Net Asset Value(s)

RNS Number : 8543L

UK Commercial Property Trust Ltd

19 January 2009

 



Net Asset Value

For the three month period from 1 October 2008 to 31 December 2008

Investment Objective

The investment objective of the Company 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.

Net asset value

The unaudited net asset value per share of UK Commercial Property Trust Limited as at 31 December 2008 was 71.2p.  This represents a decrease of 12.1 per cent. from the net asset value per share as at 30 September 2008.

The net asset value per share is based on the external valuation of the property portfolio prepared by CB Richard Ellis Limited as at 31 December 2008 of £560.1 million.

The net asset value per share is calculated under International Financial Reporting Standards ('IFRS').

The net asset value per share includes all current period income and is calculated after deduction of all dividends paid prior to 31 December 2008.  It does not include provision for any unpaid dividends for the periods prior to 31 December 2008 including the dividend for the quarter to 31 December 2008. It is expected that the shares will go ex-dividend on 11 February 2009 and that the dividend of 1.3p per share will be paid on 27 February 2009.  The adjusted net asset value per share after deducting such quarterly dividend is 69.9p.

The NAV per share at 31 December 2008 is based on 867,126,287 shares of 25p each, being the total number of shares in issue at that time.  

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 1 October 2008 to 31 December 2008.

UK Commercial Property Trust Limited	Per  Share  (p)	Attributable Assets (£m)
Net assets as at 1 October 2008	81.0	702.2
Unrealised decrease in valuation of property portfolio	(9.6)	(83.3)
Capital expenditure during the period	(0.1)	(0.7)
Income earned for the period	1.5	12.6
Expenses for the period	(0.3)	(2.1)
Dividend paid on 28 November 2008	(1.3)	(11.4)
Net assets as at 31 December 2008	71.2	617.3

UK Commercial Property Trust Limited
Net Asset Analysis as at 31 December 2008	£m	%
Property Portfolio
Office	290.5	47.1
Retail	168.1	27.2
Industrial	101.5	16.4
Total Property	560.1	90.7
Net Current Assets	57.2	9.3
Total Net Assets as at 31 December 2008	617.3	100.0

The annualised total expense ratio of the Company for the year ended 31 December 2008, based on the average total assets during the year to 31 December 2008 and on the basis of annualised expenses, was 0.85%. For the purposes of this calculation, 'expenses' includes the costs of running the Group, including the investment management fee, administration fees, Directors' fees, insurance costs, Board costs, registrar costs and any irrecoverable VAT, but excludes, capital expenditure and refurbishment and irrecoverable property running costs.

Over the period the Company had no borrowings. However, as stated in the 20 June 2008 announcement, the Company has an £80 million seven year term loan facility with Lloyds TSB Scotland plc now in place.

For the period from 22 September 2006 (launch) to 31 December 2008 the unaudited net asset value per share calculated under IFRS has decreased by 26.8% from 97.2p to 71.2p. Over the twelve month period to 31 December 2008 the net asset value per share has decreased by 22.7%.

Review of the period

The general economic background deteriorated further during the last 3 months of 2008.  The GDP change for Q3 was -0.6% and initial indications for Q4 suggest that the slide in GDP  accelerated; forecasts indicate a further decline in GDP of at least 1.5% in 2009.

Consistent with this, consumer confidence, retail sales and productivity are all down. Although the MPC has adopted quite an aggressive approach to interest rates, now at an all time low of 1.5%, as long as the banks continue to keep a rein on lending, consumer and corporate confidence are unlikely to improve.  The weakness in the economy is closely linked to a lack of credit and this has clearly manifested itself in both direct and indirect property markets.

For the last quarter of 2008, the IPD Monthly Index recorded its largest fall with -13.5% total return . For the year to December 2008 All Property total returns were -22.5% and from the market's turning point in September 2007, the figure is -31.6%.  

The absence of finance in the property market hit 2008 transaction volumes hard: they were 58% down on 2007 levels. Whilst it is too soon to call the bottom of the market, pricing is beginning to look interesting in some sectors of the market. However, as long as the risks of voids and rental declines remain, the market will continue to be nervous, with resultant falls in capital value. 

The value of the Company's portfolio has clearly been affected by all of these factors. The impact has been felt across all sectors, although what has been notable this quarter are the falls in Central London office stocks (-12.82% compared to -3.75% in Q3).   This would have an even greater negative impact on the portfolio were it not for the fact that King William Street in the City was sold during the Summer of 2008. Bulky goods retail warehousing and distribution warehouses were also particularly hard hit.  

Again, the importance of asset management has been demonstrated, as lease renewals limited the fall in value for Kensington High Street. This, together with a continued focus on the strength and security of the Company's income stream, remain at the heart of the strategy for the portfolio. It is also encouraging to note that the Company's void level remains unchanged, with rent collection efficiency for the fourth quarter of 2008 being the same as in the final quarter of 2007 - testimony to the resilience of the Company's portfolio.

There were no sales or purchases during the quarter. The Company remains ungeared with available cash reserves of approx £57.2m and a loan facility in place with Lloyds TSB. The Company is alive to the opportunities which are beginning to emerge in some markets.

Breakdown in valuation movements over the period 1 October 2008 to 31 December 2008

Set out below is a breakdown of the movement in the external valuation of the property portfolio over the period from 1 October to 1 December 2008.

UK Commercial Property Trust Limited	Exposure % as at 1 October 2008	Capital Value Shift %	£m
External Valuation at  1 October 2008			643.4
Sub Sector Analysis
Retail	30.0	-12.11	-23.15
High St - South East	9.61	-8.57	-5.05
Shopping Centres	9.77	-12.65	-7.92
Retail Warehouses	10.62	-14.61	-10.18
Offices	51.87	-12.87	-42.92
West End	20.88	-12.82	-17.20
South East	12.49	-13.02	-10.47
Rest of UK	18.50	-12.83	-15.25
Industrial	18.12	-14.51	-17.23
South East	10.25	-15.28	-10.36
Rest of UK	7.87	-13.48	-6.87
Adjustment for disposals			0.00
Adjustment for acquisitions			0.00
External valuation at 31 December 2008		-12.95%	560.1

Material Events

The Board is not aware of any significant events or transactions which have occurred between 31 December 2008 and the date of publication of this statement which would have a material impact on the financial position of the Company.

Enquiries

The Company Secretary, Northern Trust International Fund Administration Services (Guernsey) Limited - 01481 745338

Robert Boag/Gerry Brady/Gary Hutcheson, Ignis Investment Services Limited - 0141 222 8000

Important Note

The above information is unaudited and has been calculated by Ignis Investment Services Limited.

 

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