Standard Life Investments Property Income Trust (SLI) has reported a 3.5% jump in net asset value (NAV) in the quarter to 30 June 2021, as the property market continues to bounce back from the impact of COVID.
The increased in NAV, to 88.3p per share, was due to a 3.3% like-for-like rise in the value of its portfolio to £433.8m, helped by its significant weighting to the industrial and logistics sector (51.1% by value).
SLI is restructuring its portfolio to be “fit for purpose” post-COVID, with many trends such as increased online retailing and flexible working expected to be the norm, including strong ESG credentials (more detail can be found in our most recent research note on SLI).
It sold two assets in the quarter, an office in Farnborough for £9.5m (let to BAE that was over rented with a short lease) and an industrial unit in Kettering for £9.25m (that did not meet its ESG requirements), which it believes will struggle to attract tenants in the long-term and impact on results.
It now has £80m of financial resources available for investment (a £55m revolving credit facility and £25m of cash). It has three assets under offer to buy and has indicated that it may fund the development of speculative logistics warehouses, given the strong supply-demand imbalance in that sector.
Rent collection
The group has now collected 95.2% of rent due for 2020, and so far in 2021 it has collected 90% in the first quarter, 92% in the second and 94% for the third quarter.
The group has served a court notice on one of its tenants that has the greatest level of arrears, after the tenant declined offers for a rent free and regear of the lease. The manager believes it is quite capable of paying the rent, however.
Several of the other tenants with arrears have agreed payment plans, and it expects continued progress with collecting arrears given that nearly all tenants can now trade again. The company’s bad debt provision now stands at just under £3.9m.
Dividend
The group has declared a dividend for the second quarter of 2021 of 0.8925p, matching the level of the dividend for the first quarter, which was increased by 25%.
The board said it considers this rate to be sustainable given current rent collection rates even though recent asset sales will reduce rental income until reinvestment occurs. It will keep the quarterly dividend under review as lockdown measures are eased and rental collection levels improve further and the reinvestment of the asset sales proceeds takes place.
Financial position and gearing
As at 30 June 2021, the company had a very low Loan to Value (LTV) ratio of 17.6%.
SLI : Standard Life Property Income posts 3.5% jump in NAV