TIDMAIRE
RNS Number : 4775Y
Alternative Income REIT PLC
04 May 2023
4 May 2023
Alternative Income REIT PLC
(the " Company " or " Group " or " AIRE ")
NET ASSET VALUE, DIVID DECLARATION AND PORTFOLIO VALUATION
UPDATE TO 31 MARCH 2023
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 31
March 2023.
Simon Bennett, Non-Executive Chair of Alternative Income REIT
plc, comments:
"The Board is pleased to declare a third interim dividend of
1.375pps for the quarter ended 31 March 2023, which is 110.9%
covered by cash 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 is
expected to be fully covered and remains subject to continued
strong rent collection. The target annual dividend for 2023
represents a 3.6% increase on the 5.5pps annual dividend paid for
the prior year.
In the second half of 2022, the UK commercial real estate sector
suffered significant repricing as a result of the rapid increase in
interest rates as the Bank of England reacted decisively to the
sharp rise in inflation.
However, the first quarter of 2023 has been characterised by a
more measured approach to valuations with the value of the Group's
portfolio falling by just GBP0.7 million or 0.7% to GBP106.7
million (31 December 2022: GBP107.4 million) over the period.
As previously stated, the Group has avoided the worst of the
property market downturn due to the composition of its portfolio
which has seen consistently strong income growth, with 96% of the
rental income inflation linked and 100% of rents due continuing to
be collected, which is expected to continue for the March 2023
quarter . In addition, the low exposure to prime industrial and
warehouse assets, which have seen the worst of the downward
movement in valuations, has also helped to insulate the
portfolio.
The wider economic outlook remains uncertain, however, the Group
continues to benefit from a well-managed, diversified and resilient
portfolio, which remains fully let. Furthermore, all of our debt is
fixed at a historically low rate of 3.19% until October 2025. The
Board therefore remains confident that the Company will achieve its
dividend target for this financial year and that it is well
positioned for the future."
Overview of key financials
At 31 March At 31 December Change
2022
2023 (unaudited)
(unaudited)
Net Asset Value ("NAV") GBP67.3 million GBP67.9 million -0.9%
----------------- ----------------- --------
NAV per share 83.5p 84.3p -0.9%
----------------- ----------------- --------
Share price per share 67.2p 66.7p +0.8%
----------------- ----------------- --------
Share price discount to
NAV 19.5% 20.9% -1.4%
----------------- ----------------- --------
Investment property fair
value
(based on external valuation) GBP106.7 million GBP107.4 million -0.7%
----------------- ----------------- --------
Loan to gross asset value
("GAV") (A) (B) 37.0% 36.8%
----------------- ----------------- --------
Quarter ended Quarter ended Change
31 March 2023 31 December 2022
(unaudited)
(unaudited)
EPRA earnings per share
(A) 1.6p 1.9p -18.6%
--------------- ------------------ --------
Adjusted earnings per
share (A) 1.5p 1.9p -18.6%
--------------- ------------------ --------
Dividend cover (A) 110.9% 136.2% -25.3%
--------------- ------------------ --------
Total dividends per share 1.375p 1.375p 0.0%
--------------- ------------------ --------
Dividend yield (A) 2.1% 2.1% 0.0%
--------------- ------------------ --------
Earnings per share 0.6p -11.3p +105.3%
--------------- ------------------ --------
Share price total return
(A) +2.8% +4.3%
--------------- ------------------ --------
NAV total return (A) +0.7% -11.6%
--------------- ------------------ --------
Annualised passing rent GBP7.6 million GBP7.5 million +0.85%
--------------- ------------------ --------
Ongoing charges (A) (annualised) 1.5% 1.4% +10bps
--------------- ------------------ --------
(A) Considered to be an Alternative Performance Measure.
(B) The loan facility at 31 March 2023 of GBP41.0 million (31
December 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 third interim quarterly
dividend of 1.375pps for the quarter ended 3 1 March 2023. This
dividend will be distributed as Property Income Distribution
("PID") and will be paid on 26 May 2023 to shareholders on the
register on 12 May 2023. The ex-dividend date will be 11 May
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 1.5pps for the quarter (31 December 2022:
1.9pps), reflecting 110.9% dividend cover.
Property Valuation
At 31 March 2023, the Group's property portfolio, comprising 19
assets, had a fair value of GBP106.7 million, representing a 0.7%
decrease from the last quarter (31 December 2022: GBP107.4
million).
At 31 March 2023, the Net Initial Yield on the Group's portfolio
was 6.5% (31 Dec ember 2022: 6.4%).
Following the significant mark downs in valuations for most
sectors of the commercial property market in 2022, valuations have
been more stable in Q1 2023 with some positive and negative
revisions to valuations coming through for particular properties
and those in specific sectors. Transactional activity remains weak
and comparable evidence for valuers is therefore limited, but there
is a sense of greater confidence in the value of industrial and
warehouse properties, in respect of which rental growth continues
to feed through, and in alternatives and prime retail warehouse
properties, which in some cases appear undervalued. There is still
a weariness around the value of larger lot sizes, regional offices
and high street retail, which do not form part of the Group's
portfolio. With a further increase in interest rates on the cards
for May, we do not expect to see any significant increase in the
value of the portfolio in the near term with the outlook for
valuations generally benign, save for any unforeseen shocks to the
wider commercial property market or the economy.
Net Asset Value
At 31 March 2023, the Group's unaudited NAV was GBP67.3 million,
83.5pps ( 31 December 2022: GBP67.9 million, 84.3pps), representing
a 0.9% decrease over the quarter, due to the 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 0.7%
(31 December 2022: -11.6%).
Conversely, following a narrowing of the Company's share price
discount to its NAV, the share price increased 0.8% to 67.2pps and
the share price total return for the quarter was 2.8%. The
Company's share price discount to NAV of 19.5% continues to be one
of the lower discounts in the UK REIT sector.
The table below sets out the movement in NAV during the
quarter.
Pence per
share GBP million
NAV at 31 December 2022 84.3 67.9
---------- ------------
Valuation movement in property portfolio (1.0) (0.8)
---------- ------------
Income earned for the period 2.6 2.1
---------- ------------
Expenses for the period (0.6) (0.4)
---------- ------------
Net finance costs for the period (0.4) (0.4)
---------- ------------
Interim dividend paid during the quarter
ended 31 December 2022 (1.4) (1.1)
---------- ------------
NAV at 31 March 2023 83.5 67.3
---------- ------------
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 March 2023 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 March 2023, t he Group's assets are fully let (31 December
2022: 100% let). The weighted average unexpired lease term at 31
March 2023 was 16.7 y ears to the earlier of break and expiry ( 31
December 2022: 17.0 years) and 18.6 years to expiry ( 31 December
2022: 18.8 years).
In aggregate, 96 % (3 1 December 2022: 96%) of the portfolio's
income stream is reviewed periodically on an upward only basis, in
line with inflation ( 44.9 % annually); with 70.0 % and 26.1 % of
the portfolio inflation-linked (subject to floors and caps) to RPI
and CPI, respectively. The remaining 3 . 9% of the portfolio's
income stream is subject to fixed uplifts or expiries.
Contracted annualised rent increased by 0.85% 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, 11.5 % of the Group's income
will be reviewed ( three annual index-linked rent reviews and two
fixed uplift rent reviews).
Rent Collection
Rent collection remains resilient with 100 % expected for the
March 2023 quarter. The rents for the March 2023 quarter are split
82.7 % payable quarterly in advance and 17.3 % 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
Jane Blore +44 (0)20 3657 5500
Panmure Gordon (UK) Limited +44 (0)20 7886 2500
Alex Collins
Tom Scrivens
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 230 employees in 15
countries and territories. The team manages c. 620 assets with a
value of circa EUR6.9 billion (as at 31 December 2022).
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END
DIVDZGGKDDMGFZM
(END) Dow Jones Newswires
May 04, 2023 10:45 ET (14:45 GMT)
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