TIDMEPIC
RNS Number : 7149C
Ediston Property Inv Comp PLC
24 January 2018
Ediston Property Investment Company plc
(LEI: 213800JRL87EGX9TUI28)
Net Asset Value ("NAV") as at 31 December 2017
Ediston Property Investment Company plc (LSE: EPIC) (the
"Company") announces its unaudited NAV as at 31 December 2017,
following a positive first quarter of the new financial year.
Quarter highlights
-- The dividend will increase by 4.5% to 5.75 pence per share,
commencing in January 2018, payable in February 2018. It is
expected that future dividends will remain fully covered.
-- GBP88.7 million of new equity raised, which increased the
Company's equity base by 60%. The new equity, existing cash
resources and additional debt were used to finance a substantial
acquisition of new properties ("the Acquisition").
-- Four retail warehouse assets were acquired for GBP144
million, in a cost-efficient transaction, diversifying the
portfolio and its tenant exposures, and increasing the scale of the
Company.
-- An additional debt facility of GBP54.2 million, maturing in
2027, was negotiated and drawn down at an 'all-in' fixed rate of
2.73%, leaving the Company with aggregate debt of GBP111 million
and gearing of 32% of total assets.
-- Total assets of the Company increased by 70.5% to GBP347.3 million.
-- Fair Value independent valuation of the property portfolio as
at 31 December 2017 of GBP319.3 million, a like-for-like increase
of 1.39% on the valuation at 30 September 2017.
-- NAV per share at 31 December 2017 of 111.02 pence (30
September 2017: 111.32 pence), a modest decrease of 0.27%, after
taking into account capital expenditure and costs of the
Acquisition.
Net Asset Value
The unaudited NAV of the Company at 31 December 2017 was
GBP233.52 million, or 111.02 pence per share, a decrease of 0.27%
on the Company's NAV per share as at 30 September 2017. Property
valuations increased by 0.76 pence per share supported by capital
expenditure of 0.25 pence per share. The principal movement was the
incurring of a one-off transaction cost of 1.14 pence per share
relating to the acquisition of a GBP144 million property portfolio,
a capital raise of GBP88.7 million and a new debt facility of
GBP54.2 million.
Pence Per Share GBP million
-------------------------------- ---------------- ------------
NAV at 30 September 2017 111.32 145.82
-------------------------------- ---------------- ------------
Valuation increase in property
portfolio 0.76 1.59
-------------------------------- ---------------- ------------
Capital expenditure (excluding
costs of the Acquisition) (0.25) (0.53)
-------------------------------- ---------------- ------------
Income earned 1.66 3.50
-------------------------------- ---------------- ------------
Expenses & finance costs (0.63) (1.33)
-------------------------------- ---------------- ------------
Dividends paid (0.86) (1.80)
-------------------------------- ---------------- ------------
Equity raised 0.16 88.66
-------------------------------- ---------------- ------------
Costs of issuing new equity (0.67) (1.40)
-------------------------------- ---------------- ------------
Costs of the Acquisition (0.47) (0.99)
-------------------------------- ---------------- ------------
NAV at 31 December 2017 111.02 233.52
-------------------------------- ---------------- ------------
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 December 2017, and undistributed income for the quarter, but
does not include a provision for any accrued dividend.
Dividends Paid and Dividend Increase
The Company paid dividends of 0.4587 pence per share in October
and 0.4583 pence per share in November and December 2017, resulting
in a cumulative dividend payment in the quarter of 1.3753 pence per
share.
As a result of an improvement in dividend cover, it was
announced on 15 November 2017 that it was the Company's intention
to increase the annualised dividend level by 4.5% to 5.75 pence per
share, from 5.5 pence per share, being a monthly rate of 0.4792
pence per share. This increased dividend level is to commence in
respect of the month ending 31 January 2018 and will be paid in
late February 2018.
The Board remains committed to paying a monthly dividend which
is progressive and sustainable in its cover.
Transactional Activity - A Significant Step Forward
Growth in the Company was a strategic priority of the Board in
2017 providing it could be achieved in a manner that was
advantageous to shareholders.
The Company acquired four retail warehouse parks for GBP144
million in an off-market transaction in December 2017. The
Acquisition has had a positive impact on the Company, increasing
its total assets by 70.5% to GBP347.3 million. The Acquisition has
significantly improved the Company in terms of total assets, equity
base and the structure of the portfolio.
The Acquisition was part funded by the issue of 79.3 million new
shares at a price of 111.75 pence per share, raising GBP88.7
million and enlarging the capital base of the Company by 60%. 32.7
million of the new shares (GBP36.5 million) were issued to the
vendor as part consideration for the portfolio. The balance of the
consideration was met from a new debt facility, existing cash
resources, and the cash raised by issuing new shares to other
parties.
The Board believes the Acquisition should bring benefits to the
income and capital value of the Company over successive periods, as
well as helping the secondary market for the Company's shares
through greater liquidity, and reducing the Total Expense Ratio
(TER) as a result of having a larger capital base.
The new assets, which are located in Hull, Prestatyn, Barnsley
and Widnes, all have value-add potential and suit the investment
style and experience of the Company's Investment Manager. The
acquired properties improve tenant diversification, increase the
weighted average unexpired lease term of the Company's property
portfolio, and the additional income enhances dividend cover.
The Company acquired the four assets in a very cost-efficient
manner, which considerably reduced the negative impact that
transaction costs would usually have on the net asset value of the
Company. Property costs of the Acquisition were just 0.7% of the
purchase price. It is not uncommon for the costs of purchasing
property assets to be 6.8% of the purchase price. This represents a
saving to the Company of approximately GBP8.8 million.
The transaction is a significant step forward for the
Company:
-- it increased the Company's equity base by 60%;
-- total assets increased by 70.5% to GBP347.3 million;
-- contracted rent increased by 79.3%; and
-- the TER, calculated on total assets, reduced to 0.85%, as at
31 December 2017 (30 September 2017: 1.06%).
Debt
During the period, to help fund the Acquisition, the Company
secured an additional debt facility of GBP54.2 million, from Aviva
Commercial Finance Limited. The facility, which matures in 2027,
was drawn down at an 'all-in' fixed rate of 2.73%. The Company's
total debt is now GBP111 million at a blended 'all-in' fixed rate
of 2.86%. Gearing at 31 December was 32.0% of total assets and
within investment policy limits.
Cash and Future Funding
The Company has approximately GBP25.8 million of cash available
for investment on management initiatives within the enlarged
property portfolio. The Investment Manager has identified uses for
a significant proportion of the cash available over the coming
months which should be accretive to NAV.
The Company also has shareholder approval for an annual equity
placing programme of up to 60 million shares which could be used
for significant property acquisitions, if appropriate to do so,
further strengthening the equity base of the Company.
Outlook
Demand for UK real estate remains strong from both domestic and
international investors. However, with the possibility of a further
rise in interest rates, continuing geopolitical uncertainty and the
prospect of a slowing economy, it seems likely that the market wide
reduction in property yields we have seen over recent years could
be at or close to an end.
It is expected that future returns will be generated from the
resilience of portfolio income, the ability to grow income where
there are supply /demand imbalances and the skill to generate new
sources of income from management initiatives on assets in the
portfolio. The Board believes the Company has an Investment Manager
who can take advantage of this type of market and, following the
Acquisition and capital raise, the Company has the asset base to
exploit these opportunities to full advantage.
Portfolio Composition
Sector
Sector Exposure
(%)
------------------ ---------
Retail warehouse 75.34
------------------ ---------
Office 21.48
------------------ ---------
Other commercial 3.18
------------------ ---------
Geography
The portfolio is diversified across the regional markets and has
no exposure to Central London assets.
Sector Exposure
(%)
--------------- ---------
Wales 30.61
--------------- ---------
North West 15.38
--------------- ---------
North East 15.34
--------------- ---------
Yorkshire 12.37
--------------- ---------
West Midlands 11.03
--------------- ---------
Scotland 9.22
--------------- ---------
East Midlands 4.43
--------------- ---------
South West 1.62
--------------- ---------
William Hill, Chairman, commented:
"The equity raise and portfolio purchase is a significant step
forward in the development of the Company. Successfully executing
this complex transaction in such a short space of time has
significantly enhanced the Company, growing its total assets to
more than GBP347 million and increasing the contracted rental
income by over 79%. With a fully covered dividend, which is
increasing by 4.5%, and an enlarged capital base, the Company is in
an excellent position to progress during 2018."
Calum Bruce, Investment Manager, commented:
"Having refreshed the portfolio earlier in the year with two
sales and an acquisition, it made sense to apply cash resources and
use the opportunity to expand the Company's capital base by
acquiring the four retail park assets. We are an experienced
investor in, and developer of, retail parks and believe it is the
right time to be investing in the sector.
The new assets have a strong income stream, and also offer the
prospect of both rental growth and yield compression. We are
working on a number of asset management initiatives on the new
properties and continue to exploit value-add opportunities we have
identified across the entire portfolio."
Forthcoming Events
The next scheduled independent quarterly valuation of the
property portfolio will be conducted by Knight Frank as at 31 March
2018 with the NAV per share at that date expected to be announced
in April 2018.
The Company continues to have a placing programme for up to 60
million new shares in place, which it hopes to deploy if suitable
property acquisition opportunities are sourced.
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 - Canaccord Genuity 0207 523 8000
Calum Bruce - Ediston Properties Limited 0131 225 5599
Donald Cameron - Maitland Administration Services (Scotland) Limited 0131 550 3763
David Masters - Lansons 0207 294 3687
Laura Cronin - Lansons 0207 294 3607
This information is provided by RNS
The company news service from the London Stock Exchange
END
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