Ediston Property Investment Company, which listed on 28 October 2014, raising initial gross proceeds of £95m has announced its first set of full year results for the year ended 30 September 2015. During the period, the total return on the company’s EPRA NAV was 13.7% whilst its share price total return was 14.3%. Its NAV per share increased 8.6% to 106.49p (+8.6% from initial NAV at launch to 30 September 2015), whilst the share price increased by 9.5% to 109.5p. The company made a profit before tax of £12.9m and paid total dividends of 5.09p per share (dividend cover was 84.7%).
In terms of portfolio development, the company acquired 11 properties during the period for £119.8m and the end of period portfolio value was £136.4m. The weighted average unexpired lease term was 8.6 years. The company also raised gross proceeds of £35.9m through issuance of 33.3 million ordinary shares, in July 2015 and put in place a £40m 10-year credit facility with Aviva Commercial Finance Limited at an ‘all-in’ fixed interest rate of 3.09% per annum for the duration of the loan. The loan to value at the end of the period was 29.3%. The company says that locking in 10-year finance is helpful in protecting future distributions to shareholders from the risk of higher borrowing rates in the future.
The company also says that there has been further NAV growth since the period end. The NAV has increased a further 1.3% to 107.92p per share as at the 31 December 2015.
In terms of performance contributions, the company says that the portfolio of five investments identified in the prospectus for £76.7m were acquired and these offered some immediate asset management opportunities to exploit. The execution of these, with lettings achieved in Edinburgh, Birmingham and Reading and a value-enhancing restructuring of the lease to Capita on the Sheffield property, were important drivers of the EPRA NAV total return per share of 13.7%. The company comments that the 13.7% EPRA NAV total return was achieved whilst incurring the purchase costs associated with the acquisition of 11 properties during the year.
In addition to the initial five properties outlined in the prospectus, a further six properties were purchased during the year for at a total cost of £43.1m. The properties comprised an office in Bath, a retail warehouse in Coatbridge, a retail warehouse park in Daventry and three leisure properties in Hartlepool, Telford and Liverpool. The total investments made in the year were £119.8m. Subsequent to the year end, an investment has been made in a retail warehouse park in Wrexham. The managers say that the portfolio will remain regionally based until such time as they believe they can purchase higher-yielding, good-quality assets in central London and which can be accretive to the dividend yield of the Company.
In terms of outlook, the Board believes that the fall in property yields that has characterised the market over the last two years may come to an end. They say that they believe a greater proportion of total return is therefore likely to come from income and that, with several parts of the UK property market undersupplied, the prospects for income growth are positive. The Company’s strategy for the coming months is to continue to invest in assets with income returns above 6.5%, targeting properties with the ability to grow income or the potential to add value from management initiatives, (if possible) raising further capital to enable the Company to continue to grow in a measured way, actively managing the existing portfolio to improve value in the portfolio, and use prudent levels of gearing to enhance opportunities for income distribution and capital growth.
Ediston Property has an EPIC start – returns 13.7% in first year : EPIC