Standard LifeInvProp COVID-19 and Dividend Update

 
TIDMSLI 
 
23 April 2020 
 
      STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST LIMITED (LSE: SLI) 
 
 
                           LEI: 549300HHFBWZRKC7RW84 
 
                         COVID-19 AND DIVIDEND UPDATE 
 
 
This announcement contains Inside Information as defined under the Market Abuse 
Regulation (EU) No. 596/2014. 
 
 
Standard Life Investments Property Income Trust Limited (LSE: SLI), today 
provides an update in relation to the impact of COVID-19 on the Company.  The 
Company entered the crisis in a robust position, with a diversified portfolio 
of UK commercial property that is heavily weighted towards the industrial 
sector; it also has prudent gearing and significant capital resources. 
 
 
Portfolio Valuation 
 
The portfolio valuation as at 31 March 2020 was GBP458.6 million which represents 
a 4.9% like for like decline in valuation from 31 December 2019. The components 
of the movement in valuation, split by sector, are shown in the table below. 
 
The Company's portfolio is well diversified with a 52.3% weighting to the 
industrial sector and only 8.5% in the retail sector and 7.3% in the other 
commercial sector which includes leisure. The Company owns no shopping centres. 
 
                       Portfolio Value  Exposure as at Like for Like   Capital Value 
                         as at 31 Mar    31 Mar 2020   Capital Value    Shift (incl 
                          2020 (GBPm)          (%)        Shift (excl   transactions (GBP 
                                                       transactions &       m) 
                                                           CAPEX) 
 
                                                            (%) 
 
External valuation at                                                      493.2 
31 Dec 19 
 
Retail                       39.0            8.5            -7.7           -3.2 
 
South East Retail                            2.0            -9.4           -0.9 
 
Rest of UK Retail                            0.0            0.0             0.0 
 
Retail Warehouses                            6.5            -7.1           -2.3 
 
Offices                     146.3            31.9           -4.1           -17.0 
 
London City Offices                          2.9            -0.7           -0.1 
 
London West End                              3.0            -4.9           -0.7 
Offices 
 
South East Offices                           15.1           -4.4           -13.9 
 
Rest of UK Offices                           10.9           -4.5           -2.3 
 
Industrial                  240.1            52.3           -5.0           -12.8 
 
South East Industrial                        13.6           -4.9           -3.2 
 
Rest of UK Industrial                        38.7           -5.1           -9.6 
 
Other Commercial             33.2            7.3            -4.5           -1.6 
 
External valuation at       458.6           100.0           -4.9           458.6 
31 Mar 20 
 
 
Financial Resources 
 
The Company is in a strong financial position. It has a robust, prudently 
geared balance sheet with significant financial resources available of GBP47 
million being the unutilised amount of its low cost, flexible revolving credit 
facility with The Royal Bank of Scotland ("RBS"). As at 20 April the Company 
also had GBP5.9 million of cash. 
 
 
Gearing 
 
The Company has a Loan to Value ("LTV") of 24.4%, based on the 31 March 2020 
valuation and the cash balance above; the debt comprises a term loan of GBP110 
million and a revolving credit facility of GBP55 million of which GBP8 million has 
been utilised, both with RBS. The facilities expire in April 2023 and currently 
have an overall blended interest rate of 2.65% per annum. 
 
 
Bank Covenants 
 
As at 31 December 2019, the Company reported the following amounts in relation 
to its loan covenants: 
 
                                Cover / Limit 
 
Actual Interest Cover         683% (Limit 175%) 
 
LTV*                          28.3% (Limit 55%) 
 
*Loan value less cash held in RBS accounts divided by pledged portfolio 
 
 
In terms of headroom, net rental income would need to fall by 74% and property 
values would need to fall by 50% for covenants to be breached based on the 31 
December 2019 numbers. In addition there are four properties still available to 
be pledged which were valued at GBP53 million at end of December. 
 
 
Rent collection 
 
As at close of business on 20 April 2020, the Company had received payments 
reflecting 66% of rents due for what can collectively be termed advance billing 
for the second quarter of the year; this comprises both old and new English 
quarter days (25th March and 1st April) and the Scottish quarter day (28th 
February). The figures below include those tenants with whom it has been 
agreed, and have paid, on a monthly in advance basis. Assuming those tenants 
continue to pay rent monthly the collection figure should increase to 74%. The 
statistics, split between sectors, are shown below. 
 
The impact of the virus and associated restrictions on how we live, work and 
play is felt by every company, and this Company's team of asset managers are 
working closely with our tenants to understand their needs. We believe that 
this is a crisis that impacts on individuals as much as companies and we take 
the Social aspects of ESG very seriously. We firmly believe that by helping 
tenants now and building better relationships we will have better occupancy 
over future months and years, which will in turn benefit the Company's cash 
flow. 
 
                                 % collected 
                                 compared to 
                               contracted rent 
                                  per sector 
 
Industrial                           65% 
 
Retail                               60% 
 
Offices                              72% 
 
Other                                100% 
 
Leisure                              39% 
 
Overall                              66% 
 
The payment rate is continuing to rise and the Investment Manager is in close 
communication with tenants to understand their difficulties and assess where 
genuine challenges exist which can be alleviated by alternative rent solutions 
from deferral of repayment to rent rebates in return, for example, for 
extensions of leases. 
 
 
Dividend 
 
The Company confirms that it intends to pay a quarterly dividend of 1.19p per 
share, in respect of the three month period to 31 March 2020, which is expected 
to be declared and payable in May 2020. This reflects the fact that a 
significant proportion of rent for this period was paid in advance, prior to 
the impact from the Covid-19 pandemic. The Company is acutely aware of the 
importance of quarterly dividends payable to shareholders, and whilst the 
Company experienced some disruption to cash collection in the quarter to 31 
March 2020, it will deploy a small part of the financial resources that it has 
available to cover the shortfall in income for this period. However, in light 
of the current uncertainty and in the absence of a clear resolution to Covid-19 
and its impact on the economy and the ability of businesses to conduct normal 
activities, the rent collection for the period to 30 June 2020, and potentially 
thereafter, will be materially impacted which is likely to affect the Company's 
future dividends. The Board will continue to closely monitor the situation in 
relation to rent collection and keep its future dividend policy under review 
accordingly. 
 
 
Year end results 
 
While the Company announced its fourth quarter NAV statement on 4 February 
2020, due to the impact of COVID-19 and guidance from both the Company's 
auditors and the Financial Conduct Authority, the release of the Company's 
final full year 2019 results is now expected to be made during May 2020.  In 
addition, a full quarterly net asset value statement for the quarter ending 31 
March 2020 will also be issued in due course. 
 
 
Details of the Company may also be found on the Investment Manager's website 
at: www.slipit.co.uk 
 
 
For further information:- 
 
Jason Baggaley - Real Estate Fund Manager, Aberdeen Standard Investments 
 
Tel:  07801039463 or jason.baggaley@aberdeenstandard.com 
 
 
Graeme McDonald - Senior Fund Control Manager, Aberdeen Standard Investments 
 
Tel: 07717543309 or graeme.mcdonald@aberdeenstandard.com 
 
 
 
END
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