Interim Management Statement

RNS Number : 1587S

IRP Property Investments Ltd

16 November 2011

 



IRP Property Investments Limited

Interim Management Statement

For the Three-Month Period from 1 July 2011 to 30 September 2011

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 2011
Net asset value per share	(1.6)%
Ordinary share price	(13.6)%
Portfolio total return per IPD	1.6%
Investment Property Databank UK Quarterly and Monthly Funds Index	1.9%
FTSE All-Share Index	(13.5)%

Capital Values - 3 months	As at 30 September 2011	As at 30 June 2011	% Change
Net asset value per share	79.7p	82.8p	(3.7)%
Ordinary share price	76.0p	90.0p	(15.6)%
FTSE All-Share Index	2,654.38	3,096.7	(14.3)%
(Discount)/premium to net asset value	(4.6)%	8.7%
Net gearing #	37.4%	37.0%

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 2011 of 1.8 pence per share was paid on 30 September 2011. 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 2011/12 financial year.

Property Market Overview

The third quarter of 2011 registered a total return of 1.9%, as measured by the IPD Quarterly Index. Total returns have edged lower, on a quarterly basis, during the course of 2011 as the pace of inward yield movement has slowed. This has been reflected in a deceleration in capital growth with capital values registering a 0.4% uplift in 3Q 2011 and 2% for the January-September 2011 period. Rental growth remains subdued at 0.1% in the latest quarter.

Retail property has come under some pressure, with the shops market particularly affected. The difference in performance between Central London and provincial offices has persisted but the latest quarter has seen some cooling in the City office market to narrow the gap. The industrial sector slightly outperformed in the latest quarter following a period of relative weakness; the improvement was driven by higher total returns for standard industrial property in the South East. Prime property has continued to outperform secondary stock in most segments of the market.

The banks and leveraged owners are starting to sell more assets but the amount of prime stock being marketed remains limited.

Portfolio Overview

The value of the Company's portfolio remained broadly unchanged over the quarter at £161.6m. During the period the portfolio had an income return of 1.6%, slightly ahead of the benchmark of 1.4%. The portfolio's lack of exposure to Central London assets contributed to underperformance in capital value terms returning 0.1% against the benchmark of 0.4%.

The total return for the quarter was 1.6% which compared with the IPD Quarterly Index of 1.9%. Over the 12 month period to 30 September 2011, total returns from the portfolio were 6.1%.

24 Haymarket, London SW1 was the largest contributor to portfolio performance where the value increased by £225,000 or 5.8% due to the completion of a lease of ground and first floors to ATFC Ltd, trading as Aberdeen Steak House. At 100a Princes Street, Edinburgh, let to Swarovski, the lease expiry date was extended by 10 years to October 2026 in return for a rent-free period. As the end of the rent-free period is approaching, the value of this property increased by £180,000 or 6.9%.

At 51-53 High Street, Guildford, a renewal lease has been completed with Vision Express. The rent has increased from £211,000pa to £270,000pa on a new ten year lease with effect from October 2009.

During the quarter, Photologic Ltd, the tenant of Unit B Hemel Gateway, Hemel Hempstead went into liquidation and the premises are now vacant. The modern, well specified unit extends to 27,764sqft and has a rental value of £207,000pa. This has caused the void rate in the portfolio to rise to 5.0%, although other vacant units are currently under offer.

There were no sales and no purchases to report during the quarter.

The average weighted unexpired lease term (including breaks) is 8.1 years.

Top Ten Holdings

Property	Sector	30/09/2011 % of portfolio
Unit 3663, Echo Park, Banbury	Industrial	11.1
Units 1-8, Lakeside Road, Colnbrook	Industrial	7.5
Southampton International Park, Eastleigh	Industrial	6.8
30/40, The Parade & 47/59A Warwick Street, Leamington Spa	Retail	6.5
Mercury House, 1 Dove Wynd, Strathclyde Business Park	Offices	5.8
Clifton Moor Gate, York	Out of Town Retail	5.4
1-2 Lochside Way, Edinburgh Park, Edinburgh	Offices	5.0
Hemel Gateway, Boundary Way, Hemel Hempstead	Industrial	4.9
Willowbeck Road, Northallerton	Out of Town Retail	4.1
Swift House, Cosford Lane, Rugby	Industrial	3.5
Total		60.6

Geographical Analysis

Location	30/09/2011 Percentage of Portfolio		30/06/2011 Percentage of Portfolio
South East	49.2		49.3
West Midlands	12.8		12.9
Scotland	12.6		12.5
Yorkshire and Humberside	9.5		9.4
North West	3.8		3.8
East Midlands	2.9		2.8
Eastern	2.6		2.6
London - West End	2.5		2.4
Rest of London	1.7		1.8
North East	1.7		1.8
South West	0.7		0.7
Total	100.0		100.0

Sector Analysis

Sector	30/09/2011 Percentage of Portfolio		30/06/2011 Percentage of Portfolio
Industrial	36.7		36.9
Retail	31.3		31.1
Offices	17.6		17.7
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 2011 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: [phone]

 

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