25th Apr 2008 15:26
Standard Life Invs Property Inc Tst25 April 2008 STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST LIMITED 31 March 2008 - Net Asset Value Announcement The unaudited net asset value per ordinary share of Standard Life InvestmentsProperty Income Trust Limited at 31 March 2008 was 102.7 pence. This is adecrease of 8.0 percentage points over the net asset value of 111.6 pence pershare at 31 December 2007. The net asset value is calculated under International Financial ReportingStandards ("IFRS") and includes a provision for payment of a proposed interimdividend of 1.69p per ordinary share for the quarter to 31 March 2008. The net asset value incorporates the external portfolio valuation by Jones LangLaSalle at 31 March 2008. The property portfolio will next be valued by anexternal valuer during June 2008 and the next quarterly net asset value will bepublished thereafter. Breakdown of NAV movement Set out below is a breakdown of the change to the unaudited net asset value pershare calculated under IFRS over the period 31 December 2007 to 31 March 2008. Pence per % of opening share NAV Net Asset Value per share as at 31 December 111.6 -2007Decrease in valuation of property portfolio(including the effect of gearing) (8.3) (7.4%)Decrease in interest rate swap valuation (0.4) (0.4%)Other movement in reserves (0.2) (0.2%)Net Asset Value per share as at 31 March 102.7 (8.0%)2008 The ungeared decrease in the valuation of the property portfolio over thequarter to 31 March 2008 was 4.9%. Total asset analysis as at 31 March 2008 (unaudited) +----------------------------+-----------+------------+| |£m |% |+----------------------------+-----------+------------+|Office |46.8 |22.2 |+----------------------------+-----------+------------+|Retail |35.9 |17.1 |+----------------------------+-----------+------------+|Industrial |56.3 |26.8 |+----------------------------+-----------+------------+|Other |20.9 |9.9 |+----------------------------+-----------+------------+|Total Property Portfolio |159.9 |76.0 |+----------------------------+-----------+------------+|Cash |48.3 |23.0 |+----------------------------+-----------+------------+|Other Assets |2.1 |1.0 |+----------------------------+-----------+------------+|Total Gross Assets |210.3 |100.0 |+----------------------------+-----------+------------+ Cash position As at 31 March 2008, the Company has borrowings of £84.4m and a cash position of£48.3m (excluding rent deposits) therefore cash as a percentage of debt was57.2%. Loan to value ratio As at 31 March 2008 the loan to value ratio after taking account of the cashoffset is 22.5%. The gearing level was 27.3% (bank borrowings plus zero dividendpreference share liability less cash divided by property portfolio).Breakdown in valuation movements over the period 31 December 2007 to 31 March2008 +---------------------------+-------------+-------------+---------+| | Exposure as |Capital Value| £m || | at 31 March | Movement on | || | 2008 (%) | Standing | || | |Portfolio (%)| |+---------------------------+-------------+-------------+---------+|External Valuation at 31/12| | | 178.2 ||/07 | | | |+---------------------------+-------------+-------------+---------+|Sub Sector Analysis: | | | |+---------------------------+-------------+-------------+---------+|RETAIL | | | |+---------------------------+-------------+-------------+---------+|South East Standard Retail | 15.0 | -1.5 | -0.4 |+---------------------------+-------------+-------------+---------+|Retail Warehouses | 18.1 | -4.8 | -1.5 |+---------------------------+-------------+-------------+---------+| | | | |+---------------------------+-------------+-------------+---------+|OFFICES | | | |+---------------------------+-------------+-------------+---------+|Central London Offices | 10.6 | -8.9 | -19.6 |+---------------------------+-------------+-------------+---------+|South East Offices | 6.5 | -4.8 | -0.5 |+---------------------------+-------------+-------------+---------+|Rest of UK Offices | 12.1 | -5.8 | -1.2 |+---------------------------+-------------+-------------+---------+| | | | |+---------------------------+-------------+-------------+---------+|INDUSTRIAL | | | |+---------------------------+-------------+-------------+---------+|South East Industrial | 7.2 | -7.3 | 6.4 |+---------------------------+-------------+-------------+---------+|Rest of UK Industrial | 28.0 | -3.2 | -1.5 |+---------------------------+-------------+-------------+---------+| | | | |+---------------------------+-------------+-------------+---------+|OTHER | 2.5 | -2.4 | |+---------------------------+-------------+-------------+---------+| | | | |+---------------------------+-------------+-------------+---------+|External Valuation at 31/03| 100 | -10.3 | 159.9 ||/08 | | | |+---------------------------+-------------+-------------+---------+ Investment Manager Commentary UK Property Market 2008 started in much the same manner as 2007 finished with the pricingcorrection continuing to play out. Encouragingly, the pace of decline in capitalvalues has decelerated and pricing looks to be moving closer to a floor andnearer to fair value. At the end of March, the IPD monthly total return on AllProperty at -0.8% has recovered from the -3.7% record monthly low recorded inDecember 2008. With annual returns to the end of March running at -10.7% p.a.and prices falling at a slower rate, this year is likely to record similarreturns to last years low negative single digits. At 0.7%, returns from listed stocks also improved markedly in the first quarterof 2008 as the sector staged a bounce back from the double digit negativereturns recorded in the last quarter of 2007. Similarly, the offshore sectorposted less negative returns at -1.4%, on average, in the first quarter of 2008although there was a wide variation of returns across the sector. In contrast to last quarter, total returns from the office sector at -3.2% overthe quarter were above the returns from the other two sectors. Despite thisoutperformance, we continue to hold the view that the cyclical office sectorlooks to be past the peak of this cycle and we expect offices to underperformthe other sectors in the near term. The credit market problems are likely toaccelerate the steepness of the downswing if the problems are prolonged and weexpect financial and business service office occupiers to bear the brunt of theexpected fall-out. In the context of the pricing correction, capital values inthe office sector, at -4.5% have been more resilient to price falls over thequarter. In a reversal of last quarter's results, prices within the industrialssector at -5.4% have fallen at a faster rate than the other sectors over thelast three months. Retail values falling -4.8% over the quarter were roughly inline with the average for All Property. Tenant demand moderated across thesectors this quarter as a consequence of the economic softening. In thisenvironment, incentives and rent free periods have increased and this is mostmarked in areas of oversupply that are most susceptible to slowing tenantdemand. As alluded to last quarter, speculative development has been relativelyrestrained in this cycle although there are exceptions such as the City and someof the regional office markets. Economic forecasts continue to edge downwardsbut at this stage the economy does not look to be moving towards recessionarylevels of growth. Although moderating, positive economic growth will continue tounderpin the occupier markets. Investment Outlook Our view remains that there will be several more challenging months of negativereturns over the course of 2008 as the pricing correction continues to run itscourse. As witnessed in the first quarter, the pace of capital value declineshas slowed and we expect the magnitude of price falls to continue to moderateover the next few months. We believe the strong performance of the office marketis coming to an end and will likely be accelerated by falling demand fromfinancial companies. We therefore expect retail, particularly prime qualityretail, to offer the strongest opportunities for rental growth over the next fewyears. The fundamentals supporting the market have been relatively resilient so faralthough there has been some weakening over the quarter. The downside risk of acontracting economy, although still relatively low at present, has increasedover the quarter. The banking sector remains key as to whether the downsiderisks crystallize significantly. Inter-bank lending markets have yet to returnto normal and the longer they remain non-functioning the greater the risk thatrationed credit will cause problems in other parts of the economy. We continueto expect the market to provide healthy single digit returns over the next fewyears with the caveat that tenant demand, although robust currently, may besusceptible to accelerated softening if financial markets continue in theirpresent cautious state. Strategy Update Whilst the direct property market continues to see falling capital values andthe general outlook remains difficult the Board is content to hold cash whilstcontinually considering the various investment options available to it. The£48.2m of cash is held in a AAA account that provides secure returns in excessof the UK commercial property market, along with the flexibility to invest inthe best interest of shareholders as opportunities arise. Portfolio Activity Purchases and Sales: During the quarter the Company completed on the purchase of a well letindustrial unit in the Thames Gateway for £7.5m, which shows an initial yield of6.5%. The purchase was delayed following exchange in November 2007 for thevendor to undertake some works to the property. The Company also completed onthe sale of Wellington House, London for £17.65m. The property had been thelargest in the portfolio, and had a lease expiry in 2011 that gave cause forconcern over the security of income at a time that rental values in CentralLondon are forecast to fall. Asset Management: Hollywood Green, London: Following the agreement to lease with Cineworld, andagreement to surrender with Hoyts an application was made to the OFT, whounfortunately referred the application to the competition commissioner. As aresult the deal did not complete. The Company continues to receive rent fromHoyts but will continue to look for alternative opportunities. Storage Land, Witham: A planning consent has been achieved on a half acre site,and discussions are ongoing over its sale. Ocean Trade Centre, Aberdeen: We completed a new lease on unit 17 at a rentallevel of £7.50 per sq ft. The estate is now fully let. All Enquiries: The Company Secretary Northern Trust International Fund Administration Services (Guernsey) Ltd Trafalgar Court Les Banques GY1 3Q1 Tel: 01481 745439 Fax: 01481 745085 APENDIX 1 Historical NAV per Ordinary Share are as follows: Adjusted IFRS NAV Adjusted UK GAAP NAV 31/03/08 102.71p 107.47p31/12/07 111.60p 115.96p30/09/07 130.70p 133.47p30/06/07 137.16p 137.79p31/03/07 134.42p 137.23p31/12/06 132.68p 136.47p30/09/06 129.51p 134.37p30/06/06 130.20p 134.87p31/03/06 124.28p 130.46p31/12/05 116.46p 124.00p30/09/05 107.12p 114.31p30/06/05 103.88p 111.82p31/03/05 101.34p 106.63p31/12/04 99.00p 105.16p This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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