“More of the same may look boring, but it’s what our shareholders like,” says Mike Brown of Prestbury Investments, the investment manager for Secure Income Reit (SIR). Adjusted net asset value (NAV) rose by 9.9 per cent to 355.5p for the six months to June 2017, well above the sector average of 2 per cent, and the quarterly dividend was increased to 3.5p a share, implying an annualised dividend yield of nearly 4 per cent. The NAV growth plus dividends added up to a total shareholder return of 11.7 per cent over the six months.
The portfolio comprises 81 properties, a third of which are well-known leisure attractions operated by Merlin Entertainments. Just over half the portfolio comprises hospitals, mostly run by a subsidiary of Ramsay Health Care, while Travelodge Hotels make up around 12 per cent. The common theme running through the portfolio is long leases, as much as 25 years with minimum fixed annual rent rises, generating annualised passing rent at the half-year of £95.2m.
Demand for quality assets is such that it is easier to raise money than it is to invest it wisely, and Secure Income maintained its strict acquisition criteria by not chasing assets.
Analysts at Stifel are forecasting adjusted NAV per share at the December 2017 year-end of 356p, up from 324p in 2016.
| SECURE INCOME (SIR) | ||||
| ORD PRICE: | 356p | MARKET VALUE: | £821m | |
| TOUCH: | 354-358p | 12-MONTH HIGH: | 367p | LOW: 297p |
| DIVIDEND YIELD: | 2.7% | TRADING PROP: | nil | |
| PREMIUM TO NAV: | 1% | |||
| INVESTMENT PROP: | £1.73bn | NET DEBT: | £878m | |
| Half-year to 30 Jun | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p*) |
| 2016 | 296 | 25.9 | 14.1 | 2.9375 |
| 2017 | 353 | 88.2 | 37.7 | 6.6 |
| % change | +19 | +241 | +167 | - |
| Ex-div: | - | |||
| Payment: | - | |||
| Dividends paid quarterly, with 3rd quarter of 3.5p paid on 25 Aug. Only one quarter paid in previous first half | ||||
