Invista European Real Estate Trust has revealed a 10% fall in its net asset value to €0.415 (33.4p) a share in the quarter to the end of June.
The pan-European listed fund, which has been managed by Internos Real Investors since January, also reported a 2.9% slide in the value of its direct property portfolio from €434.9m at the end of March to €422m at 30 June.
IERET said the €12.9m drop was “a result of market sentiment in the eurozone and pressure on portfolio income from vacancy and approaching lease breaks”.
There were no property transactions during the quarter.
As the end of the quarter, the vehicle’s portfolio generated gross income of €34.3m pa, representing a gross income yield of 8.12% and a net income yield of 7.37%.
The portfolio weighted average lease term to break is 4.4 years and 5.7 years to expiry. The portfolio void level by income as at 30 June 2012 was 16.6%, however post quarter end portfolio vacancy by income increased to 20.6% following tenants vacating logistics sites in France and Czech Republic.
Net assets increased €22.7m quarter-on-quarter due to reclassification of an asset held for sale and liabilities attributable to it, to stand at €36.6m at the end of June.
As at 30 June 2012, IERET had drawn down a total of €286.7m of senior debt in respect of its €359.3m facility with the Bank of Scotland. In addition, the company had cash balances of €24.3m, giving a net debt position of €262.4m, reflecting a net loan-to-value ratio of 62.2%, and gross debt LTV, on which the bank covenants are tested and the margin determined, was 67.9%.
IERET said: “With an uncertain outlook, occupiers are adopting a cautious approach and this is reflected in falling demand for space, as take-up slowed in many markets over the first six months of 2012. Following a relatively robust level of take-up in H2 2011, demand in the French logistics market for H1 2012 was down 55% on the previous six months (BNP Paribas).
“With a weakened outlook for French manufacturing and export industries, it is likely that take-up for the full year will be weaker than 2011.
“The German office market has also experienced a decline in take-up with a fall of 10.5% year-on-year in the first six months of 2012 (Savills). Demand for prime German retail space appears to be holding up, with national and international retailers looking to benefit from the relatively robust, for the time being, level of domestic demand.
“In the investment market, a total of €24bn was transacted in Q2, representing a slight fall of 2% on Q1 2012 and a decline of 6% on Q2 2011 (CBRE). The core markets of UK, Germany, France and the Nordics accounted for 87% of investment as investors continue to be risk-averse.
“The office sector increased its share of investment, accounting for 52% of investment with the retail sector experiencing lower levels of investment in recent quarters with 25% of investment as the availability of prime product remains low (CBRE).”
bridget.o’connell@estatesgazette.com
