UKCM’s portfolio dives by 17.8%
UK Commercial Property REIT’s net asset value has fallen to just over £1bn.
In a Q4 trading update this morning, the FTSE 250-listed UKCM said its total portfolio value had fallen by 17.8% to £1.31bn, from £1.58bn in September. NAV was down from £1.32bn to £1.04bn
UKCM said the £275.2m fall in net assets was “predominantly driven by a market-wide rerating of yields in response to interest rate rises.”
UK Commercial Property REIT’s net asset value has fallen to just over £1bn.
In a Q4 trading update this morning, the FTSE 250-listed UKCM said its total portfolio value had fallen by 17.8% to £1.31bn, from £1.58bn in September. NAV was down from £1.32bn to £1.04bn
UKCM said the £275.2m fall in net assets was “predominantly driven by a market-wide rerating of yields in response to interest rate rises.”
The fall of 17.8% was marginally worse than the MSCI UK Monthly Property Index average, which was a 15.6% decrease over the quarter.
However, earnings were up, with a 12.3% increase in EPRA earnings per share to 0.82p for the quarter, leading to 19% growth for the year.
UKCM chair Ken McCullagh said: “This gives me confidence that, at an operational level, the company is well placed to weather the current economic headwinds and rising interest rates, which have led to a rerating of real estate and therefore downward pressure on valuations. While we have not been immune from this, our balance sheet remains well positioned with low gearing.”
He added that UKCM would maintain its dividend for the final quarter. This translates to an 11% increase in ordinary distributions to shareholders over the year, a level which is 97% covered.
Earlier this month, UKCM extended its £180m revolving credit facility with Barclays, of which £93m is drawn, to January 2026. This has a new margin of 1.9% and a blended interest rate of 3.68% pa.
The REIT’s LTV is currently 20%, and the board continues to target a gearing level of up to 25%. However, added costs on its development pipeline might tip it over target.
UKCM has a pipeline of five developments due to complete this year and next. The remaining £55m will be funded through existing borrowing, which will move gearing to approximately 24.6%.
But the REIT added: “It is reasonably foreseeable that the current economic and investment climate and its market-wide impact on valuations could take gearing slightly above, over the medium term, the board’s target level of gearing of 25%.”
To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews
