Last checked at 18 May 2009 10:22
F&C Commercial Property Trust Limited
Interim Management Statement
For the Three Month Period from 1 January 2009 to 31 March 2009
Investment Objective
The investment objective of the Company is to provide ordinary shareholders with an attractive level of income together with the potential for capital and income growth from investing in a diversified UK commercial property portfolio.
Performance Summary
| Total Return | For the three month period ended 31 March 2009 |
| | |
| Net asset value per share * | (6.6)% |
| Ordinary Share price | 7.8% |
| Investment Property Databank UK Monthly Index | (7.1)% |
| FTSE All-Share Index | (9.1)% |
| | |
| Capital Values | As at 31 March 2009 | As at 31 December 2008 | % Change |
| | | | |
| Published net asset value per share * | 78.7p | 85.8p | (8.3) |
| Ordinary Share price | 65.25p | 62.00p | 5.2 |
| Investment Property Databank UK Monthly Index | 132.83 | 145.81 | (8.9) |
| FTSE All-Share Index | 1984.17 | 2209.29 | (10.2) |
| Discount to published net asset value per share * | (17.1)% | (27.7)% | |
| Gearing * # | 30.0% | 28.2% | |
| Net gearing * $ | 11.0% | 10.3% | |
| | | | |
Sources: F&C Investment Business Limited, Investment Property Databank ('IPD'), Datastream.
* Calculated under International Financial Reporting Standards ('IFRS'). Net asset value total return is calculated assuming dividends are re-invested
# Gearing: Secured Bonds/total assets (less current liabilities)
$ Net gearing: (Secured Bonds - cash)/total assets (less current liabilities and cash)
Review of the First Quarter
During the quarter the UK commercial property market continued to fall further, but the rate of decline was less severe than in the last quarter of 2008. Although the volume of investment transactions is still extremely thin, there is evidence emerging of some transactions. A number of sales have completed with the purchasers being substantially equity backed investors and overseas buyers and there is increasing activity from 'opportunity funds'. The focus of interest remains on prime properties, supported by underlying property fundamentals and secure income streams with a minimum of ten year unexpired lease terms. The market is highly risk averse and will not take a view on poor covenants, shorter incomes and voids, resulting in capitalisation yields for secondary properties continuing to move out further.
The IPD UK Monthly Index recorded a capital decline of -8.9 per cent over the quarter. In comparison the Company's direct property portfolio fell in value by -7.1 per cent. This resulted in a total return from the portfolio for the quarter of -5.4 per cent compared with a -7.1 per cent total return from the index.
The Company did not complete any investment transactions during the quarter. It is not under any pressure to sell assets, continues to hold considerable cash reserves, now approximately £163 million, and is actively exploring opportunities to acquire suitable direct property. The Company has a quality threshold and any proposed acquisitions must be of properties of similar quality to the existing portfolio. Acquisitions of direct property will significantly enhance the income returns on the portfolio, when compared with the low returns currently generated from cash on deposit.
The occupational markets remain in a poor state of health across all the property sub-sectors. Against such a background leasing activity within the portfolio has been subdued in the quarter. The Company completed two small lettings at St Christopher's Place Estate, London W1: at 11 Gees Court newly refurbished floors were let to Alizone Ltd at an annual rent of £107,000pa (£65psf) on a ten year lease with a break at year five; and a small suite at 69 Wigmore Street at £22,230pa (£45psf). The Company continues, where possible, to engage with its tenants to secure income ahead of future lease events. An example of this activity is at 82 King Street, Manchester where the occupation of Michael Page was secured for a further ten years beyond their break in July 2009.
At 31 March 2009 the void rate (excluding properties held or in process of development) in the portfolio was 4.6 per cent, having increased from 4.3 per cent as at 31 December 2008. At the end of the quarter the Company's largest void was a retail unit at 124/125 Princes Street, Edinburgh but, since the end of the period, an agreement has been entered into for a let to Urban Outfitters. This is a significant letting both for the Company and Princes Street, Edinburgh. The Company's other main voids are floors available in the West End office portfolio where there are a number of leasing initiatives underway. Although the void rate increased during the quarter, the contracted letting at Edinburgh will be beneficial. It should also be noted that the Company's void rate is significantly lower than the IPD average of 11.7 per cent (source: IPD Monthly, March 2009).
Dividends
A fourth interim dividend for the year ended 31 December 2008, of 0.5 pence per share, was paid on 30 January 2009. A fifth interim dividend of 0.5 pence per share was paid on 27 February 2009, and a sixth interim dividend of 0.5 pence per share was paid on 27 March 2009.
It is the Directors' intention that the Company will continue to pay dividends monthly.
Share Buy Backs
During the period the Company did not buy back or issue any shares.
| Property | Sector | 31/03/2009 Percentage of portfolio |
| London W1, St Christopher’s Place Estate | Retail | 16.0 |
| Newbury, Newbury Retail Park | Retail Warehouses | 8.7 |
| Solihull, Sears Retail Park | Retail Warehouses | 7.3 |
| London SW1, Cassini House, St James’s Street | Offices | 7.0 |
| London SW19, Wimbledon Broadway | Retail | 6.7 |
| London SW1, 84 Eccleston Square | Offices | 6.2 |
| Uxbridge, 3 The Square, Stockley Park | Offices | 5.2 |
| Rochdale, Dane Street | Retail Warehouses | 4.6 |
| London SW1, Charles House, 5-11 Regent Street | Offices | 4.3 |
| Glasgow, Alhambra House, Wellington Street | Offices | 3.9 |
| | | |
| Total | | 69.9 |
| Location | 31/03/2009 Percentage of portfolio | | 31/12/2008 Percentage of portfolio |
| London - West End | 39.4 | | 39.3 |
| South East | 31.8 | | 31.7 |
| North West | 8.3 | | 8.5 |
| West Midlands | 7.3 | | 7.5 |
| Scotland | 7.2 | | 7.1 |
| Eastern | 2.8 | | 2.6 |
| Yorkshire and Humberside | 1.5 | | 1.5 |
| Rest of London | 0.9 | | 1.0 |
| Indirect | 0.8 | | 0.8 |
| | | | |
| Total | 100.0 | | 100.0 |
| | 31/03/2009 Percentage of portfolio | | 31/12/2008 Percentage of portfolio |
| Offices | 45.6 | | 46.4 |
| Retail | 28.0 | | 27.2 |
| Retail Warehouses | 20.6 | | 20.7 |
| Industrial | 5.5 | | 5.4 |
| Shopping Centres | 0.3 | | 0.3 |
| | | | |
| Total | 100.0 | | 100.0 |
Events Since the End of the Period
At an extraordinary general meeting of the Company held on 1 May 2009, shareholders approved two resolutions: the first to approve the continuation of the Company; and the second to amend the Company's policy on continuation votes, as set out in the circular sent to shareholders on 31 March 2009. This means that the Company will not be required to hold another continuation vote unless the market price of a share is more than five per cent below the published net asset value per share for a continuous period of 90 dealing days or more following the second anniversary (rather than the first anniversary) of the passing of the resolution.
The Board is not aware of any other significant events or transactions which have occurred since 31 March 2009 and the date of publication of this statement which would have a material impact on the financial position of the Company.
Quarterly and Key Information
Further information regarding the Company, including movements in the share price since the end of the period and the most recent annual and interim reports, can be found at the Company's websitewww.fccpt.co.uk.
Enquiries:
Richard Kirby
F&C REIT Asset Management LLP
Tel: 0207 499 2244