Balanced Commercial Property NAV narrows amid office sector weakness

Balanced Commercial Property Trust reported a net asset value total return of -0.8% for the quarter ended 30 June on Monday, reflecting continued economic pressures on the real estate sector.

The London-listed firm said its unaudited net asset value per share decreased to 105.1p, down from 107.3p at the end of March.

That decline was attributed to a 2.1% drop in property portfolio valuation, partially offset by revenue gains and dividends.

BCPT's share price also saw a negative total return of -1.1% over the same period, closing at 79.2p per share, representing a 24.6% discount to net asset value.

The trust's portfolio experienced a capital return of -1.5%, largely driven by a -9.6% return from office assets.

It said the office sector remained a challenge due to persistent uncertainty and investor wariness, despite stabilising hybrid work models.

In line with its strategic pivot away from office assets, BCPT disposed of three office properties post-quarter, generating £60.7m.

Since December 2023, the trust had sold seven office holdings, reducing its office sector exposure from 29.6% to 14.4% and raising £129.5m at an average discount of 4.1% to preceding valuations.

Other sectors within BCPT's portfolio demonstrated resilience, with retail warehousing assets showing a 3.3% capital growth and the St Christopher’s Place asset in central London returning to positive capital growth.

Industrial assets and student housing remained stable, underpinned by strong investor demand and secure income streams.

The trust completed or renewed 19 leases during the quarter, enhancing its income profile.

Notable transactions included new leases at St Christopher’s Place and Wimbledon Broadway, and a lease extension at Watchmoor Park.

BCPT said it was currently undergoing a strategic review, with interest from several potential third-party investors.

The outcomes of the review, which could include a managed wind-down, were expected to be announced later this quarter.

BCPT held £67.3m in available cash as of 30 June, and maintained a loan-to-value ratio of 20.6% net of cash.

It paid three monthly property income distributions at a rate of 0.44p per share during the quarter.

At 1028 BST, shares in Balanced Commercial Property Trust were up 2.35% at 87.2p.

Reporting by Josh White for Sharecast.com.