No resolution, yet.

The plan is to buy Investment Trusts to earn dividends to buy more Investment Trusts to earn dividends, to buy more Investment Trusts that pay a dividend.

Dividend stream in March £1045.00

Dividend stream in April £721.00

To see where the dividends may be re-invested, use the search box.

Triple Point Energy Transition plc

(“TENT” or the “Company”)

DIVIDEND DECLARATION

Triple Point Energy Transition plc (ticker: TENT), has declared an interim dividend in respect of the period from 1 October 2023 to 31 December 2023 of 1.375 pence per Ordinary Share, payable on or around 5 April 2024 to holders of Ordinary Shares on the register on 22 March 2024. The ex-dividend date will be 21 March 2024.

A portion of the Company’s dividends are designated as an interest distribution for UK tax purposes. The interest streaming percentage for this dividend is 77.65%.

H1 dividend per share 3.0p, unchanged 

CHAIR’S STATEMENT

Dear Shareholder,

The UK grocery sector continued to show strong growth in 2023 against a persistently uncertain economic backdrop. During the Period, Kantar reported an 8%¹⁰ increase in UK grocery sales building on the strong growth seen in the previous period. Tesco and Sainsbury’s, the UK’s largest grocery operators by revenue, and our two largest tenants, have performed particularly strongly, with both operators growing market share and sales, which is fuelling cash flow growth and profit margins.

In a tight market for new sites due to a lack of prime locations, planning restrictions and elevated construction costs, our large format stores provide the operators with the space to grow sales volumes and thus sales densities, which will further increase rental affordability and should feed through to higher rental income at lease expiry.

The importance of mission-critical supermarkets, the revenue hubs in this growing sector, together with long inflation-linked full repairing and insuring (“FRI”) leases, has attracted a growing range of investors to this market. In 2023 we saw a record £2.1 billion of investment volumes. In addition, we continue to see our two biggest tenants, Tesco and Sainsbury’s buying in their stores with over £2.0 billion of supermarkets purchased in the last five years, testament to the value that they see in owning their top trading, omnichannel stores.

Despite the strong grocery market backdrop, supermarket property yields continued to widen in line with the broader property market driven by the negative macro-economic environment. As a result, the Portfolio valuation declined 3.2% on a like-for-like basis, reflecting a Net Initial Yield of 5.8% as at 31 December 2023 (30 June 2023: 5.6%).

Given the uncertain economic and interest rate outlook for much of 2023, the Company took the prudent decision to use some of the proceeds from the sale of the Sainsbury’s Reversion Portfolio to pay down debt, reducing LTV to 33%. Despite this lower leverage position, we have maintained the EPS level we achieved before the sale of the SRP. The undrawn debt capacity means we are ideally positioned to take advantage of some highly attractive pricing, and earnings accretive acquisition opportunities in the market.

The reduction in the 5 year interest swap rate from 5.0% in June 2023 to 3.4% in December 2023 has reduced borrowing costs, generating an attractive spread to current supermarket investment yields. Combined with the strong, growing operational market and improving lease reversion values, we remain highly optimistic on the longer-term valuation outlook and remain open to future earnings accretive investments.

The Company has continued to build on the progress that it has already made on sustainability. Following the publication of our first standalone sustainability report in September, along with our TCFD compliant Annual Report, we have now submitted our science-based emissions reduction targets to the Science Based Target initiative (“SBTi”) for validation. We have also actively managed assets to deliver sustainability improvements and have now deployed EV charging at five sites and are continuing to support the roll out of solar PV with rooftop solar now installed at 20% of our stores. This is improving the environmental efficiency of our sites including our Tesco store in Thetford, which energised in the Period. The PV system provides clean energy directly to the store, helped to deliver an EPC upgrade from C to B and was completed with zero capex cost to the Company.

OUTLOOK

Once again, the grocery market has delivered a strong performance in a challenging, unpredictable economic environment. Whilst we have seen a decline in valuations based on transactions which completed late last year, constrained supply and falling debt cost conditions combined with evidence of increased competition for assets since the start of the year, suggest that we may see a more positive environment for valuations going forward.

With our current reduced leverage, we are now ideally placed to add earnings accretive assets. Meanwhile, our high-quality portfolio of mission-critical supermarkets continue to deliver stable, long-term inflation-linked income. Combined with our robust balance sheet, fixed borrowing costs and highly visible cashflows, the Board is confident of the Company’s ability to provide secure income to our investors.

Nick Hewson

Chair

INVESTMENT ADVISER’S REPORT

Atrato Capital Limited, the Investment Adviser to the Group (the “Investment Adviser”), is pleased to report on the operations of the Group for the Period.

Overview

Continued strong growth of the grocery sector

We observed UK grocery sales growth of 8% in the Period. Annual sales in the UK grocery market are currently forecast to reach £250 billion in 2024; an increase of £65 billion since the Company’s IPO in 2017. The sector’s non-discretionary nature ensures that it is highly resilient relative to the volatility of the economic cycle and is strongly correlated to inflation. The recent peak of UK price inflation has now seemingly passed and operators are reporting volume growth both in-store and online.

In October 2023, Tesco reported 9.3% growth in grocery sales from its supermarket estate and Sainsbury’s reported similar growth of 10.8%, outpacing the wider UK grocery market. Core to the operator’s growth are the omnichannel supermarkets that provide in-store shopping, but also operate as last mile, online grocery fulfilment centres for both home delivery and click and collect. Omnichannel stores provides the space, proximity to customers and flexibility to service customer demand in the growing physical and online markets. It is worth noting that approximately 80% of Tesco’s 1.1 million weekly online orders are now fulfilled from omnichannel supermarkets and, similarly, the increased focus on omnichannel stores has propelled Sainsbury’s to become the number one click and collect retailer in the UK.

Focused investment strategy targeting top trading, mission critical real estate

Our strategy is aligned with the future model of UK grocery, capitalising on the long-term structural trend toward growing omnichannel operations. We have handpicked the UK’s leading portfolio of supermarket investment assets. We are the largest landlord of omnichannel grocery stores in the UK, offering a combination of attractive, secure and growing income with potential for long-term capital growth. Our stores facilitate in-store shopping, home delivery, click and collect, and increasingly, rapid ready to eat food delivery. 93% of the Group’s portfolio by value are omnichannel stores, future proofing the portfolio and providing exposure to the fastest growing grocery market channel since the Company’s IPO in 2017^.

Omnichannel stores act as significant online fulfilment hubs. A typical omnichannel store will operate as many as 25 home delivery vans, with c.200 employees dedicated to online fulfilment, accounting for up to 30% of store turnover. These large sites, often exceeding 10 acres, have good road transport links in densely populated areas and thus would be very difficult to recreate today. The stores typically have long trading histories, many having been supermarkets for more than 30 or 40 years, underlining the strength of the site as a grocery location. The Company’s strategy of targeting such stores ensures that its tenants are committed to the location beyond the contractual lease term and provides assurance of strong alternative occupier demand in the highly competitive grocery market. The scarcity of alternative locations combined with increased build costs, up c.30% since 2022, are driving up supermarket replacement values, making existing omnichannel supermarkets even more valuable.

Income generated from strong tenant covenants

The Company has continued to achieve 100% rent collection during the period, of which 77% is received from its key tenants, Tesco and Sainsbury’s, the UK’s largest retailers by revenue. The Company also benefits from its tenants’ capital investment programmes, which are focused on enhancing existing stores, including those which are occupied leasehold, over new store openings. The limited new store openings and capital investment programmes mean that high sales growth is being achieved like-for-like, enhancing existing store trading performance and ensuring progressive ERV growth.

While the growth of the Discounters has gained attention, it is worth noting that much of their sales growth is achieved through new store openings and therefore at a lower margin. Tesco and Sainsbury’s have competed particularly well with the Discounters, with Clubcard and Nectar customer loyalty programmes proving highly effective in customer retention.

2023 was a record year for supermarket real estate investment volumes

The investment market for supermarkets saw volumes of £2.1 billion in 2023, highlighting the attractiveness of the asset class at current yields. The volume of transactions demonstrated the significant value of supermarket real estate to both the traditional institutional investors and also to Tesco and Sainsbury’s, as they continue to buy back leasehold stores. This operator buyback activity, given the knowledge of their own store estates, clearly demonstrates the value of their store networks.

The liquidity of the supermarket investment market means that valuers are able to base valuations on real world transactional evidence. This stands in contrast to other sectors of the real estate market where volumes were significantly reduced in 2023, reflecting the wide gap that still remains between buyer and seller price expectations in those sectors. The defensive characteristics of supermarkets, combined with the capex certainty provided by the Fully Repairing and Insuring lease structures are proving attractive for investors.

Challenging economic environment impacting property valuations

The high level of transactions in the grocery investment market provided clear market pricing guidance for the sector. For the majority of the year, supermarket valuations remained broadly flat following the valuation decline seen in Q4 of 2022. However, in December 2023, following an improvement in 5 year swap rates and forward financing expectations, some buyers opportunistically closed deals to purchase assets from some vendors who were under pressure. These transactions would have been priced earlier in the year when the interest rate outlook was less favourable. This short burst of transactions closing late in the year at wider yields resulted in a 3.2% like-for-like valuation decline of the Company’s portfolio as at 31 December 2023.

Since the start of 2024 we have seen strong investor interest, including for those stores for which demand was weaker in Q4 2023. This includes assets on short leases or let to non-institutional grade tenants such as Asda, Morrisons and Waitrose, providing confidence that we have seen a bottoming out of valuations in the sector. 

Whilst volatility remains, interest rate expectations have moderated somewhat and the 5 year swap rate has reduced from 5.0% in June to 3.4% in December, providing accretive opportunities to deploy capital. We expect that more constrained supply following very high transaction volumes in 2023 combined with falling interest rates will provide support for capital growth going forwards.

As sector specialists, we are able to identify value in often overlooked sub-sectors in a challenging real estate market. The prospective all-in fixed cost of debt for the Company is around 5.5% and we see accretive opportunities to deploy, whilst maintaining focus on high quality assets.

Strong balance sheet, well positioned to take advantage of opportunities in the market

The Company’s balance sheet is in a robust position. During 2023, the Board and Investment Adviser took the prudent decision to maintain lower leverage given the challenging macro environment, resulting in an LTV of 33% as at 31 December 2023 (30 June 2023: 37%). This conservative approach, which saw the Company reduce debt and step back from the investment market to conserve cash during a period of continued volatility, now provides the Company with capacity for accretive deployment in an increasingly attractive investment environment.

The Company’s cost of debt remains 100% fixed until FY26, through the peak of the interest rate cycle and we continue to see good access to refinancing liquidity from both new and existing lenders. We added Sumitomo Mitsui Banking Corporation to our group of relationship banks in the Period and we continue to maintain strong relationships with all lenders. Fitch ratings recently reaffirmed the Company’s Investment Grade, long-term Issuer Default Rating (“IDR”) of ‘BBB+’ with a stable outlook.

The Company has significant headroom on its bank facility covenants and given the attractiveness of current investment yields is currently assessing a number of earnings accretive acquisition opportunities.

Here’s how spending £100 monthly on FTSE 100 shares can help me build wealth

Story by Christopher Ruane

I think that doing that can hopefully help me steadily build wealth over the coming years and decades. Here’s why.
Building wealth through shares
Basically there are two ways in which owning a share can potentially reward me financially.

One is a change in its share price. If I had invested £1,000 in Spirax-Sarco shares five years ago, for example, my holding would now be worth £1,820.

The opposite can also happen, though. If I had put £1,000 into shares of Primark-owner Associated British Foods five years ago, that stake would now only be worth £700.
That does not necessarily mean that I would have actually lost money. Share prices move up and down. If I bought those shares in Associated British Foods, the loss would only occur if I sold the shares at their current price. But I could hold onto them, in line with my long-term investing style. It may be that, in future, the share price moves back to what I paid – or higher.

Income generation
A second way in which owning shares can reward me financially is through the distribution of profits to shareholders. That is what is known as a dividend.

Dividends are never guaranteed and they can be cut. Even FTSE 100 shares sometimes cut their dividends. Shell did that in 2020 for the first time since the war. (That is why I always diversify my portfolio across a range of shares).

But one thing I like about FTSE 100 shares when it comes to dividends is that often they can be good payers. Typically, they are mature companies. That can mean they have positive cash flows but limited growth opportunities.

That can translate into some juicy dividend yields. Among FTSE 100 shares in my portfolio at the moment, for example, British American Tobacco yields 8.3% and M&G, 9.8%.

Buy and hold
Rather than taking dividends out as cash, I can choose to reinvest them. That is known as compounding and over the long term it could significantly improve my investment returns.

That is because it means that, even while still putting aside only £100 each month to invest, I end up being able to invest more once dividends are taken into account.

All of this takes time. As a long-term investor, I aim to buy and hold. Whether buying for growth or income, I take the long view.

To build wealth, compounding dividends can help a lot — especially over the long term. Imagine I invest £100 monthly at an average yield of 9% and compound for 25 years. At the end of that time, I would have a portfolio worth almost £106,000. Not bad for £100 a month!

Whether I focussed on income, growth, or a combination of the two, I would aim to buy into quality companies trading at attractive prices.

Support line at 741p can be deleted as we wait and watch.

CityWire

Refinancing risk sinks shares in Regional Reit

Shares in Regional Reit plunge 39% year to date as investors fret about office investor’s enlarged debt burden and falling occupancy.

Shares in Regional Reit RGL have tanked 39% this year despite a lower-than-expected decline in the value of the regional office portfolio.

At the start of this month, Regional reported a 5.9% like-for-like fall in its assets outside of the M25 orbital road in the six months to 31 December.

This was better than the 11% decline in the MSCI UK Monthly Property index but failed to reassure investors, who worry about the trust’s debt and falling occupancy. They have have continued to dump the shares, resulting in a fall of 24%, or 6.8p, this month.

Shares began the year at 35p and now sit at 21.5p. They have plunged from 44.7p last September, leaving Regional on a 64% discount to Deutsche Numis’ estimated net asset value (NAV) per share of 59.6p. The last NAV from the company was 64.4p per share in June.  

The yield on the shares has also widened to 22%, despite the dividend suffering a 27% cut in September as the fund paid just 1.2p in the second quarter, down from 1.65p in the previous three months.

At the heart of investors’ concern is the weight of Regional’s debt burden, as the fall in valuation increased its net loan-to-value (LTV) to 55.1%, although the company says debt remains fully hedged at an average cost of 3.5% with an weighted average maturity of 3.5 years.

Management sold six assets over the second half of 2023 in a bid to pay down debt and reduce its LTV, receiving proceeds of £26.1m before costs.

This took the total number of disposals for 2023 to 10, and further sales are expected as Stephen Inglis, chief executive of London and Scottish Property Investment Management, battles to bring the LTV back to its 40% target.

Deutsche Numis analyst Andrew Rees said a ‘near-term priority’ for the Reit will be the £50m retail bond due for repayment in August this year.

‘Reducing debt will therefore require an acceleration of disposal activity from current levels although we note this remains a challenging market to sell regional offices,’ he said.

‘Without an improvement, or even stabilisation, in occupier appetite, we believe the outlook for Regional remains uncertain and this is reflected in the share price.’

Occupancy has been another area of concern since lockdown prompted a shift to working from home, which left many companies without the need for expensive offices.

While Regional had been confident that local offices – which make up 92% of the fund – would be part of the work-from-home trend that would allow employees access to office facilities closer to home rather than travelling into major cities, the theory has yet to play out.

There are also significant costs in upgrading properties to the top EPC energy certificate rating of B.

The number of properties in the portfolio dropped to 144 in 2023 from 154 in 2022, while the number of occupiers has reduced from 1,076 to 978. On top of lower levels of both offices and occupiers, occupancy overall has fallen from 83% in 2022 to 80% in 2023.

Inglis said 2023 was ‘one of the most challenging years for Reits in recent memory’ and Regional was not immune.

He said valuations have been impacted but his asset management initiatives ‘continued to mitigate some of the impact on the portfolio’.

‘The leasing market was slower than anticipated largely due to the uncertainty around working patterns and the geopolitical situation impacting inflation and interest rates, but with some stability we are witnessing increasing numbers of enquiries for our assets,’ said Inglis.

The Reit declined to comment on the fall in the share price. 

As it was written so it came to pass.

RGL. Trusts don’t trade at big yields for no reason, although Mr. Market isn’t always right but the risks are much higher.

REGIONAL REIT LIMITED

(“Regional REIT” or the “Company”, together with its subsidiaries the “Group”)

Response to press speculation

Further to the Q4 trading update published on 2 February 2024 and the dividend declaration announcement on 22 February 2024 (together, the “Previous Announcements”), Regional REIT (LSE: RGL) notes the recent press speculation regarding the possibility of the Company undertaking an equity capital raise of around £75 million.

As indicated in the Previous Announcements, the Company is actively exploring a range of refinancing options, including debt and/or equity, in respect of the existing £50 million retail bond (the “Retail Bond”) given its maturity date in August 2024.  

The Company confirms that significant preparatory work has been undertaken to date in respect of both the debt and equity options, which remain under active consideration.

In the event that the Company proceeds with an equity issue, the Company expects that it would be at a material discount to the Company’s current share price and would be subject to, amongst other things, shareholder approval.

The Company continues to consider its options and a further announcement will be made when appropriate.

£££££££££££££

The blog portfolio would buy shares if there is an equity issue.

Foresight Solar Fund Limited

(“Foresight Solar”, “FSFL” or “the Company”)

Annual Results to 31 December 2023

Foresight Solar, a sustainability-focused fund investing in solar and battery storage assets in the UK and internationally, announces its results for the year ended 31 December 2023.

Highlights

·    Net Asset Value (NAV) of £697.9 million (31 December 2022: £771.5 million).  The uplift from the sale of the Lorca portfolio stake at a 21% premium to holding value, alongside an active power price hedging strategy, mitigated the negative impacts from higher discount rates and softening power price forecasts.

·    Record electricity generation with 1,094GWh exported to the grid, enough to power over 400,000 UK households for a year – avoiding 390,000 tonnes of carbon dioxide emissions.

·    Record cash distribution from the underlying assets of £120 million, the highest in Foresight Solar’s 10-year history.

·    FSFL delivered on the first phase of its divestment programme with the sale of a 50% stake in the Lorca portfolio. The proceeds from this transaction, alongside free cash, were used to pay down £40 million of variable rate debt on the RCF, bringing the drawn balance down to £75 million.

·    Foresight Solar grew its proprietary pipeline with the acquisition of the rights to a 467MWp portfolio of development-stage solar projects in Spain. The move exemplifies the Company’s capital allocation strategy, focused on new investments with limited upfront capital requirements to drive long-term growth and total shareholder returns.

·    Foresight Solar returned £20 million to shareholders via share buybacks, deploying half of the £40 million allocation in the year and delivering 1.1 pence per share of NAV accretion.

·    Total dividend of 7.55 pence per share declared for the full year, in line with the Company’s target. Dividend cover for 2023 was 1.61x.

·    Target dividend of 8.00 pence per share for 2024, an increase of 6% compared to the previous year. The 2024 target is expected to be 1.50x covered from cash generated in the period, with around 1.35x cover for 2025 – assuming current revenue forecasts.

·    The sale of several large ROC-backed solar portfolios in the UK offers reliable market benchmarks for the Company’s assets. The price at which the latest deal closed indicates a value per megawatt approximately 15% above Foresight Solar’s £1.17m/MW valuation of its UK portfolio.

Key Metrics

	As at31 December 2023	As at31 December 2022
Net Asset Value (NAV)	£697.9m	£771.5m
NAV per Share	118.4p	126.5p
Total Dividend per Share for the period	7.55p	7.12p
Gross Asset Value (GAV)	£1,140.5m	£1,296.3m
Gearing (as a % of GAV)	38.8%	40.5%
Annualised Total NAV Return since IPO	8.0%	9.0%
Annualised Total Shareholder Return since IPO	6.2%	7.8%
UK portfolio valuation	£1.17m/MW	£1.29m/MW

Commenting on the results, Alexander Ohlsson, Chairman of Foresight Solar, said:

“Foresight Solar delivered resilient performance with record electricity production and cash distribution against a challenging market backdrop. Our operational strength, the powerhouse behind our progressive dividend, enabled us to comfortably meet our dividend target of 7.55p per share for 2023 and allows us to propose an above inflation increase of 6.0% for the 2024 target dividend of 8.0p per share.

“During the year, we have remained focused on initiatives to address the discount to NAV at which the Company’s shares have traded and to place the fund in the best possible financial position to support shareholders’ interests. We paid down £40 million of variable rate RCF debt, reducing financing costs, and returned £20 million to investors via share buybacks. The Board is adhering to its disciplined approach to capital allocation and the only new project investments currently under consideration are modest investments to expand the development stage pipeline.

“In the year Foresight Solar celebrated its 10^th anniversary, we successfully completed the Company’s first divestment. The partial sale of the Spanish Lorca portfolio at a 21% premium to holding value validates our valuation methodology and supports our investment model. Bringing projects through development to construction and then into operation offers optionality and allows the Company to capture financial upside, a strategy we intend to replicate through our development pipeline.

“The Lorca transaction was also a key driver of NAV uplift, and the Investment Manager continues to make progress on the next phases of the divestment programme. We look forward to providing more details to shareholders in due course.

“By leveraging the Investment Manager’s local networks in Spain, Foresight Solar purchased the rights to six development-stage solar projects, totalling over 460MWp. Over the medium-term, we will expand this growing proprietary development pipeline and focus on the huge potential for solar and storage to be unlocked throughout Europe.

“As power price forecasts softened across markets during the year, Foresight Solar’s active hedging strategy enabled the fund to lock in higher prices. These favourable terms will help insulate the NAV against market fluctuations in 2024 and beyond, providing greater visibility on dividend cover.

“After a challenging year for markets, we believe there are reasons for optimism. The energy transition is one of the biggest investment themes of our generation. The solar power opportunity alone is immense. Industry fundamentals remain attractive and solar generation continues to be one of the cheapest and most reliable sources of electricity available. This promising outlook, coupled with Foresight Solar’s improved financial position and clear strategy to deliver income and growth, positions the fund well to capitalise on the opportunities ahead.”