19 May 2011 14:20
IRP Property Investments Limited
Interim Management Statement
For the Three-Month Period from 1 January 2011 to 31 March 2011
Investment Objective
The investment objective is to provide 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 2011 | For the nine month period ended 31 March 2011 |
Net asset value per share | +1.5% | +7.5% |
Ordinary share price | +3.8% | +6.2% |
Portfolio total return per IPD | +1.5% | +5.7% |
Investment Property Databank UK All Quarterly and Monthly Valued Funds |
+2.4% |
+7.8% |
FTSE All-Share Index | +1.0% | +23.3% |
Capital Values - 3 months | As at 31 March 2011 | As at 31 December 2010 |
% Change |
Net asset value per share | 86.3p | 86.8p | -0.6 |
Ordinary share price | 83.8p | 82.5p | +1.6 |
FTSE All-Share Index | 3,067.7 | 3,062.9 | +0.2 |
Discount to net asset value | (3.0)% | (5.0)% | |
Net gearing # | 32.3% | 32.6% | |
Capital Values - 9 months | As at 31 March 2011 | As at 30 June 2010 |
% Change |
Net asset value per share | 86.3p | 85.4p | +1.1 |
Ordinary share price | 83.8p | 84.3p | -0.6 |
FTSE All-Share Index | 3,067.7 | 2,543.5 | +20.6 |
Discount to net asset value | (3.0)% | (1.3)% | |
Net gearing # | 32.3% | 33.6% | |
Sources: F&C Investment Business Limited, Investment Property Databank ('IPD'), Datastream.
* - All total returns are based on net dividends re-invested
# - Net gearing: Bank debt (less cash) divided by fair value of investment properties
Dividends
The second interim dividend for the year ending 30 June 2011 of 1.8 pence per share was paid on 25 March 2011 and a third interim dividend of 1.8 pence per share is due to be paid on 24 June 2011. In the absence of unforeseen circumstances it is the intention of the Board to maintain quarterly dividends at this rate, giving a total dividend of 7.2 pence per share for the 2010/11 financial year.
Review for the Period
The past three quarters have seen property revert to the traditional model with total returns driven largely by income and with modest positive capital growth. In the first quarter of 2011, the all property total return was 2.4% as measured by the IPD Quarterly Index for standing investments, with capital growth of 0.8%. Rental growth during the quarter rose by 0.2% at the all property level but this masks differences between sectors. IPD initial yields stabilised during the quarter at 6.1%. The market has continued to see a strong performance from Central London shops and offices contrasting with weakness in the provincial markets. Investment activity edged back in the first quarter of 2011 after a surge in investment transactions at the end of 2010. This has partly been caused by a lack of stock being marketed during the quarter, especially at the prime end. Banks are starting to release some stock onto the market but are still restricting new lending. Investors remain risk averse and focused on core product in established locations, concerned to protect the income stream and favouring long leases to sound covenants.
The value of the Company's portfolio remained broadly unchanged over the quarter at £154.1m. During the period the portfolio had an income return of 1.6%, slightly in excess of the benchmark of 1.5%. The total return for the quarter was 1.5% which compared with the IPD Quarterly Index of 2.4%. Over the 12 month period to 31 March 2011, total returns from the portfolio were 8.5%.
The largest contributor to portfolio performance was Cobham Road, Sunningdale which saw an increase in value of 7.6% following a reappraisal of the values of the residential component of the property. Units 1&2 Above Bar Church, Southampton saw an increase of £110,000, or 3.5%, following a letting of a vacant unit to Trespass Europe Ltd at a rent of £74,900pa. The motor showroom complex at Clifton Moor Gate, York saw an increase in value of £135,000 or 1.6% on the strength of the market for prime well let investments in this sector.
During the quarter, the Company sold 1-2 Church Street, Nuneaton for £2.13m, a yield of 6.75%. Since the end of the quarter, the company has also sold 42 Yorkshire Street, Rochdale for £400,000, a yield of 9.0%. The Company has also exchanged contracts on a packaged purchase of the freeholds of retail warehouses at Willow Beck Road, Northallerton for £6,550,000 at a yield of 6.2% and Sands Road, Swalwell, Gateshead for £2,250,000 at a yield of 7.2%. A more detailed announcement will be made after completion.
As at 31 March 2011, the void rate in the portfolio had fallen to 1.2% from 3.4% as at December 2010. The average weighted unexpired lease term (including breaks) was 7.9 years.
Top Ten Holdings
Property |
Sector | 31/03/2011 Percentage of portfolio |
Unit 3663, Echo Park, Banbury | Industrial | 11.6 |
Units 1-8, Lakeside Road, Colnbrook | Industrial | 7.9 |
Southampton International Park, Eastleigh | Industrial | 7.3 |
30/40, The Parade & 47/59A Warwick Street, Leamington Spa | Retail | 6.8 |
Mercury House, 1 Dove Wynd, Strathclyde Business Park | Offices | 6.1 |
Clifton Moor Gate, York | Retail Warehouse | 5.7 |
Hemel Gateway, Boundary Way, Hemel Hempstead | Industrial | 5.6 |
1-2 Lochside Way, Edinburgh Park, Edinburgh | Offices | 5.3 |
Swift House, Cosford Lane, Rugby | Industrial | 4.0 |
Churchill Way, Nelson | Retail Warehouse | 3.7 |
Total | 64.0 |
Geographical Analysis
Location | 31/03/2011 Percentage of Portfolio | 31/12/2010 Percentage of Portfolio | |
South East | 52.2 | 51.4 | |
West Midlands | 13.8 | 15.0 | |
Scotland | 13.0 | 13.0 | |
Yorkshire and Humberside | 5.7 | 5.5 | |
North West | 4.2 | 4.2 | |
East Midlands | 2.9 | 2.8 | |
Eastern | 2.7 | 2.7 | |
London - West End | 2.5 | 2.5 | |
Rest of London | 1.9 | 1.8 | |
South West | 0.7 | 0.7 | |
North East | 0.4 | 0.4 | |
Total | 100.0 | 100.0 |
Sector Analysis
Sector | 31/03/2011 Percentage of Portfolio | 31/12/2010 Percentage of Portfolio | |
Industrial | 39.3 | 38.6 | |
Retail | 32.7 | 33.7 | |
Offices | 18.6 | 18.5 | |
Retail Warehouse | 9.4 | 9.2 | |
Total | 100.0 | 100.0 |
The Board is not aware of any significant events or transactions which have occurred between 31 March 2011 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 performance since launch and the most recent annual and interim reports, can be found at the Company's website www.irppropertyinvestments.com, or at www.fandc.com.
For further information please contact:
Ian McBryde/Scott Macrae
F&C Investment Business Limited
Tel: 0207 628 8000