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QuotedData’s morning briefing 16 May 2022

In QuotedData’s morning briefing 16 May 2022:

  • Finsbury Growth & Income (FGT) has posted its unaudited half year results for the six months to 31 March 2022. During the period, the NAV total return was -2.2% and the share price total return was -3.0%. The benchmark rose by 4.7%. Despite this, manager Nick Train (pictured) reiterated that he would not be changing the investment approach nor has there been any substantive change to the portfolio constituents. He added: ‘The state of the world and of global stock markets, as I write this report, is apprehensive. The duration and effects of war are uncertain. There may be a speculative bubble deflating in technology company shares. It is possible inflation and interest rates will go higher. We have no particular perspective on any of these issues that would give us an edge in timing the markets. Often events don’t work out as badly as people fear; but even if they do, owning shares in solid companies is a good strategy to see you through to the better days to come. The company’s strategy will continue to prize long-term ownership of “sound common stocks”.’
  • Tufton Oceanic Assets (SHIP) has announced another two sales and one acquisition, which it says was done to improve its emissions intensity, yield, upside potential and to offer inflation protection. The divestments include the Containership Parrot for $31m and the Handysize Bulker Lavender for $17.7m. Meanwhile, SHIP has agreed to acquire a Handysize Bulker for $26.3m. Like its sistership Masterful which recently joined the portfolio, it is being acquired slightly above DRC but the company says the strong cash flows from its charter will significantly de-risk the investment. The vessel has a fixed rate time charter of four to six months producing a net yield of c.27%.
  • Riverstone Credit Opportunities Income (RCOI) has announced the upsize of its investment in Streamline Innovations. On 23 November 2021, RCOI participated in a $20m first lien delayed-draw term loan to the sponsor-backed leader in environmentally-advanced treatment solutions and equipment for hydrogen sulfide in energy, renewable fuels, wastewater, landfill gas, biogas, and industrial processes.  On 10 May 2022, RCOI participated in a $25m upsize of the investment, which now qualifies as a green loan, bringing the total loan size to $45m and the total committed by RCOI to $13.8m. As part of the upsize, Sustainable Fitch provided a Second Party Opinion on the green loan to Streamline, which verifies the term loan’s alignment to the LSTA Green Loan Principles with the transaction being compliant with the four pillars of the LSTA Green Loan Principles and aligned with the LSTA category of pollution and prevention.
  • Greencoat UK Wind (UKW) has agreed to acquire a net 12.5% stake in Hornsea 1 offshore wind farm from Global Infrastructure Partners for a total cash consideration (including cash and working capital) of approximately £400m. The acquisition is expected to complete in Q3 2022. Hornsea 1 is the world’s largest offshore wind farm and is located 80 miles off the Yorkshire coast in the North Sea. It comprises 174 Siemens 7MW turbines and has a grid export capacity of 1,200MW. It entered into full commercial operation in December 2019, has a high load factor and benefits from a 15 year CFD at a price of £175.25/MWh (real 2022). Hornsea 1 is currently 50% owned by Orsted and 50% owned by GIP, with GIP’s 50% stake part funded by £2.9bn of limited recourse debt. UKW’s pro rata share of this limited recourse debt is £0.7bn, giving a total enterprise value of £1.1bn for UKW’s net 12.5% stake. Orsted will continue to provide operation, maintenance and management services to the wind farm. The acquisition is expected to be funded from cash flow and, to the extent required, the company’s revolving credit facility.
  • LondonMetric Property (LMP) has sold four assets, in separate transactions, for £34.2m (LMP share: £25.2m), reflecting a blended net initial yield of 4.1%. The combined sale price is 35% above 30 September 2021 book value. The assets comprise a 32,000 sq ft grocery store in Ashford, Middlesex, which has been sold by Metric Income Plus Limited Partnership, LMP’s joint venture with Universities Superannuation Scheme. A new 25 year lease was signed with Lidl recently on a unit that was previously occupied by Hitchcock & King; a 34,000 sq ft retail asset in Cardiff recently re-let to Sofology and Tapi; a pub in Greenwich let to Spirit Group for a further 22 years; and a petrol filling station and convenience store in Rushden let to Euro Garages with a WAULT of 30 years.
  • Great Portland Estates (GPE) has acquired the long leasehold interest at 6/10 St Andrew Street, EC4, for £30m. The 46,200 sq ft building is located close to both Chancery Lane and Farringdon tube stations and is currently vacant. GPE intends to comprehensively refurbish the building, which has planning permission in place for a two-storey extension.
  • Sirius Real Estate (SRE) has agreed the sale of an asset in Camberwell, London, for £16m representing a net initial yield of 2.0%. The asset formed part of the UK portfolio SRE acquired in November 2021 with its purchase of BizSpace. The sale price represents a 94% premium to the valuation at the time of Sirius’ acquisition of BizSpace. The multi-tenanted business park, which comprises 34,700 sq ft of industrial and office space, is 91% occupied following a series of asset management measures delivered through the BizSpace platform. The sale is expected to complete in July 2022.
  • Picton Property (PCTN) has completed the acquisition of Charlotte Terrace, Hammersmith Road, W14, for £13.7m. Charlotte Terrace comprises four adjoining buildings, which total 28,500 sq ft of office space and 4,400 sq ft of retail space, arranged over five floors. The property is located close to Olympia, in Kensington, which is currently undergoing a £1bn redevelopment delivering a new creative district, with a new theatre, entertainment venue, hotel, office, retail and leisure space, which will enhance the surrounding area. The current annual rental income is £0.5m, which is expected to rise to over £1.1m once vacant space is leased. PCTN plans to upgrade the office space and rollout SwiftSpace, its recently launched flexible lease offering. The purchase price reflects a net initial yield of 3.3%, rising to over 8% once fully let.

We also have portfolio updates from Aquila European Renewables Income, HydrogenOne Capital Growth and BBGI Global Infrastructure, an acquisition by Life Science REIT and a potential fund raise by Home REIT.

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