6 January 2012 - Valuation Announcement
The Board of Matrix European Real Estate Investment Trust Limited announces the valuation of the Group's property portfolio as at 31 December 2011.
Property Portfolio Value
The value of the property portfolio as at 31 December 2011 has fallen slightly to €365.7 million (30 June 2011: €367.2 million), a decrease of 0.4%.
This apparent stability masks a shifting of values within the portfolio. Following the recently announced lease regearing at St Etienne and lease extension at Kaiserslautern the values of these assets have increased, which has helped offset declines in the values of the Dutch and Spanish properties.
The valuations are based upon the valuations provided by the independent valuer (CBRE) in accordance with the Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation Standards and show the "Market Value" assuming an asset sale of each property and allow for acquisition costs incurred by purchasers.
Loan-to-Value Covenants
The LTV as at December 2011 increased slightly to 65.1%, still substantially below the maximum LTV of 75%. At this level the margin on the facility remains at 275bps.
Hedging Contracts
The Group uses financial derivatives to hedge its exposure to movements in interest rates and exchange rates. As at 31 December 2011 the value of the interest-rate derivatives was a liability of £6.9 million, representing an increase in the liability of £0.4 million since 31 December 2010 (£6.5 million).
Over the course of the year, in accordance with the Company's stated strategy, the Group's foreign-exchange derivative ("FX") contract has been steadily reduced. At 31 December 2010, the FX contract was comprised of a capital hedge to exchange €150.0 million for £101.3 million in June 2014 and an income hedge to exchange €5.0 million to £3.7 million on a quarterly basis until June 2014. The contract at that time represented a liability of £37.0m.
Since then, £6 million has been expended in reducing the contract and the capital hedge is now to exchange €116.3 million for £78.5 million in June 2014, the income hedge remains unchanged. The current contract represented a liability of £25.6 million as at 31 December 2011.
The Board intends to continue reducing the capital hedge on a quarterly basis.
Foreign Exchange Covenants
The FX contract is subject to two covenant tests, being that the NAV of the Group must be at least twice the FX liability and must also be a minimum of €75 million. The Group is in compliance with these covenants.
This announcement is not a preliminary statement of the Group's financial results. The financial information contained herein is not audited and is subject to change. The Group expects to publish its audited financial statements for the year ended 31 December 2011 during March 2012.
For further details:
Praxis Fund Services Limited
Shona Darling Phone: +44(0) 1481 755528
Cenkos Securities plc
Dion Di Miceli Phone: +44 (0) 20 7397 1921
Will Rogers Phone: +44 (0) 20 7397 1920
Matrix Group
Ian Blake Phone: +44(0) 20 3206 7155
