22nd Feb 2021 11:19
(Alliance News) - Alternative Income REIT PLC on Monday said its profit increased in the first half of its financial year, helped especially by a gain on sale of investment property plus a gain on fair value.
Shares in Alternative Income were down 2.6% at 57.48 pence in London in late morning trading, however, likely due to a reduced dividend and net asset value.
The real estate investment trust, which owns a portfolio of UK commercial property assets mostly let on long leases, reported a 42% increase in pretax profit for the six months ended December 31 to GBP3.0 million from GBP2.1 million.
While rental and other income dipped to GBP3.5 million from GBP3.6 million, the company's interim results benefitted from both a drop in other operating expenses to GBP388,000 from GBP539,000 as well as a GBP425,000 gain on sale of investment property with no such gain the year prior.
Furthermore, the company swung to a GBP270,000 gain on change in fair value of investment properties from a GBP245,000 loss the previous year.
Alternative Income declared dividends totalling 2.25p per share for the half-year, down 18% from 2.75p per share the year before.
The company explained the dividend reduction, saying: "A quarter of the group's rent is derived from the hotel and leisure industry, which has been adversely affected by the Covid-19 related lockdown measures enforced during 2020 and, indeed, most remain closed.
"As a result, the group currently has arrears from this sector equal to [approximately] 8% of its 2020 rents, which, when combined with the remedial work that the group completed in December 2020 to ensure that its property in Swindon conforms with current building regulations, has impacted the group's cash position, resulting in a lower dividend declared on February 4, 2021 in respect of the final quarter of 2020."
Alternative Income continues to target the resumption of a 5.5p per share fully covered annual dividend by September 2022, all else being equal.
NAV per share dropped to 84.68p at at December 31 from 94.63p the prior year dye to a drop in the value of its property portfolio to GBP104.8 million from GBP113.0 million.
Chair Steve Smith said: "Despite the potential impact of Brexit and, latterly, the major disruption caused by the Covid-19 pandemic, the appetite for well let UK commercial property with secure income remains relatively strong. We therefore remain confident that the group's diversified robust portfolio is well positioned to absorb potential market dislocation.
"The board believes that it has taken a disciplined and timely approach, particularly in relation to cost management and the appointment of a talented, proficient team of service providers and advisers. The group has a strong foundation from which to deliver attractive total returns including a potentially progressive dividend and believes the portfolio to be well positioned for the better times that we expect to lie ahead."
By Anna Farley; [email protected]
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