£ |
£ |
£ |
Opening balance at 01 January
2019
|
|
227,431,057 |
6,156,881 |
37,959,970 |
97,838,372 |
369,386,280 |
|
|
|
|
|
|
|
Surplus for the period |
|
- |
11,629,581 |
- |
- |
11,629,581 |
Other comprehensive income |
|
- |
- |
(1,593,258) |
- |
(1,593,258) |
Total comprehensive
surplus for the period |
|
- |
11,629,581 |
(1,593,258) |
- |
10,036,323 |
|
|
|
|
|
|
|
Dividends paid |
7 |
- |
(9,659,597) |
- |
- |
(9,659,597) |
Valuation surplus from investment
properties |
3 |
- |
(958,500) |
958,500 |
- |
- |
Surplus on disposal of investment
properties |
3 |
- |
(867,550) |
867,550 |
- |
- |
Balance at 30 June
2019 |
|
227,431,057 |
6,300,815 |
38,192,762 |
97,838,372 |
369,763,006 |
|
|
|
|
|
|
|
|
|
Share Capital |
Retained
earnings |
Capital reserves |
Other distributable
reserves |
Total equity |
|
Notes |
£ |
£ |
£ |
£ |
£ |
Opening balance at 01 January
2018 |
|
217,194,412 |
8,364,603 |
22,600,929 |
97,838,372 |
345,998,316 |
|
|
|
|
|
|
|
Surplus for the period |
|
- |
17,568,493 |
- |
- |
17,568,493 |
Other comprehensive income |
|
- |
- |
1,373,850 |
- |
1,373,850 |
Total comprehensive
surplus for the period |
|
- |
17,568,493 |
1,373,850 |
- |
18,942,343 |
|
|
|
|
|
|
|
Ordinary shares issued net of issue
costs |
|
8,807,445 |
- |
- |
- |
8,807,445 |
Dividends paid |
7 |
- |
(9,594,147) |
- |
- |
(9,594,147) |
Valuation surplus from investment
properties |
|
- |
(8,628,067) |
8,628,067 |
- |
- |
Surplus on disposal of investment
properties |
3 |
- |
(995,922) |
995,922 |
- |
- |
Balance at 30 June
2018 |
|
226,001,857 |
6,714,960 |
33,598,768 |
97,838,372 |
364,153,957 |
|
|
|
|
|
|
|
|
|
Share Capital |
Retained
earnings |
Capital reserves |
Other distributable
reserves |
Total equity |
|
Notes |
£ |
£ |
£ |
£ |
£ |
Opening balance at 01 January
2018 |
|
217,194,412 |
8,364,603 |
22,600,929 |
97,838,372 |
345,998,316 |
|
|
|
|
|
|
|
Surplus for the year |
|
- |
30,946,377 |
- |
- |
30,946,377 |
Other comprehensive income |
|
- |
- |
1,440,836 |
- |
1,440,836 |
Total comprehensive
surplus for the year |
|
- |
30,946,377 |
1,440,836 |
- |
32,387,213 |
|
|
|
|
|
|
|
Ordinary shares issued net of issue
costs |
|
10,236,645 |
- |
- |
- |
10,236,645 |
Dividends paid |
7 |
- |
(19,235,894) |
- |
- |
(19,235,894) |
Valuation surplus from investment
properties |
|
- |
(12,057,044) |
12,057,044 |
- |
- |
Surplus on disposal of
investment properties |
3 |
- |
(1,861,161) |
1,861,161 |
- |
- |
Balance at 31
December 2018 |
|
227,431,057 |
6,156,881 |
37,959,970 |
97,838,372 |
369,386,280 |
The notes are an integral part of these Consolidated Financial
Statements.
Consolidated Cash Flow
Statement |
|
|
|
|
for the period ended 30 June
2018 |
|
|
|
|
|
Notes |
1 Jan 19 to 30 Jun
19 £ |
1 Jan 18 to 30 Jun
18 £ |
1 Jan 18 to 31 Dec
18 £ |
Cash flows from operating
activities |
|
|
|
|
Surplus for the period before
taxation |
|
11,629,581 |
17,568,493 |
30,946,377 |
Movement in non-current lease
incentives |
|
(784,580) |
(396,485) |
(735,921) |
Movement in trade and other
receivables |
|
(941,426) |
18,889,516 |
16,441,217 |
Movement in trade and other
payables |
|
2,185,153 |
(2,068,406) |
1,243,386 |
Finance costs |
|
1,841,277 |
1,670,862 |
3,524,503 |
Finance income |
|
(7,656) |
(51,302) |
(58,411) |
Valuation surplus from investment
properties |
3 |
(958,500) |
(8,628,067) |
(12,057,044) |
Surplus on disposal of investment
properties
|
3 |
(867,550) |
(995,922) |
(1,861,161) |
Net cash inflow from operating
activities |
|
12,096,299 |
25,988,689 |
37,442,946 |
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
Interest received |
|
7,656 |
51,302 |
58,411 |
Purchase of investment
properties |
|
- |
(50,212,474) |
(64,023,051) |
Additions through business
acquisition |
|
- |
- |
(23,913,188) |
Capital expenditure on investment
properties |
3 |
(1,076,919) |
(2,936,163) |
(8,170,795) |
Net proceeds from disposal of
investment properties |
3 |
5,967,550 |
38,395,922 |
44,861,161 |
Net cash inflow/ (outflow) from
investing activities |
|
4,898,287 |
(14,701,413) |
(51,187,462) |
|
|
|
|
|
Cash flows from financing
activities |
|
|
|
|
Proceeds on issue of ordinary
shares |
|
- |
8,874,000 |
10,314,000 |
Transaction costs of issue of
shares |
|
- |
(66,555) |
(77,355) |
Bank borrowing |
|
- |
- |
20,000,000 |
Repayment of RCF |
|
(2,000,000) |
- |
- |
Bank borrowing arrangement
costs |
|
(150,000) |
(52,500) |
(52,490) |
Interest paid on bank borrowing |
|
(1,452,231) |
(1,167,133) |
(2,546,435) |
Payments on interest rate swap |
|
(298,283) |
(411,478) |
(726,842) |
Dividends paid to the Company’s
shareholders |
|
(9,659,597) |
(9,594,147) |
(19,235,894) |
Net cash (outflow)/inflow from
financing activities |
|
(13,560,111) |
(2,417,813) |
7,674,984 |
|
|
|
|
|
Net increase in cash and cash
equivalents |
|
3,434,475 |
8,869,463 |
(6,069,532) |
Cash and cash equivalents at
beginning of period |
|
8,264,972 |
14,334,504 |
14,334,504 |
|
|
|
|
|
Cash and cash equivalents at end
of period |
|
11,699,447 |
23,203,967 |
8,264,972 |
The notes are an integral part of these consolidated financial
statements
Notes to the Unaudited Consolidated
Financial Statements
for the period ended 30 June 2019
1 Accounting Policies
The Unaudited Consolidated Financial Statements have been
prepared in accordance with International Financial Reporting
Standard (“IFRS”) IAS 34 ‘Interim Financial Reporting’ and, except
as described below, the accounting policies set out in the
statutory accounts of the Group for the year ended 31 December 2018. The condensed Unaudited
Consolidated Financial Statements do not include all of the
information required for a complete set of IFRS financial
statements and should be read in conjunction with the Consolidated
Financial Statements of the Group for the year ended 31 December 2018, which were prepared under full
IFRS requirements.
2 Related Party Disclosures
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or operational
decisions.
Investment manager
Following the merger of Standard Life plc with Aberdeen Asset
Management PLC in August 2017, the
Company appointed Aberdeen Standard Fund Managers Limited as its
AIFM with effect from 10 December
2018. The appointment is on identical terms to the
arrangements previously in place with Standard Life Investments
(Corporate Funds) Limited and the terms of the previous management
agreement have been novated across to Aberdeen Standard Fund
Managers Limited.
Under the terms of the current IMA, the Investment Manager is
entitled to receive fees of 0.75% of total assets up to
£200million; 0.70% of total assets between £200million and
£300million; and 0.65% of total assets in excess of £300million.
The total fees charged for the period ended 30 June 2019 amounted to £1,754,640 (period ended
30 June
2018: £1,661,767). The total amount due and payable at the
period end amounted to £875,388 excluding VAT (period ended
30 June 2018: £834,388 excluding
VAT).
3 Investment Properties
Country |
UK |
UK |
UK |
UK |
|
Class |
Industrial |
Office |
Retail |
Other |
Total |
|
30 Jun 19 |
30 Jun 19 |
30 Jun 19 |
30 Jun 19 |
30 Jun 19 |
Market value at 1 January |
259,150,000 |
159,630,000 |
46,530,000 |
33,800,000 |
499,110,000 |
Purchase of investment
properties |
- |
- |
- |
- |
- |
Capital expenditure on investment
properties |
587,649 |
489,270 |
- |
- |
1,076,919 |
Opening market value of disposed
investment properties |
- |
(5,100,000) |
- |
- |
(5,100,000) |
Valuation surplus from
investment properties |
2,406,969 |
(822,506) |
(1,629,850) |
1,003,887 |
958,500 |
Movement in lease incentives
receivables |
185,382 |
633,236 |
(30,150) |
(3,887) |
784,581 |
Market value at 30 June
|
262,330,000 |
154,830,000 |
44,870,000 |
34,800,000 |
496,830,000 |
|
|
|
|
|
|
Right of use asset recognised on
leasehold properties |
- |
1,716,391 |
- |
- |
1,716,391 |
Adjustment for lease incentives |
(1,973,247) |
(1,786,574) |
(274,758) |
(614,446) |
(4,649,025) |
Carrying value at 30 June
|
260,356,753 |
154,759,817 |
44,595,242 |
34,185,554 |
493,897,366 |
The market value provided by Knight Frank LLP at 30 June 2019 was £496,830,000 (30 June 2018: £457,985,000) however an adjustment
has been made for lease incentives of £4,649,025 (30 June 2018: £3,478,043) that are already
accounted for as an asset. In addition, as required under IFRS 16
which became effective from 1 January
2019, a right of use asset of £1,716,391 has been recognised
in respect of the present value of future ground rents. As required
under IFRS 16 an amount of £1,716,391 has also been recognised as
an obligation under finance leases in the balance sheet.
In the unaudited consolidated cash Flow statement, surplus from
disposal of investment properties comprise:
|
1 Jan
19 to 30 Jun 19 |
1 Jan
18 to 30 Jun 18 |
1 Jan
18 to 31 Dec 18 |
Opening market value
of disposed investment properties |
5,100,000 |
37,400,000 |
43,000,000 |
Surplus on disposal of
investment properties |
867,550 |
995,922 |
1,861,161 |
Net proceeds from
disposed investment properties |
5,967,550 |
38,395,922 |
44,861,161 |
4 Investment Properties Held For
Sale
There were no assets held for sale at 30
June 2019 (2018: £11,250,000).
5 Earnings Per Share
The earnings per Ordinary share are based on the net profit for
the period of £11,629,581 (30 June
2018: £17,568,493) and 405,865,419 (30 June 2018: 401,011,552) ordinary shares, being
the weighted average number of shares in issue during the
period.
Earnings for the period to 30 June
2019 should not be taken as a guide to the results for the
year to 31 December 2019.
6 Investment in Subsidiary
Undertakings
The Group undertakings consist of the following 100% owned
subsidiaries at the Balance Sheet date:
- Standard Life Investments Property Holdings Limited, a property
investment company with limited liability incorporated in
Guernsey, Channel Islands.
- Standard Life Investments (SLIPIT) Limited Partnership, a
property investment limited partnership established in England.
- Standard Life Investments SLIPIT (General Partner) Limited, a
company with limited liability incorporated in England. This Company is the GP for the
Limited Partnership.
- Standard Life Investments SLIPIT (Nominee) Limited, a company
with limited liability incorporated and domiciled in
England.
- Hagley Road Limited, a property investment company with limited
liability incorporated in Jersey, Channel
Islands.
7 Dividends and Property Income
Distribution Gross of Income Tax
|
|
30 Jun 19 |
30 Jun 18 |
31 Dec 18 |
|
|
£ |
£ |
£ |
Non property income
distributions |
|
|
|
|
0.668p per ordinary share paid in
March 2018 relating to the quarter ending 31 December 2017 |
|
- |
2,692,811 |
2,692,811 |
0.421p per ordinary share paid in
November 2018 relating to the quarter ending 30 September 2018 |
|
- |
- |
1,708,693 |
|
|
|
|
|
Property Income
Distributions |
|
|
|
|
0.552p per ordinary share paid in
March 2018 relating to the quarter ending 31 December 2017 |
|
- |
2,104,263 |
2,104,262 |
1.19p per ordinary share paid in May
2018 relating to the quarter ending 31 March 2018 |
|
- |
4,797,073 |
4,797,073 |
1.19p per ordinary share paid in
August 2018 relating to the quarter ending 30 June 2018 |
|
- |
- |
4,811,949 |
0.769p per ordinary share paid in
November 2018 relating to the quarter ending 30 September 2018 |
|
- |
- |
3,121,106 |
1.19p per ordinary share paid in
March 2019 relating to the quarter ending 31 December 2018 |
|
4,829,799 |
4,797,073 |
- |
1.19p per ordinary share paid in May
2019 relating to the quarter ending 31 March 2019 |
|
4,829,798 |
4,797,074 |
- |
|
|
9,659,597 |
9,594,147 |
19,235,894 |
A property income dividend of 1.19p per share was declared on
8 August 2019 in respect of the
quarter to 30 June 2019 – a total
payment of £4,829,798. This was paid on 30
August 2019.
8 Financial Instruments and Investment
Properties
Fair values
The fair value of financial assets and liabilities is not
materially different from the carrying value in the financial
statements.
Fair value hierarchy
The following table shows an analysis of the fair values of
investment properties recognised in the balance sheet by the level
of the fair value hierarchy:
30 June 2019 |
Level 1 |
Level 2 |
Level 3 |
Total fair
value |
Investment properties |
- |
- |
496,830,000 |
496,830,000 |
The lowest level of input is the underlying yields on each
property which is an input not based on observable market data.
The following table shows an analysis of the fair values of
financial instruments recognised in the balance sheet by the level
of the fair value hierarchy:
30 June 2019 |
Level 1 |
Level 2 |
Level 3 |
Total fair
value |
Loan facilities |
- |
129,895,646 |
- |
129,895,646 |
The lowest level of input is the interest rate payable on each
borrowing which is a directly observable input.
30 June 2019 |
Level 1 |
Level 2 |
Level 3 |
Total fair
value |
Interest rate swap |
- |
2,397,221 |
- |
2,397,221 |
Of the figure above, £595,528 is included within current
liabilities and £1,801,693 is included within non-current
liabilities. The lowest level of input is the three month LIBOR
yield curve which is a directly observable input.
There were no transfers between levels of fair value hierarchy
during the six months ended 30 June
2019.
Explanation of the fair value
hierarchy:
Level 1 Quoted (unadjusted) market prices in active
markets for identical assets or liabilities.
Level 2 Valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly
or indirectly observable.
Level 3 Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable.
The fair value of investment properties is calculated using
unobservable inputs as described in the annual report and accounts
for the year ended 31 December
2018.
Sensitivity of measurement to variance
of significant unobservable inputs:
- A decrease in the estimated annual rent will decrease the fair
value.
- An increase in the discount rates and the capitalisation rates
will decrease the fair value.
- There are interrelationships between these rates as they are
partially determined by the market rate conditions.
- The fair value of the derivative interest rate swap contract is
estimated by discounting expected future cash flows using current
market interest rates and yield curves over the remaining term of
the instrument.
The fair value of the loan facilities are estimated by
discounting expected future cash flows using the current interest
rates applicable to each loan.
9 Bank Borrowings
On 28 April 2016 the Company
entered into an agreement to extend £145million of its existing
£155 million debt facility with RBS. The debt facility
consists of a £110million seven year term loan facility and a
£35million five year RCF which was extended by two years in
May 2018 with the margin on the RCF
now at LIBOR plus 1.45%. Interest is payable on the Term Loan
at 3 month LIBOR plus 1.375% which equates to a fixed rate of
2.725% on the Term Loan.
In June 2019, the Company also
entered into a new arrangement with the Royal Bank of Scotland
International Limited (RBSI) to extend its Revolving Credit
Facility (RCF) by £20m. The Company currently has £18m undrawn from
its existing facility, and has not drawn the new facility, which
has an expiry coterminous with the existing debt provided by RBSI,
in April 2023. The new facility has a
margin of 160bps above Libor.
Under the terms of the loan facility there are certain events
which would entitle RBS to terminate the loan facility and demand
repayment of all sums due. Included in these events of default is
the financial undertaking relating to the LTV percentage. The loan
agreement notes that the LTV percentage is calculated as the loan
amount less the amount of any sterling cash deposited within the
security of RBS divided by the gross secured property value, and
that this percentage should not exceed 60% for the period to and
including 27 April 2021 and should
period to and including 27 April 2021
and should not exceed 55% after 27 April
2021 to maturity.
10 Events After the Balance Sheet
Date
On 30 August 2019, the Company
completed the sale of Crown Farm, Mansfield for £900,000.
On 5 September 2019, the Company
completed the sale of Michigan Drive, Milton Keynes for £9.3 million.
On 9 September 2019, the Company
completed the acquisition of Unit 4 at Broadoak Business Park,
Trafford for £3.5 million
On 13 September 2019, the Company
completed the acquisition of Causeway House, Edinburgh for £9.1 million.
The Interim Report and Unaudited Consolidated Condensed
Financial Statements for the period from 1
January 2019 to 30 June 2019
will shortly be available for download from the Company’s website
hosted by the Investment Manager (www.slipit.co.uk).
Please note that past performance is not necessarily a guide to
the future and that the value of investments and the income from
them may fall as well as rise. Investors may not get back the
amount they originally invested.
All enquiries to:
The Company Secretary
Northern Trust International Fund Administration Services
(Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Tel: 01481 745001
Fax: 01481 745051
Jason Baggaley
Aberdeen Standard Investments Limited
Tel: 0131 245 2833
Graeme McDonald
Aberdeen Standard Investments Limited
Tel: 0131 245 3151
END