F&C UK Real Estate share price recovers post referendum – F&C UK Real Estate has released results for the year ended 30 June 2017. Its NAV total return for the year was 6.1% with a NAV per share as at 30 June 2017 of 100.1p, up from 99.2p at the prior year-end. The share price total return was 26.8% with the shares trading at 106.8p at the year-end, a premium of 6.7% to the NAV. The statement says that increase in the share price for the year can primarily be explained by the fact that the share price at the previous year-end was trading at a 10.8 per cent discount, reflecting the initial fall experienced following the result of the EU referendum on 23 June 2016. Despite the move to a discount, the strength of the closed-ended sector was demonstrated as many open-ended funds were forced into short term selling of property to finance redemptions. In many cases, this was followed by the suspension of redemptions until the market stabilised. The share price rebounded relatively quickly following the initial shock and has been trading at a gradually increasing premium over the year.
Four dividends of 1.25p gave a total dividend for the year ended 30 June 2017 of 5.0 p, a yield of 4.7% on the year-end share price. In the absence of unforeseen circumstances, it is the intention of the Group to continue to pay quarterly interim dividends at this rate.
They say that the UK commercial market delivered a total return of 5.6%, by strength in investment demand for industrial property and alternative assets such as student accommodation, healthcare and self-storage, coupled with overseas buying of London property. At 30 June 2017 the value of the portfolio was GBP335.4 million. No assets were acquired over the year apart from some additional car parking space at Lochside Way, Edinburgh Park. A sales programme has been undertaken to dispose of the secondary and non-core holdings to take advantage of investor appetite. A majority of these assets have been from the high street retail sector with a further three assets sold over the year at net premium to valuation.
The Group’s property portfolio produced an ungeared return of 6.6%. Given the positive sentiment for the Industrial sector over the year, the portfolio’s industrial and distribution assets, being exclusively located within the South East, were again the key contributors to performance, producing a total return comfortably in excess of the market average. The portfolio’s retail assets also outperformed their peers, though at a lower overall level of return. The portfolio’s office assets offered poorer performance over the period and although the Central London assets performed broadly in line with their peers, they contributed negatively at the portfolio level.
They say that the portfolio offers an above market income yield, a predominantly fully let portfolio with a void rate of 5.6 per cent and contractual income with an
average weighted lease term of approximately 7 years.
FCRE : F&C UK Real Estate share price recovers post referendum