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QuotedData’s morning briefing 7 February 2024 – UKCM, CREI, PSDL

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In QuotedData’s morning briefing 7 February 2024:

  • UK Commercial Property REIT (UKCM) posted a 2.5% fall in NAV to 78.7p per share in the quarter to 31 December 2023. The group’s portfolio value dropped 2.1% in the period to £1.25bn. On the operational side, the company grew earnings 6.3% over 2023 to 3.35p per share. This did not quite cover its annual dividend of 3.4p. In the final quarter of 2023, the company signed three industrial leases at an average premium to previous passing rent of 30% and has a further two deals agreed at a 36% uplift. Two office leases were also signed at 9.75% above previous passing rent. Occupancy remained high at 96%. In January 2024, the company completed the sale of its Craven House offices in London’s West End for £22m at December valuation, representing a 4.6% net initial yield. The company will use the proceeds to pay down floating rate debt on its revolving credit facility, which costs 7.2%, to £15.7m. The company has a low LTV of 15.8%, with 93% of group debt at a low fixed rate and a blended cost of 3.19%.
  • Custodian Property Income REIT (CREI) reported a NAV at 31 December 2023 of 93.3p per share, a 2.7% drop in the quarter. The value of its portfolio of 158 assets decreased on a like-for-like basis by 1.7% (£10.5m) to £602.4m. A dividend of 1.375p was approved for the quarter, fully covered by unaudited EPRA earnings of 1.4p, in line with target of at least 5.5p for the year ending 31 March 2024. The company’s LTV increased slightly to 30.6% (from 29.6%), but property disposals since the quarter end will bring LTV down to 29.4%. The borrowings have a weighted average cost of 4.3%.
  • In a business update, Phoenix Spree Deutschland (PSDL) reported a like-for-like portfolio valuation decline of 5.3% to €675.6m in the six months to December 2023 (11.9% over the year), reflecting an increase in market yields, partially offset by rental growth. The company said it would accelerate condominium sales this year to take advantage of the “material gap between the per sqm valuation of condominium units versus rental unit equivalents”, with sales prices per sqm of €4,885 per vacant unit compared to a portfolio average of €3,587 per sqm for rental units. The company sold €7.2m of condominiums in 2023, and has already sold four in 2024 for a total of €1.9m. PSDL’s portfolio has a further 73% of units which are legally split into condominiums but not valued as such and could be brought forward to the market to materially increase sales volumes.
  • Palace Capital (PCA) has unconditionally exchanged or completed on the sale of three investment properties for £15.2m, which is 2.3% below the March 2023 valuation. The sales comprised: Bridge Park, East Grinstead for £7.2m; High Street, Sutton for £3.6m; and Lendal & Museum Street, York for £4.4m. The company said that several properties were currently under offer, which if they all complete will provide it with various options for returning capital to shareholders, including a tender offer. The company utilised part of the sale proceeds to fully repay its floating rate £5.6m loan with Barclays, on which the most recent interest rate was at 7.1%. Consequently, the company only has the Scottish Widows debt facility of £8.3m outstanding, which is at a fixed interest rate of 2.9% until July 2026.

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