F&C UK Real Estate Investments Ltd - Net Asset Value(s)

To:                   Company Announcements

Date:                31 January 2019

Company:        F&C UK Real Estate Investments Limited

LEI:                  231801XRCB89W6XTR23

Subject:           Net Asset Value

Net Asset Value

The unaudited net asset value per share of F&C UK Real Estate Investments Limited (“FCRE”) as at 31 December 2018 was 106.0 pence. This represents a decrease of 1.2 per cent from the net asset value per share as at 30 September 2018 of 107.3 pence and a NAV total return for the quarter of -0.1 per cent

The net asset value is based on the external valuation of the Group's property portfolio prepared by Cushman & Wakefield.

The net asset value is calculated under International Financial Reporting Standards ("IFRS").

The net asset value includes all income to 31 December 2018 and is calculated after deduction of all dividends paid prior to that date.  It does not include a provision for the dividend for the quarter to 31 December 2018, which is expected to be paid in March 2019.

Share Price

The share price was 92.2 pence per share at 31 December 2018, which represented a discount of 13.0 per cent to the NAV per share announced above. The share price total return for the quarter was -2.1 per cent.

Breakdown of NAV movement

Set out below is a breakdown of the change to the unaudited net asset value per share calculated under IFRS over the period from 30 September 2018 to 31 December 2018.

	Pence per share	% of opening NAV
Net asset value per share as at 30 September 2018	107.3
Unrealised movement in valuation of property portfolio (including the effect of gearing)	(1.3)	(1.2)*
Movement in revenue reserves	-	-
Net asset value per share as at 31 December 2018	106.0	(1.2)

* The un-geared decrease in the valuation of the property portfolio over the quarter to 31 December 2018 was 0.9%.

The net gearing as at 31 December 2018 was 26.3% #

# Bank debt (less net current assets) divided by fair value of investment properties

Performance

The capital value of the portfolio decreased by 0.9 per cent over the quarter, compared to the 0.2 per cent fall in the MSCI UK Monthly Index over the same period. The retail market remains under pressure with the vast majority of subsectors experiencing falls in valuation over the quarter, reflecting both ongoing challenges within the occupier markets and weak investor sentiment.  The All Retail index recorded capital falls of 3.3 per cent at the market level over the quarter. While the Company does not hold any shopping centres or department stores, this impact was felt across the High Street portfolio with a 3.2 per cent fall in values. The decrease in value in the portfolio’s retail warehouse assets of 1.5 per cent was primarily attributable to the property at Northfields, Rotherham, let to Homebase which has been subject to a CVA.

The positive capital return derived from the portfolio’s Rest of UK Office segment was as a result of successful asset management initiatives at the property at Standard Hill, Nottingham.  38 per cent of the portfolio comprises Industrial assets located within the south east. These assets experienced capital growth over the period of 0.6 per cent.

At the period end the portfolio void rate was 4.0 per cent by ERV and the average weighted unexpired lease term was 6.1 years.

Portfolio Analysis	£m	% of portfolio as at 31 December 2018	% capital value movement  in quarter
Offices	89.0	25.6	(1.0)
West End	28.2	8.1	-
South East	28.2	8.1	(3.6)
Rest of UK	32.6	9.4	0.5
Industrial	132.6	38.2	0.6
South East	132.6	38.2	0.6
Standard Retail	55.9	16.1	(3.2)
West End	8.4	2.4	-
Rest of London	3.3	0.9	(4.3)
South East	17.3	5.0	(1.4)
Rest of UK	26.9	7.8	(5.1)
Retail Warehouse	69.8	20.1	(1.5)
Rest of UK	60.1	17.3	(2.1)
Rest of London	9.7	2.8	2.6
Total Property	347.3	100.0	(0.9)

Property Purchases and Sales

There were no sales or purchases in the quarter.

Summary Balance Sheet

	£m	Pence per share	% of Net Assets
Property Portfolio per Valuation Report	347.3	144.3	136.1
Adjustment for lease incentives	(4.2)	(1.7)	(1.6)
Fair Value of Property Portfolio	343.1	142.6	134.5
Cash	9.4	3.9	3.7
Trade and other receivables	5.7	2.4	2.3
Trade and other payables	(6.7)	(2.8)	(2.7)
Interest-bearing loans	(96.4)	(40.1)	(37.8)
Net Assets at 31 December 2018	255.1	106.0	100.0

The property portfolio will next be valued by an external valuer during March 2019 and the net asset value per share as at 31 March 2019 will be announced in April 2019.

This announcement contains inside information.

Enquiries:
The Company Secretary
Northern Trust International Fund Administration Services (Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Tel: [phone]
Fax: [phone]

Peter Lowe
Scott Macrae
F&C Investment Business Ltd
Tel: [phone]
Fax: [phone]
 

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