The commercial property market is beginning to slow, with F&C predicting between 7% and 8% sector returns for 2007.
In releasing its six-month to 30 June interim results to the LSX, F&C Commercial Property Trust outlined a more cautious overall market expectation than widely forecasted, due to a weakening in secondary stock and lower bidder depth.
“Having experienced three years of exceptional total returns, the UK commercial property market is now slowing,” F&C Commercial Property Trust chairman Peter Niven says.
“Yield compression, which has largely driven performance of the sector during this period, would now appear to have stabilised.”
F&C announced a first interim dividend of 1.5p per share was paid on 27 July, with a further 1.5p per share to be paid on 26 October, to shareholders registered on 28 September.
The trust says it recorded a 6.3% net asset value return and 4.8% dividend yield; while its total assets reached £1.3 billion – a 2.6% increase in the period.
Its un-geared portfolio total return was 6.1%, above the 4.4% Investment Property Databank UK Monthly Index return.
F&C’s retail properties return was 4.7%, again above the 2.9% IPD index all-retail return.
Niven says the office market continues to be the best performing sector, propelled by strong rental growth and investor demand in Central London, delivering an 8% return.
He says: “2007 is an important year for the company, with a significant portion of its income subject to rent review, lease renewal or break options.”
Since its March 2005 launch the trust has produced a 64.7% net asset value total return.
To comment on this story, contact:
0207 034 2681
Claim from SocGen's global markets division
Third annual Hampton-Alexander review
European Commission yields to pressure
Numbers in Adviserland
Retirement sector trends