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 £458.6 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 as at 31 Mar 2020 (£m) |
Exposure as at 31 Mar 2020 (%) |
Like
for Like Capital Value Shift (excl transactions &
CAPEX) |
Capital Value Shift (incl transactions (£m) |
|
(%) |
External valuation
at 31 Dec 19 |
|
|
|
493.2 |
|
|
|
|
|
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
Offices |
|
3.0 |
-4.9 |
-0.7 |
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 31 Mar 20 |
458.6 |
100.0 |
-4.9 |
458.6 |
Financial Resources
The Company is in a strong financial position. It has a robust,
prudently geared balance sheet with significant financial resources
available of £47 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 £5.9 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 £110 million and a
revolving credit facility of £55 million of which £8 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 £53 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