30th Apr 2009 07:00
FOR IMMEDIATE RELEASE
30 April 2009
the Advantage Property Income Trust Limited ("TAP" or the "Company")
TAP - INTERIM MANAGEMENT STATEMENT
Spring 2009
Investment objectives -
To provide shareholders with an attractive level of income, together with the potential for income and capital growth derived from investment in the Group's diversified portfolio of commercial property in the United Kingdom and the Channel Islands.
TAP benefits from a well balanced and diversified portfolio, with the opportunity to increase income and capital value. The Company provides an attractive dividend yield to investors, with further income growth through the delivery of asset management initiatives.
Property Fund Adviser's comments -
Debt & Debt Restructuring
The Company has completed an amendment to the terms of its revolving bank facility with the Bank of Scotland. The amendment provides for revised margins over the 3 month London Interbank Offer Rate, on the basis of a sliding scale of loan to value ratios up to a maximum of 70%. The facility has also been reduced from £98.3 million to £78.0 million.
Investment Strategy
Over the quarter, modest share price improvements were seen across the majority of the peer group which acted to narrow discounts to NAV. However, discounts remain far in excess of the long running average due to market expectation of further capital falls and general investor sentiment towards commercial property.
UK All Property capital performance for Q1 (-8.9%), as measured by IPD Monthly was a notable improvement on the dire performance of Q4 2008 (-15.0%). However, the extent of value falls is far in excess of those recorded in the same three-month period last year (Q1 2008 -4.7%). The IPD Monthly total return for the quarter is now standing at -7.1%. During Q1 TAP's capital returns at property level once again exceeded those of the IPD Universe (-7.6% v -8.9% respectively). The property portfolio continues to be managed with the aim of providing higher than average income returns. With an income return of 1.9 % (IPD Monthly 1.9%) over the quarter, the Company's total return of -5.8 % for Q1 2009 represents significant outperformance against the IPD Monthly Q1 total return.
Following the completion of the refurbishment projects at Advantage Reading and Stratford Upon Avon during the quarter, TAP's lettable void rate has increased to 8.44% as at 31 March 2009. Going forward, the void provides the Company with the opportunity to secure an additional £1.45 million of new income. Marketing campaigns are progressing well and the Company remains focused on a number of asset management initiatives, including the refurbishment of Advantage One Milton Keynes. As a collective, this activity has resulted in a total void rate of 11.40% at the quarter end. This remains in line with the market with Knight Frank Research reporting a market vacancy rate of 11.20% for the same period.
The sale of a vacant shop in Leicester and an industrial estate in Stoke on Trent were completed during the quarter achieving a combined consideration of £1.2 million enabling the Company to maintain its strategy of reducing debt. The Company continues to review the future potential of all stabilised assets.
Financial Highlights as at 31 March 2009
NAV fell to 46.3p, a reduction of 18.3% over the quarter
Share price 15.00p (31/03/09)
Discount to NAV 67.6% (31/03/09)
Portfolio nominal equivalent yield of 8.52% (8.22% Q4 09)
Portfolio total return for the quarter was -5.8% (IPD Monthly Index Q1 09 at -7.1%)
Two sales completed in Q1 09
Dividend equivalent to 3.25 pence per share per annum paid during quarter.
Q1 2009 Portfolio Activity
An industrial estate in Stoke on Trent was sold for £750,000, a 3% premium to the December valuation and reflecting an 8% NIY to the purchaser. In addition, a vacant shop unit in Leicester was sold for £416,250, 2% below the December valuation.
Three lettings completed over the Q1 2009, providing the Company with an additional £45,400 pa of rental income at Southgate Retail Park Derby and York House Felixstowe.
Seven lease renewals were completed over the quarter, preserving £121,871 pa of rental income for the Company.
The refurbishment of AdVantage, Reading achieved practical completion in March and was awarded a BREEAM rating of "Excellent". The 24,500 sq ft Grade A office building is being marketed by Lambert Smith Hampton and Jones Lang LaSalle who are in discussions with a number of potential occupiers.
The insurance claim at the former Garrard Waters unit on Brackmills, Northampton is progressing well, with a settlement anticipated during Q2 2009.
Following the income risk statistics reported last quarter, there have been no new tenant failures. The amount of 'red-rated' high risk income has fallen from 10.75% in Q4 2008 to 5.4% in Q1 2009. Similarly, the amount of 'green-rated' low risk income has increased from 72.7% in Q4 2008 to 77.5% in Q1 2009.
Key Financial Statistics
As at 31 March 2009
|
Fund |
|
|
Launched |
Feb 2005 |
|
Share Price (31/03/09) |
15.00 |
|
Total shares issued |
142,747,300 |
|
Long term debt |
£111,759,705 |
|
Gearing |
61.9% LTV |
|
Average all in cost of debt |
4.94% |
|
Dividend dates |
Feb, May, Aug, Nov |
|
Property Portfolio |
|
|
Total property assets |
£180,558,000 |
|
Number of properties |
70 |
|
Average lot size |
£ 2.58 million |
|
Average lease length |
6. 41 years |
|
Total void rate (% rental value) |
11.40% |
|
Lettable void rate |
8.44% |
|
Income return (annualised) |
7.7% |
|
Net Initial Yield |
8.02% |
|
Net Reversionary Yield |
9.03% |
PROPERTY PORTFOLIO
Property Market
As recorded by the monthly index, IPD returns indicate a slowing in the pace of capital value falls when compared to Q4 2008. It is clear that this quarter marks a switch from yield driven to rental-led valuation falls. IPD report that whilst All Property yields continue to rise, the pace of outward yield shift is easing, with an equivalent yield shift of 22 bps over the quarter to 9.15%. The total price correction since the peak of the market in June 2007 now stands at -41.4%. The market total return for the preceding 12 months now stands at -25.5% (IPD Monthly).
Increasingly, the downward pressure on rental values is the key contributor to capital depreciation. According to CBRE, All Property rental growth for the quarter was -3.5%, with IPD recording a figure of -3.0% for the same period. This illustrates the ongoing uncertainty in the occupational market, as landlords cut rents to attract or keep tenants in occupation. The office sector, particularly Central London, continues to provide the poorest rental growth, due to the oversupply caused by the contraction in the financial and services industries. TAP benefits from no exposure to the Central London market.
Despite some commentators reporting that the market is at or approaching its trough, investment transaction volumes in the quarter remain historically low, even when compared to the already depressed levels seen in Q4 2008. Only £4 billion of property was traded in the quarter, the lowest level for a decade. Despite moderate improvements in the debt markets, it is clear that the majority of investment activity is being undertaken by equity investors with limited requirements for debt and overseas investors capitalising on the weak pound.
kEY pORTOLIO aCTIVITIES
Top 10 property investments
|
|
Location |
Valuation Weighting |
|
Waterfront Business Park |
Fleet |
5.01% |
|
National Westminster House |
Guernsey |
4.96% |
|
The Brunel Centre |
Bletchley |
4.92% |
|
Brunswick Point |
Leeds |
4.43% |
|
Kingscourt Leisure Complex |
Dundee |
4.26% |
|
The Links |
Warrington |
3.93% |
|
Geoffrey House |
Maidenhead |
3.41% |
|
Silver Court |
Welwyn Garden City |
3.35% |
|
Southgate Retail Park |
Derby |
3.01% |
|
AdVantage |
Reading |
2.80% |
|
Total |
|
40.08% |
Sector breakdown %
|
37.06 |
Offices |
|
20.97 |
Industrial |
|
19.84 |
Retail Warehousing |
|
17.87 |
Retail |
|
4.26 |
Leisure |
Geographic breakdown %
|
38.02 |
South East |
|
12.09 |
Scotland |
|
8.98 |
West Midlands |
|
8.98 |
East Midlands |
|
7.26 |
Yorkshire & Humberside |
|
6.56 |
North West |
|
4.96 |
Channel Islands |
|
4.33 |
South West |
|
4.43 |
Outer London |
|
2.53 |
Eastern |
|
1.46 |
Wales |
|
0.39 |
North East |
Top 10 tenants
|
Income Weighting |
|
|
Halfords Limited |
14.90% |
|
Nisaba Group Ltd |
4.70% |
|
Clydesdale Bank plc |
4.33% |
|
National Westminster Bank plc |
4.21% |
|
Toys R Us |
3.85% |
|
Odeon Multiplex Ltd |
3.40% |
|
Amtek Investments UK 2 Ltd |
3.30% |
|
Exel Europe Ltd |
2.46% |
|
GeoPost Ltd |
1.98% |
|
Wilkinson Hardwear Stores Ltd |
1.79% |
Contact details
For further information, or to organise a presentation, please contact:
Broker
Singer Capital Markets LtdOne Hanover StreetLondonW1S 1AX
James Maxwell - T: 020 3205 7500
Secretary
Anson Fund Managers LimitedAnson PlaceMill Court La Charroterie
St. Peter Port GuernseyGY1 1EJ
T: 01481 722260
Property Fund Adviser
Valad Asset Management (UK) Limited 1 Mount StreetLondon W1K 3NB
CHRIS CARTER KEALL / FRASER KENNEDY - T: 020 7659 6666
Source: This snap shot has been approved for issue by The Advantage Property Income Trust Limited, which accepts responsibility for the information contained herein save for the content of the Property Fund Adviser's comments.
This document is not, and is not intended to be an invitation, inducement, offer, or solicitation, to deal in the shares of the company. The price of shares in the company and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of shares in the company. An investment in the company should be considered only as part of a balanced portfolio of which it should not form a disproportionate part. Investments in property are relatively illiquid and may be more difficult to realise than equities or bonds. Yields may vary and are not guaranteed. All figures are correct as at 31 March 2009 . Past performance cannot be relied upon as a guide to future performance.
The Advantage Property Income Trust Limited (TAP)
Anson Place, Mill Court, La Charroterie, St. Peter Port, Guernsey GY1 1EJ
T 01481 722260 F 01481 729829 E [email protected] W www.tapincome.com
END OF ANNOUNCEMENT
E&OE - In transmission
Related Shares:
TAP.L