Secure Income Reit (SIR) is about to start a new chapter in its life as a public company. The group - which floated in 2014 - managed to refinance its debt last year, and when it completes a secondary placing to replace 43 per cent of the issued share capital with new institutional investors, it plans to start distributing shareholder returns from August 2016.
The payments should be made on a quarterly basis at an annualised rate of 11.75p a share. That equates to a 4.2 per cent yield based on its adjusted net asset value (NAV) of 283p a share, as at 31 December 2015. Net assets were up 9 per cent year on year thanks to a valuation uplift of £83.4m, as well as rising rents and profit on disposals.
Despite jitters about the health of the housing market in the UK, chief executive Nick Leslau suggested a possible correction - which is more likely in his view than a collapse - could prompt investors to seek out companies providing reliable, long-term income. There is a reason why management opted for the title 'secure income'. Nearly all of the Reit's rental income is guaranteed by either Australian group Ramsay Healthcare (au: RHC) or Merlin Entertainments (MERL).
| SECURE INCOME REIT (SIR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 260p | MARKET VALUE: | £469m | |
| TOUCH: | 255-265p | 12-MONTH HIGH: | 308p | LOW: 245p |
| DIVIDEND YIELD: | nil | TRADING PROPERTIES: | nil | |
| DISCOUNT TO NAV: | 7% | NET DEBT: | 160% | |
| INVESTMENT PROPERTIES: | £1.35bn | |||
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014** | 204 | 133 | 150 | nil |
| 2015 | 280 | 39.2 | 20.4 | nil |
| % change | +37 | -71 | -86 | - |
*Pre-IPO figures **Nine-month period | ||||
