Value and Indexed Property Income Trust PLC
(VIP)
£5.75 million Purchases and Year End
Portfolio Valuation
Value and Indexed Property Income
Trust PLC (VIP) announces the acquisition of two freehold leisure
investments at Ashford (Kent) and Peterborough for £5.75 million at
a net initial yield of 8.1%. They are both let to Hollywood Bowl
Group plc on full repairing and insuring leases without breaks to
2040, with annual rental increases in line with the Retail Price
Index (RPI), capped at 3% p.a. and collared at 2% p.a.
VIP is now fully invested in direct
commercial property, delivering long, strong, index-related income.
Its dividend, which has risen for each of the last 37 years, is
fully covered. 100% of rent due has been collected throughout the
year, and 54% of rental income comes from the top 5 tenants - Marks
and Spencer, Government/Local Authorities, Ten Entertainment Group,
Premier Inn, and Sainsbury's.
Over the year to March 2024, three
leisure properties with annual RPI-linked rent increases were
bought for £11.85 million, at a net initial yield of 7.8%, rising
to 8.5% in May 2024. Their average unexpired lease term was 14.4
years. Seven properties were sold - VIP's last four Stonegate
pubs, two short-let petrol filling stations and an over-rented
convenience store for £13.3 million, at just above their valuation
total at an average net yield of 7.5%. Contracts were also
exchanged for the sale of a pub to the tenant for £3.7 million,
7.2% above valuation at a net yield of 4.7%, with completion set
for July 2024.
The portfolio's weighted average
unexpired lease term (WAULT) is now 11.6 years to the earliest
break options. 82% of the portfolio's rental income now has
index-related and 14% fixed increases, and 97% of VIP's properties
have an EPC (Energy Performance Rating) of A-C. Over the year, rent
reviews were completed on 11 properties, adding £0.4 million
(+4.9%) of rental income.
VIP has no empty properties and no
offices. 29% of the portfolio is in supermarkets, 28% is in
warehouses/industrials, 27% in bowling, a health club and a caravan
park, and 15% in hotels and pubs.
The average interest rate payable on
VIP's debt is 4.0% (93% fixed), with an average maturity of 6.9
years and a 36% Loan to Value ratio.
Portfolio Valuation
Savills' year end independent
valuation of VIP's property portfolio at end March 2024 totalled
£138.1 million, at a net initial yield of 6.6%, against £135.5
million (at a net yield of 6.1%) at end-September 2023. Rental
income offset a capital decline of 3.4% over the past six months.
So, the total return was 0.0%, which should be above our benchmark,
the MSCI UK Quarterly Property Index, and -1.8% over the past year,
broadly in line with the Index. Full details will be available in
VIP's 2024 Annual Report after the MSCI UK Quarterly Property Index
return for last quarter is published.
Enquiries:
OLIM Property Limited, Investment
Manager
Tel: 020 7846 3252
matthew.oakeshott@olimproperty.co.uk
2 April 2024