UK Commercial Property REIT Limited which owns a £1.31 billion portfolio of high quality and diversified real estate across the UK today provides a net asset value and trading update for the fourth quarter of 2022.

Highlights

  • 12.3% increase in EPRA earnings per share to 0.82p (30 September 2022: 0.73p) for the quarter leading to 19% growth for the year.
  • Unaudited NAV per share of 79.7p (30 September 2022: 101.5p) a NAV reduction of 21.5% and a NAV total return for the quarter of -20.8% (Q3: -7.9%). The twelve months of 2022 show an overall 21.9% NAV reduction, and a NAV total return of -18.1%.
  • Dividend maintained at 0.85p per share for the fourth quarter, payable 28 February 2023.

  • Dividend cover was 96.9% for both the quarter and year.
  • Rent collection normalised at 98% for rents due in the first quarter; portfolio occupancy also high at 98%.
  • ESG – second in GRESB peer group and 3* for 2023, on target to meet Net Zero Carbon 2030 and 2040 goals, and strong Energy Performance Certificate (EPC) ratings.
  • The Company benefits from relatively low and prudent gearing at 20.0% group loan to value* and a current blended interest cost of 3.61% per annum, of which 68% is at a fixed rate.  All covenants well covered.
  • On 10 January 2023 the Company extended its revolving credit facility with Barclays from January 2024 to January 2026 and at a slightly increased margin of 190bps (previously 170bps). After the extension, the weighted maturity is 5.2 years and removes the risk of short-term refinancing in a potentially volatile banking market.

* Calculated, under AIC guidance, as gross borrowings less cash divided by portfolio value.

Ken McCullagh, Chair of UKCM, commented: “UK Commercial Property REIT’s high-quality, diversified portfolio, which is weighted towards sectors that benefit from strong underlying structural and societal drivers, coupled with our proactive approach to asset management have allowed us to deliver robust earnings growth in the final quarter and almost 20% over the year.  This gives me confidence that, at an operational level, the Company is well placed to weather the current economic headwinds and rising interest rates which have led to a rerating of real estate and therefore downward pressure on valuations.  While we have not been immune from this, our balance sheet remains well positioned with low gearing.  Our confidence in the Company’s prospects is underlined by our decision to maintain the dividend for the final quarter. This translates to a 11% increase in ordinary distributions to shareholders over the year, a level which is 97% covered, in addition to a 1.92 pence per share special dividend which we paid in August.”

Will Fulton, Lead Manager of UKCM at abrdn, said: “Although the challenging macroeconomic backdrop has impacted valuations across the industry, our continued focus on asset management has driven impressive rental growth during the period. It is testament to the strength of our team and the underlying quality of our properties that we have been able to capture reversionary potential across a number of lease events while maintaining a very low void rate. We expect to deliver further income growth in the next 12 months as we complete development projects in the student accommodation, industrial and hospitality sectors. Extending the maturity of our flexible RCF debt facility to January 2026 at a very mild margin increase protects our P&L from the risk of refinancing in a potentially volatile banking market and we are delighted, after the year end, to have secured two new industrial tenants making good on the expectation of strong rental increases.  Both actions are positive milestones on our journey to increase Company earnings.”