UK commercial Property trust shares down, but why?

UK Commercial Property Trust has recently published that there has been a decline in its year-end net asset value (also known as NAV) due to a decrease in its property portfolio value, as well as a decrease in the value of its industrial portfolio alongside its working capital outgoings.

The shares associated with the UK Commercial Property Trust have therefore declined and the net asset value per share recorded on December 31st 2012 was 69.9p in contrast with 75.9p the year before. However, the income from rent for this period increased by 9.2%, which resulted from the £164m-worth of acquisitions over the previous two years.

During the five year period preceding the share post of December 2012 the company returned 6.7% and 36.3%  as a total return basis based on a net asset value, and this was ahead of the IPD benchmark (which is 1.7%) and the FTSE Real Estate Investments Trusts Index (-25.9%). However, the NAV total return was then -1.0%, the main reason for this being because the proportion of Central London offices in the company’s portfolio is rather low, while its portfolio contains a high percentage of shopping centres, compared to the benchmark. The fact that the company was overweight in shopping centres in comparison with other sectors was a significant factor in the decrease of its shares – consumer and investor inactivity in this sector contributing to this decline.

Thus investment in Central London offices can be interpreted as the safe option for investors and may serve to bolster a property company’s portfolio, especially from a shareholder’s perspective.

Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.