RNS Number : 4084I
ING UK Real Estate Income Trust Ltd
18 November 2008
 



ING UK Real Estate Income Trust Limited

Interim Management Statement


Please find attached via the link below, the Interim Management Statement for ING UK Real Estate Income Trust Limited for the period 1 July 2008 to 30 September 2008:


http://www.ingreit.co.uk/default.aspx?page=investor-relations-quarterly&folder=1


With recent guidance from the FSA/AIC we have included the unedited full text of the announcement below:-


ING UK Real Estate Income Trust Limited

Q3 Interim Management Statement


Facts & Figures (At 30 September 2008)


Launch Date

25 October 2005

Shares in issue

330.4 million

Share Price

46 pence

Dividend

4 pence (annual) *

Market Capitalization

GBP 151.98 million

Net Asset Value

GBP 276.9 million

Property Value

GBP 486.9 million

Net Asset Value per Share

83.8 pence

Number of Properties

52

Average Lot Size

GBP 9.4 million

Average Lease Length

8.76 years

Current Debt

GBP 282.2 million

Net Gearing **

42.3%

Weighted Average Cost of Debt ***

5.09%

Financial Year End

31 December 2008

Half Year

30 June 2009

Dividend Payment Dates

Aug/Nov/Feb/May

Total Expense Ratio

1.31% Annualised to 30 September 2008


       *      With effect from 04/11/08

**      Net gearing is calculated as total debt less cash deposits as a proportion of gross property asset value.

     ***      Excluding loan arrangement costs

Source: ING Real Estate


Key Highlights


>  NAV of approximately 83.8 pence per share.

>  GBP 15 million of disposals completed over the quarter. 

>  Following quarter end repayment of £57.2 million of non-securitised debt.

>  Revised Annual Dividend of 4 pence per share.




About the Company


The Company is a closed-ended, Guernsey registered investment company. The Company was launched on the London and Channel Islands' Stock Exchanges on 25 October 2005. The investment portfolio is managed by ING Real Estate Investment Management (UK) Limited, a member of the ING Group.



Investment Objectives and Process


The Company's aim is to provide shareholders with an attractive level of income together with the potential for capital growth.


The Company will invest both directly and indirectly in UK commercial real estate. The Manager's investment process is research-led, guided by an interactive top-down and bottom-up approach. 



Performance


As at 30 September 2008 the Net Asset Value of the Company was GBP 276.9 million, reflecting approximately 83.8 pence per share. In line with the underlying real estate market, the underlying property portfolio saw a capital decline of -6.4%, which resulted in a reduction to the NAV of approximately 12.9 pence per share or a decrease of 13.3% over the quarter.



IRET - NAV & Share Price

Date

NAV

Share Price (as at quarter end)

31 March 2006

110 pence

120.25 pence

30 June 2006

117 pence

114.75 pence

30 September 2006

123 pence

122.5 pence

31 December 2006

126 pence

118 pence

31 March 2007

129 pence

121 pence

30 June 2007

133 pence

106.25 pence

30 September 2007

124 pence

101.5 pence

31 December 2007

112 pence

69.5 pence

31 March 2008

102 pence

69 pence

30 June 2008

97 pence

47.5 pence

30 September 2008

84 pence

46 pence



Changes in Capital Structure


There were no changes to the capital structure over the quarter. Following the Quarter End, the company repaid GBP 57.2 million of non-securitised debt, reducing the overall level and cost of debt to GBP 225 million and 4.86% respectively.  



Diversification

Sector

Weighting (%)

Retail  

12.7%

Offices  

48.1%

Industrial  

28.5%

Leisure 

4.0%

Retail Warehouse  

6.8%


Geographical

Weighting (%)

Central London

9.7%

Greater London

6.0%

South East

24.2%

East  

11.1%

Midlands  

17.8%

South West 

5.2%

North  

15.1%

Wales  

6.2%

Scotland  

2.9%

Offshore UK  

1.7%



Security of Income


As a percentage of current net annual rent, the length of the lease to the first termination is summarised below. 

Lease Length

%

0 - 5 years

39.8%

5 - 10 years

32.2%

10 - 15 years

17.4%

15 - 25 years

6.9%

25 + years

3.6%




The covenant strength, based as a percentage of current passing rent by risk rating, is shown in the table below. The Company also holds GBP 1.38 million in rental deposits.


Risk Rating


Negligible (%)

Low

(%)

Low-Med (%)

Med-High (%)

High

(%)

Max

(%)

Un-Scored + Ineligible (%)

ING UK REIT

48.63

25.32

9.1

4.8

2.39

7.01

2.76

IPD Benchmark

40.79

24.98

13.59

5.12

4.01

5.27

6.25



Acquisitions and Disposals


Over the quarter the company completed on the disposal of assets in Balham and Mitcham for GBP 15 million. It also exchanged contracts on the disposal of an asset in Fulham for GBP 4.7 million.  



Fund Managers Commentary


The quarter witnessed the failure of major financial institutions, which has resulted in a systematic shock to capital markets and required central bank and government intervention.  


Amidst this turbulence, the UK commercial real estate market has seen yields continue to rise across all sectors and an increased rate of capital value decline with transaction volumes quarter on quarter continuing their decrease. IPD monthly Capital Growth Index showed a decline of -6.2% over the quarter and a decline of approximately 25% since its peak in June 2007.


With the changes announced to the level of dividend, the Company now operates a fully covered position (approximately 125%) which will strengthen its ability to withstand the challenging economic climate. The portfolio remains well balanced and diversified across assets, sectors and geographically. The Manager remains focussed on the need to ensure the net debt position is maintained in light of continued weakness in underlying market.



Important Information


This newsletter is issued by ING UK Real Estate Income Trust Limited ("IRET"). It is based on information supplied by the Investment and Property Manager, ING Real Estate Investment Management (UK) Limited. This newsletter is intended for shareholders of IRET only. The provision of the information herein is permitted under Article 43 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. It is not a recommendation to deal or refrain from dealing in the shares of IRET. This newsletter should not be passed to any person other than an existing shareholder in IRET or their professional adviser. Any shareholder who requires advice on their investment in IRET should contact their stock broker, bank or independent financial adviser. This newsletter has been approved by ING Real Estate Investment Management (UK) Funds Ltd which is authorised and regulated by the Financial Services Authority.


Contact Information



Fund Administration

Mark Vidamour

Northern Trust International Fund

Administration Services (Guernsey) Limited

P.O. Box 255Trafalgar Court, Les Banques, 

St Peter PortGuernsey GY1 3QL

T: 01481 745 001


Broker

William Simmonds

JP Morgan Cazenove

20 Moorgate, LondonEC2R 6DA

T: 020 7588 2828

Investment and Property Manager

Michael Morris

ING Real Estate Investment Management (UK) Limited

2nd Floor, 25 Copthall AvenueLondonEC2R 7BP

T: 020 7767 5600


Website

www.ingreit.co.uk





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