Local Shopping REIT to continue with piecemeal liquidation – Local Shopping REIT has released results for the year ended 30 September 2017. The highlights are:
- IFRS Loss for the financial period of GBP0.86m or 1.04 pence per share (2016: Profit GBP0.63m or 0.76 pps).
- Adjusted operating profit for the period of GBP1.26m or 1.5 pps (2016: GBP1.53m or 1.9 pps).
- Portfolio valued at 30 September 2017 at GBP55.46m, reflecting an equivalent yield (excluding the residential element) of 9.47% (30 September 2016: GBP75.3m, equivalent yield 9.5%).
- Net asset value: GBP34.8m or 42 pps (30 September 2016: GBP35.55m, 43 pps).
- Total net debt of GBP20.2m, reflecting a Group LTV on all investment properties of 36.5% (2016: GBP39.54m; 52.5%).
- During the year, the company sold 142 properties for a combined gross consideration of GBP19.3 million, reflecting a 1.9% discount to property valuation. Transaction costs for the sales were 4.7% of the prices achieved.
The chairman said “A significant achievement during the year was the agreement with HSBC, in November 2016, to extend our banking facilities to 31 December 2019, at the prevailing interest margin of 2% above 3-month LIBOR. During the year the proceeds of the property sales programme, together with operational income, were applied to further reduce our indebtedness. As a result of this our overall loan-to-value ratio stood at 36.5% at the year end (2016: 52.5%)“.
With regards to the ongoing liquidation of the portfolio, the chairman said “the company has over the past six weeks marketed a portfolio through Allsop LLP. This portfolio comprises larger and multiple-occupancy properties, reflecting approximately 70% by value of the Company’s total property assets. Whilst a portfolio sale is our preferred route for disposal of these assets, the indicative offers that have been received have fallen substantially short of the proceeds that the Board believes can be achieved through sale by auction or in smaller concentrated private treaty disposals.
We will therefore continue and seek to further accelerate our current programme of individual asset sales, irrespective of lot size and location, with the aim of selling approximately 75% of the remaining assets by the end of the current financial year. This equates to approximately 125 property sales, totalling GBP40m by value. The average lot size of these properties is approximately GBP320,000 against an average of approximately GBP135,000 for the 157 sold since October 2016. Depending on progress with the sale programme, we also aim for the company to be debt-free by end-June 2018. Whilst the Board believes this programme is achievable, it will be challenging and shareholders should be aware that the programme set out above is reliant on market conditions and other external factors.”
LSR : Local Shopping REIT to continue with piecemeal liquidation