Trading Update and NAV

To:  Company Announcements
Date:  9 August 2022
Company:  CT Property Trust Limited
LEI:  231801XRCB89W6XTR23

Subject:  Trading Update and Net Asset Value

Headlines

• Net Asset Value total return of 4.5 per cent for the quarter ended 30 June 2022

• NAV per share increased to 132.8 pence. Seventh consecutive quarter of Net Asset Value appreciation

• Share Price total return of -9.7 per cent for the quarter ended 30 June 2022

• As of 30 June 2022, the portfolio void rate was 2.6 per cent by estimated rental value

• Completed the disposal of the office at 14 Berkeley Street for £32.4 million (5% above the 30 June independent valuation) after the quarter end, reducing the Company’s office exposure to 15.2 per cent by portfolio capital value

• Intention to commence share buybacks following the property disposal

Net Asset Value (‘NAV’)

The unaudited NAV per share of CT Property Trust Limited (‘CTPT’) as at 30 June 2022 was 132.8 pence. This represents an increase of 3.8 per cent from the NAV per share as at 31 March 2022 of 128.0 pence and a NAV total return for the quarter of 4.5 per cent.

The NAV is based on the external valuation of the Company's property portfolio prepared by Cushman & Wakefield.

The NAV is calculated under International Financial Reporting Standards ("IFRS").

The NAV includes all income to 30 June 2022 and is calculated after the deduction of all dividends paid prior to that date.  

Breakdown of NAV movement

Set out below is a breakdown of the change to the unaudited net asset value per share calculated under IFRS over the period from 31 March 2022 to 30 June 2022.

	Pence per share	% of opening NAV
Net asset value per share as at 31 March 2022	128.0
Unrealised movement in valuation of property portfolio (including the effect of gearing)	4.4	3.4*
Realised gain on sale of property (including the effect of gearing)	0.1	0.1
Net revenue	1.3	1.0
Dividends paid	(1.0)	(0.7)
Net asset value per share as at 30 June 2022	132.8	3.8

* The un-geared capital return of the property portfolio over the quarter to 30 June 2022 was 2.7 per cent.

Performance

The capital value of the Company's portfolio increased by 2.7 per cent over the quarter, with all sectors contributing positively to capital performance for a second consecutive quarter.

The Company’s allocation towards retail warehousing remains a key structural benefit as capital values of the Company’s assets increased by 5.0 per cent over the quarter. This capital performance was largely generated by market yield compression, supported by asset management which saw the completion of new leases to Bensons for Beds at Halls Mill Retail Park in Bury and Tapi Carpets at Beverley Way in New Malden. Both deals were concluded at rental levels ahead of expectation and were therefore accretive to both income profile and capital returns. The retail warehousing sector now accounts for 18.8 per cent of the portfolio by capital value and has proven a driver of outperformance.

The industrial and logistics sector maintained its strong run, delivering a valuation increase of 2.8 per cent over the quarter. While the pace of capital growth in the sector has slowed, the supply-demand imbalance continues to support rental growth within a robust occupational market. The Company’s assets, comprising 54.7 per cent of the portfolio by capital value, are anticipated to remain a driver of performance as sector returns become increasingly focussed on income. Active management of the portfolio has been crucial in capturing rental uplifts at lease events, with live asset management initiatives underscoring the continued resilience of the sector.

The Company’s office portfolio increased in value by 1.0 per cent, the strongest out-turn since the onset of the pandemic. The positive valuation movement was generated by asset management successes at 14 Berkeley Street, London, demonstrating the continued resilience of prime assets. Following the recent reletting of the final vacant ‘Plug & Play’ office suite, the agreement of a significant uplift at rent review of the ground floor car dealership further enhanced the asset’s rental profile and capital value.

The sale of the retail holding on High Street, Guildford for £3.1 million, a 14 per cent premium to valuation, supported a 0.1 per cent capital value uplift from the Company’s high street retail assets, which now make up 4.9 per cent of the portfolio by capital value. Wider portfolio performance was curtailed by the inclusion of prudent valuation assumptions on assets facing expiry risk. However, the near-zero vacancy rate across the retail portfolio demonstrates that occupational markets remain active, while continued investor appetite underlines the liquidity of the Company’s assets.

The vacancy rate across the portfolio fell marginally to 2.6 per cent by rental value and the weighted average unexpired lease term remains substantially unchanged at 6.1 years.

Disposal of 14 Berkeley Street

On 5 August 2022 the Company completed on the disposal of 14 Berkeley Street, a prime, multi-let office building located in London’s Mayfair. The freehold asset represents the third largest holding in the Company’s portfolio by capital value. The disposal reduces the Company’s exposure to the office sector to 15.2% by portfolio capital value.

The property was sold for a total consideration of £32.4 million, reflecting a premium of 5 per cent above the last independent valuation as at 30 June 2022. The disposal follows the successful delivery of the asset business plan, with the letting of two newly refurbished office suites securing full occupation of the building. Alongside the agreement of a significant uplift at the rent review of the ground floor car showroom, this asset management helped enhance the leasing profile prior to the sale. The disposal was timed to take full advantage of both the asset and market cycles. This has enabled the Company to secure a strong net initial yield of 3.1 per cent for this trophy asset and crystallise meaningful profit for the Company.

Cash and Borrowings

As at 30 June 2022, the Company had approximately £13.6 million of available cash and an undrawn revolving credit facility of £13 million. The £90 million long-term debt with Canada Life and the £20 million revolving credit loan facility with Barclays (of which £7 million is drawn) do not need to be refinanced until November 2026 and March 2025 respectively. As at 30 June 2022, the LTV (net of cash) was 22.1 per cent.

Following the sale of Berkeley Street, the Company has c.£45 million of available cash and the LTV (net of cash) is approximately 15.3 per cent based on the June 2022 valuations.

Share Price and Commencement of Share Buybacks

The share price was 84.0 pence per share as at 30 June 2022, which represented a discount of 36.7 per cent to the NAV per share announced above. The share price total return for the quarter was -9.7 per cent.

The Board and Manager believe that the current share price is not reflective of the quality of the Company’s portfolio, its long-term performance and robust financial position. The Board believes that using some of the Company’s cash resources to buy the Company’s shares at a discount rather than deploy all the cash into new properties offers attractive value for shareholders and will be both NAV and earnings enhancing. If the high level of discount persists and subject to normal market conditions, the Board has resolved to commence share buybacks.

Dividend

On 18 May 2022, the Company announced a quarterly dividend payment of 1.0 pence per ordinary share in respect of the financial year ended 30 June 2022, which was paid to shareholders on 30 June 2022. The Board will continue to monitor rental receipts and earnings closely and keep the future level of dividends under review.

Board and Manager Update

Further to the announcements made on 31st March and 19th April, Rebecca Gates will retire as a Director of the Company on 31st August 2022. Vikram Lall, the Chairman of the Company, will also step down from the Board later this year on appointment of a suitable replacement. The process to identify a successor to Vikram Lall has commenced and a further update will be provided in due course.

A change in Lead Manager was also referenced in those announcements and the Board is pleased to confirm that Matthew Howard has now formally succeeded Peter Lowe with effect from the 19 July 2022.

Portfolio Analysis	£m	% of portfolio as at 30 June 2022	% capital value movement  in quarter
Offices	88.4	21.6	1.0
West End	30.8	7.5	6.4
South East	32.7	8.0	(2.2)
Rest of UK	24.9	6.1	(1.0)
Industrial, logistics and distribution	224.6	54.7	2.8
South East	224.6	54.7	2.8
Standard Retail	20.2	4.9	0.1
West End	6.4	1.5	(3.9)
Rest of London	1.5	0.4	(1.7)
South East	8.9	2.2	5.0
Rest of UK	3.4	0.8	(3.5)
Retail Warehouse	77.0	18.8	5.0
Total Property	410.2	100.0	2.7

Summary Balance Sheet

	£m	Pence per share	% of Net Assets
Property Portfolio per Valuation Report	410.2	170.4	128.3
Adjustment for lease incentives	(4.3)	(1.8)	(1.3)
Fair Value of Property Portfolio	405.9	168.6	127.0
Cash	13.6	5.7	4.3
Trade and other receivables	7.1	2.9	2.2
Trade and other payables	(10.1)	(4.2)	(3.2)
Interest-bearing loans	(96.9)	(40.2)	(30.3)
Net Assets at 30 June 2022	319.6	132.8	100.0

The property portfolio will next be valued by an external valuer during September 2022 and the net asset value per share as at 30 September 2022 will be announced in October 2022.

Important information

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via Regulatory Information Service this inside information is now considered to be in the public domain.

Enquiries:
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Tel: [phone]


Matthew Howard
Scott Macrae
Columbia Threadneedle Investment Business Limited
Tel: [phone]