Alternative Income’s discount to net asset value has widened to 23%, as valuations fall by 12.7%.
Despite rising rents, the REIT saw pretax profit fall from £13.2m last year to a loss of £5.2m. The discount to NAV was 14.8% at the previous year end.
Chair Simon Bennett said he recommended shareholders vote in favour of retaining the ability for the board to issue and buy back shares at the forthcoming AGM.
He said: “Although these powers have not been used to date, they could prove important.”
The REIT’s portfolio value of 19 properties fell from £117m to £107m, though annual rents of £7.6m were up from £7.2m the previous year. The portfolio is widely held in non-traditional sectors, with 23% in industrial, 18% in hotels and 16.8% in healthcare. Its most valuable property, at £12m, is the Bramall Court residential scheme in Salford, let to the Mears Group for £734,600 per annum.
Bennett added: “The impact of rising interest rates has affected real estate valuations and share prices detrimentally, with a significant downward movement in valuations particularly in the first half of the financial year.”
However, he added that “valuations of the group’s portfolio have now stabilised”.
In August, the REIT sold its Mercure City Hotel in Glasgow to its tenant, S Hotels & Resorts for £7.5m. The property accounted for 6.5% of the REIT’s portfolio at 30 June and the sale represents a 7.9% premium on the book value.
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