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A property hedge against UK inflation risk

A well-managed commercial property Reit is delivering valuation uplifts, and offers a valuable inflation hedge for shareholders, too
A property hedge against UK inflation risk
  • Net asset value (NAV) per share up 11.3 per cent to 96.4p in 12 months to 30 June
  • Full-year EPRA earnings per share (EPS) increases 9.5 per cent to 5.55p
  • Fully covered annual dividend rises seven per cent to 5.5p

Alternative Income Reit's (AIRE:78p) fourth-quarter results highlight a well-managed commercial portfolio of 19 freehold and long leasehold properties that is delivering valuation uplifts, and offers a valuable inflation hedge for shareholders, too.

That’s because 96 per cent of contracted rents are linked to UK inflation (44 per cent reviewed annually), and 59 per cent of group rental income will be reviewed over the next 12 months. Eight of the forthcoming reviews are annual index-linked rent reviews, and six are periodic reviews coming three or five years after the last review. The point is that even if the £118mn portfolio continues to be valued on a net initial yield of 5.7 per cent, the uplift in annualised contracted rental income of £7.28mn will drive valuations higher.

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