Alpha Pyrenees edges closer to negative NAV territory

ALPH : Alpha Pyrenees edges closer to negative NAV territory

Alpha Pyrenees’ interim results published on 15 August show a fall in its net asset value to 5.3p from 12.7p. (12.0p from 22.8p if, as Alpha Pryenees do, you adjust for the fair value movement on the currency swap – eliminated in October 2013, the interest rate swap derivatives and 50% of the company’s deferred tax liabilities).

The equity in the business was just £6.2m at the end of June – the sum of two very large numbers. Borrowings of €269m (£215.5m) are set against property worth €278m (£222.8m) at the end of June. There was cash of £11.8m but this is more than offset by other liabilities.

The valuation of the property is based on an 8.2% yield. The valuation fell by 4.2% over the six months ended 30 June 2014. Vacant space in the portfolio should be generating rental income of £3m per annum.

Two properties were sold for a total of €7m during the period.

The borrowings expire on 10 February 2015. Before then there are no LTV ratio covenant tests to worry about and the interest cover covenant seems to be well covered. The Board say they are considering more asset sales “as well as consideration of a potential debt and equity refinancing, and other corporate finance solutions”.