CT Property Trust Limited Trading Update and Net Asset Value

 
TIDMCTPT 
 
To:                   Company Announcements 
Date:                2 February 2023 
Company:        CT Property Trust Limited 
LEI:                  231801XRCB89W6XTR23 
 
Subject:           Trading Update and Net Asset Value 
 
 
Headlines 
 
  * NAV per share of 95.4 pence and Net Asset Value total return of -21.0 per 
    cent for the quarter ended 31 December 2022. 
  * Share Price total return of -11.2 per cent for the quarter ended 31 
    December 2022 (68.6 pence per share). 
  * Portfolio capital value decrease of 18.4 per cent on a like-for-like basis. 
  * As of 31 December 2022, the portfolio void rate was 2.9 per cent by 
    estimated rental value. 
  * Rent collection rates continue at pre-pandemic levels receiving 99.9 per 
    cent for Q4 2022 and 99.9 per cent for 2022 as a whole. 
  * £90 million term loan at a fixed rate of 3.36 per cent until November 2026. 
    Cash reserves of £32.3 million and access to a rolling credit facility of £ 
    20 million which is currently undrawn. 
  * Quarterly dividend maintained at 1.0p per share, paid on 30 December 2022. 
 
Net Asset Value ('NAV') 
 
The unaudited NAV per share of CT Property Trust Limited ('CTPT') as at 31 
December 2022 was 95.4 pence. This represents a decrease of 21.8 per cent from 
the NAV per share as at 30 September 2022 of 122.0 pence and a NAV total return 
for the quarter of -21.0 per cent. 
 
The NAV is based on the external valuation of the Company's property portfolio 
prepared by Cushman & Wakefield. 
 
The NAV is calculated under International Financial Reporting Standards 
("IFRS"). 
 
The NAV includes all income to 31 December 2022 and is calculated after the 
deduction of all dividends paid prior to that date. 
 
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 2022 to 31 
December 2022. 
 
                                                                  Pence      % of 
                                                                    per   opening 
                                                                  share       NAV 
 
Net asset value per share as at 30 September 2022                 122.0 
 
Unrealised movement in valuation of property portfolio           (27.3)   (22.3)* 
(including the effect of gearing) 
 
Share buy-backs                                                     0.3       0.2 
 
Net revenue                                                         1.4       1.1 
 
Dividends paid                                                    (1.0)     (0.8) 
 
Net asset value per share as at 31 December 2022                   95.4    (21.8) 
 
* The un-geared unrealised capital return of portfolio over the quarter to 31 
December 2022 was -18.4 per cent. 
 
 
Matthew Howard, Fund Manager, CT Property Trust, commented: 
 
The rapid repricing of the wider UK real estate market means that Q4 2022 is 
one of the most significant quarters for capital value declines on record. The 
pace of change has been determined by a concentration of events. Wider UK 
economic pressures and a highly inflationary environment saw the Bank of 
England base rate and gilt yields rise from the historic and sustained lows of 
recent years. This has placed upward pressure on yields for UK commercial 
property, which has been compounded by the increased cost and lower 
availability of debt and some areas of distressed selling. Against this 
backdrop, the autumn was a period of 'pricing discovery' across commercial 
markets, although towards the end of the year we did see an uptick in 
transactional activity on quality assets. 
 
The industrial and retail warehousing sectors suffered the sharpest falls in 
value, as the significant and sustained yield compression of recent periods was 
partly reversed. We remain confident in our conviction positions towards the 
industrial and retail warehouse sectors (combined representing 77.5 per cent of 
the portfolio by value), where we hold a zero void rate against both sectors 
and continue to capture the in-built reversionary income growth at lease 
events, demonstrating their strong underlying occupational markets. 
 
The Company's wider portfolio continued to deliver positive occupier activity, 
represented by the low overall portfolio vacancy of 2.9 per cent (by estimated 
rental value) following the letting at Bracknell. The continued good 
occupational news across all sectors, including our offices in High Wycombe and 
retail in Sunningdale outlined below, speaks to the strong underlying 
fundamentals of the Company's assets. 
 
Our long-term focus on resilient locations, smaller assets and active 
management will be of increased importance this year as occupiers navigate 
inflationary pressures and a consumer credit squeeze. 
 
As we enter 2023, we expect to see continued pricing pressure in parts of the 
commercial real estate market. An outcome of cyclical downturns is the 
opportunity to acquire quality assets that offer attractive pricing on a 
long-term basis. The Company maintains a conservative level of debt and our 
current cash position offers the potential to invest in new assets to enhance 
Company income where and when we see value. 
 
Portfolio Performance 
 
The capital value of the Company's portfolio fell by 18.4 per cent over the 
quarter, with valuation movements dominated by market yield adjustments. The 
vacancy rate across the portfolio fell from 5.4 per cent by estimated rental 
value to 2.9 per cent, driven primarily by the letting at Unit 1 Network, 
Bracknell. The weighted average unexpired lease term, assuming all break 
options are exercised, fell slightly from 6.3 years to 6.2 years. 
 
Industrial 
 
The Company's industrial assets saw a decline in value of 21.3 per cent over 
the quarter. This correction comes despite the sector's strong occupational 
market and continued rental growth. Unit 1 Network, Bracknell, which had become 
vacant in September 2022, was let during the quarter reflecting a 47 per cent 
uplift from the previous passing rent. We also agreed terms for two outstanding 
rent reviews at Lakeside Logistics Centre near Heathrow, which will show 
material increases to previous passing rents once concluded. The current 
vacancy within the industrial portfolio is zero and there are several near-term 
lease events where we expect to enhance income. 
 
Retail Warehousing 
 
The capital value of Company's retail warehousing assets fell by 15.3 per cent 
over the quarter, which again was driven by a market level yield adjustment. 
The portfolio remains fully occupied and is characterised by 'essential 
retailers' and discount-led occupiers let at sustainable rental levels. 
Exposure to this occupier base has been part of the long-term strategy for the 
Company, which is less sensitive to challenges in consumer spend and disposable 
income. 
 
High Street Retail 
 
Although the Company's high street retail assets saw capital value decline of 
8.0 per cent over the quarter, the in-town retail sector has benefitted from a 
relative yield defence following a number of years of previous yield 
decompression. Our exposure is fairly limited at 6.4 per cent of the portfolio 
by value but the neighbourhood and convenience focussed portfolio has been 
accretive to portfolio income and remains near fully occupied. Over the 
quarter, two lease renewals were concluded at the neighbourhood scheme at 
Chobham Road, Sunningdale. The renewals were delivered at a premium of 2 per 
cent above estimated rental value on 5-year terms. 
 
Offices 
 
The portfolio's office assets saw valuation falls of 15.3 per cent over the 
quarter, which was also predominantly driven by market yield adjustments. There 
is an increasing focus on the ESG credentials of offices, with valuers becoming 
more sensitive to potential cap-ex requirements. Companies with established and 
robust ESG agendas, that have been positioning their portfolios for the long 
term, are well placed in this evolving environment. The occupational market for 
good quality space remains strong, as illustrated by the November letting of 
two floors of offices at Glory Park in High Wycombe. The incumbent occupier 
lease was surrendered for a premium and the floors immediately relet at a 
similar rental tone to a new occupier on a 10-year lease, with a break option 
after 5 years. 
 
Investment Activity 
 
No sales or purchases concluded over the quarter. 
 
 
ESG 
 
We were pleased to retain both our GRESB two-star rating and EPRA Gold Award 
for sustainability disclosures, demonstrating the continued progress with our 
ESG strategy. Towards the end of 2022 we completed a programme of individual 
Net Zero Carbon (NZC) surveys for all assets and have made good progress with 
our portfolio level analysis, working alongside our retained advisors. Having 
taken the decision to complete these surveys in advance of our announcing our 
targets, the Company will soon be in a position to release its NZC pathway. 
 
Cash and Borrowings 
 
As at 31 December 2022, the Company had approximately £32.3 million of 
available cash and an undrawn revolving credit facility of £20 million. The £90 
million long-term debt with Canada Life and the £20 million revolving credit 
loan facility with Barclays (which is undrawn) do not need to be refinanced 
until November 2026 and March 2025 respectively. As at 31 December 2022, the 
LTV (net of cash) was 22.7 per cent. 
 
Share Price 
 
The share price was 68.6 pence per share as at 31 December 2022, which 
represented a discount of 28.1 per cent to the NAV per share announced above. 
The share price total return for the quarter was -11.2 per cent. 
 
Share Buybacks 
 
The Company purchased 2,475,000 ordinary shares during the quarter. As at 31 
December 2022 the Company had 8,575,000 shares held in treasury (3.7 per cent 
of ordinary shares in issue), acquired at an average discount to NAV of 37.9 
per cent. 
 
Dividend 
 
On 29 November 2022, the Company announced a quarterly dividend payment of 1.0 

pence per ordinary share in respect of the financial year ended 30 June 2023, 
which was paid to shareholders on 30 December 2022. The Board will continue to 
monitor rental receipts and earnings closely and keep the future level of 
dividends under review. 
 
 
Portfolio Analysis 
 
                                                        £m          % of   % capital 
                                                            portfolio as       value 
                                                                   at 31   movement 
                                                           December 2022  in quarter 
 
Offices                                               46.1          16.1      (15.3) 
 
·      South East                                     26.4           9.2      (16.1) 
 
·      Rest of UK                                     19.7           6.9      (14.2) 
 
Industrial, logistics and distribution               160.0          56.0      (21.3) 
 
·      South East                                    160.0          56.0      (21.3) 
 
Standard Retail                                       18.4           6.4       (8.0) 
 
·      West End                                        5.8           2.0       (9.8) 
 
·      Rest of London                                  1.2           0.4       (6.0) 
 
·      South East                                      8.2           2.9       (7.9) 
 
·      Rest of UK                                      3.2           1.1       (5.9) 
 
Retail Warehouse                                      61.5          21.5      (15.3) 
 
Total Property                                       286.0         100.0      (18.4) 
 
 
Summary Balance Sheet 
 
                                                              £m    Pence % of Net 
                                                                      per   Assets 
                                                                    share 
 
Property Portfolio per Valuation Report                    286.0    123.2    129.2 
 
Adjustment for lease incentives                            (4.1) 
                                                                    (1.8)    (1.9) 
 
Fair Value of Property Portfolio                           281.9    121.4    127.3 
 
Cash                                                        32.3     13.9     14.6 
 
Trade and other receivables                                  6.8      2.9      3.1 
 
Trade and other payables                                   (9.6)    (4.1)    (4.4) 
 
Interest-bearing loans                                    (90.0)   (38.7)   (40.6) 
 
Net Assets at 31 December 2022                             221.4     95.4    100.0 
 
The property portfolio will next be valued by an external valuer during March 
2023 and it is expected that the net asset value per share as at 31 March 2023 
will be announced in April 2023. 
 
 
Important information 
 
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. 
 
 
 
Enquiries: 
The Company Secretary 
Northern Trust International Fund Administration Services (Guernsey) Limited 
Trafalgar Court 
Les Banques 
St Peter Port 
Guernsey 
GY1 3QL 
Tel: [phone] 
 
 
Matthew Howard 
Scott Macrae 
Columbia Threadneedle Investment Business Limited 
Tel: [phone] 
 
 
 
 
END 
 
 

(END) Dow Jones Newswires

February 02, 2023 02:00 ET (07:00 GMT)