I’ve sold the last top up in GRID for a loss of £211.00
Month: February 2024 (Page 16 of 16)
SERE was sold to buy GRID, not a great decision.
SERE’s next dividend was pencilled in for April
so the income will be need to be replaced by then
which will mean selling GRID at a loss.
ABRDN PROPERTY INCOME TRUST LIMITED
Unaudited Net Asset Value as at 31 December 2023
Net Asset Value and Valuations
– Net asset value (“NAV”) per ordinary share was 78.4p (Sep 2023 82.2p), a decrease of 4.6% for Q4 2023, resulting in a NAV total return, including dividends, of -3.5% for the quarter;
– The Company saw an increase in the value of its industrial assets (which make up 57% of the portfolio) of £6.9m (excluding sales), whilst its office assets (16.5% of the portfolio) fell by £7.5m. Retail and “Other” assets fell slightly by £1.0m and £2.4m respectively.
– The portfolio again outperformed the MSCI monthly index with a capital value decline of 2.2% on a like for like basis during the quarter, compared to the MSCI Monthly Index decline of 2.6% over the same period.
– The portfolio ERV of £34.2m is £7.0.m (25.7%) above the current contracted rent, demonstrating the significant reversionary potential.
– Rent Collection remained robust with 99% collected so far for Q4. Since the beginning of 2021 quarterly rent collection has been consistently at or above 99%.
– EPRA Earnings have increased by £132,000 (4.3%) compared to Q3 (£274,000 increase in Q3 over Q2).
Investment and letting activity
– Four lettings completed over the quarter totalling £1.14m pa rent along with a lease extension for 5 years securing £160,000pa.
– Three rent reviews settled on logistics assets providing an uplift in annual rent of £236,487 (52% above the previous rent passing, and 12% above the valuation assumption).
Financial Position
– Robust balance sheet with financial resources available for investment of £25.0 million (from the Company’s revolving credit facility) net of current cash after dividend and other financial commitments.
Occupancy / Void / WAULT
The Company had a vacancy rate of 7.6% as at end Q4 2023 (Q3 8.0%). Although new leases were completed that would have reduced the vacancy rate to 4.4% on a like for like basis, we had a new vacancy on a logistics unit in late November. That unit is now under offer to sell.
Debt Facility and Gearing
API currently has two facilities with RBSI, an £85m term loan (fully drawn) and an £80m Revolving Credit Facility (RCF) of which £56.9m was drawn as at 31st December. Both facilities are at a margin of 150bps over SONIA and an interest rate cap on SONIA has been put in place at 4% over the term loan (all-in rate of 5.5%). As at 31 December 2023, the Company had a Loan to Value (LTV) of 30.8%*.
*LTV calculated as debt less all cash divided by investment portfolio value
Dividends
A dividend of 1p will be paid for the quarter which means that the dividend is therefore being maintained at an annualised rate of 4p per share. The dividend cover for Q4 2023 is 83.4% (Sep 23 – 79.9%). The Board has provided guidance of its intention to maintain the current dividend level.
Net Asset Value (“NAV”)
The unaudited net asset value per ordinary share at 31 December 2023 was 78.4p. The net asset value is calculated under International Financial Reporting Standards (“IFRS”).
The net asset value incorporates the external portfolio valuation by Knight Frank LLP at 31 December 2023 of £439.2 million.
Target Healthcare REIT plc and its subsidiaries
Net Asset Value, update on corporate activity and dividend declaration
Target Healthcare (LSE: THRL), the UK listed specialist investor in modern, purpose-built care homes, announces its unaudited quarterly Net Asset Value (‘NAV’) as at 31 December 2023, an update on corporate activity and its second interim dividend for the year ending 30 June 2024.
Corporate activity highlights
Fourth consecutive quarter of EPRA NTA growth demonstrates resilience of business model and structural tailwinds underpinning modern, purpose built care home sector:
· EPRA Net Tangible Assets (‘NTA’) per share increased 1.0% to 106.7 pence (30 September 2023: 105.6 pence), primarily reflecting a like-for-like valuation uplift driven by inflation-linked rent reviews. The twelve-month increase in EPRA NTA is 3.6%
· EPRA “topped-up” net initial yield remained stable at 6.25% (30 September 2023: 6.22%)
· Adjusted EPRA EPS for the quarter of 1.51 pence per share, fully covering the dividend of 1.428 pence per share, which is to be paid in respect of the quarter
· NAV total return of 2.4% for the quarter (based on EPRA NTA and including payment of dividend)
· Net LTV of 25.8% (30 September 2023: 25.0%)
· Weighted average debt term of 5.7 years (30 September 2023: 6.0 years) with the earliest maturity in November 2025. Interest costs hedged on 91% of drawn debt to the relevant facility maturity date
· Total capital available of £41 million, net of the Group’s capital commitments including five development assets, one of which is an operationally net zero carbon home
Inflation-linked rental growth, resilient capital values and underlying portfolio trading providing high portfolio rent covers:
· Diversified portfolio of 98 assets let to 32 tenants and valued at £911.1 million (30 September 2023: £890.3 million) reflecting an increase of 2.3%, of which the like-for-like increase was 0.6%
· Like-for-like increase in contracted rent roll of 1.1%, primarily driven by inflation-linked upwards-only annual rent reviews
· WAULT of 26.0 years which remains one of the longest in the listed UK real estate sector (30 September 2023: 26.3 years)
· High quality, modern and sustainable real estate portfolio:
o 98% of the portfolio is A or B EPC rated, (100% A to C ratings) and therefore compliant with the minimum energy efficiency standards anticipated to apply from 2030
o Positive social impact from sector-leading real estate standards: 99% wet-rooms; generous 47 sqm space per resident; sustainable rent of £190 per sqm
· 99% rent collection, as overall tenant profitability continues to benefit from improved trading performance across our fit-for-purpose real estate with mature rent cover of 1.9x for the September 2023 quarter (most recent quarter of data from tenants)
Kenneth MacKenzie, CEO of Target Fund Managers, commented:
“Rental growth continues and is well-supported by tenant profitability, with the core positive drivers of portfolio value, demographic trends and increasing demand for modern, purpose-built, real estate being clearly demonstrated. Rent covers have continued to improve, with the September quarter result of 1.9x continuing the upward trend seen over the last five quarters and representing the highest level since IPO. Underlying resident spot occupancy for mature homes increased to 87% as at 31 December 2023 (87% today).
“Valuations are still seeing some limited outward NIY movement as a response to higher risk-free rates, though we note we are seeing significant bifurcation in market pricing between our prime UK care home real estate and poorer-quality, non-purpose built homes, as institutional investors recognise the benefits of the former such as social acceptability, energy efficiency and future demand for places.
“Our long-standing dedicated management team remain ever focused on our core investment strategy to deliver strong investment returns from our modern, purpose-built portfolio.”
EPRA NTA
The Group’s unaudited EPRA NTA per share as at 31 December 2023 was 106.7 pence and NAV total return for the quarter was 2.4%.
A balance sheet summary and an analysis of the movement in the EPRA NTA over the quarter is shown in the Appendix of this announcement.
Corporate Update
Portfolio performance
As at 31 December 2023, the Group’s portfolio was valued at £911.1 million and comprised 98 properties, consisting of 93 operational care homes and five pre-let sites, which are being developed through capped forward funding commitments with established development partners.
Portfolio value increased by 2.3% over the quarter, comprising:
· a 0.6% like-for-like increase in the operational portfolio, reflecting an increase of 1.2% from inflation-linked rent reviews and rent-free unwinds alongside a 0.6% decrease from outward movement in net initial yields
· a 1.7% increase from capital expenditure, primarily associated with the five development properties
Contractual rental income increased by 1.3% over the quarter, comprising a 1.1% like-for-like increase from 25 inflation-linked upwards-only rent reviews, with an average uplift of 4.0%. The remaining 0.2% increase was from the rentalisation of capital expenditure following an asset management initiative at one of the Company’s existing properties (as detailed below) and the rentalisation of a contingent performance payment which crystalised at another property.
The portfolio’s WAULT was 26.0 years (30 September 2023: 26.3 years).
The EPRA “topped-up” net initial yield was 6.25% based on an annualised contractual rent of £57.9 million and the EPRA net initial yield was 6.17% with one asset in a rent-free period.
Portfolio update
During the quarter, the following asset management initiatives were undertaken:
· As previously announced, the Group’s largest tenant, Ideal CareHomes (“Ideal”) was acquired by HC-One, the UK’s largest care home operator, which runs 275 homes. Ideal runs 36 homes, 18 of which are owned by the Group, representing 16% of the Group’s contractual rent roll and 18% of the portfolio’s capital value as at 31 December 2023. The 18 homes are trading well and no material valuation change has occurred as a result of the transaction. In consenting to the change in control, the Group’s rent deposit position has been strengthened, “green lease” provisions have been added and landlord lease extension options have been obtained.
· The conversion of a further eight rooms to provide full en suite wet-room facilities were completed as part of ongoing asset enhancements, progressing plans to move the portfolio to 100% wet-rooms, currently 99% following these works.
· As reported previously, the Group had committed to £2.35 million of capital expenditure to add 18 new bedrooms at an existing property. During the quarter to 31 December 2023, the remaining eight of these were completed and the additional costs incurred to complete of £0.7 million were rentalised.
Debt facilities and swap arrangements
As at 31 December 2023, the Group’s total borrowings were £252.5 million, representing a net LTV of 25.8% (total gross debt less cash, as a proportion of gross property value). The Group’s weighted average cost on its drawn debt, inclusive of amortisation of loan arrangement costs, was 4.05% (30 September 2023: 3.91%).
91% of drawn debt is fully hedged:
· £150 million is fixed with a weighted average term of 10.1 years and a weighted average interest rate of 3.18% (excluding the amortisation of arrangement fees)
· £30 million of the Group’s bank facilities is fixed at 2.48% for 1.8 years through an interest rate swap
· £50 million of the Group’s drawn revolving credit facilities have interest rates capped at 5.17% via a 3% SONIA cap for 1.8 years
· The remaining £22.5 million of the Group’s drawn revolving credit facilities carries a variable interest rate of SONIA plus a margin of 2.18%
The Group has access to a further £67.5 million of committed, but undrawn, revolving credit facilities which, if drawn, would carry an interest rate of SONIA plus 2.22%. The £9.5 million drawn in the quarter is being used to fund construction of the Group’s development assets, and the other capex initiatives noted above, with £29 million of such commitments remaining on a cash basis.
At 31 December 2023, the weighted average term to expiry on the Group’s total committed loan facilities was 5.7 years (30 September 2023: 6.0 years) with the earliest maturity in November 2025.
Dividends
The Group paid its first interim dividend for the year ending 30 June 2024, in respect of the period from 1 July 2023 to 30 September 2023, of 1.428 pence per share, on 24 November 2023 to shareholders on the register on 10 November 2023. This distribution was comprised wholly of a property income distribution (PID).
Announcement of second interim dividend
The Company today declares its second interim dividend for the year ending 30 June 2024, in respect of the period from 1 October 2023 to 31 December 2023, of 1.428 pence per share as detailed in the schedule below:
Interim Property Income Distribution (PID): 1.428 pence per share
Interim ordinary dividend: nil
| Ex-Dividend Date: | 8 February 2024 |
| Record Date: | 9 February 2024 |
| Payment Date: | 23 February 2024 |
The quarterly dividend reflects an annualised dividend of 5.712 pence per share and a dividend yield of 6.8% based on the 31 January 2024 closing share price of 83.8 pence.
A big problem for the portfolio and it will have
to take the hit, sooner than later.
Gresham House Energy Storage Fund PLC
(“GRID” or the “Company“)
Trading Update
Gresham House Energy Storage Fund plc (LSE: GRID), the UK’s largest fund investing in utility-scale battery energy storage systems (BESS), today provides a trading update ahead of the publication of its audited annual results in April 2024.
The Company continues to be impacted by the weak revenue environment, due to a combination of:
· BESS still being significantly under-utilised in National Grid ESO’s (ESO’s) Balancing Mechanism (BM) – its forum for trading the necessary amounts of electrical energy to balance supply and demand for each half-hourly period – resulting in ‘skip rates’ remaining high despite the recent launch of ESO’s Open Balancing Platform (OBP), one of the key milestones in ESO’s Balancing Programme;
· the continued excessive use of legacy gas-fired electricity generation by ESO to provide the BM with flexible generation which in turn causes oversupply in the wholesale electricity market, reducing the revenue opportunity for BESS; and
· the slower than expected pace of commissioning of new projects to date, due to elongated grid connection times.
The rising need for BESS as renewable generation increases remains as true as ever. The revenue environment is expected to improve, as discussed in the Market update below, although there is some uncertainty on the timing and trajectory of such improvement.
Also, notwithstanding challenges around the completion of connection works at certain projects, the Company remains on target to reach 1,072MW in total operational capacity (currently 740MW) and intends to complete a number of extensions to project durations in 2024, taking the average project duration to 1.6hrs (currently 1.2hrs), doubling the number of MWh installed over the course of the year. A more detailed update is included below.
In light of the uncertainties and challenges mentioned above, the Board and Manager’s aim is to put the Company in the strongest possible position, to ensure it remains cash generative as it manages its way through the current low revenue backdrop and make certain that revenue accretive projects get commissioned during 2024. As previously reported, the increase in operational capacity detailed above would enable the Company to cover its historical dividend on a run-rate basis at depressed revenue levels.
Meanwhile, the Board and Manager are determined to take a proactive and disciplined approach to capital allocation, focusing on i) capex, ii) dividend policy, iii) share buybacks and iv) the Company’s debt facility.
i) Capex – In 2024, the Company intends to solely focus on completion of its 2023 pipeline projects comprising of a further 332MW, all of which are constructed and awaiting completion of grid connection related works, together with the duration extensions already committed to, given the potential for this to meaningfully increase the earnings capacity of the portfolio. A significant amount of this capex is expected to be financed by cash on hand (which stood at in excess of £40 million as at 31 December 2023).
ii) Dividend policy – Given the recent difficult revenue environment, the Board has decided not to declare a dividend for Q4 2023. In terms of the dividend for 2024, if the current revenue environment endures, it will be challenging to generate the cash required to cover the dividend this year. As such, the Board intends to recalibrate the Company’s dividend target for 2024, as well as the Dividend policy on an ongoing basis to better reflect the predominantly merchant nature of the Company’s revenues. A further announcement in this regard will be made as soon as possible and not later than the announcement of our Annual Results.
iii) Share buybacks – Noting the recent sharp decline in the Company’s share price, the Board confirms its intention to commence a share buyback programme. Initial buybacks are not expected to exceed any reduction in the dividend. Further details will be announced in due course.
iv) Debt facility – The Company also intends to enter into discussions with its lenders to seek certain amendments to optimise its debt facility. This may include a reduction in the size of the facility, to reduce the overall cost of funding given the whole of this debt facility may not be required. As of 31 December 2023, £110 million (also £110 million as at June 2023) was drawn under the £335 million debt facility.
In terms of recent construction progress, we are pleased to report that our 50MW/50MWh West Didsbury project has been commercially operational since December 2023. In addition, the 50MW/76MWh York project was energised in mid-January 2024 and is expected to be revenue-generating in February 2024.
Meanwhile extensions of project durations are getting underway. The Company has not previously reported which project durations are being extended. We are pleased to report that a total 340MW of projects are being upgraded, of which 305MW will have a 2 hour (h) duration;
· Arbroath (35MW) is being extended to a 1.4h project and work is underway.
· Nevendon is being extended from a 0.4h 10MW project to a 2h 15MW project. This is expected to complete in May.
· Enderby (50MW) and West Didsbury (50MW), both built with extensions in mind, are increasing from a 1h to 2h duration. Works are set to start in March and are expected to take two months.
· Penwortham (50MW) and Melksham (100MW), similarly built with extensions in mind are also being upgraded from a 1h to 2h duration with works expected from April and also expected to take two months.
· Coupar Angus (40MW) is also being upgraded from 1h to 2h and works will commence in around June.
Given the focus on existing projects, the Company has decided to defer its investment in Project Iliad, which it intends to revisit once the market backdrop improves. The Company is continuing to progress a disposal of a subset of the portfolio and the process is ongoing.
John Leggate CBE, Chair of Gresham House Energy Storage Fund plc, commented:
“The challenging environment continues to persist for the battery storage industry in Great Britain as it transitions to a trading-focused business model, having been focused on frequency response until Q1 2023. These conditions, and their effect on revenues, are not unique to GRID.
“The UK’s need for increased energy storage capacity remains as clear as ever given the rising levels of committed renewable generation coming online over the period to 2030. In turn, clean energy dominates energy output more and more frequently, as legacy gas-fired electricity generation continues to be squeezed off the system by cheaper renewables, with battery storage the clear technological leader in tackling the consequential rising intermittency. The ESO’s efforts to improve access to the Balancing Mechanism for BESS via the Balancing Programme (BP), are clear evidence of this and are welcomed. However, the rollout of ESO’s BP must remain on track and enable improved utilisation of BESS, which has yet to manifest in a material way.
“Proper utilisation of BESS will also result in lower energy bills for consumers and will accelerate the decarbonisation of our power system.
“It is therefore a matter of when, not if, BESS become better utilised and fully integrated into the ESO’s operating environment. Similarly, it is also a matter of time before our pipeline is completed and target capacity is reached.
“Therefore, the decision to cut our Q4 2023 dividend and reallocate capital in GRID’s shares has been very carefully considered. The current level of the share price represents the most compelling historic opportunity to invest capital in GRID’s shares, and to enhance net asset value per share. It is for these reasons that, in parallel with today’s dividend announcement, we aim to commence a share buyback.
“In the meantime, the Board is working closely with the Manager to continue to position the Company to thrive, as further renewable generation comes online and ESO continues to improve battery storage utilisation in the Balancing Mechanism.”
Ben Guest, Fund Manager of Gresham House Energy Storage Fund plc, added:
“As GRID goes through this low point, we are determined to take the right capital allocation decisions to position the Company prudently. The Manager fully supports the Board’s decision to not pay a Q4 2023 dividend and agrees with the need to reposition the Dividend policy, further details of which will be announced soon. We firmly believe that in light of prevailing market conditions, focusing capital on buying back shares and on building out committed pipeline projects is the right approach for the medium and longer term success of GRID and for delivering returns to its shareholders.
“ESO has always said that its Balancing Programme progress will occur in stages during 2024 and we look forward to learning of and reporting on progress, particularly around the imminent launch of Balancing Reserve in March 2024, as well as communicating continued progress on our construction and asset enhancement programme.”
Market update
Open Balancing Platform
· The launch of the ESO’s OBP took place as planned on 12 December 2023. The system was taken offline on 15 December to address minor technical issues and was relaunched on 8 January 2024.
· OBP is being actively used, and while the volume of trades allocated to BESS has increased since the launch, it remains far below its potential. As such the ‘skip rate’ has remained high.
· ESO has indicated that it will allocate a rising volume of trades to BESS, as pre-contracting of gas assets declines, which in turn will help increase volumes of trades to the OBP (and therefore BESS).
· Specifically, in accordance with ESO’s Balancing Programme milestones , we expected better utilisation of BESS:
i. As BESS capacity in the Balancing Mechanism is seen as being present in sufficient volume for the control room to schedule marginally less gas-fired power. Expected timeframe: February 2024.
ii. As a result of the launch of Balancing Reserve (BR), BESS will be able to pre-contract their capacity in the day ahead market, in a competitive forum, head-to-head with gas-fired generation (for the first time since the small Reserve from Storage trials in 2020). This will allow BESS to be “seen” and used by the Control Room ahead of real time. This represents a new revenue stream for BESS while also ensuring less gas-fired power hits the market, leading to lower skip rates in real time. BR is intended to replace Regulating Reserve, through which gas-fired generation is currently reserved, and is expected to be a gigawatt-scale opportunity. Expected timeframe: BR launches 12 March 2024.
iii. Quick Reserve is set to launch in the summer and represents a further revenue opportunity for BESS. It is a service for reserving primarily BESS, to take advantage of their highly responsive capabilities. Expected timeframe: Summer 2024.
Wholesale electricity market
· The impact of gas-fired generation being turned on in order to meet flexibility requirements of the market is leading to oversupply in the wholesale market, and curtailment of renewables, in our view this is distorting half-hourly power prices.
· As gas-fired generation is used less often, gas will supply the marginal demand less frequently. This will result in more volatile power prices, unlocking again the revenue potential for BESS in the wholesale market.