REG-UK Comm Prop Tst Ltd: Net Asset Value(s) <Origin Href="QuoteRef">UKCM.L</Origin>
12/02/2015 07:01
12 February 2015
UK Commercial Property Trust Limited ("UKCPT" or the "Company")
Net Asset Value/ Trading Statement
For the three month period from 1 October 2014 to 31 December 2014
STRONG NAV GROWTH AND POSITIVE PORTFOLIO ACTIVITY
UK Commercial Property Trust Limited (LSE: UKCM), the largest Guernsey based,
London listed, UK focused commercial property trust, today provides its Trading
Statement for the three months to 31 December 2014 and unaudited quarterly Net
Asset Value ("NAV") as at 31 December 2014.
Key Highlights
* 2.9% increase in NAV per share* as at 31 December 2014 to 83.0p (30
September 2014: 80.7p);
* 3.2% increase in portfolio valuation over the quarter to £1,272.3million
before capital expenditure and stamp duty, ahead of IPD Balanced Monthly &
Quarterly Funds benchmark ("IPD") of 2.8%;
* Total return over the quarter of 4.0% and total return for the whole of
2014 of 18.4%, compared to IPD equivalents of 4.1% and 17.4% respectively;
* Positive performance driven by the Company's Central London Office and
South East Industrial assets plus valuation uplifts in recently completed/
acquired assets at Aberdeen and Dartford and as a result of successful
asset management initiatives;
* Key portfolio activity during the quarter:
+ Acquisition of Site D1 at Aberdeen Gateway plus completion of forward
funding at Site A.The combined valuation of the entire Aberdeen project
is £48.7 million, 5% above cost;
+ Partial completion of the purchase of Regent Circus, Swindon,
increasing the Company's exposure to the favoured leisure sector;
+ Purchase of Unit 12 Newton's Court, Dartford which complements the
existing Dartford holding and has provided significant marriage value;
+ Sale of two small offices in Bristol for £3.6million, above valuation
and in-line with portfolio strategy of selling small assets with
limited return prospects;
+ Post quarter end, successful sales of Pall Mall Court, Manchester and
the Sovereign Centre, Weston-super-Mare for a combined £49.4million,
both sales being at December valuations and in-line with Company's
portfolio strategy.
* Void level of 2.6% as at 31 December 2014, significantly below the IPD
figure of 6.8%;
* Issue of 32.6 million shares, raising proceeds of £26.9million at a premium
to ex-dividend NAV of 4.7%, providing the Company with further resources to
invest in the portfolio;
* The Company's Investment Manager Ignis Fund Managers Limited (a Standard
Life Investments ('SLI') company) has advised the Board of the resignation
of Robert Boag and recommended to the Board the appointment of Will Fulton
to lead the team dedicated to the management of the Company's portfolio.
* After careful consideration the Board have concluded that Mr Fulton has the
appropriate experience and expertise to lead the property management team
and therefore has agreed to his appointment.
Christopher Hill, Chairman of the Company, commented:
"This quarter has seen the Company produce another strong performance driven by
robust capital growth. The stable financial position of theCompany hasoffered
greater flexibility in terms of the portfolio strategy and provides a strong
platform to allow the Company to continue to pursue income focused
acquisitions, which we believe will continue to provide investors with a strong
and sustainable return.
"We have taken full advantage of the strong investment sentiment in both the
regional office and secondary shopping centre markets and, through the disposal
of assets such as Pall Mall Court, Manchester and The Sovereign Shopping
Centre, Weston-super-Mare, we were able to achieve an overall sale price ahead
of September valuation. This has released equity for future revenue focused
acquisitions and income enhancing initiatives, in line with our wider strategy.
"We also completed the contracted acquisitions announced earlier in the year at
Aberdeen and Swindon, in addition to supplementing an existing asset with a
solus unit at Newton's Court, Dartford, a successful asset management
initiative which provided significant marriage value.
The Board is sorry that Robert Boag has decided to seek other opportunities. We
wish to thank him sincerely for his significant contribution to the success of
the Company. Robert has been involved in the management of UK Commercial
Property Trust since its formation in 2006 and was appointed lead manager in
2009. Much of the success of the Company has resulted from his conscientious
approach and patient leadership and we wish him well in the future.
Having overseen the successful transition of the Company's portfolio onto SLI's
platform, Mr Boag will leave SLI at the end of April 2015. Until then he and Mr
Fulton will work closely together in order to achieve a smooth handover of
property management.
On Robert's departure, Mr Fulton will assume the role of named individual fund
manager wholly dedicated to UKCPT. He has 27 years' experience in UK and
continental European commercial real estate markets, across a variety of
different real estate funds, and has been the fund manager of the Standard Life
Heritage With Profits Fund's £2.3 billion real estate portfolio for the last 4
years.
We are confident that the transfer of management and administration is
substantially complete and the Board is reassured by the depth of resource
provided by SLI."
Breakdown of NAV movement
Set out below is a breakdown of the change to the unaudited Net Asset Value per
share calculated under International Financial Reporting Standards ("IFRS")
over the quarter from 1 October 2014 to 31 December 2014. The property portfolio
has been externally valued by CBRE.
UK Commercial Property Per Share Attributable Comment
Trust (p) Assets (£m)
Limited
Net assets as at 1 October 80.7 1,022.8
2014
Unrealised increase in 2.9 37.3 Increase of 3.2% in quarter
valuation of property on both existing and
portfolio acquired assets before
capital expenditure
Stamp duty costs on (0.2) (2.1) At Swindon and Dartford
purchases
Capital expenditure during (0.3) (4.4) Principally relates to
the period acquisition costs on
purchases plus expenditure
on asset management
initiatives
Share Issuance in the 0.1 26.9 NAV accretive issue of
period 32.6million shares
Income earned for the 1.3 17.5 Equates to dividend cover of
period 104% for the quarter
Expenses for the period (0.4) (5.4)
Dividend paid on 28 (0.9) (11.7)
November 2014
Interest rate swaps mark to (0.2) (2.0) Increase in swap liabilities
market revaluation as interest rate
expectations affected by
Eurozone issues and falling
oil price
Net assets as at 31 83.0 1,078.9
December 2014
*The NAV per share is calculated under IFRS and is unaudited. It includes all
current period income and is calculated after the deduction of all dividends
paid prior to 31 December 2014. It does not include provision for any unpaid
dividends relating to periods prior to 31 December 2014 i.e. the proposed
dividend for the period to 31 December 2014.
The NAV per share at 31 December 2014 is based on 1,299,412,465 shares of 25p
each, being the total number of shares in issue at that time.
The EPRA NAV (IFRS NAV but excluding swap liabilities) is 83.7p
Net Asset Analysis as at 31 December 2014 £m %
Property Portfolio
Retail 565.8 52.4
Office 281.9 26.1
Industrial 332.2 30.8
Leisure 92.4 8.6
Total Property Market Value 1,272.3 117.9
Adjustment for lease incentives (7.1) (0.6)
Fair Value of Property Portfolio 1,265.2 117.3
Net Current Assets 50.9 4.7
Loan facilities (incl swap liabilities) (237.2) (22.0)
Total Net Assets as at 31 December 2014 1,078.9 100.0
Economic and Property Market Review
The economic fundamentals supporting the UK economy remain robust with
consensus growth forecasts of around 2.6% in 2015. Strong new business flows,
the promise of a boost to demand from the slump in oil prices, stable interest
rates in a low inflationary environment and evidence of an upbeat mood amongst
consumers augurs well for 2015 although this may be tempered by the imminent
general election and continuing travails of the Eurozone.The UK commercial
property sector has been a key beneficiary of these factors, as total returns
for the quarter to end December reached 4.1% as measured by the IPD Quarterly
and Monthly benchmark, with a total return for the whole of 2014 of 17.4%.
Over the quarter, capital values grew by 2.8%, in the main still driven by yield
compression as the sector continues to attract a large amount of capital from
both foreign and domestic participants. Rental growth continues to improve on a
quarterly basis with rents expected to pick up further into the recovery cycle.
In the final quarter of the year, rents rose by 1.0%.
UK investment reached £59.6billion in 2014, up 18% and the highest level since
the financial crisis, boosted by a 41% increase in regional investment to
£21.1 billion. Whilst every region outside London showed positive investment
growth on 2013, demand for Central London remains very strong, with the fourth
quartershowing double the investment volume of quarter three. Although overseas
investors remain the largest buyers, with US investment doubling year-on-year
and interest from Asia also increasing, UK institutions are the principal
investors in the regions.
Portfolio Performance
The external portfolio valuation as at 31 December 2014 is £1,272.3 million, an
increase of 3.2% (excluding capital expenditure and stamp duty on purchases) on
the quarter (Q3 2014: 3.1%) which is ahead of the IPD benchmark capital return
of 2.8%.The table below sets out the capital value movements in each of the
main sub-sectors.
Portfolio Exposure as at Capital Value Capital Value
Value 31 Shift Shift
as at 31 Dec Dec (£m)
2014 (£m)
2014 (%) (%)
External 1,175.5
Valuation as at
30 Sep 2014
Retail 565.8 44.5 2.0 11.0
High St - South 9.3 1.6 1.9
East
High St- Rest of 2.1 0.0 0.0
UK
Shopping Centres 11.0 3.1 4.2
Retail Warehouse 22.1 1.8 4.9
Offices 273.8 21.5 3.7 9.9
West End 10.9 5.0 6.6
South East 1.7 0.0 0.0
Rest of UK 8.9 2.9 3.3
Industrial 283.1 22.3 4.1 11.2
South East 15.5 4.6 8.7
Rest of UK 6.8 3.0 2.5
Leisure/Other 58.8 4.6 0.0 0.0
Purchase of 48.7 3.8 5.0 26.1
Aberdeen Gateway
Purchase of Unit 8.5 0.7 50.4 8.5
12,
Newton's Court,
Dartford
Purchase of 33.6 2.6 0.0 33.6
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