M7 Regional E-Warehouse REIT’s net asset value (NAV) fell by -18.10% for the quarter ended 31 December 2022.
The value of its portfolio decreased by £6.73m in the quarter to £106.5m – a 5.97% reduction against the property valuation at 30 September 2022 (£112.78m). The REIT said this was due to the rerating of UK commercial property values.
Its operating profit increased 6.9% to £1.7m in the reporting period, with an IFRS loss before tax of £6.69m, ‘primarily resulting from the market wide reduction in property value’.
The board reported it would pay a dividend of 2p per share for the quarter, in line with its annual 8p, or 8%, target.
James Max, non-executive chairman of M7 Regional E-Warehouse REIT, said: “Our fourth quarter performance and continued strong rent collection helped drive further growth in operating profit and a further interim dividend, which provides investors with an attractive 7.2% dividend yield for the financial year (8 pence per share), in line with expectations.
“In our Q3 update we noted the significant headwinds facing the economy and the resultant impact on the commercial real estate sector. This led to a rerating of UK commercial property and a fall in values across the sector in general during Q4. “However, the broad composition and strong income characteristics of M7 Regional E-Warehouse REIT’s portfolio mitigate this with the company reporting a 6% fall in the valuation over the period. We continue to closely monitor the financial performance of our tenants and to explore every opportunity to reduce costs and drive income as well as opportunistic disposals of particular assets.”
He added: “We have maintained the attractive dividend in 2022 and in light of anticipated increased cost of debt post refinancing in August 2023 will pay careful attention to the feasibility of maintaining this level of dividend in the short term. Despite this the portfolio has a strong income return and cash flow which in the current economic situation is a positive differentiating factor for the portfolio, which gives us confidence about the future prospects of the business.”
