To: Company Announcements
Date: 29 August 2014
Company: AXA Property Trust Limited
Subject: Net Asset Value 30 June 2014 (Unaudited)
CORPORATE SUMMARY
The Company's unaudited Consolidated Net Asset Value at 30 June 2014 was £51.33
million (55.47 pence per share), a decrease of £3.29 million (1.21 pence per
share) since 31 March 2014 when the Consolidated Net Asset Value was £54.62
million (56.68 pence per share);
The Company and its subsidiaries made a loss after tax of £1.48 million (1.61
pence per share) in the twelve month period to 30 June 2014;
The agreement for the sale of the asset at Wuerzburg was notarised on 13 August
2014 at a price of EUR 5.35 million. The retail property is located on the
western side of the town in an established residential area. It totals some
2,821 square metres of retail space in two units let to the national traders DM
chemists and REWE supermarkets. The purchaser is the German property company
FIM Immo Gmbh and it is expected that the sale will complete in the coming
weeks. The Company expects to distribute the proceeds from the sale through a
further partial capital redemption which will be announced in due course.
The asset at Koethen has been brought to market;
Preparation for sale of the remaining assets in Germany is advancing and a
number of asset management initiatives are in progress;
At Venray in the Netherlands, the logistics unit let to Rank Xerox has
undergone a replacement of the entire roof covering. This has been completed
and the unit is being actively marketed.
PORTFOLIO UPDATE
Country Allocation at 30 June 2014 (by value)
Country % of portfolio
Germany 66%
Italy 26%
Netherlands 8%
Sector Allocation at 30 June 2014 (by value)
Sector % of portfolio
Retail 58%
Industrial 27%
Leisure 15%
MARKET UPDATE
German retail
According to the European Commission, German consumers have gradually become
more confident and increased their consumption levels over the last few years.
Household confidence is close to levels last reached in 2007 and 2011 and the
savings rate has dropped to 9.9%. This trend is expected to continue as Germans
benefit from their country's economic prosperity and strong labour market.
However, we expect the impact on retail assets to be differentiated. While
prime high streets are expected to continue to perform well and experience
rental value growth, secondary locations are expected to suffer from the
competition of online shopping. International retailers tend to aim for the
best locations in cities and although this is pushing some retailers to nearby
locations, it is not causing retailer demand to spread to secondary locations
thus far. However, we are seeing international retailers opening shops outside
of the main cities - in so-called B, C and D cities. This will benefit the very
prime locations in these secondary cities.
Yields have fallen across Germany and are now below the levels of 2007 and
2008. Prime high street property currently yields 4.1%, secondary 6.0% and
shopping centres 4.5%. Besides the occupier demand mentioned above, this also
reflects the significant sums of money that are being allocated to real estate
at present. Foreign investors in particular have shown an interest in German
retail property due to the superior income returns over other asset classes.
For example, investment volumes for shopping centres touched a three year high
in Q4 2013. We expect that prime high street property and shopping centres (in
primary and secondary cities) will continue to benefit from this trend while
European growth expectations remain muted and interest rates stay low.
German industrial
Although German industrial property has outperformed the rest of Europe
recently, we expect further prime rental value growth in the future. Demand for
space - especially close to urban areas - has outstripped existing supply and
there is limited development coming to market in the next 12-18 months, most of
which is pre-let anyway and being developed on a build-to-suit basis.
Investment demand for prime product remains robust. Foreign investors have
shown a special interest in industrial assets in Germany which combines the
'safe haven' of German property with the dynamism of the world's third largest
export nation.
Netherlands logistics
Within the Netherlands the industrial market is expected to benefit most from
the economic recovery, thanks to its central location along the European
logistics corridor. The Central and East Brabant and Limburg regions, focused
on European distribution and high-tech sectors, are benefiting from cheaper
rents and good accessibility to the rest of Europe and we expect them to record
the strongest growth over the next few years. No speculative supply is
anticipated in the Netherlands in the short-term, as the country still faces
high vacancy rates. However, availability of Class A units remains scarce, with
vacancy rates for such spaces at frictional levels in the main logistics
markets. This is expected to support prime rents in the most sought-after
markets over the coming years (+7% year-to-date in Rotterdam in H1 2014).
As a result, the Dutch industrial market has seen an increase in investor
interest since the end of 2013 (EUR 601m invested in H1 2014, up 30% compared
to H1 2013), which does not limit itself to established markets anymore. We
expect this trend to continue and yields across the country to compress further
(-20 bps year-to-date in H1 2014), especially along the European distribution
corridor.
Italian logistics
Logistics activity remains subdued in Italy, penalised by the industrial
production slump and the weak demand from international players, but most
active demand remains focused on Northern Italy. The key sectors driving
occupier interest continue to be e-retailing, pharmaceuticals and third-party
logistics uses. While demand remains subdued, vacancy is shrinking at prime/
established locations as speculative deliveries remain scarce and even new
pre-let supply will be limited. The supply overhang elsewhere remains
significant and some secondary locations and buildings will not see demand
return in this cycle. Incentives have been growing, with the spread between
headline and effective rents widening to close to 17% and we expect Italian
prime rental values will continue to fall in 2014 with a slow recovery
thereafter.
CONSOLIDATED PERFORMANCE SUMMARY
Unaudited Unaudited
9 months ended 12 months ended
31 March 2014 30 June 2014 Quarterly
Movement
Pence per share Pence per share Pence per
share /(%)
Net Asset Value per 56.68 55.47 -1.21
share (-2.1%)
(Loss) / Earnings per (1.99) (1.61) 0.38
share
Share price (mid 39.07 41.50 -2.43
market) (-6.2%)
Share price discount 31.1% 25.2% 5.9
to Net Asset percentage
Value points
Total return Unaudited Unaudited
9 months ended 12 months ended
31 March 2014 30 June 2014
Net Asset Value Total Return -9.7% -14.2%
Share Price Total Return
- AXA Property Trust 7.6% 14.3%
- FTSE All Share Index 10.6% 13.1%
- FTSE Real Estate Investment 19.3% 23.9%
Trust Index
Source: Datastream; AXA Real Estate
Total net loss was £1.48 million (1.61 pence per share) for the twelve months
to 30 June 2014, including £1.97 million of "revenue" profit (excluding capital
items such as revaluation of property) and £3.45 million "capital" loss,
analysed as follows:
Unaudited Unaudited Unaudited
9 months 3 months 12 months
ended ended ended
31 March 2014 30 June 2014 30 June 2014
£million £million £million
Net property 5.07 1.03 6.10
income
Net foreign exchange gains / (losses) 0.04 (0.1) (0.06)
Investment Manager's fees (0.38) (0.08) (0.46)
Other income and (2.42) 0.92 (1.50)
expenses
Net finance (1.74) (0.37) (2.11)
costs
Revenue profit 0.58 1.39 1.97
Unrealised losses on revaluation of investment (1.20) (1.04) (2.24)
properties
(Loss) / Gain on disposal of shares in a (0.48) 0.13 (0.35)
subsidiary
Gain / (Losses) on derivatives (hedging interest 0.01 (0.32) (0.31)
rate and currency exposures)
Share in (losses) / profit of Joint Venture (0.14) 0.32 0.18
Finance costs (0.51) 0.06 (0.45)
Net foreign exchange losses (0.09) - (0.09)
Deferred (0.08) (0.11) (0.19)
tax
Capital loss (2.50) (0.96) (3.45)
Total net (loss) / profit (1.92) 0.44 (1.48)
NET ASSET VALUE
The Company's unaudited Consolidated Net Asset Value per share as at 30 June
2014 was 55.47 pence (56.68 pence as at 31 March 2014), a decrease of 1.21
pence.
The Net Asset Value attributable to the Ordinary Shares is calculated under
International Financial Reporting Standards. It includes all current year
income after the deduction of dividends paid prior to 30 June 2014.
The £3.29 million decrease in Net Asset Value over the quarter ended 30 June
2014 can be analysed as follows:
Unaudited Unaudited Unaudited
9 months ended 3 months ended 12 months ended
31 March 2014 30 June 2014 30 June 2014
£million £million £million
Opening Net Asset Value 59.22 54.62 59.22
Net (loss) / gain after tax (1.92) 0.44 (1.48)
Unrealised movement on 1.12 (0.12) 1.00
derivatives
Share redemption (2.00) (2.10) (4.10)
Foreign exchange translation gains / (losses) (1.80) (1.51) (3.31)
Closing Net Asset Value 54.62 51.33 51.33
On a like-for-like basis the Euro valuation of the property portfolio decreased
by 0.5% to EUR 103.22 million for the quarter. In Sterling currency terms, the
property valuation was £82.64 million (including the effects of valuation
movements, capital expenditure and foreign exchange movements). The £/EUR
foreign exchange rate applied to the Company's Euro investments in its
subsidiary companies at 30 June 2014 was 1.25 (31 March 2014: 1.21).
SHARE PRICE AND DISCOUNT TO NET ASSET VALUE
As at close of business on 30 June 2014, the mid market price of the Company's
shares on the London Stock Exchange was 41.50 pence, representing a discount of
25.2% on the Company's Net Asset Value at 30 June 2014.
As at close of business on 28 August 2013, the mid market price of the
Company's shares was 41.25 pence, representing a discount of 25.6% on the
Company's Net Asset Value at 30 June 2014.
FUND GEARING
Unaudited Unaudited
31 March 2014 30 June 2014 Movement
£million /% £million /% £million /%
Property portfolio * 85.74 82.64 -3.1 (-3.6%)
Borrowings (net of capitalised 34.14 32.39 -1.75 (-5.1%)
issue costs)
Total gross gearing 39.8% 31.4% -8.4
percentage pts
Total net gearing 32.5% 27.7% -4.8
percentage pts
*Portfolio value based on the Company's independent valuation
Fund net gearing decreased by 4.8 percentage points over the quarter to 27.7%
as at 30 June 2014.
Fund gearing is included to provide an indication of the overall indebtedness
of the Company and does not relate to any covenant terms in the Company's loan
facilities. Gross gearing is calculated as debt over property portfolio at fair
value. Net gearing is calculated as debt less cash over property portfolio at
fair value.
As the wind down progresses, the level of gearing will continue to decrease as
proceeds from sales are used to reduce debt over the next 12 to 18 months.
LOAN FACILITIES
Gross Loan to Value (LTV) Covenants Unaudited Unaudited
31 March 2014 30 June 2014 Maximum
Main loan facility 44.85% 45.1% 60.00%
As at 30 June 2014, the loan-to-value ratio on the main facility was 45.1%
based on the Company's independent valuation of the property portfolio.
Interest Cover Ratio at 30 Historic Minimum Projected Minimum Net rental
June 2014 income
Unaudited Unaudited headroom
Main loan facility covenant 283.4% 200.0% 286.5% 185.00% 35.4%
Interest Cover Ratio (ICR) is calculated as net financing expense payable as a
percentage of net rental income less movement in arrears. Net rental income
headroom is based on projected interest cover.
CASH POSITION AND CAPITAL EXPENDITURE
Of the £3.76 million cash held by the Group including the cash in the Agnadello
JV at 30 June 2014, £0.5 million was held in bank accounts pledged to the
financing banks.
The anticipated capital expenditure over the next twelve months is £0.7 million
(EUR 0.9 million).
MATERIAL EVENTS
Except for those noted above, the Board of the Company is not aware of any
significant event or transaction which occurred between 30 June 2014 and the
date of the publication of this Statement which would have a material impact on
the financial position of the Company.
Company website:
http://www.axapropertytrust.com
All Enquiries:
Investment Manager
AXA Investment Managers UK Limited
Broker Services
7 Newgate Street
London EC1A 7NX
Tel: +44 (0)20 7003 2345
Email: broker.services@axa-im.com
Broker
Oriel Securities Limited
Neil Winward / Mark Bloomfield / Matthew Marshall
Tel: +44 (0)20 7710 7600
Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
GY1 3QL
Tel: +44 (0)1481 745324AXA PROPERTY TRUST LTD - Net Asset Value(s)
© 2014 PR Newswire
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