15th May 2009 11:00
CLOSE HIGH INCOME PROPERTIES PLC (the "Company")
INTERIM MANAGEMENT STATEMENT
ANNOUNCEMENT OF NAV
The board of Close High Income Properties PLC advises that as at close of business on 30 April 2009, the unaudited net asset value per Ordinary Share of 1 penny each of the Company was 29.70 pence (31 March 2009: 29.36 pence). The unaudited net asset value per "D" Ordinary Share of 1 penny each was 6.97 pence (31 March 2009: 6.46 pence). This represents an increase of 1.18 per cent per Ordinary Share and an increase of 7.88 per cent per "D" Ordinary Share.
The net asset value is based on the external valuation of the Company's property portfolio prepared by DTZ Debenham Tie Leung Limited at 31 March 2009. On a like for like basis there has been an average fall in valuation from 31 December 2008 of 9.4% across the Ordinary Share Portfolio and a 9.8% fall in valuation across the "D" Ordinary Share portfolio. The net asset value also incorporates the movement in the interest rate swap valuations as seen in the table below.
During the month the market value of the interest rate swap liability entered into by Ordinary Share decreased by £0.22 million to a liability of £4.55 million (31 March 2009: liability of £4.77 million). The movement during the month represented an increase in net asset value of 1.02 per cent per Ordinary Share. Whilst the total market valuation of the interest rate swap is currently in deficit, its value will run to zero over the term of the contract. The swap continues to provide a fixed rate of interest to the Company. It is not the intention of the Company to dispose of the swap and realise the deficit as the Company continues to benefit from fixed rate funding.
There were no property sales completed between January and April 2009.
The net asset value is calculated under International Financial Reporting Standards ("IFRS").
|
Ordinary Share |
"D" Ordinary Share |
|||
|
Pence per share |
% of opening NAV |
Pence per share |
% of opening NAV |
|
|
Net asset value per share as at 31 March 2009 |
29.36 |
- |
6.46 |
- |
|
Decrease in interest rate swap liability valuation |
0.30 |
1.02 |
- |
- |
|
Movement in revenue reserves |
0.04 |
0.16 |
0.51 |
7.88 |
|
Net asset value per share as at 30 April 2009 |
29.70 |
1.18 |
6.97 |
7.88 |
The property portfolio will next be valued by an external valuer at 30 June 2009 and the net asset value per share as at 31 May 2009 will be announced in June 2009.
PROPERTY PORTFOLIO PERFORMANCE
In the first four months of 2009 void levels within the Ordinary Share Property Portfolio have increased from around 11% to 16.5% as a number of tenant businesses failed or exercised breaks and vacated properties. The 'D' Ordinary Share Portfolio void increased slightly during the period from 15.6% to 17.9%.
Some of this void activity is cyclical and occurs each year soon after the Christmas period. However, the increased scale of voids this year is reflective of the difficult general economic conditions faced as the UK enters recession. Both portfolios have seen increased tenant interest in many of the vacant properties with a number of new lettings in solicitors' hands.
Rent levels are coming under pressure as more tenants attempt to negotiate favourable terms on lease expiry or break options dates. However the Property Investment Advisor is attempting to minimise any fall in revenue by negotiating longer lease terms, or in the case of the 'D' Ordinary Share Portfolio, more standard repairing and insuring leases which minimise the Company's outgoings.
GROUP BORROWINGS
As mentioned in the recently published annual accounts, the Company has appointed JC Rathbone Structured Finance Limited to assist in seeking dispensation from its two lending banks for the breach of Loan to Value ("LTV") covenants in return for the Company paying a higher level of interest and an agreement to use any excess revenues to pay down part of the outstanding loans. Since 31 December 2008, the Group has repaid £0.1m to lenders and currently holds cash reserves of £3.2m.
|
Ordinary Share |
"D" Ordinary Share |
|
|
Current LTV ratio |
73.1% |
88.2% |
|
Net Debt |
£68.5m |
£19.8m |
The Company will continue to update the market and shareholders when matters progress.
DIVIDEND SUSPENSION
The Board confirms that all dividends have been suspended. The Directors are conscious of the attractiveness of dividends to shareholders and plan to restore the payment of dividends once the banking position has been resolved and debt levels are brought back to target LTV levels. However it is expected that dividends will remain suspended for the foreseeable future.
FUTURE PROSPECTS
The Company remains focused on resolving the breaches of its banking covenants. Once this has been achieved the Board intends putting forward to shareholders proposals for the continuation of the Company in advance of the shareholder vote which is scheduled for mid 2010.
At the same time the Property Investment Advisor to the Company remains focused on minimising voids and maximising net income from the property portfolios through intense active management of each property.
For further information contact:
Peter Roscrow
Close Investments Limited
020 7426 4174
Related Shares:
IMPT.L