TR Property, an investment trust focused on the European property market, is proposing to merge its two property portfolios and convert its Sigma shares into one class of ordinary shares.
The move comes following a strategic review and was announced as it delivered its interims for the six months ended September 30th.
The proposed conversion will result in a single, larger ordinary share class that will retain the objective of maximising shareholders' total returns by investing in property shares and investment property on an international basis. The physical property investments will continue to be located in the UK only.
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Although analysis has shown that Sigma net asset value (NAV) total return had outperformed the ordinary share class NAV total return since its establishment, particularly since 2009, the company has concluded that prospective investors are less interested in smaller funds focused on small companies with limited liquidity. This has been demonstrated by the fact that the Sigma shares have now traded at a significant discount to NAV for a prolonged period.
The proposal will be voted on at an Extraordinary General Meeting on December 14th.
Interim resultsFor the six months to September 30th the ordinary shares produced a total income of £29.6m (2012: loss of £78.7m) and a pre-tax profit of £15.9m (2012: loss of £83.2m). While the Sigma shares produced a total income of £7.6m (2012: loss of £24.4m) and a pre-tax profit of £7m (2012: loss of £25m).
The Ordinary share class showed a NAV total return of 4.7% against the benchmark total return of 3.4%. The share price total return was 5.8%. For the Sigma share class, the NAV total return was 5.7% and the benchmark total return was 3.5%. The share price total return was 13.3% due to a significant tightening in the discount to NAV at which the shares traded following the announcement of the change on September 26th.
The ordinary shares will pay an interim dividend of 2.65p per share, an increase of 10.4% on last year's interim dividend of 2.40p. While Sigma shares will pay an interim dividend of 1.05p per share, an increase of 10.5% over last year's interim dividend of 0.95p.
The shares of both classes will go ex-dividend on December 5th.
CM
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