UK Commercial Property REIT Background
UK Commercial Property Trust was launched in September 2006, registered as a Guernsey investment company and has a full listing on the London Stock Exchange (FTSE 250).
The initial offering raised £530m and the proceeds were used to acquire a portfolio of properties from closed life funds held by Phoenix Group Holdings.
Similar exercises were undertaken in February 2007 and October 2009, whereby separate property portfolios were purchased from Phoenix life funds. These transactions were financed by further share issues of £360m and £111m respectively and in the case of the latter, in conjunction with the partial drawdown of a £80m Lloyds Group plc debt facility secured in June 2008.
In January 2010, a further £150m shares were issued to finance further dividend accretive acquisitions and portfolio initiatives. Further share issuance took place throughout 2014.
On 29 May 2018 shareholders voted in favour of the Company converting to a UK REIT and changing its name to UK Commercial Property REIT Limited. These changes took effect from 1 July 2018.
At an EGM in April 2019 shareholders granted approval to expand the Company’s Investment policy expanding the definition of commercial property within the Company's investment policy. This will allow the Investment Manager to respond to the evolution of the commercial property market and provide the flexibility to maintain an attractive and diversified portfolio, potentially including assets in the alternative commercial property sectors.
Prime, diversified portfolio with modest gearing
Since launch, the Company has adopted a conservative approach to gearing (the lowest in its immediate peer group), which has helped preserve value in difficult market conditions and ensured an attractive share price total return relative to the FTSE All Share REIT Index. The current maximum gearing limit is 25%. At the same time, the Company has maintained a strong bias towards prime, institutional quality properties. This portfolio continues to support an attractive yield for shareholders.
On 21 February 2019, the Company restructured its debt facilities. As at this date, the refinancing provided the Group with:
- an increase in the weighted maturity profile of its fixed term debt from 4 years to 10 years;
- additional flexibility with £150 million or 43% of total available debt (£350 million) now in the form of a revolving Credit Facility (“RCF”) available until 2024;
- Based on the cost of the drawn RCF at this date, a reduction in the Group’s current blended cost of debt from 2.89% per annum to 2.80%; and
- Net gearing of 15.3% and gross gearing of 17.3%, one of the lowest in the Company’s peer group and the quoted REIT sector.
The Company has successfully completed a range of asset management initiatives across the portfolio and has consistently delivered an attractive return for shareholders underpinned by a consistent income return.