UK Commercial Property Trust posts decline in NAV per share

UK Commercial Property Trust (UKCPT), the FTSE 250 investment company, has posted a decline in its year-end net asset value (NAV) per share as a result of a like-for-like decrease in its property portfolio value, the acquisition costs of an industrial portfolio, and working capital outgoings.

UK Commercial Property Trust (UKCPT), the FTSE 250 investment company, has posted a decline in its year-end net asset value (NAV) per share as a result of a like-for-like decrease in its property portfolio value, the acquisition costs of an industrial portfolio, and working capital outgoings.

The NAV per share at December 31st 2012 totalled 69.6p, compared to 75.5p a year earlier.

Rental income for the period climbed 9.2% during the 12 months, mainly due to £164m-worth of acquisitions over the past two years.

The group said the share price total return was 2.5%, which resulted in a reduction in the discount at which the shares trade to the NAV.

Over a five year period the company has returned 6.7% and 36.3% on a NAV and share price total return basis, respectively, ahead of the IPD Benchmark (1.7%) and the FTSE Real Estate Investment Trusts Index (- 25.9%).

However, the NAV total return for the year was -1.0%, with the underperformance relative to the IPD benchmark being attributed to the fact the portfolio is underweight in Central London offices where values have continued to increase due to significant overseas investment and the current perception that London is a safe haven.

The company also blamed the fact the portfolio is overweight in shopping centres compared to the benchmark and said rental and capital values have been the subject of downward pressure due to negative consumer and investor sentiment.

The group acknowledged that the commercial property market has been "affected by the travails of the wider UK economy", saying "the divergence of performance between prime and secondary properties, and between London and the rest of the UK, has continued; investors are showing little appetite for risk due to the ongoing economic uncertainty which has resulted in capital value falls over the past 12 months across most sectors".

Company Chairman Christopher Hill said: "The board believes that UKCPT is well placed to achieve its objectives by undertaking proactive asset management initiatives to preserve and improve income. The company has considerable cash resources which can be utilised for income enhancing acquisitions or asset management opportunities.

"The portfolio is of a prime nature and has a strong and well diversified tenant base which offers the potential for additional income generation. In a low interest rate environment, these factors should ensure that the company remains an attractive proposition for investors."

Looking ahead, the company expects property valuations to remain under pressure, particularly in the retail sector, with little capital growth expected outside Central London in the next twelve months. It said it believes that the key to positive performance will be the "successful implementation of asset management initiatives and preserving and growing income where possible", adding that it is well placed to achieve this.

It added: "The company has considerable cash resources which can be utilised for income enhancing acquisitions or asset management opportunities. In addition, the portfolio is of a prime nature and has a strong and well diversified tenant base which offers the potential for additional income generation.

"In a low interest rate environment, these factors should ensure that the company remains an attractive proposition for investors."

The share price rose 0.07% to 68.50p by 08:38.

NR

Recommended

Imperial Brands has an 8.3% yield – but what’s the catch?
Share tips

Imperial Brands has an 8.3% yield – but what’s the catch?

Tobacco company Imperial Brands boasts an impressive dividend yield, and the shares look cheap. But investors should beware, says Rupert Hargreaves. H…
20 May 2022
Investing in drugmakers: uncommon profits from curing rare diseases
Share tips

Investing in drugmakers: uncommon profits from curing rare diseases

Treatments for medical conditions with only a small number of sufferers can still be very attractive for pharmaceutical companies and investors becaus…
20 May 2022
Share tips of the week – 20 May
Share tips

Share tips of the week – 20 May

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
20 May 2022
Delivering profits: should you buy Royal Mail shares?
Share tips

Delivering profits: should you buy Royal Mail shares?

The volume of parcels delivered by Royal Mail soared during the pandemic, and so did its profits. But it has been coming under pressure lately. So, as…
19 May 2022

Most Popular

The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves looks at the FTSE 100’s top yielding stocks for income investors to consider.
18 May 2022
Aviva: a share for income investors to tuck away
Share tips

Aviva: a share for income investors to tuck away

Insurance giant Aviva is one of the highest yielding stocks in the FTSE 100 – and it’s cheap, too, making it a tempting target for income investors. R…
18 May 2022
Despite the crypto crash, bitcoin still has a bright future
Bitcoin & crypto

Despite the crypto crash, bitcoin still has a bright future

Cryptocurrencies have crashed hard, with bitcoin down by more than 50% from its peak. But, says Dominic Frisby, bitcoin still has a future – it is the…
19 May 2022