Last checked at 31 Oct 2008 09:46
F&C Commercial Property Trust Limited
Interim Management Statement
For the Three Month Period from 1 July 2008 to 30 September 2008
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 30 September 2008 |
| | |
| Net asset value per share * | (6.5)% |
| Ordinary Share price | 1.0% |
| Investment Property Databank UK Monthly Index | (4.8)% |
| FTSE All-Share Index | (12.2)% |
| | |
| Capital Values | As at 30 September 2008 | As at 30 June 2008 | % Change |
| | | | |
| Published net asset value per share * | 103.4p | 112.2p | (7.8) |
| Ordinary Share price | 78.50p | 79.25p | (0.9) |
| Investment Property Databank UK Monthly Index | 171.52 | 182.89 | (6.2) |
| FTSE All-Share Index | 2483.67 | 2855.69 | (13.0) |
| Discount to published net asset value * | (24.1)% | (29.4)% | |
| Gearing * # | 23.8% | 22.3% | |
| Net gearing * $ | 9.3% | 15.6% | |
| | | | |
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 Third Quarter
Direct Properties
In the face of the crisis in the financial and banking sectors the pace of capital declines has steepened. Capitalisation rates are moving out across the board with secondary property particularly affected. Rental growth as recorded by the IPD indices has turned negative in all sectors with Central London offices especially weak.
The IPD UK Monthly Index recorded a capital decline of 6.2% over the quarter. In comparison, the Company's direct portfolio fell in value by 5.4% (prior to the effect of gearing).
In July the Company completed the sale of Lion Walk Shopping Centre, Colchester, which was its only directly held shopping centre. The sale price was £69 million, gross of twelve months' rental guarantees on vacant units with a maximum exposure to the Company of £865,000. The sale price compared to the last external valuation of £68.7 million. This sale was in accordance with the strategy to reduce the Company's exposure to the retail sector and further reduces non-recoverable expenditure, voids and potential future voids at this property. The sale completed in a very challenging environment and the sale proceeds provide the Company with additional flexibility and further reduces its net gearing to 9.3%. There were no purchases during the quarter.
During the quarter the remaining two floors at Charles House, 5-11 Regent Street, London SW1 were let. The ground floor was let to Ross Bennett Smith at £110,272pa (£64.50psf) and the lower ground floor to the Association of Electricity Producers at £98,605pa (£35psf). Both of these lettings achieved rents in excess of pro-forma ERV's and were for lease terms of ten years with breaks at year five. All four of the refurbished floors are now let. At 17a Curzon Street, London W1 the Company has agreed a renewal of Bank of Beirut's leases of ground, first and second floors (totalling 4,900sq ft). These floors will undergo a phased refurbishment and the Bank will enter a new ten year lease at a rent of £380,000pa compared to the previous rent passing of £157,340pa.
Against a background of global economic and financial uncertainty the Company has delayed its commitment to the redevelopment of 24-27 Great Pulteney Street, London W1. The Board and Managers remain confident of the scheme, its location and longer term success and contribution to the Company's future performance. The scheme will be regularly reviewed and progressed when fundamentals improve and there is less uncertainty in the market.
At 30 September 2008 the void rate (excluding properties held or in the process of development) in the portfolio was 1.6% compared with 1.9% as at 30 June 2008. The Company's provision for bad debts (90 days overdue) stands at 0.6% of gross annualised rent. At the end of the quarter, two of the Company's tenants entered Administration; Rosebys at Newbury Retail Park and Joy at St Christopher's Place Estate. The combined rental of these two units amounted to £312,445pa.
Indirect Holdings
The externally produced net asset values per unit of the Company's investments in two indirectly held property funds (the 'Indirect Holdings') fell by 7.9% over the quarter to 30 September 2008.
As previously announced, the Board has appointed an independent valuer to value the Company's investments. Following the application of the Directors' valuation which reflects these independently produced values, the Company's investments in the Indirect Holdings fell in value by 23.1% over the quarter to 30 September 2008.
The movement is due to a lack of liquidity in the units and an absence of a secondary market at the current time.
Dividends
The first interim dividend of 1.5 pence per share for the year ending 31 December 2008 was paid on 25 July 2008. A second interim dividend of 1.5 pence per share was paid on 24 October 2008 to shareholders on the register on 26 September 2008.
Share Buy Backs
During the period the Company did not buy back or issue any shares.
Top Ten Holdings
| Property | Sector | 30/09/2008 Percentage of portfolio |
| London W1, St Christopher’s Place Estate | Retail | 14.0 |
| Newbury, Newbury Retail Park | Retail Warehouse | 8.5 |
| London SW1, Cassini House, St James’s Street | Offices | 7.4 |
| Solihull, Sears Retail Park | Retail Warehouse | 7.4 |
| London SW19, Wimbledon Broadway | Retail | 6.0 |
| London SW1, 84 Eccleston Square | Offices | 5.5 |
| Industrial Property Investment Fund | Industrial | 5.4 |
| Uxbridge, 3 The Square, Stockley Park | Offices | 4.6 |
| Rochdale, Dane Street | Retail Warehouse | 4.2 |
| London SW1, Charles House, 5-11 Regent Street | Offices | 4.1 |
| | | |
| Total | | 67.1 |
Geographical Analysis
| Location | 30/09/2008 Percentage of portfolio | | 30/06/2008 Percentage of portfolio |
| London - West End | 37.1 | | 33.7 |
| South East | 29.6 | | 27.0 |
| North West | 8.0 | | 7.4 |
| West Midlands | 7.4 | | 6.7 |
| Indirect | 6.6 | | 7.4 |
| Scotland | 6.6 | | 6.1 |
| Eastern | 2.3 | | 9.4 |
| Yorkshire and Humberside | 1.3 | | 1.2 |
| Rest of London | 1.1 | | 1.1 |
| | | | |
| Total | 100.0 | | 100.0 |
Sector Analysis
| Location | 30/09/2008 Percentage of portfolio | | 30/06/2008 Percentage of portfolio |
| Offices | 44.2 | | 40.9 |
| Retail | 24.8 | | 22.4 |
| Retail Warehouse | 20.1 | | 18.1 |
| Shopping Centres | 1.2 | | 8.7 |
| Industrial | 9.7 | | 9.9 |
| | | | |
| Total | 100.0 | | 100.0 |
The Board is not aware of any significant events or transactions which have occurred since 30 September 2008 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 website www.fccpt.co.uk.
Enquiries:
Richard Kirby
F&C REIT Asset Management LLP
Tel: 0207 499 2244