Comparatives are not straightforward with half-year results from Secure Income Reit (SIR), because the landlord's initial public offering came just last June. However, measuring its progress from the December 2014 year-end provides ample evidence of the group's impressive performance, with net asset value since then jumping by 29 per cent.
Mindful of its Reit status, Secure Income expects to start dividend payments in the autumn of next year, with a proposed yield of over 4 per cent, thanks to a revised debt structure. Over £900m of fresh financing has been secured, replacing existing borrowings due in 2017 with nine-year debt, and reducing the weighted average cost of debt from 6.8 per cent to 5.2 per cent. Asset sales in the first half also fetched £382m - an 8 per cent premium to December 2014 book values - and included the freehold on Madame Tussauds and the New Hall Hospital in Salisbury.
The group benefits from a very high-quality rental stream: over half the rent roll is guaranteed by Ramsay Health Care (Aus: RHC), one of the five largest private hospital groups in the world, while a further 39 per cent is backed by Merlin Entertainments (MERL), the largest operator of visitor attractions in Europe. Unexpired lease terms average 24 years, and all rents are subject to annual uplifts at fixed rates or linked to retail price inflation.
| SECURE INCOME REIT (SIR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 250p | MARKET VALUE: | £451m | |
| TOUCH: | 245-255p | 12-MONTH HIGH: | 345p | LOW: 250p |
| DIVIDEND YIELD: | nil | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | 5% | NET DEBT: | 230% | |
| INVESTMENT PROPERTIES: | £1.35bn | |||
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014* | 112 | 12 | 80.0 | nil |
| 2015 | 264 | 103 | 58.7 | nil |
| % change | - | |||
*Three months to June 2014 | ||||
