Balanced Commercial Property Trust Ltd - NAV Release and Company Update
To: Company Announcements
Date:
Company:
LEI: 213800A2B1H4ULF3K397
NAV (unaudited) and Company Update
Headlines
-- Net Asset Value total return of -1.1 per cent for the quarter ended 31March 2024 .
-- Share Price total return of +14.3 per cent for the quarter ended 31March 2024 .
-- Disposal of two office assets completed, raising proceeds of £54.6m at an aggregate discount to valuation of 0.4 per cent (both disposals announced previously).
-- 18 leases and tenancy agreements completed or renewed over the quarter.
Net Asset Value: total return of -1.1 per cent for the quarter
The unaudited net asset value (‘NAV’) per share of the Company as at
The NAV has been calculated under International Financial Reporting Standards (‘IFRS’). It is based on the external valuation of the Company’s property portfolio which has been prepared by
The NAV includes all income to
Analysis of Movement in NAV
The following table provides an analysis of the movement in the unaudited NAV per share for the period from
£m Pence per share % of opening NAV per share NAV as at 31 December 2023 770.0 109.8 Unrealised decrease in valuation of property (11.4) (1.6) (1.5) portfolio Realised losses on property (2.8) (0.4) (0.4) sales Other net revenue 6.0 0.8 0.7 Dividends paid (9.3) (1.3) (1.1) NAV as at 31 March 2024 752.5 107.3 (2.3)
The EPRA Net Tangible Assets per share as at
Market Commentary
Whilst uncertainty on the outlook and timing for interest rate cuts has weighed on real estate capital markets, the pace of declines in valuations has moderated. At the market level, the MSCI
Occupational markets have remained resilient, despite the economic challenges, delivering income growth of 3.4 per cent and rental value growth of 3.5 per cent over the 12 months to March.
Asset management update
Over the first quarter, 18 leases and tenancy agreements have been completed or renewed. Notable transactions include:
-- St Christopher’s Place, Central London– Sunday in Brooklyn have committed to a 15-year lease on a newly created anchor unit, at a rent in line with estimated rental value (‘ERV’) and with the potential for a further rental top-up based on the restaurant’s turnover. Recent F&B lettings have increased the estate’s exposure to the sector to 42 per cent by capital value. Currently 44 per cent of the space available at the estate is under offer.
-- Cowdray Centre, Colchester– following the completion of a substantial refurbishment,MKM Building Supplies have signed a new 20-year lease at a rent in line with the unit’s ERV.
--17A Curzon Street ,London W1– the newly refurbished top-floor suite of this multi-letWest End office holding has been let on a new 5-year lease to Turcan Connell at a rent of £131.50 per square foot, representing a marginal premium to ERV.
--7 Birchin Lane ,London EC3– this multi-letCity of London holding has been subject to a phased refurbishment programme which has now completed with the leasing of the final suite. The ground floor suite has been let to Exquitech on a new 5-year lease at a rent of £64.50 psf. The rent represents a marginal premium to the suite’s ERV, and a 9.5 per cent premium to the pre-refurbishment ERV.
The portfolio vacancy rate increased marginally over the quarter, rising from 6.7 per cent to 6.8 per cent by ERV. Of this, 4.6 per cent is attributed to
Portfolio valuation
Over the quarter, the Company’s portfolio recorded a valuation decline of 1.6 per cent, with valuation yields moving as set out below:
____________________________________________ |Portfolio yield (%)|December 2023|March 2024| |___________________|_____________|__________| |Net initial yield |5.5 |5.6 | |___________________|_____________|__________| |Equivalent yield |6.5 |6.7 | |___________________|_____________|__________|
Offices saw a valuation decline of 4.3 per cent amid prevailing weak investor sentiment towards the sector. The equivalent yield on the office portfolio increased by 92 basis points to 9.1 per cent.
St Christopher’s Place experienced a valuation decline of 3.3 per cent. The primary cause of this was the administration of The Body Shop, who have ceased trading from their store at 372/
The retail warehouse assets experienced a 2.4 per cent increase in value, as prime market yields compressed over the quarter amid strong levels of investor and occupational demand. The Company’s retail parks in
Industrial assets saw capital values fall marginally by 0.2 per cent as the equivalent yield on the portfolio assets remained broadly stable at 6.1 per cent.
Investment activity
As previously announced, the Company successfully completed the disposal of two office holdings in the first quarter:
--2-4 King Street ,London SW1 – a multi-let freehold of 15,000 sq ft in London’sWest End . --The Leonardo Building ,Crawley – a headquarters office building of 110,000 sq ft, located on an out-of town business park.
The sales completed at an aggregate price of £54.6m, reflecting a discount to the preceding valuation of 0.4 per cent. The pricing achieved on these disposals reflects the quality of the real estate in the portfolio which has strong underlying fundamentals.
The Manager is continuing to actively review a pipeline of further disposals from the office sector, as part of the Company’s strategy to enhance the portfolio’s exposure to structurally supported growth sectors and assets.
Share Price
As at
Cash and Borrowings
The Company had £66.1 million of available cash as at
The Company has a £260 million term loan in place with L&G which matures in
As at
Dividend
The Company paid three monthly property income distributions at a rate of
Portfolio Analysis – Sector Breakdown
Portfolio % of portfolio at % capital return Value at 31 March 2024 (adjusted for sales 31 March 2024 and CAPEX) £m Industrial 331.7 34.7 -0.2 South-East 59.0 6.2 0.8 Rest of UK 272.7 28.5 -0.5 Offices 206.8 21.6 -4.3 West End 54.7 5.7 1.7 South-East 15.9 1.7 -8.4 South-West 20.6 2.2 -11.2 Rest of UK 97.0 10.1 -5.8 City 18.6 1.9 -0.9 Retail 183.0 19.1 -3.4 West End 157.6 16.5 -3.9 South-East 25.4 2.6 -0.4 Retail Warehouse 129.0 13.5 2.4 Alternatives 106.5 11.1 -1.9 Total Property 957.0 100.0 -1.6 Portfolio
Portfolio Analysis – Geographic Breakdown
Market % of portfolio as at Value 31 March 2024 £m West End 259.0 27.1 Midlands 238.3 24.9 South East 222.4 23.2 North West 127.5 13.3 Scotland 70.6 7.4 South West 20.6 2.2 Rest of London 18.6 1.9 Total Property Portfolio 957.0 100.0
Top Ten Investments
Sector Properties valued in excess of £200 millionLondon W1, St Christopher’sPlace Estate * Mixed Properties valued between £50 million and £70 millionSolihull ,Sears Retail Park Retail Warehouse Newbury ,Newbury Retail Park Retail Warehouse Properties valued between £40 million and £50 millionLondon SW19, WimbledonBroadway ** Mixed Winchester,Burma Road Alternative Properties valued between £30 million and £40 million Industrial Chorley, Units6 and 8 Revolution Park Industrial Birmingham , Unit8 Hams Hall Distribution Park Industrial Markham Vale , Orion 1 & 2 IndustrialLiverpool , Unit 1, G.Park,Portal Way Industrial Daventry, Site E4,Daventry International Rail Freight Terminal
* Mixed use property of retail, office and residential space.
** Mixed use property of retail and leisure space.
Summary Balance Sheet
£m Pence per share % of Net Assets Property Portfolio 957.0 136.4 127.2 Adjustment for lease incentives (14.7) (2.1) (2.0) Fair Value of Property Portfolio 942.3 134.3 125.2 Trade and other receivables 26.1 3.7 3.4 Cash and cash equivalents 66.1 9.4 8.8 Current liabilities (19.7) (2.8) (2.6) Current interest-bearing loan (259.8) (37.0) (34.5) Total Assets less current liabilities 755.0 107.6 100.3 Non-current liabilities (2.5) (0.3) (0.3) Net Assets at 31 March 2024 752.5 107.3 100.0
The next quarterly valuation of the property portfolio will be conducted by
Subsequent events
On
Following the quarter ended
Important information
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via
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