F&C UK Real Estate suffers from loss in investor confidence after Brexit vote

F&C UK Real Estate Investments, a trust that offers investors exposure to commercial property assets, has faced a fall in profits due to weaker investor sentiment after the UK’s vote to leave the EU.

The firm’s net asset value return for the year was 7.5% as at 30 June 2016 with a net asset value of 99.2p per share, up from 97p per share at the prior year-end.

“Following on from the initial drop in the share price, the result of the EU referendum on 23 June 2016 prompted a sharper reaction as investors responded to the climate of uncertainty following the leave vote,” said Chairman Kieran Poynter.

Rental income rose to £19.6m from £18.9m in 2015 but gains on investment properties fell from £31.7m to £4.8m.

Net operating profit before finance costs also fell, to £20.4m from £46.7m and profit for the year declined to £17.18m from £40.6m.

The firm expects economic growth to be lower particularly over the next year or so but does not think there will be a prolonged recession.

“While nervousness in the investment markets does present some downside risk to near term values, the Manager reports that initial post Brexit demand is still evident across the majority of sectors and geographical areas with increased focus on defensive assets, longer leases and core locations," said the board.

Cash and cash equivalents rose to £11.9m from £4.6m and the company entered into two new loan agreements totaling £110m with a weighted average interest rate reduced by 3.3% from 5.8% in previous loan agreements.

F&C declared a dividend of 5p per share for the year, giving a yield of 5.6% on the year end share price.

At 1010 BST, the shares were down 0.01% to 95.99p.