The UK Commercial Property Trust (UKCPT) has released its interim results for the first half of 2015, during which it recorded 2.4 per cent capital growth leading to a property portfolio valuation of £1.24 billion as of the 30th June.
However the NAV return of 5.2 per cent fell below the MSCI benchmark of 6.2 per cent, although this remains comfortably higher than the FTSE All-Share Index (3 per cent).
Furthermore, the high quality property investment portfolio controlled by UKCPT raised an attractive and secure dividend yield of 4.0 per cent, well ahead of the FTSE REIT Index and the FTSE All-Share Index which stand at 2.8 per cent and 3 per cent respectively.
UKCPT Chairman Christopher Hill believes that shareholders will be satisfied with the first half performance. He says; “During the first half, UKCPT continued to deliver positive shareholder returns, albeit at a steadier pace than in 2014.
“The portfolio generated positive income and capital returns of 2.5% and 2.4% and the Investment Manager took advantage of the strong market to sell a number of assets which had limited future return prospects.”
During the first half of the year UKCP engaged in extensive portfolio repositioning which largely reduced the exposure to retail assets in favour of prime office properties.
This saw the sale of the Sovereign Centre in Weston-super-Mare, Pall Mall Court in Manchester, 134-138 North Street in Brighton and 176-206 Kensington High Street which in total raised £133 million – well ahead of valuation estimates and leaving the firm with cash resources of £132 million which is now available to invest.
Letting activity remained high for the firm’s assets, with asset management activity generating valuation and rental income increases whilst reducing the portfolio’s void rate to just 3.3 per cent by the 30th of June. Particular highlights were the creation of two new flagship stores for fashion brand H&M at The Parade, Swindon and High Street, Exeter, along with the securing of Primark as the new anchor tenant for UKCPT’s Charles Darwin Centre in Shrewsbury.
Mr Hill believes that this will reap rewards for the Guernsey registered investment company in the medium to long term.
He says; “Following the significant portfolio repositioning out of such properties, the current focus is to re-invest in assets that offer the potential, through the deployment of expert asset management, for a growing and sustainable income stream and capital appreciation.
“These assets are also expected to benefit from the strengthening of the UK economy, while still maintaining the prime nature of the portfolio.
“In the short term, this may mean acquisition costs and higher than normal cash levels impact performance – however, over the medium to longer term, we expect this strategy to continue to deliver the strong returns it has produced for shareholders since inception.”
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