Standard Life property income trust hits half-billion pound milestone on industrial sector focus

Robert Peto

Its annual results show the value of the trust at the end of December 2018 was £499.1 million, up from £433.2 million the previous year.

It achieved a net asset value return (NAV) of 9.6 per cent in 2018, which it said was largely because of its “strategic overweight position in the industrial sector”.

Over the period, the company completed eight purchases for a total of £87.9 million.

The investments include the Speedy Hire site at Cambuslang. The company purchased the unit of 61,200 sq ft close to Junction 2A of the M74, providing easy access to Glasgow and the Scottish motorway network.

The purchase price of £5.03 million reflected an initial yield of 5.9 per cent. The property is let to Speedy Hire for a further five years, and the lease has an outstanding rent review. The company expects the yield to increase to 7 per cent.

Robert Peto, chairman of the trust, said in the annual report: “It is pleasing to report that your company has continued to deliver both strong portfolio and NAV returns in 2018. These returns have been driven by a portfolio that is strategically weighted to the outperforming industrial sector, with low exposure to the struggling retail sector.’’

Mr Peto said growth had been achieved despite the UK having been “mired in political uncertainty” since the EU referendum and the inconclusive result of the general election in 2017.

He said: “It is not surprising that the continued uncertainty of Brexit has impacted on tenants’ decision making – letting transactions are taking longer and tenants are seeking more flexibility and only making commitments when they absolutely have to.

“The retail occupational market is very thin, with only discount retailers taking space; the office market  has perhaps been surprisingly resilient (we are certainly encouraged by viewing levels on the vacant accommodation we have); and the industrial/ logistics demand has generally remained robust, but certainly should not be taken for granted.’’

Over the past ten years the SLI Property Income Trust has produced a NAV total return of 187 per cent compared with a sector average of 159.9 per cent.

The report said that the trust had a secure and growing balance sheet, significant financial resources and a portfolio of outperforming assets that continued to underpin an attractive dividend for shareholders.

The trust competed a number of asset management initiatives, contributing to income and capital values, during 2018, including 13 new lettings generating £2.65 million a year of income and eight lease renegotiation or rent reviews securing longer term income of £1.58 million.