ING UK Real Estate Income Trust bags £20m profit

The ING UK Real Estate Income Trust, which has seen its net asset value rise by 10.8% over the first six months of the year, has negotiated a new debt facility.

In its half yearly results the trust said that it has begun transferring the assets it picked up from the acquisition of the Rugby Real Estate Investment Trust offshore.

The group’s NAV rose from £181.1 million at the start of the year to £203 million on June 30 with its NAV per share rising from 55p to 59p. The trust posted a £20.8 million pre-tax profit and paid £6.6 million in dividends.

Chairman Nicholas Thompson said that the dividend is 1.36 times covered and the Rugby acquisition will add value to shareholders.

However, he warned that the recent strong rebound in property prices appears to have been a short-term reaction to the sell-off.

‘This has now largely run its course,’ he said. ‘We believe a further improvement in the underlying economic position within the UK is required to improve occupier demand and rental growth.’

He expects income to generate the bulk of returns in the current climate and stressed the trust remains focused on maintaining strong occupancy.

That said some 47.3% of the trusts’ property tenants have less than five years on their lease and 34.4% between five and 10 years.

In terms of the new debt facility, the trust has is transferring assets from the Rugby acquisition into Guernsey-domiciled companies for tax efficiency reasons. This has also enabled the trust to renegotiate its associated debt facility, reducing it to £21.3 million. The prepayment fees payable have fallen from 0.5% to 0.25% but there is a requirement to hedge at least 50% of the facility amount based on a margin of 185 basis points above Libor.