UK COMMERCIAL PROPERTY TRUST LIMITED - Net Asset Value(s)

10 October 2016

UK Commercial Property Trust Limited (“UKCPT” or “the Company”)

Net Asset Value at 30 September 2016

UK Commercial Property Trust Limited (LSE: UKCM), the largest Guernsey based, UK focused, London listed commercial property investment company, which is advised by Standard Life Investments, announces its unaudited quarterly Net Asset Value (“NAV”) as at 30 September 2016.

·     NAV per share of 83.7p (30 June 2016: 86.5p), resulting in a NAV total return of -2.2% over the period;

·     Like-for-like portfolio capital value decline of 2.7% during the quarter. This compares favourably to the fall in the IPD Monthly index for just the two months of July and August of 3.4%, highlighting the defensive qualities of the Company’s portfolio;

·     Void rate of 2.7%*, well below the IPD benchmark figure of 6.7%**;

·     Positive leasing activity post the EU referendum delivering sixteen new or renewed leases which secured £1.7m of annual rental income. Transactions of note include;

             ·     A 10 year lease renewal of Craven House, an office building in Soho, London at £1,027,250 per annum, an increase of 37%;
 

             ·     Good tenant progress at the Company’s Shrewsbury shopping centres, generating £232,400 per annum of income from four new leases at - New Look Menswear, Smiggle, The Body Shop and Yours Clothing;
 

             ·     A 10 year lease renewal within 9 Colmore Row, an office building in Birmingham, at £105,150 per annum, an increase of 15%;

·     Strong financial resources with £112 million cash as at 30 September of which £70 million is available for investment after allowing for dividend and capital expenditure commitments. Additional cash in the form of a £50 million revolving credit facility is available;

·     Low net gearing of 11.2%*** (gross gearing of 18.7%***) remaining one of the lowest in the Company’s peer group and also the quoted REIT sector;

·     Attractive dividend yield of 4.7%*, which compares favourably to the FTSE All-Share Index (3.5%*) and FTSE REIT Index (3.6%*).

*30 September 2016

** 30 June 2016

*** Net gearing - Gross borrowing less cash divided by total assets (excluding cash) less current liabilities

        Gross gearing - Gross borrowings divided by total assets less current liabilities

Andrew Wilson, Chairman of UKCPT commented: “Whilst any fall in value is disappointing, it is at such times that the Company’s strong income component shows its value. It is also pleasing to see the combination of successful asset management and UKCPT’s strong defensive characteristics provide a brake on capital change when compared to the IPD index while still delivering an attractive income yield.”

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 1 July 2016 to 30 September 2016.

UK Commercial Property Trust Limited	Per  Share (p)	Attributable Assets (£m)	Comment
Net assets as at 1 July 2016	86.5	1,124.6
Unrealised increase in valuation of property portfolio	-2.6	-33.7	Like for like decrease of 2.7% in property portfolio
Capital expenditure during the period	-0.1	-1.4	Principally relates to costs associated with ongoing work at Shrewsbury to deliver the Primark store.
Income earned for the period	1.3	16.2	Dividend cover of 90% for the nine months to 30 Sep 16 with £70m still available for investment. For the quarter, dividend cover was 81% following the sale of Arlington Street and Dolphin House and a revenue deduction attributable to the BHS administration which will not recur.
Expenses for the period	-0.5	-6.5
Dividend paid on 31 August 2016	-0.9	-12.0
Interest rate swaps mark to market revaluation	0.0	0.0	Marginal increase in swap liabilities (£50k)as interest rates continue to fall
Net assets as at 30 Sep 2016	83.7	1,087.2

The NAV per share is based on the external valuation of the Company’s direct property portfolio. It includes all current period income and is calculated after the deduction of all dividends paid prior to 30 September 2016. It does not include provision for any unpaid dividends relating to periods prior to 30 September 2016, i.e. the proposed dividend for the period to 30 September 2016.

The NAV per share at 30 September 2016 is based on 1,299,412,465 shares of 25p each, being the total number of shares in issue at that time.

The EPRA NAV per share (excluding swap liability) is 84.1p (Jun 2016 – 87.0p).

Sector Analysis

	Portfolio Value as at 30 Sep 2016 (£m)	Exposure as at 30 Sep 2016 (%)	Like for Like Capital Value Shift (excl sales & purchases)	Capital Value Shift (including transactions)     (£m)
			(%)
Valuation as of 30 Jun 2016				1,282.4
Retail	440.8	35.3	-4.5	-20.8
High St – South East		3.0	-1.5	-0.6
High St- Rest of UK		2.7	-1.7	-0.6
Shopping Centres		7.3	-9.3	-9.4
Retail Warehouse		22.3	-3.5	-10.2
Offices	285.8	22.9	-3.8	-11.3
City		2.2	-5.2	-1.5
West End		8.8	-5.8	-6.7
South East		1.7	-4.1	-0.9
Rest of UK		10.2	-1.7	-2.2
Industrial	395.9	31.7	-0.1	-0.5
South East		23.2	-0.2	-0.5
Rest of UK		8.5	0.0	0.0
Leisure/Other	125.9	10.1	-1.1	-1.4
External valuation at 30 Sep	1,248.4	100.0	-2.7	1,248.4

Whilst uncertainty has diminished over the quarter, CBRE Ltd continue to include a diluted “market conditions” caveat in the vast majority of the valuations they undertook as at 30 September 2016. This caveat is as follows:

“Following the Referendum held on 23 June 2016 concerning the UK’s membership of the EU, a decision was taken to exit.  Since that date we have monitored market transactions and market sentiment in arriving at our opinion of Market Value/Fair Value.  After an initial period of uncertainty and an absence of activity, transactional volumes and available evidence has risen in most sectors of the market and liquidity is returning to more normal levels.  This has led to a generally more stable outlook for the market.   However, there remains a paucity of comparable transactions in central London offices, development land and buildings, retail parks and large shopping centres and therefore valuations in these sectors reflect a greater degree of judgement.”

For further information please contact:

Will Fulton / Graeme McDonald, Standard Life Investments
Tel: [phone]

Edward Gibson-Watt / Oliver Kenyon, J.P. Morgan Cazenove
Tel: [phone]

Richard Sunderland / Claire Turvey / Clare Glynn, FTI Consulting
Tel: [phone]

The above information is unaudited and has been calculated by Standard Life Investments Limited.

Copyright er 7 PR Newswire