RDI REIT targets full exit from retail assets

RDI REIT targets full exit from retail assets – RDI REIT says that, for the year ended 31 August 2020, its EPRA NAV fell by 18.3% from 185.5p to 151.5p and its earnings per share almost halved from 13p to 6.9p. The dividend was cut in half – to 5p from 10p.

Highlights for the year

  • £371.4m of largely retail disposals exchanged or completed at an average 3.5% discount to the last reported value
  • Pro forma retail exposure reduced to 10.1% (31 August 2019: 28.1%) [the plan is to get this to zero – see below]
  • Pro forma LTV reduced to 32.6% (31 August 2019: 42.0%) [this represents good progress against a target introduced just 18 months ago of 30%-40%]
  • High quality Distribution, Industrial and Office portfolios now comprise 56.5% of portfolio on a pro forma basis
  • Cash and available facilities has increased to approximately £240.0m post year end
  • Dividend reinstated at 5.0p, with dividend cover of 1.4 times [this is good news for investors and reflects the progress made with strengthening the balance sheet and reshaping the portfolio.]

Robust operational performance

  • EPRA occupancy increased to 98.8% (31 August 2019: 95.9%)
  • 121 leasing events completed during the year, 5.1% (£0.8m) above ERV
  • Like-for-like net rental income declined 23.5%reflecting a reduction in income from operational assets, continued CVA activity in the retail sector and a deterioration in collection rates
  • Like-for-like net rental income excluding operational assets declined 5.3%
  • All properties including Hotels and London Serviced Offices reopened
  • London Serviced Office portfolio delivered a resilient performance despite the COVID-19 restrictions with EBITDA of £8.5m
  • Early signs of a moderate recovery in Hotel portfolio occupancy and room rates, prior to new lockdown measures

COVID-19 trading update and financial position 

  • Like-for-like valuation decline of 9.8%, weighted toward the second half of the financial year
  • Average rent collection rate of 91.9%, of rents demanded between March and September
  • Disciplined measures to reduce asset related operating costs
  • Committed capital expenditure limited to £2.3m

CEO Succession

  • Mike Watters will retire and step down from the Board as an Executive Director during December 2020
  • Stephen Oakenfull to succeed Mike Watters as CEO and will join the Board later today

Full exit from retail

At the end of the 2018 financial year, retail assets represented 45 per cent of the Group’s portfolio. A reduction in retail exposure to 20 per cent was targeted through the disposal of the German retail portfolio and certain smaller UK assets. The majority of the German portfolio has been sold or contracted for sale during the course of the 2020 financial year. In addition, the recent disposal of the UK Retail Parks portfolio has reduced retail exposure on a pro forma basis to 10.1 per cent of the portfolio. A full exit from all retail assets is now being targeted.”

The Hotel portfolio has increased to 26.5 per cent of the Group portfolio as a result of disposal activity rather than a strategic decision to increase absolute exposure to the sector. As part of the ongoing repositioning of the portfolio, strategic options are being actively considered for the Hotel portfolio in medium term. Given the quality of the portfolio and our expectation of a recovery in the trading performance, a near term exit is not expected to deliver best value to shareholders.”

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