TIDMUKCM
10 May 2023
UK Commercial Property REIT Limited ("UKCM" or "the Company")
Net Asset Value at 31 March 2023
MARGINAL VALUATION INCREASES POINT TO PORTFOLIO STABILISATION WHILE LEASING
MOMENTUM REMAINS STRONG
10 May 2023: UK Commercial Property REIT Limited ("UKCM" or the "Company") (FTSE
250, LSE: UKCM), which owns a £1.32 billion portfolio of high quality and
diversified real estate across the UK today provides a net asset value ("NAV")
and trading update for the first quarter of 2023.
Highlights
· EPRA earnings per share steady at 0.81p (31 December 2022: 0.82p) for the
quarter;
· 0.9% increase in like-for-like portfolio capital value, net of capital
expenditure, to £1.32billion, reflecting a stabilisation for the Company's
portfolio and comparing favourably to the MSCI UK Monthly Property Index where
capital values fell by -1.2% over the quarter;
· Unaudited NAV per share of 80.6p (31 December 2022: 79.7p) a NAV increase of
1.1% and a NAV total return for the quarter of 2.2% (Q4: -20.8%);
· Dividend maintained at 0.85p per share for the first quarter, payable 31 May
2023, which was substantially covered at 95% for the quarter;
· Rent collection normalised at 99% for rents due in the second quarter;
portfolio occupancy also high at 98%;
· The Company benefits from relatively low and prudent gearing at 20.0% group
loan to value* and a current blended interest cost of 3.93% per annum, of which
68% is at a fixed rate. All covenants covered.
* Calculated, under AIC guidance, as gross borrowings less cash divided by
portfolio value.
Ken McCullagh, Chair of UKCM, commented: "After a rerating of the UK commercial
real estate sector in the final quarter of last year, as a result of a dramatic
increase in interest rates as governments tried to stem inflation, there has
been a period of stabilisation in the first quarter of 2023. During the period,
the Company has continued its asset management initiatives to drive earnings.
These factors have led to a marginal increase in the value of UK Commercial
Property REIT's high-quality, diversified portfolio, which is also reflected in
the small increase to NAV. I am also encouraged by the continued strong
operational performance across the portfolio which has benefited from high
occupancy, strong demand led leasing momentum and, in turn, rental growth. The
Company's balance sheet remains robust with low leverage and ample resources to
complete our development pipeline. While we remain aware of the uncertainty
that still prevails in the market, this more positive broader outlook and the
Company's healthy first quarter performance gives us further confidence about
the future prospects for the Company."
Will Fulton, Lead Manager of UKCM at abrdn, said: "During the first quarter of
the year we have continued to see strong occupational demand for the limited
amount of space we have available to let across our portfolio, allowing us to
maintain high occupancy at 98% and capture significant reversion. While our
industrial assets were the biggest driver of rental growth, encouragingly we saw
positive leasing activity and uplifts at renewal across our office and retail
warehouse assets as well. The final phase of our student accommodation
development completed during the period, with a rent guarantee for the first
year and bookings already strong for the next academic year. Our development
pipeline will add further rent as the new properties come on line in the months
ahead. With valuations having stabilised during the quarter, we are starting to
see anecdotal evidence that the investment markets are beginning to open up
which should help provide further confidence to the market."
Asset management delivering rental growth potential and high occupancy
The Company has maintained a very low void rate of 2.0% which provides good
visibility of future income and clearly demonstrates both the quality of the
Company's portfolio and the asset management team's ability to retain income
while focusing on capturing reversionary potential.
Continued strong leasing momentum in the investment portfolio during the last
quarter including:
As previously disclosed, at Ventura Park, Radlett, the 31,803 sq ft Unit B was
let to Aerospace Reliance Ltd, which supplies aircraft maintenance materials
worldwide, at a rent of £558,025 per annum (£17.55psf pa). The tenant has
entered into a 10 year lease, with a tenant only break option in year 5. A seven
month lease incentive was provided as the tenant accepted the unit in its
current condition without the need for any Landlord works or additional capital
contribution.
Unit 7, also at Ventura Park Radlett and previously disclosed, has been let to
Location Collective Ltd, a Film & Media Production Company at a rent of
£1,455,880 per annum (£17psf pa). The property has an area of 85,640 sq ft and
the tenant has entered into a 15 year lease with a mutual break in year 12. An
incentive of twelve months rent free has been provided to the tenant.
Demonstrating the ability to drive rental income and capture reversion in the
portfolio, these two new leases equate to a 69% increase on the previous rent
paid and are 63% ahead of December 2021's ERV; they leave Ventura Park with a
low 6% available in which the Company has good interest .
At Trafford Retail Park, Manchester, a lease renewal was completed with Kentucky
Fried Chicken, which occupies the 2,388 sq ft unit 4 at the Park, for a new 20
year lease term with a tenant only break option at the end of year 15. A six
month rent free period was provided, with a new headline rent of £83,580 per
annum (£35psf pa), reflecting a 17% increase in passing rent and a 9% premium to
ERV.
Unit 11, Emerald Park, Bristol has been let to South West Ambulance Service on a
10 year lease without break. A rent of £92,022 per annum (£10.50psf pa) has been
agreed over the 8,764 sq ft unit with a lease incentive of nine months' rent
free. The new rent is 21% ahead of the previous passing rent and is also ahead
of ERV.
Webcon, a supplier of car parts, has agreed a five-year lease renewal for the
c.10,000 sq ft Unit 1 at Dolphin Industrial Estate in Sunbury-on-Thames, Surrey.
The new lease increases annual rental income on the unit by 63% to £155,000, or
4% ahead of ERV as at the December 2022 valuation and includes a three-month
rent-free period.
These three new leases were achieved at a combined weighted premium of 40% to
previous passing rent.
Also, at Gatwick Gate, Crawley, a 12 month extension over Unit 2B was agreed
with Airbase at a rent of £13.50 per sq ft, equating to £330,000 per annum,
increased from £11.50 per sq ft. This is a significant rental increase and
improves the Estate's rental tone.
Finally, three rent reviews, a mix of open market review, index-linkage, and a
stepped increase, have been completed at the Dolphin Industrial Estate, Sunbury
-on-Thames, the Centrum logistics warehouse at Burton-upon-Trent, and the White
Building office in Reading, increasing income by £214,000 representing a
weighted 11% uplift on the previous rent and in line with ERV.
Progress continues to be made in the Company's development pipeline:
· The Company achieved practical completion of its 107,00 sq ft industrial
development, Sussex Junction, in Bolney. Of the three units, two are pre-let to
geological services company CGG on a 15 year lease at an annual rent of £780,875
pa and the third unit of 46,500 sq ft is currently under offer to another
tenant. The development has a BREEAM 'Very Good' rating for its shell and core
with an EPC rating of A.
· The Company's 226 room student housing development at Glenthorne Road in
Exeter also completed during Q1. The asset is let directly to students however
UKCM benefits from guaranteed Year 1 income of £1,650,000. There is strong
letting momentum for the 2023/2024 Academic year already. The development has an
EPC rating of B, benefits from PV solar panels on the roof, and is targeting a
BREEAM `Very Good' rating, all of which appeal to the modern environmentally
conscious student.
· The small industrial development on land already owned at Precision Park,
Leamington Spa, is expected to complete in May 2023 where there is good leasing
interest.
· Work continues at the Company's Hyatt Hotel in Leeds which is expected to
complete in Summer 2024.
Strong balance sheet with significant covenant headroom and flexibility
Robust balance sheet with low gearing and financial resources of £44.4 million
available after allowing for future capital commitments and the May 2023
dividend.
The Company has three debt facilities in place with all covenants well covered
and an additional £437 million of unencumbered property which provides further
significant headroom and flexibility with respect to the Company's covenant
package. The current blended interest rate is 3.93% per annum on drawn debt of
which 68% is at a fixed rate.
The Company adopts a prudent approach to debt which allows it to benefit from
relatively low gearing with a group loan to value of 20.0%*, as calculated using
AIC methodology, and 21.3% ** as calculated using Gross Assets methodology, as
at 31 March 2023.
The Company has a remaining pipeline of two high quality developments due to
complete, one in the coming weeks and one in 2024, which will add further long
-term income to the Group's rent roll. It is intended that the c.£52 million of
remaining development commitments will be funded through existing borrowings
which will move gearing to approximately 24.3%***, based on the assumption that
development valuations change in line with project expenditure. As previously
intimated it is reasonably foreseeable that the economic and investment climate,
with its market wide impact on valuations, or potentially opportunities arising
from this, could take gearing slightly above, over the medium term, the Board's
target level of gearing of 25%. The Board, with the investment manager, will
continue to ensure that borrowings are controlled and managed effectively taking
into account the Company's development plans.
* Calculated, under AIC guidance, as gross borrowings less cash divided by
portfolio value
**calculated as (Current Borrowings £293m / Gross Assets £1,368m).
***calculated as (Current Borrowings £293m + Development Commitments £51.7m) /
(Gross Assets £1,368m + Development Commitments £51.7m).
Rent Collection
Rent collection rates have normalised with 99% of second quarter rents already
received allowing for those tenants who have paid, by agreement, on a monthly
basis.
The Company has a diverse tenant mix of quality occupiers, the largest five of
which comprise resilient businesses such as Ocado (5.7% of rent), Public Sector
(5.1%), Amazon (4.0%), Armstrong Logistics (3.5%) and Total (3.1%). In total
the portfolio's income is secured from 199 tenancies.
Dividends
The first quarter dividend has been maintained at 0.85p per share and is payable
31 May 2023, giving dividend cover of 95%.
Breakdown of NAV movement
Set out below is a breakdown of the change to the unaudited net asset value per
share calculated under International Financial Reporting Standards ("IFRS") over
the period from 31 December 2022 to 31 March 2023:
+---------------------------+-----+------------+----------------------------+
|UK Commercial Property REIT|Per |Attributable|Comment |
|Limited |Share|Assets (£m) | |
| |(p) | | |
+---------------------------+-----+------------+----------------------------+
|Net assets as at 31 |79.7 |1,035.7 | |
|December 2022 | | | |
+---------------------------+-----+------------+----------------------------+
|Unrealised increase in |1.2 |15.9 | |
|valuation of property | | | |
|portfolio | | | |
+---------------------------+-----+------------+----------------------------+
|Capex |-0.3 |-4.3 |Primarily relates to ongoing|
| | | |development capex for the |
| | | |student accommodation at |
| | | |Exeter, the industrial units|
| | | |at Sussex Junction and |
| | | |Leamington Spa and the hotel|
| | | |in Leeds. |
+---------------------------+-----+------------+----------------------------+
|Income earned for the |1.4 |17.7 |Equates to dividend cover of|
|period | | |95%. |
+---------------------------+-----+------------+----------------------------+
|Expenses for the period |-0.6 |-7.2 |
+---------------------------+-----+------------+----------------------------+
|Dividend paid in February |-0.8 |-11.0 |
|2023 | | |
+---------------------------+-----+------------+----------------------------+
|Net assets as at 31 March |80.6 |1,046.8 | |
|2023 | | | |
+---------------------------+-----+------------+----------------------------+
The EPRA Net Tangible Assets per share is 80.6p (31 December 2022: 79.7p) with
EPRA earnings per share for the quarter being 0.81p (31 December 2022: 0.82p).
Sector Analysis
+-------------+---------+--------+----------+-------------------+
| |Portfolio|Exposure|Like for |Capital Value Shift|
| |Value as |as at |Like |(including sales & |
| |at 31 |31 March|Capital |purchases & |
| |March 23 |23 (%) |Value |development |
| |(£m) | |Shift (net|spend) (£m) |
| | | |of | |
| | | |CAPEX) | |
+-------------+---------+--------+----------+-------------------+
| |(%) |
+-------------+---------+--------+----------+-------------------+
|Valuation as | | | |1,308.0 |
|at 31 Dec 22 | | | | |
+-------------+---------+--------+----------+-------------------+
| | | | | |
+-------------+---------+--------+----------+-------------------+
|Industrial |789.7 |59.7 |2.1 |16.3 |
+-------------+---------+--------+----------+-------------------+
|South East | |36.2 |2.3 |11.0 |
+-------------+---------+--------+----------+-------------------+
|Rest of UK | |23.5 |1.3 |5.3 |
+-------------+---------+--------+----------+-------------------+
| | | | | |
+-------------+---------+--------+----------+-------------------+
|Retail |183.9 |13.9 |1.9 |3.6 |
+-------------+---------+--------+----------+-------------------+
|High St - | |0.9 |0.0 |0.0 |
|South East | | | | |
+-------------+---------+--------+----------+-------------------+
|High St- Rest| |1.2 |-4.3 |-0.7 |
|of UK | | | | |
+-------------+---------+--------+----------+-------------------+
|Retail | |11.8 |2.8 |4.3 |
|Warehouse | | | | |
+-------------+---------+--------+----------+-------------------+
| | | | | |
+-------------+---------+--------+----------+-------------------+
|Offices |167.2 |12.6 |-2.4 |-4.0 |
+-------------+---------+--------+----------+-------------------+
|West End | |1.9 |0.2 |0.1 |
+-------------+---------+--------+----------+-------------------+
|South East | |5.0 |-1.8 |-1.3 |
+-------------+---------+--------+----------+-------------------+
|Rest of UK | |5.7 |-3.6 |-2.8 |
+-------------+---------+--------+----------+-------------------+
| | | | | |
+-------------+---------+--------+----------+-------------------+
|Alternatives |183.1 |13.8 |-1.3 |0.0 |
+-------------+---------+--------+----------+-------------------+
|Leisure | |5.7 |-5.4 |4.3 |
+-------------+---------+--------+----------+-------------------+
|Student | |4.4 |3.1 |1.9 |
|Accommodation| | | | |
+-------------+---------+--------+----------+-------------------+
|Hotels | |3.7 |0.4 |2.5 |
+-------------+---------+--------+----------+-------------------+
| | | | | |
+-------------+---------+--------+----------+-------------------+
|Valuation as |1,323.9 |100.0 |0.9 |1,323.9 |
|at 31 Mar 23 | | | | |
+-------------+---------+--------+----------+-------------------+
Top Ten Investments Sector
+------------------------------------------------------+----------------+
|Properties valued in excess of £100 million | |
+------------------------------------------------------+----------------+
|Ventura Park, Radlett |Industrial |
+------------------------------------------------------+----------------+
|Properties valued between £50 million and £100 million| |
+------------------------------------------------------+----------------+
|Ocado Warehouse, Hatfield |Industrial |
+------------------------------------------------------+----------------+
|Hannah Close, Neasden, London |Industrial |
+------------------------------------------------------+----------------+
|Dolphin Industrial Estate, Sunbury-on-Thames, London |Industrial |
+------------------------------------------------------+----------------+
|Newton's Court, Dartford |Industrial |
+------------------------------------------------------+----------------+
|Junction 27 Retail Park, Leeds |Retail Warehouse|
+------------------------------------------------------+----------------+
|Properties valued between £25 million and £50 million | |
+------------------------------------------------------+----------------+
|XDock 377, Lutterworth |Industrial |
+------------------------------------------------------+----------------+
|The Rotunda, Kingston on Thames |Alternatives |
+------------------------------------------------------+----------------+
|Emerald Park, Bristol |Industrial |
+------------------------------------------------------+----------------+
|Trafford Retail Park, Manchester |Retail Warehouse|
+------------------------------------------------------+----------------+
The independent valuation as at 31 March 2023 was carried out by CBRE Ltd.
Net Asset Value analysis as at 31 March 2023 (unaudited)
+------------------------------------+---------+---------------+
| | £m|% of net assets|
+------------------------------------+---------+---------------+
|Industrial |789.7 |75.4% |
+------------------------------------+---------+---------------+
|Retail |183.9 |17.6% |
+------------------------------------+---------+---------------+
|Offices |167.2 |16.0% |
+------------------------------------+---------+---------------+
|Alternatives |183.1 |17.5% |
+------------------------------------+---------+---------------+
|Total Property Portfolio |1,323.9 |126.5% |
+------------------------------------+---------+---------------+
|Adjustment for lease incentives |-32.4 |-3.1% |
+------------------------------------+---------+---------------+
|Fair value of Property Portfolio |1,291.5 |123.4% |
+------------------------------------+---------+---------------+
|Cash |28.4 |2.7% |
+------------------------------------+---------+---------------+
|Other Assets |47.6 |4.5% |
+------------------------------------+---------+---------------+
|Total Assets |1,367.5 |130.6% |
+------------------------------------+---------+---------------+
|Current liabilities |-29.3 |-2.8% |
+------------------------------------+---------+---------------+
|Non-current liabilities (bank loans)|-291.4 |-27.8% |
+------------------------------------+---------+---------------+
|Total Net Assets |1,046.8 |100.0% |
+------------------------------------+---------+---------------+
The NAV per share is based on the external valuation of the Company's direct
property portfolio as at 31 March 2023. It includes all current period income
and is calculated after the deduction of all dividends paid prior to 31 March
2023.
The NAV per share at 31 March 2023 is based on 1,299,412,465 shares of 25p each,
being the total number of shares in issue at that time.
The Board is not aware of any other significant events or transactions which
have occurred between 31 March 2023 and the date of publication of this
statement which would have a material impact on the financial position of the
Company.
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014. Upon the publication of this announcement via Regulatory
Information Service this inside information is now considered to be in the
public domain.
Details of the Company may also be found on the Company's website which can be
found at: www.ukcpreit.com
For further information please contact:
Will Fulton / Jamie Horton, abrdn
Tel: 0131 528 4261
William Simmonds, J.P. Morgan Cazenove
Tel: 020 7742 4000
Richard Sunderland / Andrew Davis / Emily Smart, FTI Consulting
Tel: 020 3727 1000
UKCM@fticonsulting.com
The above information is unaudited and has been calculated by abrdn Fund
Managers Limited.
This information was brought to you by Cision http://news.cision.com
END
(END) Dow Jones Newswires
May 10, 2023 02:00 ET (06:00 GMT)
Uk Commercial Property R... (LSE:UKCM)
Gráfico Histórico do Ativo
De Ago 2023 até Set 2023
Uk Commercial Property R... (LSE:UKCM)
Gráfico Histórico do Ativo
De Set 2022 até Set 2023
