30th Jan 2009 07:00
Wichford P.L.C.
("Wichford" or the "Company")
Interim Management Statement
30 January 2009
The Board of Wichford P.L.C., the property investment company, issues the following Interim Management Statement relating to the quarter ended 31 December 2008.
Property Valuations
UK
The decline in the IPD index of UK property has continued, with a 15% fall over the three month period to 31 December 2008. Whilst it seems likely that the decline is going to continue in 2009, the Directors believe that the quality of the Company's income, the length of leases and the low average rents mean that the valuation of the Wichford portfolio, which is next due on 31 March 2009, will be less impacted than the overall UK office sector.
Continental Europe
Although initially more robust than the UK market, values have now started to decline in Germany, Holland and France and the Board therefore expects that it will report that at 31 March 2009 there has also been a material decline in the value of the Continental European portfolio.
Debt
Lehman Brothers
It was reported in the Company's year end accounts that loans originally provided by Lehman Brothers were securitised into three Collateralised Mortgage Backed Securities ("CMBS") vehicles, Windermere VIII, Windermere XI and Windermere XIV.
Following the publication of the Annual Report, the Company was notified that the interest rate swaps originally put in place between the CMBS vehicles and Lehman Brothers Special Finance Limited ("LBSF") remained in place but that LBSF could not fulfil its obligations. The Company has now been advised that replacement swaps are being arranged.
Wichford, with advice from its specialist debt advisors, NM Rothschild, is working to ensure that the replacement swaps are on acceptable terms. It is expected that this process will be completed by no later than the end of the first quarter 2009.
Wichford has no loan to value covenants on its principal UK debt facilities which represent 64% of all borrowings.
No value was attributed to the interest rate swaps on the Windermere facilities at 30 September 2008, because of the potential inability of LBSF to act as counterparty to the hedging arrangements.
Derivative Financial Instruments
As at 31 December 2008, as a result of the recent sharp fall in Sterling and Euro interest rates, the fair value loss of Wichford's interest rate swaps was estimated at £30.0 million (September 2008: estimated gain of £6.4 million). This included the swaps assigned to the Windermere facilities which were estimated at £5.0 million as at 31 December 2008 (September 2008: gain of £1.3 million excluding the Windermere swaps). This will cause a further diminution in the Company's net asset value; however, there is no impact on its cash position or obligations.
Since inception, the Company has employed a policy of hedging through swaps the interest rates on its debt at the time properties are acquired. The majority of the swaps have been put in place at higher than prevailing interest rates.
Outlook
Despite the prospect of declining valuations, the Board reiterates that the Company's rental income stream continues to grow and that the Company continues to be able to meet its current financing obligations.
The Board remains confident that Wichford is able to weather the current economic conditions, provide a dividend return to Shareholders, and will be well placed to take advantage of an upturn in due course.
For further details, please contact,
|
Wichford P.L.C. |
|
|
Philippe de Nicolay |
00 33 1 40 74 42 79 |
|
Wichford Property Management Ltd |
|
|
Jamie Hambro |
020 7747 5678 |
|
Philip Cooper |
020 7495 7111 |
|
Michael Watters |
020 7811 0100 |
|
Citigate Dewe Rogerson |
020 7638 9571 |
|
George Cazenove Hannah Seward |
|
Notes to Editors
Wichford P.L.C. (UK Listed: WICH) is a property investment company, with a portfolio focused on investment property occupied exclusively by Central and State Government bodies. Approximately a quarter of the portfolio comprises public sector rented properties in Germany, the Netherlands and France.
Related Shares:
RDI.L