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Research: Real Estate
Strong leasing activity is supporting EPRA earnings and Custodian REIT (CREI) is on track to meet its FY23 DPS target of not less than 5.5p, fully covered. Despite the robustness of occupational demand and continued rent growth in many areas, capital values began to reprice to increased bond yields. We expect these trends to continue, with EPRA earnings and DPS progressing further while asset values and net asset value (NAV) decrease further.
Custodian REIT |
Robust EPRA earnings but decreased NAV |
Q223 NAV update |
Real estate |
28 November 2022 |
Share price performance
Business description
Next events
Analyst
Custodian REIT is a research client of Edison Investment Research Limited |
Strong leasing activity is supporting EPRA earnings and Custodian REIT (CREI) is on track to meet its FY23 DPS target of not less than 5.5p, fully covered. Despite the robustness of occupational demand and continued rent growth in many areas, capital values began to reprice to increased bond yields. We expect these trends to continue, with EPRA earnings and DPS progressing further while asset values and net asset value (NAV) decrease further.
Year end |
Net rental |
EPRA |
EPRA |
NAV** |
DPS |
P/NAV |
Yield |
03/21 |
33.1 |
23.7 |
5.6 |
97.6 |
5.00 |
0.95 |
5.4 |
03/22 |
35.6 |
25.3 |
5.9 |
119.7 |
5.25 |
0.78 |
5.7 |
03/23e |
37.9 |
25.2 |
5.7 |
98.5 |
5.50 |
0.94 |
5.9 |
03/24e |
39.3 |
26.1 |
5.9 |
98.9 |
5.60 |
0.94 |
6.0 |
Note: *Excludes revaluation gains/losses and other exceptional items. ***Defined as EPRA net tangible assets per share (EPRA NTA).
Cautiously reduced EPRA earnings and DPS growth
CREI continues to see good levels of occupier activity, continuing into Q323, supporting like-for-like rent growth (rent roll +1.1% ERV +2.2%) and increased occupancy (Q223 EPRA occupancy of 89.3% vs 88.7% in Q122). Accretive acquisitions have also continued along with disposals ahead of valuation. Mirroring market trends, property valuations fell 5.4% like-for-like (Q123: +1.7%), driving a negative 5.8% total return, with a 1.1% dividend return only partly offsetting a 6.9% decrease in NAV per share to 113.7p (Q123: 122.2p). In an uncertain and challenging economic environment, we have cautiously reduced forecast growth in EPRA earnings (by 3% in FY24) and DPS (7%) and allow for an additional 0.5% property yield widening (Q223 NIY of 5.9%), reducing FY23e/FY24e NAV by c 20%.
Income at the core of strategy
CREI’s prime strategy for delivering returns is the generation of attractive and stable dividend returns from an actively managed, well-diversified portfolio of UK commercial real estate. Within this, it is differentiated by a principal focus on properties with smaller individual values (‘lot sizes’) of less than £15m at the point of investment. These typically provide a yield premium over larger assets, recently widened, partly the result of a broader range of potential occupiers, while attracting less competition from larger institutional investors. Combined with moderate gearing and a relatively low-cost base, this yield premium has contributed to consistent and attractive average annual total returns of 6.1% since the company listed in 2014. Dividends account for 75% of the 6.1% average annual total return, and, we forecast, effectively all of the returns in the next two years.
Valuation: Consistent, dividend-based returns
The minimum 5.50p DPS targeted by CREI for FY23 represents an attractive yield of a 5.9%, which we expect to be fully covered. The c 18% discount to Q223 NAV compares with an average 3% premium since IPO, and already appears to be factoring significant asset price weakening and a further H223 NAV decline.
Robust EPRA earnings but weaker NAV
Strong leasing activity is supporting EPRA earnings and fully covered DPS. Five new leases were signed during Q223 at an average 9% ahead of estimated rental value (ERV), adding £0.4m to annual rent, with a weighted average 6.3 years to first break (Q123: 13 new leases adding £1.8m of rent for 6.8 years). Lettings momentum has continued into H2231 with a further five new leases completing since end-Q323, adding £0.6m of annual rental income for an average 7.0 years. The two rent reviews settled during Q223 generated an aggregate 22% increase on previous rents, adding £0.1m to annual rent.
To 9 November 2022.
Q123 EPRA occupancy increased to 89.3% after a Q123 dip to 88.7% and is now close to the 89.9% at the start of the year. A significant share (54%) of remaining vacancy at end-Q323 was subject to refurbishment, with a further 25% under offer for sale or lease, both positive indicators for further void reduction. Meanwhile, ERV continued to increase during Q223, by 0.8% (industrial by 1.6%; office 2.2%; and retail -0.8%).
Exhibit 1: Vacancy breakdown
Number of assets |
ERV (£m) |
% of ERV |
% of vacancy |
|
Undergoing or earmarked for refurbishment/development |
11 |
2.8 |
5.7 |
53.8 |
Under offer to sell or let |
9 |
1.3 |
2.7 |
25.0 |
Being marketed to let |
11 |
1.1 |
2.3 |
21.2 |
Void total |
31 |
5.2 |
10.7 |
100.0 |
Let property |
134 |
43.4 |
89.3 |
N/A |
Total portfolio |
165 |
48.6 |
100.0 |
N/A |
Source: CREI data
Asset repricing reflecting rising bond yields
The quarterly data shown in Exhibit 2 indicate H123 EPRA EPS of c 2.8p (H122: 3.0p), fully covering DPS paid of 2.75p. Reflecting the material change in market conditions during Q2, property valuation movements and NAV were noticeably weaker than in Q123. Across all main sectors of the UK commercial property market, general economic and political challenges and uncertainties, including the war in Ukraine, are weighing on asset valuations. The 10-year UK gilt yield has increased from below 1% at the beginning of the year to c 3.1%, having recently been as high as 4.5%. Adding to asset pricing uncertainty, investment demand for commercial real estate assets has fallen sharply after a strong start to the year. The open-ended property retail funds sector is again under pressure to raise liquidity and even the pension fund sector has been forced to reappraise sector weightings.
For CREI, during Q123 property revaluation movements (excluding gains on disposal) represented 2.6p per share, followed by a loss of 8.9p in Q223. Although asset management initiatives, new lettings in particular, had a positive impact, this was dwarfed by wider market influences. The aggregate H123 loss of 6.3p compared with a gain of almost 8p in H122.
Exhibit 2: Reconciliation of (unaudited) H123 NAV movement
£m |
Pence per share |
|||||
Q123 |
Q223 |
H123 |
Q123 |
Q223 |
H123 |
|
Opening NAV |
527.6 |
538.7 |
527.6 |
119.7 |
122.2 |
120 |
Valuation movements relating to asset management activity |
6.9 |
1.4 |
8.3 |
1.6 |
0.3 |
1.9 |
General valuation movements |
4.5 |
(40.6) |
(36.1) |
1.0 |
(9.2) |
(8.2) |
Net unrealised valuation movement |
11.4 |
(39.2) |
(27.8) |
2.6 |
(8.9) |
(6.3) |
Profit on disposal |
1.3 |
3.4 |
4.7 |
0.3 |
0.8 |
1.1 |
Acquisition costs |
(1.6) |
(1.8) |
(3.4) |
(0.4) |
(0.4) |
(0.8) |
Total property valuation movement |
11.1 |
(37.6) |
(26.5) |
2.5 |
(8.5) |
(6.0) |
EPRA earnings |
6.1 |
6.4 |
12.5 |
1.4 |
1.4 |
2.8 |
Dividends paid |
(6.1) |
(6.1) |
(12.2) |
(1.4) |
(1.4) |
(2.8) |
Closing NAV |
538.7 |
501.4 |
501.4 |
122.2 |
113.7 |
113.7 |
Source: Custodian REIT data
We expect more stable income returns to drive performance
The commercial property sector is cyclical, but income returns have historically been significantly more stable than volatile capital values and have provided a more consistent measure of value.
Exhibit 3: Trend in income return and capital return (%) |
Source: CREI data, Edison Investment Research |
The relative stability of income returns can be seen clearly in CREI’s NAV total return record since listing in March 2014. Despite the strains of the pandemic, particularly in early FY21, NAV total return has been positive each year since IPO in March 2014, with an average annual total return of 6.1% up to end-H123. Reflecting CREI’s strong dividend focus, income return has represented three-quarters of total return, broadly in line with the wider market split of returns across the cycle. In the current market environment, we expect income to remain the driver of return.
Exhibit 4: NAV total return since listing
Mar-15 |
Mar-16 |
Mar-17 |
Mar-18 |
Mar-19 |
Mar-20 |
Mar-21 |
Mar-22 |
Jun-22 |
Sep-22 |
March-14 to Sep-22 |
|
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
2022 |
Q123 |
Q223 |
||
Opening NAV per share (p) |
98.2 |
101.3 |
101.5 |
103.8 |
107.3 |
107.1 |
101.6 |
97.6 |
119.7 |
122.2 |
98.2 |
Closing NAV per share (p) |
101.3 |
101.5 |
103.8 |
107.3 |
107.1 |
101.6 |
97.6 |
119.7 |
122.2 |
113.7 |
113.7 |
DPS paid (p) |
3.750 |
6.350 |
6.350 |
6.425 |
6.525 |
6.625 |
4.913 |
5.625 |
1.375 |
1.375 |
49.3 |
Dividend return (%) |
3.8 |
6.3 |
6.3 |
6.2 |
6.1 |
6.2 |
4.8 |
5.8 |
1.1 |
1.1 |
50.2 |
Capital return (%) |
3.2 |
0.2 |
2.2 |
3.4 |
(0.2) |
(5.2) |
(4.0) |
22.7 |
2.1 |
(7.0) |
15.8 |
NAV total return (%) |
7.0 |
6.4 |
8.5 |
9.6 |
5.9 |
1.0 |
0.9 |
28.4 |
3.2 |
-5.8 |
66.0 |
Average total return pa (%) |
6.1 |
Source: CREI data, Edison Investment Research
Like-for-like portfolio valuations reduced by 5.4% in Q223 versus a 1.7% gain in Q123. Including modest impact from capex and transactions, the portfolio net initial yield (NIY) increased from 5.5% at end-Q123 to 5.9%. With a weaker demand-supply balance, rising bond yields and limited market transactions, there is much uncertainty about future capital values, despite many sectors reporting good occupier demand and increasing rents. This is particularly the case for industrial/logistical assets, which saw the largest pull back in quarterly valuation after exceptionally strong past growth, despite continuing firm occupier demand, constrained supply and rising rents. High street retail, where CREI has focused on prime locations, was the strongest performer in Q223, despite the obvious pressures on consumer disposable incomes and continuing modest declines in rents. In such an environment, the benefits of a diversified investment approach are clear.
Exhibit 5: Q223 valuation movement by sector
End-valuation (£m) |
Weighting (%) |
Valuation change (£m) |
Valuation movement (%) |
|
Industrial |
327.3 |
47.8 |
(22.6) |
(7.1) |
Retail warehouse |
147.3 |
21.5 |
(7.5) |
(6.0) |
Office |
83.4 |
12.2 |
(5.0) |
(5.7) |
Other* |
77.2 |
11.3 |
(2.7) |
(3.5) |
High street retail |
50.2 |
7.3 |
(1.4) |
(2.8) |
685.4 |
100.0 |
(39.2) |
(5.4) |
Source: CREI. Note: *Other comprises drive-through restaurants, car showrooms, trade counters, gymnasiums, restaurants and leisure units.
Recognising that there is more uncertainty than usual about the future course of property valuation movements, we have assumed a further 10% like-for-like reduction in property values in H223, representing a widening of the NIY by 0.6% (to 6.5% from 5.9% at end-Q223). For FY24 we have assumed no further valuation movement, positive or negative
Continuing investment to drive income and enhance portfolio quality
During Q223, CREI invested £26.5m in five acquisitions at an accretive blended NIY of 6.8% and disposed of one industrial property for £8.5m, 67% above book value, generating a gain of £3.4m. Acquisitions comprised two industrial assets, two retail warehouses and two drive-through restaurants. Net investment increased the annualised rent roll by 4.5% to £43.0m. So far in Q323, CREI has sold a shopping centre (part of the FY22 DRUM Income REIT acquisition) for £9.3m, 3.5% above its apportioned purchase value, and an industrial unit at auction for £1.4m, 12% ahead of valuation. The unit’s environmental credentials did not fit with CREI’s ESG objectives and it was not considered practical to mitigate these risks.
CREI has a strong pipeline of asset management projects, which it expects to enhance earnings and increase valuation in excess of capital expenditure. During the next 12 months it expects to complete:
■
A £2m refurbishment of an office property in Manchester which, when completed and fully let, CREI expects to increase rents from the current £20 per sqft towards £30 per sqft and enhance the valuation by c £3–4m.
■
A £6.5m redevelopment of an industrial unit in Redditch, which commenced in September 2022, to build a BREEAM2 excellent, EPC A rated unit. When completed and fully let, CREI expects annual rent of the completed asset to be c £0.5m, with an expected gross development profit of c £2.0m.
Building Research Establishment Environmental Assessment Methodology, a sustainability assessment of new build and refurbishment projects within the built environment.
■
A new drive-through restaurant at a retail park in Carlisle, subject to planning. A 20-year lease without break at an annual rent of £80k has already been agreed and CREI’s expected valuation increase on completion is c. £1.4m.
Mostly fixed-rate borrowing provides interest rate protection
CREI operates with moderate gearing and for most of its debt the interest rates are fixed. During Q223, the net loan to value (LTV) ratio increased to 25.4% (end-Q123: 21.5%), reflecting the £18.0m (before costs) of net deployment in the period and negative valuation movements. Adjusting for Q323 disposals, net gearing had reduced to 24.3%3 and the LTV is now 23.8% on a pro forma basis. Our forecasts assume further downwards property revaluation and indicate that as a result, LTV will rise to almost 30% versus the company’s 25% medium-term target. This would remain well within banking covenants (see below) and we do not expect this to materially impact investment or dividend policy.
As at 9 November 2022.
Total agreed debt facilities amount to £180m (Exhibit 6), with a blended yield to maturity of more than six years. This comprises £140m of fully drawn fixed-rate debt with a blended cost of c 3.6% and average term to maturity of just under eight years, and a £40m shorter-term, flexible, floating rate revolving credit facility (RCF) with Lloyds Bank. The RCF may be increased to a maximum £50m with lender approval. At end-Q223, £178m of debt had been drawn, of which fixed rate debt represented 79%, and following the Q323 disposals (and RCF pay-down) the proportion of fixed-rate debt was 84%.
Including the 3 November increase in the Bank of England (BoE) Base Rate to 3.0% (from 2.25%), and allowing for Q322 RCF paydown, the blended average cost of borrowing remains at a similar level to end-Q222 (3.5%). BoE Base Rate is closely tracked by SONIA, the reference rate for CREI’s variable rate borrowing. Money market expectations for the future development of SONIA/the base rate, reflected in the SONIA swap curve, have been volatile, indicating a peak of 4.5–6.0% by the middle of 2023 before steadily declining towards a long-term level of 3–4%. Current rates are at the lower end of this range. Our forecasts reflect a SONIA rate of 4.5% during FY23 and 4.0% through FY24. Were SONIA to be 0.5% higher than we forecast through FY24, this would reduce our FY24 EPRA earnings forecast by a little less than 1%.
Each debt facility has a discrete security pool, comprising a number of individual properties, over which the lender has security and covenants. LTV covenants for these discrete pools are in a range of 45–50%, with an overarching covenant on the property portfolio of a maximum 35% LTV. Additionally, net rental receipts from each discrete security pool, over the preceding three months, must exceed 250% of the facility’s quarterly interest liability. Including FY22 group-level interest cover, Custodian operates well within these covenants.
Exhibit 6: Summary of debt facilities at 30 September 2022
Lender |
Facility (£m) |
Drawn (£m) |
Margin (%) |
Term to maturity (years) |
Maturity date |
Scottish Widows |
20.0 |
20.0 |
3.935 |
2.9 |
13/08/2025 |
Scottish Widows |
45.0 |
45.0 |
2.987 |
5.7 |
05/06/2028 |
Aviva tranche 1 |
35.0 |
35.0 |
3.020 |
9.5 |
06/04/2032 |
Aviva tranche 2 |
15.0 |
15.0 |
3.260 |
10.1 |
03/11/2032 |
Aviva tranche 3 |
25.0 |
25.0 |
4.100 |
10.1 |
03/11/2032 |
Total fixed rate |
140.0 |
140.0 |
3.359 |
||
Lloyds Bank revolving credit facility* |
40.0 |
38.0 |
SONIA +1.5–1.8 |
2.0 |
17/09/2024 |
Total debt facilities |
180.0 |
178.0 |
3.5 |
6.3 |
Source: CREI data, Edison Investment Research. Note: *The margin on the Lloyds revolving credit facility is determined by the prevailing LTV. The facility may be increased to a maximum £50m with Lloyds’ approval.
Estimate changes driven by the market-wide softening of property values
The changes to our headline EPRA earnings and DPS forecasts are modest compared with the balance sheet impact of widening property yields. Our forecast EPRA earnings are c 5% lower in FY23 and c 3% lower in FY24 compared with those last published, comprising:
■
Higher gross rental income resulting from continuing leasing progress, more than offset by higher non-recoverable property costs, significantly driven by inflationary pressure.
■
Lower administrative costs driven by lower investment management charges, more than two-thirds of the total. These are linked to NAV and the weakness of property valuations has a positive impact.
■
Higher net interest costs, mainly driven by the impact of higher market interest rates on the floating rate debt. Average debt is also slightly higher, reflecting net acquisition activity.
Reflecting the uncertain market environment, we have taken a slightly more cautious stance on DPS growth, deferring an increase in quarterly DPS until Q124, with a slightly smaller uplift, maintain a good level of DPS cover.
Our forecasts for FY23 and FY24 EPRA NTA per share are c 20% lower at c 99p in each year (end-FY22: 120p).
In addition, a 1% fall/increase in the end-FY23 portfolio value would reduce FY23e EPRA NTA per share by c 1.4%.
Exhibit 7: Forecast revisions
£m unless stated otherwise |
Forecast |
Previous forecast |
Change |
% change |
||||
FY23 |
FY24 |
FY23 |
FY24 |
FY23 |
FY24 |
FY23 |
FY24 |
|
Gross rental income |
41.9 |
43.4 |
41.8 |
42.7 |
0.1 |
0.7 |
0.3% |
1.7% |
Non-recoverable property costs |
(4.0) |
(4.1) |
(3.0) |
(2.7) |
(1.0) |
(1.4) |
||
Net rental income |
37.9 |
39.3 |
38.8 |
40.0 |
(0.9) |
(0.7) |
-2.3% |
-1.7% |
Administrative expenses |
(6.2) |
(5.8) |
(6.4) |
(6.6) |
0.2 |
0.7 |
-3.7% |
-11.1% |
Net Interest |
(6.5) |
(7.4) |
(5.9) |
(6.4) |
(0.6) |
(0.9) |
10.0% |
14.7% |
EPRA earnings |
25.2 |
26.1 |
26.4 |
27.0 |
(1.2) |
(0.9) |
-4.7% |
-3.4% |
Realised & unrealised property gain/(losses) |
(93.8) |
0.0 |
20.6 |
0.0 |
(114.4) |
0.0 |
||
IFRS earnings |
(68.6) |
26.1 |
47.1 |
27.0 |
(115.7) |
(0.9) |
||
EPRA EPS (p) |
5.7 |
5.9 |
6.0 |
6.1 |
(0.3) |
(0.2) |
-4.7% |
-3.4% |
IFRS EPS (p) |
(15.6) |
5.9 |
10.7 |
6.1 |
(26.2) |
(0.2) |
||
DPS declared (p) |
5.50 |
5.60 |
5.63 |
6.00 |
(0.1) |
(0.4) |
-2.2% |
-6.7% |
Dividend cover (x) |
1.04 |
1.06 |
1.07 |
1.02 |
||||
EPRA NTA (p) |
98.5 |
98.9 |
124.7 |
124.9 |
(26.2) |
(26.0) |
-21.0% |
-20.8% |
EPRA NTA total return (%) |
-13.1% |
6.0% |
8.8% |
4.9% |
||||
LTV (%) |
28.9% |
29.8% |
23.0% |
24.0% |
Source: Edison Investment Research
Valuation
CREI’s target DPS for FY23 of at least 5.5p represents a prospective yield of 5.9%. Meanwhile, the shares trade at a c 18% discount to the Q223 NAV per share of 113.7p. For most of the period until the pandemic, CREI traded at a premium to NAV, reflected in an average over the whole period of 3%.
Exhibit 8: Trailing share price yield (%) |
Exhibit 9: Trailing price/NAV (x) |
Source: Refinitiv prices, company dividend data |
Source: Refinitiv prices, company NAV data |
Exhibit 8: Trailing share price yield (%) |
Source: Refinitiv prices, company dividend data |
Exhibit 9: Trailing price/NAV (x) |
Source: Refinitiv prices, company NAV data |
Compared with those companies that we consider to be its closest diversified income-oriented peers, CREI’s share price performance is above the peer group average and the broad UK property index over one year and three years. The sector has underperformed the UK equity index over the same periods. CREI’s P/NAV is above the average of the group, as it has been for most of the period since IPO, and its trailing yield is below average. Factors supporting CREI’s valuation include uninterrupted quarterly DPS during the pandemic (albeit at a reduced level), moderate gearing and a focus on smaller lot size properties with a yield premium that has historically supported risk-adjusted income returns.
Exhibit 10: Peer performance and valuation summary
Price (p) |
Market cap (£m) |
P/NAV* (x) |
Trailing Yield** (%) |
Share price performance (%) |
||||
1 month |
3 months |
1-year |
3-years |
|||||
Ediston Property |
66 |
140 |
0.70 |
7.5 |
1% |
-10% |
-14% |
-24% |
CT Property Trust |
72 |
168 |
0.59 |
5.5 |
1% |
-18% |
-18% |
-14% |
Balanced Commercial Property Trust |
92 |
648 |
0.66 |
5.0 |
7% |
-13% |
-8% |
-23% |
Picton |
88 |
482 |
0.75 |
4.0 |
2% |
-3% |
-11% |
-6% |
Regional REIT |
60 |
310 |
0.62 |
11.0 |
-11% |
-15% |
-34% |
-45% |
Schroder REIT |
46 |
226 |
0.62 |
6.7 |
3% |
-12% |
-11% |
-14% |
abrdn Property Income Trust |
55 |
209 |
0.52 |
7.3 |
-1% |
-28% |
-26% |
-38% |
UK Commercial Property REIT |
61 |
787 |
0.60 |
8.5 |
-1% |
-15% |
-18% |
-30% |
Average |
0.64 |
6.7 |
0% |
-14% |
-18% |
-24% |
||
Custodian REIT |
93 |
410 |
0.82 |
5.9 |
5% |
-12% |
-5% |
-19% |
UK property sector index |
1,373 |
4% |
-12% |
-29% |
-27% |
|||
UK equity market index |
4,112 |
7% |
1% |
2% |
0% |
Source: Company data, Refinitiv prices at 25 November 2022. Note: *Based on last reported EPRA NAV/NTA. **Based on trailing 12-month DPS declared.
Exhibit 11: Financial summary
Year end 31 March, £m |
2020 |
2021 |
2022 |
2023e |
2024e |
|
PROFIT & LOSS |
||||||
Gross rental income |
40.0 |
38.7 |
39.0 |
41.9 |
43.4 |
|
Non-recoverable property costs |
(1.9) |
(5.6) |
(3.4) |
(4.0) |
(4.1) |
|
Net rental income |
|
38.1 |
33.1 |
35.6 |
37.9 |
39.3 |
Administrative expenses |
(4.8) |
(4.6) |
(5.5) |
(6.2) |
(5.8) |
|
Operating Profit before revaluations |
|
33.4 |
28.5 |
30.1 |
31.7 |
33.5 |
Revaluation of investment properties |
(25.9) |
(19.6) |
94.0 |
(95.0) |
0.0 |
|
Costs of acquisitions |
(0.6) |
(0.7) |
(2.3) |
(3.4) |
0.0 |
|
Profit/(loss) on disposal |
(0.1) |
0.4 |
5.4 |
4.6 |
0.0 |
|
Operating Profit |
6.8 |
8.6 |
127.2 |
(62.1) |
33.5 |
|
Net Interest |
(4.7) |
(4.8) |
(4.8) |
(6.5) |
(7.4) |
|
Profit Before Tax |
|
2.1 |
3.7 |
122.3 |
(68.6) |
26.1 |
Taxation |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Profit After Tax |
2.1 |
3.7 |
122.3 |
(68.6) |
26.1 |
|
Net revaluation of investment property/costs of acquisition |
26.4 |
20.3 |
(91.7) |
92.0 |
98.5 |
|
Gains/(losses) on disposal |
0.1 |
(0.4) |
(5.4) |
(4.6) |
0.0 |
|
EPRA earnings |
28.7 |
23.7 |
25.3 |
25.2 |
26.1 |
|
Average Number of Shares Outstanding (m) |
409.7 |
420.1 |
428.7 |
440.9 |
440.9 |
|
IFRS EPS (p) |
|
0.5 |
0.9 |
28.5 |
(15.6) |
5.9 |
EPRA EPS (p) |
|
7.0 |
5.6 |
5.9 |
5.7 |
5.9 |
Dividend per share (p) |
|
6.65 |
5.00 |
5.25 |
5.50 |
5.60 |
Dividend cover (x)* |
1.04 |
1.13 |
1.10 |
1.04 |
1.06 |
|
Ongoing charges ratio (excluding property expenses) |
1.12% |
1.12% |
1.20% |
1.26% |
1.28% |
|
NAV total return |
1.1% |
0.9% |
28.4% |
-13.1% |
6.0% |
|
BALANCE SHEET |
||||||
Fixed Assets |
|
559.8 |
551.9 |
665.2 |
622.2 |
633.0 |
Investment properties |
559.8 |
551.9 |
665.2 |
622.2 |
633.0 |
|
Other non-current assets |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Current Assets |
|
30.7 |
9.9 |
16.8 |
12.4 |
8.6 |
Debtors |
5.3 |
6.0 |
5.2 |
7.8 |
7.8 |
|
Cash |
25.4 |
3.9 |
11.6 |
4.6 |
0.7 |
|
Current Liabilities |
|
(14.9) |
(12.8) |
(39.9) |
(17.8) |
(17.9) |
Creditors/Deferred income |
(14.9) |
(12.8) |
(17.2) |
(17.8) |
(17.9) |
|
Short term borrowings |
0.0 |
0.0 |
(22.7) |
0.0 |
0.0 |
|
Long Term Liabilities |
|
(148.9) |
(139.2) |
(114.5) |
(182.6) |
(188.0) |
Long term borrowings |
(148.3) |
(138.6) |
(113.9) |
(182.0) |
(187.4) |
|
Other long-term liabilities |
(0.6) |
(0.6) |
(0.6) |
(0.6) |
(0.6) |
|
Net Assets |
|
426.8 |
409.9 |
527.6 |
434.3 |
435.8 |
NAV/share (p) |
101.6 |
97.6 |
119.7 |
98.5 |
98.9 |
|
EPRA NTA/share (p) |
101.6 |
97.6 |
119.7 |
98.5 |
98.9 |
|
NAV total return |
1.1% |
0.9% |
28.4% |
-13.1% |
6.0% |
|
CASH FLOW |
||||||
Operating Cash Flow |
|
31.0 |
23.8 |
32.6 |
28.9 |
32.7 |
Net Interest |
(4.4) |
(4.5) |
(4.5) |
(6.1) |
(7.0) |
|
Tax |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Net additions to investment property |
(12.2) |
(10.1) |
26.6 |
(50.1) |
(10.0) |
|
Ordinary dividends paid |
(27.0) |
(20.6) |
(24.2) |
(24.7) |
(24.6) |
|
Debt drawn/(repaid) |
10.5 |
(10.1) |
(25.1) |
45.0 |
5.0 |
|
Proceeds from shares issued (net of costs) |
25.0 |
0.0 |
0.5 |
0.0 |
0.0 |
|
Other cash flow from financing activities |
0.0 |
0.0 |
1.7 |
0.0 |
0.0 |
|
Net Cash Flow |
22.9 |
(21.5) |
7.7 |
(7.0) |
(3.9) |
|
Opening cash |
2.5 |
25.4 |
3.9 |
11.6 |
4.6 |
|
Closing cash |
|
25.4 |
3.9 |
11.6 |
4.6 |
0.7 |
Debt as per balance sheet |
(148.3) |
(138.6) |
(136.6) |
(182.0) |
(187.4) |
|
Unamortised loan arrangement fees |
(1.7) |
(1.4) |
(1.2) |
(0.8) |
(0.4) |
|
Total debt |
(150.0) |
(140.0) |
(137.8) |
(182.8) |
(187.8) |
|
Restricted cash |
(0.9) |
(1.2) |
(1.1) |
(1.4) |
(1.4) |
|
Closing net debt |
|
(125.5) |
(137.3) |
(127.3) |
(179.5) |
(188.4) |
Net LTV |
22.4% |
24.9% |
19.1% |
28.9% |
29.8% |
Source: Custodian REIT historical data, Edison Investment Research forecasts
|
|
Research: Industrials
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