The £450m Property Income trust has reported a net asset value total return of 10.3 per cent over the year ending 30 June, compared to a return of 2.2 per cent for the FTSE All Share index and a loss of 8.3 per cent for the FTSE Real Estate Investment Trusts index.
In the first six months of 2016, the trust returned 2.3 per cent, against a 4.3 per cent gain in the FTSE All Share index and an 11.8 per cent loss for the FTSE Reit index.
Back in July, Standard Life announced it had sold three properties within the trust, amounting to around £12.4m in assets, with the proceeds from the sale being used to reduce the borrowings under the trust’s credit facility.
This came just weeks after the fund group was forced to suspend trading in its £2.9bn real estate fund due to a hefty amount of redemptions from investors following the Brexit vote.
The trust, which is managed by Jason Baggaley, also reported a dividend cover of 111 per cent for the first six months of the year, compared to 98 per cent for 2015, which Standard Life stated highlighted the “income accretive nature” of the portfolio acquired at the end of last year.
Net asset value (NAV) per share, however, dipped to 81.8p on 30 June, from the 82.2p reported at the end of December 2015.
Standard Life blamed this on the movement of interest rate swaps, where it incurred a swap liability of £5.4m, which it said offset the positive performance of the portfolio.
Robert Peto, chairman of the trust, said uncertainty following the decision of the UK electorate to leave the European Union is likely to continue, although he said it wasn’t yet possible to forecast what the impact of the Brexit vote will mean for UK growth, and in particular the UK commercial real estate market.
“In the short term at least the sentiments are negative,” he said, adding the share prices of Reits and other closed ended companies has also been affected by this negative sentiment with the FTSE All-Share Reit index falling by 12 per cent in the first week after the referendum.
He admitted the share price of the Standard Life trust has been volatile over this period, with a low of 68p on 6 July 2016, compared to 84.5p on the day of the vote.
Mr Peto said, however, the price recovered quickly following the initial shock, and is now trading at 81.25p, as at 26 August 2016, which is a discount to net assets of 0.7 per cent.
Dan Farrow, director of SBN Wealth Management, said: “It would be interesting to see what the up to date figures are now, because on 30 June, the FSTE All Share had been relatively flat and commercial property valuations nearing the peak of the cycle.
“As an investor, I would want to see if the trust had realised gains or whether these were driven by bullish valuations, and also how much leverage was being used to boost the trust’s return.”
katherine.denham@ft.com
