10th Oct 2007 07:01
Local Shopping REIT (The) PLC10 October 2007 The Local Shopping REIT plc: Trading Update (London: 10 October 2007) - The Local Shopping REIT ("LSR" or the "Company"), aUK real estate investment trust focused on investments in local shopping assets,is pleased to announce that it has made good progress in the delivery of itsbusiness plan in a highly active period since its Admission to the London StockExchange on 2 May 2007. Acquisitions In accordance with its business plan, as set out in its Prospectus, since 28March 2007 (when the existing portfolio was valued at £207.7 million) theCompany has acquired a further 150 properties, in 106 separate transactions, fora total consideration of £47.8 million. This includes the £14.6 millionportfolio of properties LSR acquired through the purchase of the entire sharecapital of Gilfin Property Holdings Limited in August. The blended yield ofthese purchases (excluding Gilfin) is 7.34%, demonstrating the Company's abilityto continue to acquire properties on an accretive basis. As a result of these acquisitions the Company now has a portfolio of 633properties comprising more than 1,980 letting units. Acquisition Pipeline In addition to the acquisition of those properties which were contractuallycompleted, as at 30 September, the Company has also agreed terms to purchase afurther 41 properties for £8.2 million at a blended yield of 7.36%. Oncompletion of these acquisitions, the Company's total portfolio will extend to674 properties. Acquisition of Gilfin Property Holdings Limited On 29 August 2007 LSR completed the purchase of the entire share capital ofGilfin Property Holdings Limited ("Gilfin") for £12.85 million. 50% of theconsideration was satisfied in cash and 50% with 3,897,246 new LSR shares issuedat its last published Net Asset Value of £1.6486 per share. Gilfin was a privately owned property company with a portfolio of 28 propertiesvalued at £14.6 million. It had net liabilities of £0.3 million and £1 millionof associated debt which was repaid at completion. Approximately half theportfolio, by value, is located in Scotland, while the rest is in south westLondon and the surrounding area. The portfolio produces a total rent of £967,038per annum which is anticipated to rise to £1,044,268 per annum when fully let ata market rent. LSR continues actively to seek out further corporate opportunities in theprivate sector enabling it to maximise the various advantages of its REITstatus. Sales During the period since flotation to 30 September 2007, LSR disposed of oneproperty in Wishaw, north Lanarkshire, for £167,500, equivalent to a 5.52%yield, against its book valuation of £133,000. Asset Management During the period, the Company has successfully implemented the following assetmanagement initiatives: - carried out rent reviews on 65 units, increasing the rent by £111,297 per annum (an average uplift of 13.4%, and 8.5% above Estimated Rental Value) - renewed leases on 14 units adding a total of £28,709 rental income per annum (an average uplift of 15.7% and 7.3% above ERV) - the surrender and re-let of eight units, adding £19,300 per annum (an average uplift of 17.5% and 22.5% above ERV) - let 29 vacant units at a rent of £305,800 per annum (2.1% above ERV). In line with its strategy to deliver value from the under-used upper parts ofsome properties, the Company has secured planning consent for 10 residentialunits, with applications submitted for a further 28 units. Financing In July, £26.37 million from the IPO proceeds was used to repay the Company'sloan from Barclays, reducing the loan to £69.29 million (representing 60% LoanTo Value), and its margin to 0.75% from 1.125%. The Company's total debt stands at £99.29 million and it has an additionalcommitted and undrawn long term facility of £120 million from HSBC, with afurther £10 million undrawn short term facility from RBS. In addition to being100% hedged on existing loans, we have further interest rate swaps totalling £50million. The Company's blended interest rate for loans that have been drawn andcommitted, at the current loan to value ratio, up to the limit of the currenthedging level is 5.69% for 8 years. Share buybacks The Company has undertaken share buybacks totalling 2,953,750 ordinary shares ata weighted average price per share of £1.2939. These shares are held inTreasury. Market Conditions The Board believes that current uncertainty in the property market is likely toprovide LSR with more accretive acquisition opportunities in the currentfinancial year. Nick Gregory, LSR's Joint Chief Executive Officer, said: "For the past two and a half years we have been focused on building the size ofthe portfolio. Now that we have turned our attention to asset management we arebeginning to see the rewards through good levels of rental growth andplanning-led initiatives. Our REIT status means we are well placed to offercompetitive prices and tax efficient solutions to private property owners withan unrealised capital gains position." Mike Riley, LSR's Joint Chief Executive Officer, added: "Our local knowledge, speed of response and our very strong financial positionwill enable us to act quickly and decisively to take advantage of opportunitieswe are confident will arise in the market." For more information please contact: The Local Shopping REIT plc Tel: 020 7187 4444Mike Riley/Nick Gregory Financial Dynamics Tel: 020 7831 3113Stephanie Highett/Lauren Mills/Jamie Robertson About The Local Shopping REIT The Local Shopping REIT plc ("LSR") is the first specialist start-up Real EstateInvestment Trust ("REIT") to launch in the UK. Aimed solely at local shopping assets in urban areas, the Company invests inneighbourhood and convenience retail assets, heralding the foundations of a newinstitutional investment class. As at 28 March 2007 the Company's portfoliocomprised 484 properties, with over 1,400 letting units, which was valued at£207.7 million. A further £47.8 million of properties have been acquired sincethen, including the £14.6 million portfolio of properties LSR acquired throughthe purchase of Gilfin Properties. As a result of these acquisitions the Companynow has a portfolio of 633 properties, comprising more than 1,980 letting units. The Company is aiming to become the market leader in the local shopping marketin the UK. In building its portfolio, the Company principally targetsneighbourhood and specialist property in urban conurbations. Typical of theportfolio are shops in local shopping parades and neighbourhood venues forconvenience or 'top-up' shopping. For further information on LSR, please visit www.thelocalshoppingreit.co.uk. For further information on REITS, please visit www.reita.org. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
LSR.L