To:
Company Announcements
Date:
2 February 2023
Company: CT Property
Trust Limited
LEI:
231801XRCB89W6XTR23
Subject:
Trading Update and Net Asset Value
Headlines
- NAV per share of 95.4 pence and
Net Asset Value total return of -21.0 per cent for the quarter
ended 31 December 2022.
- Share Price total return of -11.2 per cent for the quarter
ended 31 December 2022 (68.6 pence per share).
- Portfolio capital value decrease of 18.4 per cent on a
like-for-like basis.
- As of 31 December 2022, the
portfolio void rate was 2.9 per cent by estimated rental
value.
- Rent collection rates continue at pre-pandemic levels receiving
99.9 per cent for Q4 2022 and 99.9 per cent for 2022 as a
whole.
- £90 million term loan at a fixed rate of 3.36 per cent until
November 2026. Cash reserves of £32.3
million and access to a rolling credit facility of £20 million
which is currently undrawn.
- Quarterly dividend maintained at 1.0p per share, paid on
30 December 2022.
Net Asset Value (‘NAV’)
The unaudited NAV per share of CT Property Trust Limited
(‘CTPT’) as at 31 December 2022 was
95.4 pence. This represents a
decrease of 21.8 per cent from the NAV per share as at 30 September 2022 of 122.0
pence and a NAV total return for the quarter of -21.0 per
cent.
The NAV is based on the external valuation of the Company's
property portfolio prepared by Cushman & Wakefield.
The NAV is calculated under International Financial Reporting
Standards ("IFRS").
The NAV includes all income to 31
December 2022 and is calculated after the deduction of all
dividends paid prior to that date.
Breakdown of NAV movement
Set out below is a breakdown of the change to the unaudited net
asset value per share calculated under IFRS over the period from
30 September 2022 to 31 December 2022.
|
Pence per share |
% of opening NAV |
Net asset value per share as at 30
September 2022 |
122.0 |
|
Unrealised movement in valuation of
property portfolio (including the effect of gearing) |
(27.3) |
(22.3)* |
Share buy-backs |
0.3 |
0.2 |
Net revenue |
1.4 |
1.1 |
Dividends paid |
(1.0) |
(0.8) |
Net asset value per share as at
31 December 2022 |
95.4 |
(21.8) |
* The un-geared unrealised capital return of portfolio over the
quarter to 31 December 2022 was -18.4
per cent.
Matthew Howard, Fund Manager, CT
Property Trust, commented:
The rapid repricing of the wider UK real estate market means
that Q4 2022 is one of the most significant quarters for capital
value declines on record. The pace of change has been determined by
a concentration of events. Wider UK economic pressures and a highly
inflationary environment saw the Bank of England base rate and gilt yields rise from
the historic and sustained lows of recent years. This has placed
upward pressure on yields for UK commercial property, which has
been compounded by the increased cost and lower availability of
debt and some areas of distressed selling. Against this backdrop,
the autumn was a period of ‘pricing discovery’ across commercial
markets, although towards the end of the year we did see an uptick
in transactional activity on quality assets.
The industrial and retail warehousing sectors suffered the
sharpest falls in value, as the significant and sustained yield
compression of recent periods was partly reversed. We remain
confident in our conviction positions towards the industrial and
retail warehouse sectors (combined representing 77.5 per cent of
the portfolio by value), where we hold a zero void rate against
both sectors and continue to capture the in-built reversionary
income growth at lease events, demonstrating their strong
underlying occupational markets.
The Company’s wider portfolio continued to deliver positive
occupier activity, represented by the low overall portfolio vacancy
of 2.9 per cent (by estimated rental value) following the letting
at Bracknell. The continued good occupational news across all
sectors, including our offices in High Wycombe and retail in
Sunningdale outlined below, speaks to the strong underlying
fundamentals of the Company’s assets.
Our long-term focus on resilient locations, smaller assets and
active management will be of increased importance this year as
occupiers navigate inflationary pressures and a consumer credit
squeeze.
As we enter 2023, we expect to see continued pricing pressure in
parts of the commercial real estate market. An outcome of cyclical
downturns is the opportunity to acquire quality assets that offer
attractive pricing on a long-term basis. The Company maintains a
conservative level of debt and our current cash position offers the
potential to invest in new assets to enhance Company income where
and when we see value.
Portfolio Performance
The capital value of the Company’s portfolio fell by 18.4 per
cent over the quarter, with valuation movements dominated by market
yield adjustments. The vacancy rate across the portfolio fell from
5.4 per cent by estimated rental value to 2.9 per cent, driven
primarily by the letting at Unit 1 Network, Bracknell. The weighted
average unexpired lease term, assuming all break options are
exercised, fell slightly from 6.3 years to 6.2 years.
Industrial
The Company’s industrial assets saw a decline in value of 21.3
per cent over the quarter. This correction comes despite the
sector’s strong occupational market and continued rental growth.
Unit 1 Network, Bracknell, which had become vacant in September 2022, was let during the quarter
reflecting a 47 per cent uplift from the previous passing rent. We
also agreed terms for two outstanding rent reviews at Lakeside
Logistics Centre near Heathrow,
which will show material increases to previous passing rents once
concluded. The current vacancy within the industrial portfolio is
zero and there are several near-term lease events where we expect
to enhance income.
Retail Warehousing
The capital value of Company’s retail warehousing assets fell by
15.3 per cent over the quarter, which again was driven by a market
level yield adjustment. The portfolio remains fully occupied and is
characterised by ‘essential retailers’ and discount-led occupiers
let at sustainable rental levels. Exposure to this occupier base
has been part of the long-term strategy for the Company, which is
less sensitive to challenges in consumer spend and disposable
income.
High Street Retail
Although the Company’s high street retail assets saw capital
value decline of 8.0 per cent over the quarter, the in-town retail
sector has benefitted from a relative yield defence following a
number of years of previous yield decompression. Our exposure is
fairly limited at 6.4 per cent of the portfolio by value but the
neighbourhood and convenience focussed portfolio has been accretive
to portfolio income and remains near fully occupied. Over the
quarter, two lease renewals were concluded at the neighbourhood
scheme at Chobham Road, Sunningdale. The renewals were delivered at
a premium of 2 per cent above estimated rental value on 5-year
terms.
Offices
The portfolio’s office assets saw valuation falls of 15.3 per
cent over the quarter, which was also predominantly driven by
market yield adjustments. There is an increasing focus on the ESG
credentials of offices, with valuers becoming more sensitive to
potential cap-ex requirements. Companies with established and
robust ESG agendas, that have been positioning their portfolios for
the long term, are well placed in this evolving environment. The
occupational market for good quality space remains strong, as
illustrated by the November letting of two floors of offices at
Glory Park in High Wycombe. The incumbent occupier lease was
surrendered for a premium and the floors immediately relet at a
similar rental tone to a new occupier on a 10-year lease, with a
break option after 5 years.
Investment Activity
No sales or purchases concluded over the quarter.
ESG
We were pleased to retain both our GRESB two-star rating and
EPRA Gold Award for sustainability disclosures, demonstrating the
continued progress with our ESG strategy. Towards the end of 2022
we completed a programme of individual Net Zero Carbon (NZC)
surveys for all assets and have made good progress with our
portfolio level analysis, working alongside our retained advisors.
Having taken the decision to complete these surveys in advance of
our announcing our targets, the Company will soon be in a position
to release its NZC pathway.
Cash and Borrowings
As at 31 December 2022, the
Company had approximately £32.3 million of available cash and an
undrawn revolving credit facility of £20 million. The £90 million
long-term debt with Canada Life and the £20 million revolving
credit loan facility with Barclays (which is undrawn) do not need
to be refinanced until November 2026
and March 2025 respectively. As at
31 December 2022, the LTV (net of
cash) was 22.7 per cent.
Share Price
The share price was 68.6 pence per
share as at 31 December 2022, which
represented a discount of 28.1 per cent to the NAV per share
announced above. The share price total return for the quarter was
-11.2 per cent.
Share Buybacks
The Company purchased 2,475,000 ordinary shares during the
quarter. As at 31 December 2022 the
Company had 8,575,000 shares held in treasury (3.7 per cent of
ordinary shares in issue), acquired at an average discount to NAV
of 37.9 per cent.
Dividend
On 29 November 2022, the Company
announced a quarterly dividend payment of 1.0 pence per ordinary share in respect of the
financial year ended 30 June 2023,
which was paid to shareholders on 30
December 2022. The Board will continue to monitor rental
receipts and earnings closely and keep the future level of
dividends under review.
Portfolio Analysis
|
£m |
% of portfolio as at 31
December 2022 |
% capital value
movement in quarter |
Offices |
46.1 |
16.1 |
(15.3) |
·
South East |
26.4 |
9.2 |
(16.1) |
· Rest
of UK |
19.7 |
6.9 |
(14.2) |
Industrial, logistics and
distribution |
160.0 |
56.0 |
(21.3) |
·
South East |
160.0 |
56.0 |
(21.3) |
Standard Retail |
18.4 |
6.4 |
(8.0) |
· West End |
5.8 |
2.0 |
(9.8) |
· Rest
of London |
1.2 |
0.4 |
(6.0) |
·
South East |
8.2 |
2.9 |
(7.9) |
· Rest
of UK |
3.2 |
1.1 |
(5.9) |
Retail
Warehouse |
61.5 |
21.5 |
(15.3) |
Total Property |
286.0 |
100.0 |
(18.4) |
Summary Balance Sheet
|
£m |
Pence per
share |
% of Net
Assets |
Property Portfolio per Valuation
Report |
286.0 |
123.2 |
129.2 |
Adjustment for lease incentives |
(4.1) |
(1.8) |
(1.9) |
Fair Value of Property
Portfolio |
281.9 |
121.4 |
127.3 |
Cash |
32.3 |
13.9 |
14.6 |
Trade and other receivables |
6.8 |
2.9 |
3.1 |
Trade and other payables |
(9.6) |
(4.1) |
(4.4) |
Interest-bearing loans |
(90.0) |
(38.7) |
(40.6) |
Net Assets at 31
December 2022 |
221.4 |
95.4 |
100.0 |
The property portfolio will next be valued by an external valuer
during March 2023 and it is expected
that the net asset value per share as at 31
March 2023 will be announced in April
2023.
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 Regulatory Information Service
this inside information is now considered to be in the public
domain.
Enquiries:
The Company Secretary
Northern Trust International Fund Administration Services
(Guernsey) Limited
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3QL
Tel: 01481 745001
Matthew Howard
Scott Macrae
Columbia Threadneedle Investment Business Limited
Tel: 0207 628 8000