AXA Property Trust Net Asset Value 30 June 2016 (Unaudited)
August 31 2016 - 6:58AM
UK Regulatory
TIDMAPT
To: Company Announcements
Date: 31 August 2016
Company: AXA Property Trust Limited
Subject: Net Asset Value 30 June 2016 (Unaudited)
CAPITAL REDEMPTION
- During the Financial year ending 30 June 2016 the Company returned GBP16.2
million capital to Shareholders (GBP5.2 million on 30 July 2015 and GBP11.0 million
on 6 January 2016) bringing the total capital returned to Shareholders to GBP42.4
million.
- Under the terms of the extension of the Company's debt facility from 1
July 2016 to 31 December 2016, net sales proceeds and rents from the portfolio
will be used to repay the debt in priority to shareholder distributions.
CORPORATE SUMMARY
- The Company's unaudited Consolidated Net Asset Value as at 30 June 2016
was GBP39.63 million and the NAV per share was 68.82 pence per share. This
reflects an increase of GBP1.08 million (1.87 pence per share) compared to 31
March 2016 when the Consolidated Net Asset Value was GBP38.55 million (66.95
pence per share);
- The Company and its subsidiaries made a profit after tax of GBP2.30 million
for the twelve month period ended 30 June 2016 and GBP0.72 million in the three
month period ended 30 June 2016.
MANAGED WIND-DOWN STATUS
- The Company continues to progress the managed wind-down of its portfolio
with a view to realising its investments in a manner that achieves a balance
between maximising the value from the Company's investments and making timely
returns of capital to shareholders.
- During the Year ended 30 June 2016 the Trust completed the sale of the
asset in Venray, The Netherlands and of the asset in Fuerth, Germany.
- During the quarter ending 30 June 2016 contracts were signed for the sale
of the Dasing asset. The sale was completed post-quarter and the net disposal
proceeds received on the 25 August 2016 have been allocated to the
reimbursement of the debt.
- Of the remaining [three] assets, during the quarter ending 30 June 2016
asset management initiatives continued on the Rothenburg asset in order to
prepare the asset for sale, and marketing commenced post-quarter.
- The two Italian assets continued to be marketed on an individual basis.
- Year end 2016 has been the target for the completion of all sales,
however at present it is considered that the sales programme of the remaining
assets is more likely to complete in the first half of 2017.
PORTFOLIO UPDATE
Country Allocation at 30 June 2016 (by value)
Country % of portfolio
Germany 53%
Italy 47%
Sector Allocation at 30 June 2016 (by value)
Sector % of portfolio
Retail 40%
Industrial 34%
Leisure 26%
MARKET UPDATE
Eurozone - Economic environment
Eurozone real gross domestic product grew by 0.6% Quarter-on-Quarter (QoQ) in
Q1 2016, more than expected. Growth was principally driven by unexpected
improvements in private spending and investment activity. The contribution of
net exports continued however to be negative for the third quarter in a row.
Among major Eurozone countries, Spain showed the strongest GDP growth (+0.8%
QoQ), followed by Germany (+0.7% QoQ) and France (+0.6% QoQ). Italy's growth
was moderate, although positive and in slight acceleration (+0.3% QoQ).
Domestic demand is expected to remain the key driver of Eurozone growth;
external demand, given recent economic difficulties faced by emerging markets,
does represent a potential drag on expansion. Improvements in employment and
earnings, as well as subdued inflation continue supporting disposable household
income and thus private consumption. In Q2 2016 consumption is estimated to
have marginally slowed (+0.3% QoQ), as some temporary effects faded away. Over
the rest of 2016, consumption is expected to continue its recent trend rate
(+0.4% QoQ) resulting, according to Ifo, INSEE and Istat, in an overall growth
rate of 1.7%.
Eurozone growth in investment amounted to +0.8% QoQ in Q1, but is, according to
Ifo, expected to decelerate to +0.5% QoQ in Q2 2016, along with the general
slowdown in economic activity. Productive investment is likely to be supported
by steady improvements in activity and the financial situation of businesses.
Furthermore, the new ECB Corporate Sector Purchase Programme should continue
easing already favourable financing conditions. Accordingly, investment is
expected to gradually accelerate.
The result of the UK referendum has inevitably increased uncertainty over
economic growth prospects in the Eurozone: while the short run impact on the
activity of the area, via the trade channel, should be limited until Q4 2016,
the medium term effect strongly depends upon the timing of the UK's exit and
the future trade agreements to be negotiated between UK and the EU.
All in all, Eurozone GDP is, according to Ifo, INSEE and Istat, expected to
expand by 0.3% in Q2 2016 and by 0.4% in Q3. In Q4 the BREXIT effects are
likely to drive slowdown in momentum reducing annual average GDP growth for the
year to nearer 1.6% , slightly weaker than growth seen in 2015 (+1.7%). Under
the assumption that oil prices remain stable at $49 per barrel, and the Dollar/
Euro exchange rate fluctuates around 1.12 USD per EUR, inflation is expected to
moderately increase during the rest of the year, bringing the annual average to
+0.3%.
The German economy had a positive start to 2016, with Q1 GDP growth
accelerating materially compared to late 2015. The industrial sector showed
strong momentum in January, a notable loss in momentum was however visible
throughout Q1 2016. The German economy grew at a seasonally-adjusted 0.7% QoQ
in Q1 2016, accelerating from a 0.3% QoQ expansion in the previous quarter.
Growth was mainly driven by household spending with foreign trade having a
slight downward effect on growth. After a weak start to the second quarter,
German business sentiment improved, with the Ifo Business Climate Index rising
to 108.7 points in June from 107.8 points in May (seasonally adjusted). The
German economy is expected to continue rebalancing over the coming years and
both private and government consumption should remain key drivers for growth.
Rising wage costs are likely however to place pressure on company profit
margins.
The Italian economy grew by 0.3% QoQ in the three months to March of 2016
compared to a 0.2% QoQ expansion in the previous period. Growth was mainly
driven by household expenditure and an accumulation of inventories, counter
balanced by a slump in exports. Overall, GDP grew by 1.0% YoY in Q1 2016. The
constitutional referendum, taking place in late 2016 represents a key risk to
the economic outlook and Prime Minister Matteo Renzi has pledged to resign if
he loses the referendum. The latest polls suggest the outcome is finely
balanced and a resignation by Matteo Renzi could, given most recent polls,
potentially lead to the Five Star Movement winning an absolute majority in
subsequent general elections. A period of uncertainty and a further delay in
the implementation of crucial reforms would most likely dampen prospective
economic growth. Furthermore, a high stock of non-performing loans on Italian
banks' balance sheets present further shock risks to the economy with many
retail investors exposed to these instruments believing them to be a secure as
bank deposits.
Italian Logistics Market
According to CBRE and as at Q2 2016, prime rents stand at EUR52.00/sq m/year in
Rome and at 50/sq m/year in Milan. RCA reported real estate investment volumes
into the industrial [sector?] of EUR246m over Q2, this excluding the EUR535m sale
concerning 300 Enel buildings. The quarter also saw a slight decrease in prime
yields to 6.4%, both in Milan and Rome, representing a decline of 10bps QoQ in
both cases. According to CBRE, yields are now down 60bps compared to Q2 2015 in
both city markets reflecting increased demand from international investors.
German Retail Market
The first half of 2016 saw the signing of retail lease contracts representing
over 236,500 sq m of retail space, broadly similar to levels seen in the first
half of 2015. More than two-thirds of all rental contracts were concluded by
international retailers. According to CBRE German prime retail rents remained
largely stable over the second quarter of 2016 although Berlin recorded prime
rental growth of 1.5%. Retail real estate investment volumes amounted to
approximately EUR4.1bn in the first half of 2016 whilst JLL recorded prime high
street yields in the Big 7 centres at 3.70% following a further, albeit slight,
decline (by 5 basis points). Yields for shopping centres and retail parks fell
by 15 basis points respectively to 4.10% and 5.10%.
German Logistics Market
During the first six months of 2016, Germany saw a logistics and industrial
take up of on aggregate 3.3m sq m with the second quarter being the strongest
quarterly result ever recorded. Occupier and developers are particularly active
in secondary locations with nearly all of the deals exceeding 20,000 sq m
having taken place in these locations. Overall, CBRE expects an all-time record
take-up of 6.5m sq m for 2016. Prime rents remained stable year-on-year, with
the exceptions of Munich and Berlin where both markets recorded significant
rent increases of approximately 3.3% and 0.9% respectively. At EUR2.1bn, the
transaction volume for German logistics properties over the first two quarters
of 2016 has exceeded the previous entire year's volume by 45% and recorded a
new half-year record. The lack of prime products increasingly results in a
shift of investors to a riskier set of existing properties as well as locations
outside the top investment locations. The gross initial yield in the prime
segment of the top markets declined by 65 basis points over the last 12 months
to an average of 5.65%. Munich and Berlin saw prime yields of 5.3% and 5.4%
respectively. Smaller cities, such as Bremen, Leipzig, Kassel and Nuremberg,
saw yields standing at 5.85%.
CONSOLIDATED PERFORMANCE SUMMARY
Unaudited Unaudited
9 months ended 12 months ended
31 March 2016 30 June 2016 Quarterly
Movement
Pence per Pence per Pence per share
share share /(%)
Net Asset Value per share 66.95 68.82 1.87 2.80%
Share price (mid-market) 53.88 55.13 1.25 2.32%
Share price discount to Net 19.5% 19.9% 0.4 percentage
Asset Value points
Total Return per Share Audited Unaudited
12 months ended 12 months ended
30 June 2015 30 June 2016
Net Asset Value Total Return -5.4% 13.1%
Share Price Total Return
- AXA Property Trust 10.5% 29.6%
- FTSE All Share Index 2.6% 2.2%
- FTSE Real Estate Investment 19.5% -8.3%
Trust Index
Source: AXA Investment Managers UK Limited and Stifel Nicolaus
Europe Limited.
Total net profit was GBP2.30 million (2.11 pence per share) for the twelve months
to 30 June 2016, including -GBP1.43 million of "revenue" loss (excluding capital
items such as revaluation of property) and GBP3.73 million "capital" gain,
analysed as follows:
Unaudited Unaudited Unaudited
9 months ended 3 months ended 12 months ended
31 March 2016 30 June 2016 30 June 2016
GBPmillion GBPmillion GBPmillion
Net property 2.27 (0.23) 2.04
income
Net foreign exchange (losses) / gains (0.30) 0.10 (0.20)
Investment Manager's fees (0.26) 0.04 (0.22)
Other income and expenses (2.28) 0.01 (2.27)
Net finance (0.65) (0.13) (0.78)
costs
Revenue loss (1.23) (0.21) (1.43)
Unrealised / gains on revaluation of investment 1.39 0.84 2.24
properties
Net gain on disposal of investment properties 1.08 0.02 1.10
Net gains on derivatives 0.53 0.11 0.63
Share in losses of Joint Venture (0.21) (0.11) (0.32)
Finance costs (0.00) (0.00) (0.00)
Net foreign exchange losses (0.02) - (0.02)
Deferred tax 0.03 0.07 0.11
Capital profit 2.81 0.93 3.73
Total profit 1.58 0.72 2.30
NET ASSET VALUE
The Company's unaudited Consolidated Net Asset Value as at 30 June 2016 was GBP
39.63 million (68.82 pence per share) an increase of GBP1.08 million compared to
Net Asset Value as at 31 March 2016 of GBP38.55 million.
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 2016.
The GBP1.08 million increase in Net Asset Value over the quarter ended 30 June
2016 can be analysed as follows:
Unaudited Unaudited Unaudited
9 months ended 3 months ended 12 months ended
31 March 2016 30 June 2016 30 June 2016
GBPmillion GBPmillion GBPmillion
Opening Net Asset 49.37 38.55 49.37
Value
Net (loss) / profit after tax 1.58 0.72 2.30
Unrealised movement on 0.57 0.18 0.75
derivatives
Share Redemption (16.19) 0.00 (16.19)
Foreign exchange translation losses 3.23 0.17 3.40
Closing Net Asset Value 38.55 39.63 39.63
On a like-for-like basis the Euro valuation of the property portfolio decreased
by 1.31% to EUR 56.30 million for the quarter. In Sterling currency terms, the
property valuation was GBP46.79 million (including the effects of valuation
movements, capital expenditure and foreign exchange movements). The GBP/EUR
foreign exchange rate applied to the Company's Euro investments in its
subsidiary companies at 30 June 2016 was 1.20 (31 March 2016: 1.26).
SHARE PRICE AND DISCOUNT TO NET ASSET VALUE
As at close of business on 30 June 2016, the mid-market price of the Company's
shares on the London Stock Exchange was 53.13 pence, representing a discount of
19.9% on the Company's Net Asset Value at 30 June 2016.
As at close of business on 30 August 2016, the mid market price of the
Company's shares was 56.12 pence, representing a discount of 18.5% on the
Company's Net Asset Value at 30 June 2016.
FUND GEARING
Unaudited Unaudited
31 March 2016 30 June 2016 Movement
GBPmillion / % GBPmillion / % GBPmillion / %
Property portfolio * 45.23 46.79 1.56 3.3%
Borrowings 14.24 14.93 0.69 4.6%
Total gross gearing 31.5% 31.9% 0.4 percentage
points
Total net gearing ** 27.2% 26.5% -0.8 percentage
points
* Based on the portfolio's independent market valuation,
including that of the Company's share in the Agnadello
property
** Net Gearing is calculated as overall debt, net of unallocated cash held
by the Group over the portfolio at fair value
The variation of the amount of borrowings is due to foreign exchange impacts.
No debt reimbursement or drawing occurred during the quarter.
In view of the targeted disposal timetable for the Company's remaining real
estate assets AXA Property Trust concluded an extension of the Company's loan
facility until 31st December 2016. Under the terms of the extension disposal
proceeds and net rents will be allocated to debt reimbursement in priority to
shareholder distribution.
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 unallocated 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 6 months.
LOAN FACILITIES
Gross Loan to Value (LTV) Unaudited Unaudited
Covenants
31 March 2016 30 June 2016 Maximum
Main loan facility 42.6% 42.6% 60.00%
As at 30 June 2016, the loan-to-value ratio on the main facility was 42.6%
based on the bank's independent valuation of the property portfolio.
Interest Cover Ratio at 30 Historic Minimum Projected Minimum
June 2016
(Unaudited) (Unaudited)
Main loan facility covenant 332.0% 200.0% 297.3% 185.00%
Interest Cover Ratio (ICR) is calculated as net financing expense payable as a
percentage of net rental income less movement in arrears.
CASH POSITION AND CAPITAL EXPITURE
GBP9.44 million cash was held by the Group, including the Company's share of the
cash in the Agnadello JV as at 30 June 2016.
The Company is currently holding GBP5.8 million (EUR7.0 million) as reserve to
cover any potential claim on Representations & Warranties granted on assets
which have previously been sold. It is intended that a master insurance policy
will be secured to cover these potential obligations and when this is concluded
these funds will largely be available for the reimbursement of the outstanding
debt facility.
MATERIAL EVENTS
The disposal proceeds of Dasing were received on the 25th August 2016 in the
amount of EUR7.45 million. After disposal and ancillary expenses EUR6.5 million
will be allocated to the loan reimbursement and other financing costs.
Except for those noted above, the Board of the Company is not aware of any
significant event or transaction which occurred between 30 June 2015 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:
Real Estate Adviser
AXA Real Estate 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
Stifel Nicolaus Europe Limited
150 Cheapside
London EC2V 6ET
Tel: +44 (0)20 7710 7600
Company SecretaryNorthern Trust International Fund Administration Services (Guernsey) Limited
PO Box 255
Trafalgar Court
Les Banques
St Peter Port
GY1 3QL
Tel: +44 (0)1481 745324
END
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