F&C UK Real Estate Investments sees strong returns as sentiment improves

F&C UK Real Estate Investments Limited has announced a period of strong performance in its interim results for the six months to 31 December 2013.

According to the company’s report, F&C’s NAV total return for the six month period was 11% and the share price total return was 18.9%. The shares were trading at a premium to the NAV of 8.4% at the period end.

During the six months the value of the property portfolio increased by 2.6%. Properties in the Industrial sector witnessed the highest growth, with values increasing by 3.8%, followed by Retail Warehouses which increased by 3.1%.

As the report also highlighted, properties with the largest increase in capital values were Hemel Gateway, Hemel Hempstead, which saw an uplift of 12.6% and 14 Berkeley Street, London, which increased in value by 11.%. The portfolio delivered an income return of 3.5% over the six month period.

Commenting on the outlook for the UK Commercial Property sector, fund manager Ian McBryde said: “Sentiment towards UK commercial property is becoming increasingly positive. Yields have moved inwards and although prime property remains in favour, there are signs that investors are starting to look more closely at opportunities in the regions and for “good secondary” stock.

“There is a mood amongst investors to move up the risk curve and that perceived threats identified in some secondary property can now be viewed as opportunities. There is much greater letting activity as the UK economy and sentiment improves, bringing forward the potential for rental growth, the reduction of incentives to tenants and the resultant yield compression.”



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