31 January 2019
DRIP REIT - RNS Results for the Period to September 2018 (31/12/2019)
Drum Income Plus REIT was established in May 2015 with the initial objective being to provide its shareholders with a regular dividend income together with the prospect of income and capital growth over the longer term from a portfolio of regional real estate assets in the UK. I am pleased to present the annual report and accounts for the year to 30th September 2018.
The Group’s net asset value per share at 30 September 2018 was 93.8 pence, 0.2% lower than the figure at the end of the previous year. When dividends paid during the year are included the net asset value total return for the year was 6.0%. At the time of writing the share price stands at 94.5 pence, representing a premium of 0.7% when compared to the year end net asset value per share.
Dividends in respect of the financial year will total 6.0 pence per share, an increase of 9.1% on the dividends paid in respect of the previous year. The dividend yield on the current share price is 6.3%.
The dividends were fully covered by revenue earnings per share of 6.80 pence.
It is the Board’s intention, in the absence of unforeseen circumstances to at least maintain the 6.0p level of payment for the current year.
The Company was fully invested and had drawn down substantially all of its available loan facilities when it entered the financial year. No properties were sold during the year and therefore all the investment activity related to the existing properties and, in particular, the realization of a number of asset management opportunities at the respective properties.
In such a short period and given an increasingly uncertain macro outlook for the UK economy there has, inevitably, been some mixed outcomes for the portfolio. There has been considerable comment and speculation in relation to the retail sector and the challenging background that the industry faces. The portfolio has not been immune to these challenges and a reduction in value was seen at the property in Eastern Avenue in Gloucester when one sitting tenant entered a Company Voluntary Arrangement (CVA). Your investment adviser however is in a position to pursue a number of initiatives in relation to this asset which, if successful, should result in the diminution in value seen in 2018 recouped to some extent.
The value reduction referred to has been offset by activity elsewhere in the portfolio that has seen valuations increase reflecting new lease terms and increased rents in a number of properties.
A full description of the portfolio and the management initiatives is given in the Investment Adviser’s Report.
The portfolio was constructed in line with the expectations set out in the prospectuses. The key features are that it is well diversified by region and asset type. There is no exposure to London or the South East, and no high street or major shopping centre exposure. The retail properties in the portfolio rely on local demand and are, in the case of Gosforth and Duloch in Dunfermline, meeting convenience demand from essentially a very local population.
The current period will undoubtedly be challenging as reflected in the considerable political and economic uncertainty, not least of which is the whole issue of Brexit. The Board and Manager are focused on the aspects of the Trust that they can control and are actively pursuing the asset management and value enhancing opportunities that lie within the portfolio.
29 January 2019
Report & Financial Statements click here