UKCM’s high street exit helps it outperform benchmarks
UK Commercial Property REIT has outperformed its benchmark as it shelves high street retail.
The £1.2bn industrial-heavy REIT had a solid first six months of the year, with portfolio total returns at 6.5%, ahead of its 5.5% benchmark, and boosted its NAV return to 6% from H1 2020’s -5.1% return.
Chair Ken McCullagh said that the REIT’s healthy financial position would allow it to continue to invest and increase dividends. “The company’s rapid return in performance is testament to our clear strategy of investing in a diversified portfolio of assets that are fit for the modern economy, as well as working closely with our tenants over the last 18 months,” he said.
UK Commercial Property REIT has outperformed its benchmark as it shelves high street retail.
The £1.2bn industrial-heavy REIT had a solid first six months of the year, with portfolio total returns at 6.5%, ahead of its 5.5% benchmark, and boosted its NAV return to 6% from H1 2020’s -5.1% return.
Chair Ken McCullagh said that the REIT’s healthy financial position would allow it to continue to invest and increase dividends. “The company’s rapid return in performance is testament to our clear strategy of investing in a diversified portfolio of assets that are fit for the modern economy, as well as working closely with our tenants over the last 18 months,” he said.
“This stands us in good stead to increase earnings, drive shareholder value and enhance the company’s status as one of the UK’s largest diversified REITs.”
The REIT was aided by the sale of three retail properties totalling £67.9m, including the disposal of its final high street retail asset. But while it now has 63% of its portfolio in industrials, with retail accounting for just 10.7%, the REIT has not turned aside from retail investment altogether. After the reporting period it bought Trafford Retail Park in Manchester for £32.8m.
Kerri Hunter, interim fund manager of UKCM at abrdn, said: “These disposals provide us with additional firepower as we look to invest in future-fit assets that we expect to play a continued role in today’s modern economy. As a diversified REIT, we benefit from the ability to look across different sectors to find investment opportunities that deliver an attractive level of income, together with the potential for capital and income growth. This includes the retail sector, where we expect bifurcation, with modern retail parks, let at affordable rents and anchored by grocery, discount variety and DIY occupiers, seeing yields harden to deliver strong returns over the next 12 months.”
UKCM was also able to reduce its gearing to 1.9% from 10.5% in H1 2020.
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