12th Mar 2007 07:01
F&C Commercial Property Trust Ltd12 March 2007 To: RNS Date: 12 March 2007 From: F&C Commercial Property Trust Limited Results in respect of the Year Ended 31 December 2006 • Net asset value total return of 26.0 per cent • Dividends of 6.0p per share in respect of the year The Chairman, Peter Niven, stated: "I am delighted to be reporting the Company's results for its first fullaccounting year since launch in March 2005. During this time the Company hascontinued to perform strongly with a net asset value total return for the yearended 31 December 2006 of 26.0 per cent. The net asset value at the end of the year was 141.5 pence per share and theshare price was 131.0 pence. Since launch, the share price has increased by 31.0per cent and shareholders have benefited from a further 9.3 per cent of theissue price in the form of dividends declared up to 31 December 2006. There continued to be a good level of demand for the Company's shares during theyear reflecting its attractive dividend yield and quality property portfolio.The Company's peer group of Guernsey registered property investment companiescomprised ten companies as at 31 December 2006 with an aggregate marketcapitalisation of £3.4 billion. With total assets of £1.3 billion as at 31December 2006, and a market capitalisation of £963 million, the Company is thelargest company within that group. The Company is also a constituent of the FTSE 250 Index and the FTSE Real EstateSector. The FTSE Real Estate Sector comprises not only the peer group companiesbut also those property companies which have recently converted into UK RealEstate Investment Trusts ('REITs'). While the introduction of REITs in the UKhas broadened the opportunities open to real estate investors, the Boardbelieves the Company's structure remains attractive. In particular, theCompany's dividend yield is significantly higher than that generally availablefrom a UK REIT. Property Market and Portfolio For the third year in succession, total returns from the commercial propertymarket, as measured by the Investment Property Databank ('IPD') All MonthlyValued Funds, were in their high teens. The market benefited from continuingstrong levels of investment demand from institutions, overseas buyers andprivate individuals resulting in yield compression across the main propertysectors of Retail, Office and Industrial. The best performing of those was theOffice sector where total returns for the year exceeded 20 per cent. The CentralLondon market has been especially strong with valuations being driven upwards bysignificant yield compression and rental growth. The valuation of the Company's property portfolio increased to £1.23 billionduring the year, representing an ungeared increase of 17.8 per cent and a totalreturn of 23.3 per cent. This compares favourably to the equivalent returns fromthe IPD All Monthly Valued Funds of 12.4 per cent and 18.1 per cent. The most notable increase came from Cassini House, St James's Street, Londonwhich increased in value by 39.0 per cent to £81.6 million. The valuation ofthis property has benefited significantly from strong rental growth within theCentral London market; the effective rent increasing from £59.50 to £75 per sq.ft. during the year. The largest direct property in the portfolio, the St Christopher's Place Estate,London, also benefited from strong rental growth following a number ofsuccessful rent reviews during the year. Its valuation increased by 17.7 percent to £123.9 million, which represented 10.1 per cent of the portfolio as at31 December 2006. There was also a significant contribution from Newbury Retail Park, whichincreased by 20.3 per cent to £83.2 million. As I reported at the interim stage,this property has the benefit of an Open A1 food consent and the Company hascontracted a letting to Borders Books on the final 10,000 sq. ft. within therecently completed extension to the park which remains fully let with importantrent reviews due this year. The Company acquired one property during the year, at 44 James Street, London,for £975,000, which is an integral property within the St Christopher's PlaceEstate. One property, Blocks A,D,E,F,G & H at the International Business Centre,Sunbury, was sold in December for £23.3 million net of rental guarantees,representing a premium of 11.3 per cent to the valuation as at 30 September2006. The Company's indirect holdings in both the Industrial Property Investment Fundand The Mall LP continued to be an important part of the portfolio where thesefunds increased in value by 17.9 per cent during the year and accounted for 14.8per cent of the portfolio at the year end. Since then, the Company has disposedof a small portion (749,264 units) of its holding in The Mall LP for £1.9million, which represented a small premium of 0.6 per cent to the valuation asat 31 December 2006. Dividends First, second and third interim dividends, each of 1.5 pence per share, werepaid on 28 July and 27 October 2006, and 26 January 2007 respectively. The Boardhas declared a fourth interim dividend of 1.5 pence per share which will be paidon 27 April 2007 to shareholders on the register on 30 March 2007. This bringsthe total dividend for the year to 6.0 pence per share, which is unchanged fromthat set at the time of the Company's launch in March 2005. Share Buy Backs The Board continues to believe it is important to have the ability to buy backshares. The Company will therefore seek to renew its share buy back authority atthe forthcoming Annual General Meeting. Subject to the passing of a resolutionto be proposed at the Annual General Meeting, any shares bought back may becancelled or held in treasury for subsequent re-issue. At the time of the Company's launch it was stated that the Directors intended touse the share buy back authority to purchase shares (subject to the income andcash flow requirements of the Company) if the share price was more than five percent below the published net asset value for a continuous period of 20 dealingdays or more. To ensure a fair comparison, the Directors believe that suchdiscount should be calculated by adjusting the published net asset value for anyquarterly dividends for which the share price has gone ex-dividend. On thisbasis, although the discount has, on occasions this year exceeded five per cent,it has not done so continuously for 20 dealing days. At the time of the launch it was also stated that, in the event of the discountto the published net asset value being more than five per cent for 90 dealingdays or more, the Directors would convene an Extraordinary General Meeting to beheld within three months to consider an ordinary resolution for the continuationof the Company. Again, this condition has not been met to date. Borrowings As a result of the continuing rise in the value of the property portfolio, thelevel of gearing as at 31 December 2006 was 18.0 per cent. This compares to 21.0per cent as at 31 December 2005 and 24.4 per cent at launch. The Company's borrowings are represented by £230 million Secured Bonds due 2017which have been assigned an 'Aaa' rating by Moody's Investors Services. TheBonds carry interest at a fixed rate of 5.23 per cent per annum. Outlook With IPD data showing all property initial yields at 4.6 per cent compared witha five year swap rate of 5.4 per cent the prospect of any further all propertyyield compression is remote and further rises in UK interest rates could putvaluations under pressure. That said, the climate for rental growth remainsfavourable and this should help support valuation levels. The Managers' in-house estimates for 2007 are for total returns of between 9 and10 per cent which, aside from the Office sector, they expect will be largelyincome driven. Total returns will be enhanced by successful asset managementinitiatives and, with its quality portfolio and robust cashflows, the Boardbelieves the Company is well positioned to make further good progress in theyear ahead." All enquiries to: The Company Secretary Northern Trust International Fund Administration (Guernsey) Limited Trafalgar Court Les Banques St Peter Port Guernsey GY1 3QL Tel: 01481 745001 Fax: 01481 745051 F&C Commercial Property Trust Limited Consolidated Income Statement (audited) Year Ended 31 For the period December 2006 from incorporation on 21 January 2005 to 31 December 2005 £'000 £'000 RevenueRental income 53,427 39,705Income from indirect property funds 7,747 6,166 Gains on investmentsUnrealised gain on revaluation of investmentproperties 151,309 113,173Unrealised gain on revaluation of indirectproperty funds 27,653 20,277Realised gain on sale of investment properties 4,202 - ----------- -----------Total income 244,338 179,321 ----------- -----------ExpenditureInvestment management fee (9,050) (6,111)Set up costs - (9,354)Other expenses (3,870) (2,728) ----------- -----------Total expenditure (12,920) (18,193) ----------- -----------Net operating profit before finance costs 231,418 161,128 ----------- -----------Net finance costsInterest revenue receivable 1,573 1,507Finance costs (12,123) (9,566) ----------- ----------- (10,550) (8,059) ----------- ----------- Net profit from ordinary activities beforetaxation 220,868 153,069 Taxation on profit on ordinary activities (457) (585) ----------- ----------- Net profit for the year/period 220,411 152,484 ----------- -----------Earnings per share 30.0p 20.7p F&C Commercial Property Trust Limited Consolidated Balance Sheet (audited) As at As at 31 December 31 December 2006 2005 £'000 £'000 Non-current assetsInvestment properties 1,046,980 908,895Investments in indirect property funds held atfair value 181,877 154,224 ----------- ----------- 1,228,857 1,063,119 ----------- -----------Current assets Trade and other receivables 6,217 4,563Cash and cash equivalents 53,291 41,680 ----------- ----------- 59,508 46,243 ----------- ----------- Total assets 1,288,365 1,109,362 ----------- ----------- Non-current liabilities Interest-bearing bonds (228,993) (228,899)Deferred taxation (360) (165) ----------- ----------- (229,353) (229,064) Current liabilities Trade and other payables (19,243) (16,840) ----------- -----------Total liabilities (248,596) (245,904) ----------- -----------NET ASSETS 1,039,769 863,458 ----------- ----------- Represented by: Share capital 661,500 661,500Special distributable reserve 58,434 62,337Capital reserve - realised 4,202 -Capital reserve - unrealised 312,412 133,450Revenue reserve 3,221 6,171 ----------- -----------Equity SHAREHOLDERS' FUNDS 1,039,769 863,458 ----------- ----------- Net asset value per share 141.5p 117.5p F&C Commercial Property Trust Limited Consolidated Statement of Changes in Equity (audited) for the year ended 31 December 2006 Share Special Capital Capital Revenue Total Capital Reserve Reserve Reserve Reserve Realised Unrealised £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 661,500 62,337 - 133,450 6,171 863,4582006Net profit forthe - - - - 220,411 220,411yearDividends paid - - - - (44,100) (44,100)Transfer fromspecial - (3,903) - - 3,903 -reserveTransfer inrespectof gains on - - - 151,309 (151,309) -investmentpropertiesTransfer inrespectof gains on - - - 27,653 (27,653) -indirectproperty fundsRealised gainon saleof investment - - 4,202 - (4,202) -properties At 31 December 661,500 58,434 4,202 312,412 3,221 1,039,7692006 Consolidated Statement of Changes in Equity (audited) for the period from incorporation on 21 January 2005 to 31 December 2005 Share Share Special Capital Revenue Total Capital Premium Reserve Account Reserve Unrealised Reserve £'000 £'000 £'000 £'000 £'000 £'000 Issue ofordinary share 661,500 62,337 - - - 723,837capital, netof issue costsConversion ofshare premium - (62,337) 62,337 - - -accountNet profit for - - - - 152,484 152,484the periodDividends paid - - - - (12,863) (12,863)Transfer inrespect ofgains on - - - 113,173 (113,173) -investmentpropertiesTransfer inrespect ofgains on - - - 20,277 (20,277) -indirectpropertyfunds At 31 December 661,500 - 62,337 133,450 6,171 863,4582005 F&C Commercial Property Trust Limited Consolidated Cash Flow Statement (audited) Year ended 31 For the period December 2006 from incorporation on 21 January 2005 to 31 December 2005 £'000 £'000 Cash flows from operating activities Net operating profit for the period before financecosts 231,418 161,128Adjustments for:Unrealised gain on revaluation of investmentproperties (151,309) (113,173)Unrealised gain on revaluation of indirectproperty funds (27,653) (20,277)Realised gain on sale of investment properties (4,202) -Increase in operating trade and other receivables (1,654) (4,563)Increase in operating trade and other payables 2,452 16,420 ----------- ----------- 49,052 39,535 ----------- -----------Interest received 1,573 1,507Interest paid (12,029) (9,471)Taxation paid (311) - ----------- ----------- (10,767) (7,964) ----------- -----------Net cash inflow from operating activities 38,285 31,571 ----------- -----------Cash flows from investing activities Purchases of investments (975) (925,372)Sale of investments 23,237 -Capital expenditure (4,836) (4,297) ----------- -----------Net cash inflow/(outflow) from investingactivities 17,426 (929,669) ----------- -----------Cash flows from financing activities Proceeds from issue of ordinary share capital - 735,000Issue costs of ordinary share capital - (11,163)Proceeds from issue of 5.23 per cent Secured Bonds - 230,000Issue costs of 5.23 per cent Secured Bonds - (1,196)Dividends paid (44,100) (12,863) ----------- -----------Net cash (outflow)/inflow from financingactivities (44,100) 939,778 ----------- -----------Net increase in cash and cash equivalents 11,611 41,680Opening cash and cash equivalents 41,680 - ----------- -----------Closing cash and cash equivalents 53,291 41,680 ----------- ----------- F&C Commercial Property Trust Limited Notes to the Consolidated Financial Statements for the year to 31 December 2006 1. The Board has declared a fourth interim dividend of 1.50pper share to be paid on 27 April 2007 to shareholders on the register on 30March 2007. The ex-dividend date will be 28 March 2007. 2. There were 735,000,000 Ordinary Shares in issue at 31December 2006 (2005 : same). The earnings per Ordinary Share are based on thenet profit for the year of £220,411,000 (2005 : £152,484,000) and on 735,000,000Ordinary Shares (2005 : same), being the weighted average number of shares inissue during the period. 3. The Group results consolidate those of F&C CommercialProperty Holdings Limited, a wholly owned subsidiary which invests inproperties. The Group results also consolidate the results of F&C Commercial PropertyFinance Limited, a special purpose vehicle incorporated to issue the interestbearing bonds. 4. These are not full statutory accounts. The full audited accounts for the yearto 31 December 2006 will be sent to shareholders in March 2007, and will beavailable for inspection at Trafalgar Court, Les Banques, St Peter Port,Guernsey, the registered office of the Company. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Balanced Commercial Property Trust