Local Shopping REIT (The) PLC
10 October 2007
The Local Shopping REIT plc: Trading Update
(London: 10 October 2007) - The Local Shopping REIT ("LSR" or the "Company"), a
UK real estate investment trust focused on investments in local shopping assets,
is pleased to announce that it has made good progress in the delivery of its
business plan in a highly active period since its Admission to the London Stock
Exchange on 2 May 2007.
In accordance with its business plan, as set out in its Prospectus, since 28
March 2007 (when the existing portfolio was valued at ?207.7 million) the
Company has acquired a further 150 properties, in 106 separate transactions, for
a total consideration of ?47.8 million. This includes the ?14.6 million
portfolio of properties LSR acquired through the purchase of the entire share
capital of Gilfin Property Holdings Limited in August. The blended yield of
these purchases (excluding Gilfin) is 7.34%, demonstrating the Company's ability
to continue to acquire properties on an accretive basis.
As a result of these acquisitions the Company now has a portfolio of 633
properties comprising more than 1,980 letting units.
In addition to the acquisition of those properties which were contractually
completed, as at 30 September, the Company has also agreed terms to purchase a
further 41 properties for ?8.2 million at a blended yield of 7.36%. On
completion of these acquisitions, the Company's total portfolio will extend to
Acquisition of Gilfin Property Holdings Limited
On 29 August 2007 LSR completed the purchase of the entire share capital of
Gilfin Property Holdings Limited ("Gilfin") for ?12.85 million. 50% of the
consideration was satisfied in cash and 50% with 3,897,246 new LSR shares issued
at its last published Net Asset Value of ?1.6486 per share.
Gilfin was a privately owned property company with a portfolio of 28 properties
valued at ?14.6 million. It had net liabilities of ?0.3 million and ?1 million
of associated debt which was repaid at completion. Approximately half the
portfolio, by value, is located in Scotland, while the rest is in south west
London and the surrounding area. The portfolio produces a total rent of ?967,038
per annum which is anticipated to rise to ?1,044,268 per annum when fully let at
a market rent.
LSR continues actively to seek out further corporate opportunities in the
private sector enabling it to maximise the various advantages of its REIT
During the period since flotation to 30 September 2007, LSR disposed of one
property in Wishaw, north Lanarkshire, for ?167,500, equivalent to a 5.52%
yield, against its book valuation of ?133,000.
During the period, the Company has successfully implemented the following asset
- carried out rent reviews on 65 units, increasing the rent by ?111,297
per annum (an average uplift of 13.4%, and 8.5% above Estimated Rental Value)
- renewed leases on 14 units adding a total of ?28,709 rental income per
annum (an average uplift of 15.7% and 7.3% above ERV)
- the surrender and re-let of eight units, adding ?19,300 per annum (an
average uplift of 17.5% and 22.5% above ERV)
- let 29 vacant units at a rent of ?305,800 per annum (2.1% above ERV).
In line with its strategy to deliver value from the under-used upper parts of
some properties, the Company has secured planning consent for 10 residential
units, with applications submitted for a further 28 units.
In July, ?26.37 million from the IPO proceeds was used to repay the Company's
loan from Barclays, reducing the loan to ?69.29 million (representing 60% Loan
To Value), and its margin to 0.75% from 1.125%.
The Company's total debt stands at ?99.29 million and it has an additional
committed and undrawn long term facility of ?120 million from HSBC, with a
further ?10 million undrawn short term facility from RBS. In addition to being
100% hedged on existing loans, we have further interest rate swaps totalling ?50
million. The Company's blended interest rate for loans that have been drawn and
committed, at the current loan to value ratio, up to the limit of the current
hedging level is 5.69% for 8 years.
The Company has undertaken share buybacks totalling 2,953,750 ordinary shares at
a weighted average price per share of ?1.2939. These shares are held in
The Board believes that current uncertainty in the property market is likely to
provide LSR with more accretive acquisition opportunities in the current
Nick Gregory, LSR's Joint Chief Executive Officer, said:
"For the past two and a half years we have been focused on building the size of
the portfolio. Now that we have turned our attention to asset management we are
beginning to see the rewards through good levels of rental growth and
planning-led initiatives. Our REIT status means we are well placed to offer
competitive prices and tax efficient solutions to private property owners with
an unrealised capital gains position."
Mike Riley, LSR's Joint Chief Executive Officer, added:
"Our local knowledge, speed of response and our very strong financial position
will enable us to act quickly and decisively to take advantage of opportunities
we are confident will arise in the market."
For more information please contact:
The Local Shopping REIT plc Tel: 020 7187 4444
Mike Riley/Nick Gregory
Financial Dynamics Tel: 020 7831 3113
Stephanie Highett/Lauren Mills/Jamie Robertson
About The Local Shopping REIT
The Local Shopping REIT plc ("LSR") is the first specialist start-up Real Estate
Investment Trust ("REIT") to launch in the UK.
Aimed solely at local shopping assets in urban areas, the Company invests in
neighbourhood and convenience retail assets, heralding the foundations of a new
institutional investment class. As at 28 March 2007 the Company's portfolio
comprised 484 properties, with over 1,400 letting units, which was valued at
?207.7 million. A further ?47.8 million of properties have been acquired since
then, including the ?14.6 million portfolio of properties LSR acquired through
the purchase of Gilfin Properties. As a result of these acquisitions the Company
now has a portfolio of 633 properties, comprising more than 1,980 letting units.
The Company is aiming to become the market leader in the local shopping market
in the UK. In building its portfolio, the Company principally targets
neighbourhood and specialist property in urban conurbations. Typical of the
portfolio are shops in local shopping parades and neighbourhood venues for
convenience or 'top-up' shopping.
For further information on LSR, please visit www.thelocalshoppingreit.co.uk.
For further information on REITS, please visit www.reita.org.
This information is provided by RNS
The company news service from the London Stock Exchange