Interim Management Statement

RNS Number : 9651G

F&C Commercial Property Trust Ld

19 May 2011

 



F&C Commercial Property Trust Limited

Interim Management Statement

For the Period from 1 January 2011 to 19 May 2011

Investment Objective

The investment objective of the Company is to provide ordinary shareholders with an attractive level of income together with the potential for capital and income growth from investing in a diversified UK commercial property portfolio.

Performance Summary

Total Return	For the three month period ended 31 March 2011
Net asset value per share *	2.7%
Ordinary Share price	(0.9)%
Investment Property Databank All Quarterly and Monthly Valued Funds	2.4%
FTSE All-Share Index	1.0%

Capital Values	As at  31 March 2011	As at 31 December 2010	% Change
Net asset value per share *	97.3p	96.3p	+1.0
Ordinary Share price	103.1p	105.6p	-2.4
Premium to net asset value *	6.0%	9.7%
Gearing * #	29.6%	29.9%
Net gearing * $	20.3%	20.4%

Sources: F&C Investment Business Limited, Investment Property Databank ('IPD'), Datastream.

*  Calculated under International Financial Reporting Standards ('IFRS'). Net asset value total return is calculated assuming dividends are re-invested

#  Gearing: Secured Bonds/total assets (less current liabilities)

$  Net gearing: (Secured Bonds - cash)/total assets (less current liabilities and cash)

Review of the First Quarter

The past quarter has seen downward revisions to GDP growth forecasts and increased concern about inflation. Investors remain cautious and are focused on prime property in core locations, driven by the need to secure and protect the income stream. Although there are signs that the banks are starting to release stock, there is a shortage of prime property on the market. Yield movement, which has driven the recovery to date, is ending and there are signs that the gap between prime and secondary is widening. The occupational market remains muted with rental growth of only 0.2% in the latest quarter, driven largely by central London shops and offices. The provincial markets have generally under-performed, affected by the impact of the government's austerity measures and continued credit constraints. The latest quarter saw total returns repeat the pattern of the previous six months, delivering total returns largely driven by income, with some modest capital growth.

The Company's portfolio was valued at £851.275m as at 31 March 2011 reflecting an increase of £12.975m over the period. This represents an ungeared capital increase, net of capital expenditure, of 1.1 per cent compared with market growth of 0.9 per cent. The portfolio recorded a total return of 2.6 per cent over the period, compared with the return from the IPD All Quarterly and Monthly Valued Funds (the Company's Benchmark) of 2.4 per cent. The portfolio continues to achieve top quartile performance over one, three and five years.

There were no sales or purchases during the quarter.

In the Office sector, the Company's Central London exposure dominated returns. The portfolio has an absolute overweight position generally, but the exposure is primarily to the West End of London (22 per cent of the portfolio). The Company's South East and Regional Offices experienced some valuation falls this quarter as capitalisation rates moved out. However, the portfolio's properties still outperformed their benchmark in each of these segments. The development of 24/27 Great Pulteney Street, London W1, continues to progress (34,000 sq ft Grade A offices) and is forecast to be delivered both on programme and budget, with practical completion scheduled for September 2011.

In the Retail sector, Central London retail continues to outperform with significant retailer interest in core locations. This was evidenced at St Christopher's Place, London W1, where the rental tone of the retails units improved and the overall estimated rental value of the Estate increased by 4.5 per cent. Of particular note was the reletting of 372 Oxford Street to Aldo, an uplift of £124,000 per annum over the previous passing rent. The Company also regeared the lease of 385/389 Oxford Street, a retail unit let to Boots the Chemist, at an uplift of £102,500 per annum

In the Industrial sector, the value of the Distribution units let on shorter unexpired incomes (under 5 years) were marked down in value by approximately 2.0 per cent. However, given the segments relative high running yield, the portfolio's industrial properties produced the highest total return of the three sectors at 3.2 per cent. At Revolution Park, Chorley, the capital works to the property have completed. The rent free period to Kimberly Clark expires in June 2011 and elsewhere in the portfolio, 7 other lettings or lease renewals were completed securing, in aggregate, a total rent of £254,375 per annum.

The void rates within the portfolio remain low at 3.2 per cent (excluding properties held or in the course of development) which remains significantly below the 8.3 per cent recorded by the IPD Quarterly Index. Rent arrears and overdue debt continue to be well managed and at 0.7 per cent of gross annualised rent, remain low for a portfolio this size.

Dividends

Monthly interim dividends, in respect of the year ended 31 December 2010, each of 0.5 pence per share, were paid on 28 January, 25 February and 25 March 2011.

Top Ten Holdings

Property	Sector	31/03/2011 Percentage of portfolio
London W1, St Christopher's Place Estate	Retail	16.4
Newbury, Newbury Retail Park	Retail Warehouse	8.9
London SW1, Cassini House, St James's Street	Offices	7.4
Solihull, Sears Retail Park	Retail Warehouse	6.8
London SW19, Wimbledon Broadway	Retail	6.1
London SW1, 84 Eccleston Square	Offices	5.2
Uxbridge, 3 The Square, Stockley Park	Offices	4.3
Rochdale, Dane Street	Retail	4.2
London SW1, Charles House, 5-11 Regent Street	Offices	4.0
Glasgow, Alhambra House, Wellington Street	Offices	3.2
Total		66.5

Geographical Analysis

Location	31/03/2011 Percentage of portfolio		31/12/2010 Percentage of portfolio
London - West End	41.4		41.0
South East	26.6		26.9
Midlands	13.4		13.8
North West	9.6		9.2
Scotland	5.8		5.9
Eastern	2.1		2.1
Rest of London	1.0		1.0
Yorkshire and Humberside	0.1		0.1
Total	100.0		100.0

Sector Analysis

Sector	31/03/2011 Percentage of portfolio		31/12/2010 Percentage of portfolio
Offices	40.4		40.4
Retail	26.5		26.6
Retail Warehouse	19.8		19.9
Industrial	13.3		13.1
Total	100.0		100.0

The Board is not aware of any significant events or transactions which have occurred since 31 March 2011 and the date of publication of this statement which would have a material impact on the financial position of the Company.

Quarterly and Key Information

This statement and further information regarding the Company, including movements in the share price since the end of the period and the Group's most recent annual and interim reports, can be found at the Company's website www.fccpt.co.uk.

Enquiries:

Richard Kirby

F&C REIT Asset Management LLP

Tel: [phone]

 

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