REIT News - October 2021
REIT Market Overview
The month of September has witnessed a high level of investment activity across different industries including office, warehousing and industrial.
Custodian REIT has announced the acquisition of a 20,012sf office building on Fountain Street, Manchester and the disposal of a portfolio of seven industrial properties for £32.6m located in Gateshead, Stockton-on-Tees, Warrington, Stone, Christchurch, Aberdeen and Bedford. Industrials REIT announced the sale its Guernsey office building to ARC Global (Guernsey) Holdings Limited for a consideration which values the property at £55m. LondonMetric Property announced the acquisition of an urban logistics warehouse in Cardiff for £11.1m and the acquisition of three other urban logistics warehouses for £35.4m located in Worthing, Uckfield and Exeter.
(Ticker, Share Price, EPRA NAV per Share, Premium/Discount)
Aberdeen Standard European Logistics Plc (LON:ASLI, 115.5p, 106.1p, +5.1%)
Aberdeen Standard European Logistics Income has announced half year results to 30 June 2021.Key details are:
- NAV per share up 3.3% to €1.24 (31 December 2020: €1.20);
- NAV total return (in Euro terms) of 5.2% and 14.7% for the 12 months to 30 June 2021;
- LTV of 31.7% (all in cost of debt 1.36%, average term to maturity five and a half years);
- £19.4m oversubscribed equity issuance completed in March 2021;
- Post-period end oversubscribed £125m equity issuance;
- 99% of rent due for the period collected;
- Portfolio valued at €492m, reflecting yield compression and new acquisitions; on a like for like basis, the portfolio value increased by 3.4% over 31 December 2020;
- Two acquisitions, totalling €46.8m, taking the total portfolio to 16 modern properties, diversified by geography and tenant;
- WAULT of 7.4 years;
- Long-term solar panel leases at the Company's Ede and Den Hoorn assets have delivered a capital uplift of approximately €1m.
Alternative Income REIT Plc (LON:AIRE, 70.2p, 85.6p, -18.0%)
Alternative Income REIT has announced full year results to 30 June 2021. Key details are:
- NAV of £68.89m, and of 85.58pps (30 June 2020: £67.29m and 83.58 pps);
- Operating profit of £6.31m (before fair value changes) (FY 2020: £5.80m);
- At 30 June 2021, had a £41.0m loan facility with Canada Life Investments and was geared to 36.3% of the GAV (30 June 2020: £41.0m, gearing of 37.0%);
- Non-property operating expenses were £0.88m (FY 2020: £1.49m), representing a 41% reduction, or 35% reduction after allowing for the period during which M7 did not charge an investment advisory fee and as a result of the Board taking a disciplined approach to cost management;
- Ongoing charges of 1.27% (30 June 2020: 2.22%);
- Collected 97.8% of all rent demanded since the beginning of the COVID-19 pandemic, with the remaining 2.2% to be collected through payment plans throughout 2021 and 2022;
- Property portfolio value of £109.23m across 19 properties (30 June 2020: £104.76 m, 19 properties including the Wet 'n' Wild Water Park held for sale);
- WAULT of 17.8 years to the earlier of break and expiry (30 June 2020: 19.5 years) and 19.8 years to expiry (30 June 2020: 21.6 years);
- EPRA NIY of 5.94% as at 30 June 2021 (30 June 2020: 5.72%).
BMO Commercial Property Trust Ltd (LON:BCPT, 96.5p, 124.8p, -22.7%)
BMO Commercial Property Trust has announced the disposal of Cassini House located in St. James’, London for £145.5m, reflecting a substantial increase of 11% over the last external valuation of 30 June 2021 and 19% over the year-end valuation of 31 December 2020. The disposal represents the culmination of a long-term business plan which involved a complete refurbishment, introduction of new tenants and re-gearing of leases. The property is a prime multi-let freehold office building and represents the second largest holding in the portfolio.
BMO Commercial Property Trust has announced half year results to 30 June 2021. Key details are:
- Share price total return of 16.3%;
- NAV total return of 8.0%;
- 91.6% rent collection currently received since the onset of the pandemic in April 2020 to June 2021;
- Void rate at 1.9%, excluding property being developed or refurbished, which compares to a rate of 2.9% at the start of the calendar year;
- Completed a £19m property disposal, with further sales of £199.5m in September 2021 as part of the strategy to adjust sector weightings;
- Company’s portfolio produced a total return of 6.9%.
BMO Commercial Property Trust has also announced the disposal of its holding at Dane Street, Rochdale, a purpose-built supermarket with a 12-pump filling station and an adjacent retail warehouse, for a total consideration of £35.0m reflecting an NIY of 4.75%. The sale price also reflects an increase of 9% over the last valuation at 30 June 2021 and 12% over the year-end valuation at 31 December 2020. The supermarket is let to Asda Stores Limited and the adjoining retail warehouse to DSG Retail Limited t/a Currys/PC World. The disposal follows the successful re-gearing of the Asda lease and extension of the term expiry date out to December 2038. The Currys lease expiry is March 2022.
Capital & Regional Plc (LON:CAL, 61.8p, 113.0p, -45.3%)
Capital & Regional has announced half year results to 30 June 2021. Key details are:
- Ongoing strategic focus on non-discretionary goods and services continued to alleviate the impact of the pandemic in the period;
- 99% of leased units are back open and trading with all seven community shopping centres remaining open to some degree throughout the pandemic;
- Occupancy at 90% (31 December 2020: 92%);
- 83% of rent due in respect of the 2021 year to the end of August has now been collected, a further 13% improvement on the update provided on 25 June 2021;
- 54 new lettings and renewals achieved at a combined average premium to previous rent and ERV. This compares to 24 and 44 deals respectively in the equivalent 2020 and 2019 periods;
- Over 30 lettings and renewals completed since 30 June 2021;
- Net Rental Income (NRI) down £1.8m to £13.4m (H1 2020: £15.21 m);
- Adjusted Profit of £2.3 m (H1 2020: £4.6 m);
- IFRS loss of £41.3m due primarily to a 7.5% fall in like-for-like property valuations (H1 2020: 16% fall in property valuations and loss of £115.5m);
- Snozone profit of £1.3m (H1 2020: loss of £0.4 m) due to enforced closure of UK operations until 12 April 2021. Results supported by £2.5m recovery under pandemic insurance policy and VAT reclaim of £1.4 m. Ski slope operation at Xanadú, Madrid fully integrated and rebranded as Snozone following February 2021 acquisition;
- Total cash on balance sheet of c. £75m, of which £56.8m was maintained centrally outside of the collateral of any of the debt facilities, equivalent to more than one year's Contracted Rent;
- NAV and EPRA NTA per share, at 113p and 117p respectively (31 December 2020: 150p and 158p respectively);
- Net LTV increased to 72% (31 December 2020: 65%) or 61% excluding Managed Assets (31 December 2020: 56%);
- Signed extensions of covenant waivers on The Mall and Ilford to January 2022 and April 2022, respectively. Terms agreed on an extension to Luton waiver until January 2022.
Capital & Regional has also announced that it has signed an exclusivity agreement with a subsidiary of Far East Consortium International Limited (FEC), a leading international real estate developer, specialising in high quality residential, hotel and mixed-use developments in the UK, Asia and Australia. The agreement will see the two groups work together over the next 18 months to identify and bring forward the development of new residential opportunities across the group's shopping centre portfolio. While the primary aim of the partnership is to facilitate projects that will enhance asset value and/or generate potential land receipts for Capital & Regional, it will also assess where community retail and services might be added to FEC's existing portfolio and pipeline, as well as seek new projects where the collective expertise and resources of the partnership could be utilised.
Custodian REIT Plc (LON:CREI, 93.3p, 101.7p, -8.3%)
Custodian REIT has announced that it has acquired a 20,012sf office building on Fountain Street, Manchester which is a short walk from Piccadilly Gardens and Oxford Road station. The property comprises basement parking and six floors let to Leyton UK, Meridian Healthcomms, Venditan and Fourthline with a WAULT to first break or expiry of 1.2 years and an aggregate rent of £406,704 pa, reflecting a NIY of 6.10%. The agreed purchase price of £6.25m was funded from the Company's existing debt facilities, resulting in net gearing increasing to 25.2% LTV.
Custodian REIT has announced it has completed the disposal of a portfolio of seven properties for £32.6m. The portfolio comprises five industrial sites in Gateshead, Stockton-on-Tees, Warrington, Stone and Christchurch announced on 30 July 2021 as having unconditionally exchanged to sell, and two further industrial properties in Aberdeen and Bedford. The Portfolio has a current passing rent of £2.0m, and a net initial yield1 of 5.9%. The agreed sale price of £32.6m is £5.1m (19%) above the portfolio's 31 March 2021 valuation and £2.9m (10%) above the portfolio's 30 June 2021 valuation.
Great Portland Estates Plc (LON:GPOR, 748.0p, 779.0p, -4.0%)
The GHS Limited Partnership (GHS), one of Great Portland Estates plc's (GPE) joint ventures, has announced that it has let two retail stores at its recently completed development at Hanover Square, W1. The first is a 6,000sf flagship store over three floors at 70/71 New Bond Street to Pronovias, the leading global bridal brand, which will showcase Pronovias wedding gowns, including the new Vera Wang Bride, launching globally this month. The second is at 1 Tenterden Street, which has been let to Moyses Stevens, the only florist to hold a Royal Warrant. Pronovias has signed a new 10-year lease and are relocating from their existing Bond Street store. Moyses Stevens has also signed a 10-year lease on a prominent corner site, adjacent to the new Bond Street West Elizabeth line entrance. The unit comprises 400sf, all at ground floor. Both units form part of the Hanover Square mixed-use development providing 167,200sf of Grade A offices, 33,500f of retail predominately fronting New Bond Street, an 8,300f restaurant and six residential apartments totalling 12,200sf. Pronovias and Moyses Stevens will join existing retailer Canali and restaurant The Maine, Mayfair, whilst Glencore, KKR and The London Fashion Academy have collectively contributed to more than 95% of the office space.
Highcroft Investments Plc (LON:HCFT, 862.4p, 1,185.0p, -27.2%)
Highcroft Investments has announced half year results to 30 June 2021. Key details are:
- Gross rental income down 2% to £2,977,000 (H1 2020: £3,044,000);
- Net rental income down 2% to £2,735,000 (H1 2020: £2,777,000);
- 89% occupancy (30 June 2020: 99%);
- 90% of Q1 rent, 96% of Q2 rent and 95% of Q3 rent, due to date, collected;
- Total EPS of 118.8p (H1 2020: 51.4p loss);
- Property valuation up 5.7% to £86,745,000 (31 December 2020: £82,060,000);
- NAV per share up 7.3% to 1185p (30 June 2020: 1095p, 31 December 2020: 1104p);
- LTV at 31.4% (30 June 2020: 31.9%, 31 December 2020: 33.1%).
Home REIT Plc (LON:HOME, 108.5p, 104.6p, +3.7%)
Home REIT announced that it has raised gross proceeds of £350 million through a significantly oversubscribed Initial Issue of 321,100,917 New Ordinary Shares at an issue price of 109 pence per New Ordinary Share. Given the strong level and quality of demand from investors in the capital raise, the Board determined to increase the size of the Initial Issue from the target of approximately £262 million to £350 million. Notwithstanding this increase, investor demand exceeded the maximum size of the Initial Issue and a scaling back exercise was undertaken.
Impact Healthcare REIT Plc (LON:IHR 110.0p, 110.7p, -0.6%)
Impact Healthcare REIT as announced half year results to 30 June 2021. Key details are:
- PBT up31.3% to £14.51m (H1 2020: £11.05m);
- EPRA EPS up 13.3% to 4.10p (H1 2020: 3.62p);
- Contracted rent roll of £33.8m (31 December 2020: £30.9m);
- Portfolio valuation of £432.4m (31 December 2020: £418.8m);
- NAV per share of 110.66p (31 December 2020: 109.58p);
- LTV ratio of 13.7% (31 December 2020: 17.8%);
- NAV total return of 3.88%;
- Cash of £17.7m (31 December 2020: £8.0m);
- Acquired one property and exchanged contracts on another, in total adding 137 beds for a total net consideration of £15.4m;
- Committed to forward fund a further property with 80 beds. On completion, this will bring total properties to 111 with 6,141 beds;
- Added one new tenant, giving the Group 13 tenants 4 at the period end. All leases continue to be inflation-linked with upwards only rent reviews;
- WAULT of 19.5 years (30 June 2020: 19.5 years);
- 81 properties had rent reviews during the period adding £405,000 to the contracted rent, representing a 2.0% increase on the associated portfolio.
Industrials REIT Ltd - Previously Stenprop - (LON:MLI, 187.0p, 147.0p, +27.2%)
Stenprop announces that it has changed its name from Stenprop Limited to Industrials REIT Limited, in order to align the corporate identity with its "Industrials" operating brand and its investment strategy. The name change was approved by shareholders at the Company's annual general meeting on 10 September 2021. As a result of the change, the Company's shares will trade under the ticker MLI on both the London and Johannesburg Stock Exchanges.
Industrials REIT announced that it has simultaneously exchanged contracts for and completed the sale of Trafalgar Court, its Guernsey office building to ARC Global (Guernsey) Holdings Limited for a consideration which values the property at £55m. The buyer is a wholly owned subsidiary of Global Net Lease, Inc. (NYSE: GNL), a real estate investment trust that focuses on acquiring and managing a globally diversified portfolio of commercial real estate properties. Totalling 10,564sqm of gross lettable space, Trafalgar Court is located in St Peter Port, Guernsey. The weighted average rental is currently £419.2psqm.
KCR Residential REIT Plc (LON:KCR 22.0p, 40.2p, -45.2%)
KCR Residential REIT has announced full year results to 30 June 2021. Key details are:
- Revenues of £1.04m (FY 2020: £1.04m);
- Portfolio level occupancy remains high (>95%), capital values remain firm with nominal arrears across the portfolio;
- Gross profit up 44% to £1.02m (FY 2020: £0.88m);
- Secured bank borrowings at period end of £11.1m (31 December 2020: £11.1m);
- Average debt cost has reduced post-period following property refinancing in August 2021;
- Net total assets at £24.4m (31 December 2020: £25.2m);
- NAV per share at 40.18p (31 December 2020: 44.03p).
LondonMetric Property Plc (LON:LMP, 239.8p, 190.3p, +26.0%)
LondonMetric Property has announced the acquisition of an urban logistics warehouse in Cardiff for £11.1m, reflecting a blended NIY of 5.0%. The 119,000sf warehouse is let to Global Life Sciences Solutions, trading as Cytiva, on a new ten-year lease with RPI linked rent reviews of between 1% and 3%. The building is located in an established Life Sciences location, adjacent to J32 of the M4. The property generates a rent of £0.6m pa with the contractual rent reviews expected to increase the purchase NIY to 5.8% after five years.
LondonMetric Property has announced that it has sold a grocery asset in Liverpool for £10.2m, reflecting a NIY of 4.65%. The 29,000sf asset was acquired in 2014 for £8.1m and is let to M&S and Aldi. It generates a rent of £0.5m pa and has a WAULT of 12.6 years. The sale price is line with the 31 March 2021 book value and crystallises a 26% profit on cost and an ungeared IRR of 9%.
LondonMetric Property has announced the acquisition of three urban logistics warehouses for £35.4m in separate transactions, reflecting a blended NIY of 4.4% and a reversionary yield of 4.9%. The properties generate a rent of £1.7m pa with 83% of the income benefiting from RPI or CPI linked rent review. The warehouses have a WAULT of 15 years and comprise:
- 130,000sf in Worthing, acquired for £19.0m through a sale and lease back transaction with Bowers & Wilkins, a global leader in high performance audio technology. The occupier has agreed a new 15 year lease with rent reviews linked to CPI;
- 50,000sf in Uckfield, acquired for £10.3m and let to John Lewis for a further 15 years with RPI linked rent reviews. The building is located on the A22 / A272 junction and has a low site density of 32%;
- 47,000sf in Exeter acquired for £6.1m and let to Jewson for a further 17 years. The building has strong reversionary and redevelopment potential and benefits from open market rent reviews with the next review in March 2022. It is located next to the M5 / A30 junction with the majority of the investment value supported by the residual land.
LXI REIT Plc (LON:LXI, 137.8p, 125.7p, +9.6%)
LXi REIT has announced the off-market sale and leaseback acquisition of a portfolio of 23 nursery schools in England for a total cost of £34m, reflecting an accretive 5.5% NIY (versus a current portfolio value of 4.7%). The Nurseries have been acquired from and leased back to KidsFoundation, one of Europe's leading providers of education and care services for children, with over 900 educational facilities across the UK and northern Europe. Each property benefits from a new, unbroken 30-year lease to the top entity within the KidsFoundation group. The rent increases on an annual basis in line with RPI inflation until 2030, from which date the reviews convert to CPIH inflation plus 0.83% pa (to reflect the change in RPI from that date). The reviews contain a collar of 1% pa and a cap of 4% pa. The Nurseries are well located across England, with strong and affluent catchment populations and the rent has been set at a sustainable level to produce a high rent cover of 2.75x EBITDAR on an individual asset basis. This ensures the rent remains affordable for the tenant whilst the investment is also underpinned by vacant possession value. The acquisition deploys the balance of the equity proceeds of the Company's £100 million placing in July this year. The Company is also in solicitors' hands on a range of pre-let forward fundings, which will be funded through the Company's revolving credit facility.
Palace Capital Plc (LON:PCA, 245.0p, 350.0p, -30.0%)
Palace Capital has announced the sale of a 9,600sf industrial unit in Rustington, West Sussex to a private property investment company for £860,000 which is above book value and a price representing close to a 135% uplift on the value of the asset when Palace Capital acquired it in 2014. The transaction is in line with Palace Capital's disposal strategy which targets £30 million of sales this year, comprising properties that are either non-core or where maximum value has been created through the conclusion of business plans. This property was originally let to June 2021 at a rental of £36,000 pa exclusive, but as part of a tailored value add programme agreement was reached for a new 10-year lease with Precision Products (Brighton) Ltd on a rising rent to £65,000 pa exclusive in June 2025.
Palace Capital has announced that it has disposed of its entire shareholding in Circle Property Plc. 1,592,500 shares were sold at a price of 200p per share.
Primary Health Properties Plc (LON:PHP, 151.3p, 115.4p, +31.1%)
Primary Health Properties has announced that it has acquired the entire issued share capital of Sarak Group Limited, whose sole asset is the Crwys Medical Centre in Cathays, Cardiff, for £4.5m. Of the total consideration, approx. £1m will be satisfied by the issue at completion to two of the sellers of 595,167 new ordinary shares of 12.5p each in the capital of PHP and the balance in cash. The Crwys Medical Centre is a modern, purpose-built primary care centre, comprising 9,384sf of lettable space, over three floors. The property is fully let to a large local GP practice serving over 8,000 patients and to a pharmacy. The two leases, with a WAULT of 13 years, are accretive to the portfolio WAULT and providing for circa 80% government backed income. This acquisition will increase PHP's portfolio to a total of 516 assets, of which 19 are in Ireland, with a contracted rent roll of over £138m.
Real Estate Investors Plc (LON:RLE, 40.3p, 57.7p, -30.1%)
Real Estate Investors, the UK's only Midlands-focused Real Estate Investment Trust (REIT) with a portfolio of 1.53 million sqft of commercial property across all sectors has reported its unaudited half year results for the six-month period ended 30 June 2021. Key details are:
- Uplift in pre-tax profit to £9 million (H1 2020: £3.8 million loss) allowing for a 1.88% increase in property values and interest hedging costs surplus of £716,000;
- EPRA NTA per share of 57.7p (FY 2020: 55.2p) up 4.5%;
- Revenue of £7.7 million (H1 2020: £8.2 million) down 6%;
- Underlying profit before tax of £3.8 million (H1 2020: £4.1 million) down 7%;
- The Company will make a fully covered quarterly dividend payment of 0.75p per share in respect of Q2 2021 and anticipates that this will also be the level of dividend for Q3 2021, with the intention to pay an uplifted final quarterly dividend payment at the year end;
- On a like for like basis the portfolio valuation has improved on December 2020 by 1.88%, demonstrating portfolio stability in an extremely challenging marketplace;
- £195.2 million gross portfolio valuation (after asset disposals) (FY 2020: £201.3 million);
- Completed 15 value enhancing lease events (including 5 lease renewals);
- Completed 7 portfolio disposals totalling £9.4 million (net of costs) and 1 inventory sale for £1.15 million (aggregate uplift of 10.3% above book value, 14.0 % uplift on portfolio disposals) taking advantage of the increase in private investors and their focus on acquiring smaller units;
- WAULT improved to 5.01 years to break/6.70 years to expiry (FY 2020: 4.84/6.54 years);
- Contracted rental income of £14.7 million p.a. (H1 2020: £17.0 million p.a.) down 13.5% due to known lease events and disposals (to be recycled into income producing assets) ;
- Occupancy levels at 83.43% (FY 2020: 91.60%), now increased to 86.07% post period;
- March 2021 renewal of £51 million facility with National Westminster Bank plc for 3 years at 2.25% above LIBOR with £4.1 million repaid since March 2021;
- Fixing of £35 million of £51 million NatWest facility at competitive rates from 1 January 2022;
- As at 30 June 2021, hedge facility has improved by £716,000 for half year to 30 June 2021;
- £9.1 million cash at bank to fund value-add opportunistic acquisitions;
- Average cost of debt 3.4% (FY 2020: 3.4%) with 46% fixed debt (FY 2020: 86%) (84% from 1 Jan 2022);
- 45% Loan to Value (net of cash) (FY 2020: 49.2%) (target LTV net of cash 40% or below);
- Strong rent collection for H1 2021 of 98.53% (adjusted for monthly and deferred agreements) improved from 97.22% reported in the 5 July 2021 trading update despite the disappointing UK;
- Covid period - overall rent collection level for 2020, has risen to 98.82% (adjusted for monthly and deferred agreements) up from 98.75% reported in the 5 July 2021 trading update;
- Completed sales of £987,500;
- Sales awaiting completion in H2 of £5.83 million;
- New pipeline sales of £780,000 in legals;
- Completed additional 6 lease events which include 2 lease renewals, 1 break removal and 12 lettings in legals, which will improve occupancy further.
Regional REIT Limited (LON:RGL, 88.6p, 99.1p, -10.6%)
Regional REIT has announced half year results to 30 June 2021. Key details are:
- Total rent collection for the period was 99.0% of rent due, ahead of the 93.7% of rent collected for the equivalent period in 2020;
- Rent roll at £61.1m (31 December 2020: £64.2m);
- NIY of 6.7% (31 December 2020: 6.9%);
- EPRA NTA per share of 99.1p (31 December 2020: 98.6p);
- IFRS NAV per share of 98.5p (31 December 2020: 97.5p);
- Cost of debt 3.3% (31 December 2020: 3.3%);
- Net LTV of 39.8% (31 December 2020: 40.8%);
- Weighted average debt duration at 6.0 years (31 December 2020: 6.4 years);
- Portfolio valuation of £729.1m (31 December 2020: £732.4m);
- Operating profit before gains and losses on property assets and other investments of £19.9m (H1 2020: £18.1m);
- Post the period end, significant progress made in exiting industrial and retail holdings to focus entirely on core regional offices. At the period end, 83.2% (31 December 2020: 83.5%) of the portfolio by valuation was offices, 11.3% industrial (31 December 2020: 11.1%), 4.1% retail (31 December 2020: 4.1%) and 1.4% other (31 December 2020:1.3%);
- By income, office assets accounted for 82.5% of gross rental income (31 December 2020: 82.3%) and industrial assets for 9.8% (31 December 2020: 10.3%);
- EPRA Occupancy rates of 85.7% (31 December 2020: 89.4%);
- Completed 25 new lettings - once fully occupied, these will provide an additional gross rental income of c. £1.3m.
Safestore Holdings (LON:SAFE, 1,052.0p, 596.0p, +76.5%)
Safestore Holdings has issued a trading update for its Q3 to 31 July 2021. Key details are:
- Group revenue for the quarter in constant exchange rates (CER) up 19.7%:
- UK total revenue up 24.7%;
- Paris total revenue up 5.6%;
- Spain total revenue up 8.3%.
- Group like-for-like storage revenue in Q3 in CER up 17.7% and like-for-like total revenue up 18.6%;
- Like-for-like occupancy up 10.6ppts at 87.0% (Q3 2020: 76.4%):
- UK up 11.8ppts at 87.6% (Q3 2020: 75.8%);
- Paris up 6.2ppts at 84.7% (Q3 2020: 78.5%).
- Contracts exchanged for new freehold development sites in Shoreham, UK and Southern Paris, which will together add c. 109,000sf of maximum lettable area (MLA);
- Planning permission granted for previously announced Central Barcelona 1 and Southern Madrid sites;
- Additional new leasehold site in Central Barcelona of 19,000sf MLA secured;
- Property pipeline now at 702,000 sqft of MLA;
- Strong momentum into Q4 with August like-for-like revenue up 21.5% (UK up 26%, Paris up 7.9%).
Schroder European Real Estate Investment Trust Plc (LON:SERE, 104.0p, 148.5p, -30.0%)
Schroder European Real Estate Investment Trust has announced financial updates at 30 June 2021. Key details are:
- NAV of €198.6m or 148.5 cents per share, a 0.8% increase compared to 31 March 2021;
- NAV total return of 1.8% over the quarter and 15.5% for the twelve months to 30 June 2021;
- Portfolio valuation has increased to €204.7m, reflecting a 0.9% increase, net of capital expenditure;
- Completed the acquisition of a €6.2m logistics investment in Nantes, reflecting a NIY of 5.5%;
- Currently has c. €20m of firepower to deploy into an attractive pipeline of acquisitions and a further c. €35m to be released as the refurbishment of the Paris, Boulogne-Billancourt is completed.
Secure Income REIT Plc (LON:SIR, 418.0p, 391.1p, +6.9%)
Secure Income REIT has announced half year results to 30 June 2021. Key details are:
- Gross property valuation up 2.0% driven by rental uplifts up to the end of July of 1.9% with Topped Up NIY steady at 5.4%;
- EPRA NTA per share up 3.1% to 391.1p (31 December 2020: 379.3p);
- Rents returned to 92% of the levels they would have been without pandemic rent concessions and are anticipated to fully resume the levels originally contracted by January 2022;
- Impact of temporary rent concessions of 1.6p per share, down from 2.0p per share reflecting some three months of concessions reported in the half year to 30 June 2020;
- Total Shareholder Return of 29.1% following share price recovery to within 97% of EPRA NTA at 30 June 2021 and above 30 June 2021 EPRA NTA by 7 September 2021;
- WAULT of 19.7 years;
- Net LTV at 35.6% down from 36.4% (31 December 2020: 36.4%);
- EPRA Cost Ratio of 12.6%.
SEGRO Plc (LON:SGRO, 1,195.0p, 909.0p, +31.5%)
SEGRO has announced the launch and pricing of a ten year, €500m senior unsecured Green bond issue. The bonds, which were eight times oversubscribed, were priced at 55 basis points above euro mid-swaps and have an annual coupon of 0.5%. This is SEGRO’s first bond in the euro market and its first Green bond, following from the Green bond issued by SEGRO European Logistics Partnership (SELP’) in May 2021. The proceeds of the issue will principally be used to finance and/or refinance Eligible Green Projects as outlined in the SEGRO Green Finance Framework, including the continued development programme, as well as providing funding for general corporate purposes.
Supermarket Income REIT Plc (LON:SUPR, 116.5p, 108.0p, +7.9%)
Supermarket Income REIT has issued an update in relation to its 50:50 joint venture with British Airways Pension Trustees Limited. The JV has a 51% beneficial interest in the Sainsbury's Reversion Portfolio. The remaining 49% beneficial interest is held by Sainsbury's. The Portfolio consists of the freeholds to 26 Sainsbury's supermarkets. The Company announces that Sainsbury's has exercised a purchase option to acquire 13 stores within the Portfolio. Sainsbury's acquisition of the 13 stores will be completed in March 2023 upon expiry of the current occupational leases. The purchase price under the option is to be determined based on the assumption of a new 20-year lease to Sainsbury's with the initial rent set at the higher of passing or open market, subject to upward-only, five yearly market rent reviews. In addition, Sainsbury's has a remaining purchase option to acquire a further 10 stores in the Portfolio, which can be exercised between December 2021 and January 2022.
Supermarket Income REIT announced the acquisition of six supermarkets for a total purchase price of £113.1 million (excluding acquisition costs), reflecting a combined net initial yield of 4.6%. Acquired from different vendors, the purchases consist of a Tesco in Prescot, two Morrisons in Durham and Cumbria, an Aldi in Oldham and an Aldi and M&S Foodhall site in Liverpool.
Supermarket Income REIT has reported its audited consolidated results for the Group for the year ended 30 June 2021. Key details are:
- 11% Total Shareholder Return for the year and 40% since initial listing in July 2017;
- Direct Portfolio independently valued at £1.15 billion, an increase of £609.0 million following valuation growth of £67.8 million and new acquisitions of £541.2 million (excluding acquisition costs):
- 8.5% valuation growth on a like-for-like basis;
- 4.1% valuation growth on acquisitions in the year;
- Direct Portfolio net initial yield ("NIY") of 4.7%;
- Direct Portfolio weighted unexpired lease term ("WAULT") of 15 years.
- £353 million of equity raised via two upsized and over-subscribed issuances of New Ordinary Shares:
- £200 million Placing and Offer for Subscription in September 2020;
- £153 million Placing in March 2021.
- Acquisition of 20 complementary supermarket assets for an aggregate purchase price of £541.2 million at a blended net initial yield of 5.0%;
- Acquisition of a further 25.5% stake in the Sainsbury's Reversion Portfolio through the Company's joint venture with British Airways Pension Trustees Limited ("BAPTL"). The cost of the Group's additional investment was £57.5 million (excluding acquisition costs);
- Direct Portfolio net loan to value ("LTV") ratio of 34% as at 30 June 2021, with a weighted current cost of debt of 1.9%;
- EPRA NTA per ordinary share of 108 pence as at 30 June 2021;
- 100% of grocery rent collected with 99.5% of total rent received;
- Purchase of 5 supermarket sites for £94.6 million (excluding acquisition costs) providing a blended NIY of 4.8%;
- £91.3 million of new debt financing at a weighted average cost of 1.55% and a weighted average term of five years;
- £128 million of remaining debt capacity through committed and uncommitted accordion options on debt facilities;
- FY 2022 dividend target has increased by 1.4% to 5.94 pence per share, in line with the average increase in passing rents for the year.
Supermarket Income REIT has also announced its intention to raise approximately £100m by way of a placing and an offer for subscription at an issue price of 115p per share which represents a 6.5% premium to the last reported EPRA NTA per share as at 30 June 2021 of 108p.
Target Healthcare REIT Plc (LON:THRL, 114.8p, 110.4p, +4.0%)
Target Healthcare REIT has announced that it has raised gross proceeds of £125m through a significantly oversubscribed issue of new ordinary shares at 115p per share. After careful consideration of the exceptionally strong level of support and quality of demand from investors in the issue, alongside the pipeline of attractive investment properties available, the board determined to increase the size of the Issue from £100m to £125m. Notwithstanding this increase, investor demand substantially exceeded the maximum size of the issue and, accordingly, a scaling back exercise was undertaken.
The PRS REIT Plc (LON:PRSR, 100.0p, 96.2p, +4.0%)
PRS REIT provided an update on activity since the financial year end to 31 August 2021, including the immediate pipeline of development opportunities, and unaudited NAV for the financial year ended 30 June 2021. Construction activity continues to progress well, with 243 new homes added to the portfolio since the end of the financial year to 30 June 2021. This takes the total portfolio to 4,227 completed homes with an ERV of £40.3m as at 31 August 2021, with a further 828 homes contracted and at varying stages of the construction process. Of the 4,227 homes completed, 4,081 (97%) were occupied at 31 August 2021, with a further 80 homes reserved for qualified applicants with rental deposits received. Demand is high, and rent collection in July and August remained strong, with 98% of rent collected (as a percentage of rent invoiced in the period). Total arrears remain very low at £0.4m as at 3 September 2021. As at 30 June 2021, the PRS REIT's unaudited NAV was 99.0 pence per ordinary share (31 December 2020: 96.1 pence per ordinary share).
The Unite Group Plc (LON:UTG, 1,090.5p, 837.0p, +30.3%)
The Unite Group has announced that it has agreed and signed a £450m sustainability-linked unsecured RCF from HSBC, NatWest and Royal Bank of Canada. The facility has an initial term of three and a half years, which may be extended by a maximum of a further two years at Unite's request, subject to lender consent. The RCF incorporates three sustainability-linked performance targets which align with the Group’s sustainability strategy, launched earlier this year. These include annual targets based on:
- Supporting the group's transition to net zero carbon by 2030, through reduction in scope 1 and 2 carbon emissions for operational buildings;
- Improvements in the EPC ratings of properties in England and Wales with a target of all properties reaching at least C rating by 2027;
- The value of Unite's contributions to social initiatives aimed at improving access to post-18 education, enhancing employment prospects for graduates and benefiting local communities;
- The RCF is fully available for general corporate purposes and is an amendment and extension of the Group's existing bank debt facilities, which were due to mature in November 2022. The refinancing extends the Group's earliest debt maturity to 2025 and increases its weighted average debt maturity by 0.3 years to 5.0 years.
Triple Point Social Housing REIT Plc (LON:SOHO, 94.5p, 106.4p, -11.2%)
Triple Point Social Housing REIT has announced half year results to 30 June 2021. Key details are:
- EPRA NTA per share of 106.42p (31 December 2020: 106.42p);
- Portfolio valued on an individual property basis at £596.3m on an IFRS basis (31 December 2020: £571.5m), reflecting a valuation uplift of 7.7% against total invested funds of £553.6m;
- Portfolio valued at £639.9m on a portfolio valuation basis (31 December 2020: £611.6m), reflecting a portfolio premium of 7.3% or a £43.7 m uplift;
- Total annualised rental income was £33.4m (31 December 2020: £31.6m);
- Operating profit of £13.3m (H1 2020: £11.8m);
- Ongoing Charges Ratio of 1.53% (31 December 2020: 1.57%; 30 June 2020: 1.61%);
- Group did not draw down further debt from the £160m RCF resulting in £130m of the RCF remaining drawn as at 30 June 2021;
- Acquired 14 properties for an aggregate purchase price of £22.3m (including acquisition costs) bringing the total investment portfolio to 458 properties.
Tritax EuroBox Plc (LON:EBOX, 111.2p, 105.2p, +5.7%)
Tritax EuroBox has announced a proposed placing of new ordinary shares to raise targeted gross proceeds of approx. £170m (€200) pursuant to its placing programme. The placing will comprise a target issue of approx. 152.5m new shares at an issue price of 111.5p per share which represents a premium of c.3.7% to the estimated unaudited IFRS NAV per share as at 30 June 2021 of €1.265 converted at prevailing exchange rates (the estimated unaudited EPRA NTA per share as at 30 June 2021 was €1.306).
Tritax EuroBox has also announced that conditional contracts have been entered into to acquire the land for the development of a new high specification and sustainable logistics asset in Oberhausen, a prime location in the Rhine-Ruhr region of Germany. The Company will now enter into a forward funding agreement to construct the building. The property will comprise a single building of 23,346sqm of ground level logistics space with additional mezzanine and office accommodation, capable of being split into four separate, equally sized units. The development will be undertaken by Verdion, which specialises in European industrial and logistics real estate. The land purchase is conditional on receiving the building permit and access rights which are both expected in the near-term. This acquisition is structured as a forward funding development opportunity, where the Company has agreed an aggregate fixed purchase price of €29.9m comprising land purchase, construction of the buildings and developer's profit. There is the potential for an additional incentive payment to Verdion if certain leasing conditions are met. From completion of the land purchase and during the construction phase, the Company will receive from the developer an income return equivalent to the agreed net initial yield. The Company will also benefit from a 12-month rental guarantee provided by Verdion of €1.313m from completion of construction, which is expected to be in Q4 2022. This rental guarantee is in line with the current estimated market rental value per annum assuming a rent of €56psqm. The acquisition price of €29.9m reflects a NIY of 4.3% based on the income from the rental guarantee.
Tritax EuroBox has announced that conditional contracts have been entered into to acquire the land and provide forward funding for the development of a new high specification and sustainable logistics asset for a total consideration of SEK 284m (€27.9m) in a prime location just north of Stockholm, Sweden. It comprises a 13,181sqm logistics facility consisting of two separate units of 8,204sqm and 4,977sqm to be constructed between November 2021 and December 2022. The development is being undertaken by Verdion. The land purchase is conditional on receiving the building permit which is expected in the near-term. The acquisition is structured as a forward funding development opportunity, where the Company will buy the land initially and then fund the construction of the buildings. The total development cost is capped at SEK 284m (€27.9m). From completion of the land purchase and during the construction phase, the Company will receive from the developer an income return equivalent to the agreed net initial yield. The Company will also benefit from a 12-month rental guarantee of SEK 12m (€1.18m) from completion of construction which is estimated to be in December 2022. This rental guarantee is in line with the current estimated market rental value per annum assuming a rent of SEK 907 (€891) psqm. The acquisition price of SEK 284m reflects a NIY of 4.2% based on the income from the rental guarantee.
Tritax EuroBox announced the results of the placing of new ordinary shares in the Company. Investor demand for the Placing has significantly exceeded the targeted size of approximately £170 million (€200 million). The Directors, after careful consideration with the Manager and in consultation with its Joint Financial Advisers, have determined to increase the size of the Placing to approximately £213 million (€250 million). In taking this decision the Board has taken into account the strength of the Manager's near-term investment pipeline. A total of 191,228,355 New Ordinary Shares will be issued at a price of 111.5 pence per New Ordinary Share (the "Placing Price") pursuant to the Placing. The Euro equivalent Placing Price has been fixed at 130.66 cents per New Ordinary Share, based on the Relevant Euro Exchange rate of 1.1718
UK Commercial Property REIT Limited (LON:UKCM, 73.7p, 90.2p, -18.3%)
UK Commercial Property REIT has announced half year results to 30 June 2021. Key details are:
- NAV total return of 6.0% (H1 2020: -5.1%);
- 40% increase in quarterly dividend to 0.644p for the first two quarters compared to the second half of 2020, with a further top-up dividend of 0.531p paid in May 2021 in respect of 2020;
- Net gearing of 1.9% (30 June 2020: 10.5%);
- £272m available for investment, comprising £122m of uncommitted cash and £150m of the RCF;
- Portfolio total return of 6.5%;
- Sold three assets, totalling £67.9m - continuing reduction of retail exposure - included the disposal of the final high street retail asset;
- Portfolio is valued at £1.21bn - overweight position to industrials of 62.9% and an underweight position to retail of 10.7%;
- Occupancy rate of 96%. The single largest void is within the investment property held for sale;
- Rent collection for the Q3 billing periods of 92% as at 31 August 2021 with ongoing negotiations with tenants who have been unable to pay to date.
Urban Logistics REIT Plc (LON:SHED, 174.8p, 149.8p, +16.7%)
Urban Logistics REIT provided the following acquisitions update. Since the July equity raise of £109m Urban Logistics has deployed, or committed to deploy, £88m of this equity on 771,748 sq. ft. of logistics units in 6 'off market' transactions. The blended net initial yield (NIY) was 5.4% and is made up of a combination of income producing assets and forward funding commitments. Separately a further £15m was deployed before this equity raise, in 3 transactions for 157,516 sq. ft. of space.
Workspace Group Plc (LON:WKP, 827.0p, 938.0p, -11.8%)
Workspace Group announced the exchange of contracts for the disposal of 13-17 Fitzroy Street in Fitzrovia, for a total of £92m. The sale of the vacant property is at a discount of 3.2% to the 31 March 2021 valuation and a capital value of £993 per sqft. The property currently provides 92,700 sqft. of net lettable space over lower ground, ground and six upper floors. It was acquired in 2017 and was fully let to Arup until June 2021, providing £4.9m of net rental income a year.
Workspace Group has announced that it has exchanged contracts to acquire Stapleton House, also known as 'The Old Dairy', in Shoreditch, for a total of £43.38m. The property provides 57,000sf of net lettable space adjacent to Workspace's business centre, The Frames, which opened in 2017 following a major refurbishment project. The Old Dairy is currently 80% let and is being acquired at a NIY of 4.9% and a capital value of £761psf. The acquisition is being funded from existing facilities.
Data sourced through the London Stock Exchange and RNS announcements.