UK Commercial Property REIT NAV falls as it exits some retail assets
By Josh White
Date: Thursday 31 Oct 2019
(Sharecast News) - UK Commercial Property REIT reported a net asset value per share of 90.5p as at 30 September on Thursday, up from 93.2p at the end of June, resulting in a net asset value total return of -1.9% for the quarter, with a continued low net gearing of 17.0%.
The London-listed firm said its like-for-like portfolio capital value decreased by -2.1%, with overall capital performance net of capital expenditure investment standing at -2.2%.
That, the board said, was driven by further valuation pressure in the retail sector and, in particular, its only shopping centre, which is in Swindon but had now been contracted for sale.
It compared to a 0.7% fall in the MSCI IPD monthly index over the period.
After the disposal of Manchester in the quarter, UKCP said its portfolio was now valued at £1.42bn, down from £1.46bn.
The company said its passing rent at 30 September was £66.2m, compared to an estimated recovery value of £80.2m, which the boards said demonstrated the reversionary nature of its portfolio.
In addition, over the last 12 months, 99% of UKCP's rent roll continued to be collected within 21 days.
With close to a 50% exposure, the firm said its current, strategic overweight position to the industrial and logistics sector, with a bias towards urban stock and the south-east, was continuing to provide a positive contribution to returns, and contained the majority of its reversionary potential.
In the office sector, where the firm had a 16.5% exposure with around two thirds outside London, capital value had remained "resilient", while tenant leasing enquiries in the "relatively small" 7% vacancy had picked up over the quarter.
"Significant further progress has been made to the company's ongoing strategy of reducing its exposure to retail," said chair Andrew Wilson.
"The sale of two retail assets has further reduced the company's weighting to this sector which is already significantly below that of the benchmark.
"The portfolio also remains highly reversionary as evidenced by the leasing activity undertaken during the period which locked in some of the rental growth that we expect to be a key driver of future income and shareholder returns."
Wilson said he was "delighted" that Chris Fry had accepted an invitation to join the board from January.
"He brings with him a wealth of property expertise and experience which I am sure will be invaluable to the company in the future."
Will Fulton, lead manager of UKCM at Aberdeen Standard Investments, added that the company took the opportunity to capitalise on good investor interest ahead of a potential lease break to sell its retail asset in central Manchester.
"We were also pleased to make further progress towards reducing our exposure to retail after the period end, when we signed an agreement to sell The Parade in Swindon, our only remaining shopping centre, to an investor with a different return and risk profile.
"Around half of the portfolio is now weighted towards the industrial and logistics sector of which more than half is of an urban nature - a sub-sector where we continue to see strong interest and rental prospects.
"Looking ahead, we will continue to assess further opportunities to recycle capital through strategic disposals whilst making investments to grow the portfolio."
As at 1148 GMT, shares in UK Commercial Property REIT were down 0.45% at 88.4p.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN