Secure Income REIT has announced its interim results for the six months ended 30 June 2016. These show a 6.2% increase in its EPRA NAV to 300.2 pence per share and a near doubling of its adjusted EPRA EPS to 5.4p, up from 2.9p in the six months to 31 December 2015 and (0.3)p in the six months to 30 June 2015. They made their first distribution to shareholders in August 2016: 2.9375 pence per share as first quarterly payment, annualising at 11.75 pence per share and equating to a 3.9% yield on 30 June 2016 EPRA NAV. In the six months to 30 June 2016, the portfolio valuation rose by 2.1% to GBP1.38 billion, showing a net initial yield of 5.3% and an equivalent yield of 6.3%.
Secure Income REIT has also announced today an agreement to acquire a GBP192.6 million investment portfolio of 55 Travelodge hotels financed by a new GBP60m seven year fixed rate non-recourse secured loan facility and a proposed placing of new ordinary shares to raise c. GBP140 million at a placing price (equivalent to the pro forma EPRA NAV, adjusted for the impact of the transaction) of 298.6 pence per share. The acquisition is conditional on the placing and should it complete, the Board estimates a 14% increase in the dividend yield to 4.5% on the placing price. The 55 hotels have a weighted average unexpired lease term of 27 years with upwards only RPI linked rent reviews throughout the term. Travelodge Hotels Limited is the UK’s second largest budget hotel brand. They say the deal will be earnings accretive, with the Travelodge portfolio expected to produce GBP13.7 million of rental income per annum initially, rising in line with the upwards only RPI linked uplifts throughout the term. In addition, assuming completion of the deal, the net LTV ratio will reduce from 59.5% to 56.0%. The weighted average term to maturity of all of the Company’s debt facilities following completion of the Transaction will be approximately 7.5 years.
SIR : Secure Income REIT plans £140m fund raise