UKCM maintains dividend as net asset value falls

7th Nov 2022 09:13

(Sharecast News) - UK Commercial Property REIT maintained its dividend in its latest quarterly update on Monday, even after its net asset value fell 10.1% to 101.5p per share.

The FTSE 250 real estate investment trust said its net asset value total return for the third quarter was -7.9%, while the first nine months of 2022 showed an overall net asset value reduction of 0.5%, and a total return of 3.7%.

It recorded a 7.1% decrease in its like-for-like portfolio capital value, net of capital expenditure, to £1.6bn, against the MSCI UK Monthly Property Index capital value, which decreased by 5.1% over the quarter.

Rent collection rates had normalised to pre-pandemic levels, the board reported, with 97% received for the fourth quarter of 2022, and 98% for the year-to-date.

The quarterly dividend was maintained at 0.85p per share, payable in November.

EPRA earnings per share for the quarter came in at 0.73p, down from 0.83p in the June period, giving dividend cover of 86.3%, with dividend cover for the nine months of 96.9%.

UKCM said it was still "one of the lowest-geared companies" in its peer group at 16%, with drawn debt at a blended interest rate of 3.16% per annum, of which 75% was at a fixed rate.

The weighted maturity was 5.2 years, and all banking covenants were "well-covered", the board said.

"Since we last reported, and as widely anticipated, the economic environment has become more challenging," said chair Ken McCullagh.

"The rise in interest rates has resulted in weakening yields, which have, in turn, put downwards pressure on valuations.

"We have continued to focus on our strategy that we have put in place over the past few years to proactively manage our portfolio towards high quality assets in sectors that are supported by structural drivers and societal changes, that positions us well for the future."

McCullagh said the company's assets were "well-placed" to deliver income growth and security, as evidenced by continued high occupancy in its portfolio, as the firm continued to sign tenants at above passing rents or rental value as vacancy or lease events arose.

"I take further comfort from the fact that our balance sheet remains lowly levered, with over three quarters of our debt at fixed rates and continues to be comfortably within the banking covenants, and undrawn debt that provides us with flexibility."

At 0843 GMT, shares in UK Commercial Property REIT were down 1.13% at 61.2p.

Reporting by Josh White for Sharecast.com.