UK Commercial Property REIT has reported a 5.1% decline in its net asset value in the half-year ended 30 June due to revaluation in the wake of coronavirus.
The REIT reported a net loss of £58m for the year, driven by a £80m valuation loss and offset by £34m in rental income.
Its NAV is down 6.7% compared to a year ago.
UKCM agreed three major sales during the period, bringing in £85m and reducing its exposure to retail.
The REIT has been shifting its focus to industrials, which now make up 54% of the £1.22bn portfolio.
It reported a -3.4% return for the period, with industrials at 0.4%, but driven down by alternatives at -11.2% and retail at -9.5%. The two poor-performing sectors made up 31% of the portfolio.
Ken McCullagh, chair of UKCM, said the REIT is forecasting ongoing declines in valuation for the remainder of the year.
He said: “In terms of the economic impact and because it touches every aspect of life, the UK commercial real estate market is at the forefront of the impact that Covid-19 has wreaked on the UK economy.
“The ability of tenants to continue trading and pay pay rent will be key in preserving values and revenues.”
He added that different sectors will see different recoveries in the move to online retail, supporting UKCM’s shift to industrial.
“Overall, I believe the company has both a strong portfolio and financial foundations that will allow it to navigate through the current difficult situation and maintain its position as one of the UK’s largest diversified REITs.”
Will Fulton, lead manager of UKCM at Aberdeen Standard Investments, added: “To say that the first half of the year was not what we expected when we started 2020 would be an understatement of the highest order.”
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