TR Property beat its benchmark by a decent margin over the year to the end of March 2015, producing a return on net assets of 28.3% and a share price return of 29.5% as compared to a 23.3% return on the benchmark. The dividend was increased by 3.4% on earnings up 9.9% and the dividend was covered 1.15x. This is the third year in a row in which the NAV has risen more than 20%.
With respect to income, a fall in earnings is anticipated in the 2015/16 financial year. This is due in part to the fact that they are seeing a fall in income from the direct property portfolio as the redevelopment at the Colonnades is underway. This is temporary and will benefit the income account in the longer term. In addition, the acquisition of Corio by Klepierre benefitted the income account in the year under review by bringing income forward, however, it will result in a fall in income from this holding in the next financial year, although normal business is expected to be resumed thereafter. They expect the rate of growth in income from the underlying portfolio to slow but remain positive. The Board will not be afraid of utilising the revenue reserves to maintain and even grow the dividend, providing they are confident that the shortfalls will not be long term and there is evidence of underlying income growth in the portfolio.
Minor changes to management fee: The base element of the Investment Management Fee is subject to an annual review. As part of that review at the end of March the following changes have been made with effect from 1st April 2015. Historically, a number of third party costs have been included in the Investment Management fee. The Board decided that as most of these do not generally form part of the Investment Management Fee of other investment trusts, these should be charged directly to the Company by the providers of these services and separately disclosed to ensure that the arrangements are fully transparent. The Base Investment Management Fee consists of a core fixed element and a smaller variable element. The fixed element of the base fee has not increased for the last 4 years. For the year to March 2016 an increase of £130,000 has been agreed. On a like for like basis after deducting the third party costs to be billed directly as outlined above, this is an increase of 4%. Since the last fixed fee increase four years ago Shareholders’ Funds have increased by over 50%. The final change is that the cap on the Performance Fee has been reduced from 2% to 1.5% of NAV.
The manager’s report is more comprehensive than many we have seen recently. rather than reproducing it in full we suggest that anyone who is interested read the full report which should be available on TR property’s company page (under documents) tomorrow.
TRY : TR Property extends run of good performance