CT Property Trust Limited: Trading Update and Net Asset Value
26/04/2023 07:00
To: Company Announcements
Date: 26 April 2023
Company: CT Property Trust Limited
LEI: 231801XRCB89W6XTR23
Subject: Trading Update and Net Asset Value
Headlines
* Net Asset Value (“NAV”) per share of 96.6 pence and NAV total return of
+2.4% for the quarter ended 31 March 2023.
* Share Price total return of -5.2% for the quarter ended 31 March 2023 (64.0
pence per share).
* £90 million term loan at a fixed rate of 3.36% until November 2026. Cash
reserves of £30.8 million and access to a rolling credit facility of £20
million which is currently undrawn.
* Quarterly dividend maintained at 1.0p per share, paid on 31 March 2023.
* As of 31 March 2023, the portfolio occupancy rate was 97.0% by estimated
rental value (“ERV”).
* Portfolio valuation movement of +0.8% over the quarter, supported by
increase in values of industrial and retail warehousing portfolios.
Net Asset Value (‘NAV’)
The unaudited NAV per share of CT Property Trust Limited (‘CTPT’) as at 31
March 2023 was 96.6 pence. This represents an increase of 1.3% from the NAV
per share as at 31 December 2022 of 95.4 pence and a NAV total return for the
quarter of 2.4%.
The NAV is based on the external valuation of the Company's property portfolio
prepared by Cushman & Wakefield.
The NAV is calculated under International Financial Reporting Standards
("IFRS").
The NAV includes all income to 31 March 2023 and is calculated after the
deduction of all dividends paid prior to and including that date.
Breakdown of NAV movement
Set out below is a breakdown of the change to the unaudited net asset value
per share calculated under IFRS over the period from 31 December 2022 to 31
March 2023.
Pence per share % of opening NAV
Net asset value per share as at 31 December 2022 95.4
Unrealised movement in valuation of property portfolio (including the effect of gearing) 0.9 0.9*
Net revenue 1.3 1.4
Dividends paid (1.0) (1.0)
Net asset value per share as at 31 March 2023 96.6 1.3
* The un-geared unrealised capital return of portfolio over the quarter to 31
March 2023 was 0.8%.
Matthew Howard, Fund Manager, CT Property Trust, commented:
Following the rapid repricing of real estate in the second half of 2022, the
early part of 2023 has shown a stabilisation in yields for some property sub
sectors. Industrial/logistics property and retail warehousing in particular is
attracting renewed investor interest. There were early signs in December that
the market was emerging from a period of ‘pricing discovery’ with an
uptick in investment activity following the relative market paralysis between
September to November. These cautious steps have continued into Q1 with
investment activity gathering pace as we head into the spring. Increasing
confidence in real estate pricing has been supported by the stability in
10-year UK government bonds, which over the past 5 months have trended around
the 3.5% level (having peaked at 4.6% in September) meaning the pricing margin
to UK real estate is closer to the generally accepted long term risk premia.
As such, yields for resilient assets and sectors have seen some marginal
appreciation since the start of the year suggesting that the worst is behind
us for ‘relevant’ real estate. This is reflected in the capital return of
our industrial and retail warehouses (representing 77.9% by value of the
portfolio), which were +0.8% and +2.5% respectively. We also saw a small
rebound of +0.7% in our high street assets, a sector that has been largely
repriced in recent years and offers an attractive income return for the
portfolio. As always, the markets remain nuanced. Prime offices, of high
quality, strong amenity and ESG credentials have seen some value
stabilisation, but we expect values for offices of a quality below the
best-in-class to remain under pressure owing to the ongoing uncertainties and
structural risk repricing for this property segment. Our offices saw capital
loss of -1.6% over the period.
The MSCI monthly data indicates that All-Property capital values moved -1.2%
at a market level for Q1 2023. This may reflect a degree of overhang from Q4,
with March showing positive capital movements on a monthly basis for the first
time since June 2022. The quarterly data, which reflects a larger pool of
funds, will be released in a few weeks.
In context of the recent economic backdrop, we have spoken much of the
continued positive news within the occupational markets. At a market level, we
saw rental growth within the logistics market in excess of 10% over 2022, with
vacancy rates remaining at near record lows nationally. Trading within retail
warehouses now exceeds that of pre-pandemic levels and, as a format, is
attractive to retailers as part of omni channel sales strategies, a trend
which has caused a headache for shopping centres and high street assets.
Our investment strategy to focus on resilient locations, smaller assets and
active management will be key to our performance as markets continue to adopt
a cautious view of the year ahead. Occupiers, although proving resilient, are
still navigating inflationary pressures and the full effects of consumer
credit squeeze are perhaps yet to be completely felt. Against this backdrop,
we remain confident in our conviction position to industrial and retail
warehousing and the prospects for portfolio income and capital growth in the
near term.
Portfolio Performance
The capital return of the Company’s portfolio was 0.8% over the quarter,
reflecting some marginal pricing recovery across all sectors save for offices.
The portfolio occupancy level remains robust at 97.0%, while rent collection
for Q1 2023 stands at 99.2% to date.
The weighted average unexpired lease term (“WAULT”), assuming all break
options are exercised, fell slightly from 6.2 years to 5.9 years. The WAULT of
the portfolio offers an attractive balance of lease term and active management
opportunity with a spread of lease events over the short and medium term to
allow us to capture the portfolio’s inherent reversionary potential. When
comparing estimated rental values against the annualised passing rent at the
latest valuation date, the portfolio reflects a reversionary income potential
of 18.2%. This is before factoring in any further rental growth and
demonstrates one of the key drivers of future income growth.
Portfolio Activity
Our industrial portfolio accounts for 56.0% of portfolio value and retains a
100% occupancy rate, alongside a current ERV approximately 30% above the
passing rent. Recent activity includes:
* Rent reviews dated June 2021 were concluded with Westgate Handling Services
on two units at Lakeside Logistics Centre in Heathrow, at a combined rent of
£322,360 per annum representing a 32% uplift to the previous rent.
* A rent review dated May 2022 was concluded with Specsavers at Wide Lane,
Eastleigh, at a rent representing a 24% uplift to the previous passing rent.
Our retail warehouse portfolio remains 100% occupied and leased to a tenant
base focussed on the ‘essential’ retailing’ market. This sector accounts
for 21.9% of portfolio value.
The high street retail sector reflects 6.4% of portfolio value and focuses on
core neighbourhood and convenience sub-markets. The portfolio remains near
fully occupied with a number of leasing events completing over the quarter:
* A 5-year lease renewal was concluded with Cancer Research at 47 High Street
in Rayleigh, at a rent of £31,800 per annum, reflecting a 3.4% uplift to the
passing rent.
* A 5-year lease renewal was completed with Holland & Barrett at 55A High
Street, Rayleigh, maintaining the passing rent of £44,400 per annum.
The office portfolio is 88.2% occupied by ERV and accounts for the majority of
all-portfolio vacancy. Recent activity includes:
* At Glory Park in High Wycombe, terms agreed with an existing occupier to
take a further lease of the 2(nd) floor within the building at a rent
reflecting £24 psf. The incumbent tenant is paying an early surrender premium
for a coterminous surrender and reletting.
Investment Activity
No sales or purchases concluded over the quarter.
Cash and Borrowings
As at 31 March 2023, the Company had approximately £30.8 million of available
cash and an undrawn revolving credit facility of £20 million. The £90
million long-term debt with Canada Life and the £20 million revolving credit
loan facility with Barclays (which is undrawn) do not need to be refinanced
until November 2026 and March 2025 respectively. As at 31 March 2023, the LTV
(net of cash) was 22.3%.
Share Price
The share price was 64.0 pence per share as at 31 March 2023, which
represented a discount of 33.7% to the NAV per share announced above. The
share price total return for the quarter was -5.2%.
Dividend
On 2 March 2023, the Company announced a quarterly dividend payment of 1.0
pence per ordinary share in respect of the financial year ended 30 June 2023,
which was paid to shareholders on 31 March 2023. The Board will continue to
monitor rental receipts and earnings closely and keep the future level of
dividends under review.
Portfolio Analysis
£m % of portfolio as at 31 March 2023 % capital value return in quarter
Offices 45.4 15.7 (1.6)
· South East 25.8 8.9 (2.2)
· Rest of UK 19.6 6.8 (0.8)
Industrial, logistics and distribution 161.4 56.0 0.8
· South East 161.4 56.0 0.8
Standard Retail 18.5 6.4 0.7
· West End 5.8 2.0 0.4
· Rest of London 1.2 0.4 (2.1)
· South East 8.3 2.9 2.3
· Rest of UK 3.2 1.1 (1.6)
Retail Warehouse 63.0 21.9 2.5
Total Property 288.3 100.0 0.8
Summary Balance Sheet
£m Pence per share % of Net Assets
Property Portfolio per Valuation Report 288.3 124.2 128.6
Adjustment for lease incentives (4.2) (1.8) (1.9)
Fair Value of Property Portfolio 284.1 122.4 126.7
Cash 30.8 13.3 13.7
Trade and other receivables 7.0 3.0 3.1
Trade and other payables (7.6) (3.3) (3.4)
Interest-bearing loans (90.0) (38.8) (40.1)
Net Assets at 31 March 2023 224.3 96.6 100.0
The property portfolio will next be valued by an external valuer during June
2023, and it is expected that the net asset value per share as at 30 June 2023
will be announced in July 2023.
Important information
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014. Upon the publication of this announcement via Regulatory
Information Service this inside information is now considered to be in the
public domain.
Enquiries:
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Tel: 01481 745001
Matthew Howard
Scott Macrae
Columbia Threadneedle Investment Business Limited
Tel: 0207 628 8000
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