F&C Commercial Property Trust says it returned 8.2% on net assets over the first half of 2015. The return to shareholders was 5.7%. Shareholders got six, monthly dividends of 0.5p – keeping them on rack for their 6p target dividend for the year.
The return on the property portfolio was 7.4%, ahead of the total return of 6.5% from the benchmark Investment Property Databank (‘IPD’) Quarterly Universe.
The sale of their property in Princes Street Edinburgh, at a £3m uplift over the value at the end of December 2014, completed on 30 June. The Company did not purchase any properties during the period but, since the
end of the period, has announced the acquisition of The Leonardo Building, which is a Grade A Headquarters Office Building occupying a prime location within the Crawley Business Quarter, Manor Royal, Crawley. The building is
currently under construction with completion expected on 31 March 2016. It is pre-let to Virgin Attlantic Ltd and the total consideration will be £45.3m.
The best performing parts of the portfolio relative to the IPD benchmark were their High Street Retail property outside of the South East of the UK (driven by the sale of Princes Street) and their South Eastern Industrial exposure (driven by Hedge End, Southampton where a previously vacant unit of 67,500 sq ft was let to Amazon on a new 10 year lease, a break at year five, at a rent of £7.50 per sq ft).
They say the redevelopment of 71-77 Wigmore Street commenced in January 2015 and construction works are progressing. The formal marketing of the retail and restaurant units has not yet commenced but they have already generated a good level of interest.
Within their office portfolio, the largest weighted contribution to performance came from 82 King Street,
Manchester. The refurbishment of all vacant floors has completed and the recent lettings to Zeus Capital, Axa, Channel 4 and Credit Suisse (renewal) have seen rents grow to £31 per sq ft. In addition to the occupational demand, yields have sharpened and the capital value of the property increased 21.2% over the period.
They secured a new £260m ten year loan agreement with Legal & General Pensions on 31 December 2014, refinancing its previous their existing £260m of borrowings. The L&G loan carries a fixed interest rate of 3.32% a year. F&C Commercial Property also has a £50m bank loan with a term to 28 June 2017 on which the interest rate is fixed, through an interest rate swap of the same notional value and duration, at 4.88%. In aggregate they have borrowed £310m at 3.57%. Gearing, net of cash, at the end of the period was 16.9%.
FCPT : F&C Commercial Property outperforming in 2015