Secure Income REIT grows NAV but shrinks dividend
Secure Income REIT has posted a 3.2% rise in its EPRA NAV per share in the six months to 30 June, but reduced its interim dividend.
Its EPRA net asset value rose to 382.4p per share during the six months, which was also 4.8% above its March 2018 placing price.
The EPRA NAV per share growth was driven by a 2.8% like-for-like increase in portfolio value, with annualised passing rent on the portfolio held throughout the period up by 2.4%.
Secure Income REIT has posted a 3.2% rise in its EPRA NAV per share in the six months to 30 June, but reduced its interim dividend.
Its EPRA net asset value rose to 382.4p per share during the six months, which was also 4.8% above its March 2018 placing price.
The EPRA NAV per share growth was driven by a 2.8% like-for-like increase in portfolio value, with annualised passing rent on the portfolio held throughout the period up by 2.4%.
The REIT declared an interim dividend of 6.0p per share, down 9.1% from the previous year.
It attributed the reduction to the three-month period between its placing to raise £315.5m in an equity issue, and the full deployment of funds raised in July after completing a £224m leisure portfolio acquisition.
Meanwhile, net loan to value ratio has reduced to 44.4%, down from 49.6% at 31 December.
However, the company’s Q3 dividend is expected to annualise at 15.73p. Annualised dividend yield on EPRA NAV, post acquisitions, climbed to 4.1% from 3.9%.
Martin Moore, non-executive chairman, added: “The core attributes of our business remain very appealing with a net initial property yield of 5.2% secured on key operating assets in defensive sectors let to good covenants with RPI or fixed uplifts and a weighted average unexpired lease term of 21.4 years.
“The biggest strength of Secure Income REIT is that it is not dependent upon new acquisitions to continue to deliver an attractive risk-adjusted return and we continue to view the future prospects of the business with confidence.”
Speaking to EG, Nick Leslau, chairman of Prestbury Investments, the investment adviser to Secure Income REIT, said he was pleased with the results and expected more of the same in the future.
Headwinds in the wider economy have made long-income assets more attractive given their security and stability, though Leslau warned: “You have to be realistic. If there was a downturn all real estate will suffer, and we will not be immune to that.”
Referring to his experiences after the Lehman Brothers collapse, he said: “I don’t have to hypothesise as to what happens when the world turns nasty. I’ve seen it with these very assets, and you’re not immune – but you are more immune than most.”
What about Brexit?
Leslau is openly pro-Brexit but is critical of the government’s handling of the negotiations with the European Union: “They have no idea. Whoever is responsible for negotiating this ultimately – I suppose it’s the prime minister – has no idea how to negotiate a deal.”
Despite stressing that he remains an ideological Brexiteer, Leslau said: “If I knew then what I know now, which is that what could happen is that the Conservative government could blow itself up and we could have a Corbyn government – something I never contemplated in a million years – I would have said ‘Let’s not do this now.’”
Though he expects a no-deal Brexit to be “very painful for a few years”, Leslau said it will eventually be seen as a blip in the long-term – a blip Secure Income REIT can withstand.
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