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Ediston Property Inv Comp PLC   -  EPIC   

Net Asset Value(s)

Released 07:00 29-Jan-2020

RNS Number : 1902B
Ediston Property Inv Comp PLC
29 January 2020

Ediston Property Investment Company plc

(LEI: 213800JRL87EGX9TUI28)

Net Asset Value ("NAV") as at 31 December 2019

Ediston Property Investment Company plc (LSE: EPIC) (the "Company") announces its unaudited NAV as at 31 December 2019.

Quarter Summary

·   Extended occupation of Currys on two retail parks to give term certain of five and ten years respectively, securing £464,094 of income per annum.

·     Served break notice on Arcadia, post its CVA, to secure vacant possession of its unit at Widnes and subsequently let 6,792 sq. ft of this space to JD Sports.

·     Annualised dividend yield of 6.4% based on an annual dividend per share of 5.75 pence and share price of 89.30 pence (at 31 December 2019).

·     Fully covered dividend, with cover of 117.6% for the quarter to 31 December 2019.

·     EPRA vacancy rate remains low at 3.0%.

·     Fair Value independent valuation of the property portfolio as at 31 December 2019 of £308.9 million, a like-for-like decrease of 3.22% compared to the valuation at 30 September 2019.

·     NAV per share at 31 December 2019 of 103.69 pence (30 September 2019: 108.72 pence), a decrease of 4.63%.

·     NAV total return (including dividends) for the quarter of -3.3%.

·     Share price total return for the quarter of 5.1%.



Net Asset Value

The unaudited NAV of the Company at 31 December 2019 was £219.3 million, or 103.69 pence per share, a decrease of 4.63% on the Company's NAV per share as at 30 September 2019. 



Pence Per Share

£ million

NAV at 30 September 2019



Valuation of property portfolio



Capital expenditure



Income earned



Expenses & finance costs



Dividends paid



NAV at 31 December 2019



The NAV attributable to the ordinary shares has been calculated under International Financial Reporting Standards ("IFRS"); the EPRA NAV is not reported separately in this update as it is the same as the IFRS NAV.

The NAV incorporates the independent portfolio valuation as at 31 December 2019 and undistributed income for the quarter but does not include a provision for any accrued dividend.


The continuing negative sentiment towards retail assets is the principal driver of a further decline in the Company's NAV. 

The decline was partly mitigated by proactive asset management more fully described below.  Further, the average rent of £15.50 per sq. ft. in the retail warehouse portfolio remains affordable to occupiers.  As a consequence, the rental base of the Company's retail warehouse portfolio remains resilient with no decline in the aggregate contractual passing rent over 2019.

The occupier base is varied, and the parks appeal to different retailer types at these levels of rent. Most of the assets owned have open planning consents providing the Company with the flexibility to keep occupation at high levels.  The evidence is there to support this as in the year to 31 December 2019, 23 asset management deals were completed across the retail warehouse portfolio embracing rent increases at review, new lettings, lease renewals and extensions, and agreements for lease ('AFLs') for new units to be constructed in 2020.

A problem for the sector is that many of the traditional 20 to 25-year leases signed either side of the millennium are expiring.  Rents on many of the fashion orientated retail parks are significantly out of line with the level of rent affordable to suit the modern needs of retailers and their 'omnichannel strategies'.  Investors are discounting prices to reflect the risk of voids and reletting units at much lower rents and demanding higher yields for that risk.   Unfortunately, the Company is not immune from the valuation impact of this despite the more defensive nature of its retail warehouse assets.


Fully covered dividend

The Company paid a dividend of 0.4792 pence per share in each of October, November and December 2019, resulting in a cumulative dividend payment in the quarter of 1.4376 pence per share.  The monthly dividend rate of 0.4792 pence per share equates to an annualised dividend of 5.75 pence per share.

The Board remains committed to paying a monthly dividend which is covered and sustainable.  It looks to grow dividends over the longer term.  The annual dividend is expected to be fully covered, in the absence of unforeseen circumstances, with cover for the quarter to 31 December 2019 of 117.6% an increase from 116% at 30 September.


Asset management in the quarter

Break notice served on Arcadia

As previously reported, Arcadia completed a Company Voluntary Arrangement (CVA) during Q2 2019.  The Company has two units let to Arcadia group companies, one in Hull and one in Widnes.  The Company initially voted against the CVA proposal, but after further consideration and following some improved terms, it elected to vote in favour.  Under the terms of the CVA the landlord is entitled to break Arcadia's leases and secure vacant possession of each unit.  

The Investment Manager considered that the rent set under the CVA for Widnes was below market, so the Company took the opportunity to exercise its break clause.  The Company intends to split the 13,202 sq. ft. unit in two and has exchanged an AFL with JD Sports who will lease 6,792 sq. ft.  The Investment Manager is confident of identifying another tenant to lease the remaining 6,006 sq. ft. unit.



Planning consent secured

In December, planning consent was received for the Company's proposed retail warehouse development at Haddington, East Lothian.  The Company now has a planning consent for a 48,000 sq. ft. retail warehouse park and a petrol filling station. 

The asset is 97% pre-let to Aldi, The Food Warehouse, Costa Coffee, Home Bargains and Euro Garages.  One unit of 1,500 sq. ft. remains available to let, in which there is tenant interest.  Once fully let and constructed, the asset will have a WAULT in excess of 15 years and will generate an annual rent of £875,000.  Based on tendered build costs, the project should generate a return on cost of capital employed of around 8.0% per annum.


Coatbridge development to commence

During the quarter, the decision was made to start construction of the two pod units at Coatbridge.  Construction is due to start in early February 2020 and is expected to finish in August 2020.

The units, which extend to 1,800 and 2,750 sq. ft., have been pre-let to Costa Coffee and Burger King.  Costa has signed a 15-year lease with a 10-year break option, whilst Burger King has signed a 20-year lease.  On completion the units will provide a combined rental income of £160,000 per annum and deliver a return on the additional capital employed of c. 8.0% per annum.


Lease renewals and rental income

During the period, the Company completed two lease renewals with DSG Retail Limited, trading as Currys ('Currys'), securing £464,094 of income per annum for the Company. 

At Clwyd Retail Park in Rhyl, Currys has signed a five-year lease extension on its 10,020 sq. ft. unit.  The lease was due to end in March 2020 but will now expire in 2025.  This lease extension follows the recent lease restructures completed on the park with Pets at Home and B&Q plc.

At Plas Coch Retail Park in Wrexham, Currys has agreed to restructure its lease to give a 10-year term certain.  The lease on the 22,182 sq. ft. unit was due to expire in June 2022 but Currys has underscored its commitment to the location by signing a lease which will keep it on the park until 2029.

The Company's rent roll has been resilient.  Throughout 2019, the contracted rent remained unchanged on a like for like basis.  One asset was sold that reduced the overall rent by £300,000 but this will be replaced in due course by redeployment of the capital released.  Letting vacant space has reduced the EPRA vacancy rate from 6.3% to 3.0% during 2019. 



The decisive outcome of the General Election and more clarity over Brexit have brought a bit of confidence back into the market.  However, the retail sector remains out of favour with some forced sellers likely to keep the downward pressure on values.  Nevertheless, there are signs of capital being raised for retail warehouse investments, which suggests that the sector might now be starting to attract 'bottom fishers'.

On a medium-term outlook, we remain confident about the Company's assets given the resilient income, asset management angles and development opportunities within the portfolio.  Assuming the Company builds the assets subject to AFLs, the contracted rent roll would increase by £1.0m per annum yielding approximately 8.0% per annum on the capital employed if budgeted costs are achieved.


Portfolio Composition



Exposure (%)

Retail warehouse






Other commercial






The portfolio is diversified across the regional markets.


Exposure (%)



North East


North West


West Midlands






East Midlands


South West



William Hill, Chairman, commented:

"Since the inception of the Company the asset management of its properties and the expansion of its capital base have allowed it to pay an attractive and increasing dividend and, until recently, to produce a progressive NAV.  It is frustrating, therefore, to have to report further reductions in our NAV as the retail property sector, where we have exposure through retail warehousing, goes through its contortions. We remain convinced that our portfolio is well-positioned for the changes that are happening in the way retail operates.  We travel with optimism for the medium to longer term, with sustainability and growth of income remaining our current focus."


Forthcoming Events

The next scheduled independent quarterly valuation of the property portfolio will be conducted by Knight Frank LLP as at 31 March 2020 with the unaudited NAV per share at that date expected to be announced in April 2020.

The Company intends to publish a factsheet shortly which will be made available on the Company's website at




The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.



Will Barnett - Investec Bank plc                                                                                             0207 597 5873

Calum Bruce - Ediston Properties Limited                                                                           0131 225 5599

Daniel Ferrandis - Maitland Group                                                                                       01245 206 138

Ben Robinson - Kaso Legg Communications                                                                        0203 137 7821


Stephanie Ross - Kaso Legg Communications                                                                     0203 137 7784

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