7th Aug 2006 15:30
F&C Commercial Property Trust Ltd07 August 2006 To: RNSDate: 7 August 2006From: F&C Commercial Property Trust Limited Interim results in respect of the period ended 30 June 2006 • Net asset value total return of 13.3 per cent • Dividend yield of 4.6 per cent The Chairman, Peter Niven, stated: 'I am once again pleased to report that the Company has sustained its goodperformance over the six months to 30 June 2006. The results continue to achievethe Company's objective to provide ordinary shareholders with an attractivelevel of income together with the potential for capital and income growth frominvesting in a diversified UK commercial property portfolio. PerformanceThe commercial property market continued to perform strongly during the firsthalf of 2006 with the latest Investment Property Databank ('IPD') Monthly datashowing total returns of 9.7 per cent over the period. Property forecasters arerevising their projections upwards for 2006 and a third consecutive year ofreturns in the mid/high teens is in prospect. The performance has been driven by the continued strength of investment demand.Evidence suggests approximately £19 billion was invested in commercial propertyover the period with institutions, overseas buyers and private individuals allnet investors. Institutions acquired a net £2 billion of property over thisperiod, across all sectors, but favouring Central London offices in particular.Indeed, over 40 per cent of all investment was in Central London properties. Yields have continued to compress across all property sectors and types, whetherprime or secondary. IPD data shows the all property equivalent yield at 5.63 percent in June compared with 6.47 per cent a year earlier. The initial yield islower at 4.81 per cent whilst the Jones Lang LaSalle prime index is lower stillat 4.61 per cent; initial yields are now below the key borrowing rate - the fiveyear swap rate. Last year saw a convergence in performance by sector but 2006 has witnessedoffices pulling ahead of both retail and industrial property. This is partly dueto yield compression driven by the weight of money but also reflects thestrengthening of rental growth in the sector. In contrast, retail property hasslipped into third place behind industrials over the past quarter with bothretail warehousing and town centre retail under-performing the all propertyrange. Against this background it is encouraging to report that the Company's net assetvalue total return was 13.3 per cent for the six month period to 30 June 2006.The share price total return for the period was 13.6 per cent, and the shareprice of 131.5p per share as at 30 June 2006 represented a premium of 1.2 percent to the net asset value per share. PortfolioThe portfolio performed well during the period. Its value increased to £1.16billion, an ungeared uplift of 8.9 per cent. This compares favourably with anincrease of 7.0 per cent in the IPD Monthly Index. Retail SectorThe all retail total return over the period according to the IPD Monthly Indexwas 9.0 per cent. Investment demand remains strong especially for prime shoppingcentres and retail warehouse parks with the benefit of Open A1 planningconsents. Recent evidence may suggest that prime high street retail units haveapproached the top of the market. Retailers themselves are becoming more costconscious and incentives for them to take space have increased markedly. Newbury Retail Park, Newbury, has the benefit of an Open A1 food consent and theCompany has contracted a letting to Borders Books on the final 10,000 sq ftwithin the recently completed extension to the park. This letting reflects anaverage rent of £26.40 psf and is above the evidence set on the letting to NewLook at a headline of £25 psf. The park is now fully let with rent reviews onthe main body due next year. At Sears Retail Park, Solihull, the rent review of a unit has been agreed at£852,000 per annum which is an uplift of 42 per cent over the previous rentpassing. At St Christopher's Place Estate, London W1, which is the Company's largestproperty, 20 James Street has been let to a Sushi operator further enhancing thefood offer now available on James Street. OfficesThe office market continues its recovery and produced a total return of 12.0 percent according to the IPD Monthly Index, making it the best performing sectorduring the period. Central London has been especially strong with notable rentalgrowth. Investors have recognised rental growth in Central London and therecovery potential in the South East markets has driven yields down. The Companycontinues to benefit from its overweight exposure to Central London offices andhas continued its programme of the refurbishment or conversion of office spaceat St Christopher's Place Estate. It has also benefited from the refurbishmentof two floors at 7 Birchin Lane, London EC3, with the fifth floor under offer ata headline rent of £32.50 psf against a pro forma rent of £26 psf. IndustrialThe industrial sector produced a total return of 9.4 per cent during the periodaccording to the IPD Monthly Index. The Company's largest holding in thesub-sector is in the Industrial Property Investment Fund which produced a totalreturn of approximately 10 per cent over the half year. Purchases and DisposalsThe Company completed its first acquisition during the period: 44 James Street,London W1, at £975,000, being an integral property within the St Christopher'sPlace Estate. Terms have also been agreed to forward acquire a retail warehousewhich adjoins one of the Company's existing properties. DividendsA first interim dividend of 1.5p per share was paid on 28 July 2006. The Boardhas declared a second interim dividend of 1.5p per share which will be paid on27 October 2006 to shareholders on the register on 29 September 2006. Thecurrent annual rate of dividend, of 6.0p per share, is unchanged from that setat the time of the Company's launch in March 2005. BorrowingsThe Company's borrowings are represented by £230 million Secured Bonds due 2017which have been assigned an 'Aaa' rating by Moody's Investors Service. The Bondscarry interest at a fixed rate of 5.23 per cent per annum. As a result of the strong rise in the value of the portfolio, the level ofgearing as at 30 June 2006 was 19.3 per cent, which compares to 21.0 per cent asat 31 December 2005 and 24.4 per cent at launch on 18 March 2005. OutlookProperty is continuing to perform well and the Managers have increased their2006 house forecast for the sector from 10 per cent at the start of the year to15.0 per cent. Total returns may begin to revert to more sustainable levelssoon. Yields are now at historically low levels and there seems limited scopefor further yield falls, especially relative to 5 year swap rates. Concern isgrowing that secondary stock is over bought with prices paid which do notreflect sufficient risk premia. This stock could be vulnerable to any marketcorrection. Looking forward to 2007, it is expected property will revert to itstraditional model of being income return driven with the capital return beingenhanced by the asset management of the portfolio.' All enquiries to: The Company SecretaryNorthern Trust International Fund Administration Services (Guernsey) LimitedTrafalgar CourtLes BanquesSt. Peter PortGuernsey GY1 3QL Tel: 01481 745001Fax: 01481 745051 Richard KirbyF&C Asset Management plc Tel: 0207 506 1121 F&C Commercial Property Trust Limited Consolidated Income Statement (unaudited) for the six months to 30 June 2006 Total £'000 RevenueRental income 25,982Income from indirect property funds 4,354Gains on investmentUnrealised gains on revaluation of investment properties 79,618Unrealised gains on revaluation of indirect property funds 15,503 -------- --------Total income 125,457 -------- ExpenditureInvestment management fee (4,277)Direct operating expenses of let rental property (1,287)Valuation and other professional fees (151)Directors' fees (49)Administrative fee (50)Other expenses (393) --------Total expenditure (6,207) --------Net operating profit before finance costs 119,250 -------- Finance costsInterest revenue receivable 855Interest payable (6,062) -------- (5,207) -------- Net profit from ordinary activities before taxation 114,043 Taxation on profit on ordinary activities (333) --------Net profit for the period 113,710 ======== Earnings per share 15.5p F&C Commercial Property Trust Limited Consolidated Income Statement (unaudited) for the period from incorporation on 21 January 2005 to 30 June 2005 Total £'000 RevenueRental income 13,551Income from indirect property funds 228Gains on investmentUnrealised gains on revaluation of investment properties 34,014Unrealised gains on revaluation of indirect property funds 5,422 -------- --------Total income 53,215 -------- ExpenditureSet up costs (9,440)Investment management fee (2,136)Direct operating expenses of let rental property (393)Valuation and other professional fees (143)Directors' fees (39)Administrative fee (27)Other expenses (264) --------Total expenditure (12,442) --------Net operating profit before finance costs 40,773 -------- Finance costsInterest revenue receivable 709Interest payable (3,468) -------- (2,759) -------- Net profit from ordinary activities before taxation 38,014 Taxation on profit on ordinary activities - --------Net profit for the period 38,014 ======== Earnings per share 5.2p F&C Commercial Property Trust Limited Consolidated Income Statement (audited) for the period from incorporation on 21 January 2005 to 31 December 2005 Total £'000 RevenueRental income 39,705Income from indirect property funds 6,166Gains on investmentUnrealised gains on revaluation of investment properties 113,173Unrealised gains on revaluation of indirect property funds 20,277 -------- --------Total income 179,321 -------- ExpenditureSet up costs (9,354)Investment management fee (6,111)Direct operating expenses of let rental property (1,701)Valuation and other professional fees (271)Directors' fees (86)Administrative fee (79)Other expenses (591) --------Total expenditure (18,193) --------Net operating profit before finance costs 161,128 -------- Finance costsInterest revenue receivable 1,507Interest payable (9,566) -------- (8,059) -------- Net profit from ordinary activities before taxation 153,069 Taxation on profit on ordinary activities (585) --------Net profit for the period 152,484 ======== Earnings per share 20.7p F&C Commercial Property Trust Limited Consolidated Balance Sheet as at 30 June 2006 (unaudited) 30 June 30 June 2005 31 Dec 2006 £'000 2005* £'000 £'000Non-current assetsInvestment properties 991,885 826,240 908,895Investments in indirect property fundsheld at fair value 169,727 139,369 154,224 -------- -------- -------- 1,161,612 965,609 1,063,119 -------- -------- --------Current assetsTrade and other receivables 4,084 2,189 4,563Cash and cash equivalents 35,397 40,885 41,680 -------- -------- -------- 39,481 43,074 46,243 -------- -------- -------- Total assets 1,201,093 1,008,683 1,109,362 -------- -------- -------- Current liabilitiesTrade and other payables (16,767) (17,941) (16,840) -------- -------- -------- Non-current liabilitiesInterest bearing bonds (228,946) (228,891) (228,899)Deferred taxation (262) - (165) -------- -------- -------- (229,208) (228,891) (229,064) -------- -------- --------Total liabilities (245,975) (246,832) (245,904) -------- -------- --------NET ASSETS 955,118 761,851 863,458 ======== ======== ======== Represented by:Share capital 661,500 661,500 661,500Share premium account - 62,337 -Special distributable reserve 62,337 - 62,337Other reserves 231,281 38,014 139,621 -------- -------- --------Equity SHAREHOLDERS' FUNDS 955,118 761,851 863,458 ======== ======== ======== Net asset value per share 129.9p 103.6p 117.5p *Audited F&C Commercial Property Trust Limited Consolidated Statement of Changes in Equity (unaudited) for the six months to 30 June 2006 Six months to Period to Period to 30 June 2006 30 June 2005 31 Dec 2005* £'000 £'000 £'000 Opening net assets 863,458 - -Net profit forthe period 113,710 38,014 152,484Issued ordinary sharecapital, netof issue costs - 723,837 723,837Dividends paid (22,050) - (12,863) --------- -------- --------Closing net assets 955,118 761,851 863,458 ========= ======== ======== *Audited F&C Commercial Property Trust Limited Consolidated Cash Flow Statement (unaudited) for the six months to 30 June 2006 Six months to Period to Period to 30 June 2006 30 June 2005 31 Dec 2005* £'000 £'000 £'000Cash flows from operatingactivitiesNet operating profit for theperiod before finance costs 119,250 40,773 161,128Adjustments for: Decrease/(increase) in operating trade and other receivables 479 (2,189) (4,563)(Decrease)/increase in operatingtrade and other payables (26) 17,213 16,420Increase in unrealised gains oninvestment properties (79,618) (34,014) (113,173)Increase in unrealised gains onindirect property funds (15,503) (5,422) (20,277) ---------- -------- -------- 24,582 16,361 39,535 ---------- -------- -------- Income tax paid (283) - -Interest received 855 709 1,507Bond interest paid (6,015) (3,468) (9,471) ---------- -------- -------- (5,443) (2,759) (7,964) ---------- -------- --------Net cash inflow from operating activities 19,139 13,602 31,571 ---------- -------- -------- Cash flows from investingactivitiesPurchases of investments (975) (925,372) (925,372)Development expenditure (2,397) (73) (4,297) ---------- -------- --------Net cash outflow frominvesting activities (3,372) (925,445) (929,669) ---------- -------- -------- Cash flows from financingactivitiesProceeds from issue ofordinary share capital - 735,000 735,000Proceeds from issue of 5.23%Secured Bonds - 230,000 230,000Issue costs - (12,272) (12,359)Dividends paid (22,050) - (12,863) ---------- -------- --------Net cash (outflow)/inflow from financing activities (22,050) 952,728 939,778 ---------- -------- --------Net (decrease)/increase incash and cash equivalents (6,283) 40,885 41,680Opening cash and cashequivalents 41,680 - - ---------- -------- --------Closing cash and cashequivalents 35,397 40,885 41,680 ========== ======== ======== *Audited F&C Commercial Property Trust Limited Notes to the Consolidated Financial Statements for the six months to 30 June 2006 1.The unaudited interim results have been prepared on thebasis of International Financial Reporting Standards and the accounting policiesset out in the statutory accounts of the Group for the period ended 31 December2005. 2.Earnings per Ordinary Share are based on 735,000,000 shares,being the weighted average number of shares in issue during the period. 3.Earnings for the six months to 30 June 2006 should not betaken as a guide to the results for the year to 31 December 2006. 4. Dividends: Period to 30 June 2006 Rate £'000 (pence) Third interim dividend for the period to 31 December2005, paid 27 January 2006 1.50 11,025 Fourth interim dividend for the period to 31 December2005, paid 28 April 2006 1.50 11,025 --------- -------- 3.00 22,050 ========= ======== A first interim dividend for the year to 31 December 2006, of 1.5p per share,was paid on 28 July 2006 to shareholders on the register at close of business on30 June 2006. A second interim dividend of 1.5p per share will be paid on 27 October 2006 toshareholders on the register at close of business on 29 September 2006. Theex-dividend date will be 27 September 2006. 5. There were 735,000,000 Ordinary Shares in issue at 30 June 2006 (30 June 2005and 31 December 2005 - 735,000,000). 6. The Group results consolidate the results of F&C Commercial Property HoldingsLimited, a wholly owned subsidiary which invest in properties, and F&CCommercial Property Finance Limited, a special purpose company which has issuedthe £230 million Secured Bonds. 7. The Interim Report will be posted to shareholders during September 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Balanced Commercial Property Trust