RDI REIT plans Germany exit as NAV declines
RDI REIT has pledged to reduce its retail exposure as its net asset value fell 4.4% for the six months ended 28 February 2019.
Its EPRA NAV dropped to 204.4p per share, with a like-for-like portfolio value decline of £39m or 2.5%.
The group revealed that it planned to sell its German assets, which consist mainly of retail properties, and the Aviva-financed UK shopping centre portfolio to reduce its loan to value ration which stands at 48.5%.
RDI REIT has pledged to reduce its retail exposure as its net asset value fell 4.4% for the six months ended 28 February 2019.
Its EPRA NAV dropped to 204.4p per share, with a like-for-like portfolio value decline of £39m or 2.5%.
The group revealed that it planned to sell its German assets, which consist mainly of retail properties, and the Aviva-financed UK shopping centre portfolio to reduce its loan to value ration which stands at 48.5%.
The REIT said: “A successful disposal of these assets has the potential to reduce overall retail exposure from 43% to approximately 22%. The remaining retail exposure, consisting predominantly of well-located and performing retail parks, would have an approximate 62% weighting by value to Greater London.”
Its portfolio was valued at £1.617bn against £1.62bn a year earlier. LTV rose to 48.5%, compared with 46.2% last year.
The REIT attributed this to “lower values for UK shopping centres and strengthening against the euro” and said it would seek to reduce retail exposure in favour of residential, industrial and offices.
Valuations for UK shopping centres declined by £23.3m or 7.7% and UK retail parks were down by £4.6m or 2.5%. Its UK commercial and hotels portfolio saw minimal valuation changes.
The declines come days after Australia’s Cromwell Property Group backed away from its bid to acquire the landlord, after RDI decided a conditional proposal undervalued the company.
RDI REIT is looking to restructure a £144.7m debt pile held against four shopping centres – or offload some of the assets – after agreeing a debt standstill with lender Aviva Commercial Finance. The REIT is also seeking to sell its European assets, valued at £244.2m, and expects that combined these disposals would bring LTV closer to its target of 30-40%.
In the trading update, chairman Gavin Tipper said it had been a “challenging period on a number of fronts”.
Tipper said: “I am confident that the current initiatives to further reduce retail exposure and facilitate a stronger capital structure will deliver sustained long-term shareholder value.”
Chief executive Mike Watters said: “Following unprecedented weak sentiment towards the UK retail sector and the resulting negative impact on asset valuations, RDI has reached an inflexion point that will see us taking decisive action to accelerate delivery against our strategic priorities.
“These include a lower leverage capital structure, more focused capital allocation and continued reduction to retail exposure. These priorities will support a simplified, single geography investment proposition with an enhanced portfolio weighted towards our preferred sectors of beds, sheds and desks.”
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