Last checked at 19 May 2014 10:33
F&C Commercial Property Trust Limited
Interim Management Statement
For the Period from 1 January 2014 to 19 May 2014
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 2014 |
Net asset value per share * | 4.8% |
Ordinary Share price | 1.1% |
Investment Property Databank Quarterly Universe | 3.6% |
FTSE All-Share Index | (0.6)% |
Capital Values | As at 31 March 2014 | As at 31 December 2013 |
% Change |
Net asset value per share * | 108.9p | 105.3p | 3.4 |
Ordinary Share price | 120.3p | 120.5p | -0.2 |
Premium to net asset value * | 10.5% | 14.4% | |
Net gearing * $ | 18.7% | 13.1% | |
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
$ Net gearing: (Borrowings - cash)/total assets (less current liabilities and cash)
Review of the First Quarter
Property Market Overview
All property total returns were 3.6% for the quarter ended 31 March 2014 according to the IPD Quarterly Universe. There was some moderation in performance after a very strong final three months in 2013.
With an improving economic outlook in the UK, sentiment towards commercial property has remained positive. Institutions were net investors in direct property during the quarter and retail investors also showed sustained interest in property funds.
The quarter witnessed some easing in the pace of yield compression following a market-wide major inward yield shift in the previous quarter. London and the South East continued to out-perform the regions but the gap narrowed. The regions and more secondary stock have gradually been moving into favour and this continued in the first quarter.
The occupational market is showing some signs of improvement, although the picture remains mixed. Rental growth was sustained at 0.4% at the all-property level for the second successive quarter and more development projects and speculative starts are being announced on the back of expected improved occupier interest. However, the market vacancy rate moved higher during the quarter and, within the market, growing the income stream remains challenging. The retail market has continued to see negative rental growth.
Portfolio Overview
As at 31 March 2014 the Company's portfolio was valued at £1,034.9 million (31 December 2013: £927.9 million). After allowing for capital expenditure, this represented a 3.2 per cent increase in the valuation over the quarter.
The portfolio recorded a total return of 4.5 per cent over the period, compared with the IPD Quarterly Universe total return of 3.6 per cent. The portfolio continues to be in the top quartile of the IPD Quarterly Universe over one year and top decile over three and five years.
During the quarter, the Company purchased two units at Sears Retail Park, Solihull for £4.5 million, and since the end of the period it has completed the purchase of 1 Barrett Street, London W1 for £6.3 million. This is an adjoining property to St. Christopher's Place Estate and creates an attractive development opportunity of a strategic site overlooking the main pedestrianised square in the Estate.
As announced on 29 April 2014, the Company completed the purchase of Blocks 1 and 2, Prime Four Business Park, Kingswells, Aberdeen in March for a cost of £65.0 million, and the purchase of Blocks 3 and 4 in April for £30.4 million. This is a significant transaction for the Company and provides it with exposure to one of the most buoyant office markets in the UK as well as increasing its level of dividend cover. The valuations of Blocks 1 and 2 are reflected in the NAV per share as at 31 March 2014 and the valuations of Blocks 3 and 4 will be recognised in the NAV per share as at 30 June 2014.
Void levels within the portfolio were 6.5 per cent of estimated rental value (excluding properties held for development) as at 31 March 2014, compared with the benchmark void rate of 7.5 per cent.
Dividends
Monthly interim dividends, in respect of the year ended 31 December 2013, each of 0.5 pence per share, were paid on 31 January, 28 February, 28 March and 30 April 2014. The Board has recently announced a first monthly interim dividend in respect of the year to 31 December 2014, of 0.5 pence per share, payable on 30 May 2014 to shareholders on the register on 16 May 2014.
Top Ten Holdings
Properties valued in excess of £150 million | Sector |
London W1, St. Christopher's Place Estate | Retail |
Properties valued between £70 million and £100 million | |
Newbury, Newbury Retail Park | Retail Warehouse |
London SW1, Cassini House, St James's Street | Offices |
Properties valued between £50 million and £70 million | |
London SW19, Wimbledon Broadway | Retail |
Solihull, Sears Retail Park | Retail Warehouse |
Properties valued between £40 million and £50 million | |
London W1, 25 Great Pulteney Street | Offices |
Aberdeen, Block 2, Prime Four Business Park | Offices |
Aberdeen, Block 1, Prime Four Business Park | Offices |
Properties valued between £30 million and £40 million | |
Uxbridge, 3 The Square, Stockley Park | Offices |
Rochdale, Dane Street | Retail Warehouse |
Geographical Analysis
Location | 31/03/2014 Percentage of portfolio | 31/12/2013 Percentage of portfolio | |
London - West End | 34.9 | 37.8 | |
South East | 25.9 | 28.4 | |
Scotland | 14.4 | 7.4 | |
Midlands | 12.0 | 12.4 | |
North West | 10.0 | 10.9 | |
Eastern | 1.7 | 1.9 | |
Rest of London | 1.1 | 1.2 | |
Total | 100.0 | 100.0 |
Sector Analysis
Sector | 31/03/2014 Percentage of portfolio | 31/12/2013 Percentage of portfolio | |
Offices | 37.4 | 32.0 | |
Retail | 27.0 | 29.6 | |
Retail Warehouses | 19.0 | 20.7 | |
Industrial | 13.9 | 14.7 | |
Other | 2.7 | 3.0 | |
Total | 100.0 | 100.0 |
Subsequent Events
Other than the transactions described above, the Board is not aware of any significant events or transactions which have occurred since 31 March 2014 which would have a material impact on the financial position of the Company.
Quarterly and Key Information
This statement and further information regarding the Company, including movements in the share price since the end of the period and the Group's most recent annual and interim reports, can be found at the Company's website www.fccpt.co.uk.
Enquiries:
Richard Kirby
F&C REIT Asset Management LLP
Tel: 0207 499 2244
Graeme Caton
Winterflood Securities Limited
Tel: 0203 100 0268