UK Commercial Property REIT Ltd – Net Asset Value as at 31 March 2022

4 May 2022

UK Commercial Property REIT Limited (“UKCM” or “the Company”)

Net Asset Value at 31 March 2022



  • 9.0% growth in NAV per share to 111.2p (31 December 2021: 102.0p) for the quarter, which has resulted in a NAV total return of 9.8% for the quarter. The MSCI monthly index increased 5.6% over the quarter.
  • Valuation increases across all asset classes led to 7.9% growth in the like-for-like portfolio to £1.67 billion, net of capital expenditure, with the 64% industrial weighting driving outperformance against the 4.4% uplift in the MSCI monthly index over the quarter.
  • Rent collection for billings raised in the first quarter of 2022 (collectively the 25 March and 1 April, English, and 28 February, Scottish, quarterly billing dates) stood at 95% after allowing for agreed rent deferrals and including those tenants who have paid, by agreement, on a monthly basis. This figure is expected to rise throughout the Quarter.
  • 9.0% increase in EPRA Net Tangible Assets per share to 111.2p (31 December 2021: 102.0p).
  • Quarterly dividend increased by a further 6.7% to 0.80p per share, following the 16.4% increase announced in relation to the fourth quarter of 2021. This increase reflects the current investment and development pipeline in addition to the commitment by the Investment Manager to reduce their Management Fee.  
  • EPRA earnings per share for the quarter of 0.76p (31 December 2022: 0.90p, which included the reduction of bad debt provisions against the Company’s largest arrear), giving dividend cover for the quarter of 101%.

Ken McCullagh, Chair of UKCM, commented: “Having finished last year with a strong final quarter, we have continued that positive momentum into 2022.  The strong NAV performance reflects the hard work we have undertaken over recent years to reposition the portfolio towards asset classes that are capable of delivering long term and growing income for shareholders, as well as the asset management initiatives undertaken by the team at abrdn.  Having also fully invested the Company’s remaining cash resources, we now intend to prudently increase gearing as we make further investments that are in line with our investment strategy. 

“While the ongoing situation in Ukraine has created further economic uncertainty just as Covid-19 restrictions were receding, resulting in  higher energy and developments costs, we remain confident in the robustness and resilience of our portfolio. The Company is also benefitting from the improved corporate efficiencies arising from the reduction in investment management fees we announced at year end. These factors combined with the strength of the current financial performance and future investment pipeline were integral to our decision to recommend a further increase to shareholder dividends.

“On a personal note, I am also very pleased to be able to welcome Will Fulton back on to the abrdn team following a temporary period of absence while he recovered from a health-related issue.”

Strong Investment Pipeline

  • Having fully invested its available cash in the final quarter of 2021, the Company has a strong near-term investment pipeline which presents a number of opportunities to add further high quality assets which are earnings accretive to UKCM’s portfolio while prudently increasing gearing.  As previously stated, the Company is targeting primarily residential asset classes, life sciences, best in class offices and other operational assets where it can partner with an experienced and skilled operator and which are supported by strong underlying real estate fundamentals.  This is in line with the Company’s strategy to invest in future fit assets that are benefitting from the long-term structural changes in both the economy and society.

Asset management driving occupancy and value

The Company has a very low void rate of 2.4% (2.1% at Q4 2021) as the asset management team continued excellent progress on growing the portfolio’s income and driving value. 

Notable transactions over the last quarter include:

  • The Company negotiated an agreement for the Secretary of State to extend its occupation of the Company’s 70,000 sq ft office building in Bristol for a further three years with a 9% increase in rent to £1.72 million per annum.  The asset is in a prime location within Bristol’s office core directly opposite Temple Meads railway station and, as part of the negotiations, the Secretary of State agreed to move the lease outside of the Landlord & Tenant Act, providing improved flexibility for a future redevelopment or refurbishment.
  • At its Gilmore Place student housing development, the Company successfully negotiated and agreed a 20-year lease with the University of Edinburgh at an annual rent of £1.24 million per annum, which is subject to annual CPIH increases with a cap and collar of 1 – 4%.  The Company had originally expected to operate and lease the asset independently to generate a higher level of rent but decided that the opportunity to fix a long term guaranteed and growing income stream from a first-class tenant covenant was in the best interests of shareholders, particularly given the anticipated valuation increase compared to the original business plan.  This new lease was agreed in April 2022 after the period end and provides certainty of income for a development which is due to complete in time for the commencement of the 2022/23 academic year.
  • Development has commenced of the land acquired with Precision Park, the life sciences and tech focused industrial and business park which the Company purchased in Leamington Spa in December last year.  The new 67,700 sq ft sub divisible unit is targeting strong ESG credentials and environmental performance with an EPC of A and a BREEAM rating of Very Good.  Practical Completion is scheduled to take place in January 2023. 

Strong balance sheet with significant covenant headroom and further resources available

  • Robust balance sheet with £85 million available to invest from current resources, comprising the £110 million available through the low cost, revolving credit facility plus existing cash and allowing for future capital commitments and the dividend payable in May 2022. Together, these resources provide the Company with significant liquidity and flexibility at both a corporate and portfolio level to fund further acquisitions.
  • The Company’s gearing1 is 12.6% as at 31 March 2022. The drawn debt has an overall blended interest rate of 2.79% per annum with a weighted maturity of 6.1 years.

1 Gearing – presented in line AIC Property Disclosure Guidance and calculated as debt less cash dividend by investment property value.

Rent Collection remains robust

  • Rent collection rates normalised throughout 2021 and this has continued in the first quarter of 2022. Payments received so far for Q1 billings (covering April to June 2022) reflect 95% of rents due as at close of business on 29 April 2022, collectively the 25 March and 1 April, English, and 28 February, Scottish, quarterly billing dates) after allowing for agreed rent deferrals and including those tenants who have paid, by agreement, on a monthly basis. 

The table below sets out the first quarter’s rent collection, split between sectors:

% of Q1 2022 rent demanded % collected
Industrial  54% 95%
Office  18% 97%
Retail  15% 97%
Other   13% 93%
Total 100% 95%

The Company has a diverse tenant mix with a number of high quality occupiers, the largest five of which comprise resilient businesses such as Ocado (5.2% of rent), Public Sector (5.0%) Warner Brothers (4.4%), Amazon (4.2%) and Total (3.2%).

The first quarter dividend has been increased by a further 6.7% to 0.80p per share. This follows a 16.4% increase for the prior quarter and reflects the Board’s continued recognition of the importance of income to shareholders. Dividend cover for Q1 2022 was 101% and the Board believe the further increase to be appropriate and sustainable given the recently announced commitment by the Investment Manager to reduce their fee as well as the current investment and development pipeline, with a number of significant ongoing developments due to complete in the second half of the year.

Breakdown of NAV movement

Set out below is a breakdown of the change to the unaudited net asset value per share calculated under International Financial Reporting Standards (“IFRS”) over the period from 31 December 2021 to 31 March 2022:

UK Commercial Property REIT Limited Per Share (p) Attributable Assets (£m) Comment
Net assets as at 31 December 2021 102.0 1,325.2
Unrealised increase in valuation of property portfolio 9.7 126.2 Predominantly like for like increase of 7.9% in property portfolio. Includes accounting adjustments for lease incentives.
Capex -0.5 -6.6 Predominantly relates to the capex for the ongoing student accommodation developments at Exeter and Edinburgh and the industrial unit development at Sussex Junction.
Income earned for the period 1.2 15.9 Equates to dividend cover of 101%.
Expenses for the period -0.5 -6.1
Dividend paid on 25 February 2022 -0.7 -9.7
Net assets as at 31 March 2022 111.2 1,444.9

The EPRA Net Tangible Assets per share are 111.2p (31 December 2021: 102.0p) with EPRA earnings per share for the quarter being 0.76p (31 December 2021: 0.90p).

Sector Analysis

Portfolio Value as at 31 Mar 22 (£m) Exposure as at 31 Mar 22 (%) Like for Like Capital Value Shift (excl sales, purchases & CAPEX) Capital Value Shift (including sales & purchases)    (£m)
Valuation as at 31 Dec 21 1,537.5
Industrial 1,071.7 64.2 9.6 96.6
South East 40.1 12.0 74.3
Rest of UK 24.1 5.9 22.3
Retail 201.6 12.2 8.2 15.4
High St – South East 0.9 2.2 0.3
High St- Rest of UK 1.2 3.3 0.6
Retail Warehouse 10.1 9.4 14.5
Offices 226.2 13.6 3.2 7.1
West End 1.7 0.0 0.0
South East 5.1 5.3 4.3
Rest of UK 6.8 2.5 2.8
Alternatives 166.1 10.0 3.5 9.0
External valuation at 31 Mar 22 1,665.6 100.0 7.9 1,665.6

The independent valuation as at 31 March 2022 was carried out by CBRE Ltd.

Net Asset Value analysis as at 31 March 2022 (unaudited)

       £m % of net assets
Industrial 1,071.7 74.2%
Retail 201.6 14.0%
Offices 226.2 15.7%
Alternatives 166.1 11.5%
Total Property Portfolio 1,665.6 115.4%
Adjustment for lease incentives and accruals -31.1 -2.2%
Fair value of Property Portfolio 1,634.5 113.2%
Cash 30.5 2.1%
Other Assets 51.5 3.6%
Total Assets 1,716.5 118.9%
Current liabilities -33.2 -2.4%
Non-current liabilities (bank loans) -238.4 -16.5%
Total Net Assets 1,444.9 100.0%

The NAV per share is based on the external valuation of the Company’s direct property portfolio as at 31 March 2022. It includes all current period income and is calculated after the deduction of all dividends paid prior to 31 March 2022.

The NAV per share at 31 March 2022 is based on 1,299,412,465 shares of 25p each, being the total number of shares in issue at that time.

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.

Details of the Company may also be found on the Company’s website which can be found at:

For further information please contact:

Will Fulton / Kerri Hunter / Gregg Carswell, abrdn
Tel: 0131 528 4261

William Simmonds, J.P. Morgan Cazenove
Tel: 020 7742 4000

Richard Sunderland / Claire Turvey / Emily Smart / Andrew Davis, FTI Consulting
Tel: 020 3727 1000

The above information is unaudited and has been calculated by abrdn.


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