15 Nov 2012 07:00
IRP Property Investments Limited
Interim Management Statement
For the Three-Month Period from 1 July 2012 to 30 September 2012
Investment Objective
The investment objective 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 2012 |
Net asset value per share | (1.6)% |
Ordinary share price | 2.7% |
Portfolio total return per IPD | 0.0% |
Investment Property Databank UK Quarterly and Monthly Funds Index | 0.7% |
FTSE All-Share Index | 4.7% |
Capital Values - 3 months | As at 30 September 2012 | As at 30 June 2012 |
% Change |
Net asset value per share | 73.2p | 76.2p | (3.9)% |
Ordinary share price | 66.0p | 66.0p | 0.0% |
FTSE All-Share Index | 2,998.9 | 2,891.5 | 3.7% |
Discount to net asset value | 9.8% | 13.4% | |
Net gearing # | 41.6% | 40.4% | |
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 net current assets) divided by fair value of investment properties
Dividends
The fourth interim dividend for the year ended 30 June 2012 of 1.8 pence per share was paid on 28 September 2012. 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 2012/13 financial year.
Property Market Overview
The UK property market delivered a total return of 0.7% in the third quarter of 2012, an improvement on the 0.4% seen in the previous quarter. Capital values fell by 0.7%, as yields edged higher and rental growth slipped by 0.2%, reflecting continued market uncertainty about the impact of wider economic and financial developments, both in the UK and overseas, on the asset class. Retail property delivered a positive performance following a weak second quarter. Central London property remains sought after especially by overseas investors, which helped offices record improved total returns in the period. Investor sentiment generally is risk averse and focused on prime property and core markets. The all property income return of 6.0% per annum is seen as attractive in comparison with yields available for other asset classes, with assets delivering long-term secure income streams especially favoured.
Portfolio Overview
The value of the Company's portfolio decreased over the quarter by 1.7% to £160.1 million. With an income return of 1.7%, the total return from the portfolio was 0.0%.
With capital values in the market trending downwards, a number of the Company's properties followed suit. Although a mixed picture, values of the regional offices and some industrial property were down over the quarter. On the retail front, performance was dictated principally by quality of location.
Although the manager continues to seek out asset management deals in order to preserve value with specific focus on retaining and enhancing income streams, asset management activity during the quarter has been relatively quiet. The Company has generally enjoyed low vacancy levels in the portfolio, and over the quarter the Manager has reduced void levels further from 5.3% at 30 June 2012 to 4.2% at 30 September 2012. The portfolio has a weighted unexpired lease term of 7.8 years (assuming breaks) as at 30 September.
At Above Bar Church, Southampton, the Company secured a new letting of the unit that became vacant earlier in 2012 as a result of Bon Marche entering liquidation. The unit has now been let to 'The Works' on the basis of a new 10 year lease, with a tenant's break at the fifth year, on a stepped rent averaging £120,000 per annum for the first five years, and subject to a 6 month rent free period. The valuation of this unit increased by 7.5% over the quarter. At 67/69 King Street, South Shields, the vacant shop unit has now been let to Greenwoods Menswear, at a rent increasing to £30,000 per annum on the basis of a five year lease with a break at the fifth year.
The property investment market has been generally quiet over the summer period with little activity outside London and the South East. Against this background, the Company has not bought or sold any property during the quarter, preferring to add value to existing property where possible. The portfolio offers opportunities in this regard with a bias towards London and the South East where 52.9% of the portfolio is located.
Top Ten Holdings
Property |
Sector | 30/09/2012 % of portfolio |
Unit 3663, Echo Park, Banbury | Industrial | 10.5 |
Units 1-8, Lakeside Road, Colnbrook | Industrial | 7.6 |
Southampton International Park, Eastleigh | Industrial | 6.6 |
30/40, The Parade & 47/59A Warwick Street, Leamington Spa | Retail | 6.4 |
Clifton Moor Gate, York | Out of Town Retail | 5.4 |
Mercury House, 1 Dove Wynd, Strathclyde Business Park | Offices | 5.0 |
Hemel Gateway, Boundary Way, Hemel Hempstead | Industrial | 4.7 |
1-2 Lochside Way, Edinburgh Park, Edinburgh | Offices | 4.4 |
Willowbeck Road, Northallerton | Out of Town Retail | 4.2 |
Winchester, 7-8 High St.& 50 Colebrook Street | Retail | 4.1 |
Total | 58.9 |
Geographical Analysis
Location | 30/09/2012 Percentage of Portfolio | 30/06/2012 Percentage of Portfolio | |
South East | 48.6 | 48.6 | |
West Midlands | 12.7 | 12.6 | |
Scotland | 11.2 | 11.6 | |
Yorkshire and Humberside | 9.6 | 9.4 | |
East Midlands | 4.9 | 4.8 | |
North West | 3.6 | 3.7 | |
Eastern | 2.6 | 2.6 | |
London - West End | 2.6 | 2.5 | |
Rest of London | 1.8 | 1.8 | |
North East | 1.7 | 1.7 | |
South West | 0.7 | 0.7 | |
Total | 100.0 | 100.0 |
Sector Analysis
Sector | 30/09/2012 Percentage of Portfolio | 30/06/2012 Percentage of Portfolio | |
Industrial | 36.0 | 36.2 | |
Retail | 33.5 | 33.0 | |
Offices | 16.1 | 16.5 | |
Out of Town Retail | 14.4 | 14.3 | |
Total | 100.0 | 100.0 |
The Board is not aware of any significant events or transactions which have occurred between 30 September 2012 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
This interim management statement has been prepared solely to provide information to meet
the requirements of the UK Listing Authority's Disclosure and Transparency Rules.
For further information please contact:
Ian McBryde/Scott Macrae
F&C Investment Business Limited
Tel: 0207 628 8000