REG - Alternative Inc REIT - NAV, Dividend Declaration and Portfolio Valuation

Alternative Income REITAnnouncement

09/05/2024 07:00

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RNS Number : 6868N  Alternative Income REIT PLC  09 May 2024

9 May 2024

Alternative Income REIT PLC

(the "Company" or "Group" or "AIRE")

NET ASSET VALUE, DIVIDEND DECLARATION AND PORTFOLIO VALUATION UPDATE

TO 31 MARCH 2024

Remain on track to deliver our target annual dividend of at least 5.9 pence
per share for the financial year ending 30 June 2024

Resilient portfolio well placed to continue to provide secure, index-linked
income with the potential for capital growth

The Board of Directors of Alternative Income REIT PLC (ticker: AIRE), the
owner of a diversified portfolio of UK commercial property assets,
predominantly let on long leases with index-linked rent reviews, provides a
trading and business update and declares an interim dividend for the quarter
ended 31 March 2024.

 

Simon Bennett, Non-Executive Chair of Alternative Income REIT plc, comments:

 

"The Board is pleased to declare a third interim dividend of 1.425 pence per
share ('pps') for the last quarter, which is 101% covered by earnings. This is
in line with the Board's previously announced annual dividend target of at
least 5.9pps for the financial year ending 30 June 2024, which remains subject
to continued strong rent collection.

 

At 31 March 2024, the Group held 19 properties valued at £102.6 million (31
December 2023: £103.3 million). The falls in value were spread across the
residential, leisure and care sectors. Transaction levels are low across the
real estate market as a whole, but these sectors, in particular, have seen the
most liquidity evidencing value levels. The Group's portfolio is relatively
insulated from market fluctuations, benefiting from being 100% let, together
with 100% collection of rent due, 95.8% index-linked rent review profile, and
low borrowing costs, which are fixed at a weighted average interest rate of
3.19% until October 2025.  The sum of these factors continues to provide a
secure and growing rental income stream.

 

The Board is actively seeking to invest the remaining proceeds from the sale
of hotel in Glasgow which as at 31 March 2024 amounted to £2.2 million."

 

Overview of Key Financials

                                            At 31 March      At 31 December   Change

                                            2024             2023

                                            (unaudited)      (unaudited)
 Net Asset Value ("NAV")                    £64.9 million    £65.7 million    -1.2%
 NAV per share                              80.6p            81.6p            -1.2%
 Share price per share                      68.0p            71.5p            -4.9%
 Share price discount to NAV                15.6%            12.4%            3.2%
 Investment property fair value             £102.6 million   £103.3 million   -0.7%

 (based on external valuation)
 Loan to gross asset value ("GAV") (A) (B)  37.8%            37.5%

 

                                   Quarter ended     Quarter ended        Change

                                   31 March 2024     31 December 2023

                                   (unaudited)       (unaudited)
 EPRA earnings per share (A)       1.5p              1.5p                 -
 Adjusted earnings per share (A)   1.4p              1.5p                 6.7%
 Dividend cover (A)                101.0%            102.6%               -1.6%
 Total dividends per share         1.425p            1.425p               -
 Dividend yield (annualised)(A)    8.7%              8.3%                 0.4%
 Earnings per share                0.4p              -0.5p                180.0%
 Share price total return (A)      -2.9%             22.4%
 NAV total return (A)              0.5%              -0.6%
 Annualised passing rent           £7.7 million      £7.7 million         -
 Ongoing charges (A) (annualised)  1.5%              1.5%                 -

(A) Considered to be an Alternative Performance Measure.

(B) The loan facility at 31 March 2024 of £41.0 million (31 December 2023:
£41.0 million) with Canada Life Investments, matures on 20 October 2025 and
has a weighted average interest cost of 3.19%.

 

Property Portfolio

 

At 31 March 2024, the Group held 19 properties valued at £102.6 million (31
December 2023: £103.3 million). The Company's property values decreased by
£0.8 million or 0.7% for the quarter ended 31 March 2024.

 

At 31 March 2024, the Net Initial Yield on the Group's portfolio was 7.0% (31
December 2023: 6.9%). The weighted average unexpired lease term at 31 March
2024 was 16.4 years to the earlier of break and expiry (31 December 2023: 16.6
years) and 18.3 years to expiry (31 December 2023: 18.5 years).

 

2024 is anticipated to be the turning point for UK commercial property
investment, with an expectation for increased activity due to interest rate
cuts, lower inflation, and enhanced debt financing opportunities. The
industrial sector is showing continued strength, with occupiers driving
demand, and the tech sector's rapid growth is translating to a growing need
for office space. The Group's portfolio is relatively insulated from market
fluctuations and continues to provide a secure and growing rental income
stream, benefiting from being 100% let, with 100% collection of rent due and
95.8% index-linked rent review profile with 35.9% of this rental income
reviewed annually.

 

Over the past year, excluding the sale in Glasgow and acquisition in
Streatham, the value of the Group's portfolio has fallen by a total of £2.3
million or 2.3%. AIRE continues to outperform relative to most other
commercial real estate companies, as demonstrated by MSCI UK Monthly Data
which reported a fall of 5.2% over the same period.

 

The Group's contracted annualised rent increased by 0.4% during the quarter to
31 March 2024. This was due to annual indexation on the Handsale lease in
Bristol and the 5 yearly index-linked rent review on the lease to YMCA in
Southampton. The portfolio continues to be actively managed; dialogue is
taking place with 5 tenants who are considering re-gearing their leases,
extending lease lengths and carrying out stock improvements, in particular
with respect of ESG initiatives and EPC improvements.

 

During the quarter to 30 June 2024, 11.1% of the Group's income will be
reviewed with three annual and one 5 yearly index-linked rent reviews.

 

Dividend Declaration, Earnings Per Share and Dividend Cover

 

The Board has set an annual dividend target of at least 5.9pps for the year
ending 30 June 2024, which is expected to be fully covered. The Board is
therefore pleased to declare an interim quarterly dividend of 1.425pps for the
quarter ended 31 March 2024. This dividend will be distributed as Property
Income Distribution ("PID") and will be paid on 31 May 2024 to shareholders on
the register on 17 May 2024. The ex-dividend date will be 16 May 2024.

 

It should be noted that the target is subject to continuing levels of rent
collection and with the Company's continuing excellent record of rent
collection and the reinvestment of the remaining of the proceeds, the
financial results for the Company remain as budgeted and the Board is also
pleased to reaffirm its 5.9pps target.

 

The Adjusted EPS of 1.4pps remains stable over the quarter (31 December 2023:
1.5pps). The dividend cover for the quarter was 101.0% (31 December 2023:
102.6%).

 

Net Asset Value, Share Price and Share Price discount to NAV

 

At 31 March 2024, the Group's unaudited NAV was £64.9 million, 80.6pps (31
December 2023: £65.7 million, 81.6pps), representing a 1.2% decrease over the
previous quarter.

 

When combined with the 1.425pps dividend paid in the quarter, this produces an
unaudited NAV total return for the quarter of 0.5% (31 December 2023: -0.6%).

 

Additionally, the share price decreased by 4.9% to 68.0pps. This reflects the
increase in discounts generally in the sector but specifically the Company's
discount increasing from 12.4% to 15.6%. The Company's discount remains one of
the lowest in the sector.

 

The table below sets out the movement in NAV during the quarter.

 

                                                                  Pence per share  £ million
 NAV at 31 December 2023                                          81.6             65.7
 Valuation movement in property portfolio                         (1.1)            (0.8)
 Income earned for the period                                     2.6              2.1
 Expenses for the period                                          (0.7)            (0.6)
 Net finance costs for the period                                 (0.4)            (0.4)
 Interim dividend paid during the quarter ended 31 December 2023  (1.4)            (1.1)
 NAV at 31 March 2024                                             80.6             64.9

 

The NAV attributable to the ordinary shares has been calculated under
International Financial Reporting Standards as adopted by the United Kingdom
and incorporates both the Group's property portfolio individually valued on a
'Red Book' basis at 31 March 2024 and net income for the quarter but does not
include a provision for the interim dividend declared today (see above).

 

The income earned for the period includes an accrual for the minimum
contractual uplifts contained in the index-linked leases. In the event that
inflation is greater than these minimum contractual uplifts, the actual income
will be greater than the income currently accrued.

 

Rent Collection

 

Rent collection remains resilient with 100% collection of rent due for the
March 2024 quarter. 88.7% of the portfolios rent is payable quarterly in
advance and 11.3% payable monthly in advance.

 

 

ENQUIRIES

 Alternative Income REIT PLC
 Simon Bennett - Chairman                               via H/Advisors Maitland below

 Martley Capital Real Estate Investment Management Ltd  020 4551 1240

 Richard Croft

 Jane Blore

 Panmure Gordon (UK) Limited                            020 7886 2500
 Alex Collins
 Tom Scrivens

 H/Advisors Maitland (Communications Advisor)           07747 113 930 / 020 7379 5151
 James Benjamin                                         aire-maitland@h-advisors.global

 Rachel Cohen

 

The Company's LEI is 213800MPBIJS12Q88F71.

 

Further information on Alternative Income REIT PLC is available at
www.alternativeincomereit.com (about:blank) (1).

 

(1) Neither the content of the Company's website, nor the content on any
website accessible from hyperlinks on its website or any other website, is
incorporated into, or forms part of, this announcement nor, unless previously
published on a Regulatory Information Service, should any such content be
relied upon in reaching a decision as to whether or not to acquire, continue
to hold, or dispose of, securities in the Company.

 

NOTES

Alternative Income REIT PLC aims to generate a sustainable, secure and
attractive income return for shareholders from a diversified portfolio of UK
property investments, predominately in alternative and specialist sectors. The
majority of the assets in the Group's portfolio are let on long leases which
contain index linked rent review provisions.

 

The Company's asset manager is Martley Capital Real Estate Investment
Management Limited ("Martley Capital"). Martley Capital is a full-service real
estate investment management platform whose activities cover real estate
investing, lending, asset management and fund management. It has over 40
employees across five offices in the UK and Europe. The team manages assets
with a value of circa £900 million across 19 mandates (at 31 March 2024).

 

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