19th Apr 2023 09:28
(Alliance News) - Balanced Commercial Property Trust Ltd on Wednesday said the second half of 2022 saw a "marked reversal" of the positivity seen in the early part of the year.
"As the year progressed, geopolitical challenges and inflationary pressures resulted in rising interest rates and slowing economic growth...September's mini budget marked a distinct turning point and proved the catalyst for one of the worst quarters of capital performance from the UK commercial real estate market on record," the commercial property investor explained.
Against this "challenging" backdrop, BCPT delivered a net asset value total return of negative 9.2% in 2022. Its NAV per share fell 12% to 118.5 pence at December 31 from 135.1p on the same date a year prior.
The company's portfolio delivered a total return of negative 6.5% in 2022. This outperformed the MSCI UK Quarterly Property Index return of negative 8.9% over the same 12-month period, however.
BCPT said the outperformance was driven by a capital return of negative 10.5% against the index's return of negative 12.4% and an income return of positive 4.5% against the index's return of positive 4.0%.
"The balanced nature of the portfolio has proven to be a structural benefit and the [investment] managers have executed a number of accretive asset management activities to deliver both capital and income outperformance over the year," it said.
BCPT swung to a pretax loss of GBP94.0 million in 2022 from a profit of GBP157.4 million in 2021, as the company swung to a loss on investment properties of GBP129.1 million from a gain of GBP87.0 million in the year prior. Revenue totalled GBP58.7 million, down slightly from GBP58.9 million the year prior.
Looking forward, BCPT said the challenges that hindered the real estate market in 2022 remain, with investors maintaining a "risk averse" approach as they await greater clarity on pricing. However, the company said that there is an expectation that the real estate market will move to a "recovery phase" in the second half of 2023.
"We expect continued recovery at St Christopher's Place to be a bedrock of returns. The industrial and retail warehousing sectors – which account for over 40% of the portfolio – have been oversold but retain a strong performance outlook founded on their critical role in UK business and consumer infrastructure. Much has been made of the uncertain outlook for the offices sector, but the portfolio is aligned towards prime assets that continue to deliver occupier demand. The portfolio is therefore aligned to continue to deliver capital outperformance, founded on the portfolio's prime nature that will benefit from a flight to quality," it said.
St Christopher's Place is an area of shops and restaurants off Oxford Street in London.
BCPT shares were down 2.9% to 86.30p on Wednesday morning in London.
By Heather Rydings, Alliance News senior economics reporter
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.
Related Shares:
Balanced Commercial Property Trust