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.
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.”
– 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;
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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.
– 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.
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.
