(Alliance News) - Balanced Commercial Property Trust Ltd on Monday said it has begun a strategic probe, with the sale of the company a possibility, as it grapples with a "difficult near-term economic and property market backdrop".
The investor in UK commercial property reported that its share price, hurt by lofty interest rates, does not reflect the value of its portfolio assets. It has kicked off a strategic review as it looks to "enhance value for shareholders".
BCPT shares rose 2.0% to 80.60 pence on Monday morning in London, they are down 12% of the past 12 months, however.
As part of its strategic review, BCPT will consider options such as selling the company's portfolio, returning capital to shareholders or an outright sale of the company.
BCPT said: "The board also recognises that the company currently faces significant challenges with a difficult near-term economic and property market backdrop in a higher interest rate environment and the current dislocation in capital markets. Despite the manager delivering steady portfolio performance over recent years, and the share price discount having narrowed, the company's shares continue to trade at a material discount to their net asset value, which the board does not believe reflects the current value of the underlying property assets, nor the longer-term prospects of the portfolio."
The company is not in discussions with any potential buyers yet, it added.
BCPT's Chair Paul Marcuse said: "Following a very challenging period for real estate investment trusts during the Covid-19 pandemic and subsequent economic and geopolitical events, BCPT has been repositioning the portfolio away from less attractive sectors and realising cash to facilitate strategic options for the company. We believe our monthly dividend offers an attractive level of regular income to shareholders.
"We recognise, however, despite recent improvements in the company's share rating, the share price remains at a material discount to the company's net asset value. In line with our commitment to do the right thing for our shareholders as a whole, we have commenced this strategic review to determine the best way to enhance value for shareholders, after which the independent board will determine the best way forward."
By Emily Parsons, Alliance News reporter
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Balanced Commercial Property Trust (BCPT)