Guernsey-registered F&C Commercial Property Trust has called an extraordinary general meeting of shareholders to be held on 28 September to decide whether the AIM-listed closed-ended property investment company should continue operating. When it was launched on 18 March 2005 the prospectus stated that the directors would call such an EGM if the market price of the company share was more than 5% below the published net asset value of the share for a continuous period of 90 days or more. This position had been reached on 23 August. The directors of the company are recommending that the company continues.
Guernsey-registered F&C Commercial Property Trust has called an extraordinary general meeting of shareholders to be held on 28 September to decide whether the AIM-listed closed-ended property investment company should continue operating. When it was launched on 18 March 2005 the prospectus stated that the directors would call such an EGM if the market price of the company share was more than 5% below the published net asset value of the share for a continuous period of 90 days or more. This position had been reached on 23 August. The directors of the company are recommending that the company continues.
From the launch of the company to 30 June 2007 the NAV total return for share was 64.7% compared with a total return of the FTSE all-share index of 27.9%. Over the same period the property portfolio generated a total return of 56.4% compared with a total return from the IPD Monthly Index of 42.7%. F&C's total portfolio of diversified commercial property in the UK was valued at 1.3 bn (almost EUR 2 bn) on 30 June this year.
The company said in a statement that there is now evidence of a slowing in certain sectors of the UK commercial property market after three years of exceptional total returns from 2003 to 2006. 'Yield compression, which has largely driven performance of the market during this period, now appears to have stabilised and in certain sectors capitalisation rates have begun to fall. This moderation in returns was expected as the all-property initial yield of 4.56 per cent. from the IPD Monthly Index as at 30 June 2007 was below the five-year swap rate and risk free yield on gilts.'
'The market is, however, still experiencing strong investment demand for prime properties but demand is weakening for more secondary properties. In particular, overseas buyers continue to be very active in the market, especially in Central London. The Board believes that the Property Portfolio comprises prime properties in the main.'
F&C said the mid-year in-house forecast for the UK commercial property market is for total returns of between 7 and 8 per cent. for 2007 and that the company's property portfolio is well placed to outperform the wider UK commercial property market over the medium term.