F&C Asset Management : Commercial Property Trust continues outperformance following regional purchases

PRESS RELEASE

 Records top quartile performance over one year and top decile performance over three and five years

F&C Commercial Property Trust ('the Company') has today announced in its interim results, to 30 June
2014, a period of strong performance, ahead of its benchmark index, the Investment Property Databank ('IPD') Quarterly Universe. The portfolio has recorded top quartile performance over one year and top decile performance over three and five years. The Company completed significant purchases during the six months totaling £124 million.
The Company's net asset value ('NAV') total return for the six months to 30 June 2014 was 12.2 per cent. This compares favourably with a total return of 8.6 per cent for the benchmark index. The share price total return during the period was 1.9 per cent and the premium of the share price to the NAV per share at the end of the period was 4.1 per cent.
During the six months, the Company completed the purchase of four office blocks in Prime Four Business Park, Kingswells, Aberdeen for a combined purchase cost of £95.4 million. The properties are all income producing, generating rental income of £6.9 million per annum, equivalent to a net initial yield of 6.8 per cent. The Company also purchased a brand new production and distribution warehouse unit at The Hive, Liverpool International Business Park, Liverpool for £11.9 million, reflecting a net initial yield of 6.5 per cent.
The total return from the Company's retail properties during the period was 8.4 per cent compared with a benchmark return of 7.3 per cent. The Company's best performing retail segment was retail warehouses, which recorded a total return of 9.2 per cent. Office properties produced a total return of 14.4 per cent compared with a benchmark return of 10.4 per cent. The total return from this part of the portfolio was driven by the recent purchases at Prime Four Business Park, Aberdeen, where all properties benefitted from a significant revaluation in excess of their purchase price. The Company's industrial and logistics properties delivered a total return of 10.8 per cent, compared with a benchmark return of 10.2 per cent, following success in regearing two logistics properties.
Six monthly dividends, each of 0.5p per share, were paid during the six months, maintaining the annual dividend rate of 6.0p per share. Based on this annual level of dividend, the dividend yield at the end of the period was 5.0 per cent based on the closing share price of 119.8p per share. Barring unforeseen circumstances, the dividend will continue to be paid monthly at the same rate.
Commenting on the outlook for the UK Commercial Property sector, fund manager, Richard Kirby said:
"Investor sentiment has improved but downside risks and uncertainties remain. The potential path of UK interest rates, the outcome of the referendum on Scottish independence, the UK general election in 2015, and a possible EU referendum are areas of uncertainty. In the international sphere, the debt crisis and stresses in the banking sector are still unwinding, while economic weakness in the Eurozone and som e emerging markets, plus political unrest in the Middle East and Ukraine, underline the fragile nature of the upturn.

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"In the absence of external shocks and if the UK economy performs in line with expectations, the prospects for property performance appear sound. While the total return of the past six months is unlikely to be sustained for the remainder of the year, the gradual elimination of excess capacity in the UK, a broadening of rental growth and continued strength in investor demand are predicted to lead to a period of positive total returns in the high single digits. We expect London and the South East to continue to out-perform and for the income return to become an increasingly important driver of performance."
The Company's level of gearing, net of cash, as at 30 June 2014, was 22.3 per cent. The Company's £230 million bonds and £30 million bank loan are due to mature in June 2015. The Board has been considering various options for refinancing this debt, either on or before its maturity. It is expected that the Company will be able to refinance successfully and that the current low interest rate environment and quality of the Company's portfolio mean that it will be well placed to refinance these borrowings on attractive terms.

 Net asset value total return of 12.2 per cent

 Share price total return of 1.9 per cent

 Dividend yield of 5.0% at the period end

 Top quartile performance of the portfolio over one year and top decile performance over three and five years within the IPD benchmark

 Completion of new property acquisitions totaling £124 million

 Portfolio weighted average lease length increased from 6.9 years to 7.9 years

 F&C Commercial Property Trust aims to provide Ordinary shareholders with an attractive level of income together with the potential for capital and income growth from investing in a diversified UK commercial property portfolio

 F&C Commercial Property Trust is managed by Richard Kirby at F&C REIT in London, who has an award winning track record as lead fund manager

 The Company is benchmarked against the Investment Property Databank ('IPD') Quarterly Universe

- ends - The full results statement is attached.

F&C is focused exclusively on managing money for its clients. It manages assets for a combination of insurance clients, institutional investors, intermediaries and private individuals. F&C invests across all major asset classes - equities, fixed income and property - and has specialist expertise in asset allocation, alternative investments, liability driven investments, multi-manager, private equity funds and Environmental Social and Governance (ESG) Investing. The F&C Group includes F&C REIT, a global real estate asset manager.
F&C has a strong footprint in the U.K. and the rest of Europe with assets under management of approximately £83 billion as at 30 June 2014. F&C has a rich heritage that dates back almost 150 years and can be traced back to the founding in 1868 of the Foreign & Colonial Investment Trust.

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F&C is part of Bank of Montreal (BMO) Global Asset Management, a global investment manager with more than US$280 billion in assets under management as of 31 July 2014. BMO Global Asset Management is a part of BMO Financial Group (NYSE:BMO), a fully diversified financial services organisation with US$531 billion total assets and more than 45,000 employees as of April 30, 2014.

 F&C REIT is an entrepreneurial, institutionally-partnered force in commercial property and manages a global portfolio worth £6.9 billion* on behalf of a wide range of individuals, professional investors, property trusts and institutional clients.

 F&C REIT's investment team uses both detailed proprietary and external research, sophisticated forecasting and strategic analysis to find market inefficiencies and opportunities - across property sectors, countries, types and tenants.

 F&C REIT offers a comprehensive, integrated range of real estate fund management services with a network of offices spanned across four countries: Germany (Munich), India (Mumbai), Ireland (Dublin), and the UK (London).

* As at 31.12.2013. Some assets under management are recorded at their acquisition cost, reflecting the basis on which income is generated for F&C REIT by these assets.

Disclaimer

Past performance should not be seen as an indication of future performance. The value of investments and income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested. The information, opinions estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time. F&C Group Companies may from time to time deal in investments mentioned herein on behalf of their clients. The source of information in all graphs is F&C unless otherwise stated. F&C Management Limited is authorised and regulated by the Financial Conduct Authority FRN: 119230 F&C Management Limited is a member of the F&C Group. The F&C Group is wholly owned by BMO Global Asset Management (Europe) Limited, which is itself a wholly owned subsidiary of the Bank of Montreal. F&C, the F&C logo, REO and the 'reo' logo are registered trademarks of F&C Asset Management plc. F&C Investments and the F&C Investments logo are trademarks of F&C Management Limited. © Copyright F&C Management Limited 2014. All Rights Reserved. Neither this document nor any part of it may be reproduced by any party whether by photocopying or storing in any medium by electronic means or otherwise without the prior approval of F&C Management Limited.
F&C Management Ltd accepts no liability in respect of the information or any views expressed herein which may be subject to change without notice at any time.

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