Discount to NAV triggers UKCM EGM

Abrdn’s UK Commercial Property REIT is calling an extraordinary general meeting as the share price discount to NAV widens. The REIT is confident that shareholders will vote in favour of continuation, and is rewarding investors with a special dividend. The £1.7bn REIT, listed on the FTSE 250, said NAV per share had increased by 1.5% during the second quarter to 112.9p, with NAV total return for Q2 of 2.3%. This is markedly down on Q1’s performance of 9.8%. NAV growth for the first half of 2022 totalled 10.7%, while first half NAV total return reached 12.3%. The REIT also saw a 1.4% increase in like-for-like portfolio capital value, rising to £1.71bn. UKCM chair Ken McCullagh said: “The board, as noted in recent prior statements, is conscious of the significant discount on the share price to NAV.” As such it has announced the payment of a special dividend of 1.92p per share “to return some of the strong gains that have been realised over the last number of quarters” but “not currently reflected in the company’s share price”. He added that further special dividends, as well as share buy-backs, could be deployed to reward shareholders in the future if the share price remains depressed. The closing market share price has been more than 5% below NAV for more than 90 continuous days, meaning that, under the REIT’s rules, an extraordinary general meeting must be held to determine whether the REIT should continue to operate. Phoenix, which currently holds in aggregate approximately 43.4% of the REIT’s issued shares, has indicated it intends to vote in favour of continuation. The quarterly dividend increased by a further 6.3% to 0.85p per share, following the increases announced in the previous two quarters. This brings the H1 2022 dividend increase to 13.3%. McCullagh added: “We have delivered a strong set of results from our portfolio during the first half of 2022, with further positive leasing momentum by our asset management team driving rental growth and an increase in portfolio valuation. Of particular note we have built a strong position in both urban and big box logistics and the living assets class, where we are invested in student housing and hotels – in all of these the supply demand imbalance and societal changes continue to be highly supportive of the occupational markets and rental growth.” He added that while he was “acutely aware” of the broader economic challenges, including rising inflation and interest rates, the REIT’s low leveraged balance sheet should allow it to weather the storm. To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews