Annual Results

To:  RNS

Date:  18 October 2022

From:  CT Property Trust Limited

LEI:  231801XRCB89W6XTR23

• Portfolio ungeared total return* of 27.4 per cent for the year

• NAV total return* of 34.3 per cent for the year

• Dividend of 4.0 pence per share for the year, giving a yield* of 4.8 per cent on the year-end share price

• Dividend cover* of 106.5 per cent for the year

* See Alternative Performance Measures

Chairman’s Statement

The 12 months to 30 June 2022 saw a sustained period of strong performance for UK commercial property, with the real estate capital and occupational markets responding well as the worst of the pandemic seemed to be behind us.  However, as 2022 has progressed we have seen a marked shift in sentiment owing to the growing economic concerns compounded by geopolitical events, inflationary pressures and the cost-of-living crisis, increasing interest rates and a decline in consumer confidence.

For the financial year, the Company has delivered a strong net asset value (‘NAV’) total return of 34.3 per cent and a NAV per share as at 30 June 2022 of 132.8 pence, up from 102.1 pence per share a year previously. The Company’s portfolio delivered a total return of 27.4 per cent over the 12 months, which was was well ahead of the MSCI UK Quarterly Property Index (‘MSCI’ or ‘Index), aided by accretive capital investment and the completion of numerous successful asset management initiatives. 

Unfortunately, the Company’s share price has not tracked the NAV performance during the year. The share price total return for the year was 24.0 per cent with the shares trading at 84.0 pence per share at 30 June, representing a discount of 36.7 per cent to the NAV at the year end.

Property Market

The MSCI Index shows an all-property total return of 19.1 per cent in the 12 months to June 2022. The performance over this period continues to be driven by the industrial, logistics and distribution (‘industrial’) sector, which delivered an exceptional total return of 36.5 per cent in the year to June. This return was underpinned primarily by strong investor demand, supported by robust rental growth within an occupational market buoyed by the growth of e-commerce and demand from companies shoring up their supply chains.

While the strong annual return figures illustrate the robust economic context that has characterised the majority of the 12 month period, the unforeseen invasion of Ukraine by Russia at the end of February 2022 dampened the obvious positivity, and the good start to 2022 deteriorated as consumer confidence and spending were impacted by the inflationary squeeze on real incomes and interest rate increases. As a result, capital growth, whilst positive, notably slowed towards the end of the financial year.

Portfolio Performance

Over the 12 month period, the Company’s portfolio generated a total return of 27.4 per cent, posting significant outperformance over the MSCI Index return of 19.1 per cent. While capital growth of 21.8 per cent was the driver of the Company’s total return performance, the portfolio also maintained an income advantage over the Index, delivering an income return of 4.7 per cent.

The sector allocations within the Company portfolio proved a significant structural advantage as over-weight positions within the industrial and retail warehousing sectors generated significant outperformance. These two sectors account for 73.5 per cent of portfolio by capital value and the allocation of further capital to both over the course of the financial year proved a highly productive use of Company’s resources.

The Company’s industrial assets were once again the bedrock of performance, delivering an exceptional total return of 41.0 per cent. The retail warehousing assets lent further support with a total return contribution of 30.1 per cent. In both cases, the sectors have seen strong investor demand on account of their robust fundamentals. As a result, the Company’s high relative weighting has served to generate substantial capital growth over the year.

The period has seen the continuation of a strategy to reduce the Company’s exposure to the high street retail sector, which continues to face structural challenge despite signs of gradual recovery. The sale during the year of the retail asset at High Street, Guilford at a 14 per cent premium to valuation illustrates the liquidity of the Company’s holdings, which continue to maintain a near-zero vacancy rate while delivering an attractive yield pick-up.

The Company’s office assets have seen a more muted total return of 5.8 per cent. As the UK’s ‘return to office’ has continued to evolve, a clear polarisation has emerged in favour of prime assets in core locations. The Company’s office portfolio is well-positioned in this regard, with over 50 per cent of the exposure being in two prime south east assets (at period end). The prime multi-let office holding at 14 Berkeley Street in London’s Mayfair has been a clear beneficiary of a ‘flight to quality’, with the asset becoming fully occupied ahead of a post-period disposal, concluded in August 2022 for £32.4 million. This asset was the third largest holding in the portfolio and was sold for a premium of 5 per cent above the year end valuation. The disposal was timed to take full advantage of both the asset and market cycles, which has enabled the Company to secure a strong net initial yield of 3.1 per cent for this quality asset and crystallise meaningful profit for the Company.

Borrowings and Cash

The Group had approximately £13.6 million of available cash at 30 June and an undrawn revolving credit facility of £13.0 million. The Group's £90 million long-term debt with Canada Life and the loan facility with Barclays do not need to be refinanced until November 2026 and March 2025 respectively. As at 30 June 2022, the Group’s net gearing was 22.1 per cent. The weighted average interest rate on the Group’s total current borrowings was 3.1 per cent. The Company continues to maintain a prudent attitude to gearing. Since the year end, the Company’s cash resources have increased considerably following the Berkeley Street disposal referred to above.

Share Buybacks

The Board and Manager believe that the current share price is not reflective of the quality of the Company’s portfolio, its long-term performance and robust financial position. Since the year end, the Company has started to use some of the cash generated from the sale of Berkeley Street to buy the Company’s shares at a discount rather than investment in new properties. This offers attractive value for shareholders and will be both NAV and earnings enhancing. Purchases of Ordinary Shares will only be made through the market for cash at prices below the prevailing net asset value of the Ordinary Shares where the Directors believe such purchases will enhance shareholder long-term value.  At the time of writing, the Company has bought back 6,325,000 Ordinary Shares since the year-end at an average discount to the NAV of 36.1 per cent.

Dividends

Three interim dividends of 1.0 pence per share were paid for the year and a fourth interim dividend was paid on 30 September 2022 at the same rate. The Board will continue to keep the future level of dividends under review.

Manager Update

As previously announced Matthew Howard has succeeded Peter Lowe as the Company’s Lead Manager with effect from 19 July 2022. We thank Peter for his considerable contribution to the Company’s strong performance and wish him well in his new role.

We are delighted to welcome Matthew as Lead Fund Manager. Matthew joins us with an excellent track record in fund management and broad experience in UK real estate investment. We are confident in Matthew’s capabilities to drive the strategy and performance of the Company.

Matthew is a Chartered Surveyor, and joined CT REP in July 2017, having spent the previous six years at Hermes Investment Management (Now Federated Hermes). He is a member of CT REP’s Investment Committee and also acts as Fund Manager of the RSA Shareholders Real Estate Fund.

Board Composition

As previously announced, Rebecca Gates retired as a Director of the Company on 31 August 2022. I would like to thank Rebecca for the contribution she has made during her time on the Board. I will also step down from the Board later this year having served on the Board for nine years. The process to identify two new non-executive Directors, including a successor to me as Chairman has commenced and we hope to be able to provide a further update on Board appointments in the near future.

Management Fee Arrangements

The Board has been in discussion with the Manager with regards to the level of management fee being charged. The current fee is 0.6 per cent per annum of the total assets, including cash held provided that no fee is payable on any cash held in excess of 5 per cent of the net assets of the Group. Following these negotiations, it has been agreed that the rate of 0.6 per cent will reduce to 0.55 per cent with effect from 1 July 2022.

Environmental, Social and Governance (‘ESG’)

As a Board, we continue to give considerable attention to our ESG commitments and will work closely with our Property Manager to meet and exceed ever-evolving regulatory standards.

As a measure of our efforts in continuing to build our ESG agenda, we are targeting further incremental improvements in our GRESB rating, which to this point has seen year-on-year improvement since the Company first entered the regime in 2018. GRESB provides validated ESG performance data and peer benchmarks for investors and managers to improve business intelligence and industry engagement.

The Company’s pathway to Net Zero Carbon (NZC) emissions is a clear strategic priority, and we have made excellent progress in developing our strategy over the course of the year. Asset-level NZC audits have been completed across the portfolio, itemising the interventions needed to achieve net zero emissions from our real estate portfolio. Armed with this information, we can establish a deliverable and tangible pathway to NZC based on informed asset-level strategy. We aim to publish our target date and pathway later this year.

An ESG Report, detailing the current status and progress made on the portfolio is available on the Group’s website.

Outlook

The UK economy rebounded strongly in 2021, but growth has slowed in the face of rising and entrenched inflation, persistent supply chain disruption and elevated geopolitical risks. Policymakers are also taking steps that will further constrain growth, with the Bank of England raising interest rates. It seems increasingly likely that this will precipitate a recession in the UK and a period of negative growth lies ahead.

At the time of writing, inflation in the UK was 9.9 per cent, just shy of the 10.1 per cent 40-year high seen in July and the Bank of England have revised their estimate of peak inflation to 11.0 per cent.  Double digit inflation is expected to last for a year as households face an acute cost of living crisis driven by increasing energy prices. 2023 should see inflation begin to edge down with the unveiling of the government’s energy price guarantee package designed to shield households and businesses from soaring energy prices over the next 6 months, followed by a review.  The Bank of England has raised interest rates to 2.25 per cent, with further increases anticipated as they battle to tame inflation. Increases in the costs of financing will undoubtedly slow real estate activity, while the ability of occupiers to withstand inflationary pressures will be a key differentiator. There have been falls in property valuations across all sectors since 30 June, with industrial valuations seeing the largest declines and the Company's portfolio will not be immune. Discounts in the UK REIT sector have widened substantially in recent months and the current discount in our shares reflects that.

In uncertain markets, the quality of the underlying portfolio comes to the fore. Our portfolio is characterised by assets in core locations, with long term value in the residual and a quality tenant base, which has delivered consistent long-term capital and income performance. As we move to the next stage in the property market cycle, income will drive returns, while asset resilience should protect long-term capital values. Consequently, the portfolio’s income advantage, sector exposures, geographical focus and low vacancy rate stand us in good stead as we enter a period of economic uncertainty.

Vikram Lall

Chairman

Manager’s Review

Portfolio headlines

• The Company’s portfolio produced a total return of 27.4 per cent over the 12 months to June 2022, versus the MSCI UK Quarterly Property Index (‘the Index’) return of 19.1 per cent.
• The portfolio has outperformed the Index on income, capital and total return over one, three, five, ten and eighteen years since inception to June 2022.
• Two property disposals totalling £11.0m executed at a combined 9 per cent premium to NAV, with subsequent redeployment into two accretive acquisitions totalling £19.4m.
• Successful practical completion of major retail warehousing redevelopment project at Enterprise Way, Luton generating exceptional returns.
• The transactional activity and capital deployment continues the Company’s focus on growth sectors and enhancing fund income return, demonstrated by the purchases in Banbury (Retail Warehousing) and Heathrow (Industrial).
• Low vacancy rate of 2.6 per cent by Estimated Rental Value, down from 4.1 per cent over the year and considerably below the MSCI Index average of 7.8 per cent.
• Robust rent collection for the year of 99.1 per cent and 97.7 per cent since the onset of the pandemic.

Property Market Review

The last 12 months have seen impressive performance from the UK real estate market. The market generated a total return of 19.1 per cent over the year to June 2022 (MSCI UK Quarterly Property Index, ‘MSCI’ or ‘the Index’) with capital growth of 14.5 per cent the driving force of performance. £35.1 billion was invested into the UK real estate market over the first six months of 2022, representing a 17 per cent increase on the equivalent period in 2021.

As the calendar year progressed, mounting economic headwinds in the form of geopolitical uncertainty, supply chain disruption, inflationary pressures and the associated cost of living crisis have begun to weigh on wider market sentiment. Investment volumes will slow over the second half of the year with uncertainty cooling capital markets and leading to some repricing in the latter part of 2022. As with all market cycles, there will be increased resilience from quality assets in sustainable locations but we expect valuation pressures across the full breadth of the UK commercial real estate markets.

Offices delivered a comparatively muted total return of 6.8 per cent over the year. Occupier and investor demand for well located, high-quality offices have proven robust at the expense of lower-quality, secondary or tertiary stock. As the UK’s ‘return to office’ has continued to evolve, office occupancy rates have improved relative to recent periods, although working patterns have yet to settle as companies continue to assess their real estate strategies.

The industrial sector has been supported over the past decade by the growth of e-commerce across big-box and mid-box logistics, as well as urban sites dedicated to last-mile delivery.  E-commence now accounts for approximately 25 per cent of all retail sales in the UK, which is below the short-lived peak of 38 per cent during 2020 but demonstrates an overall upward trend compared to 19 per cent in 2019 prior to the pandemic. Consequently, the sector has produced stellar total returns over the period of 36.9 per cent. In recent years, occupier supply chains have become increasingly sophisticated and agile and, given the economic backdrop, ensuring supply chain resilience has been of particular focus for operators. Indeed, H1 2022 has seen industrial occupational take up at near-record levels with vacancy rates in the UK standing at an all-time low. Economic headwinds will inevitably present challenges to occupiers but the supply and demand fundamentals are particularly well placed going into this period, with tangible rental growth remaining a key feature of the market at the time of writing.

Confidence within the Retail market has strengthened over the period, with the sector generating a total return of 16.6 per cent. The traditional High Street sector has seen some tentative signs of recovery in the form of rental growth and yield compression, however performance from the wider Retail sector was driven by the Retail Warehousing sub-sector. After some rebasing of rents and occupier turnover in recent years, Retail Warehousing has demonstrated its resilience and relevance as part of the consumer supply chain, particularly ‘essential retail’ such as DIY, pet stores, and discount retailers for example. Confidence in the attractive occupational fundamentals has seen a weight of capital chasing the sector leading to value growth and contributing to the sub-sector’s excellent total return of 31.8 per cent over the year. Occupiers and consumers are attracted to the convenience, accessibility, parking and the inherent flexibility of the real estate will continue to underpin the sector. However, although pockets of rental growth have been evident, rental levels are likely to come under pressure as consumer incomes and operator margins are squeezed.

Portfolio Performance

The Company’s portfolio delivered an ungeared total return of 27.4 per cent over the twelve months, against the Index return of 19.1 per cent. Capital growth from the portfolio of 21.8 per cent was the key driver of total returns, supported by a robust income return of 4.7 per cent, with both metrics showing material outperformance against the Index. Indeed, the Company portfolio has outperformed the Index on income, capital and total return over one, three, five, ten and eighteen years since inception. 

The Company’s high exposure to the Industrial and Retail Warehouse sectors (73.5 per cent combined) has proven the key determinant of outperformance. Both sectors have benefitted from a weight of capital driving material yield compression, as investors have sought exposure to the strong occupational fundamentals and favourable performance outlook.

Limited exposure to the more muted capital returns of the High Street retail and Office sectors has also proven a structural advantage, while transactional activity has further supported returns as we continue to position the portfolio towards growth assets. The strategic disposals of two assets from the retail and office portfolios were concluded at a combined premium of 9 per cent over the preceding valuations, demonstrating the liquidity of the underlying portfolio.

Despite capital outperformance, the portfolio has also sustained a significant yield premium, delivering an income return of 4.7 per cent versus the Index return of 4.1 per cent. Over the course of the year, the portfolio vacancy rate fell from 4.1 per cent to 2.6 per cent by Estimated Rental Value (ERV), comparing favourably to the Index average of 7.8 per cent. The sustained low vacancy rate is testament to the quality and sectoral constitution of the Company’s portfolio.

Alongside a yield premium, the Company’s income profile retains a lower weighted credit risk than the MSCI Index, with high quality covenants a notable feature of the Company’s office portfolio. The resilience of the Company’s tenant base is borne out in the rent collection figures, which stand at 97.7 per cent over the 27 months since the onset of the pandemic. Indeed, rental payment patterns have now normalised to pre-pandemic levels and collection across the Company portfolio stands at 99.1 per cent for the twelve months to June.

At the end of June 2022, the weighted average unexpired lease term stood at 6.1 years assuming all tenant breaks are operated. This improvement from 5.9 years in June 2021 is on account of the successful conclusion of a number of proactive asset management initiatives enhancing the portfolio’s leasing profile and supporting income and capital returns.

Industrial

With all five of the Company’s top performing assets coming from the industrial sector, combined with a 54.8 per cent exposure to the sector, it is no surprise that this has again proven the key driver of Company performance. Over the course of the year, the Company’s assets outperformed their Index peers, posting a total return of 41.0 per cent against the Index return of 36.9 per cent.

The wider market generated capital growth of 32.5 per cent driven by a significant weight of money seeking exposure to the sector’s growth potential. However, as industrial returns become primarily focussed on income, the ability to crystallise market rental growth into income through asset management will be key in delivering outperformance.

During the year we completed a number of value-accretive asset management initiatives, which supported portfolio outperformance of 4.1 per cent over the Index. Some of the most notable initiatives include:

• PCS Wireless, 1-2 Network, Bracknell – as Proctor & Gamble’s lease of Unit 2 approached expiry, we agreed a surrender of their lease in exchange for a significant premium. This allowed the unit to be near-simultaneously relet on a 10-year lease to PCS Wireless at a rental level showing a 33 per cent uplift to previous passing rent. Completion of this initiative generated a 16 per cent increase in the asset valuation.
• Booker Logistics, Echo Park, Banbury – the outstanding December 2020 rent review of this 195,000 sq ft unit was settled at a 10 per cent uplift to the passing rent and an 11 per cent premium to the ERV. The successful conclusion of the rent review resulted in a 19 per cent uplift to valuation, which was highly accretive to company performance given the asset’s relative scale as the second largest portfolio holding.

Retail and Retail Warehouses

The portfolio’s Retail assets generated a total return of 23.8 per cent against the Index return of 16.6 per cent, proving highly accretive to overall Company performance. The driver of relative sector outperformance has been the Company’s high exposure to the Retail Warehousing sub-sector, which now accounts for 18.8 per cent by portfolio capital value. Our holdings are focussed on convenience/discount-led assets let off affordable rents, also known as ‘essential retail’. These sub-markets have benefitted from strong investor appetite due to quality tenants and sustainable income streams offering a yield advantage and supported by long term residual value. As a result, portfolio Retail Warehouse holdings saw capital growth of 22.9 per cent over the course of the year.

Across both Retail Warehousing and traditional High Street retail (the latter accounting for 4.9 per cent of portfolio value), the long-term rationale for holding retail assets is the yield advantage offered by the sector as well as the resilient positioning of the real estate serving its core local market. Over the course of the year, a number of successful initiatives have maintained a near-zero void rate and contributed to the Retail portfolio’s income outperformance of 1.1 per cent relative to the Index:

• B&Q, Churchill Way, Nelson – as the tenant entered the final two years of their lease, close tenant engagement resulted in an accretive lease extension. The negotiations yielded a 10-year term certain at a rental level ahead of expectation, alongside a commitment from B&Q to invest in the fabric and appearance of the unit. The initiative contributed to an increased property valuation of 42 per cent.
• Chobham Road, Sunningdale –Over the course of the 12 months to June, four occupational agreements have been renewed, maintaining the passing rent, improving the unexpired lease term and enhancing the capital value of the asset.

• Bramingham Retail Park, Enterprise Way, Luton – in August 2021, the redevelopment of the former Homebase reached practical completion, delivering an Aldi food store and Costa drive-thru alongside a reconfigured Homebase. The development was delivered comfortably within budget and was de-risked through a pre-letting. The initiative has more than doubled the rental income and delivered an annual IRR in excess of 16 per cent over the development period.

Offices

The portfolio Office assets generated a total return of 5.8 per cent over the 12 months, lagging the Index return of 6.8 per cent.

The Company’s Office portfolio is focussed primarily on the South East, with the prime assets at Berkeley Street, London and County House, Chelmsford accounting for more than 50 per cent by capital value at period end. Over the course of the year, a clear polarisation has emerged within the Office sector as both occupier and investor demand for prime assets in core locations showed steady improvement throughout the period. In contrast, secondary and tertiary assets have seen more subdued market conditions as occupiers and investors alike grapple with structural changes and uncertainty brought about by the UK’s ‘return to office’ alongside concerns surrounding ESG-led obsolescence.

Consequently, the Company’s prime West End holding at 14 Berkeley Street proved the key driver of sector returns. A series of successful asset management initiatives on the multi-let holding saw the asset become fully occupied on leases ahead of ERV. The outstanding rent review on the ground floor car showroom was settled at a meaningful 19 per cent uplift to the passing rent. The culmination of the asset business plan optimised both the leasing profile and capital value, presenting an opportunity to extract significant profit via a disposal. The sale of the asset concluded post-period on 5 August 2022 at a 5 per cent premium to the preceding valuation. Please see ‘Investment Activity’ for further information.

Following the sale of Berkeley Street, the Company’s exposure to the Office sector fell to 15.2 per cent by capital value. While more subdued capital growth on some of the portfolio’s regional assets held back overall returns, close tenant engagement has also yielded positive asset management outcomes across the wider portfolio. We are also engaged in a number of initiatives across the Office portfolio, where assets lend themselves to longer-term, higher-value alternative uses on account of their attractive residual values.

Investment Activity

The Company completed a number of transactions during the period, continuing the strategy of increasing exposure to growth sectors.  The strategic down-weighting from the High Street sector continued with the sale of High Street, Guildford which had been identified as a potential disposal target on account of long-term void risk. The sale was completed in April 2022 at a price of £3.1 million reflecting a 14 per cent premium achieved over the most recent valuation.

The Company also completed the disposal of the Office holding, Marlborough House in St Albans in July 2021. The asset had been identified for disposal as the obsolete office accommodation required wholesale redevelopment at a scale and risk exposure incompatible with the Company’s strategy. The asset was sold for £7.9 million, an 8 per cent premium to the subsequent valuation.

Two strategic acquisitions were concluded in September 2021 for a combined £19.4 million. The Company acquired a trade-led retail warehousing scheme in Banbury for £7.325 million, occupied by Wickes and Topps Tiles. The asset met with our investment rationale for the sector, offering a robust occupational underwrite and strong residual value. Shortly thereafter, the Company acquired a South East industrial asset for £12.1 million, adjacent to the existing holding in Colnbrook, Heathrow. The asset offered excellent prospects for both capital and income growth, alongside potential for value generation through active asset management. The two assets were accretive to both capital and income return at portfolio level and have represented a highly effective use of Company cash reserves with the combined assets delivering a weighted total return of in excess of 30 per cent since acquisition, to the financial year end.

As referenced above, the disposal of the prime, multi-let office holding at 14 Berkeley Street was completed post-year end in August 2022 for £32.4 million. The asset had been identified for sale primarily on account of its very low-yielding nature, and potential to release significant cash reserves for redeployment into more accretive initiatives. The sale was executed following the successful culmination of the asset business plan and was timed to take full advantage of both asset and market cycles, allowing us to generate a highly competitive net initial yield of 3.1 per cent and a 5 per cent premium to valuation. The proceeds from the sale have served to strengthen the Company balance sheet, offering flexibility for capital reallocation to deliver further shareholder value.

Outlook

The UK real estate market had a solid first 6 months of 2022. However, given the weakening economic backdrop, geopolitical events, ensuing high inflation and rising interest rates, it is no surprise that there is more caution amongst the investor community going into the second half of the calendar year.

A UK recession now looks likely and growth will inevitably slow. The expectation is that the principal impact will be on real estate pricing rather than a wholesale slowdown in the occupational markets, a dynamic which we have begun to witness post year end. Through periods of uncertainty investors will look to protect income, which will be the primary driver of returns. The rising cost of capital and increasing gilt yields mean that yields across the market are under pressure. Industrial, where yields have reached historic lows over the period, has already seen downward pricing pressure in the capital markets , particularly for secondary or tertiary assets and where the Industrial markets became overbought.

In this economic context, the key differentiators for the Company will be twofold. Firstly, as returns become income-led, relative performance will be predicated on the ability of the tenant base to withstand inflationary pressures. In this regard, the portfolio’s sustained low vacancy rate, yield advantage and high-quality covenants in strong locations will serve the Company well, as was demonstrated through robust rent collection during the depths of the pandemic. Secondly, in a lower-returning environment, portfolio resilience will be critical in the generation of relative returns. The high weighting to Industrial and Retail Warehousing position the Company relatively well, as the two sectors are characterised by strong underlying occupational markets and perform an essential function in the business and consumer supply chain.

The portfolio has a strong pipeline of asset management opportunities to protect and create value for the Company. In addition, a strategic priority will be to explore some asset rotation to enhance the portfolio’s income return and increase diversity. The current dislocation in real estate capital markets should present opportunities to seek value and in accordance with the portfolio’s long term characteristics we will continue to target strong assets in resilient locations to position the portfolio for further growth. 

There is no doubt that we are entering a period of mounting economic headwinds and the Company will not be immune to these pressures. Nevertheless, the portfolio has been positioned to navigate challenging periods, as demonstrated by the strong track record of outperformance, and I look forward to working closely with the Board to build upon the Company’s excellent foundations.

Matthew Howard

Columbia Threadneedle REP PM Limited

CT Property Trust Limited

Consolidated Statement of Comprehensive Income

	Year ended 30 June 2022	Year ended 30 June 2021
	£000	£000
Revenue
Rental income	17,869	16,836
Other income	607	-
Total revenue	18,476	16,836
Gains/(losses) on investment properties
Gains/(losses) on sale of investment properties realised	772	(1,304)
Unrealised gains on revaluation of investment properties	71,767	12,926
Total Income	91,015	28,458
Expenditure
Investment management fee	(2,380)	(1,932)
Other expenses	(1,568)	(2,154)
Total expenditure	(3,948)	(4,086)
Net operating profit before finance costs and taxation	87,067	24,372
Net finance costs
Interest receivable	5	2
Finance costs	(3,434)	(3,341)
	(3,429)	(3,339)
Net profit before taxation	83,638	21,033
Taxation	(235)	(187)
Profit for the year / total comprehensive income	83,403	20,846
Basic and diluted earnings per share	34.6p	8.7p

All items in the above statement derive from continuing operations. 

All of the profit and total comprehensive income for the year is attributable to the owners of the Group.

CT Property Trust Limited

Consolidated Balance Sheet

	30 June 2022 £000	30 June 2021 £000
Non-current assets
Investment properties	405,875	321,886
Trade and other receivables	4,734	3,292
	410,609	325,178
Current assets
Trade and other receivables	2,418	3,431
Cash and cash equivalents	13,563	16,631
	15,981	20,062
Total assets	426,590	345,240
Non-current liabilities
Interest-bearing bank loan	(89,999)	(89,722)
Trade and other payables	(1,137)	(890)
	(91,136)	(90,612)
Current liabilities
Trade and other payables	(8,768)	(8,631)
Interest-bearing bank loan	(6,915)	-
Tax payable	(186)	(187)
	(15,869)	(8,818)
Total liabilities	(107,005)	(99,430)
Net assets	319,585	245,810
Represented by:
Share capital	2,407	2,407
Special distributable reserve	177,161	177,161
Capital reserve	136,283	63,744
Revenue reserve	3,734	2,498
Equity shareholders’ funds	319,585	245,810
Net asset value per share	132.8p	102.1p

CT Property Trust Limited

Consolidated Statement of Changes in Equity

For the year ended 30 June 2022

	Share Capital £000	Special Distributable Reserve £000	Capital Reserve £000	Revenue Reserve £000	Total £000
At 1 July 2021	2,407	177,161	63,744	2,498	245,810
Profit for the year	-	-	-	83,403	83,403
Total comprehensive income for the year	-	-	-	83,403	83,403
Dividends paid	-	-	-	(9,628)	(9,628)
Transfer in respect of gains on investment properties	-	-	72,539	(72,539)	-
At 30 June 2022	2,407	177,161	136,283	3,734	319,585

For the year ended 30 June 2021

	Share Capital £000	Special Distributable Reserve £000	Capital Reserve £000	Revenue Reserve £000	Total £000
At 1 July 2020	2,407	177,161	52,122	916	232,606
Profit for the year	-	-	-	20,846	20,846
Total comprehensive income for the year	-	-	-	20,846	20,846
Dividends paid	-	-	-	(7,642)	(7,642)
Transfer in respect of gains on investment properties	-	-	11,622	(11,622)	-
At 30 June 2021	2,407	177,161	63,744	2,498	245,810

CT Property Trust Limited

Consolidated Statement of Cash Flows

	Year ended 30 June 2022	Year ended 30 June 2021
	£000	£000
Cash flows from operating activities
Net profit for the year before taxation	83,638	21,033
Adjustments for:
(Gains)/losses on sale of investment properties realised	(772)	1,304
Unrealised gains on revaluation of investment properties	(71,767)	(12,926)
(Increase)/decrease in operating trade and other receivables	(429)	502
Increase in operating trade and other payables	384	2,241
Interest received	(5)	(2)
Finance costs	3,434	3,341
	14,483	15,493
Taxation paid	(236)	(258)
Net cash inflow from operating activities	14,247	15,235
Cash flows from investing activities
Purchase of investment properties	(20,737)	-
Capital expenditure	(1,547)	(5,816)
Sale of investment properties	10,834	4,287
Interest received	5	2
Net cash outflow from investing activities	(11,445)	(1,527)
Cash flows from financing activities
Dividends paid	(9,628)	(7,642)
Bank loan interest paid	(3,242)	(3,161)
Bank loan drawn, net of costs – Barclays Loan	7,000	-
Net cash outflow from financing activities	(5,870)	(10,803)
Net (decrease)/increase in cash and cash equivalents	(3,068)	2,905
Opening cash and cash equivalents	16,631	13,726
Closing cash and cash equivalents	13,563	16,631

CT Property Trust Limited

Principal Risks and Future Prospects

Each year the Board carries out a comprehensive, robust assessment of the principal risks and uncertainties that could threaten the Group’s success. The consequences for its business model, liquidity, future prospects and viability form an integral part of this assessment.

Risks faced by the Company include market, geopolitical, investment and strategic, regulatory, tax structuring and compliance, financial, reporting, credit, operational and environmental. The Board seeks to mitigate and manage these risks through continual review, policy-setting and enforcement of contractual obligations. It also regularly monitors the investment environment and the management of the Group’s property portfolio. 

To mitigate investment and strategic risks the Board regularly monitors the investment environment and the management of the Company’s property portfolio. The Manager seeks to mitigate the portfolio risks through active asset management initiatives and carrying out due diligence work on potential tenants before entering into any new lease agreements. All of the properties in the portfolio are insured.

As well as considering current risks quarterly, the Board and the Investment Manager carry out a separate assessment of emerging risks when reviewing strategy and evaluate how these could be managed or mitigated. However, the Board considers that the line between current and emerging risks is often blurred and many of the emerging risks identified are already being managed to some degree where their effects are beginning to impact.

The principal emerging risks identified are outlined below:

• Economic and geopolitical uncertainties leading to inflation and interest rate increases. This has been compounded by the military invasion of Ukraine by Russia which is clearly a humanitarian tragedy and is already starting to have widespread economic consequences. The Manager expects global markets to remain volatile. From a macro-economic perspective, higher medium-term oil, gas and food prices alongside financial market disruption and sanctions on Russia are likely to lead to an increase in already elevated inflationary pressures, which will in turn weaken the outlook for economic growth. There is also the risk of further interest rate increases. A period of prolonged instability, with impacts for Europe in particular, is now clearly a potential outcome. The situation is uncertain, and changing rapidly, but this may affect real estate valuations across the Group.
• The ESG agenda is a very prominent one and will continue to grow in its importance to shareholders, future investors and our customers. The increasing market attention being paid to climate risk, to net zero carbon ambition and to social impact have been notable features of the evolving agenda, and those need to be considered more explicitly in property investment and management activity than has been the case previously. Failure to respond to the evolving regulatory requirements and public expectations could have a negative effect on property valuations and would be reputationally damaging.
• There is the potential for structural change in the office market brought on by Covid-19. Appetite for offices is finding its equilibrium with a clear focus on higher quality space in central locations, as companies look to provide employees with a more structured hybrid model of operation where strong ESG and wellbeing credentials will be essential. This will be at the expense of lower quality stock and the emergence of a two-tier market is likely, rebasing both capital values and rents. There is uncertainty how this will play out and it continues to be monitored.
• The impact of technology increasingly means that working practices and the needs of society change very quickly which is an opportunity as well as a risk, and it is important that we continue to keep abreast of what is happening in this space. This has been compounded over the last two years as the reliance on technology, particularly with regards to home working has increased.

The highest residual risks encountered during the year, how they are mitigated and actions taken to address these are set out in the table below.

Highest Residual Risks	Mitigation	Actions taken in the year
Portfolio Performance Unfavourable markets, poor stock selection, inappropriate asset allocation and underperformance against the Index and/ or peer group. This risk may be exacerbated by gearing levels. Economic backdrop of inflationary pressures and increasing interest rates (heightened by the Ukraine crisis).	The underlying investment strategy, performance, gearing and income forecasts are reviewed with the Investment Manager at each Board Meeting. The Company’s portfolio is diversified and of a high quality. Gearing is kept at modest levels and is monitored by the Board. The Manager provides regular information on the expected level of rental income that will be generated from underlying properties. The exposure to individual tenants is monitored and managed to ensure there is no over exposure.	The Board reviewed the Manager’s performance at quarterly Board meetings against key performance indicators and the ongoing strategy is reviewed and agreed. Performance has been strong during the last year. Following the strategic sale of a number of properties in recent years, particularly smaller High Street retail, and reinvestment into Industrial and Retail Warehouses, the Company has combined exposure to the outperforming Industrial and Retail Warehouse sectors amounting to 73.5 per cent of the portfolio. The Manager has also ensured that the tenant base is of a high quality. Despite the strong performance, Russia’s invasion of Ukraine and continuing economic and market uncertainty indicates that this risk is unchanged. .
Risk unchanged in the year under review
Discount to NAV The share price is trading at a discount to NAV, in common with the rest of the sector. This widened towards the year end with growing economic uncertainty both in the UK and globally. This imbalance, combined with the recent share price volatility can diminish the attractiveness of the Company to investors.	The discount is reported to and reviewed by the Board regularly. Share buybacks as a means of narrowing the discount or as an attractive investment for the Company are considered and weighed up against the risks. The position is monitored by the Manager and Broker on a daily basis and any material changes are investigated and communicated to the Board more regularly.	Investors have access to the Board, the Manager and the underlying team who will respond to any queries they have on the discount. The Manager and Broker meet regularly with prospective and existing investors to try and improve demand for the Company's shares. The level of discount is kept under constant review, but it is difficult to control. Following the sale of a large property post year-end, the Company introduced share buybacks in August 2022 to try and help manage this. This continues to be closely monitored given the volatile share price since the start of the Ukraine crisis. The discount has been wide since 2020 and the risk is therefore categorised as unchanged.
Risk unchanged in the year under review
Service providers and systems security Covid-19 and the implementation of working from home and increased sophistication of cyber threats have heightened risks of loss through errors, fraud or control failures at service providers or loss of data through business continuity failure.	The ancillary functions of administration, accounting and marketing services are all carried out by the Manager. The performance of the Manager is kept under continual review.  Any security issues would be reported to the Board on a timely basis. The Management Engagement Committee reviews the performance of third-party service providers on an annual basis and the Manager keeps service levels under constant review.	The Audit and Risk Committee and the Board have regularly reviewed the Company’s risk management framework with the assistance of the Manager. Each key service provider provides a Report on Internal Controls where available (AAF 01/20 or similar). This will include the controls relevant to cyber risk where appropriate. This report is reviewed by the relevant parties and submitted to the Board on an annual basis. The Manager has maintained regular contact with its key outsourced service providers throughout the Covid-19 pandemic and received assurances regarding the continuity of their operations. Vigilance remains heightened with this risk categorised as unchanged.
Risk unchanged in the year under review
ESG Not recognising and acting upon any future environmental, social and governance risks which exist within the portfolio. Failure to do so creates the risk that the portfolio no longer remains attractive to tenants and will not maintain its value. There is increasing regulation and public interest relating to ESG issues and failure to be proactive could cause serious reputational damage.	The Manager has a dedicated team that works on this area and has allocated resources over recent years into building a comprehensive ESG plan and gathering accurate data. The Manager also works with external consulting firms who specialise in this area to scrutinise and validate these plans. The Manager liaises with tenants wherever possible to obtain data and to carry out any necessary enhancements.	Regular reporting to the Board on progress with implementing initiatives. A policy on the Company's net zero carbon pathway is being formulated and will be published on the Company website. The Manager regularly looks to engage with tenants on ESG issues.
Risk unchanged in the year under review

Viability Assessment and Statement

The Board conducted this review over a 5 year time horizon, a period thought to be appropriate for a commercial property investment company with a long term investment outlook, borrowings secured over an extended period and a portfolio with a weighted average unexpired lease length of 6.1 years. The assessment has been undertaken taking into account the principal risks and uncertainties faced by the Group which could threaten its objective, strategy, future performance, liquidity and solvency.

The major risks identified as relevant to the viability assessment were those relating to a downturn in the UK commercial property market and its resultant effect on the valuation of the investment portfolio, the level of rental income being received and the effect that this would have on cash resources and financial covenants. The Board took into account the illiquid nature of the Group’s portfolio, the existence of the long-term borrowing facilities, the effects of any significant future falls in investment values and income receipts on the ability to repay and re-negotiate borrowings, maintain dividend payments and retain investors. These matters were assessed over an initial period to September 2027, and the Directors will continue to assess viability over 5 year rolling periods, taking account of foreseeable severe but plausible scenarios.

In the ordinary course of business, the Board reviews a detailed financial model on a quarterly basis, incorporating market consensus forecast returns, projected out for 5 years. Based on conversations that have been held with existing lenders to real estate companies, it is believed that it will be possible to satisfactorily refinance existing loans. This model uses prudent assumptions and factors in any potential capital commitments. For the purpose of assessing the viability of the Group, the model is stress tested with projected returns comparable to the most extreme UK commercial property market downturn experienced historically. The model projects a worst case scenario of an equivalent fall in capital and income values over the next two years, followed by three years of zero growth.

The viability assessment modelling used the following assumptions:-

• 44 per cent capital falls in the next two years (based on the largest UK commercial property market downturn experienced in recent history) followed by zero growth for the next three years;
• tenant defaults of 15 per cent for the first year, followed by 9 per cent for the following year before returning to normal levels;
• tenant lease breaks to be taken at the earliest opportunity, followed by a substantial void period.

Even under this extreme model the Group remains viable with loan covenant tests passed and the current dividend rate maintained.

Based on their assessment, and in the context of the Group’s business model, strategy and operational arrangements set out above, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the 5 year period to September 2027. For this reason, the Board also considers it appropriate to continue adopting the going concern basis in preparing the Annual Report and Consolidated Financial Statements.

CT Property Trust Limited

Going Concern

In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council. They have reviewed detailed cash flow, income and expense projections in order to assess the Group’s ability to pay its operational expenses, bank interest and dividends. The Directors have examined significant areas of possible financial risk including cash and cash requirements and the debt covenants, in particular those relating to loan to value and interest cover. The Directors have not identified any material uncertainties which cast significant doubt on the Group’s ability to continue as a going concern for a period of not less than 12 months from the date of the approval of the consolidated financial statements. The Board believes it is appropriate to adopt the going concern basis in preparing the consolidated financial statements.

Directors’ Responsibilities in Respect of the Annual Report & Consolidated Accounts

We confirm that to the best of our knowledge:

• the consolidated financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the undertakings included in the consolidation taken as a whole and comply with The Companies (Guernsey) Law, 2008; and

• the Strategic Report (comprising the Chairman’s Statement, Business Model and Strategy, Promoting the Success of the Company, Key Performance Indicators, Principal Risks and Future Prospects, Manager’s Review, Environmental, Social and Governance and Property Portfolio) and the Report of the Directors’ includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole together with a description of the principal risks and uncertainties that it faces; and

• the financial statements and Directors’ Report include details of related party transactions; and

• the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group’s position and performance, business model and strategy.

On behalf of the Board

V Lall
Chairman
17 October 2022

CT Property Trust Limited

Notes to the Consolidated Financial Statements

for the year ended 30 June 2022

1.  The audited results of the Group which were approved by the Board on 17 October 2022 have been prepared on the basis of International Financial Reporting Standards as adopted by the EU, interpretations issued by the IFRS Committee, applicable legal and regulatory requirements of the Companies (Guernsey) Law, 2008 and the Listing Rules of the Financial Conduct Authority as well as the accounting policies set out in the statutory accounts of the Group for the year ended 30 June 2022.

2.  Financial Risk Management

The Group’s financial instruments comprise cash, receivables, interest-bearing loans and payables that arise directly from its operations.

The Group is exposed to various types of risk that are associated with financial instruments. Financial risks are risks arising from financial instruments to which the Group is exposed during or at the end of a reporting period. Financial risk comprises market risk (including currency risk, price risk and interest rate risk), credit risk and liquidity risk. There was no currency risk as at 30 June 2022 or 30 June 2021 as assets and liabilities are maintained in Sterling.

The Board reviews and agrees policies for managing the Group’s risk exposure and these policies are summarised below and have remained unchanged for the year under review. These disclosures include, where appropriate, consideration of the Group’s investment properties which, whilst not constituting financial instruments as defined by IFRS, are considered by the Board to be integral to the Group’s overall risk exposure.

The primary objectives of the financial risk management policies are to establish risk limits, and then ensure that exposure to risks stays within these limits.

Market risk

Market risk is the risk the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.

Sensitivities to market risks included below are based on change in one factor while holding all other factors constant. In practice, this is unlikely to occur, and changes in some of the factors may be correlated – for example, changes in interest rate and changes in foreign currency rates.

The Group’s strategy for the management of market risk is driven by the investment policy. The management of market risk is part of the investment management process and is typical of commercial property investment. The portfolio is managed with an awareness of the effects of adverse valuation movements through detailed and continuing analysis, with an objective of maximising overall returns to shareholders.

Price Risk

The Group has no significant exposure to price risk as it does not hold any equity securities or commodities. The Group is exposed to price risk other than in respect of financial instruments, such as property price risk including property rentals risk. Investment in property and property-related assets are inherently difficult to value due to the individual nature of each property. As a result, valuations are subject to substantial uncertainty. There is no assurance that the estimates resulting from the valuation process will reflect the actual sales price even where such sales occur shortly after the valuation date. Such risk is minimised through the appointment of external property valuers.

Interest rate risk

Some of the Group’s financial instruments are interest-bearing.  They are a mix of both fixed and variable rate instruments with differing maturities.  As a consequence, the Group is exposed to interest rate risk due to fluctuations in the prevailing market rate.

The Group’s exposure to interest rate risk relates primarily to the Group’s borrowings.  Interest rate risk on the £90 million Canada Life term loan is managed by the loan bearing interest at a fixed rate of 3.36 per cent per annum until maturity on 9 November 2026. 

Credit risk

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Group.

In the event of default by an occupational tenant, the Group will suffer a rental shortfall and incur additional costs, including legal expenses, in maintaining, insuring and re-letting the property. The Board receives regular reports on concentrations of risk and any tenants in arrears.  The Manager monitors such reports in order to anticipate, and minimise the impact of, defaults by occupational tenants.

The Group has a diversified tenant portfolio. The maximum credit risk from the rent receivables of the Group at 30 June 2022 was £816,000 (2021: £839,000). The maximum credit risk is stated after deducting an impairment provision of £164,000 (2021: £583,000). Of this amount £nil was subsequently written-off and £6,500 has been recovered.

Deposits refundable to tenants may be withheld by the Group in part or in whole if receivables due from the tenant are not settled or in case of other breaches of contract.

All of the cash is placed with financial institutions with a credit rating of A or above.  Bankruptcy or insolvency of these financial institutions may cause the Group’s ability to access cash placed on deposit to be delayed or limited.  Should the credit quality or the financial position of the banks currently employed significantly deteriorate, the Manager would move the cash holdings to another financial institution.

The Group can also spread counterparty risk by placing cash balances with more than one financial institution.  The Directors consider the residual credit risk to be minimal.

Liquidity risk

Liquidity risk is the risk that the Group will encounter in realising assets or otherwise raising funds to meet financial commitments.  The Group’s investments comprise UK commercial property.

Property in which the Group invests is not traded in an organised public market and may be illiquid.  As a result, the Group may not be able to quickly liquidate its investments in these properties at an amount close to their fair value in order to meet its liquidity requirements.

The Group’s liquidity risk is managed on an ongoing basis by the Manager and monitored on a quarterly basis by the Board.  In order to mitigate liquidity risk the Group aims to have sufficient cash balances (including the expected proceeds of any property sales) to meet its obligations for a period of at least twelve months from the date of approval of the Consolidated Financial Statements.

In certain circumstances, the terms of the Group’s bank loans entitle the lender to require early repayment, for example, if covenants are breached, and in such circumstances the Group’s ability to maintain dividend levels and the net asset value attributable to the Ordinary Shares could be adversely affected. 

3.  The fourth interim dividend of 1.00p was paid on 30 September 2022 to shareholders on the register on 9 September 2022. The ex-dividend date was 8 September 2022.

4.  There were 240,705,539 Ordinary Shares in issue at 30 June 2022. The earnings per Ordinary Share are based on the net profit for the year of £83,403,000 and on 240,705,539 Ordinary Shares, being the weighted average number of shares in issue during the year.

5.  These are not full statutory accounts. The full audited accounts for the year ended 30 June 2022 will be sent to shareholders in October 2022, and will be available for inspection at Trafalgar Court, Les Banques, St. Peter Port, Guernsey, the registered office of the Company.  The full Annual Report and Consolidated Financial Statements will be available on the Company’s website: ctpropertytrust.com

6.  The Annual General Meeting will be held at the offices of Columbia Threadneedle Investments, Quartermile 4, 7a Nightingale Way, Edinburgh, EH3 9EG on 29 November 2022 at 1pm.

Alternative Performance Measures

The Company uses the following Alternative Performance Measures (‘APMs’). APMs do not have a standard meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other entities.

Discount or Premium – The share price of an Investment Company is derived from buyers and sellers trading their shares on the stock market. If the share price is lower than the NAV per share, the shares are trading at a discount. This usually indicates that there are more sellers than buyers. Shares trading at a price above the NAV per share, are said to be at a premium.

		2022 pence	2021 pence
Net Asset Value per share	(a)	132.8	102.1
Share price per share  (b)		84.0	71.0
Discount (c = (b-a)/a)  (c)		-36.7%	-30.5%

Dividend Cover – The percentage by which Profits for the year (less gains/losses on investment properties and non-recurring other income) cover the dividend paid.

A reconciliation of dividend cover is shown below:

		30 June 2022	30 June 2021
		£000	£000
Profit for the year/total comprehensive income		83,403	20,846
Add:  (Gains)/losses on sale of investment property realised   Unrealised gains on revaluation of investment properties   Other income		(772)	1,304
		(71,767)	(12,926)
		(607)	-
Profit before investment gains/losses & other income                      (a)		10,257	9,224
Dividends	(b)	9,628	7,642
Dividend Cover (c=a/b)                                                                     (c)		106.5%	120.7%

Dividend Yield – The annualised dividend divided by the share price at the year-end.

Net Gearing – Borrowings less net current assets (excluding current Barclays loan) divided by value of investment properties.

		30 June 2022	30 June 2021
		£000	£000
Interest-bearing bank loans		96,914	89,722
Less net current assets excluding current Barclays loan		(7,027)	(11,244)
Total	(a)	89,887	78,478
Investment properties	(b)	405,875	321,886
Net Gearing (c = a/b)                                                                          (c)		22.1%	24.4%

Ongoing Charges – All operating costs incurred by the Company, expressed as a proportion of its average Net Assets over the reporting year.  The costs of buying and selling investments and derivatives are excluded, as are interest costs, taxation, non-recurring costs and the costs of buying back or issuing Ordinary Shares.  An additional Ongoing Charge figure is calculated which excludes direct operating property expenses as these are variable in nature and tend to be specific to lease events occurring during the year.

		30 June 2022		30 June 2021
		£000		£000
Investment management fee		2,380		1,932
Other expenses		1,568		2,154
Less credit loss provision		425		(380)
Less other non-recurring costs		(25)		-
Total  (a)		4,348		3,706
Average net assets   (b)		286,154		236,243
Ongoing charges (c=a/b)  (c)		1.5%		1.6%
		30 June 2022		30 June 2021
		£000		£000
Investment management fee		2,380		1,932
Other expenses		1,568		2,154
Less direct operating property costs		(1,012)		(846)
Less credit loss provision		425		(380)
Less other non-recurring costs		(25)		-
Total   (a)		3,336		2,860
Average net assets  (b)		286,154		236,243
Ongoing charges excluding direct operating  (c) property costs (c=a/b)		1.2%		1.2%

Portfolio (Property) Capital Return – The change in property value during the period after taking account of property purchases and sales and capital expenditure, calculated on a quarterly time-weighted basis.  This calculation is carried out by MSCI Inc.

Portfolio (Property) Income Return – The income derived from a property during the period as a percentage of the property value, taking account of direct property expenditure, calculated on a quarterly time-weighted basis. This calculation is carried out by MSCI Inc.

Portfolio (Property) Total Return – Combining the Portfolio Capital Return and Portfolio Income Return over the period, calculated on a quarterly time-weighted basis. This calculation is carried out by MSCI Inc.

Total Return – The return to shareholders calculated on a per share basis by adding dividends paid in the period to the increase or decrease in the Share Price or NAV. The dividends are assumed to have been reinvested in the form of Ordinary Shares or Net Assets, respectively, on the date on which they were quoted ex-dividend.

		2022	2021
NAV per share at start of year - pence		102.1	96.6
NAV per share at end of year - pence		132.8	102.1
Change in the year		+30.1%	+5.7%
Impact of dividend reinvestments		+4.2%	+3.4%
NAV total return for the year		+34.3%	+9.1%

		2022	2021
Share price per share at start of year - pence		71.0	56.0
Share price per share at end of year - pence		84.0	71.0
Change in the year		+18.3%	+26.8%
Impact of dividend reinvestments		+5.7%	+6.1%
Share price total return for the year		+24.0%	+32.9%

All enquiries to:
Matthew Howard
Scott Macrae
Columbia Threadneedle Investment Business Limited
Tel: [phone]

The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
PO BOX 255
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3QL
Tel: [phone]