TIDMAIRE
RNS Number : 4798O
Alternative Income REIT PLC
01 February 2023
1 February 2023
Alternative Income REIT PLC
(the " Company " or " Group " or " AIRE ")
NET ASSET VALUE, DIVID DECLARATION AND PORTFOLIO VALUATION
UPDATE
Remain on track to deliver our target annual dividend of at
least 5.7p per share for the financial year ending 30 June 2023
Resilient portfolio providing secure, inflation-linked
income
The Board of Directors of Alternative Income REIT PLC (ticker:
AIRE), the owner of a diversified portfolio of UK commercial
property assets, predominantly let on long leases with
inflation-linked rent reviews, provides a trading and business
update and declares an interim dividend for the quarter ended 3 1
Dec ember 2022.
Simon Bennett , Non-Executive Chair of Alternative Income R E IT
plc, comments:
"The Board is pleased to declare a second interim dividend of
1.375pps for the quarter ended 31 December 2022, which is 136.2%
covered by earnings. The dividend is in line with the Board's
previously announced target of an annual dividend of at least
5.7pps for the financial year ending 30 June 2023, which remains
subject to continued strong rent collection. Our target annual
dividend represents a 3.6% increase on the 5.5pps annual dividend
paid for the prior year.
The wider real estate sector has seen valuations impacted by
upward yield movement, resulting primarily from increases in
interest rates and inflation during 2022. The Company's property
values are inevitably not immune and the Market Value of the
portfolio decreased 9.4% for the quarter ended 31 December 2022,
however the portfolio materially outperformed benchmark property i
ndices and peers in the main part. The Company's portfolio has
avoided the worst of the sector downturn due to its consistently
strong income growth, with 96% of the rental income inflation
linked, our continuing collection of 100% of rent due, as well as
our low exposure to prime assets, which have seen the worst of the
downward movement in valuations.
Notwithstanding the ongoing challenging economic environment,
the Company continues to benefit from a diversified, well-managed
and resilient portfolio that remains 100% let. Investors can be
assured that the Company continues to be well-positioned with
growing inflation linked rents, together with having 100% of our
debt fixed at a favourable rate of 3.19% until October 2025, all
helping to underpin the Board's confidence in achieving our
dividend target."
Overview of key financials
At 31 December At 30 September Change
2022 2022
(unaudited) (unaudited)
Net Asset Value ("NAV") GBP67.9 million GBP78.1 million -13.0%
----------------- ----------------- --------
NAV per share 84.3p 97.0p -13.0%
----------------- ----------------- --------
Share price per share 66.7p 65.3p +2.1%
----------------- ----------------- --------
Share price discount to
NAV 20.9% 32.7% -11.8%
----------------- ----------------- --------
Investment property fair
value
(based on external valuation) GBP107.4 million GBP118.6 million -9.4%
----------------- ----------------- --------
Loan to gross asset value
("GAV") (A) (B) 36.8% 33.6%
----------------- ----------------- --------
Quarter ended Quarter ended Change
31 December 30 September
2022 (unaudited) 2022 (unaudited)
EPRA earnings per share
(A) 1.9p 1.5p +27.6%
------------------ ------------------ --------
Adjusted earnings per
share (A) 1.9p 1.4p +29.7%
------------------ ------------------ --------
Dividend cover (A) 136.2% 105.1% +31.1%
------------------ ------------------ --------
Total dividends per share 1.4p 1.4p 0.0%
------------------ ------------------ --------
Dividend yield (A) 2.1% 2.1% 0.0%
------------------ ------------------ --------
Earnings per share -11.3p 2.2p -616.3%
------------------ ------------------ --------
Share price total return
(A) +4.3% -18.5%
------------------ ------------------ --------
NAV total return (A) -11.6% +2.3%
------------------ ------------------ --------
Annualised passing rent GBP7.5 million GBP7.2 million +4.2%
------------------ ------------------ --------
Ongoing charges (A) (annualised) 1.4% 1.5% -10bps
------------------ ------------------ --------
(A) Considered to be an Alternative Performance Measure.
(B) The loan facility at 31 December 2022 of GBP41.0 million (30
September 2022: GBP41.0 million) with Canada Life Investments,
matures on 20 October 2025 and has a weighted average interest cost
of 3.19%.
Dividend Declaration, Earnings per share and Dividend Cover
The Board is pleased to declare a second interim quarterly
dividend of 1.375pps for the quarter ended 3 1 December 2022. This
dividend will be distributed as Property Income Distribution
("PID") and will be paid on 24 February 2023 to shareholders on the
register on 10 February 2023. The ex-dividend date will be 9
February 2023.
Having achieved the Company's target dividend of 5.5pps last
year, the Board reconfirms its dividend target of at least 5.7pps
for the year ending 30 June 2023. This increase reflects the
Board's intention to pay a progressive dividend consistent with the
Company's stated aims, subject to continued strong rent collection
from the Group's tenants.
The Adjusted EPS was 1.9pps for the quarter (September 2022:
1.4pps), reflecting 136.2% dividend cover.
Property Valuation
At 31 December 2022, the Group's property portfolio, comprising
19 assets, had a fair value of GBP107.4 million, representing a
9.4% decrease from the last quarter (30 September 2022: GBP118.6
million).
At 31 Dec ember 2022, the Net Initial Yield on the Group's
portfolio was 6.4% (30 September 2022: 5.7%).
In most sectors of the market, property investment values have
experienced significant mark downs for the quarter ended 31
December 2022. Yields have moved out further, and in some cases,
this has resulted in a bigger valuation correction than was
expected. Across the board, valuers have faced a tough job to
accurately assess values in a market where bond yields are
fluctuating and on the basis of limited transactional evidence. The
Group's portfolio has demonstrated some resilience, with a single
digit fall in capital values. Indices and wider peer group
performance has predominantly been materially worse. The portfolio
has avoided the worst of the downturn due to its consistently
strong income growth, with 96% of the rental income inflation
linked, 100% collection of rent due, as well as low exposure to
prime assets, which have seen the worst of the downward movement in
valuations. Inflation-linked reviews continue to drive rental
growth with the portfolio, with the December 2022 annualised
passing rent rising to GBP7.5 million per annum, an increase of
4.2% quarter on quarter, helping to partially offset valuation
movements in the period.
Industrial, car showroom and retail warehouse properties within
the portfolio have seen valuations fall by circa 13-15% over the
quarter, which is, on average, a fall of 75 to 100 basis points.
Pocket Nook Industrial Estate, St Helens (-6%) performed better,
demonstrating the impact of the forthcoming uncapped index-linked
rent reviews in 2023. Further resilience has been demonstrated with
valuation falls of 3-8% in the Company's assets in the energy
generation, care homes, hotels and gym sectors.
Net Asset Value
At 31 December 2022, the Company's unaudited NAV was GBP67.9
million, 84.3pps (30 September 2022: GBP78.1 million, 97.0pps)
representing a 13.0% decrease over the quarter, due to decrease in
the portfolio valuation.
When combined with the 1.375pps dividend paid for the quarter,
this produces an unaudited NAV total return for the quarter of
-11.6% (30 September 2022: +2.3%).
Conversely, following a significant narrowing of the Company's
share price discount to its NAV, the share price increased 2.1% to
66.7pps and the share price total return for the quarter was +4.3%.
The Company's discount continues to be one of the lowest in the UK
REIT sector.
The table below sets out the movement in NAV during the
quarter.
Pence per
share GBP million
NAV at 30 September 2022 97.0 78.1
---------- ------------
Valuation movement in property portfolio (13.2) (10.6)
---------- ------------
Income earned for the period 2.9 2.3
---------- ------------
Expenses for the period (0.5) (0.4)
---------- ------------
Net finance costs for the period (0.4) (0.4)
---------- ------------
Interim dividend paid during the quarter
ended 30 September 2022 (1.5) (1.1)
---------- ------------
NAV at 31 December 2022 84.3 67.9
---------- ------------
The NAV attributable to the ordinary shares has been calculated
under International Financial Reporting Standards as adopted by the
United Kingdom and incorporates both the Group's property portfolio
individually valued on a 'Red Book' basis at 31 December 2022 and
net income for the quarter but does not include a provision for the
interim dividend declared today (see above).
The income earned for the period includes an accrual for the
minimum contractual uplifts contained in the index-linked leases.
In the event that inflation is greater than these minimum
contractual uplifts, the actual income will be greater than the
income currently accrued.
Portfolio Update
At 31 December 2022, t he Group's assets are 100% let (30
September 2022: 100%). The weighted average unexpired lease term at
31 December 2022 was 17.0 y ears to the earlier of break and expiry
( 30 September 2022: 17.3 years) and 18.8 years to expiry ( 30
September 2022: 19.1 years).
In aggregate, 96 % (30 September 2022: 96%) of the portfolio's
income stream is reviewed periodically on an upward only basis, in
line with inflation ( 52 % annually); with 70 % and 26 % of the
portfolio inflation-linked (subject to floors and caps) to RPI and
CPI, respectively. The remaining 4 % of the portfolio's income
stream is subject to fixed uplifts or expiries.
Contracted annualised rent increased by 2.5% this quarter , due
to annual RPI rent reviews at Brough & Solihull (+3.5%) ,
Dudley (+4%), Glasgow ( + 11.9%) and a 5 yearly RPI rent review of
the Pure Gym , London ( + 21.7%).
Over the period to 30 June 2023, 26% of the Group's income will
be reviewed ( five annual index-linked rent reviews and three
periodic index-linked rent reviews (5 years since the previous
reviews)).
Rent Collection
Rent collection remains resilient with 100 % expected for the
Dec ember 2022 quarter. The rents for the December 2022 quarter are
split 83 % payable quarterly in advance and 17 % payable monthly in
advance.
ENQUIRIES
Alternative Income REIT PLC
S imon Bennett - Chai rman via H/Advisors Maitland
below
M7 Real Estate Ltd
Richard Croft +44 (0)20 3657 5500
Panmure Gordon (UK) Limited +44 (0)20 7886 2500
Alex Collins
Tom Scrivens
Chloe Ponsonby
H/Advisors Maitland (Communications
Advisor) +44(0) 7747 113 930
James Benjamin aire-maitland@h-advisors.global
The Company's LEI is 213800MPBIJS12Q88F71.
Further information on Alternative Income REIT PLC is available
at www.alternativeincomereit.com (1) .
(1) Neither the content of the Company's website, nor the
content on any website accessible from hyperlinks on its website or
any other website, is incorporated into, or forms part of, this
announcement nor, unless previously published on a Regulatory
Information Service, should any such content be relied upon in
reaching a decision as to whether or not to acquire, continue to
hold, or dispose of, securities in the Company.
NOTES
Alternative Income REIT PLC aims to generate a sustainable,
secure and attractive income return for shareholders from a
diversified portfolio of UK property investments, predominately in
alternative and specialist sectors. The majority of the assets in
the Group's portfolio are let on long leases which contain index
linked rent review provisions.
The Company's asset manager is M7 Real Estate Limited ("M7"). M7
is a leading specialist in the pan-European, regional,
multi-tenanted real estate market. It has over 220 employees in 15
countries and territories. The team manages almost 600 assets with
a value of circa EUR5.9 billion.
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END
DIVZZGFMNMKGFZM
(END) Dow Jones Newswires
February 01, 2023 02:00 ET (07:00 GMT)
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