UK Commercial Property reports 6.8% rise in NAV per share

20th Aug 2014 08:24

UK Commercial Property Trust has posted a 6.8% increase in its net asset value (NAV) per share, which it said was mainly due to a 6% increase in the capital value of the property portfolio, which at the period end totalled £1.1bn. NAV per share climbed from 73.1p to 78.1p, while the NAV total return for the period was 10.1%, ahead of the IPD benchmark of 8.3%. "The UK commercial property market delivered a high level of investment performance over the first half of 2014 as investors continued to target an asset class that remains very much in favour," the company said. "Property performance was driven by yield compression and, to a lesser extent, rental growth which pushed valuations higher. One theme to highlight over the period was that, whilst London and the core South East markets continued to be the best performing locations, the broader UK market is now contributing to the impressive returns that commercial property is producing."Gearing dropped from 20.7% to 19.1% during the six months, making it the lowest amongst the company's peers. Acquisition of new leisure centre in SwindonThe company also announced that it has agreed to acquire Regent Circus in Swindon in a deal worth £40.48m at a yield of 5.3%. The property is a new 97,000 square-foot family-orientated leisure development that is 97% pre-let. The site is anchored by a Morrisons supermarket, which is due to open in November, with the leisure element due to open early next year. The scheme is expected to generate £2.1m a year in rental income from leases that have an average length of 20 years. Financing for the purchase will come from a combination of the £32m proceeds of the group's treasury share issue and other resources, with the consideration due to be paid in tranches. Chairman Christopher Hill said: "This acquisition supports the company's ongoing investment strategy of acquiring assets that have the potential for both income and capital growth. "It also represents an increase in the company's leisure holdings, one of the company's favoured sectors, and is let to tenants with strong covenants and on terms that will also improve the average lease length of the portfolio."NR