Market conditions, echoing economic developments, show signs of stabilising and occupancy levels have held at 82% over the period, in line with our forecast. The company’s active leasing efforts, aimed at defending income and cash flow, have dealt with the majority of the 2016 lease maturities. Costs are being contained and the cash balance has remained strong even before July’s £109m issue of convertible preference shares. Raven Russia Ltd (LON:RUS) is well placed to navigate current market conditions and seize opportunities in an upturn.
Strategy on track in H116
H1 net operating income of $77.0m is only slightly down on the $78.7m of H215. Of the 228k sqm of 2016 maturities at 1 January, just 75k sqm remains to be dealt with, while occupancy has been maintained. Costs have fallen and FX movements were a positive $10.5m, limiting the decline in underlying PBT, $34.6m versus $39.9m in H115. Property revaluation generated only a small negative adjustment and adjusted NAV was stable at $0.70 versus year end. An interim distribution of 1p by way of a tender offer is proposed. The healthy half-year cash balance of $183m has been strengthened further by July’s £109m convertible preference issue, providing additional financial flexibility. Having entered the Russian economic and currency crisis in good shape, Raven’s cautious strategy, aimed at maximising cash flow and paying down debt, positions it well for a turn in the market.
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