TIDMUKCM 
 
Guernsey:  30 September 2022 
 
                      UK Commercial Property REIT Limited 
                           ("UKCM" or the "Company") 
                           LEI: 213800JN4FQ1A9G8EU25 
 
             INTERIM RESULTS FOR THE HALF YEARED 30 JUNE 2022 
 
UK Commercial Property REIT Limited (FTSE 250, LSE: UKCM) which owns a £1.7 
billion diversified portfolio of high-quality income-producing UK commercial 
property and is managed and advised by abrdn, announces its interim results for 
the half year ended 30 June 2022. 
 
FINANCIAL REVIEW AS AT 30 JUNE 2022 
 
  * NAV TOTAL RETURN 
    Net Asset Value ("NAV") total return of 12.3% (H1 2021: 6.0%) primarily 
    driven by valuation increases and the portfolio weighting to the industrial 
    sector. 
 
  * SHARE PRICE TOTAL RETURN 
    Share price total return of 2.3% (H1 2021: 13.4%). 
 
  * EPRA EARNING PER SHARE 
    EPRA earnings per share increased 36% to 1.58 pence per share (H1 2021: 
    1.16p) 
 
  * DIVID 
    Quarterly dividend increased by a further 6.3% to 0.85 pence per share, 
    following the uplifts announced in both the fourth quarter of 2021 and the 
    first quarter of 2022. This brings the increase in the H1 2022 fully 
    covered dividend to 13.3%. 
 
  * GEARING 
    Low gearing of 13.7% (2021: 13.5%) as at 30 June 2022 remains one of the 
    lowest in the Company's peer group. 
 
 
PORTFOLIO REVIEW AS AT 30 JUNE 2022 
 
  * PORTFOLIO PERFORMANCE 
    Portfolio total return of 11.2% resulted in continued outperformance of the 
    Company's MSCI benchmark, of 8.1%, driven by the positive relative 
    performance of the Company's industrial portfolio. 
 
  * PORTFOLIO VALUE 
    Portfolio is now valued at £1.71 billion. We believe that the Company's 
    well-let portfolio of scale, which is heavily weighted towards future-fit 
    sectors and offers good prospects for rental growth, is well placed to 
    deliver positive relative performance with good potential for future 
    earnings growth. 
 
  * OCCUPANCY 
    Occupancy rate of 98.5%. 
 
  * RENT 
    19% increase in portfolio annualised rent and ERV growth of 9%. Rent 
    collection for the three billing periods in 2022 of 99% as at 31 August 
    2022. 
 
  * ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) 
    2040 net zero carbon target for all emissions. 
 
 
Commenting on the results, Ken McCullagh, Chair of UKCM, said: "UKCM has 
delivered another strong set of results for the first six months of 2022, with 
the team's ability to invest into a diversified range of sectors and 
proactively manage the portfolio towards income growth and security ensuring 
that the Company continues to outperform its benchmark. This performance has 
been driven by a disciplined investment focus on future fit and operational 
asset classes that look to capitalise on the imbalance between supply and 
demand, are underpinned by societal changes that remain highly supportive of 
the occupational markets and rental growth. The special dividend, paid in 
August, is reflective of the Board's desire to return some of the strong 
performance delivered over the last number of quarters to shareholders, 
allowing them all to benefit from the recent growth in net asset value that is 
not currently being reflected in the Company's share price. 
 
Looking ahead, as a Board we are acutely aware of the broader economic 
challenges that have been prevalent throughout the year and, more recently, the 
impact of the government's latest fiscal announcement on the debt markets, 
which have created further uncertainty.  However, UKCM is extremely lowly 
levered, has a strong and flexible balance sheet and a portfolio that has been 
positioned over the past few years to deliver income growth through market 
cycle.  As a result, we have a number of options available to us to both manage 
and, where appropriate, seek opportunities arising from the current 
environment, and are confident in the future prospects for the Company." 
 
Will Fulton, Fund Manager at UKCM at abrdn, added: "The UK real estate market's 
performance remained very positive throughout the first half of this year, 
despite the economic challenges. The Company's portfolio also successfully 
outperformed the benchmark again, benefitting from our strategic overweight 
position to the industrial sector, which again delivered the strongest returns 
of all the major sectors, and from positive leasing and asset management. 
 
Against a backdrop of economic and inflationary pressure, and rising interest 
rates, we are alert to the challenges that lay ahead for our sector, but remain 
positive on the ability of our Company's portfolio to deliver positive rental 
and earnings growth going forward. Our strategy has been fashioned with this in 
mind by targeting those areas of the market most likely to benefit from 
positive structural changes and so experience positive demand versus supply 
over the coming years with the ability for active asset management to enhance 
income. 
 
As we move into the second half of the year we expect ESG considerations to 
become even more integral to investor decision making and asset underwriting. 
This trend was expedited as a result of the Covid-19 pandemic, but with the 
current energy crisis and pathway to net-zero, the case for integrating ESG 
considerations across all UK real estate sectors has never been greater. An 
even greater emphasis on ESG requirements for both acquisitions and 
developments is already underway across our portfolio." 
 
PERFORMANCE SUMMARY 
 
CAPITAL VALUES AND GEARING                            30 June   31 December           % 
                                                         2022          2021      Change 
 
Total assets less current liabilities (excl bank    1,733,981     1,573,554        10.2 
loan) £'000 
 
IFRS Net asset value (£'000)                        1,467,443     1,325,228        10.7 
 
Net asset value per share (p)                           112.9         102.0        10.7 
 
Ordinary share price (p)                                 75.0          74.7         0.4 
 
Discount to net asset value (%)                        (33.5)        (26.8)         n/a 
 
Gearing (%)*                                             13.7          13.5         n/a 
 
 
 
 
                                             6 month      1 year      3 year     5 year 
                                            % return    % return    % return   % return 
 
TOTAL RETURN 
 
NAV?                                            12.3        28.8        33.0       50.9 
 
Share Price?                                     2.3         1.5       (5.0)      (1.1) 
 
UKCM Property portfolio                         11.2        26.8        35.5       56.0 
 
MSCI Benchmark                                   8.1        19.6        25.7       43.2 
 
FTSE Real Estate Investment Trusts Index      (18.8)       (5.2)         4.9        9.2 
 
FTSE All-Share Index                           (4.6)         1.6         7.4       17.8 
 
 
 
                                                                 30 June        30 June 
EARNINGS AND DIVIDS                                              2022           2021 
 
EPRA Earnings per share (p)                                         1.58           1.16 
 
Dividends paid per ordinary share (p) #                             1.55          1.635 
 
Dividend Yield (%)?                                                  3.8            3.3 
 
MSCI Benchmark Yield (%)                                             3.9            4.5 
 
FTSE Real Estate Investment Trusts Index Yield (%)                   3.6            2.7 
 
FTSE All-Share Index Yield (%)                                       3.5            2.8 
 
*                 Calculated, under AIC guidance, as gross borrowings less cash 
divided by portfolio value. 
?                  Assumes re-investment of dividends excluding transaction 
costs. 
?                  Based on last four quarterly dividends, paid pre-30 June of 
2.838p and the share price at 30 June 2022. 
#                  Notes to the accounts, note 6 for further details. 
 
Sources: abrdn, MSCI 
 
 
CHAIR'S STATEMENT 
 
Background 
 
UKCM has delivered a strong set of results from our portfolio during the first 
half of 2022, with capital allocation and further positive leasing momentum by 
our asset management team driving rental growth and an increase in portfolio 
valuation. The Company delivered a NAV total return of 12.3% for the period and 
once again outperformed its benchmark. Over the past few years we have taken 
advantage of our ability to invest in a diversified range of sectors to 
proactively manage our portfolio towards income growth and security, with a 
focus on future fit and operational 
 
asset classes. Of particular note we have built a strong position in both urban 
and big box logistics and the living asset classes, where we are invested in 
student housing, and hotels. In all of these, the imbalance between supply and 
demand and the societal changes continue to be highly supportive of the 
occupational markets and rental growth. 
 
We are acutely aware of the broader economic challenges ahead, including rising 
inflation and interest rates, that 
 
could be negative on valuations. However, we believe that we are well placed, 
both in terms of the quality of our portfolio and the strength of our lowly 
leveraged balance sheet, to continue to deliver shareholder value through a 
growing level of income. The Investment Manager has delivered a 19% increase in 
portfolio annual rent over the last 12 months and 9% ERV growth within the 
standing portfolio. This confidence is reflected in the additional - and fully 
covered - dividend increases the Company announced in the first half of 2022. 
 
The Board, as noted in recent prior statements, is conscious of the significant 
discount on the share price to NAV which, in line with the broader real estate 
sector, has continued to widen since the end of June. The Company paid a 
special dividend of 1.92p per share in August to return some of the strong 
gains that have been realised over the last number of quarters from capital 
allocation and asset management initiatives, allowing all shareholders to 
benefit from the recent growth in net asset value that is not currently being 
reflected in the Company's share price. The Board believes this type of 
distribution could be utilised in the future to reward shareholders, while 
still also keeping the option of share buy-backs under consideration. 
 
While the ongoing situation in Ukraine has created further economic uncertainty 
just as Covid-19 restrictions were 
 
receding, resulting in higher energy and developments costs, we remain 
confident in the robustness and resilience of our portfolio. The Company is 
also benefitting from the improved corporate efficiencies arising from the 
reduction in investment management fees we announced at year end. These factors 
combined with the strength of the current financial performance and future 
investment pipeline were integral to our decision to recommend further 
increases to shareholder dividends. 
 
Portfolio Activity 
In line with our strategy of increasing portfolio exposure to operational 
assets and the alternatives sector, the Company committed to funding the 
development of a high-quality hotel in central Leeds which will operate under 
the renowned Hyatt brand. The development has a maximum commitment of £62.7 
million and will complete in mid-2024 when it will be operated under a lease by 
Interstate Hotels & Resorts. We expect it to be one of the best hotels in Leeds 
on completion and to deliver a high income return as the lease structure means 
the rents will be derived from the performance of the hotel. 
 
The Company has made progress on its student housing developments in Gilmore 
Place, Edinburgh. We were pleased to secure a strong 20-year lease with the 
University of Edinburgh at an annual rent of £1.24 million per annum, which is 
subject to annual CPIH increases. Whilst the Company had originally expected to 
operate and lease the asset independently to generate a higher level of rent, 
the opportunity to secure a lease of this nature to a leading UK university 
whilst de-risking the asset was felt to be in the best interest of 
shareholders. The Company will retain operational leasing exposure in the 
student residential market at its asset in Exeter. 
 
Portfolio occupancy increased to 98.5% within the period and this low level of 
vacancy demonstrates the appeal of the assets to both current and prospective 
tenants and provides good visibility on income streams. The Board and the 
Investment Manager are focussed on driving earnings growth from the portfolio 
and capturing the reversionary potential of the assets to deliver value for 
shareholders. 
 
Rent collection rates have normalised and returned to pre-Covid levels. 
Cumulatively across the three relevant billing periods straddling the first 
half of the year 99% of rents due have been received taking in to account 
agreed deferrals and monthly payments. 
 
Further details on all investment transactions and significant lettings are 
given in the Investment Manager's Review. 
 
Portfolio and Corporate Performance 
The portfolio delivered a total return of 11.2% in the half year, ahead of the 
MSCI benchmark total return of 8.1%. UKCM has continued to outperform against 
its MSCI UK Balanced Portfolio Quarterly Index benchmark for 1,3,5 and 10 
years. 
 
Further details on the Company's portfolio performance are given in the 
Investment Manager's Review. 
 
The strong portfolio performance allowed the Company to report a 12.3% NAV 
total return for the period. This strong performance, both absolute and 
relative to its peers, is not reflected in the share price total return of 2.3% 
for the same period. The discount at which the Company's shares traded versus 
their net asset value increased from 26.8% at the end of December 2021, to 
33.5% at 30 June 2022. 
 
Financial Resources 
UKCM continues to be on a solid financial footing with a NAV of £1.47 billion 
as at 30 June 2022, and gearing of just 13.7%, meaning the Company remains one 
of the lowest geared in its AIC peer group and the wider REIT sector. The 
weighted average cost of this debt remains low at 2.79% per annum, and the 
Company continues to be comfortably within the covenants on its three debt 
facilities. In addition, with over £520 million of unencumbered assets, the 
Company has significant headroom and further flexibility with respect to its 
covenants and overall gearing strategy. 
 
On the 19 August 2022 the Group increased its revolving credit facility with 
Barclays Bank plc to £180 million (Dec  2021: £150 million). There were no 
other amendments to the agreement. The facility expires in April 2024 and is 
cancellable at any time. 
 
Dividends 
The Company paid two interim dividends totalling 1.55 pence per share during 
the period. The second quarter dividend was increased by a further 6.3% to 
0.85p per share. This follows a 6.7% increase for the prior quarter and 
reflects the Board's continued recognition of the importance of income to 
shareholders. Dividend cover for the first half of 2022 was 103% and the Board 
believes the further increase to be appropriate and sustainable given the 
current level of investment and development activity within the Company. 
 
The Company paid a special dividend of 1.92p per share in August to return some 
of the strong gains that have been realised over the last number of quarters 
from capital allocation and asset management initiatives so that all 
shareholders can benefit from the recent growth in net asset value that is not 
currently reflected in the Company's share price. 
 
Environmental, Social and Governance ("ESG") 
ESG is embedded within the processes of UKCM and underpins every Board 
discussion and decision. 
 
ESG considerations are expected to become even more integral to investor 
decision making and asset underwriting. This trend was expedited as a result of 
the Covid-19 pandemic, but with the current energy and climate crisis, the case 
for the  pathway to net-zero and integrating ESG considerations across all UK 
real estate sectors has never been greater. 
 
Within the 2021 Annual Report & Accounts the Company made a commitment of 
achieving Net Zero Carbon on Landlord emission by 2030 and Net Zero Carbon on 
all emissions by 2040 and the Board is focussed on these ambitious targets. 
 
Discount Policy / EGM 
The Company's discount control policy provides that if the market price of the 
ordinary shares of 25 pence each in the Company (the "shares") is more than 5 
per cent below the published NAV for a continuous period of 90 dealing days or 
more, following the second anniversary of the Company's most recent 
continuation vote in relation to the discount control policy, the Directors 
will convene an extraordinary general meeting to be held within three months to 
consider an ordinary resolution for the continuation of the Company. The most 
recent continuation vote in relation to the share discount policy was held on 
18 March 2020. 
 
The closing market price of the shares had been more than 5 per cent below the 
published NAV for more than 90 continuous days up to 29 July 2022. In 
accordance with the discount control policy, the Board is therefore convening 
an extraordinary general meeting in October 2022 to consider a resolution to 
approve the continuation of the Company. 
 
The Investment Manager continues to improve earnings and identify attractive 
opportunities for the Company's property portfolio and the Board believes it is 
important for shareholders to approve the continuation vote in order that the 
Investment Manager may continue to pursue the investment strategy effectively. 
 
Accordingly, the Company will be publishing a circular convening an 
extraordinary general meeting to consider that continuation resolution and the 
Board will be recommending shareholders vote in favour of the Company's 
continuation. 
 
The Company has discussed the upcoming resolution with its largest shareholder, 
Phoenix, which currently holds in aggregate approximately 43.4 per cent of the 
Company's issued shares, and which has indicated it intends to vote in favour 
of continuation. 
 
Outlook 
We have delivered a strong set of results from our portfolio during the first 
half of 2022 with further positive leasing momentum by our asset management 
team driving rental growth and an increase in portfolio valuation. Over the 
past few years we have taken advantage of our ability to invest in a 
diversified range of sectors to proactively manage our portfolio towards income 
growth and security, with a focus on future fit and operational asset classes. 
Of particular note we have built a strong position in both urban and big box 
logistics, and the living asset classes, where we are invested mainly in 
student housing, and hotels - in all of these the supply demand imbalance and 
societal changes continue to be highly supportive of the occupational markets 
and rental growth. 
 
The underlying pace of the UK economy is clearly slowing whilst inflation is 
running at multi-year highs. Despite the government's announcement that energy 
prices will be frozen to help UK households and businesses, short-term 
inflation is still set to rise above 10% in October. The government's huge 
fiscal stimulus was always going to cause interest rates to rise further, but 
the large market moves since the government's economic agenda was announced 
suggest even higher rates will be necessary to restore confidence in UK assets. 
We are sceptical on what is currently priced by markets, but a period of high 
and sustained rates is likely increasing our conviction that the economy will 
soon be in a recession.  For UK real estate, the environment of rising rates 
has resulted in a repricing of debt and other asset classes, which has been a 
catalyst for a change in sentiment towards UK real estate more generally, with 
prices having started to adjust. Weaker returns are expected for UK real estate 
over the next 12-18 months, led by the lower yielding industrial and logistics 
sector although almost all sectors are expected to follow suit. On a positive 
note the occupational market for the industrial sector remains well balanced, 
with healthy levels of take-up and a national vacancy at a low 3%. Despite 
increased development for this sector, build cost inflation and development 
delays are expected to act as a natural cap on future supply. Meanwhile, the 
office market is becoming increasingly polarised between truly best in class 
space and the rest. ESG is playing an increasingly critical role in this 
regard, as are changing tenant requirements due to hybrid working arrangements, 
necessitating greater flexibility of space. With the cost of living crisis 
likely to weigh on consumer spending, the retail sector is more exposed, but 
this will be felt most acutely for discretionary led retailers, with high 
street shops and shopping centres more vulnerable. 
 
While we are acutely aware of the broader economic challenges ahead, we believe 
that we are well placed both in terms of the quality of our portfolio and the 
strength of our lowly leveraged balance sheet, to continue to deliver 
shareholder value through a growing level of income. 
 
Ken McCullagh 
Chair of UKCM 
29 September 2022 
 
 
MANAGER'S REVIEW 
For the half year ended 30 June 2022 
 
Commercial Property 
UK real estate carried some of its positive performance momentum from 2021 into 
the early part of 2022. However, this year will likely be one defined by the 
proverbial 'game of two halves' as some of the strong performance in the first 
half of the year is expected to be unwound moving forward. With sentiment 
towards UK real estate weakening, investment volumes have slowed as the market 
pauses for breath and takes stock. 
 
Over the first half of the year, performance remained very positive and, at an 
all property level, the UK real estate market delivered a total return of 8.1% 
over the first six months of 2022 (MSCI Balanced Portfolios Quarterly Property 
Index). As expected, the industrial and logistics sector continued to drive the 
market and posted a total return of 13.3% in the first half of the year, whilst 
over the same period the office sector once again provided the weakest 
performance at 3.3%. The retail sector recorded performance and provided a 
total return of 8.0%, but much of this positive performance was attributable to 
the retail warehouse sector, which provided a robust total return of 14.1% in 
the first half according the Company's MSCI benchmark. 
 
Transaction volumes in the first half of 2022 remained very robust and UK real 
estate recorded the strongest first half investment volumes since 2015 
according to Real Capital Analytics with £31.2 billion transacted over this 
period.  However, approximately two thirds of the activity occurred in the 
first quarter of 2022. Investment volumes were £10.2 billion in the second 
quarter of 2022, which was lower than the Q2 10-year average of £13.5 billion. 
 
The slowdown in investment activity towards the end of the second quarter of 
2022 can largely be attributed to the emergence of a less accommodative 
monetary policy environment as the Bank of England tries to bring inflation 
back closer to its target rate of 2%. This has resulted in slowing economic 
growth expectations, rising bond yields, and an increased cost of capital for 
debt-backed real estate investors, which has caused weaker sentiment towards UK 
real estate at this time. 
 
The industrial sector experienced a record year in 2021 in terms of both 
performance and transaction volumes and carried this momentum into 2022. 
However, with the weakening economic environment, the sector has begun to slow 
and investor sentiment has begun to cool somewhat. Whilst reflected in a 
slowing level of transaction volumes, occupier markets have seen strong 
performance, with leasing driven by the imbalance between supply and demand. 
Amazon's announcement in April 2022 that it was to reduce its operational 
estate surprised the market, but we believe this statement was primarily 
focused on the US and, more importantly, that occupational demand is and has 
proven to be more multi-faceted and deeply diverse than being wholly reliant on 
one operator or business segment. The industrial sector continues to benefit 
from longer term thematic tailwinds and rental value growth should remain 
positive in response to tight supply levels, but return to a more normalised 
growth rate. 
 
Polarisation within the office sector has been gathering pace as both occupiers 
and investors continue to narrow their focus on best in class office assets 
with strong environmental credentials. There have been increased reports of 
positive letting activity in the office sector over the second quarter of 2022. 
 
But, according to CBRE Ltd ('CBRE'), the central London vacancy rate remains 
elevated at 9%. Secondary accommodation accounts for approximately 70% of all 
available accommodation. Overall office demand is expected to fall as a poorer 
economic outlook weighs on job growth across the market, placing additional 
pressure on occupational sentiment. However, Grade A 'future fit' office 
assets, in prime locations, are anticipated to be more resilient in this 
weakening environment, whilst the outlook for secondary assets is much more 
challenging. 
 
The UK retail sector was showing tentative signs of green shoots at the start 
of 2022, but momentum, particularly in the occupational market, is expected to 
experience a marked slowdown as the current cost-of-living crisis and slowing 
economic growth puts pressure on consumer spending. This will be more acutely 
felt in the consumer discretionary and fashion-led part of the market. 
Essential, discount and convenience-led retail is expected to be much more 
resilient in this environment, but not entirely immune to the cost-of-living 
pressures facing UK households. Retail sales volumes fell by 0.5% in May 2022 
and, in the three months to May 2022, by 1.3% when compared to the previous 3 
months, continuing a downward trend that began in summer 2021. Foodstore sales 
provided the largest contribution to the fall in sales over May, as sales fell 
a further 1.6%. This supports the view that consumers are seeking to reduce 
their outgoings in the face of rising costs. 
 
Strong demographics and structural tailwinds are expected to continue to drive 
interest in the alternative sectors, particularly in healthcare, build-to-rent 
and student housing over the medium-to-long term. With the occupational 
pressures facing the office and retail markets, investor allocation to 
alternative sectors more generally is expected to grow. However, these sectors 
are not immune to the weakening macro environment and a focus on quality will 
be important to ensure performance remains resilient. 
 
Portfolio Performance 
The Company's portfolio delivered strong outperformance against its MSCI IPD 
benchmark in the first half of the year. For the six months to 30 June 2022, 
UKCM portfolio's total return was 11.2%, significantly ahead of the benchmark 
return of 8.1%. The property portfolio continues to show outperformance over 1, 
3, 5 and 10 years. Total return performance was particularly strong in Q1 2022 
at 8.8% v 4.9% for the benchmark with performance still positive but slowing in 
the second quarter, which was in line with our expectations, at 2.3% against 
the benchmark return of 3.0%. 
 
The table below breaks down this return by sector with all valuations 
undertaken by the Company's external valuer, CBRE. The portfolio delivered an 
income return marginally below benchmark of 1.8% (benchmark 1.9%) over the 
first six months of the year, but this was offset by greater capital value 
growth than the benchmark, 9.3% vs 6.1%. Portfolio-level outperformance has 
been driven by the Company's strong overweight position to the industrial 
sector which again delivered the strongest returns of all the major sectors. 
The Company's exposure stands at 63.9% weighted by capital value at the end of 
H1 2022. The office and retail assets within the portfolio also significantly 
outperformed their benchmark over the first half of the year. 
 
                   Exposure           Total Return        Income Return        Capital Growth 
 
                                    UKCM % Benchmark %   UKCM % Benchmark %   UKCM %   Benchmark 
 
All            100.0%   £1,711.0m     11.2         8.1      1.8         1.9      9.3         6.1 
 
Industrials     63.9%   £1,092.5m     12.5        13.3      1.4         1.6     11.0        11.6 
 
Offices         13.3%     £227.6m      6.1         3.3      2.3         1.8      3.8         1.5 
 
Retail          12.4%     £212.7m     16.7         8.0      2.5         2.6     14.0         5.3 
 
Alternatives    10.4%     £178.2m      1.8         5.1      3.5         2.4    (1.6)         2.6 
 
Source: MSCI June 2022 
 
Industrial 
The Company has maintained for some time a strong, strategic overweight 
position to the industrial sector which continues to be well placed to benefit 
from the structural changes that have fuelled tenant demand for space such as 
the growth e-commerce and renewed demand for storage of inventory due to the 
disruption of global supply routes. Whilst demand is likely to taper down from 
the heightened levels seen in 2020 and 2021 it is still expected to outstrip 
levels of supply leading to rental growth, particularly in strategic locations 
and those where supply of industrial land for development is restricted. 
 
In the first half of 2022 the Company's industrial holdings delivered a strong 
total return of 12.5%, albeit this was behind the benchmark return of 13.3%. 
The six-month industrial income return of 1.4% which is below the benchmark 
level of 1.6%. 
 
As the strongest performing segment of the benchmark, our strategic overweight 
allocation to the sector enhanced overall portfolio returns. The Company's 
industrial holdings are split respectively between multi-let industrial estates 
at 45% by capital value and 55% by capital value in single-let big-box 
distribution units in strategic locations throughout the South-East and the 
Midlands. In general, the multi-let estates offer more immediate prospects for 
asset management, and therefore opportunities to grow income, whilst the 
distribution units tend to be longer let and offer secure income streams with 
the opportunity to capture growth at rent reviews and lease renewals. We expect 
that returns from the sector will be driven by rental growth and would expect 
some yield weakening throughout the rest of 2022 as a result of interest rate 
rises. This will be most pronounced initially on very low yielding London / 
South East assets but is likely to have a knock-on effect to the rest of the 
sector. 
 
Office 
The Company has a low exposure to the office sector of 13.3% against the 
benchmark weighting of 25%. The office portfolio significantly outperformed the 
benchmark with a return of 6.1% vs 3.3%. It delivered an above benchmark income 
return of 2.3% vs 1.8% for the 6-month period reflecting that the Company is 
deliberately underweight to lower yielding London offices, with the vast 
majority of its office exposure being elsewhere in the South East or in 
regional cities where yields are generally higher. 
 
Over H1 2022 a strong capital return of 3.8% was also delivered by the office 
portfolio significantly ahead of the benchmark level of 1.5%. Capital growth 
was driven by positive asset management at assets such as 2 Rivergate, Bristol 
where a lease extension was agreed with the Secretary of State and at Craven 
House in London where a strong rent review settlement was also agreed. There 
was also the positive impact of acquisitions completed in Q4 2021 particularly 
Kantar House at Hanger Lane where the value is underpinned by the redevelopment 
value of the site which has significantly increased. 
 
The polarisation of the sector is expected to continue with occupiers strongly 
favouring best in class 'future-fit' properties with access to amenities and 
excellent ESG credentials. The Company is focused on ensuring all its office 
assets meet, or can meet, these standards and as a result of this analysis the 
decision was made to sell 9 Colmore Row, Birmingham in July for £26.48 million. 
Full details are provided below. 
 
Retail 
At the end of the half year, the Company's weighting to retail was 12.4% 
compared to 22% in the benchmark. The portfolio comprises supermarkets and 
retail parks dominated by either bulky goods retailers or convenience and 
discount operators. These tenants have generally emerged strongly from the 
Covid-19 pandemic and should prove to be robust in the forthcoming challenging 
economic environment where spending is likely to be focussed away from 
non-discretionary items. The Company has no exposure to shopping centres and 
its only remaining high street shops are part of the office investment at 81 
George Street, Edinburgh which are well let. At the end of Q2 2022 there were 
no vacancies in the retail portfolio which reflects the strength of these 
locations and their appeal to tenants. 
 
The quality of the Company's retail holdings is further demonstrated by its 
total return in the period of 16.7% against 8.0% recorded in the benchmark. 
This was principally driven by much stronger capital growth in the period of 
14.0% against 5.3% for the benchmark with the majority of this performance 
derived from the retail park element of the portfolio. These assets closely 
match those sought by investors in 2021 and H1 2022 in that they are 
well-located and let to tenants suited to the surrounding demographic at 
sustainable rental levels, and they have therefore benefitted from the strong 
yield compression seen in this sub-sector of the market. 
 
Alternatives 
Within the alternatives sector we saw positive total returns of 1.8% delivered 
over the first half of 2022 which was below the benchmark level of 5.1%. The 
Company's alternatives portfolio at the end of the period was split evenly in 
terms of capital value between three cinema-led leisure schemes in Kingston 
upon Thames, Glasgow and Swindon and four hotel / student housing assets, of 
which three are developments and therefore will not fully contribute to 
portfolio performance until completion. The Maldron Hotel in Newcastle which is 
let on a long-lease to Dalata and trades strongly is the fourth non-leisure 
asset within the alternatives sector. 
 
Rent collection levels at the leisure assets have normalised which contributed 
to an above benchmark income return of 3.5% v 2.4%, but this was offset by a 
capital decline of 1.6% in the portfolio whilst the benchmark recorded capital 
growth of 2.6%. 
 
The Company's student housing development in Edinburgh completed in time for 
the 2022/2023 academic year. Within the period the Company agreed an attractive 
20 year lease, which includes annual index-linked rental uplifts, with the 
University of Edinburgh over its asset at Gilmore Place, Edinburgh 
substantially derisking the operation of this asset. UKCM also committed to the 
funding of a 305 bed Hyatt Hotel in Leeds which is scheduled to complete in 
mid-2024 and detailed below. 
 
Investment Activity 
Following the significant levels of investment activity seen in 2021 there have 
been fewer transactions completed in the first half of this year. In May, the 
Company committed to the development of a high-quality hotel in central Leeds 
which will complete mid-2024 with a 25-year franchise agreement in place with 
Hyatt Hotels, one of the leading global hotel brands. UKCM is funding the 
development for a total commitment of £62.7 million. The hotel will be operated 
under a lease by Interstate Hotels & Resorts, a 50+ year old global leader in 
hotel operation, with UKCM's rental income based on the income generated from 
the operation of the hotel. 
 
The 140,000 sq ft hotel's 305 rooms will be split between the short stay Hyatt 
Place and the long stay Hyatt House brands. The upscale hotel will provide 
meeting rooms, a gym and several food and beverage options, including a rooftop 
bar with its own dedicated entrance and on completion should be one of the best 
quality hotels in Leeds. The acquisition is in line with part of UKCM's 
strategy to increase its exposure to alternatives and to invest in operational 
real estate sectors that are expected to deliver resilient rental incomes. On 
completion the asset is expected to have strong ESG credentials with a target 
EPC rating of A and an expected BREEAM rating of Excellent. 
 
After the reporting period in July, the Company disposed of its 68,400 sq ft 
central Birmingham office, 9 Colmore Row, to Birmingham City Council at a price 
of £26.48 million, ahead of the asset's book cost and at a premium to the 
latest valuation. In addition to securing a strong sale price, the disposal is 
in line with the Company strategy of exiting risk assets and those in need of 
capital expenditure which will not enhance value. 
 
The building's current EPC rating is D and this will require to be improved to 
meet forthcoming Minimum Energy Efficiency Standards legislation, with an 
expectation these costs will primarily fall upon the landlord. 
 
The Company has financial resources totalling £24 million available as at 30 
June 2022 to utilise for further acquisitions including the post-period receipt 
from the sale of Colmore Row, and allowing for future commitments and the 
dividends paid in August 2022. We are exploring sectors offering higher initial 
income returns but with some future capital growth potential with a focus on 
best in class regional offices which meet future occupier demands in terms of 
access to amenity and ESG credentials and well as further assets in the 
alternatives sector which offer strong fundamentals and robust incomes. 
 
Asset Management and Rent Collection 
Rent collection rates have normalised throughout the first half of 2022 and 
have largely returned to pre-pandemic levels of collection. There continue to 
be some tenants within the portfolio that pay rents by agreement on a monthly 
basis as opposed to quarterly however once these are adjusted for rent 
collection for the three billing periods covering the start of this year, 99% 
of rents due have been collected. 
 
The Company benefits from low tenant income concentration due to its diverse 
tenant mix of 227 tenancies across 41 assets, with its top tenant, Ocado, 
accounting for 6% of contracted rental income. In total the portfolio's top ten 
tenants account for 36.9% of total rents at the end of June 2022. 
 
Occupancy levels in the portfolio increased to 98.5% at the end of H1 2022 
which reflects a void rate approximately one fifth of the MSCI Benchmark rate 
of 7.7% at the same period. The portfolio occupancy rate is also an improvement 
on the position at the end of 2021 when the occupancy rate stood at 97.9%. This 
minimal level of vacancy reflects the work undertaken by the asset management 
team in securing income for the Company as well as the quality and appeal to 
occupiers of the assets themselves. 
 
Asset management highlights within the period included: 
 
  * As previously mentioned, at Gilmore Place in Edinburgh, the Company's 
    student housing development, a 20 year lease has been agreed with 
    University of Edinburgh at an annual rent of £1.238m per annum. The rent is 
    increased annually by CPIH with a cap and collar of 1-4%. The development 
    is due to complete in time for the commencement of the 2022/23 academic 
    year. 
 
  * At Temple Quay in Bristol, the Secretary of State has extended its 
    occupation of the Company's 70,000 sq ft HQ-style office building for a 
    further three years which includes an increase in rent to £1.72 million per 
    annum. The asset is located in a prime location within Bristol's office 
    core directly opposite Temple Meads railway station which is due to benefit 
    from an investment of £95 millon into to the station and surrounds. The 
    lease is now outside the Landlord & Tenant Act and the deal therefore 
    secures the opportunity for a future redevelopment in this excellent 
    location. 
 
  * A new tenant was secured for Unit 12, Newton's Court, Dartford following a 
    comprehensive refurbishment and environmental upgrade of the property. Paak 
    Logistics UK Limited has taken a new 15 year lease without break over the 
    67,300 sq ft unit at a rent of £942,816 per annum, representing a 27% 
    premium to the ERV at the start of the year and demonstrating the continued 
    demand for high quality, well located logistics space. This also sets a new 
    headline rental tone for the estate of £14 psf per annum and the lease 
    incorporates 5 yearly upward only open market rent reviews. The achieved 
    rent is significantly ahead of the original underwritten rental level when 
    the refurbishment commenced demonstrating the potential within the 
    portfolio to capture strong rental growth. In line with the Company's ESG 
    priorities the building's EPC was improved from a rating of D to A through 
    the refurbishment works which included using energy efficient materials and 
    installing photo voltaic panels. 
 
  * Also at Newton's Court, Dartford, Unit 6 was let to Rodenstock UK Ltd on a 
    new 10 year lease with a tenant only break option in year 5 over the 6,650 
    sq ft unit which had recently fallen vacant. The agreed annual rent is £ 
    89,775 per annum equating to £13.50 psf per annum, which is 6% ahead of the 
    unit's previous ERV at the start of the year. Overall Newton's Court, 
    Dartford has experienced 9% growth in market rents in the first six months 
    of the year. 
 
  * The rent review from June 2021 over the accommodation at Craven House, 
    Foubert's Place, London the Company's 20,100 sq ft West End office, was 
    settled 5% ahead of ERV at an increased rent equating to £54 psf per annum. 
    The prominent building is situated adjacent to Carnaby Street and is let to 
    film and television production company Molinaire until June 2026. 
 
  * St George's Retail Park in Leicester became fully occupied within the 
    period as Autoglass completed a new 10 year lease with a tenant break on 
    the fifth anniversary at a rent of £52,500 per annum in line with ERV. The 
    park has been substantially repositioned following extensive letting 
    activity on 2021 and boasts an attractive line-up of strong tenants 
    including Next, Home Bargains, DSG and Iceland. 
 
Environmental, Social and Governance (ESG) 
The Company received a three star rating and was second in its GRESB peer group 
for ESG performance and made its 2022 submission in Q2.  The Company also 
obtained a Gold Star from EPRA for ESG reporting in 2021. UKCM is working 
towards the long-term commitments announced within its 2021 Annual Report of 
Net Zero Carbon for landlord emissions by 2030 and Net Zero Carbon for all 
portfolio emissions by 2040. 
 
A number of asset-specific initiatives have been completed within the period 
such as the ESG-focussed refurbishment of Unit 12, Newton's Court, Dartford 
detailed above. The Manager continues to assess all assets within the portfolio 
for potential opportunities to improve ESG performance and also to ensure that 
the buildings can comply with forthcoming Minimum Energy Efficiency Standards 
legislation in a commercially sensible manner. 
 
Investment Outlook 
Looking forward we expect some of the strong first half 2022 performance to be 
unwound over the second half and, given the current market environment, our 
overall outlook for the next 12-18 months has been revised downwards. 
 
By early September 2022, the spread between UK real estate and UK 10 year gilts 
reached the lowest level since 2008 as the UK 10 year yield peaked at 3.1% in 
response to increasing inflation and interest rate expectations. We expect the 
yield on the UK 10 year gilt to remain at or above this level in the near-term 
adding pressure on UK real estate yields to move out to maintain an appropriate 
yield buffer. On top of this, with rising debt costs driven by tightening 
monetary policy, a number of leveraged players have begun to step back from the 
market as the cost of debt outstrips yields in several sectors making its use 
in these sectors prohibitive. As a result, we are now beginning to see some 
repricing across the UK real estate market, driven predominantly by interest 
rates 're-rating' and an increased cost of capital impacting yields. 
 
Investors are anticipated to take a more risk off approach towards UK real 
estate in the second half of this year and we expect polarisation of investor 
focus to widen, as investors target best in class assets which should provide 
more resilient returns in a weakening environment, with greater scrutiny on the 
sustainability of income streams. 
 
ESG considerations are expected to become even more integral to investor 
decision making and asset underwriting. This trend was expedited as a result of 
the Covid-19 pandemic, but with the current energy crisis and pathway to 
net-zero, the case for integrating ESG considerations across all UK real estate 
sectors has never been greater. An even greater emphasis on ESG requirements 
for both acquisitions and developments is already underway. 
 
The government's huge fiscal stimulus was always going to cause interest rates 
to rise further, but the large market moves since the government's economic 
agenda was announced suggest even higher rates will be necessary to restore 
confidence in UK assets. We are sceptical on what is currently priced by 
markets, but a period of high and sustained rates is likely increasing our 
conviction that the economy will soon be in a recession. Whilst we expect a 
slowdown in the market in the near term, we also expect inflation to fall 
through 2023 into 2024 as a result of interest rate tightening from the Bank of 
England before a cutting cycle starts. When the overall cost of debt does in 
time move lower, and become more widely available as the economic environment 
and investor sentiment towards UK real estate improves, UK government bond 
yields will also move lower. We therefore expect a relatively short period of 
increasingly tight spreads over the next 12-18 months, before UK real estate 
begins to look more attractive. Opportunities within the market should emerge 
once repricing has occurred and a rebound in real estate performance is 
anticipated. 
 
Portfolio Strategy 
Against a backdrop of economic and inflationary pressure, and rising interest 
rates, we remain positive on the ability of your Company's portfolio to deliver 
positive rental, and so earnings, growth. Our strategy has been fashioned with 
this in mind by targeting those areas of the market most likely to benefit from 
positive structural changes and so experience positive demand versus supply 
over the coming years with the ability for active asset management to enhance 
income. Embedded across your Company's strategic thinking is an awareness of 
the current and future implications of environmental, social and governance 
factors, collectively ESG, with the Company's February announcement of its net 
carbon zero targets of 2030 (landlord-controlled emissions) and 2040 (all 
emissions) a focus for asset management and investment decision-making. 
 
Whilst, as highlighted earlier, we do expect some negative repricing of real 
estate over the short term we also believe winners and losers will emerge. We 
look to maintain a diversified portfolio to reduce specific risk which we 
achieve by maintaining a wide spread of tenants, geography and a diversified 
property sector allocation - but importantly diversified across those sectors 
and assets we believe will deliver better rental growth and value prospects 
rather than simply spreading across a benchmark. The bulk of the portfolio 
comprises a solid bedrock of assets with strong fundamentals, durable income 
streams and a low risk profile. Layered on this is a select group of assets 
allowing the team to add value and rent through more active management and, in 
some cases, controlled development exposure aiming to drive superior income and 
returns. And across all an aim to maintain relatively low levels of gearing 
from our low cost and flexible debt facilities. 
 
Although we may consider selective disposals in the logistics/distribution and 
industrial sector to recycle to higher yielding stock, we wish to maintain a 
strong allocation to this important part of the market in high demand locations 
and fit-for-purpose property. We believe this sector remains well placed to 
deliver rental growth as we continue to see growing demand from the twin 
engines of continuing e-commerce penetration plus the growth expected in the 
demand for UK on-shoring of goods as the country adapts to disrupted global 
supply chains. Both, we believe, will lead to a growing demand for distribution 
space in a market still short of the right supply. 
 
We remain keen on parts of the alternative property 'beds' sector, particularly 
selective student accommodation and hotel opportunities, which can also offer 
the opportunity for enhanced returns versus traditional leasing models. Our 
latest commitment is to a Hyatt Hotel due to open in Leeds city centre during 
summer 2024 which will supplement our hotel investment in Newcastle and two 
student developments at Exeter and Edinburgh. 
 
The office sector potentially offers the greatest scope for divergence of 
returns and opportunity, as ever with care. Not only is it exposed to the force 
of an evolving model for how business and employees use an office, but it is 
also approaching regulatory hurdles to be met on energy efficiency in buildings 
by 2027 and 2030. Many offices will require significant investment to meet 
these. 
 
It is very easy to imagine business embracing the potential of agile or 
flexible home working to reduce office occupancy costs, but also allocating 
that smaller overall budget to higher quality offices to attract and retain 
staff to encourage regular office participation for the business community 
benefits that can bring. And so we believe extreme bifurcation is the watchword 
for the office sector. Those assets in strong locations displaying flexibility, 
with good built-in or locally available amenities, strong e-connectivity, 
multi-modal transport links and sustainability are likely to emerge best placed 
to capture this focused demand. The reverse is likely to be true for those that 
do not with the potential they become 'stranded' economic assets requiring 
investment to meet regulations that is not rewarded by demand and rental 
growth. We are interested in opportunities in this thin slice of the overall 
office market, those asset-specific opportunities representing offices of the 
future. Conversely, we may disinvest from those assets we do not believe pass 
muster on this test and indeed our sale of Colmore Row, Birmingham, fits that 
category. 
 
We believe that the Company's well-let portfolio of scale, heavily weighted 
towards future-fit sectors, and with good prospects for rental growth, is well 
placed to deliver positive relative performance with good potential for future 
earnings growth. 
 
Will Fulton 
Fund Manager 
29 September 2022 
 
 
PRINCIPAL RISKS AND UNCERTAINTIES 
The Group's assets consist of direct investments in UK commercial property. Its 
principal risks are therefore related to the UK commercial property market in 
general, but also the particular circumstances of the properties in which it is 
invested and their tenants. Other risks faced by the Group include those 
relating to strategy, investment & asset management, macroeconomics & finance, 
operations, regulation and shareholder engagement. These risks, and the way in 
which they are mitigated and managed, are described in more detail under the 
headings Principal Risks and Emerging Risks within the Report of the Directors 
in the Company's Annual Report for the year ended 31 December 2021, published 
in April 2022, on pages 34 to 41. The Group's principal risks have not changed 
since the date of that report. 
 
GOING CONCERN 
After making enquiries, and bearing in mind the nature of the Company's 
business and assets, the Directors consider that the Company has adequate 
resources to continue in operational existence for the next twelve months. In 
assessing the going concern basis of accounting the Directors have had regard 
to the guidance issued by the Financial Reporting Council. They have considered 
the current cash position of the Group, forecast rental income and other 
forecast cash flows. The Group has agreements relating to its borrowing 
facilities with which it has complied during the period. Based on the 
information the Directors believe that the Group has the ability to meet its 
financial obligations as they fall due for the foreseeable future, which is 
considered to be for a period of at least twelve months from the date of 
approval of the financial statements. For this reason, they continue to adopt 
the going concern basis in preparing the accounts. 
 
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN 
RESPECT OF THE HALF YEARLY FINANCIAL REPORT TO 30 JUNE 2022 
 
We confirm that to the best of our knowledge: 
 
  * The condensed set of half yearly financial statements have been prepared in 
    accordance with IAS 34 "Interim Financial Reporting", and give a true and 
    fair view of the assets, liabilities, financial position and return of the 
    Company. 
  * The half yearly Management Report includes a fair value review of the 
    information required by: 
 
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an 
indication of important events that have occurred during the first six months 
of the financial year and their impact on the condensed set of financial 
statements and a description of the principal risks and uncertainties for the 
remaining six months of the year; and 
 
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related 
party transactions that have taken place in the first six months of the current 
financial year and that have materially affected the financial position or 
performance of the company during that period; and any changes in the related 
party transactions described in the last Annual Report that could do so. 
 
 
 
 
On behalf of the Board 
 
Ken McCullagh 
Chair 
29 September 2022 
 
 
HALF YEARLY CONDENSED Consolidated Statement of Comprehensive Income 
For the HALF year ended 30 JUNE 2022 
 
                                               Half year ended     Half year Year ended 31 
                                                  30 June 2022 ended 30 June December 2021 
                                                   (unaudited)          2021     (audited) 
                                         Notes           £'000   (unaudited)         £'000 
                                                                       £'000 
 
REVENUE 
 
Rental income                                           32,326        28,769        58,307 
 
Impairment reversal/(loss) on trade                        641       (1,152)           412 
receivables 
 
Service charge income                                    3,024         2,963         6,063 
 
Gains on investment properties             2           141,768        51,761       201,753 
 
Interest income                                             66            61           116 
 
Total Income                                           177,825        82,402       266,651 
 
 
 
EXPITURE 
 
Investment management fee                              (4,798)       (4,080)       (8,500) 
 
Direct property expenses                               (1,756)       (4,004)       (5,343) 
 
Service charge expenses                                (3,024)       (2,963)       (6,063) 
 
Other expenses                                         (1,754)       (1,125)       (3,229) 
 
Total expenditure                                     (11,332)      (12,172)      (23,135) 
 
Net operating profit before finance                    166,493        70,230       243,516 
costs 
 
 
 
FINANCE COSTS 
 
Finance costs                                          (4,137)       (3,422)       (7,283) 
 
Operating profit after finance costs                   162,356        66,808       236,233 
 
  Net profit from ordinary activities                  162,356        66,808       236,233 
before taxation 
 
Taxation on profit on ordinary             8                 -             -             - 
activities 
 
Net profit for the period                              162,356        66,808       236,233 
 
Total comprehensive income for the                     162,356        66,808       236,233 
period 
 
 
Basic and diluted earnings per share       3            12.49p         5.14p        18.18p 
 
 
EPRA earnings per share                    3             1.58p         1.16p         2.65p 
 
All of the profit and total comprehensive income for the period is attributable 
to the owners of the Company. All items in the above statement derive from 
continuing operations. 
 
The accompanying notes are an integral part of this statement. 
 
 
HALF YEARLY CONDENSED Consolidated Balance Sheet 
As at 30 JUNE 2022 
 
                                                                   Year ended 
                                                 30 June 2022     31 December     30 June 
                                                  (unaudited)            2021        2021 
                                        Notes           £'000       (audited) (unaudited) 
                                                                        £'000       £'000 
 
NON-CURRENT ASSETS 
 
Investment properties                     2         1,655,915       1,508,368   1,172,556 
 
                                                    1,655,915       1,508,368   1,172,556 
 
 
 
CURRENT ASSETS 
 
Investment properties held for sale       2            22,675               -       6,250 
 
Trade and other receivables                            56,198          50,763      41,073 
 
Cash and cash equivalents                              34,288          42,121     176,742 
 
                                                      113,161          92,884     224,065 
 
Total assets                                        1,769,076       1,601,252   1,396,621 
 
 
 
CURRENT LIABILITIES 
 
Trade and other payables                             (35,095)        (27,698)    (26,017) 
 
                                                     (35,095)        (27,698)    (26,017) 
 
 
 
NON-CURRENT  LIABILITIES 
 
Bank loan                                           (266,538)       (248,326)   (198,065) 
 
Total liabilities                                   (301,633)       (276,024)   (224,082) 
 
Net assets                                          1,467,443       1,325,228   1,172,539 
                                     5 
 
 
 
REPRESENTED BY 
 
Share capital                                         539,872         539,872     539,872 
 
Special distributable reserve                         568,891         568,891     566,194 
 
Capital reserve                                       358,233         216,465      66,473 
 
Revenue reserve                                           447               -           - 
 
Equity shareholders' funds                5         1,467,443       1,325,228   1,172,539 
 
 
Net asset value per share                 5            112.9p          102.0p       90.2p 
 
 
EPRA Net tangible asset value per         5            112.9p          102.0p       90.2p 
share 
 
The accompanying notes are an integral part of this statement. 
 
 
HALF YEARLY Consolidated Statement of Changes in Equity 
FOR THE HALF YEARED 30 JUNE 2022 
 
                                                                                   Equity 
HALF YEARED                      Share       Special  Capital   Revenue Shareholders' 
30 JUNE 2022                       Capital Distributable  Reserve   Reserve         funds 
(UNAUDITED)                Notes     £'000 Reserve £'000    £'000     £'000         £'000 
 
At 1 January 2022                  539,872       568,891  216,465         -     1,325,228 
 
Total Comprehensive                      -             -        -   162,356       162,356 
income 
 
Dividends paid               6           -             -        -  (20,141)      (20,141) 
 
Transfer in respect of       2           -             -  141,768 (141,768)             - 
gains on investment 
property 
 
As at 30 June 2022                 539,872       568,891  358,233       447     1,467,443 
 
 
 
                                                 Special                           Equity 
FOR THE YEARED                   Share Distributable  Capital   Revenue Shareholders' 
31 DECEMBER 2021                   Capital       Reserve  Reserve   Reserve         Funds 
(AUDITED)                 Notes      £'000         £'000    £'000     £'000         £'000 
 
At 1 January 2021                  539,872       572,392   14,712         -     1,126,976 
 
Total comprehensive                      -             -        -   236,233       236,233 
income 
 
Dividends paid                           -             -        -  (37,981)      (37,981) 
 
Transfer in respect of                   -             -  201,753 (201,753)             - 
gains on investment 
property 
 
Transfer from special                    -       (3,501)        -     3,501             - 
distributable reserve 
 
                                   539,872       568,891  216,465         -     1,325,228 
As at 31 December 2021 
 
 
 
                                                 Special                           Equity 
HALF YEARED                      Share Distributable  Capital   Revenue Shareholders' 
30 JUNE 2021                       Capital       Reserve  Reserve   Reserve         Funds 
(UNAUDITED)               Notes      £'000         £'000    £'000     £'000         £'000 
 
At 1 January 2021                  539,872       572,392   14,712         -     1,126,976 
 
Total comprehensive                      -             -        -    66,808        66,808 
income 
 
Dividends paid            6              -             -        -  (21,245)      (21,245) 
 
Transfer in respect of                   -             -   51,761  (51,761)             - 
gains on investment 
property 
 
Transfer from special                    -       (6,198)        -     6,198             - 
distributable reserve 
 
                                   539,872       566,194   66,473         -     1,172,539 
As at 30 June 2021 
 
The accompanying notes are an integral part of this statement. 
 
 
HALF YEARLY CONDENSED CONSOLIDATED CASH FLOW STATEMENT 
FOR THE HALF YEARED 30 JUNE 2022 
 
                                                    30 June 2022 30 June 2021   Year ended 
Notes                                                (unaudited)  (unaudited)  31 December 
                                                           £'000                      2021 
                                                                        £'000    (audited) 
                                                                                     £'000 
 
CASH FLOWS FROM OPERATING ACTIVITIES 
 
Net profit for the period before taxation                162,356       66,808      236,233 
 
Adjustments for: 
 
Gain on investment properties                   2      (141,768)     (51,761)    (201,753) 
 
Movement in lease incentive                     2        (2,277)      (2,827)      (5,877) 
 
Movement in provision for bad debts                          641      (1,152)          412 
 
(Increase)/decrease in operating trade and               (3,312)       10,338        2,134 
other receivables 
 
Increase/(decrease) in operating trade and                 7,397      (2,578)        (464) 
other payables 
 
Finance costs                                              4,137        3,422        7,283 
 
 
Net cash inflow from operating activities                 27,174       22,250       37,968 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES 
 
Purchase of investment properties               2        (6,552)      (7,124)    (179,861) 
 
Sale of investment properties                                  -       67,926       74,181 
 
Capital expenditure                             2       (21,902)      (4,424)     (18,077) 
 
 
Net cash (outflow)/inflow from investing                (28,454)       56,378    (123,757) 
activities 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES 
 
Facility fee charges from bank financing                   (657)        (560)      (1,020) 
 
Dividends paid                                  6       (20,141)     (21,245)     (37,981) 
 
Bank loan interest paid                                  (3,755)      (2,823)      (5,831) 
 
Bank loan drawdown                                        28,000            -       50,000 
 
Bank loan repaid                                        (10,000)            -            - 
 
 
Net cash (outflow)/inflow from financing                 (6,553)     (24,628)        5,168 
activities 
 
 
Net (decrease)/increase in cash and cash                 (7,833)       54,000     (80,621) 
equivalents 
 
 
Opening cash and cash equivalents                         42,121      122,742      122,742 
 
 
Closing cash and cash equivalents                         34,288      176,742       42,121 
 
 
REPRESENTED BY 
 
Cash at bank                                              17,800       53,247       22,879 
 
Money market funds                                        16,488      123,495       19,242 
 
 
                                                          34,288      176,742       42,121 
 
 
The accompanying notes are an integral part of this statement. 
 
 
NOTES TO THE ACCOUNTS 
 
1.         ACCOUNTING POLICIES 
 
The condensed consolidated financial statements have been prepared in 
accordance with International Financial Reporting Standard ('IFRS') IAS 34 
'Interim Financial Reporting' and, except as described below, the accounting 
policies set out in the statutory accounts of the Group for the year ended 31 
December 2021. 
 
The condensed consolidated financial statements do not include all of the 
information required for a complete set of IFRS financial statements and should 
be read in conjunction with the consolidated financial statements of the Group 
for the year ended 31 December 2021, which were prepared under full IFRS 
requirements. 
 
These condensed interim financial statements were approved for issue on 29 
September 2022. 
 
2.       INVESTMENT PROPERTIES 
 
FREEHOLD AND LEASEHOLD PROPERTIES                                   Period ended 
                                                                    30 June 2022 
                                                                           £'000 
 
Opening valuation                                                      1,508,368 
 
Purchases at cost                                                          6,552 
 
Capital expenditure                                                       21,902 
 
Gain on revaluation to fair value                                        144,045 
 
Adjustment for lease incentives                                          (2,277) 
 
Total fair value at 30 June 2022                                       1,678,590 
 
Less: Current Assets - reclassified as held for sale                    (22,675) 
 
Non-current Assets - Fair value as at 30 June 2022                     1,655,915 
 
 
 
GAINS ON INVESTMENT PROPERTIES AT FAIR VALUE COMPRISE 
 
Valuation gains                                                          144,045 
 
Movement in provision for lease incentives                               (2,277) 
 
                                                                         141,768 
 
ASSET HELD FOR SALE 
 
At the balance sheet date one asset was classified as held for sale, Colmore 
Row, Birmingham. The asset has been shown at market value in the Balance Sheet 
as a held for sale asset and included within the investment property table 
shown in this note. 
 
3.       BASIC AND DILUTED EARNINGS PER SHARE 
 
                                                 Period ended       Period ended 
                                                 30 June 2022       30 June 2021 
 
Weighted average number of shares               1,299,412,465      1,299,412,465 
 
Net Profit (£'000)                                    162,356             66,808 
 
Basic and diluted Earnings per share (pence)            12.49               5.14 
 
EPRA earnings per share (pence)                          1.58               1.16 
 
4.        EARNINGS 
 
Earnings for the period to 30 June 2022 should not be taken as a guide to the 
results for the year to 31 December 2022. 
 
5.        NET ASSET VALUE 
 
                                                 Period ended       Period ended 
                                                 30 June 2022       30 June 2021 
 
Number of ordinary shares in issue at the       1,299,412,465      1,299,412,465 
period end 
 
Net assets attributable at the period end (£        1,467,443          1,172,539 
'000) 
 
Net asset value per ordinary share (pence)              112.9               90.2 
 
EPRA net tangible asset per share (pence)               112.9               90.2 
 
6.    DIVIDS 
 
                                                   Period ended     Period ended 
                                                   30 June 2022     30 June 2021 
                                                          £'000            £'000 
 
2021 Fourth interim: PID of 0.466p per share,             9,746            5,977 
Non PID of 0.284p per share paid 25 February 
2022 (2020 Fourth interim: PID of 0.46p per 
share) 
 
2021 Fifth interim: nil                                       -            6,900 
(2020 Fifth interim: PID of 0.531p per share) 
 
2022 First interim: PID of 0.80p per share paid          10,395            8,368 
25 May 2022 (2021 First interim: PID of 0.644p 
per share) 
 
                                                         20,141           21,245 
 
7.        RELATED PARTY TRANSACTIONS 
 
No Director has an interest in any transactions which are or were unusual in 
their nature or significant to the nature of the Group. 
 
abrdn Fund Managers Limited (previously Aberdeen Standard Fund Managers 
Limited) received fees for their services as investment managers. The total 
management fee charged to the Statement of Comprehensive Income during the 
period was £4,798,238 (30 June 2021: £4,079,597) of which £4,798,238 (30 June 
2021: £2,061,904) remained payable at the period end. 
 
The Directors of the Company are deemed as key management personnel and 
received fees for their services. Total fees for the period were £134,377 (30 
June 2021: £159,759) of which £Nil (30 June 2021: £Nil) was payable at the 
period end. 
 
The Group invests in the abrdn Liquidity Fund which is managed by abrdn. As at 
30 June 2022 the Group had invested £16.5 million in the Fund (30 June 2021: £ 
123.5 million). No additional fees are payable to the Investment Manager as a 
result of this investment. 
 
8.         TAXATION 
 
                                                                      Period ended 
                                                                      30 June 2022 
                                                                             £'000 
 
Net profit from ordinary activities before tax                             162,356 
 
UK corporation tax at a rate of 19 per cent                                 30,848 
 
Effects of: 
 
Capital gain on investment properties not taxable                         (26,936) 
 
UK REIT exemption on rental profits and gains                              (3,912) 
 
Total tax charge                                                                 - 
 
9.    FINANCIAL INSTRUMENTS AND INVESTMENT PROPERTIES 
 
The Group's investment objective is to provide ordinary shareholders with an 
attractive level of income, together with the potential for income and capital 
growth from investing in a diversified UK commercial property portfolio. 
 
Consistent with that objective, the Group holds UK commercial property 
investments. The Group's financial instruments consist of cash, receivables and 
payables that arise directly from its operations and loan facilities. 
 
The main risks arising from the Group's financial instruments are credit risk, 
liquidity risk, market risk and interest rate risk. The Board reviews and 
agrees policies for managing its risk exposure. These policies are set out in 
the statutory accounts of the Group for the year ended 31 December 2021. The 
Board, through its Risk Committee, has undertaken a thorough review of these 
risks and believe they have not changed materially from those set out in the 
2021 statutory accounts. 
 
Fair value hierarchy 
 
The following table shows an analysis of the fair values of investment 
properties recognised in the balance sheet by level of the fair value 
hierarchy: 
 
Explanation of the fair value hierarchy: 
 
Level 1        Quoted prices (unadjusted) in active markets for identical 
assets or liabilities that the entity can access at the measurement date. 
 
Level 2        Use of a model with inputs (other than quoted prices included in 
level 1) that are directly or indirectly observable market data. 
 
Level 3        Use of a model with inputs that are not based on observable 
market data. 
 
                                                                        Total fair 
                                       Level 1     Level 2   Level 3 £       value 
30 June 2022                             £'000       £'000        '000       £'000 
 
Investment properties                        -           -   1,678,590   1,678,590 
 
The lowest level of input is the underlying yields on each property, which is 
an input not based on observable market data. 
 
The fair value of investment properties is calculated using unobservable inputs 
as set out in the statutory accounts of the Group for the year ended 31 
December 2021. 
 
The following table shows an analysis of the fair value of bank loans 
recognised in the balance sheet by level of the fair value hierarchy: 
 
                                                                         Total fair 
                                        Level 1     Level 2     Level 3       value 
30 June 2022                              £'000       £'000       £'000       £'000 
 
Loan Facilities                               -     266,538           -     266,538 
 
The lowest level of input is the interest rate applicable to each borrowing as 
at the balance sheet date which is a directly observable input. 
 
The fair value of the bank loans is estimated by discounting expected future 
cash flows using the current interest rates applicable to each loan. 
 
The following table shows an analysis of the fair values of financial 
instruments and trade receivables and payables recognised at amortised cost in 
the balance sheet by level of the fair value hierarchy: 
 
                                                                         Total fair 
                                        Level 1     Level 2     Level 3       value 
30 June 2022                              £'000       £'000       £'000       £'000 
 
Trade and other receivables                   -      56,198           -      56,198 
 
Trade and other payables                      -      35,095           -      35,095 
 
The carrying amount of trade and other receivables and payables is equal to 
their fair value, due to the short-term maturities of these instruments. 
Expected maturities are estimated to be the same as contractual maturities. 
 
There have been no transfers between levels of the fair value hierarchy during 
the period. 
 
10.  FINANCING 
 
The Company has fully utilised the £100 million facility, which is due to 
mature in April 2027, with Barings Real Estate Advisers (previously Cornerstone 
Real Estate Advisers LLP). 
 
The Company has fully utilised the £100 million facility, which is due to 
mature in February 2031, with Barings Real Estate Advisers. 
 
The Company has in place a £150 million revolving credit facility with Barclays 
Bank Plc of which £68m was drawn down at the period end (30 June 2021: £nil). 
 
11.  SUBSIDIARY UNDERTAKINGS 
 
The Company owns 100 per cent of the issued share capital of UK Commercial 
Property Estates Holdings Limited (UKCPEHL), a company incorporated in Guernsey 
whose principal business is to hold and manage investment properties for rental 
income. UKCPEHL Limited owns 100 per cent of the issued share capital of UK 
Commercial Property Estates Limited, a company incorporated in Guernsey whose 
principal business is to hold and manage investment properties for rental 
income. UKCPEHL also owns 100% of Brixton Radlett Property Limited and UK 
Commercial Property Estates (Reading) Limited, both are UK companies, whose 
principal business is that of an investment and property company. In addition, 
UKCPEHL owns 100% of the issued share capital of Duke Distribution Centres Sarl 
and Duke Offices & Developments Sarl; both companies are incorporated in 
Luxembourg with the principal business being to hold and manage investment 
properties for rental income. 
 
The Company owns 100 per cent of the issued ordinary share capital of UK 
Commercial Property Finance Holdings Limited (UKCPFHL), a company incorporated 
in Guernsey whose principal business is to hold and manage investment 
properties for rental income. 
 
UKCPFHL owns 100 per cent of the issued share capital of UK Commercial Property 
Nominee Limited, a company incorporated in Guernsey whose principal business is 
that of a nominee company. UKCPFHL owns 100 per cent of the issued ordinary 
share capital of UK Commercial Property Holdings Limited (UKCPHL), a company 
incorporated in Guernsey whose principal business is to hold and manage 
investment properties for rental income. UKCPT Limited Partnership, (LP), is a 
Guernsey limited partnership, whose principal business is to hold and manage 
investment properties for rental income. UKCPHL and GP, have a partnership 
interest of 99 and 1 per cent respectively in the LP. The GP is the general 
partner and UKCPHL is a limited partner of the LP. 
 
In addition, the Group controls three JPUTS namely Junction 27 Retail Unit 
Trust, St George's Leicester Unit Trust and Rotunda Kingston Property Unit 
Trust. The principal business of the Unit Trusts is that of investment in 
property. 
 
As at 31 March 2021, Brixton Radlett Property Limited, UK Commercial Property 
Estates (Reading) Limited, the GP, Nominee and the Limited Partnership were all 
placed in the hands of liquidators as part of a solvent liquidation process and 
the conclusion of this process is due to conclude in the second half of 2022. 
 
During the period the Group successfully completed the voluntary liquidation of 
Kew Retail Park, a JPUT whose principal business prior to liquidation was that 
of investment in property. 
 
12.  POST BALANCE SHEET EVENTS 
 
The Group completed the sale of Colmore Row, Birmingham on 7 July for a 
headline sales price of £26.48m. 
 
On the 10 August 2022 the Company declared a Property Income Distribution of 
0.85p per ordinary share payable in respect of the quarter-ended 30 June 2022 
and a Special Dividend of 1.92p per ordinary share. Both were paid to 
Shareholders on the 31 August 2022. 
 
On the 19 August 2022 the Group increased its revolving credit facility with 
Barclays Bank plc to £180m (Dec 2021: £150m). There were no other amendments to 
the agreement, the facility expires in April 2024 and is cancellable at any 
time. 
 
- For further information please contact: 
 
Will Fulton / Jamie Horton, abrdn 
Via FTI consulting 
 
William Simmonds / Harry Randall, J.P. Morgan Cazenove 
Tel: 020 7742 4000 
 
Richard Sunderland / Claire Turvey / Emily Smart / Andrew Davis, FTI Consulting 
Tel: 020 3727 1000 
UKCM@fticonsulting.com 
 
 
------------ 
 
The Interim Report will be posted to shareholders in October 2022 and 
additional copies will be available from the Manager or by download from the 
Company's webpage (www.ukcpreit.co.uk). 
 
Please note that past performance is not necessarily a guide to the future and 
that the value of investments and the income from them may fall as well as 
rise. Investors may not get back the amount they originally invested. 
 
All enquiries to: 
 
The Company Secretary 
Northern Trust International Fund Administration Services (Guernsey) Limited 
Trafalgar Court 
Les Banques 
St Peter Port 
Guernsey 
GY1 3QL 
Tel: 01481 745001 
 
END OF ANNOUNCEMENT 
 
 
 
END 
 
 

(END) Dow Jones Newswires

September 30, 2022 02:00 ET (06:00 GMT)

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