REIT News - March 2022
Welcome to Ince Corporate Finance’s REIT News update...
REIT Market Overview
The month of February saw a significant activity in the REIT environment, particularly in the warehouse and logistics sectors.
British Land announced the acquisition of three warehouses at Hannah Close, Wembley, for £157m. Empiric Student Property acquired the freehold of a new 92-bed purpose-built studio asset in Bristol City for £19.0m. LondonMetric Property announced the acquisition of an urban logistics warehouse in Luton for £15.5m. Schroder Real Estate Investment Trust exchanged contracts for a 44,602sf office in Nottingham. Tritax EuroBox agreed the acquisition of a €144.26m prime logistics asset in Roosendaal, the Netherlands.
(Ticker, Share Price, EPRA NAV per Share, Premium/Discount)
AEW UK REIT Plc (LON:AEWU, 115.2p, 114.2p, +0.9%)
AEW UK REIT has announced that planning consent has been granted for the demolition and development of a 527- unit student accommodation scheme at 225 Bath Street in Glasgow city centre. This follows the exchange of contracts for the sale of the site with IQ Student Accommodation in October 2020. The sale of 225 Bath Street is expected to complete after the standard 3-month judicial review period. Once the sale has completed, the occupancy rate for the portfolio (at 31 December 2021) will improve to 93.08%, from 88.98%.
AEW UK REIT has announced the acquisition of the PRYZM Nightclub in Cardiff for a purchase price of £3,625,000 or £92 per sf. The purchase price reflects a NIY of 8%, with an anticipated reversionary yield of circa 9%. The property is located in Cardiff city centre, in close proximity to the Principality Stadium and St David's Shopping Centre, and prominent within the leisure and late-night district. It provides 39,469sf of nightclub and bar accommodation. The property is single-let to a subsidiary of Rekom UK (formerly The Deltic Group), operating as "PRYZM" and "Steinbeck & Shaw", providing over 14 years unexpired term.
Alternative Income REIT Plc (LON:AIRE, 76.0p, 87.8p, -13.4%)
Alternative Income REIT has issued a trading and business update for the quarter to 31 December 2021. Key details are:
- Collected 93.3% of the total rent due in the current quarter and this increases to 99.0% when accounting for the tenants who are contracted to pay monthly. The remaining 1.0% is expected to be recovered during the remainder of Q1 2022;
- EPRA EPS for the quarter of 1.68p per share, representing dividend cover for the quarter of 129% (30 September 2021: 1.59p, 122% cover);
- Property portfolio value of £107.73m across 18 properties (31 December 2020: £108.53 million across 19 properties);
- NIY of portfolio was 5.71%(30 September 2021: 5.8%);
- NAV up 2.94%to £72.75m, 90.38p per share, (30 September 2021: £70.68m, 87.80p);
- Occupation at 99.7% (31 December 2020: 100%) with final terms on the remaining 0.3% agreed with Bgen Ltd for a higher rent in respect of an area of land at St Helens, which was vacated during Q4 2021;
- WAULT of 18.2 years to the earlier of break and expiry (31 December 2020: 18.3 years) and 20.2 years to expiry (31 December 2020: 20.3 years).
Big Yellow Group Plc (LON:BYG, 1,415.0p, 1,034.6p, +36.8%)
Big Yellow Group has reported that it has experienced a fire in the early hours of Saturday, February 26, at its Armadillo Cheadle store, which has resulted in a total loss to the store. The cause of the fire is being investigated by Greater Manchester Fire Brigade and the Police and is at this stage unknown. There were no staff members or customers on site when the fire started and there have been no injuries. The store is a leasehold with five years remaining on the lease, and the balance sheet value of this store at 30 September 2021 was £3.3m. Buildings all risk insurance is in place for the full reinstatement value with the landlord. It also has insurance cover in place for both fit out and four years loss of income.
British Land Plc (LON:BLND, 529.6p, 681.0p, -22.2%)
British Land has announced that it has exchanged on the acquisition of three warehouses at Hannah Close, Wembley, for £157m. It is well located within the M25, just outside the North Circular, providing an excellent, medium term opportunity to deliver a multi-storey, urban logistics hub for Central and West London, where supply is highly constrained. The three warehouses comprise over 245,000sf on a 12.5 acre site and are fully let to Amazon, Euro Car Parts and the North London Waste Authority generating an annual income of £3.6m with significant reversion. The area around Hannah Close is designated a Strategic Industrial Land location, promoting industrial employment and development and offers excellent road and rail connectivity, essential for last mile urban logistics operators. It also provides good access to the underground, helping to attract employees to the location.
Civitas Social Housing Plc (LON:CSH, 88.3p, 108.8p, -18.8%)
Civitas Social Housing has announced its quarterly NAV at 31 December 2021. Key details are:
- IFRS NAV per share of 108.78p (30 September 2021: 108.49p);
- Rents received as normal with no impact from COVID-19;
- Third 1.3875p quarterly dividend declared in line with full year target of 5.55p (2021: 5.40p).
Capital & Counties Properties Plc (LON:CAPC, 116.1p, 212.4p, -45.3%)
Capital & Counties Properties has announced full year results to 31 December 2021.Key details are:
- Total equity of £1.8bn (31 December 2020: £1.8bn);
- EPRA NTA212.4p per share (31 December 2020: 212.1 p per share);
- Total property return 1.5% (FY 2020:-24.4%);
- Total shareholder return 16.5% (FY 2020:-44.3%);
- Total property value£1.8bn, a decrease of 1.3%(like-for-like) (31 December 2020: £1.9bn);
- Group net debt to gross assets ratio of 24% (31 December 2020: 28%);
- Underlying net rental income of £52.3m (31 December 2020: £43.6m);
- Underlying EPS of 0.5 p (FY 2020:-0.7 p per share);
- Group net debt of £599m (31 December 2020: £710m) and net debt to gross assets of 24% (Dec 2020: 28%);
- Undrawn facilities and cash of £652m (31 December 2020: £1bn);
- Completion of a new £300m unsecured RCF for Covent Garden, replacing the previous facility which was due to mature in December 2020;
- Early repayment of £75m of private placement loan notes due to complete shortly.
Custodian REIT Plc (LON:CREI, 102.4p, 113.7p, -9.9%)
Custodian REIT has announced highlights for its quarter to 31 December 2021. Key details are:
- Dividend per share for the quarter of 1.375p, a 10%increase from the previous quarter of 1.25p;
- NAV total return per share of 8.5%, comprising 1.2% dividends paid and a 7.3% capital increase;
- NAV per share of 113.7p (30 September 2021: 106.0p);
- NAV increased to £501.4m (30 September 2021: £445.9m) due to valuation increases of £36.2m and issuing £19.1m new equity for the corporate acquisition of DRUM Income Plus REIT;
- Dividend cover for the year 31 March 2022 to date of 109%;
- EPRA EPS of 1.3p (quarter to 30 September 2021: 1.6p) primarily due to net gearing of 19.5%(30 September 2021: 19.6%) and EPRA occupancy decreasing to 90.9% (30 September 2021: 91.6%). Of the vacant space, 34% is currently under offer to let and a further 32% is planned vacancy to enable redevelopment or refurbishment;
- Property portfolio value of £637.9m (30 September 2021: £565.3m); £36.2m aggregate valuation increase.
Derwent London Plc (LON:DLN, 3,044.0p, 3,959.0p, -23.1%)
Derwent London has announced full year results to 31 December 2021. Key details are:
- Total return of 5.8% (FY 2020:-1.8%);
- EPRA NTA up 3.9% to 3,959p per share (31 December 2020: 3,812p);
- Net rental income up 2.2% to £178.2m (FY 2020: £174.3m);
- EPRA earnings up 9.7% to £122.0m or 108.8p per share (FY 2020: 99.2p);
- IFRS PBT of £252.5m (FY 2020: loss of £83.0m);
- £350m 10-year 1.875% green bond issued in November;
- Interest cover 464%, LTV ratio of 20.8%;
- Undrawn facilities and cash of £608m (31 December 2020: £476m);
- Total property return of 6.3%;
- Portfolio valued at £5.7bn, an underlying rise of 3.5% with development valuations up 9.2%;
- £417.5m of property acquisitions;
- £405.1m of property disposals, £9.7m above December 2020 book value;
- 708,000sf under construction - two major schemes completing in H1 2022 and 19-35 Baker Street W1 commenced in H2 2021;
- £13.7m of new lettings at 3.6% above December 2020 ERV;
- £31.9m of asset management transactions in line with December 2020 ERV;
- EPRA vacancy rate of 1.6% (31 December 2020: 1.8%).
Empiric Student Property Plc (LON:ESP, 88.0p, 105.7p, -16.8%)
Empiric Student Property has issued a trading update. Key details are:
- Academic Year (AY) 2021/22 revenue occupancy across the portfolio has increased from 81% to 84% since previous update in November 2021 (AY20/21: 68%) currently greater proportion of UK domestic students now representing 48% of bookings, the balance being 26%Chinese and 26%other international;
- Expecting strong demand from both domestic and international students, supported by the ongoing lifting of restrictions and opening up of international travel;
- Completed the disposal of a portfolio of five non-core assets in Leicester, Durham and Exeter for £26.5m, in line with the latest book value as at31 December 2021;
- Total value of assets now sold is £44.6m - discussions regarding further non-core property disposals are ongoing;
- On target with development in Bristol (153 beds) and commenced a development in Edinburgh (60 beds), which will both complete in time for the start of AY 2022/23;
- Board continues to target a dividend of atleast2.5p for the financial year 2022.
Empiric Student Property has announced that it has acquired the freehold of a new 92-bed purpose-built studio asset in a prime location in Bristol city centre from McLaren Property for £19.0m, reflecting a NIY of 4.75%. The property, which was completed in September 2021, has 100% of the beds let for the current academic year. Currently, Empiric has two operational assets in Bristol (159 beds), with a third in development (153 beds) that is due to be completed in time for the academic year 2022/23. With this acquisition, the company will have 404 beds in the city for the academic year 2022/23. The 92-studio bed property is on Baldwin Street and is a new high-quality purpose-built construction behind a retained façade, developed by McLaren Property. It has an EPC B rating and is BREEAM Very Good certified, with a range of energy saving initiatives and wellbeing measures.
Great Portland Estates Plc (LON:GPE, 680.5p, 796.0p, -14.5%)
Great Portland Estates has issued an update for the period since 1 October 2021. Key details are:
- Agreed 17 new lettings across 102,100sf, generating an annual rent of £5.5m (GPE share: £4.6m) with market lettings 9.8% above March 2021 ERV;
- Of the 17 leases that completed, four were for the Flex spaces with the most recent fully fitted and fully managed leases at Pollen House, W1 achieving a rent of £210 per sf;
- Has now signed 460,900sf of new lettings since the start of the financial year (1 April 2021), generating a combined annual rent of £32.5m (GPE share: £26.4m), with market lettings 9.8%ahead of March 2021 ERV;
- Further 94,500sf under offer for a combined rent of £6.2m, 3.6%ahead of September 2021 ERV;
- December quarter's rent collection was in line with the previous quarter;
- Extended the maturity date of £400m of ESG-linked RCF by 12 months to January 2027.
Hammerson Plc (LON:HMSO, 37.0p, 69.0p, -46.4%)
Hammerson has confirmed recent press speculation that it is in discussions with entities related to Redical Holdings AG on terms for a possible sale of its Victoria Gate and Victoria Quarter shopping centres and that the pricing under discussion is £120m, which would represent a class 2 transaction.
Lok'nStore Plc (LON:LOK, 955.0p, 556.0p, +71.8%)
Lok'nStore Group has issued an update on trading for the half year to 31 January 2022. Key details are:
- Self-storage revenue up 34.1% on the previous year, driven by significant improvements in both occupancy and pricing. Price per sf of occupied space was up 18.5% and unit occupancy was up 6.0%over 12 months;
- New landmark store in Warrington now open - on site at a further five stores, two of which in Wolverhampton and Stevenage will be open in the coming months;
- Further three sites progressing with lawyers.
LondonMetric Property Plc (LON:LMP, 260.0p, 213.4p, +21.8%)
LondonMetric Property has announced the acquisition of an urban logistics warehouse in Luton from Marcol Industrial Investments for £15.5m. The 168,000sf property is located on Luton Enterprise Park, close to Luton town centre and J11A of the M1. It is let to two occupiers with a WAULT of three years. The rent of £0.7m pa equates to £4.20 per sf, reflecting a NIY of 4.3% that rises to 5.9% based on ERV. The property offers significant potential for redevelopment, which LondonMetric will look to progress on expiry of leases.
LondonMetric Property has announced that it has disposed of a car showroom investment in Solihull for £15.0m, reflecting a NIY of 4.75%. The 52,000sf asset was acquired as part of the Savills IM Fund acquisition in December 2021. It is let to Johnsons Cars operating as Volkswagen for a further 17 years and generates £0.8m pa of rent (£15.00 per sf). Completion of the sale has been delayed to the end of April, which will result in an additional £0.2m of rent. Separately, LondonMetric has acquired a 40,000sf NNN retail asset in Middleway, Birmingham for £8.0m, reflecting a NIY of 7.8%. The prominently located property is let to Dunelm and Currys with a WAULT of two years and generates £0.7m pa of rent (£15.00 per sf, excluding ancillary income).
LXI REIT Plc (LON:LXI, 138.6p, 139.5p, -0.6%)
LXi REIT has decided to increase the target size of its Subsequent Issue from approx £125m to £250m. This decision has been made on the basis of the strong level of support received from investors, which already materially exceeds the new £250m maximum size of the fundraise, and the depth of the pipeline of nearer term investment opportunities, which has grown to a level now in excess of £350m.
LXi REIT has announced nine acquisitions, funded by its recent £250m equity capital raise. The acquisitions, from six different vendors/developers, total £87m and reflect an accretive 5.1% NIY (net of purchase costs), versus the current portfolio valuation yield of 4.5%. The acquisitions are:
- Co-op Group convenience stores: acquired three convenience stores in Norwich, Aston and Washington. Each benefit from new, unbroken 20-year leases to Co-operative Food Group, with fixed rental uplifts of 2.5% pa compounded every five years;
- David Lloyd Club, Hamilton: acquired a premium health and racquets club, extending to 100,000sf and with 333 parking spaces. Facilities include an aerobics studio, fully equipped gym, indoor heated pool, sauna, steam room, spinning rooms, 4 badminton courts, 7 indoor and 3 outdoor tennis courts, 6 treatment rooms and hair salon. The property is fully let to David Lloyd Leisure with 25 years unexpired until first break. The passing rent is £6.70 per sf and increases annually in line with RPI inflation, capped at 4%pa;
- Q-Park, York: acquired a two-storey car park incorporating 385 spaces in York, fully let to Q-Park and guaranteed by Q-ParkHoldingBVon a long lease with 21 years unexpired to first break. The rent increases annually in line with RPI inflation, capped at 4% per annum and collared at 2.5% pa;
- Sainsbury's forward funding, Bewdley: acquired, by means of a pre-let forward funding, a convenience store in Bewdley, fully pre-let to Sainsbury's Supermarkets on a new, unbroken 15-year lease, with five yearly CPI inflation linked rental uplifts, capped at3%pa and collared at1%pa compounded;
- Premier Inn, Exeter: acquired a 44-bedroom Premier Inn budget hotel in Exeter, fully let to Whitbread Group, parent company of Premier Inn, on a long lease with 16 years unexpired to first break. The rent reviews five yearly in line with CPI inflation, capped at 4% pa compounded;
- Compass training facility, Milton Keynes: acquired a training facility extending to 160,000sf across four buildings on a 12-acre site, fully let to Compass Group, on a long lease with 20 years unexpired to first break. The current rent equates to £11psf and reviews annually in line with RPI inflation, capped at 5% pa.
LXi REIT has announced two acquisitions totalling £57m reflecting a 5.25% NIY (net of purchase costs), versus the current portfolio valuation yield of 4.5%. It has now deployed £144m since the capital raise, which closed on 9 February 2022. Key details of the transactions are:
- Acquired, by means of a pre-let forward funding, a 77,000sf office in Dundee, fully pre-let to BT Group plc on a new, unbroken 17.5-year lease, with five yearly CPI inflation linked rental uplifts, capped at 3% pa and collared at 1% pa compounded. Full planning consent is in place, the Agreement for Lease has been exchanged and the property is being funded on a fixed price basis. LXi will receive a cash-backed income from the developer during the construction period in line with the purchase yield.
- Acquired five customer service, car storage and repair and maintenance facilities in Chertsey, Northampton, Newcastle, Carlisle and Cardiff, by means of a sale and leaseback with Cazoo. Each property is fully let to Cazoo Limited on a new, unbroken 20-year lease with five yearly CPI linked rental uplifts, capped at 4% pa and collared at 2% pa compounded.
LXi REIT has announced two forward funding acquisitions, funded by its recent £250m equity capital raise. The acquisitions total £26m and reflect an accretive 5% NIY (net of purchase costs), versus the current portfolio valuation yield of 4.5%. For each of these forward funding acquisitions, full planning consent is in place, the Agreements for Lease have been exchanged and the properties are being funded on a fixed price basis. The Company will receive a cash-backed income from the developers during the construction periods in line with the purchase yields. Key details are:
- Acquired, by means of a pre-let forward funding transaction, a 45,000sf Tesco foodstore (75% of the total value) and a 22,000sf Home Bargains (25% of the total value) in Houghton le Spring. The property will include 329 car parking spaces, as well as electric vehicle charging points, and comprises a large, nine-acre site. The foodstore has been fully pre-let to Tesco on an unbroken 20-year lease. The starting rent reflects a low rent per sf and increases five yearly in line with CPI inflation. The Home Bargains store has been fully pre-let on an unbroken 15-year lease. The starting rent reflects a low rent per sf and increases five yearly upwards only in line with open market value;
- Acquired, through a pre-let forward funding transaction, a convenience store in Horncastle. The property benefits from a new, 25-year lease to Co-Operative Food Group Limited (with a one-off break right at year 15), with fixed rental uplifts of 2.5%pa compounded every five years.
McKay Securities Plc (LON:MCKS, 218.0p, 322.0p, -32.3%)
McKay Securities has announced that it has exchanged contracts to sell the freehold interest of Great Brighams Mead, a prominent office building located in Reading's town centre, to residential property developer King's Oak. The sale price of £19.00m (£224 per sf) reflects a premium of 21.0% to the 30 September 2021 book value. Completion of the sale is conditional on delivering vacant possession and is anticipated in April 2022. Great Brighams Mead was developed by McKay in 2000 and has been let since then on a 21-year lease, which expires on 24 March 2022. The current rent passing is £2.28m pa. The 84,840sf three-storey building sits on a 2.6-acre site within Reading's town centre. The site was part of a larger holding acquired by McKay in 1973 for £0.91m.
Picton Property Income Plc (LON:PCTN, 98.4p, 112.8p, -12.8%)
Picton Property Income has announced that it has completed the off-market acquisition of Mill Place Trading Estate in central Gloucester for £10.4m. The estate is located directly adjacent to the Madleaze Trading Estate, which Picton purchased in September 2021. It comprises 38 industrial units totalling 365,000sf on a 19.1-acre site, located between Bristol Road and the Gloucester and Sharpness canal. Approx. 14 acres is freehold, and the balance is held leasehold. The estate is let to 25 occupiers and the total net rental income is £0.68m pa, equating to a low rental rate of £2.79 per sf overall. 79,000sf of space is currently vacant which will be upgraded or redeveloped prior to leasing. The purchase price reflects a NIY of 6.1%. Picton’s combined ownership now totals over 29 acres, with 670,000sf of warehouse and ancillary accommodation, with a site coverage of 52%. The average rental across leased property is £2.76 per sf and there is a further 100,000sf of vacant accommodation that can be upgraded or redeveloped subject to occupational demand. The combined consideration is £23.5m or £35 per sf. The acquisition was funded using the RCF and the proforma LTV will increase to 22% post acquisition (31 December 2021: 21%).
Primary Health Properties Plc (LON:PHP, 135.4p, 116.7p, +16.0%)
Primary Health Properties has announced full year results to 31 December 2021. Key details are:
- Adjusted EPS up 6.9%to 6.2p (FY 2020: 5.8p);
- Contracted annualised rent roll up 4.1%to £140.7m (31 December 2020: £135.2m);
- Additional annualised rental income on a like-for-like basis of £2.4m or 1.8% from rent reviews and asset management projects (FY 2020: £2.0m or 1.6%; FY 2019: £1.9m or 1.5%);
- Refinancing of a number of legacy loan facilities with Aviva Investors reducing average cost of debt to 2.9% (31 December 2020: 3.5%) resulting in annualised interest cost savings of approximately £5.0m;
- EPRA cost ratio reduced to 9.3%(FY 2020: 11.9%);
- Quarterly dividends totalling 6.2p per share distributed in the year, a 5.1% increase over 2020 (5.9p per share);
- Adjusted NTA per share up 3.4%to 116.7p (31 December 2020: 112.9p);
- Property portfolio valued at £2.8bn (31 December 2020: £2.6bn) reflecting a NIY of 4.64% (31 December 2020: 4.81%);
- Revaluation surplus, including profit on sales, of £110.5m (31 December 2020: £51.4m), representing growth of 4.1% (FY 2020: 2.0%);
- Strong pipeline of targeted acquisitions, developments and asset management projects with a value of approximately £337m in the UK and £107m (€127m) in Ireland of which £72m and £80m (€95m) is in legal due diligence in both countries;
- Occupancy at 99.7%(31 December 2020: 99.6%) and a WAULT of 11.6 years (31 December 2020: 12.1 years);
- 30 asset management projects completed in the year and a further nine currently on-site, investing £15.0m, creating additional rental income of £0.4m pa and extending the WAULT back to over 20 years;
- LTV ratio 42.9%(31 December 2020: 41.0%);
- Weighted average debt maturity extended to 8.2 years (31 December 2020: 6.5 years);
- Post period end €75m private placement loan note issued for a 12-year term at a fixed rate of 1.64% to finance continued expansion in Ireland;
- Refinanced a number of legacy loan facilities with Aviva Investors, with a new sustainability linked £200m facility for a 15-year term at a fixed rate of 2.52%and renewed existing facilities with NatWest and Santander;
- Cash and collateralised undrawn loan facilities totalling £321.2m (31 December 2020: £361.5m) after capital commitments.
Regional REIT Plc (LON:RGL, 88.5p, 99.1p, -10.7%)
Regional REIT has announced its portfolio valuation at 31 December 2021. Key details are:
- Portfolio valuation of £906.1m (31 December 2020: £732.4m) follows the £236.0m portfolio acquisition made in Q3 2021;
- Like-for-like value up 1.1% in 2021 after adjusting for capital expenditure, acquisitions and disposals;
- Gross rent roll of £72.1m (31 December 2020: £64.2m);
- ERV £94.6m (31 December 2020: £76.6m);
- 168 properties (31 December 2020: 153);
- 1,077 occupiers (31 December 2020: 898);
- Good progress in portfolio rotation with offices (by value) at 89.8% of the portfolio (2020: 83.5%), industrials 5.1% (2020: 11.1%), retail 3.7%(2020: 4.1%), and Other 1.4% (2020: 1.3%);
- England &Wales (by value) represented 81.0% (2020: 82.7%) of the portfolio with the remainder in Scotland;
- EPRA Occupancy (by ERV) at81.8%(31 December 2020: 89.4%) - EPRA Occupancy was impacted by the £236.0m portfolio acquisition made in Q3 2021. Asset management plans are in place to improve occupancy;
- Average lot size c. £5.4m (2020: c. £4.8m);
- Net LTV was 42.4%(31 December 2020: 40.8%);
- At 16 February 2022, Q1 2021 rent collections amounted to 99.3%, Q2 2021 to 99.5%and Q3 2021 to 99.1%.
Residential Secure Income Plc (LON:RESI, 101.0p, 107.9p, -6.4%)
Residential Secure Income has announced a proposed placing, through an accelerated bookbuild, and a retail offer to raise gross proceeds of up to a maximum of £20m (11% of the issued share capital) at an issue price of 108.5p per share. The placing price represents a premium of 1.3% to the unaudited ex-dividend EPRA NTA per share of 107.11p at 31 December 2021. The net proceeds of the issue, together with associated leverage, will be used to finance up to £39m of shared ownership transactions, which are currently in legals.
Schroder Real Estate Investment Trust Plc (LON:SREI, 52.3p, 70.4p, -25.7%)
Schroder Real Estate Investment Trust has announced that it has exchanged unconditional contracts to sell The Arc, a 44,602sf office in Nottingham. The disposal price represents a 39% premium to the 31 December 2021 valuation of £9.35m and reflects a NIY of 4.5%. Completion is scheduled on 28 February 2022. Situated on the edge of Nottingham city centre, the Company acquired The Arc in August 2018. The asset produces a net rent of £622,210 pa with a WAULT of 1.7 years. Based on the disposal price, the asset has generated an ungeared total return of 12.1% pa since acquisition.
Schroder Real Estate Investment Trust announces its net asset value ('NAV') and dividend for the quarter to 31 December 2021. Key details are:
- NAV of £345.9 million (30 September 2021: £323.4 million);
- NAV per share increase of 7.0% and total return of 8.1%;
- 6.3% increase to the quarterly dividend to 0.772 pence per share;
- This reinstates the dividend back to its pre-pandemic level;
- £19.85 million off-market acquisition of four industrial assets in the northwest of England in December reflecting a 6.9% net initial yield, delivered a 4.3%valuation increase as at31 December 2021;
- Rent collection levels stabilising at pre-pandemic levels, with 96%of rent due for the quarter ending 31 March 2022 collected, in line with the equivalent date in the previous quarter;
- Post quarter end disposal of a Nottingham office building for £13.0 million, representing a 39% premium to the31 December 2021 valuation and a 4.5% net initial yield.
SEGRO Plc (LON:SGRO, 1,301.5p, 1,137.0p, +14.5%)
SEGRO has announced full year results to 31 December 2021. Key details are:
- Adjusted PBT up 20%to £356m (FY 2020: £296m);
- Adjusted EPS up 15%to 29.1p (FY 2020: 25.4p) including 1.1 p relating to recognition of performance fees from SELP joint venture;
- Adjusted NAV per share up 40%to 1,137p (31 December 2020: 814p) - portfolio valuation growth of 29%, including ERV growth of 13.1%(31 December 2020: 2.5%);
- Occupier demand, customer focus and active management of the portfolio generated £95m of new headline rent commitments, including £49m of new pre-let agreements, and a 13%average uplift on rent reviews and renewals (FY 2020: £78m);
- Net capital investment of £1.5bn (FY 2020: £1.3bn) in asset acquisitions, development projects and land purchases, less disposals;
- Development pipeline with 1.1m sqm of projects under construction or in advanced pre-let discussions, equating to £82m of potential rent, of which 70%has been pre-let, providing growth in earnings this year and next;
- Access to £1.1bn of available liquidity;
- LTV at 23% (31 December 2020: 24%);
- Full year dividend increased 10% to 24.3p (2020: 22.1p);
- Final dividend increased by 11% to 16.0p (2020: 15.2p).
Shaftesbury Plc (LON:SHB, 589.5p, 619.0p, -4.8%)
Shaftesbury has issued a trading update for the period 1 October 2021 to 3 February 2022. Key details are:
- Robust occupier demand for all uses and each location continues; vacancy continues to decline towards long-term, pre-pandemic average and rent collection continues to improve;
- Leasing transactions with a combined rental value of £10.6m completed in the quarter;
- 60 commercial lettings and lease renewals concluded with a rental value of £7.9m, on average at rents ahead of year end valuation;
- Rent reviews with a rental value of £1.4m concluded at c.14% above previous rental levels;
- 49 residential lettings (rental value of £1.3m). No apartments available to let at31 December 2021; rental levels improving;
- EPRA vacancy at 31 December 2021: 5.1%of portfolio ERV, down 0.9%over the quarter; further decrease to 4.9% by 2 February 2022;
- Available-to-let vacancy: 2.9% of ERV, across 57,000 sq. ft. (30 September 2021: 2.9%);
- Space under offer: 2.2% (30 September 2021: 3.1%);
- Rent collection at 2 February 2022:
- 88% of rent for the quarter to 31 December 2021 collected to date;
- 77% of January 2022 rents collected to date; further recoveries expected;
- Collection rates to improve further as footfall and trading bounce back.
- 165,000sf of space under refurbishment at31 December 2021;
- ERV: £11.3m, 8.6% of portfolio ERV (30 September 2021: 8.9%);
- 72 Broadwick Street scheme expected to complete in phases by May 2022;
- Other schemes underway extending to 96,000sf; 4.4%of portfolio ERV, of which 0.3% under offer;
- Five acquisitions (£18.5m, excluding acquisition costs) in Covent Garden, Chinatown and Fitzrovia;
- Disposal of two non-core properties: £11.4m gross proceeds, 9.6% above book value at30 September 2021;
- At 31 December 2021:
- Net debt: £740.9m (30.9.21: £748.5m);
- Available liquidity: £318.9m, comprising £218.9m of cash and an undrawn revolving credit facility amounting to £100m.
Standard Life Investment Property Income Trust Plc (LON:SLI, 78.6p, 101.0p, -22.2%)
Standard Life Investments Property Income Trust has announced its NAV at 31 December 2021. Key details are:
- NAV per share up 8.5%to 101.0p (30 September 2021: 93.1p), resulting in a NAV total return, including dividends, of 9.5%for the quarter;
- Portfolio valuation (before CAPEX) increased by 6.9%on a like-for-like basis;
- Two purchases completed in Q4, both in the industrial sector - £7.8m invested in a completed and let unit in Washington, Tyne and Wear - £2.8m on a site purchase in St Helen’s as part of a pre-let development that has a total cost of £15m;
- Three new leases completed (£715,730 pa of rent), three lease extensions / renewals securing £1,158,859 pa, and three rent reviews completed with an uplift in rent of £94,430p;
- £50m available for investment in the form of low cost, RCF of £55m net of current cash after dividend and other financial commitments;
- LTV of 19.2% - overall blended interest rate of 2.725% pa.
The Unite Group Plc (LON:UTG, 1,068.0p, 880.0p, +21.4%)
The Unite Group has announced full year results to 31 December 2021. Key details are:
- Adjusted earnings up 20% to £110.1m (FY 2020: £91.0m);
- Adjusted EPS up 15% to 27.6p (FY 2020: 24.0p);
- IFRS PBT of £343.1m (FY 2020: loss of £120.1m), driven by a valuation gain of £182.2m (31 December 2020: £178.8m loss);
- EPRA NTA up 8%to 882p (31 December 2020: 818p);
- IFRS NAV up 9%to 880p (31 December 2020: 809p);
- Total accounting return of 10.2% for the year (2020: -3.4%);
- Dividend of 22.1p (2020: 12.8p), reflecting a payout ratio of 80% of adjusted EPS (2020: 53%);
- 94% occupancy and 2.3% rental growth for 2021/22 (2020/21: 88% and -0.6%, 2019/20: 98% and 3.4%);
- Reservations at 67% for 2022/23 (2020/21: 60%, 2019/20: 73%);
- LTV of 29%(31 December 2020: 34%);
- LSAV joint venture extended by 10 years to 2032 and receipt of £53m performance fee;
- Anticipates total accounting returns of c.10%in 2022, excluding any impact from yield movements;
- Return to 97% occupancy and rental growth of 3.0-3.5% for 2022/23;
- EPRA EPS guidance of 41-43p for 2022;
- Targeting adjusted EBIT margin of above 72% over the medium term (2021: 62.3%).
Tritax EuroBox Plc (LON:EBOX, 104.0p, 135.0p, -23.0%)
Tritax EuroBox has announced that it has conditionally agreed the acquisition of a €144.26m prime logistics asset in Roosendaal, the Netherlands, from Logistics Capital Partners (LCP), one of the Company's main development and asset management partners. The asset is pre-let to a top four global discount supermarket retail group. Once complete, the asset will comprise a single property, divided into three units, built in three phases. It will have a total net rentable area of approximately 113,179sqm built on a total site area of approximately 210,488sqm. This transaction is structured as a forward funding development opportunity, where the Company buys the land and funds the construction of the building under a fixed price contract. The total cost of the land and development expenditure is €144.26m and reflects a NIY of 3.5%, after purchase costs and non-recoverable expenditure. The lease will generate approximately €5.1m annually on completion of all three phases and is annually indexed to Dutch CPI. The lease incorporates a rent review and option to extend for a further five years at the end of the sixth year of the lease term. This review allows the rent to increase to the prevailing open market level, with a cap of 10% above the existing (indexed) rent at that time. LCP completed the construction of the first phase in December 2021, with completion of the second and third phases expected by 1 December 2022 and 1 April 2023, respectively. As part of the proposal, during the construction phase, LCP will pay the Company income equivalent to the expected rent, until practical completion.
UK Commercial Property REIT Plc (LON:UKCM, 76.1p, 102.0p, -25.4%)
UK Commercial Property REIT has announced its NAV at 31 December 2021. Key details are:
- EPRA NTA per share up 7.9% to 102.0p (30 September 2021: 94.5p) reflecting a 17.6% increase for the year ended 31 December 2021;
- LTV of 13.5% (30 September 2020: 4.4%);
- 7.6% increase in like-for-like property valuation, net of capital expenditure helping to grow the total portfolio to £1.5bn, of which 63% is industrials;
- Rent collection for billings raised in the fourth quarter of 2021 stood at 96% after allowing - total rent collection for 2021 standing at96%;
- EPRA earnings per share up 52.5%for the quarter to 0.90p (30 September 2021: 0.59p);
- Quarterly dividend increased by 16.4% to 0.75p per share;
- Dividend cover for 2021 of 111% (91% when including the top-up dividend for 2020).
Urban Logistics REIT Plc (LON:SHED, 184.0p, 164.3p, +12.0%)
Urban Logistics has issued a further update on recent activity following its move to the Main Market and £250m equity raise in December 2021. Key details are:
- £39.5m of logistics assets recently acquired at a blended NIY of 5.0%;
- In aggregate £68.1m of capital deployed or committed since the December raise;
- Portfolio now consists of 110 strategically positioned last mile/last touch urban logistics assets;
- £9m asset disposal which has generated an IRR of c. 25%;
- £40m Aviva Investors debt draw down completed with interest only payments on a fixed rate of 2.26% in a 7 year term facility;
- 100% of prior quarter rent demanded has been collected.
Data sourced through the London Stock Exchange and RNS announcements.