Abrdn’s UK Commercial Property REIT plans to raise debt as it invests in residential and life sciences.
Chair Ken McCullagh said: “Having fully invested the company’s remaining cash resources, we now intend to prudently increase gearing as we make further investments that are in line with our investment strategy.”
The REIT, which is currently two-thirds invested in industrial property, saw 9% growth in net asset value per share to 111.2p over the last quarter, resulting in a NAV total return of 9.8%.
UKCM said valuation increases had boosted the like-for-like portfolio by 7.9% to £1.67bn, largely thanks to the strong performance of the industrial sector in the South East, which rose by 12%, and retail warehousing, which rose by 9.4%.
However, the REIT saw “residential asset classes, life sciences, best-in-class offices and other operational assets” as its best bets for the future. The company’s gearing is currently 12.6%.
UKCM owns more than 8m sq ft across 40 properties and has been repositioning its portfolio since 2020. Last year it exited high street retail and bought its first life sciences park. Over the quarter it boosted its alternatives investment to £166m, or 11.5% of its portfolio.
It added that it had collected 95% of all rent due, but expected that figure to rise during the quarter.
UKCM said the quarterly dividend would be increased by a further 6.7% to 80p per share, following the 16.4% increase announced for the fourth quarter of 2021. The increase, it added, reflects not only the current investment and development pipeline, but also a commitment by Abrdn to reduce its management fee.
McCullagh added: “The company is benefitting from the improved corporate efficiencies arising from the reduction in investment management fees we announced at year end. These factors combined with the strength of the current financial performance and future investment pipeline were integral to our decision to recommend a further increase to shareholder dividends.”
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