Net Asset Value(s)/Interim Ma
Net Asset Value/ Interim Management Statement
For the three month period from 1 October 2009 to 31 December 2009
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.
Net asset value
The unaudited net asset value per share of UK Commercial Property Trust Limited as at 31 December 2009 was 73.6p. This represents an increase of 8.7 per cent. from the net asset value per share as at 30 September 2009. The net asset value to 31 December 2009 is calculated after deduction of the additional dividend paid in November 2009, announced on 6 October 2009 (approximately four months as opposed to the usual three) as part of the property transaction completed in Q4 2009.
The net asset value per share is based on the external valuation of the property portfolio prepared by CB Richard Ellis Limited as at 31 December 2009 of £710.5 million.
The net asset value per share is calculated under International Financial Reporting Standards ("IFRS").
The net asset value per share includes all current period income and is calculated after deduction of all dividends paid prior to 31 December 2009. It does not include provision for any unpaid dividends for the periods prior to 31 December 2009 including the dividend for the period to 31 December 2009.
In accordance with the announcement made on 6 October 2009, the Company intends to declare a fourth interim dividend on 28 January 2010 in respect of the period from 30 October 2009 to 31 December 2009 of 0.9p per Ordinary Share, with an ex dividend date of 3 February 2010, which will be paid on 28 February 2010.
The adjusted net asset value per share after deducting 0.9p in respect of a notional dividend for the period 30 October 2009 to 31 December 2009 is 72.7p. This represents an increase of 9.5 per cent. from the equivalent net asset value per share as at 30 September 2009
At the start of the period the Company had 838,554,858 Ordinary Shares of 25p each in issue (excluding 41,445,142 shares held in treasury). On 30 October 2009, the Company issued 151,544,000 additional Ordinary Shares of 25p each. This resulted in a slight dilution in the NAV per share of 0.4p as set out on page 18 of the prospectus for this issue.
The NAV per share at 31 December 2009 is therefore based on 990,098,858 shares of 25p each, being the total number of shares in issue at that time (excluding 41,445,142 shares held in treasury).
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 1 October 2009 to 31 December 2009.
|
UK Commercial Property Trust Limited |
Per Share* (p) |
Attributable Assets (£m) |
|
Net assets as at 1 October 2009 |
67.7 |
567.6 |
|
Unrealised increase in valuation of property portfolio |
6.5 |
60.8 |
|
Realised gain on properties disposed in period |
0.3 |
2.8 |
|
Capital expenditure during the period |
(0.1) |
(0.7) |
|
Income earned for the period |
1.5 |
14.4 |
|
Expenses for the period |
(0.3) |
(2.4) |
|
Dividend paid on 30 November 2009 |
(1.6) |
(14.5) |
|
Net capital raised on the 30 October 2009 share issue |
(0.4) |
100.5 |
|
Net assets as at 31 December 2009 |
73.6 |
728.5 |
* Movements in NAV above are based on the average number of shares in issue during the period. Opening and Closing NAVs are based on actual shares in issue at the reporting dates.
|
UK Commercial Property Trust Limited |
|
|
|
Net Asset Analysis as at 31 December 2009 |
£m |
% |
|
Property Portfolio |
|
|
|
Retail |
335.2 |
46.0 |
|
Office |
245.0 |
33.6 |
|
Industrial |
130.3 |
17.9 |
|
Total Property |
710.5 |
97.5 |
|
Net Current Assets |
60.1 |
8.3 |
|
Bank Loan |
(42.1) |
(5.8) |
|
Total Net Assets as at 31 December 2009 |
728.5 |
100.0 |
The total expense ratio of the Company for the period ended 31 December 2009, based on the total assets as at 31 December 2009 and on the basis of annualised expenses, was 0.84%. For the purposes of this calculation, "expenses" includes the costs of running the Group, including the investment management fee, administration fees, Directors' fees, insurance costs, Board costs, registrar costs and any irrecoverable VAT, but excludes capital expenditure and refurbishment and irrecoverable property running costs.
As at the 31 December 2009 the Company had borrowings of £42.1m with Lloyds Bank Group. This is part of the £80m seven year loan facility currently in place.
Review of the period
2009 closed with more confidence than it started with most commentators anticipating the technical end to the recession when Q4 GDP figures are announced at the end of January. If that is the case then the contraction in the UK economy will have been in the region of 6%, akin to that of the early 1980s. What is somewhat different from that period is the moderation in the rate of unemployment levels which are now forecast to be closer to 2.5m rather than the 3m suggested earlier in the year.
Although the retail sales figures issued to date are stronger than expected and therefore welcomed, it is too early to tell whether this is a reaction to the reinstatement of the V.A.T. rate at 17.5% or the early tentative signs of a consumer recovery.
The expectation that interest rates will remain low for at least the first half of the year and the Government's continued commitment to maintain an expansive monetary policy, at least until the election, whilst positive, are perhaps reminders that there are still more challenges ahead for us in the form of spending cuts and tax rises.
The improving sentiment in the property sector witnessed in the late summer months gathered significant momentum over the final quarter as investment volumes increased by as much as 20% over those for the previous quarter but yet are still expected only to match the total for 2008.
A re-appraisal of the appropriate risk premium for prime property by many investors led to an increased focus on the income benefits of that class and, with that, there has been an increase in inflows to institutions, many of whom are seeking to invest that money in the same limited prime stock. As a consequence, prime yields continued to rally, led by the retail sector. Central London retail and retail warehouses showed particularly strong movement, so much so that many properties bought earlier in the year in this latter category have subsequently been sold at much keener yields.
Retail was not the only beneficiary as Central London offices continue to show strong performance with the added dimension of a more global investment focus and the tentative signs of an improvement in the occupational market outlook.
All of this investment activity exists against the background of a slowing in the level of rental falls, and even then, only in some sub-sectors, with many forecasters still expecting positive rental value growth to feature only in 2011 and in some cases later.
Notwithstanding this, the volumes of investment focusing on prime property are such that they seem set to support further capital value uplifts for at least the first half of 2010.
Against this background, the prime characteristics of the Company's portfolio ensured a capital value uplift of approximately 10 per cent. over the quarter. Mirroring the wider market, the Company's retail sector was strongest, fuelled by the very strong performance of the retail warehouse holdings, which in some cases saw capital value uplifts approaching 20%.
The Company's industrial holdings came a close second, underpinned by the movement in yield of the distribution warehouses, which display some bond-like characteristics.
The performance of the Company's office holdings was again the weakest area, though the long leases and good covenants which remain a feature of the Company's holdings in this sector, particularly in the regions, ensured a healthy capital uplift, approaching 8%.
ERV falls over the quarter have not been as marked as before and are again a feature of the prime nature of the portfolio. Portfolio ERV's fell 0.41% compared to 2.41% for the previous quarter.
As at 31 December, voids represented 2.45% of the portfolio ERV.
Set out below is a breakdown of the movement in the external valuation of the property portfolio over the period from 1 October 2009 to 31 December 2009.
|
UK Commercial Property Trust Limited |
Exposure % as at 31 Dec 2009 |
Capital Value Shift ( %) |
£m |
|
External Valuation at 1 October 2009 |
|
|
562.35 |
|
Sub Sector Analysis |
|
|
|
|
Retail |
47.18 |
12.12 |
36.24 |
|
High St - South East High St- Rest of UK |
11.75 4.00 |
9.77 5.96 |
7.43 1.60 |
|
Shopping Centres |
11.82 |
5.20 |
4.15 |
|
Retail Warehouses |
19.61 |
19.83 |
23.06 |
|
|
|
|
|
|
Offices |
34.48 |
7.73 |
17.58 |
|
|
|
|
|
|
West End |
9.93 |
8.46 |
5.50 |
|
South East |
9.58 |
4.73 |
3.08 |
|
Rest of UK |
14.97 |
9.24 |
9.00 |
|
|
|
|
|
|
Industrial |
18.34 |
11.02 |
12.94 |
|
South East |
11.83 |
11.56 |
8.71 |
|
Rest of UK |
6.51 |
10.02 |
4.23 |
|
|
|
|
|
|
Adjustment for disposals |
|
|
-56.29 |
|
Adjustment for acquisitions |
|
|
137.68 |
|
External valuation at 31 December 2009 |
|
10.17 |
710.50 |
Material Events
As announced on 29 October 2009 the Company acquired 10 properties with an aggregate market value of £137.7 million; please see the aforementioned announcement for more information. The same announcement included confirmation that the company had entered into a conditional contract for the purchase of 122/132 Argyle Street, Glasgow. The relevant conditions have yet to be fulfilled.
The Company also sold two office properties in Central London: 34/36 High Holborn for £9.815m on 26 October and 5 Chancery Lane for £49.3m on 9 December.
The Board announced on 21 December 2009 that it was considering with its advisors a proposed equity capital raising, the net proceeds of which would be used to fund the acquisition of further commercial properties in accordance with its investment policy. A further announcement relating to this will be made shortly.
Other than the above, the Board is not aware of any significant events or transactions which have occurred between 31 December 2009 and the date of publication of this statement which would have a material impact on the financial position of the Company.
Enquiries
The Company Secretary, Northern Trust International Fund Administration Services (Guernsey) Limited - 01481 745432
Robert Boag/Gerry Brady, Ignis Investment Services Limited - 0141 222 8000
Nigel Russell/Graeme Caton/Graham Reaves, G&N Collective Funds Services Limited
0131 226 4411
Important Note
The above information is unaudited and has been calculated by Ignis Investment Services Limited.
This information is provided by RNS
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