Kenmore European Industrial Fund makes strong progress
Kenmore European Industrial Fund announces interim results for the six months to 30 June 2007.
28 August 2007
The Kenmore European Industrial Fund, a Guernsey registered closed-ended investment company focusing on industrial property assets in Western Europe and Scandinavia, today announces interim results for the six months to 30 June 2007. The Company successfully raised £140 million on the London Stock Exchange in September 2006
Highlights
• Profit before tax of £15.7 million
• Adjusted Net Asset Value per share up 22% to 116.3p from 95.5p at Admission and up 5% from 110.3p at 31 March 2007
• Portfolio valued at £356 million – in the three months to 30 June 2007 the value of the property portfolio increased by 4.0% measured against value at 31 March 2007
• Seed portfolio increased in value by 7.7% to £237 million during the reporting period
• Acquisition of a further £48 million of assets in the period under review, with a further £37 million in solicitors’ hands
• Company on track to be fully invested shortly after the first anniversary of its Admission
• First dividend of 1.5 pence per share paid; additional interim dividend of 3.0 pence per share declared
The Company will shortly have completed its first year of trading since its shares were listed on the London Stock Exchange in September 2006. Since then, it has made significant progress in terms of achieving its investment objective of providing investors with an attractive level of income together with the potential for capital growth through the acquisition and management of industrial property assets throughout Western Europe and Scandinavia and the Company is firmly on track to be fully invested shortly after the anniversary of admission.
Giles Weaver, Chairman, commented:
“We have built a strong income-generating portfolio which, despite interest rate increases, continues to enjoy strong tenant interest. In addition, we continue to see ongoing demand for specialist investment vehicles such as KEIF from both indigenous and overseas investors which we believe will ensure the ongoing strength and liquidity of the European real estate markets.
“As KEIF reaches the status of being fully invested, the Board is actively considering its strategic options with regard to sourcing and financing the Company’s further growth. With the benefit of the Investment Manager’s specialist expertise and its established presence in our target markets, KEIF is well placed to continue to take advantage of opportunities to create and enhance shareholder value.”
In the three months to 30 June 2007 the value of the property portfolio increased by 4.0% measured against value at 31 March 2007.
The Company continues to see good growth in net asset value (“NAV”) per share. On the Company’s Admission, the Prospectus suggested that the adjusted net assets of the Company would be 95.5 pence per share excluding deferred tax on unrealised investment gains.
Since then KEIF has seen adjusted NAV per share increase to 116.3 pence as at 30 June 2007, representing an increase of 22% since Admission and 5% since 31 March 2007. Including (both recognised and unrecognised) deferred tax, NAV per share is 87.0 pence, an increase of 11.5% compared to the pro-forma figure on Admission of 78.0 pence and 2.6% since 31 March 2007.
In keeping with the expectation stated in the Company’s launch Prospectus, the board has decided to declare an interim dividend in respect of the 2007 financial year of 3.0 pence per share, which will be paid on 26 September 2007 to shareholders on the register on 7 September 2007.
The concentration of assets in France, which the Company acquired on Admission, has been successfully diluted by strong acquisition activity in other countries, with over one-third of the Fund’s portfolio now located in Scandinavia.
The Company has continued to make good progress in its acquisitions programme since the period end. Acquisitions completed or in solicitors’ hands currently amount to £37 million. If the transactions being progressed are completed as expected then these, combined with the existing portfolio, will represent approximately 92% of the Company’s gross property assets when fully invested and mean that the Company is firmly on track to be fully invested shortly after the anniversary of Admission.
At 30 June the portfolio produced a net yield of 7.54%. If the transactions referred to above complete, the net yield will decrease to 7.49%. Completing these transactions will also improve the geographic diversity of the portfolio, with a continued dilution of the concentration of assets in France.
At 30 June 2007, £204 million of bank debt has been drawn representing gearing on property at value of 57%. 91% of debt drawn has been protected against movements in interest rates. As at 30 June 2007, the mark to market increase in the value of those interest rate hedges since Admission is £3.9 million.
As KEIF reaches the status of being fully invested, the Board is actively considering its strategic options with regard to sourcing and financing the Company’s further growth. With the benefit of the Investment Manager’s specialist expertise and its established presence in our target markets, KEIF is well placed to continue to take advantage of opportunities to create and enhance shareholder value.