UK Commercial Property has announced results for 2014 that show the net asset value rose by 13.5% over the year to hit 83p. Adding in the income as well, the total return on net assets was 19.7% and, as the premium rose slightly, the return to shareholders was 20.4%. The total return on the property portfolio was 18.4%. By contrast the IPD return for 2014 was 17.4% (Balanced Monthly & Quarterly Funds).
They have been refinancing their debt – with a 12 year, £100m debt facility secured from Cornerstone Real Estate Advisors Europe LLP, part of the MassMutual Financial Group at an attractive fixed rate of 3.03%; in addition, in order to provide flexibility, the Company has agreed a £50m revolving credit facility with Barclays as well as lowering the current margin on the existing Barclays loan and extending the term out to April 2020. The company now has a blended cost of debt of 2.89% and an average debt maturity of 7.8 years (assuming the revolving credit facility remains undrawn).
Dividends are running at an annualised rate of 3.68p – they say this was fully covered by earnings.
The industrial property in their portfolio was the best performing – returning 25.2% as compared to 20.7% for offices, 14.6% for retail and 13.8% for the rest (leisure etc.).
They bought £97m worth of property including, the completion in December 2014 of the acquisition and forward funding at Aberdeen Gateway resulting in the purchase of two industrial units and one office building. This resulted in a healthy valuation uplift relative to the combined cost of all three assets; the purchase of Regent Circus, Swindon increasing the Company’s exposure to its favoured leisure sector; and the purchase of two industrial units in Dartford.
They also sold £53m of property including the sale of two small office blocks in Bristol at above valuation; and, post the year end, the sale of Pall Mall Court, Manchester and Sovereign Centre, Weston-super-Mare at prices in line with valuation.
Occupancy in the industrial portfolio is 99% and in the regional office portfolio 100%.
They have thought about becoming a REIT but have decided against it for the moment.
UKCM : UK Commercial Property rules out becoming a REIT – for now