Interim Management Statement
August 19 2010 - 2:00AM
UK Regulatory
TIDMWICH
RNS Number : 2940R
Wichford plc
19 August 2010
Wichford P.L.C.
("Wichford" or the "Company")
Interim Management Statement
19 August 2010
The Board of Wichford P.L.C., the property investment company, today issues the
following Interim Management Statement relating to the period from 1 April to 19
August 2010.
Overview
The Company has made substantial progress in achieving the milestones set out at
the time of the Rights Issue in August 2009, by securing its medium term
financing and actively managing its property portfolio.
Specifically, the period under review has resulted in the successful extension
of three debt facilities, including two of the three UK facilities totaling
GBP245.7 million and the extension and restructuring of the VBG1 facility of
EUR67.1 million.
The Company has also been active in managing the portfolio, completing two
further acquisitions since the end of the first half of the financial year for a
total purchase price of GBP9.50 million and achieving sales at or above
valuation on two properties which had limited growth and asset management
prospects.
Property Portfolio
Acquisitions
The following UK acquisitions have completed in the period under review and have
been previously announced.
West Tullos Industrial Estate, Aberdeen
* Let to the Aberdeen City Council until February 2134 providing an unexpired
term inexcess of 123 years
* Purchase price of GBP2.10 million reflecting a net initial yield of 4.50%
* Highly capital efficient solution to extend the WAULT of the UK portfolio
Park Place and St Paul's Street, Leeds
* Let to the Secretary of State for the Environment for an unexpired lease term
of approximately 7.8 years
* Occupied by the largest JobCentre Plus in Leeds
* Purchase price of GBP7.40 million reflecting a net initial yield of 8.12%.
* The core location together with current low capital value provides a number of
asset management opportunities to enhance the value of the property
Sales
As previously announced, Wichford has concluded the sale of Osprey House,
Redditch for GBP2.95 million. The property, which is multi-tenanted to both
government and non-government occupiers, had a weighted average unexpired lease
term of less than two years. The property has been sold to one of the existing
tenants. The sale price is equal to book value.
The Company has also exchanged contracts for the sale of St Cloud for EUR6.13
million, 3.1% ahead of the latest valuation in local currency terms. The
property is the Company's only French asset and the sale will help to simplify
the overall property portfolio geographically as well as the corporate structure
and recycle capital back into the UK portfolio.
These sales are in line with Wichford's objective of improving the overall
quality of the portfolio through recycling capital from properties with limited
growth prospects into new investments providing asset management opportunities.
Lettings & Occupancy
Crescent Centre, Bristol
* Negotiations for lease extensions on 11,551 sqft are underway in order to make
various departmental lease terms co-terminus and in line with asset management
opportunities identified on acquisition
* In addition, negotiations with an existing tenant are underway for the renewal
of 1,632 sqft
Lease expiries at Harrow and floors one to three at Croydon have increased
vacant space by 122,426 sqft. Wichford's portfolio continues to have a high
occupancy rate of 96.2%, generating a steady and robust income stream.
Progress on the planned refurbishment or redevelopment of Harrow is encouraging
with significant interest from potential joint venture partners. A number of
options are being considered including a residential-led mixed use scheme.
Rent Reviews
60.0% of the portfolio benefits from CPI / RPI indexation or fixed increases and
accordingly the Company has benefitted from a number of upward only rental
reviews.
* Bromley - a fixed increase from GBP965,000 p.a. to GBP1,200,000 p.a. has been
settled effective from March 2010. The property is let to the Secretary of State
for the Environment until March 2022 with a tenant break option in March 2018.
* Dalkeith - CPI rent review increase of 6.7% from GBP110,000p.a. to GBP117,402
p.a. has been settled
* Bradford - anticipated RPI rent review increase of 13.7% from GBP1,750,000
p.a. to GBP1,989,134 p.a.
* Oldham - anticipated CPI rent review increase of 5.8% from GBP205,000p.a. to
GBP216,968 p.a.
* Woodlands, Bedford - anticipated fixed increase from GBP900,000 to GBP981,555
p.a. reflecting a fixed 1.75% p.a. compound increase
Cash Position
As at the date of this announcement the Company had approximately GBP24.0
million available for acquisitions, comprising available cash balances and cash
on deposit to be released following the completion of various substitutions.
Debt Facilities
The Company has succeeded in securing two year extensions of both the Gamma and
Zeta facilities totaling GBP245.7m or 68% of the Company's UK debt facilities
until October 2012 and May 2013 respectively. In addition, Wichford has
completed all the necessary acquisitions to extend the GBP114.6m Delta facility
for a further two year period until October 2012.
These extensions, together with the restructuring and renegotiations of both the
VBG1 and VBG2 facilities outlined below are a very significant improvement to
the medium term funding structure of the Company and are in line with the
objectives set out by Wichford at the time of the Rights Issue. As a result of
these successful negotiations, the Company has also achieved a reduced average
total interest rate of 5.24%.
Delta Facility
The Company will be submitting a formal extension request before the end of
August 2010 following the substitution of Westwey House, Weymouth and West
Tullos Industrial Estate, Aberdeen into the facility. A further announcement
will be made once the extension to October 2012 has been confirmed.
Gamma Facility
The facility has been extended to October 2012 following the substitution of
Park Place & St Paul's Street, Leeds into the facility and acceptance of the
extension request by the Security Trustee. All other terms of the facility
remain unchanged including the total interest cost of 5.52%.
VBG1 Facility
The Company concluded an extension of the VBG1 facility until 22 January 2012.
In addition, the loan to value ("LTV") covenant has been waived for the extended
maturity period.
Quarterly interest payments will be subject to three month Euribor interest
rates at each interest payment date. However, the total effective interest rate
will be capped at a maximum of 3.60% following the purchase of interest rate
caps of 2.50%. The new arrangements represent a substantial decrease in interest
costs compared with the previous effective fixed rate of 4.27%.
These new terms will provide regular quarterly releases of surplus funds of up
to EUR219,000 per quarter.
The EUR67.1 million VBG1 facility is secured against two German properties in
Berlin and Dresden. Further details of the key restructuring provisions are
contained in the announcement released on 12 July 2010.
VBG2 Facility
As announced on 20 July 2010, the Company has agreed an LTV waiver and is in
discussions to extend or restructure the facility closer to maturity.
The EUR53.6 million VBG2 facility is secured against two German properties in
Cologne and Stuttgart. The facility matures in April 2011.
Zeta Facility
As announced on 20 July 2010, the Company has agreed a two year extension of the
Zeta (Lloyds TSB) facility to May 2013. Interest rate hedging for the facility
has been extended to the new maturity date and the existing margin remains
unchanged. The new effective fixed rate of 3.88% (previously 5.18%) will result
in a reduction in interest expense of about GBP598,000 per annum. The new rate
is effective from 20 July 2010.
Outlook
The market continues to be two tiered, with long-dated government-backed leases,
particularly to Central Government bodies, attracting strong demand from
institutional investors. At the same time, concerns over the UK budget deficit
and limited bank funding for short term leases continues to result in short-term
leases being priced at significantly higher yields. This is expected to continue
until improved occupier demand reduces re-letting risk.
Wichford's UK portfolio continues to reflect a low average rent of GBP12.5 psf
and the Company is actively assessing opportunities to assist the UK government
in the provision of cost effective office accommodation. The Government's recent
introduction of Treasury approval for all new leases and lease extensions until
the end of April 2011 is expected to lead to an overall reduction in space being
occupied by government departments, but it is anticipated that this will create
opportunities to provide cost effective accommodation to departments currently
occupying property at relatively high rental levels.
The Company has a limited amount of space subject to near term break options or
expiries. Approximately 60,000 sq ft with a passing rent of GBP0.96 million is
subject to potential break options or lease expiries before April 2011. Of this,
negotiations for extensions or renewals on approximately 35,000 sq ft are in
progress.
Previously reported cost efficiencies of approximately GBP0.70 million p.a. will
begin to be reflected in this year's results and will be fully reflected in the
next financial year.
Results and Dividend
The final dividend will be recommended to Shareholders at the time of the final
results in mid December 2010 for payment in March 2011. The final dividend will
be subject to Shareholder approval at the Annual General meeting in January
2011.
The results and dividend are expected to be in line with management
expectations.
Philippe de Nicolay, Chairman of Wichford commented:
"Wichford has continued its strong recovery following its Rights Issue in 2009.
The Company's portfolio has been carefully managed and successful negotiations
have been conducted with its major debt providers. Wichford can now look to make
strategic acquisitions and sales with a view to maintaining and growing its
income stream and dividends."
For further details, please contact,
+-------------------------------+-------------------------------+
| Wichford P.L.C. | |
+-------------------------------+-------------------------------+
| Philippe de Nicolay | 00 33 1 40 74 42 79 |
+-------------------------------+-------------------------------+
| | |
+-------------------------------+-------------------------------+
| Wichford Property Management | |
| Ltd | |
+-------------------------------+-------------------------------+
| Stephen Oakenfull | 020 7811 0100 |
+-------------------------------+-------------------------------+
| Philip Cooper | 020 7355 7020 |
+-------------------------------+-------------------------------+
| | |
+-------------------------------+-------------------------------+
| Citigate Dewe Rogerson | 020 7638 9571 |
+-------------------------------+-------------------------------+
| George Cazenove | |
+-------------------------------+-------------------------------+
| Kate Lehane | |
+-------------------------------+-------------------------------+
Wichford P.L.C. (UK Listed: WICH) is a property investment company, with a
portfolio focused on investment property occupied exclusively by Central and
State Government bodies. Approximately a quarter of the portfolio comprises
public sector rented properties in France, Germany and the Netherlands.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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