TIDMEPIC
RNS Number : 4771Y
Ediston Property Inv Comp PLC
05 May 2023
Ediston Property Investment Company plc
(LEI: 213800JRL87EGX9TUI28)
Net Asset Value ('NAV') as at 31 March 2023
And Trading Update
Ediston Property Investment Company plc (LSE: EPIC) (the
'Company') announces its unaudited NAV at 31 March 2023, which will
form part of the unaudited interim accounts expected to be
published in May 2023.
Quarter Headlines
-- Fair value independent valuation of the property portfolio at
31 March 2023 of GBP204.3 million, a like-for-like increase of 0.6%
on the valuation at 31 December 2022.
-- NAV per share at 31 March 2023 of 80.44 pence (31 December
2022: 80.93 pence), a decrease of 0.6% in the quarter.
-- NAV total return (including dividends) for the quarter of
1.0% (31 December 2022 quarter: -13.4%).
-- Portfolio weighted average unexpired lease term (WAULT) of
5.1 years and EPRA Vacancy Rate of 6.7%.
-- Rent collection expected to be 99.9% for the quarter.
-- Dividends totalling 1.25 pence per share (5.00 pence per
share annualised) paid in the quarter.
-- Share price total return of 5.4% for the quarter.
--------------------------------------------------------------------------------------------
-- Four asset management deals completed, at rents ahead of the
independent valuer's ERVs, securing GBP895,350 of rental income per
annum.
--------------------------------------------------------------------------------------------
Net Asset Value
The unaudited NAV of the Company at 31 March 2023 was GBP170.00
million, or 80.44 pence per share, a decrease of 0.6% on the
Company's NAV per share as at 31 December 2022.
Pence Per GBP million
Share
NAV at 31 December 2022 80.93 171.02
---------- ------------
Valuation of retained property
portfolio 0.26 0.54
---------- ------------
Capital expenditure (0.30) (0.63)
---------- ------------
Income earned 1.78 3.77
---------- ------------
Expenses & finance costs (0.98) (2.06)
---------- ------------
Dividends paid (1.25) (2.64)
---------- ------------
NAV at 31 March 2023 80.44 170.00
---------- ------------
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 March 2023, but does not include a provision for any accrued
monthly dividend.
Overview
The volatility in pricing in the first quarter of the Company's
new financial year dissipated in the second quarter as market
values, with the exception of offices, were generally flat.
During the quarter, the Company's investment portfolio increased
in value by 0.6%. The completion of asset management initiatives
contributed to this positive performance. This contrasted with the
significant fall in the previous quarter which gave rise to an
overall fall of 11.7% over the half year period. As a reference
point, the MSCI UK Monthly index recorded a market decline for
All-Property of 17.6% over the same period.
After adjusting for capital expenditure and the use of capital
to fund the uncovered dividend during the period, the Company's NAV
decreased by 0.6% in the quarter. Over the six-month period the NAV
declined by 15.2%.
The NAV total return over the quarter was 1.0% and -12.6% for
the half year. The share price total return was 5.4% and -5.5% for
the same periods. Dividends remained at previous levels and the
discount of the share price to NAV narrowed, ending the period at
-23.7%.
Strategic review
On 16 March 2023, the Board announced that it is undertaking a
strategic review of the options available to the Company to
maximise value for shareholders and to achieve its growth
objectives (the 'Strategic Review'). As stated in the announcement,
the Board has a preference for structuring a merger with one or
more REITs, but it will consider all options available to the
Company that offer maximum value for shareholders. Since commencing
the Strategic Review, the Board and its advisers have engaged with
a significant number of interested parties and the Board expects to
provide an update to shareholders in early Q3 2023.
Asset management activity
Four asset management deals were completed during the period,
securing GBP895,350 of income per annum.
At Widnes Shopping Park, having signed an Agreement for Lease
(AFL) last quarter, Poundland completed a five-year lease on a unit
of 11,295 sq. ft. Poundland is an existing tenant that has
increased its trading footprint by 126%. The new rent is 43% ahead
of the rent being paid by the former tenant and 12% ahead of the
independent valuer's estimated rental value (ERV) of the unit.
At Springkerse Retail Park, Stirling, DFS has upsized from a
unit of 9,979 sq. ft. and signed a 10-year lease with a five-year
break option on a unit extending to 11,916 sq. ft. The new rent is
68% higher than the rent being paid by the previous tenant who was
occupying the unit following an administration process completed
prior to the Company's ownership. The new rent is 13% higher than
the independent valuer's ERV.
Superdrug signed an AFL on a 7,539 sq. ft. unit on Prestatyn
Shopping Park. The new lease will commence in Q2, once vacant
possession has been secured from the existing tenant. On
completion, Superdrug will sign a 10-year lease with a five-year
tenant break option. The new rent is 2% ahead of the independent
valuer's ERV.
As announced on 1 March 2023, the Company has signed an AFL with
Marks and Spencer (M&S) at Plas Coch Retail Park, Wrexham. On
completion of landlord works in August this year, M&S will sign
a 10-year lease on a newly created 21,000 sq. ft. unit and will pay
a market rent which is 27% ahead of the independent valuer's
ERV.
A separate unit of 4,000 sq. ft. will be created as part of the
works, which will provide additional income to the Company once
let.
It is encouraging that the latest set of lettings have all been
achieved at rents ahead of the independent valuer's ERVs. It is
also a significant positive pointer to the strength of a park when
a tenant is upsizing as is the case at Widnes and Stirling.
The Investment Manager continues to progress lettings and lease
restructures across the portfolio, with the aim of improving the
Company's income stream and reducing the vacancy rate.
Cash and dividend
At the date of this announcement the Company has approximately
GBP47.7million of cash available for investment and operational
purposes. The Company also has GBP31.2 million of cash held in its
debt facility, which is subject to the lender's LTV requirements
being met for it to be released for investment purposes.
To provide maximum flexibility for the Strategic Review, the
Board has paused the investment of surplus cash until the outcome
of the review has been determined. The dividend will therefore
remain uncovered and funded from cash resources.
Debt
As at 31 March 2023, the average loan-to-value across the
Company's two debt facilities was 39.1%. The Company is compliant
with its debt covenants and there are no imminent refinancing
events, with GBP56.9 million maturing in May 2025 and GBP54.2
million in December 2027.
Summary and outlook
The Board is encouraged that the turbulence in capital markets
at the end of 2022 has eased over the first quarter of 2023. The
fact that tenants are taking new space and rent collection is
effectively 100% is also a good sign. However, retail markets
remain vulnerable to further interest rate rises and an economy
that falls into recession. The Board remains cautious on the
outlook but hopeful that the worst of the valuation declines have
been experienced and the Company can build from this base.
The completion of the Strategic Review will determine the future
direction of the Company. Although considerable Board and
Investment Manager resource is being utilised to drive this
process, there is no let-off in the ongoing management of the
portfolio. The Investment Manager continues to identify and execute
asset management initiatives to improve rental value, extend the
WAULT of the portfolio and drive the NAV upwards.
Portfolio sector weightings and tenant and locational exposure
as at 31 March 2023
Sector
Sector Exposure
(%)
Retail warehouse 100.0
---------
Geography
The portfolio is diversified across the regional markets.
Region Exposure
(%)
Scotland 29.3
---------
Wales 24.3
---------
Yorkshire 16.3
---------
North West 16.3
---------
North East 7.6
---------
East Midlands 6.2
---------
Top five tenants (contracted income) as at 31 March 2023
Tenant Exposure
(%)
B&Q Limited 11.7
---------
B&M Retail Limited 8.0
---------
Marks & Spencer
plc 7.6
---------
Boots UK Limited 4.7
---------
Pets at Home
Limited 3.9
---------
Valuation yield profile as at 31 March 2023
Net Initial Yield 6.2%
Equivalent yield 7.1%
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Forthcoming events
The Company expects to produce its unaudited interim results for
the period to 31 March 2023 in May.
The next interim dividend announcement is expected to be made by
1 June 2023. The next scheduled independent quarterly valuation of
the property portfolio will be conducted by Knight Frank LLP for 30
June 2023. The unaudited NAV per share at that date is expected to
be announced in July 2023.
The Company intends to publish its next factsheet shortly, which
will be made available on the Company's website at
www.ediston-reit.com.
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 - Investec Bank plc 0207 597 5873
Calum Bruce - Ediston Investment Services Limited 0131 225 5599
Ruth Wright - JTC
0203 893 1011
Ben Robinson - Kaso Legg Communications 0203 995 6672
Stephanie Ross - Kaso Legg Communications 0203 995 6676
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