Redefine International NAV slips on AUK acquisition costs

Redefine International’s interim statement, covering the six months ended 29 February 2016, saw the EPRA NAV fall by 1.7% to 40.3p. Adjusting for the result of non-recourse negative equity, adjusted NAV of 40.9 pence decreased by 0.8 pence or 1.9 per cent since year-end. The underlying valuation growth of GBP4.8 million in the property portfolio was offset by the GBP22.6 million of acquisition costs incurred on the AUK transaction which resulted in a net valuation loss of GBP17.8 million (representing 1.0 pence per share). This loss is offset by currency translation gains recorded on the Group’s net investment in Europe (representing 0.2 pence per share).

In February 2016, the Group completed the placing of 270.6 million ordinary shares at a placing price of 42.5 pence per share (a 1.9 per cent premium to the 31 August 2015 net asset value) raising gross proceeds of GBP115.0 million.

EPRA earnings per share fell from 1.8p to 1.5p primarily because last year’s figure was flattered by a gain recorded on extinguishment of debt. Underlying earnings increased 5.6 per cent to GBP22.6 million, a GBP1.2 million increase relative to the comparative period. The inclusion of a non-recurring profit on disposal of 16 Grosvenor Street, Mayfair of GBP2.8 million contributed to an 18.7 per cent increase in distributable earnings when compared to the first half of 2015. They say the inclusion of this opportunistic profit (which was realised pre-completion) goes some way towards normalising distributable earnings during the period for the impact of the phased completion of the AUK portfolio.

A fair value loss of GBP17.8 million was incurred on the Group’s property portfolio. The loss is the result of underlying valuation gains of GBP4.8 million being offset by GBP22.6 million relating to acquisition costs on the entire AUK portfolio. Capex during the period amounted to GBP4.2 million. This was invested in UK Retail (GBP1.9 million), mainly at Weston Favell, UK Hotels (GBP1.3 million), primarily extending the Travelodge at Enfield, and in Europe (GBP1.0 million), largely at Ingolstadt.

Gains on disposal of investment property of GBP3.4 million arose following the sale of ten petrol filling stations in February 2016 and an early opportunity to realise value from within the AUK portfolio in December 2015 when 16 Grosvenor Street was sold post exchange but pre-completion.

During the period the Group cumulatively invested GBP6.9 million in International Hotel Group Limited, a hotel and leisure focused property investment company. A fair value gain of GBP1.0 million was recognised at period end. At 29 February 2016 the Group’s investment represented 14.4 per cent of the company’s issued share capital.

RDI : Redefine International NAV slips on AUK acquisition costs