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Harmony Energy Income Trust plc
(the “Company” or “HEIT”)

Trading Update

Harmony Energy Income Trust plc, which invests in battery energy storage system (“BESS”) assets in Great Britain (“GB”), today provides a trading update ahead of the publication of its quarterly Net Asset Value update and audited annual results later this month. 

Weaker Revenue Environment in 2023 and January 2024

BESS revenues for the year ended 31 October 2023 were markedly lower than revenue generated in the same period in 2022. Whilst a reduction from the remarkable highs of 2022 was expected and built into third party revenue forecasts, the scale and the speed of the reduction has exceeded market expectations.

There are multiple drivers of this reduction in revenue, both macro and sector-specific:

·      Saturation of ancillary service markets. The high rate of build-out of BESS in GB led to saturation of ancillary services and has driven clearing prices to record low levels.  This was widely anticipated and the Company positioned its 2-hr duration portfolio specifically to protect against this event and take maximum advantage of the inevitable shift by BESS towards wholesale market revenue strategies and the Balancing Mechanism (“BM”). 

·      Reduction in wholesale power price volatility and spreads. As a 2-hr duration portfolio, this is more relevant to the Company than ancillary services.  Wholesale spreads in FY 2023 and FQ1 2024 have narrowed primarily due to a reduction in natural gas prices, itself due to milder than expected weather and high levels of European reserves.  In addition, GB has imported a large volume of energy from Europe (via interconnectors) and high consumer prices have encouraged a material reduction in consumer energy usage.

Wholesale price spreads are forecast by independent experts to increase during 2024 and beyond. This is driven by a range of factors including increased consumer energy demand (as the cost-of-living crisis eases), continued electrification of the country’s heating and transport infrastructure, greater penetration of intermittent renewables and an increase in pricing for natural gas and carbon.  

·     Implementation issues with National Grid ESO (“NGESO”) Open Balancing Platform (“OBP”). Another key factor in recent revenue weakness is NGESO’s continued sporadic use of BESS in the BM. Despite a well-publicised policy and comprehensive plan from NGESO to increase BESS dispatch rates in the BM via process and software enhancements over 2024 and 2025, the December 2023 launch of the new “bulk dispatch” software was curtailed due to technical issues. Since its re-launch on 8 January 2024, NGESO appears to only be using OBP intermittently, with the Company’s portfolio seeing some days of high BM volume, and some of zero.  BESS projects utilise algorithms and AI software to execute revenue strategies, and so the inconsistent use of OBP by NGESO not only limits BESS volumes in the BM, but also creates uncertainty over how much daily capacity BESS can dedicate to other strategies and services.  The Investment Adviser continues to have dialogue on this topic with NGESO directly and also via stakeholder interest groups.  NGESO has a published ambition to operate the GB system with zero carbon emissions by 2025 (i.e. reducing its use of coal and gas). A consistent use of OBP in relation to BESS by NGESO would, in the Investment Adviser’s opinion, not only help accelerate NGESO’s progress towards this goal, but also result in a near-immediate and marked increase in the Company’s revenue performance. 

Despite the conditions described above, the Company’s operating Portfolio continues to out-perform peers (on a £/MW basis).  The Company’s Pillswood (Phase 1) and (Phase 2) projects ranked #1 and #3 respectively for the calendar year 2023, and every one of the Company’s five operating assets appear in the Top-10 leaderboard for January 2024 (excluding non-BM units and estimated revenue from the Embedded Export Tariff) (Source: Modo Energy).

Operational free cash flow is forecast to increase in 2024 as the Company’s remaining three projects (c. 236 MWh / 118 MW – c.30% of the current portfolio) complete construction and begin operations. The Company has sufficient cash reserves to complete construction of these projects.

In addition, revenues going forward will be supported by the Company’s existing Capacity Market contracts, for which delivery only began in October 2023.

Postponement of First Quarterly Dividend for FY2024, and Strategy for 2024

In line with its stated dividend policy, the Company distributed 8 pence per share to Shareholders in relation to FY ended 31 October 2023.  The first quarterly distribution in relation to FY 2024 (2 pence per share) was expected to be declared later this month and paid in March.  However the Board, with support from the Investment Adviser has resolved to postpone this declaration.

While the reasons for the recent low revenue environment are understood, and the market conditions are expected to improve, the short-term outlook remains uncertain.  If these conditions do continue for an extended period, this will impact on the ability of the Company to declare and make distributions.  It is well understood that BESS revenues can vary across the course of a year and therefore prudent cash management is required. 

The Board recognises the importance of dividends to Shareholders and therefore is preparing to implement a series of short-term actions which would better position the Company for long-term stability and growth. These actions will include a restructuring of the Company’s existing debt facilities (to reflect that 70% of the portfolio’s MW capacity is now operational), coupled with one or more asset sales.  Any cash proceeds from such sales would be used, in priority, to reduce gearing and then to fund future dividend distributions for FY 2024 and 2025. These distributions could take the form of income and/or capital distributions.  The ambition of the Company remains the payment of 8 pence per share per annum. Any funds available after the payment of dividends could be used to repurchase shares. Further updates will be communicated to Shareholders in due course.

REGIONAL REIT Limited

Q4 Trading Update and Year-End Portfolio Valuation

98.6% Rent Collection for 2023

Regional REIT (LSE: RGL) today announces its portfolio valuation as at 31 December 2023 and a positive update for both EPC ratings and rent collections.

Full Year 2023 Valuation and Portfolio Update

·    Portfolio valuation £700.7m (2022: £789.5m)

·   The like-for-like value of the portfolio decreased by 5.9% from 30 June 2023 to 31 December 2023 after adjusting for capital expenditure, acquisitions and disposals during the period (5.5% excluding capital expenditure adjustment)

·   Total rent collection for 2023 is currently 98.6% compared with 97.9% for the equivalent period in 2022

·    Gross annualised rent roll £67.8m (2022: £71.8m); ERV £87.0m (2022: £92.0m)

·    Equivalent Yield 9.9% (2022: 9.0%)

·    Excellent progress on EPC ratings with c.73% of the portfolio EPC C or better

·    144 properties (2022: 154); 978 occupiers (2022: 1,076)

·    Total disposals in 2023 of £26.1m (before costs)

·    Portfolio: offices (by value) at 92.1% (2022: 91.8%), industrials 3.2% (2022: 3.1%), retail 3.1% (2022: 3.6%), and Other 1.7% (2022: 1.4%)

·    England represented 78.4% (2022: 78.3%) (by value), Scotland 16.2% (2022: 16.7%) and Wales 5.4% (2022: 5.0%)

·    EPRA Occupancy (by ERV) at 80.0% (2022: 83.4%)

·    Average lot size c. £4.9m (2022: c. £5.1m)

·    Net loan-to-value ratio 55.1% (2022: 49.5%)

·    Group cost of debt (incl. hedging) 3.5% pa (2022: 3.5% pa) – 100% fixed and hedged

·    Weighted average debt duration 3.5years (2022: 4.5 years)

Stephen Inglis, CEO of London and Scottish Property Investment Management, the Asset Manager, commented:

“2023 was one of the most challenging years for REITs in recent memory and Regional REIT was not immune from the macro-economic difficulties faced by the sector. Whilst valuations have been impacted, the Asset Manager’s active 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.

“Notably, the Company continued to achieve a strong level of rent collection thanks to its high-quality tenant base. The ongoing asset disposal programme continues to achieve the latest valuations.

“It is pleasing to note that substantial progress has been achieved in improving the EPC rating of the portfolio. Over the course of 2023 the number of properties rated EPC C and above has improved to in excess of 73% of the portfolio.

“The LTV continues to be a key focus of the Board and the management have a plan to reduce LTV to the long term target of 40% through selective sales and repayment of debt. The senior debt is 100% fixed, swapped or capped and will not exceed 3.5%. The Company is actively exploring a range of refinancing options for the retail bond given its near-term maturity date.”

Rent Collection 2023 Update

The Company is pleased to report that as at 30 January 2024, Q1 2023 collections amounted to 99.7%, Q2 2023 to 98.5% and Q3 2023 to 98.2%. Currently, Q4 2023 rent collection, adjusting for monthly rent stands at 98.1%, which is above the equivalent period in 2022, when 95.6% had been collected. The total rent collection for 2023 is currently at 98.6% (see below) compared with 97.9% this time last year.

%	Q1 2023	Q2 2023	Q3 2023	Q4 2023	YTD
Rent paid	99.7	98.4	98.1	97.3	98.4
Adjusted for monthly rents	0.0	0.0	0.1	0.7	0.2
	99.7	98.5	98.2	98.1	98.6

Table may not sum due to rounding.

The Company remains supportive of its tenants and is in ongoing discussions with occupiers regarding the balance of the outstanding rent. It expects to collect the vast majority of the outstanding rent in due course.

Gresham House Energy Storage Fund PLC

Share Buyback Programme

Further to the announcement on 1 February 2024, the Board of Directors of GRID today announces the commencement of a Share Buyback Programme. The Company will review the Share Buyback Programme on an ongoing basis in the context of its capital allocation decisions, as well as the discount to NAV at which the shares are trading at any given time.

The Company has engaged Jefferies International Limited (Jefferies) as buy-back agent in relation to the Share Buyback Programme on a discretionary basis within certain pre-set parameters. The maximum price payable per share (exclusive of expenses) will not exceed the higher of: (1) 105 per cent. of the average market value of the Company’s Shares for the five business days immediately preceding the day on which such Share is contracted to be purchased; or (2) the higher of the price of the last independent trade and the highest current independent bid on the London Stock Exchange.

Share buybacks under the Share Buyback Programme will be made pursuant to the authority granted to the Company at its general meeting held on 30 May 2023 which limits purchases of shares by the Company in the market to up to 14.99% of the Company’s then issued share capital.

The Company will announce any market repurchase of Shares on the business day following the calendar day on which the repurchase occurred. The Company intends that the repurchased shares will be held in Treasury.

The Company is satisfied that it is not currently in a closed period, nor is it party to any inside information which has not previously been disclosed via Regulatory Information Service.

The Company shall not (i) exercise any influence over how, when or whether Jefferies effects share buybacks or (ii) change the number of shares, price or timing of the purchases.

It’s all about choices.

Memo to myself ONLY buy shares that are going up, u then u will

have a 60/40 chance of printing a profit.

Gresham House Energy Storage Fund PLC on Thursday said it decided against declaring a dividend for the fourth quarter of 2023 as it continued to be hurt by a weak revenue environment.

For the fourth quarter of 2022, it had declared a 1.75p dividend.

The Gresham House-managed fund invests for income from utility-scale battery energy storage systems.

Instead of the dividend, it plans to start a share buyback programme, noting a recent sharp decline in its share price.

The stock is down 70% over the past 12 months.

The company said that battery energy storage systems are “significantly” under-utilised in the National Grid PLC electricity system operator balancing mechanism.

Further, it noted a slower than expected pace of commissioning new projects to date due to elongated grid connection times.

Chief Executive Officer John Leggate said: “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.”

Ben Guest, fund manager of the company, said: “Electricity system operator 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.”

GRID dropping their dividend doesn’t alter

the portfolio dividend fcast of 8k but it

makes the target harder to achieve, unless

there is positive corporate news.

I’ve bought for the portfolio 2408 shares in API

Abdrn Property for £2,500.00

I will collect the dividend and then re-assess.

1 February 2024

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;

19/01

Custodian Property Income REIT PLC and abrdn Property Income Trust Ltd on Friday said they have agreed to an all-share merger to create a real estate investment trust with combined assets of GBP1.0 billion.

It will mark yet another absorption of an abrdn fund, after Fidelity China Special Situations PLC took over abrdn China Investment Co Ltd, Asia Dragon Trust PLC took over abrdn New Dawn Investment Trust PLC, and Shires Income PLC took over abrdn Smaller Companies Income Trust PLC in the second half of last year.

abrdn Property Income shareholders will receive 0.78 of a new Custodian Property Income share for each share held. Based on Custodian’s closing share price on Thursday of 79.6 pence, the deal values abrdn Property Income shares at 62.1p and the entire company at GBP237 million.

I’ve sold the last top up in GRID for a loss of £211.00

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.