IRP Property Investments Limited
Interim Management Statement
For the Three-Month Period from 1 July 2011 to 30 September 2011
Investment Objective
The investment objective is to provide shareholders with an attractive level of income together with the potential for capital and income growth from investing in a diversified UK commercial property portfolio.
Performance Summary
Total Return * | For the three month period ended 30 September 2011 |
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Net asset value per share | (1.6)% |
Ordinary share price | (13.6)% |
Portfolio total return per IPD | 1.6% |
Investment Property Databank UK Quarterly and Monthly Funds Index | 1.9% |
FTSE All-Share Index | (13.5)% |
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Capital Values - 3 months | As at 30 September 2011 | As at 30 June 2011 | % Change |
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Net asset value per share | 79.7p | 82.8p | (3.7)% |
Ordinary share price | 76.0p | 90.0p | (15.6)% |
FTSE All-Share Index | 2,654.38 | 3,096.7 | (14.3)% |
(Discount)/premium to net asset value | (4.6)% | 8.7% |
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Net gearing # | 37.4% | 37.0% |
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Sources: F&C Investment Business Limited, Investment Property Databank ('IPD'), Datastream.
* - All total returns are based on net dividends re-invested
# - Net gearing: Bank debt (less net current assets) divided by fair value of investment properties
Dividends
The fourth interim dividend for the year ended 30 June 2011 of 1.8 pence per share was paid on 30 September 2011. In the absence of unforeseen circumstances it is the intention of the Board to maintain quarterly dividends at this rate, giving a total dividend of 7.2 pence per share for the 2011/12 financial year.
Property Market Overview
The third quarter of 2011 registered a total return of 1.9%, as measured by the IPD Quarterly Index. Total returns have edged lower, on a quarterly basis, during the course of 2011 as the pace of inward yield movement has slowed. This has been reflected in a deceleration in capital growth with capital values registering a 0.4% uplift in 3Q 2011 and 2% for the January-September 2011 period. Rental growth remains subdued at 0.1% in the latest quarter.
Retail property has come under some pressure, with the shops market particularly affected. The difference in performance between Central London and provincial offices has persisted but the latest quarter has seen some cooling in the City office market to narrow the gap. The industrial sector slightly outperformed in the latest quarter following a period of relative weakness; the improvement was driven by higher total returns for standard industrial property in the South East. Prime property has continued to outperform secondary stock in most segments of the market.
The banks and leveraged owners are starting to sell more assets but the amount of prime stock being marketed remains limited.
Portfolio Overview
The value of the Company's portfolio remained broadly unchanged over the quarter at £161.6m. During the period the portfolio had an income return of 1.6%, slightly ahead of the benchmark of 1.4%. The portfolio's lack of exposure to Central London assets contributed to underperformance in capital value terms returning 0.1% against the benchmark of 0.4%.
The total return for the quarter was 1.6% which compared with the IPD Quarterly Index of 1.9%. Over the 12 month period to 30 September 2011, total returns from the portfolio were 6.1%.
24 Haymarket, London SW1 was the largest contributor to portfolio performance where the value increased by £225,000 or 5.8% due to the completion of a lease of ground and first floors to ATFC Ltd, trading as Aberdeen Steak House. At 100a Princes Street, Edinburgh, let to Swarovski, the lease expiry date was extended by 10 years to October 2026 in return for a rent-free period. As the end of the rent-free period is approaching, the value of this property increased by £180,000 or 6.9%.
At 51-53 High Street, Guildford, a renewal lease has been completed with Vision Express. The rent has increased from £211,000pa to £270,000pa on a new ten year lease with effect from October 2009.
During the quarter, Photologic Ltd, the tenant of Unit B Hemel Gateway, Hemel Hempstead went into liquidation and the premises are now vacant. The modern, well specified unit extends to 27,764sqft and has a rental value of £207,000pa. This has caused the void rate in the portfolio to rise to 5.0%, although other vacant units are currently under offer.
There were no sales and no purchases to report during the quarter.
The average weighted unexpired lease term (including breaks) is 8.1 years.
Top Ten Holdings
Property | Sector | 30/09/2011 % of portfolio |
Unit 3663, Echo Park, Banbury | Industrial | 11.1 |
Units 1-8, Lakeside Road, Colnbrook | Industrial | 7.5 |
Southampton International Park, Eastleigh | Industrial | 6.8 |
30/40, The Parade & 47/59A Warwick Street, Leamington Spa | Retail | 6.5 |
Mercury House, 1 Dove Wynd, Strathclyde Business Park | Offices | 5.8 |
Clifton Moor Gate, York | Out of Town Retail | 5.4 |
1-2 Lochside Way, Edinburgh Park, Edinburgh | Offices | 5.0 |
Hemel Gateway, Boundary Way, Hemel Hempstead | Industrial | 4.9 |
Willowbeck Road, Northallerton | Out of Town Retail | 4.1 |
Swift House, Cosford Lane, Rugby | Industrial | 3.5 |
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Total |
| 60.6 |
Geographical Analysis
Location | 30/09/2011 Percentage of Portfolio |
| 30/06/2011 Percentage of Portfolio |
South East | 49.2 |
| 49.3 |
West Midlands | 12.8 |
| 12.9 |
Scotland | 12.6 |
| 12.5 |
Yorkshire and Humberside | 9.5 |
| 9.4 |
North West | 3.8 |
| 3.8 |
East Midlands | 2.9 |
| 2.8 |
Eastern | 2.6 |
| 2.6 |
London - West End | 2.5 |
| 2.4 |
Rest of London | 1.7 |
| 1.8 |
North East | 1.7 |
| 1.8 |
South West | 0.7 |
| 0.7 |
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Total | 100.0 |
| 100.0 |
Sector Analysis
Sector | 30/09/2011 Percentage of Portfolio |
| 30/06/2011 Percentage of Portfolio |
Industrial | 36.7 |
| 36.9 |
Retail | 31.3 |
| 31.1 |
Offices | 17.6 |
| 17.7 |
Out of Town Retail | 14.4 |
| 14.3 |
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Total | 100.0 |
| 100.0 |
The Board is not aware of any significant events or transactions which have occurred between 30 September 2011 and the date of publication of this statement which would have a material impact on the financial position of the Company.
Quarterly and Key Information
Further information regarding the Company, including performance since launch and the most recent annual and interim reports, can be found at the Company's website www.irppropertyinvestments.com, or at www.fandc.com
This interim management statement has been prepared solely to provide information to meet
the requirements of the UK Listing Authority's Disclosure and Transparency Rules.
For further information please contact:
Ian McBryde/Scott Macrae
F&C Investment Business Limited
Tel: 0207 628 8000
