Alternative Income REIT (AIRE) has posted an 11.8% fall in net asset value in full-year results to the end of June 2020.
The drop in NAV, from 94.81p per share in June 2019 to 83.58p this year, was due to the impact on the value of its properties from the COVID-19 pandemic.
AIRE’s portfolio fell in value by 7.3% to £104.76m. The fall was mainly seen in its leisure, gym, hotel and automotive dealership assets. These sectors, both occupational and investment markets, have been among the most affected by the COVID-19 related lockdown.
The group outlined plans to change its investment policy earlier this month that will enable it to respond to a rapidly changing commercial property market and take advantage of investment opportunities that arise during the pandemic. More information on the plans can be read here.
Results
Loss before tax was £5.05m (loss of 6.27p per share) for the year (June 2019: profit before tax of £4.23m or 5.26p).
EPRA earnings per share for the year was 5.42p per share (June 2019: 5.47p), while adjusted earnings per share was 4.25p (June 2019: 4.86p).
The group declared total dividends in the year of 5.0p (June 2019: 5.5p). The board has reaffirmed its target annual dividend of 5.5p by September 2022.
As at 30 June 2020, the group had a £41.0m loan facility with Canada Life Investments and was geared to 37.0% of the Gross Asset Value (June 2019: £41.0m, gearing of 34.4%).
Operational performance
As at today, all of the quarterly rents due for the final quarter of 2020 have been collected, along with all of the monthly rents due, and the remainder of the monthly rents are due by the end of this year.
Overall, 92% and 86% of rents in respect of Q3 and Q2 respectively, have now been collected with agreements in place for the remaining arrears to be received by September 2021.
The portfolio is currently fully let and has a weighted average unexpired lease term (WAULT) of 19.5 years to the earlier of break and expiry (June 2019: 20.5 years).
Gross passing rental income was £6.79m as at 30 June 2020 (June 2019: £6.06m).
Post period, the group disposed of the Wet ‘n’ Wild Water Park asset, in North Shields, for £3.2m, which represented a 9.7% uplift on purchase price and a 12.4% premium on book value.
The asset valuations and rental income of the 16 properties secured to the Canada Life loan would need to fall by 32% and 33% respectively before breaching the Loan to Value and Income Cover covenants respectively.
New investment adviser
During the year the company appointed M7 Real Estate as its investment adviser from 14 May 2020. M7 is providing the group with access to significant expertise and resource as well as a substantial and attractive pipeline of potential investment opportunities. More information on the appointment can be found here.
AIRE : Alternative Income REIT posts sharp fall in NAV