On a stronger footing
- 2H23 NPI grew 21.1% y-o-y to GBP21.4m on settlements for dilapidation in relation to vacated assets
- 2H23 DPU of 1.33 pence (90% payout) was lower than our estimates, due to dilution from larger share base post-preferential offering
- Cut FY24F DPU by 15% due to enlarged equity base; we see it as a small trade-off for a stronger foundation to grow
- Maintain HOLD with revised TP of GBP0.28
2H23 results highlights
- Revenue grew 0.9% y-o-y to GBP18.5m in 2H23 from GBP18.4m in 2H22, attributable to higher revenue from rent escalations of c.13.1% for 136 assets but partly offset by eight assets vacating from April 2023
- Net property income increased 21.1% y-o-y to GBP21.4m in 2H23 from GBP17.6m in 2H22, mainly due to settlements for dilapidation in relation to vacated assets
- Distributable income declined 19.8% y-o-y to GBP8.7m in 2H23 from GBP10.9m in 2H22 on increased borrowing costs, partly mitigated by lower debt levels
- DPU fell to 1.33 pence (90% payout ratio) in 2H23 from 2.25 pence (100% payout ratio) in 2H22, due to a lower payout ratio and inclusion of Preferential Offering units in 2H23 which led to an enlarged share base
- NAV per unit declined to GBP0.43 as at 31 December 2023 from GBP0.52 as at 31 December 2022
- Gearing ratio stood at 49.6% as at 31 December 2023, but would have declined to 43.7% including the effects of the GBP28m Preferential Offering
- High portfolio occupancy of 92.3% as at 31 December 2023, with ~100% of rent for 4Q23 paid in advance and within seven days of the due date
- Long WALE at 4.2 years as at 31 December 2023
