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UK Commercial Property REIT ups dividend by 40%

UK Commercial Property REIT ups dividend by 40%

UK Commercial Property REIT has increased its dividend by 40% due to the improved economic outlook for the UK.

The group, which reported a 1.5% jump in its net asset value in the first quarter of 2021, said it will increase the quarterly dividend payable to 0.644p per share.

This is still 30% down on the pre-COVID quarterly dividend level of 0.92p.

The board said it believed this current new rate to be an appropriate level given the improved outlook for the wider economy and rent collection as lockdown is eased.

It added this level also offered the potential for future growth “as and when the company’s significant financial resources are utilised”.

The group has £268m of finances available, comprising uncommitted cash of £118m and £150m available from its revolving credit facility.

Rent collection for the second quarter of 2021 stood at 86% after allowing for agreed rent deferrals and including those tenants who have paid, by agreement, on a monthly basis, in line with the whole of 2020.

Investment activity

  • Acquisition of a land parcel with planning permission for a 230 bed student accommodation facility at Gilmore Place in Edinburgh completed in January, together with an agreement to fund the construction of the scheme, which is scheduled to complete ahead of the 2022/23 academic year.  This investment is expected to generate a net operating yield of 5.5% on a total commitment of £29.1m.
  • Sale of Hartshead House, a single-let office investment in Sheffield, to Arella Property Holding completed in February for £17m, reflecting its December valuation.
  • In March, sold Kew Retail Park in London to a leading UK housebuilder for £41m, marginally below the 31 December 2020 book value.
  • In April, after the quarter end, sold its last high street shop, 140-146 Kings Road, London for £9,925,000, in line with valuation.

Ken McCullagh, chairman, said: “Despite the implementation of another lockdown at the beginning of the year creating continued economic headwinds, we have begun 2021 with some positive momentum with solid rent collection, portfolio valuation growth and strong leasing activity, which has further reduced our void rate. In addition, we have been active in the investment markets with a number of sales and acquisitions undertaken, as we continue to increase our diversified portfolio’s weighting towards modern economy sectors. While we remain fully cognisant of the fact that the longer term impact of the pandemic on the economy remains to be seen, with the vaccine being successfully rolled out and lockdown restrictions gradually being eased there is a definite feeling of renewed optimism in the market. This improved outlook and positive first quarter performance, together with our low gearing and strong cash resources, has given us the confidence to recommend an increased dividend for the quarter under review.”

UKCM : UK Commercial Property REIT ups dividend by 40%

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