F and C Commercial Property Trust claimed 2011 was another year of out-performance for the real estate investment trust, with its focus on central London serving it well.
The company's net asset value (NAV) per share as at 31st December 2011 was 100.5p. This represented an increase of 4.4% for the year, and once dividends paid to shareholders are factored in, the NAV total return for the year was 10.9%, comfortably ahead of a market portfolio return of 7.9% as measured by the benchmark Investment Property Databank (IPD) All Quarterly and Monthly Valued Funds.
The ungeared total return from the property portfolio during the year was 11.4%, reflecting strong absolute and relative performance against the IPD benchmark return. The portfolio continues to have a strong performance record, being measured top quartile over one, three and five years by IPD, F&C noted.
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The company's borrowings comprise £230m of secured bonds, which have been assigned an 'Aaa' rating by Moody's Investor Services and which mature in 2015, and a £50m secured bank loan which is repayable in 2017.
As at 31st December 2011, the company's level of gearing net of cash was 25.4% which compares with 20.6% at the beginning of 2011. The movement in net gearing is due mainly to the investment of cash during the year.
F&C said its strong performance for the year is attributable in the main to its retail and office properties in central London, in particular, Wimbledon Broadway, London SW19 and the company's largest property, St Christopher's Place Estate, London W1.
The completion during the year of the developments at Revolution Park, Chorley and 25 Great Pulteney Street, London W1 also contributed positively to performance, with Great Pulteney Street recording the highest total return within the portfolio.
In 2011 the group paid dividends every month of 0.5p, and the board anticipates this will be the case again this year.
"The prospects for UK commercial property are being adversely affected by macro-economic factors as the UK economy struggles to advance, credit markets remain constrained and the problems of the Eurozone persist. In this uncertain environment, investors are expected to remain cautious and focused on core stock, and occupiers are expected to be reluctant to expand. In addition, property returns are likely to continue to be driven by income with little prospect of capital growth," predicted F&C Commercial Property's Chairman, Chris Russell.
"Against this challenging background, the [trust's fund] managers will continue to take positive steps to protect the company's income stream in terms of covenant strength and lease length. They will seek successful asset management initiatives and acquisitions of further prime properties with attractive income characteristics to deliver performance in the year ahead," Russell added.
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