14 May 2014 16:16
F&C UK Real Estate Investments Limited
Interim Management Statement
For the Three-Month Period from 1 January 2014 to 31 March 2014
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 31 March 2014 | For the nine month period ended 31 March 2014 |
Net asset value per share | +5.4% | +17.0% |
Ordinary share price | -1.5% | +17.0% |
Portfolio total return per IPD | +3.7% | +10.3% |
Investment Property Databank UK Quarterly Index | +3.6% | +11.0% |
FTSE All-Share Index | -0.6% | +10.6% |
Capital Values - 3 months | As at 31 March 2014 | As at 31 December 2013 |
% Change |
Net asset value per share | 79.9p | 77.0p | +3.8 |
Ordinary share price | 81.0p | 83.5p | -3.0 |
FTSE All-Share Index | 3,555.6 | 3,609.6 | -1.5 |
Premium to net asset value | 1.4% | 8.4% | |
Net gearing # | 34.5% | 36.9% | |
Capital Values - 9 months | As at 31 March 2014 | As at 30 June 2013 |
% Change |
Net asset value per share | 79.9p | 71.7 p | +11.4 |
Ordinary share price | 81.0p | 72.5p | +11.7 |
FTSE All-Share Index | 3,555.6 | 3,289.7 | +8.1 |
Premium to net asset value | 1.4% | 1.1% | |
Net gearing # | 34.5% | 39.7% | |
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, excluding swap liability) divided by fair value of investment properties
Dividends
The second interim dividend for the year ending 30 June 2014 of 1.25 pence per share was paid on 31 March 2014 and a third interim dividend of 1.25 pence per share will be paid on 30 June 2014 to shareholders on the register on the record date of 13 June 2014. In the absence of unforeseen circumstances it is the intention of the Board to continue paying quarterly dividends at 1.25 pence per share.
Review for the Period
At 31 March 2014, the Net Asset Value per share of the Company was 79.9 pence, an increase of 3.8 per cent over the quarter and a total return of 5.4 per cent. The Company's property portfolio increased in value by 2.0 per cent on a like for like basis. The value of the portfolio stood at £281.5 million following two property sales in the quarter. The portfolio produced an income yield of 1.8 per cent, which together with capital growth of 1.9 per cent delivered a total return of 3.7 per cent over the quarter.
Offices produced the largest contribution to performance returning 4.8 per cent. Rest of UK offices delivered 5.5 per cent and West End offices 4.9 per cent. Industrial property returned 3.9 per cent but returns from retail property lagged delivering 2.8 per cent.
The largest contribution to returns came from 1-2 Lochside Way, Edinburgh Park, Edinburgh where the Company completed a new lease with HSBC Bank plc. The existing lease under which HSBC pay £837,380 per annum expires on 30 August this year. A new ten year reversionary lease has been granted at a rent of £699,616 per annum, with 12 months' rent free, subject to a tenant's break after five years conditional on a 12 month rent penalty. The value of the property has increased delivering a 14.7 per cent return over the quarter.
The Company has continued to dispose of smaller lot sized properties and completed the sales of Unit 1, King George Close, Romford and Swift House, Cosford Lane, Rugby for £2.45 million and £5.25 million respectively.
Currently the average weighted lease expiry profile is 8.0 years with the void rate of 6.3 per cent.
Top Ten Holdings
Property |
Sector | 31/03/2014 Percentage of portfolio |
London, W1, 14 Berkeley Street | Offices | 7.6 |
Banbury, Unit 3663, Echo Park | Industrial | 6.4 |
Colnbrook, Units 1-8, Lakeside Road | Industrial | 4.3 |
Eastleigh, Southampton International Park | Industrial | 4.2 |
Leamington Spa, 30-40, The Parade & 47/59A Warwick Street | Retail | 3.8 |
York, Clifton Moor Gate | Retail Warehouse | 3.5 |
Chelmsford, County House, County Square | Offices | 3.2 |
Hemel Hempstead, Hemel Gateway | Industrial | 3.0 |
Andover, Keens House, Anton Mill Road | Offices | 2.8 |
Luton, Enterprise Way | Retail Warehouse | 2.8 |
Total | 41.6 |
Geographical Analysis
Location | 31/03/2014 Percentage of Portfolio | 31/12/2013 Percentage of Portfolio | |
South East | 46.2 | 44.8 | |
London - West End | 9.3 | 9.0 | |
Yorkshire and Humberside | 7.8 | 7.6 | |
Eastern | 7.5 | 7.4 | |
West Midlands | 6.5 | 8.2 | |
Scotland | 6.3 | 6.0 | |
North West | 4.7 | 4.6 | |
Rest of London | 4.6 | 5.4 | |
East Midlands | 4.3 | 4.2 | |
South West | 1.7 | 1.7 | |
North East | 1.1 | 1.1 | |
Total | 100.0 | 100.0 |
Sector Analysis
Sector | 31/03/2014 Percentage of Portfolio | 31/12/2013 Percentage of Portfolio | |
Industrial | 27.8 | 29.7 | |
Offices | 27.6 | 26.6 | |
Retail | 26.2 | 25.8 | |
Retail Warehouse | 18.4 | 17.9 | |
Total | 100.0 | 100.0 |
The Board is not aware of any significant events or transactions which have occurred between 31 March 2014 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.fcre.co.uk or at www.fcre.gg or at www.fandc.com .
For further information please contact:
Ian McBryde/Scott Macrae
F&C Investment Business Limited
Tel: 0207 628 8000