26 May 2017
DRIP REIT - Interim Announcement, May 2017
Unaudited results for the six months ended 31 March 2017
Drum Income Plus REIT plc was established in May 2015 to provide investors with a regular dividend income, plus the prospect of income and capital growth over the longer term, by investing in regional real estate assets. I am pleased to present this interim report covering the six month period to 31 March 2017.
The Group’s net asset value (“NAV”) as at 31 March 2017 was 96.5 pence per share, up 3.2% since 30 September 2016. When the dividends paid during the period are taken into account, the NAV total return for the six months to 31 March 2017 was 6.1%.
As at 31 March 2017 the share price was 97 pence, giving a share price total return of 3.6% since launch. The share price continues to stand at 97 pence as I write, representing a premium of 0.5% to the NAV.
The Company has declared two interim dividends of 1.375 pence per share in respect of the six month period to 31 March 2017, representing an increase of 4.8% on the dividends paid in respect of the same period last year. These dividends were fully covered by the Company’s earnings of 3.51 pence for the period, and the Board is targeting fully covered aggregate quarterly dividends of at least 5.5 pence per share in respect of the year ending 30 September 2017 and at least 6.0 pence per share in respect of the year ending 30 September 2018.
The prospective yield on the Company’s shares is 5.7% at the date of this Statement.
The emphasis during the period under review has been to deliver on asset management opportunities at the Company’s nine existing properties. These are in strong regional locations and have in total 82 tenants; the Company has no exposure to Central London markets. Further detail on the property portfolio is given in the Investment Adviser’s Report on page 6.
Since the period end, the Group has acquired a tenth property, Kew Retail Park in Southport, for £8.7m. The purchase price reflects an acquisition yield of 8.78% and bolsters the Group’s presence in the North West.
The Board is delighted that the whole of the proceeds of the initial and subsequent issues have been invested at valuations and yields very much in line with those described in the prospectuses.
The Board stated that it intended to target initial gearing, calculated as borrowings as a percentage of the Group’s gross assets, of 40% and this remains the case. The Group has in place a £25 million 3 year revolving credit facility with The Royal Bank of Scotland plc which is not due to expire until January 2020. £14.5 million was drawn down at 31 March 2017, representing a gearing percentage of 29.4%.
Following the Southport acquisition described above, the Company has now drawn down £22.8 million, representing a gearing percentage of 40.0%.
The Company issued 1.6m shares in February 2017 at £1.00 per share. This took the number of shares in issue to 38.2m. Following the latest property purchase the Company is now fully invested.
I said in January that the Board believed that the outlook for the regional property market in the UK remained strong, underpinned by high levels of occupational demand and a shortage of supply. This remains the case, and is evidenced by the growth in NAV during the period, achieved primarily as a result of effective management of the properties by the Investment Adviser. The Investment Adviser’s knowledge and experience was also critical in identifying and executing the Southport opportunity, which significantly strengthens the property portfolio.
The Company will continue to focus on its differentiated investment strategy of investing in, and improving, multi–let assets in regional locations with a value of between £2m and £15m.
24 May 2017