- Launch of the Company on 28 October 2014 raising £95.0 million of equity (before costs and expenses)
- Acquisition of a property portfolio for a total consideration of £76.7 million
- Renegotiation and extension of lease at Cutler’s Gate, Parkway, Sheffield, increasing the NAV by £1.3 million
- Fair Value independent valuation of the property portfolio as at 31 December 2014 of £84.1 million, a 9.6 per cent increase on the valuation at acquisition
- NAV per share at 31 December 2014 of 101.08 pence, an increase of 5.13 per cent on the Company’s NAV (after launch and portfolio acquisition costs)
Net Asset Value
The Company’s unaudited NAV per share as at 31 December 2014 was 101.08 pence. This is the first NAV announcement since launch on 28 October 2014. As at 31 December 2014, the Company owned investment properties with a Fair Value of £84.1m and had cash balances of approximately £11.4 million.
The unaudited NAV of the Company at 31 December 2014 was £96.03 million, or 101.08 pence per share, an increase of 5.13 per cent on the Company’s NAV (after launch and portfolio acquisition costs):
|Pence per share||£ million|
|NAV (after launch and portfolio acquisition costs)||96.15||91.34|
|Lease incentive payments||(3.57)||(3.39)|
|Valuation uplift in property portfolio||7.79||7.40|
|Income earned for the period||0.97||0.92|
|Expenses for the period||(0.26)||(0.24)|
|Dividend paid in the period||0.00||0.00|
|NAV at 31 December 2014||101.08||96.03|
The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards, incorporates the independent portfolio valuation as at 31 December 2014 and income for the quarter, but does not include a provision for any accrued dividend.
The Company entered the REIT regime with effect from 31 October 2014 following the submission of the relevant notice to HM Revenue & Customs.
Between launch and 31 December 2014, the Company acquired the initial portfolio for an aggregate consideration of £76.7 million on the terms set out in the prospectus dated 16 October 2014.
As announced on 15 January 2015, lease renegotiations were completed on the office property at Cutler’s Gate, Parkway, Sheffield, with its sole tenant, Capita Business Services Limited. The Company granted a reversionary lease which extends the unexpired term from 10 years to 25 years. The lease remains in the name of the existing tenant but the Company has secured a new guarantee from its parent company, Capita plc, for the duration of the term, giving additional security to income. The annual rent passing remains at c.£1.05 million, but the five-yearly upward-only rent review provisions have been replaced by annual uplifts in line with the Retail Prices Index (RPI) throughout the term. The RPI increase has been capped at 3.00 per cent per annum and collared at 0.00 per cent per annum.
This transaction has increased the weighted average unexpired lease term (WAULT) to lease breaks from 4.88 years to 7.63 years over the whole of the Company’s portfolio. The WAULT to lease expiries have increased from 6.36 years to 9.12 years.
The valuation of the portfolio increased by £7.4 million from its value at acquisition, which reflects a rise of 9.6 per cent.
The sector weighting, by value, of the portfolio as at 31 December 2014 was 81% offices and 19% retail.
Danny O’Neill, Managing Director of Ediston Properties Limited, the Company’s investment adviser, commented: “Our focus is on the deployment of the remaining capital raised at IPO with the acquisition of suitable properties and on securing a debt facility across the whole portfolio. The improvement in the security of income and in the average lease length within the portfolio will aid those discussions, and we are confident of agreeing terms for the facility within the first quarter of 2015”.
Post quarter end activity
The initial dividend of 0.9685 pence per Ordinary Share will be paid in respect of the period from admission to 31 December 2014. This dividend will go ex-dividend on 29 January 2015 and will be paid on 6 February 2015.
The Board expects to publish the financial statements of the Company for the period ended 30 September 2014 at the end of January 2015.
The next independent quarterly valuation of the property portfolio will be conducted by Knight Frank LLP during March 2015, and it is expected that the NAV per share as at 31 March 2015 will be announced in April 2015.