16 Nov 2010 16:15
IRP Property Investments Limited
Interim Management Statement
For the Three-Month Period from 1 July 2010 to 30 September 2010
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 30 September 2010 |
Net asset value per share | 1.0% |
Ordinary share price | (5.4)% |
Portfolio total return per IPD | 1.9% |
Investment Property Databank UK Quarterly Funds Index | 2.3% |
FTSE All-Share Index | 13.6% |
Capital Values - 3 months | As at 30 September 2010 | As at 30 June 2010 |
% Change |
Net asset value per share | 84.4p | 85.4p | (1.2)% |
Ordinary share price | 78.0p | 84.3p | (7.5)% |
FTSE All-Share Index | 2,867.6 | 2,543.5 | 12.7% |
Discount to net asset value | 7.6% | 1.3% | |
Net gearing # | 32.4% | 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 net current assets) divided by fair value of investment properties
Dividends
The fourth interim dividend for the year ended 30 June 2010 of 1.8 pence per share was paid on 24 September 2010. 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
Property has continued to record a positive performance but the pace has decelerated as the year has progressed and, in the third quarter of 2010, the all property total return was 2.3%, according to the IPD Quarterly Index. Capital values moved up by a modest 0.6% in the quarter as the yield compression that has driven the recovery to date slowed markedly. Retail and office property both delivered total returns of 2.4% during the quarter with industrials lagging at 1.7%. The occupational market showed some signs of stabilising with void levels edging down, rental growth being sustained for Central London offices and the pace of rental decline generally slowing elsewhere. At the all property level, rents rose by 0.1% in the third quarter of 2010 after nine quarters of decline. Investment activity has marked time with £8.0bn invested in the quarter, compared to £8.7bn in the previous three month period, driven by net investment from both institutions and overseas buyers.
The value of the Company's property portfolio as at 30 September was £154.6m, an increase of 0.4% over the quarter. During the period the portfolio had an income return of 1.5%, in line with the benchmark. Total returns for the quarter were 1.9%, compared with 2.3% for the IPD Quarterly Index.
The largest contributor to portfolio performance was 88/90 High Street Leamington Spa. The property, let to Superdrug, was sold for £3.625m, reflecting a net initial yield of 4.9%, ahead of the June valuation of £3.39m, a yield of 5.25%. The property at 42 Yorkshire Street, Rochdale, despite its small lot size of £440,000, significantly contributed to performance. Its value increased by 22.2% over the quarter as a result of the removal of the tenant's 2011 break clause.
The Company re-let the industrial unit at Chippenham Drive, Milton Keynes to the previous sub-tenant. The unit, comprising 73,700 sqft, has been let for a further five years on a stepped rent rising to £406,000pa.
The void rate within the portfolio was 3.4% as at 30 September, compared with the IPD average of 10.0%. The unexpired lease length was 7.7 years, assuming all breaks exercised.
Top Ten Holdings
Property |
Sector | 30/09/2010 % of portfolio |
Unit 3663, Echo Park, Banbury | Industrial | 10.4% |
Units 1-8, Lakeside Road, Colnbrook | Industrial | 7.3% |
Southampton International Park, Eastleigh | Industrial | 7.0% |
30/40, The Parade & 47/59A Warwick Street, Leamington Spa | Retail | 6.5% |
Mercury House, 1 Dove Wynd, Strathclyde Business Park | Offices | 6.0% |
Hemel Gateway, Boundary Way, Hemel Hempstead | Industrial | 5.4% |
Clifton Moor Gate, York | Out of Town Retail | 5.2% |
1-2 Lochside Way, Edinburgh Park, Edinburgh | Offices | 5.0% |
Swift House, Cosford Lane, Rugby | Industrial | 3.8% |
Churchill Way, Nelson | Retail Warehouse | 3.5% |
Total | 60.1% |
Geographical Analysis
Location | 30/09/2010 Percentage of Portfolio | 30/06/2010 Percentage of Portfolio | |
South East | 51.6 | 50.3 | |
West Midlands | 15.0 | 16.9 | |
Scotland | 13.0 | 12.8 | |
Yorkshire and Humberside | 5.5 | 5.3 | |
North West | 4.2 | 4.1 | |
East Midlands | 2.8 | 2.8 | |
Eastern | 2.7 | 2.7 | |
London - West End | 2.3 | 2.2 | |
Rest of London | 1.8 | 1.8 | |
South West | 0.7 | 0.7 | |
North East | 0.4 | 0.4 | |
Total | 100.0 | 100.0 |
Sector Analysis
Sector | 30/09/2010 Percentage of Portfolio | 30/06/2010 Percentage of Portfolio | |
Industrial | 38.5 | 37.8 | |
Retail | 33.6 | 34.9 | |
Offices | 18.7 | 18.3 | |
Out of Town Retail | 9.2 | 9.0 | |
Total | 100.0 | 100.0 |
The Board is not aware of any significant events or transactions which have occurred between 30 September 2010 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