UK Commercial Property REIT (UKCM) has reported a 6.6% fall in net asset value for the six months to the end of June 2020.
The company’s NAV has been hit by a drop in the value of its property portfolio during the COVID-19 pandemic, which fell 11.6% to £1.22bn in the period.
NAV per share is now 83.9p versus 89.8p at the end of 2019. This translates to a NAV total return for the period of −5.1% (H1 2019: 1.9%).
In share price terms, share price total return was −31.3% (H1 2019: 8.3%) as COVID-19 impacted share prices of all diversified property REITs. As at 31 August 2020 the share price stood at a discount of 20.9% to NAV.
UKCM cut its quarterly dividend by 50% in response to lower rent collection during the crisis. As at 31 August 2020, rent collection for the Q2 and Q3 billing periods was 77%.
The group’s net gearing of 10.5% as at 30 June 2020 (30 June 2019: 16.2%) remains one of the lowest its peer group and the wider REIT sector and compares to the AIC Property Direct – UK Commercial sector average of 32%.
It has significant financial resources at its disposal, with £194m available for investment comprising £94m of uncommitted cash and £100m undrawn on its revolving credit facility RCF.
Portfolio
During the period, UKCM has reduced its retail exposure with the sale of three assets for £85.8m, with a further sale post-period end of Great Lodge Retail Park in Tunbridge Wells for £46.25m, bringing the company’s retail weighting to 16.3%, with no shopping centre exposure.
Will Fulton, fund manager, said: “Needless to say, a key area of focus has been and remains on rent collection, as this underpins our ability to pay a dividend to shareholders. We have successfully collected over 75% of the rent due for the second and third quarters and have worked very hard to accommodate many of our smaller tenants and those that have been hardest hit. However, it is very disappointing to see that some large well financed companies, particularly those which have been able to trade throughout the lockdown, simply refusing to honour their rental contracts.”
UKCM : UK Commercial Property REIT posts 6.6% fall in NAV