UK Commercial Property REIT’s net asset value (NAV) fell sharply in the final three months of last year. In a trading update the REIT reported a NAV reduction of 21.5% and a NAV total return for the quarter of -20.8%.
The REIT added that in 2022 it had experienced a 21.9% NAV reduction and a NAV total return of -18.1%, due to the challenging macroeconomic backgrounds, which has impacted valuations across the property industry.
UK Commercial Property REIT’s EPRA earnings per share increased 12.3% to 0.82p in the final quarter, reflecting 19% growth for the year. Its dividend was maintained at 0.85p for the fourth quarter.
Ken McCullagh, chair of UK Commercial Property REIT, said: “UK Commercial Property REIT’s high-quality, diversified portfolio, which is weighted towards sectors that benefit from strong underlying structural and societal drivers, coupled with our proactive approach to asset management have allowed us to deliver robust earnings growth in the final quarter and almost 20% over the year.
“This gives me confidence that, at an operational level, the company is well placed to weather the current economic headwinds and rising interest rates which have led to a rerating of real estate and therefore downward pressure on valuations.
Will Fulton, lead manager of UK Commercial Property REIT at abrdn, added: “Although the challenging macroeconomic backdrop has impacted valuations across the industry, our continued focus on asset management has driven impressive rental growth during the period.
“It is testament to the strength of our team and the underlying quality of our properties that we have been able to capture reversionary potential across a number of lease events while maintaining a very low void rate. We expect to deliver further income growth in the next 12 months as we complete development projects in the student accommodation, industrial and hospitality sectors.”
