Secure Income REIT has today released its interim results for the first six months of the year, announcing its intention to pay distributions from autumn 2016, following the implementation of new financing arrangements.
The specialist long term income REIT put the new financing arrangements, totalling £903 million, in place after 30 June, reducing interest costs by 23 per cent, from 6.8 per cent to 5.2 per cent per annum.
The move extends Secure Income’s terms to maturity from less than two years to nine years and facilitates the initiation of distribution payments, reflecting a yield exceeding 4 per cent with attractive compound growth prospects ahead of inflation.
In addition the interim results reveal a 6 per cent rise in the valuation of Secure Income’s portfolio to £1.3 billion, reflecting a net initial yield of 5.3 per cent and equivalent yield of 6.4 per cent.
The weighted average unexpired lease term of the portfolio is 24 years, with all rents subject to annual fixed rate or RPI linked uplifts. In total the portfolio generates a passing rent of £76 million secured entirely against major global businesses.
Asset sales during the first half of the year, including the freehold sale of the Madame Tussauds building in London (pictured) and that of New Hall Hospital in Salisbury, totalled £382 million.
“Since the start of the year we have secured over £900 million of new financing that, together with proceeds from selective asset sales, replaces our existing debt in its entirety, resulting in significantly lower leverage and a debt package with lower cost and longer maturity,” said Independent Non-Executive Chairman Martin Moore.
“As of autumn next year we will be in a position to begin making attractive cash distributions, thereby providing early delivery on our IPO objective.
“We believe that in the current environment there is a shortage of investment opportunities which provide secure and growing income combined with a good prospect of capital preservation.
“Our portfolio, let to multi-billion pound covenants for an average of over 24 years with annual uplifts in rental, provides a compelling opportunity for investors and we look to the future with confidence.”