TIDMCREI
RNS Number : 2426M
Custodian REIT PLC
19 January 2016
19 January 2016
Custodian REIT plc
("Custodian REIT" or "the Company")
Unaudited Net Asset Value as at 31 December 2015 and Increase in
Target Dividend
Custodian REIT (LSE: CREI), the UK commercial real estate
investment company, today reports its unaudited net asset value
("NAV") as at 31 December 2015, highlights for the period from 1
October 2015 to 31 December 2015 ("the Period"), details of the
portfolio acquired on 4 January 2016 and an increase in the target
dividend for the year ending 31 March 2017.
Financial highlights
-- NAV total return(1) of 1.5%
-- Proposed dividend for the Period of 1.5875p per share
-- NAV per share of 103.0p (30 September 2015: 103.0p)
-- RCF facility increased to GBP35m and term extended to 2020
-- GBP49.8m of new equity raised during the Period at average
premium of 3.0% to adjusted(2) NAV
-- Net gearing(3) of 5.1% loan-to-value (30 September 2015: 13.7%)
-- Increase in target dividend for the year ending 31 March 2017 to 6.35p per share
Portfolio highlights to 31 December 2015
-- Portfolio value of GBP254.0m (30 September 2015: GBP232.8m)
-- GBP1.2m (0.5%) portfolio valuation uplift
-- GBP19.9m invested in four acquisitions and on-going developments
-- Occupancy 97.9% (30 September 2015: 97.6%)
Acquisition of portfolio on 4 January 2016
-- Acquisition of nine properties(4) for GBP55.1m
-- Net initial yield ("NIY") of 6.32%, with an expected reversionary yield of 6.89%
-- Following acquisition, Company had net gearing of 20.7%,
uncommitted facilities of GBP8.1m, occupancy of 97.2% and weighted
average unexpired lease term to first break ("WAULT") of 6.8
years
(1) NAV movement plus dividends paid.
(2) Premium adjusted to deduct dividends earned but not paid
post ex-dividend date.
(3) Gross borrowings less unrestricted cash divided by portfolio
valuation.
(4) Representing nine of the 11 properties in the 'Target
Portfolio' described in the Company's November 2015 prospectus.
Net asset value
The unaudited NAV of the Company at 31 December 2015 was
GBP245.5 million, reflecting approximately 103.0 pence per share,
in line with the NAV per share at 30 September 2015:
Pence
per
share GBPm
-------------------------------------------- ----------- ----------
NAV at 30 September 2015 103.0 196.5
Issue of equity (net of costs) 0.0 48.5
103.0 245.0
Valuation uplift in property portfolio 0.6 1.2
Impact of acquisition costs (0.6) (1.2)
Net valuation movement 0.0 0.0
Income earned for the Period 2.4 4.7
Expenses and net finance costs for
the Period (0.9) (1.3)
Dividends paid (1.5) (2.9)
NAV at 31 December 2015 103.0 245.5
-------------------------------------------- ----------- ----------
The NAV attributable to the ordinary shares of the Company is
calculated under International Financial Reporting Standards and
incorporates the independent portfolio valuation as at 31 December
2015 and income for the Period, but does not include any provision
for the interim dividend for the Period, to be paid on 31 March
2016.
In the first seven quarters' trading we have been delighted to
grow the scale of the Portfolio from GBP95 million to GBP309
million (as at 4 January 2016), diversifying risk across 111
properties and 220 tenancies, while growing NAV and hitting all
dividend targets, fully covered by income.
Market
Property valuation growth started in London, spread to the
South-East in 2014 and took hold across regional markets in 2015.
This valuation growth has been partly due to the expectation of
future rental growth, but primarily due to the extraordinary demand
for commercial property investment in a supply-constrained market
from overseas investors, UK institutions, open-ended retail funds,
listed property companies and US and UK recovery funds. Most of
this demand has focused on large lot sizes, typically GBP10 million
plus. The need to commit funds to the market quickly has driven
investors to pay ever higher prices for ever larger assets, and
valuations have reacted accordingly. The market can now boast close
to 10 year low NIYs for large, good quality, regional assets,
particularly in the office, shopping centre, retail warehouse and
distribution sectors.
However, the same is not true for smaller lot sizes. While there
has been some yield compression, most can be accounted for by the
prospects of rental growth, with equivalent yields remaining more
stable than for larger lots and market pricing much closer to
long-term averages.
Outlook
Valuation
Custodian REIT's portfolio valuation has delivered a stable
equivalent yield of circa 6.75% since September 2014, demonstrating
very low volatility despite a rapidly changing market. Recent
demand-driven yield compression has been concentrated on large lot
sizes, particularly in central London, which is outside the
Company's sphere of operations. As we look forwards to the
remainder of 2016 and beyond, we expect the value of small lot
size, regional property to grow sustainably as a result of
underlying rental growth, rather than simply demand-led valuation
growth.
Income
Income is the lower risk component of total return, as it is
secured against tenants' lease contracts. Custodian REIT seeks to
maximise shareholder returns by paying one of the highest dividends
in its peer group. This dividend is supported by low levels of
gearing, with a target loan-to-value of just 25%. The Investment
Property Forum Consensus Forecast from November 2015 predicts
capital value growth across the UK market in 2016 to be less than
half that of 2015. Against this backdrop, we believe a focus on
income can deliver greater overall returns.
Costs
The growth of the fund has created economies of scale, with the
annual management charge falling from 0.9% to 0.75% of marginal NAV
above GBP200 million, and a dilution of the Company's fixed cost
base. These economies of scale enhance dividend cover and the
Company's ability to grow future dividends.
Acquisition of portfolio
On 4 January 2016 the Company acquired nine of the 11 properties
in the 'Target Portfolio' described in the Company's November 2015
prospectus (together "the Portfolio") for GBP55.1 million. The
Portfolio's current passing rent of GBP3.68 million reflects a NIY
of 6.32%, with an expected reversionary yield of 6.89%.
Between exchange and completion the Company sub-sold the
remaining two properties in the 'Target Portfolio', comprising an
industrial unit in Norbiton (Kingston upon Thames) and three shops
with offices above in Richmond at prices of GBP5.8 million and
GBP8.6 million respectively, reflecting a blended NIY of less than
5%.
Details of each property in the Portfolio are set out below:
Offices
West Malling - a modern 29,065 sq ft office situated on Kings
Hill Business Park let to Regus (Maidstone West Malling) Limited (a
subsidiary of Regus plc) with a WAULT of 2.2 years and a passing
rent of GBP558,160 per annum. The property provides a modern
detached two-storey office building in a prominent position with
motorway links in close proximity, with an opportunity to extend
the existing lease and to benefit from growing rents in the local
market.
Edinburgh - a 38,956 sq ft multi-let office to the west of
Causewayside, a primary arterial route into the city centre. The
offices are let to Digby Brown LLP, Megaswitch Networks Limited and
Age Scotland, with a recently vacated office suite available to
let, and the ground floor is let to Tesco Stores Limited and R
Scott Bathrooms Limited. The WAULT is 2.2 years and passing rent is
GBP442,193 per annum. The property underwent a comprehensive
refurbishment programme in 2004 and the vacant suite offers the
opportunity to enhance income and set a new rental level.
Industrial
Redditch - a 57,239 sq ft industrial/distribution unit on
Ravenswood Business Park, an established distribution location
approximately four miles south of the M42. The property is let to
Amco Services (International) Limited with a WAULT of 4.5 years and
passing rent of GBP315,000 per annum. There is a very short supply
of equivalent space locally and nearby industrial development is
planned or in progress, which should set new rental levels for the
town.
Chepstow - the Severn Link Distribution Centre, a modern 82,078
sq ft multi-let industrial estate comprising eleven units,
strategically situated on the Newhouse Farm Industrial Estate
immediately adjacent to junction two of the M48. The units are let
to eight tenants with a WAULT of 1.1 years, presenting various
asset management opportunities, with a passing rent of GBP279,628
per annum.
Warrington - two well specified industrial/warehouse units of
34,023 sq ft and 20,483 sq ft with access to junction 11 of the M62
and junction 21 of the M6. The property is let to EAF Supply Chain
Limited and Synertec Limited with a WAULT of 7.3 years and passing
rent of GBP259,903 per annum. Other occupiers in the vicinity
include Walkers, Pepsico, Farm Foods and Mercedes Benz. In common
with the rest of the UK there is a shortage of this type of space,
leading to pressure on rents and the likelihood of rental growth at
rent review or lease renewal.
Retail
(MORE TO FOLLOW) Dow Jones Newswires
January 19, 2016 02:00 ET (07:00 GMT)
Portsmouth - a modern 21,490 sq ft parade of four retail units
on the east side of Commercial Road in the heart of the retail
centre. The units are let to Poundland Limited, Your Phone Care
Limited, Sportswift Properties Limited (a subsidiary of Card
Factory plc) and Game Retail Limited with a WAULT of 3.3 years and
a passing rent of GBP525,800 per annum. Nearby occupiers including
M&S, Boots, Primark, New Look and Topshop. Commercial Road
benefits from a low vacancy rate and these units are likely to have
strong appeal to tenants, should they fall vacant.
Colchester - five shops totalling 18,977 sq ft between High
Street and Trinity Square. The units are let to Burton/Dorothy
Perkins Properties Limited, Laura Ashley Limited, H Samuel Limited,
Lush Retail Limited and Leeds Building Society with a WAULT of 1.9
years and a passing rent of GBP448,600 per annum. There are
potential opportunities to change the tenant mix and drive rents in
this location.
Guildford - 8,360 sq ft of retail and uppers floors between High
Street and North Street. The 3,075 sq ft retail unit arranged over
the ground floor and basement is let to Reiss Limited with an
unexpired term of 1.7 years and a passing rent of GBP198,400 per
annum. The upper floors measuring 5,285 sq ft are let to House of
Fraser (Stores) Limited as storage for their adjacent retail unit
with an unexpired term of 1.7 years and a passing rent of GBP85,083
per annum. Guildford is a prime retail location which has prospered
as the way people shop adjusts to online retailing, 'click and
collect' and out of town versus the high street. Dominant,
comparison retailing centres appear to have overcome competition
and continue to form an important part of the retail landscape.
Winnersh - two modern retail warehouse units totalling 30,120 sq
ft prominently situated on the southern side of Reading Road
linking Wokingham and Reading. The units are let to Wickes Building
Supplies Limited with an unexpired term of 11.1 years and Pets at
Home Limited with an unexpired term of 12 years, with a combined
passing rent of GBP571,950 per annum. Both units benefit from
extensive onsite car parking (141 spaces) and have an open planning
permission, making them suitable for all out of town retailers and
offering rental growth potential.
Following acquisition of the Portfolio, the Company has net
gearing of 20.7%, occupancy of 97.2% and a WAULT of 6.8 years. The
Portfolio has increased the Company's exposure to the office sector
at a time we are seeking to benefit from rental growth in this
market, and has grown the share of the portfolio located in the
South East. In all other regards, the Portfolio has diversified the
existing portfolio. The Company's portfolio sector, geographic and
income expiry analysis at 31 December 2015 and following
acquisition of the Portfolio on 4 January 2016 is as follows:
Valuation
Valuation 31 Period Weighting Weighting Weighting
4 Jan Dec valuation by income by income by income
Sector 2016 2015 movement 4 Jan 31 Dec 30 Sept
GBPm GBPm GBPm 2016 2015 2015
---------------- -------------- -------------- --------------- --------------- --------------- ---------------
Industrial 121.9 110.0 1.3 40% 44% 45%
Retail 86.3 58.4 (0.3) 27% 22% 25%
Other(5) 55.1 55.1 (0.1) 17% 20% 18%
Office 45.8 30.5 0.3 16% 14% 12%
Total 309.1 254.0 1.2 100% 100% 100%
---------------- -------------- -------------- --------------- --------------- --------------- ---------------
(5) Includes car showrooms, petrol filling stations, children's
day nurseries, restaurants and hotels.
Valuation Quarter Weighting Weighting Weighting
Valuation 31 Dec valuation by income by income by income
4 Jan 2016 2015 movement 4 Jan 31 Dec 30 Sept
Location GBPm GBPm GBPm 2016 2015 2015
---------------- ---------------- -------------- --------------- --------------- --------------- ---------------
South-East 76.8 49.3 0.6 24% 19% 20%
West
Midlands 50.2 45.7 0.0 16% 17% 14%
North-West 41.7 37.8 0.3 13% 14% 13%
North-East 27.8 27.8 (0.1) 9% 11% 12%
East
Midlands 27.7 27.7 0.1 13% 15% 17%
South-West 31.7 31.7 0.2 9% 11% 10%
Scotland 25.2 16.2 0.0 8% 7% 7%
East Anglia 23.0 16.4 0.1 6% 5% 6%
Wales 5.0 1.4 0.0 2% 1% 1%
Total 309.1 254.0 1.2 100% 100% 100%
---------------- ---------------- -------------- --------------- --------------- --------------- ---------------
4 Jan 31 Dec 30 Sept
Income expiry 2016 2015 2015
--------------------- ----------- ----------- ------------
0-1 years 8.9% 6.3% 7.5%
1-3 years 23.3% 16.8% 14.8%
3-5 years 21.3% 21.8% 23.4%
5-10 years 24.4% 29.2% 32.7%
10+ years 22.1% 25.9% 21.6%
Total 100.0% 100.0% 100.0%
----------------------- ----------- ----------- ------------
Dividends
An interim dividend of 1.5 pence per share for the quarter ended
30 September 2015 was paid on 31 December 2015. The Board expects
to propose an interim dividend relating to the Period of 1.5875
pence per share. In the absence of unforeseen circumstances, the
Board intends to pay further quarterly dividends to achieve the
target dividend(6) of 6.25 pence per share for the financial year
ending 31 March 2016.
Increase in target dividend
The prompt deployment of proceeds from the recent share issue
and the use of flexible debt facilities to acquire the Portfolio
increased gearing to 20.7% following the acquisition and enhanced
expected dividend cover. As a result, the Company has increased its
target dividend(6) for the financial year ending 31 March 2017 from
6.25 pence per share to 6.35 pence per share (a 1.6% increase),
which is expected to be fully covered by net rental income.
The Company's aim is to continue to increase dividends in a
sustainable way, at a rate which is fully covered by net rental
income and which does not inhibit the flexibility of its investment
strategy.
(6) This is a target only and not a profit forecast. There can
be no assurance that the target can or will be met and it should
not be taken as an indication of the Company's expected or actual
future results. Accordingly, shareholders or potential investors in
the Company should not place any reliance on this target in
deciding whether or not to invest in the Company or assume that the
Company will make any distributions at all and should decide for
themselves whether or not the target dividend yield is reasonable
or achievable.
Portfolio analysis
The portfolio is split between the main commercial property
sectors, in line with the Company's investment objective to
maintain a suitably balanced portfolio, but with a relatively low
exposure to offices and a relatively high exposure to industrial
and to alternative sectors, often referred to as 'other' in
property market analysis, as demonstrated in the sector weightings
table below:
Retail
Retail Warehouse Offices Industrial Other
-------------------------- ------------- --------------- -------------- ----------------- ------------
Custodian REIT 20% 7% 16% 40% 17%
IPD November 2015(7) 19% 20% 35% 19% 7%
(7) Source: Numis.
While deemed to be outside the core sectors of offices, retail
and industrial the 'other' sector offers diversification of income
without adding to portfolio risk, containing assets considered
mainstream but which typically have not been owned by institutional
investors.
(MORE TO FOLLOW) Dow Jones Newswires
January 19, 2016 02:00 ET (07:00 GMT)
Custodian Property Incom... (LSE:CREI)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Custodian Property Incom... (LSE:CREI)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024
