Ediston Property’s (EPIC ) strategic review is nearing completion and the real estate investment trust expects to make an announcement ‘shortly’ on how it intends to maximise shareholder value and remove its 21% share price discount. 

At 64p each, shares in the £171m retail park portfolio are back to where they were when EPIC’s chair William Hill kicked off the search for potential merger partners in March.    

In a trading update last week, the 8% dividend-yielder said it was ‘encouraged by the progress’ made in the review and said portfolio manager Calum Bruce had been focusing on squeezing gains from a commercial property market that remains ‘on pause’ amid the uncertainty over interest rates and inflation.

EPIC reported a 2.03% like-for-like increase in its valuation to £208m in the three months to 30 June, which edged the net asset value (NAV) per share slightly higher to 80.77p from 80.44p at 31 March. The shares have risen 12% this year but are down 12% over one year.

Bruce said investors were adopting a wait-and-see approach and ‘looking for some stability before buying or selling properties’.

‘As a result, investment volumes remain below long-term averages and valuations were broadly flat in the quarter, albeit the office sector continues to see the largest declines in value,’ said Bruce.

The strategic review has been the reason EPIC’s monthly dividend – which it maintained at 1.25p per share over the quarter – has remained uncovered, with just 55.5% contribution from rental income. The closed-end fund has £45.1m in cash for investment and operational purposes and another £31.2m in cash in its debt facility, although this is subject to the lender’s loan-to-value requirements being met before it can be released.

‘To provide maximum flexibility for the strategic review, the board has paused the investment of surplus cash until the outcome of the review has been determined,’ said the trust.

‘The dividend will therefore remain uncovered and funded from cash resources.’

Bruce has not been idle while the review has been in progress, completing seven deals that secured £437,000 of income a year.

These included signing a five-year lease with Superdrug for a unit at EPIC’s Prestatyn Shopping Park for a rent that is 2% ahead of the independent valuer’s estimated rental value. At the same shopping park, leases were extended for five years with Card Factory and David J Jones Furniture Craftsmen.

At Widnes Shopping Park, EPIC increased the rent by 35% on its drive-thru outlet leases to KFC and also signed a 10-year lease with pet store Jollyes after Poundland moved out of the space into a larger unit.

Bruce also continued the company’s rollout of electric vehicle charging points by signing two leases with Osprey Charging, which will install three charging points each in two retail parks, in Rhyl and Barnsley, with more to be installed across the portfolio in the coming months.

‘It is testament to the strength of the company’s assets that not only do existing tenants want to remain on the parks, but new tenants can see the benefits of the properties and want to be there too,’ he said.

He said there are further deals in the pipeline to progress lettings and lease restructures that should improve the income stream and reduce the vacancy rate, which moved from 6.7% to 6% over the quarter.