Net Asset Value

To:                 Company Announcements
Date:              23 July 2018
Company:        F&C Commercial Property Trust Limited
LEI:                213800A2B1H4ULF3K397

Subject:           Net Asset Value

Net Asset Value

The unaudited net asset value (‘NAV’) per share of the Group as at 30 June 2018 was 143.2 pence. This represents an increase of 0.2 per cent from the unaudited NAV per share as at 31 March 2018 of 142.9 pence and a NAV total return for the quarter of 1.3 per cent.

The NAV has been calculated under International Financial Reporting Standards (‘IFRS’). It is based on the external valuation of the Group’s direct property portfolio prepared by CBRE Limited.

The NAV includes all income to 30 June 2018 and is calculated after deduction of all dividends paid prior to that date. As at 30 June 2018, no adjustments were required to the NAV in respect of dividends for which the share price had gone ex-dividend.

Share Price

The share price was 150.60 pence per share at 30 June 2018, which represented a premium of 5.2 per cent to the NAV per share announced above. The share price total return for the quarter was 7.6 per cent.

Analysis of Movement in NAV

The following table provides an analysis of the movement in the unaudited NAV per share for the period from 31 March 2018 to 30 June 2018 (including the effect of gearing):

	£m	Pence per share	% of opening NAV per share
NAV as at 31 March 2018	1,142.4	142.9
Unrealised increase in valuation of property portfolio *	5.1	0.6	0.4
Movement in fair value of interest rate swap	(0.2)	0.0	0.0
Other net revenue	9.6	1.2	0.8
Dividends paid	(12.0)	(1.5)	(1.0)
NAV as at 30 June 2018	1,144.9	143.2	0.2

* The ungeared increase in the valuation of the property portfolio over the quarter to 30 June 2018 was 0.4%, after allowing for capital expenditure.

The net gearing at 30 June 2018 was 20.2%. #

# Net gearing: (Borrowings – cash) ÷ total assets (less current liabilities and cash).

Performance

The capital value growth over the quarter was 0.4%. The IPD Monthly Index recorded capital value growth of 0.9% over the period.

At the sector level industrials and offices recorded the highest capital growth in the portfolio with valuations increasing on the back of further yield compression in the industrial and logistics sector and on the progress of asset management activities in the office sector. As widely reported the retail market remains challenging. The Company has no exposure to shopping centres and limited exposure to traditional High Streets. However, the Company’s retail warehouses have been affected by Company Voluntary Arrangements (‘CVA’s’), specifically New Look and Mothercare where rents at Newbury Retail Park have reduced, impacting the Company’s rent roll by 0.5%.

The strong performance of the Alternative sector is due to the annual rental uplift being agreed at the purpose built student accommodation block at Winchester and yield compression in the sector for long leased properties.

Portfolio Analysis – Sector Breakdown

	Market Value £m	% of portfolio as at 30 June 2018	% unrealised movement in quarter
Offices	532.1	36.7	1.1
West End	154.7	10.7	1.4
South East	132.0	9.1	1.3
South West	32.0	2.2	1.4
Rest of UK	193.4	13.3	0.8
City	20.0	1.4	-0.1
Retail	443.9	30.6	0.0
West End	343.6	23.7	0.0
South East	68.4	4.7	-0.2
Rest of UK	31.9	2.2	-0.3
Industrial	249.8	17.2	1.2
South East	57.1	3.9	2.6
Rest of UK	192.7	13.3	0.8
Retail Warehouse	180.7	12.5	-3.1
Other	43.5	3.0	6.6
Total Property Portfolio	1,450.0	100.0	0.4

Portfolio Analysis – Geographic Breakdown

	Market Value £m	% of portfolio as at 30 June 2018	% unrealised movement in quarter
West End	498.3	34.4	0.5
South East	359.1	24.8	-0.1
Midlands	178.9	12.3	0.4
Scotland	172.6	11.9	0.1
North West	159.9	11.0	1.1
South West	32.0	2.2	1.4
Eastern	29.2	2.0	2.3
Rest of London	20.0	1.4	-0.1
Total Property Portfolio	1,450.0	100.0	0.4

Top Ten Investments

	Sector
Properties valued in excess of £250 million
London W1, St Christopher’s Place Estate *	Retail
Properties valued between £100 million and £150 million
London SW1, Cassini House, St James’s Street	Office
Properties valued between £70 million and £100 million
Newbury, Newbury Retail Park	Retail Warehouse
Properties valued between £50 million and £70 million
Solihull, Sears Retail Park	Retail Warehouse
London SW19, Wimbledon Broadway	Retail
Properties valued between £40 million and £50 million
Crawley, Leonardo House, Manor Royal	Office
Winchester, Burma Road	Other
Manchester, 82 King St	Office
Properties valued between £30 million and £40 million
Aberdeen, Unit 2 Prime Four Business Park, Kingswells	Office
Uxbridge, 3 The Square, Stockley Park	Office

*Mixed use property of retail, office and residential space.

Summary Balance Sheet

	£m	Pence per share	% of Net Assets
Property Portfolio per Valuation Report	1,450.0	181.4	126.7
Adjustment for lease incentives	(20.9)	(2.7)	(1.7)
Fair Value of Property Portfolio	1,429.1	178.7	125.0
Debtors	24.5	3.1	2.1
Cash	19.9	2.5	1.7
Interest rate swap	0.1	-	-
Current Liabilities	(19.0)	(2.4)	(1.7)
Total Assets (less current liabilities)	1,454.6	181.9	127.1
Non-Current liabilities	(1.9)	(0.2)	(0.2)
Interest-bearing loans	(307.8)	(38.5)	(26.9)
Net Assets at 30 June 2018	1,144.9	143.2	100.0

Property Purchases and Sales

The Company completed the purchase of Hurricane 47, Estuary Business Park, Liverpool for £3.995 million as well as an adjoining site of 3.6 acres with planning consent for the construction of a 52,000 sq. ft. unit for £1.080 million. Hurricane 47 comprises a 47,462 sq. ft. speculatively developed building, which achieved practical completion in April 2018 and is constructed to a high specification. The Company has entered into a forward commitment to acquire the warehouse to be constructed on completion of the works at an additional sum of £3.382 million. The Company already has an existing property on Estuary Business Park having acquired a warehouse let to Adient Seating in April 2014. The investment provides the Company with an opportunity to generate sustainable income and to benefit from the lack of supply for new buildings  and strong occupier demand, both of which are driving up rents in the logistics sector.

Borrowings

The Group’s borrowings consist of a £260 million loan with a term to 31 December 2024 and a fixed interest rate of 3.32 per cent per annum. The Group also has a £50 million bank loan with a term to 21 June 2021 on which the interest rate has been fixed, through an interest rate swap of the same notional value and duration, at 2.522 per cent per annum. In addition, the Board has agreed an additional revolving credit facility of £50 million with Barclays over the same period, to be used for ongoing working capital purposes and to provide the Group with the flexibility to acquire further property should the opportunity arise.

The Group’s weighted average cost of debt is 3.3 per cent per annum.

Key Information

This statement and further information regarding the Company, including movements in the share price since the end of the period and the Group’s most recent annual and interim reports, can be found at the Company’s website fccpt.co.uk.

The next quarterly valuation of the property portfolio will be conducted by CBRE Limited during September 2018 and it is expected that the unaudited NAV per share as at 30 September 2018 will be announced in October 2018.

This announcement contains inside information.

Enquiries:

Richard Kirby
BMO REP Asset Management plc
Tel: [phone]

Graeme Caton
Winterflood Securities Limited
Tel: [phone]