TIDMAIRE
RNS Number : 4435E
Alternative Income REIT PLC
05 November 2020
5 November 2020
Alternative Income REIT PLC
(the " Company " or " Group ")
DIVID DECLARATION
UPDATE ON NAV, TRADING AND THE BUSINESS
The Board of Directors of Alternative Income REIT PLC (ticker:
AIRE), the owner of a diversified portfolio of UK commercial
property assets predominantly let on long leases, today provides a
trading and business update and declares an interim dividend for
the quarter ended 30 September 2020 .
Steve Smith, Chairman of Alternative Income REIT plc,
commented:
"The interim dividend of 1.25 pence per share that we have
declared today is consistent with the Company's annual dividend of
5.0 pence per share paid for the year ended 30 June 2020,
reflecting the Company's strong collection of its rent for the
current quarter to December 2020 and strong cash flow. The Board
continues to target a resumption of a fully covered annual dividend
of 5.5 pence per share(1) , all else being equal, by September
2022.
The Board firmly believes that the resilience of the Company's
diversified portfolio, that remains fully let , its resilient
balance sheet and robust rent collection together with the recent
significant reduction in the Group's overhead leaves the Group well
positioned to pursue its proposed enhanced strategy, supported by
its accomplished Investment Adviser, M7 Real Estate Limited, in
rapidly changing market conditions suited to a more active and
responsive approach.
The Board believes that with additional investment it can
deliver to its shareholders both strong performance and a secure
and progressive dividend and that the proposed cash tender offer
from Glenstone for up to 25% of the Company's shares significantly
undervalues the Company."
Dividend declaration and robust rent collection
The Board declares today an interim dividend of 1.25 pence per
share for the quarter ended 30 September 2020 . The dividend will
be paid on 30 November 2020 to shareholders on the register on 13
November 2020. The ex-dividend date will be 12 November 2020. The
dividend will be a Property Income Distribution.
This dividend is consistent with the Company's aggregate
dividends of 5.0 pence per share paid in respect of the year ended
30 June 2020.
As announced on 16 October 2020, the Board remains pleased to
have reached agreements with all of the Group's tenants and for the
quarter ending December 2020, if all agreements are honoured, the
Group will collect 100% of its rent for the current quarter.
Furthermore, the Group has continued to collect its rent arrears
with agreements now in place to collect 100% of the rents
outstanding for the March and June 2020 quarter days by October
2021.
Resilient Earnings Per Share, Valuation and Net Asset Value
Unaudited EPRA earnings per share ("EPRA EPS") for the quarter
ended 30 September 2020, which includes the profit realised in late
July 2020 from the disposal of the Wet 'n' Wild Water Park
increased by 65.8% to 2.120 pence per share, representing dividend
cover for the quarter of 169.6% (quarter to 30 June 2020: 1.279
pence per share, 89.7% cover).
The EPRA EPS includes accruals to reflect the minimum contracted
uplifts under the Group's leases, the spreading of rent free
periods, an adjustment for the amortisation of loan arrangement
fees and provision for impairment of trade receivables. Excluding
these accruals from the Group's EPRA EPS, the unaudited adjusted
cash earnings were 1.922 pence per share, reflecting 153.8% cash
dividend cover for the quarter (quarter ended 30 June 2020: 1.079
pence per share, 75.7% cash dividend cover). If the profit from the
disposal of Wet 'n' Wild is excluded, then the adjusted earnings
were 1.394 pence/share, reflecting dividend cover of 111.5%.
As at 30 September 2020, the independent fair valuation
undertaken by Knight Frank of the Company's property portfolio was
GBP101.76 million (30 June 2020: GBP101.91 million, excluding
GBP2.85 million for Wet n Wild sold in July 2020), reflecting a
0.15% reduction, and the net initial yield on the portfolio was
5.76% (30 June 2020: 5.77%).
The Company's unaudited net asset value ("NAV") was GBP67.52
million, 83.882 pence per share as at 30 September 2020, (30 June
2020: GBP67.29 million, 83.586 pence per share). See the table
below for NAV movement during the quarter.
Analysis of Movement in NAV
Movement during the quarter Pence per share GBP million
NAV at 30 June 2020 83.586 67.287
---------------- ------------
Valuation change in property portfolio* (0.399) (0.321)
---------------- ------------
Income earned for the period 2.226 1.792
---------------- ------------
Expenses for the period (0.193) (0.156)
---------------- ------------
Reversal of impairment of trade
receivables 0.145 0.117
---------------- ------------
Net finance costs for the period (0.443) (0.357)
---------------- ------------
Net gain on sale of Wet n Wild,
North Shield 0.385 0.309
---------------- ------------
Interim dividend paid in respect
of the quarter ended 30 June 2020 (1.425) (1.147)
---------------- ------------
NAV at 30 September 2020 83.882 67.524
---------------- ------------
* The quarter's reduction in the independent fair valuation of
GBP0.15 million was further reduced by GBP0.17 million to reflect
the minimum contracted rental uplifts and the rent frees in the
quarter, resulting in a net valuation change in the quarter of
GBP0.32 million.
Proposed amendment of Investment Policy
The Company is tabling an ordinary resolution at its AGM on
Thursday 26 November 2020 to seek permission from shareholders to
amend the Company's Investment Policy. The principal changes to the
Investment Policy include a reduction in the minimum WAULT of the
portfolio to 12 years, the removal of the requirement for leases
representing 85% of gross passing rent to be linked to inflation
and the removal of the restrictions relating to permitted sectors,
including the differentiation between traditional and
non-traditional sectors.
The Board believes that with the implementation of the proposed
amendments to the investment policy and strategy set out in the
Annual Report and Notice of AGM, the Group has the potential to
outperform from what is now a relatively strong base.
Response to proposed tender offer from Glenstone Property
PLC
As announced on 27 October 2020, the Board believes that
Glenstone's proposed cash Tender Offer price of 59.25 pence per
share for up to 20,125,000 ordinary shares in AIRE, representing up
to 25.0% of AIRE's issued share capital, significantly undervalues
the Company, representing a discount of 29.3% to the 30 September
2020 net asset value per share of 83.882 pence, underpinned by the
robust rent collections.
Diversified portfolio, fully let predominantly on long,
index-linked, leases
Following the sale of the Wet 'n' Wild Water Park announced on 3
August 2020, the Group owns a diversified portfolio of UK
commercial property assets that are fully let, with a w eighted
average unexpired lease term ("WAULT") of 19.2 years (30 June 2020:
19.5 years) to the earlier of break and expiry and 21.4 years (30
June 2020: 21.6 years) to expiry as at 30 September 2020.
88 % of the portfolio's income stream is reviewed periodically,
on an upward only basis, in line with inflation; with 64 % and 24 %
of the portfolio indexed (subject to floors and caps) to RPI and
CPI respectively and, except for the rent for 2021 from Travelodge
(as a result of the terms of Travelodge's Company V oluntary A
rrangement (" CVA ") as announced by the Company on 13 July 2020 )
, none of the rents are pegged to the tenant's turnover or trading
volumes .
The NAV attributable to the ordinary shares has been calculated
under International Financial Reporting Standards as adopted by the
European Union and incorporates both the Group's property portfolio
individually valued on a 'Red Book' valuation basis as at 30
September 2020 and net income for the quarter, but does not include
a provision for the interim dividend (see above) for the quarter
ended 30 September 2020.
The income earned for the period includes an accrual for the
minimum contractual uplifts defined within the index linked leases.
In the event that inflation is greater than these minimum
contractual uplifts, the actual income will be greater than that
currently accrued.
ENQUIRIES
Alternative Income REIT PLC
Steve Smith - Chairman via Maitland/AMO below
M7 Real Estate Ltd
Richard Croft +44 (0)20 3657 5500
Panmure Gordon (UK) Limited +44 (0)20 7886 2500
Alex Collins
Tom Scrivens
Chloe Ponsonby
Maitland/AMO (Communications Adviser) +44(0) 7747 113 930
James Benjamin james.benjamin@maitland.co.uk
The Company's LEI is 213800MPBIJS12Q88F71.
Further information on Alternative Income REIT plc is available
at www.alternativeincomereit.com (2)
NOTES
Alternative Income REIT PLC aims to generate a sustainable,
secure and attractive income return for shareholders from a
diversified portfolio of UK property investments, predominately in
alternative and specialist sectors. The majority of the assets in
the Group's portfolio are let on long leases which contain
inflation linked rent review provisions.
The Company's investment adviser is M7 Real Estate Limited
("M7"). M7 is a leading specialist in the pan-European, regional,
multi-tenanted real estate market. Majority owned by its senior
managers, it has over 200 employees in 14 countries across Europe.
The team manages over 835 properties with a value of circa EUR5.1
billion.
1 This is a target only and not a profit forecast. There can be
no assurance that the target will be met and it should not be taken
as an indicator of the Company's expected or actual results.
2 Neither the content of the Company's website, nor the content
on any website accessible from hyperlinks on its website or any
other website, is incorporated into, or forms part of, this
announcement nor, unless previously published on a Regulatory
Information Service, should any such content be relied upon in
reaching a decision as to whether or not to acquire, continue to
hold, or dispose of, securities in the Company.
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END
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November 05, 2020 12:44 ET (17:44 GMT)
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