27 October 2023

Value and Indexed Property Income Trust PLC - VIP

Portfolio Update as at 30 September 2023

The Board of Value and Indexed Property Income Trust PLC ("VIP"), the specialist trust investing directly in UK commercial property to deliver long, strong, indexed income, announces a portfolio update ahead of its results for the half year ended 30 September 2023, which will be released in mid-November 2023.

Portfolio Update

Savills' independent valuation as at period ended September 2023 totalled £135.45 million (31 March 2023: £150.50 million) with a running yield of 6.5% (31 March 2023: 6.2%) reflecting a net initial yield of 6.1% (31 March 2023: 5.8%) after deducting notional purchase costs.   The average lot size is £3.9 million. 

The valuation reflects a 5.0% like-for-like reduction in capital value, of the 35 properties held over the six months, due to the impact of rising interest rates across the property investment market and economic and political turbulence.  The total return, taking capital and income together was -1.8%.  This is likely to be slightly behind VIP's MSCI Quarterly Index Benchmark, as VIP's portfolio outperformed on the income front but underperformed on capital. 

Four overrented properties were sold over the six month period, two pubs, a supermarket and a petrol filling station for a gross total of £8.08 million (+2.9% on March 2023 valuation).  Several acquisitions are under negotiation to reinvest the proceeds of these sales in properties at higher yields with longer leases and better long term growth prospects. 

Contracted income from the 35 properties is now £8.795 million (31 March 2023: £9.338 million from 39 properties). 65% of rental income comes from the top six tenants - Marks & Spencer, Government/Local Authorities, Ten Entertainment Group, Premier Inn, Sainsbury's, and Parkdean Resorts. 

The portfolio remains fully let with 100% of rent collected.  VIP has no exposure to offices, high street retail or shopping centres.  The seven sectors by rental value are: supermarkets, industrials, bowling, other (caravan park plus a library), hotels, pubs and roadside in that order.

Annual rent increases were completed at five properties over the six months, with an average uplift of +3.8% on their passing rents (three with RPI-linked increases and two with fixed uplifts).  Nine further rent reviews are due up to the period ending 31 March 2024.

VIP has a resilient, diversified portfolio with strong tenants and long leases. The weighted average unexpired lease is 11.9 years (if all breaks are exercised), with 69% of the rental income linked to RPI, 12% linked to CPI, 15% with fixed increases and 4% with open market upward only rent reviews.  

97% of the portfolio now has EPC ratings of A to C (31 March 2023: 96%) and we continue to work with our tenants to upgrade properties and improve energy efficiency.

Savills independently revalue the property portfolio on a half-yearly basis at 31 March and 30 September.

Enquiries:

OLIM Property Limited, Investment Manager

Tel: 020 7846 3252

Matthew.oakeshott@olimproperty.co.uk

Louise.cleary@olimproperty.co.uk

Berenberg

Gillian Martin / Richard Bootle

Tel: +44 (0)20 3207 7800