30th Jan 2008 08:18
Invista Foundation Property Tst Ltd30 January 2008 Invista Foundation Property Trust Limited (the "Company") ANNOUNCEMENT OF NAV, DIVIDEND AND INTERIM MANAGEMENT STATEMENT Net Asset Value As at 31 December 2007 the Company's NAV was 117.4 pence per share (pps), a fallof 19.8 pps or -14.4% relative to the September 2007 figure of 137.2 pps. Theimpact of marking to market the Group's interest rate swaps reduced the NAV by£10.3 million, representing 2.1% of the -14.4% fall in NAV. The Company will pay an interim dividend of 1.6875 pence per share in respect ofthe period 1 October 2007 to 31 December 2007. The dividend payment will be madeon 22 February 2008 to Shareholders on the register on 8 February 2008. Theex-dividend date will be on 6 February 2008. Over the 12 months to 31 December 2007 the Company's NAV fell by 19.5 pps or-14.3%. Including dividends, the total NAV return over last 12 months has beenapproximately -10%. Since inception in July 2004 to December 2007 the Company'stotal NAV return has been approximately 12% per annum. A breakdown of the NAV is set out below: 31/12/2007 30/09/2007 3 month Change (£m) (£m) (£)Direct property independentvaluation 582.36 616.50 (34.14) Capital expenditure during the quarter - 8.4 - Like for like direct property 582.36 624.86 (42.5) Joint venture investments (exclswaps) 37.82 51.53 (13.70)Market value - On-balance sheetswaps (5.70) 1.73 (7.43)Market value - Off-balance sheetswaps 2.30 5.18 (2.88)Net current assets 54.70 69.30 (14.60)On-balance sheet loan (259.42) (259.30) -Net Asset Value 412.06 484.94 (72.88)Net Asset Value per share (pps) 117.4 137.2 (19.8) Property Portfolio and Performance Relative to IPD Peer Group The Company's property portfolio was valued at £622.8 million as at 31 December2007, and comprises 71 properties with an average lot size of £8.8 million. Thelike-for-like capital fall of direct properties over the quarter was -6.6% whichincreases to -8.7% including joint venture investments. Sector weightings Sector WeightingRetail 21%Offices 53%Industrial 22%Other 4%Total 100% Regional weightings Region WeightingCentral London 32%South East excl. Central London 35%Rest of South 11%Midlands and Wales 13%North and Scotland 9%Total 100% Top ten properties Value (£) % 1 Minerva House, London SE1 57,650,000 4.6 2 National Magazine House, London W1 52,100,000 4.2 3 Portman Square House, London W1 34,475,000 2.8 4 Plantation Place, London EC3 33,896,000 2.7 5 The Galaxy, Luton 23,130,000 1.9 6 6-8 Tokenhouse Yard, London EC2 21,700,000 1.7 7 Reynard Business Park, Brentford 18,000,000 1.4 8 Victory House, Brighton 17,500,000 1.4 9 Churchill Way West, Salisbury 15,900,000 1.3 10 Union Park, Fifers Lane, Norwich 15,750,000 1.3 Total as at 31 December 2007 290,101,000 23.3 Top ten tenants excluding joint ventures Value (£) % 1 The National Magazine Co Ltd 2,311,125 7.6 2 Synovate Limited* 1,900,000 6.2 3 Reed Smith Services 1,326,190 4.4 4 Mott MacDonald Limited 1,307,148 4.3 5 Wickes Building Supplies Limited 1,092,250 3.6 6 The British Broadcasting Corporation £850,100 2.8 7 Recticel SA £713,538 2.3 8 Partners of Cushman & Wakefield £574,128 1.9 9 Motorhouse 2000 Limited £570,150 1.9 10 Partners of Irwin Mitchell £555,000 1.8 Total as at 31 December 2007 11,199,629 36.8 * Synovate Limited will commence paying this rent in mid 2009 Investment Property Databank ('IPD') has prepared an initial analysis of theCompany's underlying property portfolio relative to the IPD Monthly Index, agood proxy for the IPD peer group Benchmark. Over the quarter to December 2007the Company's directly held assets and joint venture investments produced atotal return of -7.9% relative to the Benchmark of -9.7%. Over 12 months theCompany's directly held assets and joint venture investments produced a totalreturn of -2.3% relative to the IPD Monthly Index return of -5.5%. The decline in capital values of the direct portfolio over the quarter has beenless than the IPD Monthly Index and was consistent across the sectors withretail falling 8.6% (IPD -9.8%), offices falling 7.1% (IPD -10.5%) andindustrial falling 6.8% (IPD -8.3%). Share Repurchases Between 2 November and 6 December the Company has acquired and cancelled 2.7million shares for £2.19 million, reflecting an average price of 81 pence pershare. The Board will continue to consider share repurchases if they appearattractive on investment grounds, while taking account of other calls on theCompany's cash resources. Market Background The IPD Monthly Index reported a capital value fall of 4.2% for December alone,the largest monthly capital fall recorded. This results in a total return for2007 of -5.5% compared with 2006 of 18%. UK capital values have fallen 12.1%from the June 2007 peak, which disaggregate to -12.3% offices (July peak), -13%retail (May peak) and -11.3% industrial (June peak). With the risk of recession in the US and financial market volatility in the UK,it is difficult to predict the outcome for 2008 and a further fall in values inthe short term cannot be ruled out. In contrast to the cyclical downturn of theearly 1990s, occupational demand remains at healthy levels with limited tenantdefault. The early 1990s were also characterised by high inflation and interestrates. The current consensus is for falling interest rates and we anticipate abottoming out in the direct market with some recovery in the direct real estatemarket during the second half of the year. Strategy As the issues affecting the UK commercial property markets and the widerfinancial markets continue, the Group's strategic focus remains on maintainingand increasing income. This is balanced with the objective of reducing totaldebt whilst retaining cash to ensure operational flexibility. Whilst some disposals have been concluded and more are being considered whereasset management plans have been successfully implemented, assets will not besold at forced sale prices. Active Asset Management The period under review has included some asset management successes. At PortmanSquare House, London W1, where the Group owns a 21.6% share, a major new lettinghas exchanged at a new benchmark rent for the prime office building. Thebuilding was acquired in 2006 for £127.5 million (Group share £27.55 million)with an average rental value of £62.50 per sq ft. In December, one tenant whowas paying £827,000 million per annum has vacated in exchange for a payment of£750,000, and in December a simultaneous new lease with a new tenant wasexchanged at a rent of £1.425 million, equating to £95 per sq ft. Thistransaction has supported the valuation with the Groups share valued at £34.5million as at 31 December 2007. At Solent Road Industrial Estate, Havant, the Company has secured planning atappeal for a 15,000 sq ft trade counter unit including 2,800 sq ft of retailspace. Detailed negotiations are continuing with two potential pre-lets. Theconsent is the first phase of the strategy to convert the secondary industrialestate into a high quality trade park close to a retail park and Tescosuperstore. Finance As at 31 December 2007 the Group had securitised on-balance sheet debt of £263.5million fully hedged against interest rates until 2014 at a total cost of fundsof 5.58%. This debt is secured against £555.14 million of property and cash of£10.1 million, reflecting a loan to value of 46.6% relative to a bank covenantof 60%. The value of the security would need to fall by £126.2 million or 22% tobe in breach of the covenant. Secured assets can be sold without penalties orrestriction provided that the proceeds are used to pay down the loan. The security provides a well diversified income stream with an interest coverratio of 203% relative to the bank covenant of 150%. In addition, the Group has£27.1 million of unsecured property and free cash of £49.1 million, with cashproviding important operational flexibility. This results in an overallon-balance sheet loan to value of 38.6%. As at 31 December 2007 the Group hasoff-balance sheet debt of £142.75 million that results in a fully consolidated,on- and off-balance sheet loan to value of 49.3%. If cash balances are nettedagainst borrowings, this ratio falls to 45.3%. As at 31 December 2007 the loan to value ratio of the separate, non-recoursePlantation Place debt facility is 81.47% relative to a covenant of 82.14%. Inthe event of a further deterioration in the value of Plantation Place over thequarter to March 2008 the Group has cash resources to address covenant issues inthe Plantation Place investment structure. Contacts Investment ManagerInvista Real Estate Investment ManagementExchequer Court33 St Mary AxeLondon EC3A 8AATel: 020 7153 9300Duncan Owen (Chief Executive) Broker:JP Morgan Cazenove20 MoorgateLondon EC2R 6DATel: 0207 588 2828Richard Cotton (Managing Director, Corporate Finance) Public Relations:Financial DynamicsTel: 020 7831 3113Stephanie HighettDido Laurimore This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Schroder Real