F&C Commercial Property Trust Ltd - Net Asset Value(s)

To:                 Company Announcements

Date:              8 February 2017

Company:        F&C Commercial Property Trust Limited

Subject:          Net Asset Value

Net Asset Value

The unaudited net asset value (‘NAV’) per share of the Group as at 31 December 2016 was 135.5 pence. This represents an increase of 2.7 per cent from the unaudited NAV per share as at 30 September 2016 of 132.0 pence and a NAV total return for the quarter of 3.8 per cent.

The NAV has been calculated under International Financial Reporting Standards (‘IFRS’). It is based on the external valuation of the Group’s direct property portfolio prepared by CBRE Limited.

The NAV includes all income to 31 December 2016 and is calculated after deduction of all dividends paid prior to that date. As at 31 December 2016 no adjustments were required to the NAV in respect of dividends for which the share price had gone ex-dividend.

Share Price

The share price was 136.4 pence per share at 31 December 2016, which represented a premium of 0.6 per cent to the NAV per share announced above. The share price total return for the quarter was 12.2 per cent.

Analysis of Movement in NAV

The following table provides an analysis of the movement in the unaudited NAV per share for the period from 30 September 2016 to 31 December 2016 (including the effect of gearing):

	£m	Pence per share	% of opening NAV per share
NAV as at 30 September 2016	1,055.4	132.0
Unrealised increase in valuation of property portfolio *	26.8	3.4	2.6
Realised increase in valuation of property portfolio	0.2	-	-
Movement in fair value of interest rate swap	0.8	0.1	0.1
Other net revenue	12.2	1.5	1.1
Dividends paid	(12.0)	(1.5)	(1.1)
NAV as at 31 December 2016	1,083.4	135.5	2.7

* The ungeared increase in the valuation of the property portfolio over the quarter to 31 December 2016 was 2.1%, after allowing for capital expenditure.

The net gearing at 31 December 2016 was 17.2%.#

# Net gearing: (Borrowings – cash) ÷ total assets (less current liabilities and cash).

Performance

The capital value growth of 2.1% over the quarter compares favourably with the IPD Quarterly Index which recorded capital value growth of 1.0% over the same period.

The portfolio structure was beneficial, having no exposure to shopping centres and only one small building in the City of London. The sale of 25 Great Pulteney Street, London W1 and the completion of the commercial units at the redevelopment of 71-77 Wigmore Street, London W1 were both events contributing to a strong quarter. The industrial and logistics sector produced good returns as asset management and a further hardening of capitalisation rates underpinned performance.

Portfolio Analysis – Sector Breakdown

	Market Value £m	% of portfolio as at 31 Dec 2016	% unrealised movement  in quarter
Offices	469.4	35.5	1.0
West End	132.7	10.0	2.6
South East	131.6	10.0	0.6
Rest of UK	186.5	14.1	0.3
City	18.6	1.4	0.9
Retail	382.9	29.0	3.4
South East	382.9	29.0	3.4
Industrial	214.5	16.2	5.1
South East	50.5	3.8	6.9
Rest of UK	164.0	12.4	4.5
Retail Warehouse	218.1	16.5	0.1
Other	37.6	2.8	0.0
Total Property Portfolio	1,322.5	100.0	2.1

Portfolio Analysis – Geographic Breakdown

	Market Value £m	% of portfolio as at 31 Dec 2016	% unrealised movement  in quarter
West End	448.0	33.9	3.5
South East	351.7	26.6	0.9
Scotland	170.2	12.9	0.0
Midlands	164.1	12.4	6.0
North West	142.9	10.8	3.0
Eastern	27.0	2.0	8.1
Rest of London	18.6	1.4	0.9
Total Property Portfolio	1,322.5	100.0	2.1

Top Ten Investments

	Sector
Properties valued in excess of £200 million
London W1, St Christopher’s Place Estate *	Retail
Properties valued between £70 million and £100 million
Newbury, Newbury Retail Park	Retail Warehouse
London SW1, Cassini House, St James’s Street	Office
Properties valued between £50 million and £70 million
Solihull, Sears Retail Park	Retail Warehouse
London SW19, Wimbledon Broadway	Retail
Properties valued between £40 million and £50 million
Uxbridge, 3 The Square, Stockley Park Crawley, Leonardo House, Manor Royal	Office Office
Properties valued between £30 million and £40 million
Winchester, Burma Road	Other
Aberdeen, Unit 2 Prime Four Business Park, Kingswells	Office
Aberdeen, Unit 1 Prime Four Business Park, Kingswells	Office

*Mixed use property of retail, office and residential space.

Summary Balance Sheet

	£m	Pence per share	% of Net Assets
Property Portfolio per Valuation Report	1,322.5	165.4	122.1
Adjustment for lease incentives	(16.5)	(2.1)	(1.5)
Fair Value of Property Portfolio	1306.0	163.3	120.6
Current Debtors	20.9	2.6	1.9
Cash	85.0	10.6	7.8
Current Liabilities	(20.5)	(2.5)	(1.9)
Total Assets (less current liabilities)	1,391.4	174.0	128.4
Interest-bearing loans	(307.3)	(38.4)	(28.3)
Interest rate swap	(0.7)	(0.1)	(0.1)
Net Assets at 31 December 2016	1,083.4	135.5	100.0

Property Purchases and Sales

The Board announced previously that, on 22 December 2016, the Company completed the sale of its Freehold interest in 25 Great Pulteney Street, London W1 for £54.4 million, reflecting a net initial yield of 3.95 per cent. The property comprises a seven-storey building providing high quality, contemporary, Grade A office accommodation and is fully let to four tenants. The sale price compares to the valuation as at 30 September 2016 of £51.2 million.

25 Great Pulteney Street is a property that the Company fully redeveloped, completing in 2011. It was subsequently leased at high rents reflecting the quality of the building. The most recent re- letting achieved a rent of £96.50psf. The disposal crystallises substantial value for the Company, reduces its exposure to Central London and allows capital to be deployed into other opportunities.

Borrowings

The Group’s borrowings consist of a £260 million loan with a term to 31 December 2024 and a fixed interest rate of 3.32 per cent per annum. The Group also has a £50 million bank loan with a term to 21 June 2021 on which the interest rate has been fixed, through an interest rate swap of the same notional value and duration, at 2.522 per cent per annum. In addition the Board has agreed an additional revolving credit facility of £50 million with Barclays over the same period, to be used for ongoing working capital purposes and to provide the Group with the flexibility to acquire further property should the opportunity arise.

The Group’s weighted cost of debt is therefore 3.3 per cent per annum.

Key Information

This statement and further information regarding the Company, including movements in the share price since the end of the period and the Group’s most recent annual and interim reports, can be found at the Company’s website www.fccpt.co.uk.

The next quarterly valuation of the property portfolio will be conducted by CBRE Limited during March 2017 and it is expected that the unaudited NAV per share as at 31 March 2017 will be announced in April 2017.

This announcement contains inside information.

Enquiries:

Richard Kirby
BMO REP Asset Management plc
Tel: [phone]

Graeme Caton
Winterflood Securities Limited
Tel: [phone]

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