FOR IMMEDIATE RELEASE
The Local Shopping REIT plc (the "Company")
Update on Property Sales Programme
and Estimate of Net Realisable Value
10 October 2018
The board of The Local Shopping REIT plc ("the Board") is pleased to provide the following update on progress with its property sales programme.
Since the last update, the Company has sold or exchanged contracts for sale on 36 properties for an aggregate price of £5.8 million, representing a 1.1% premium to carrying value before sales costs.
Of these, 20 properties (including a 14-asset portfolio) were sold by private treaty transactions which completed or exchanged for an aggregate sale price of £2.2 million, representing a 0.6% discount to carrying value before sales costs.
The other 16 properties exchanged in recent auctions, primarily in September. The aggregate sale price of these was £3.6 million, representing a 2.1% premium to carrying value before sales costs. Two of these auction sales have since completed.
The aggregate sales costs associated with all the disposals described above is estimated to be circa 4.0% of the aggregate sales price, resulting in an aggregate realised loss on sale of circa 2.9%.
The proceeds of the asset sales have been used to repay bank debt, which was thereby eliminated in full during July 2018, achieving an important milestone in the Company's investment policy.
Currently, the company has £3.2 million in cash reserves and sales on which contracts have been exchanged are expected to generate a further £13.8 million in net sales proceeds.
Excluding properties on which we have exchanged contracts for sale, the portfolio comprises 42 properties with an aggregate carrying value of £13.6 million. We are now focussed on the disposal of these remaining assets.
To this end, we are progressing a number of private treaty sales and have agreed terms, subject to contract, on 10 properties with an aggregate carrying value of £3.1 million.
This leaves 32 properties with an aggregate carrying value of £10.5 million. We will continue to market these as individual assets and small portfolios, both in the private treaty market and by auction, during the remainder of the calendar year. Approximately half of these properties are scheduled for auction in October.
The Board expects to provide a further market update following the October auctions.
The Board considers that progress towards achieving the Company's investment objective is now such that it is appropriate to provide an estimate of the net realisable value of the Company's shares available for distribution to shareholders in due course.
It is the opinion of the Board that the net realisable value will be between 33.0 and 34.5 pence per share.
In estimating this figure, which has not been audited, the Board has taken note of:
- estimated property sales (completed, contracted, under offer & forecast);
- property sales costs and associated accounting write-downs (for example, capitalised rent frees and other non-cash items);
- actual and forecast operating performance;
- actual and forecast capital expenditure requirements;
- estimated corporate wind-up costs;
- irrecoverable VAT.
The Board is currently considering the optimum route for returning cash to shareholders, which will aim to be both as rapid and as cost effective as possible. That, together with an indicative timetable, will be made available as soon as practicable.
The net realisable value figures in this announcement are estimated and are based on unaudited estimated values. The net realisable value estimate should only be taken as an indicative value which has been provided for information only and no reliance should be placed on it. There are a number of significant risks associated with the estimated figures, for example, as a consequence of (i) general market conditions relating to investment property; (ii) the sales performance of the Company's remaining property portfolio; (iii) the speed of execution (in order to curtail corporate overhead costs); and (iv) the extent of any corporate costs. Estimated results, performance or achievements may therefore differ materially from any actual results, performance or achievements. The term "carrying value" used in this announcement refers to the property values comprised in the Company's unaudited accounts as at 31 March 2018.
Except as required by applicable law, the Company expressly disclaims any obligations to update or revise such estimates to reflect any change in expectations, new information, subsequent events or otherwise.
This document is for information purposes only and is not an offer to invest. All investments are subject to risk and past performance is no guarantee of future returns. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decisions.
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 ("MAR"). Upon the publication of this announcement, the inside information is now considered to be in the public domain for the purposes of MAR.
The person responsible for making this announcement is William Heaney, Company Secretary.
Rupert Wallman, Fund Manager +44 20 7355 8800
Bill Heaney, Company Secretary +44 20 7355 8800