12th Sep 2024 09:59
(Alliance News) - Balanced Commercial Property Trust reported a decline in net asset value in the first half of the year, as the real estate sector waited for greater clarity on the path of interest rates.
The investor in UK commercial properties, formerly known as BMO Commercial Property Trust, said net asset value per share fell to 105.1 pence as at June 30 from 109.8p as at December 31. It represented a further decline from 117.1p as at June 30, 2023.
"The real estate sector spent much of the first half of the year awaiting greater clarity on the path of interest rates. This August saw the end of the tightening cycle as the Bank of England delivered a 0.25 per cent cut to the base rate. Prior to this cut, there were some signs of renewed investor appetite, and whilst still modest, there has been an increase in transaction volumes over the first six months of the year compared to the last six months of 2023," Chair Paul Marcuse said.
NAV total return was negative 1.9% in the first half of 2024, turned from positive 0.8% a year ago.
"The macroeconomic environment has shown marked improvement over the course of the year to date as the UK economy returned to growth quickly following the technical recession of 2023. A new government prioritising economic growth has been elected with a strong majority and inflation has steadily receded back towards the Bank of England's target of 2 per cent," said Richard Kirby and Dan Walsgrove from Columbia Threadneedle REP AM PLC, fund managers of Balanced Commercial.
Chair Marcuse said: "Amid cautious optimism in the capital markets, and a more supportive economic backdrop, there are tentative signs that the outlook for certain real estate sectors may be beginning to turn. While the geopolitical landscape remains volatile, a number of market participants are beginning to look to the next stage of the cycle."
Balanced Commercial declared an interim dividend of 2.64p per share, up 10% from 2.4p a year ago.
Last Wednesday, the company accepted a takeover offer from funds managed by private equity firm Starwood Capital, the two companies.
The offer represents a 22% premium to its share price of 79.00p on April 12, when Balanced Commercial Property launched a strategic review, but an 8.7% discount to its net asset value per share of 105.1p on June 30.
The offer of 96.00p in cash per Balanced Commercial Property share values the FTSE 250 company's equity at GBP673.5 million.
Balanced Commercial shares were 0.3% lower at 94.75p each on Thursday morning in London.
By Tom Budszus, Alliance News slot editor
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