CI Property Fund reshapes portfolio in long-term plan

In an update to investors, the Channel Islands Property Fund’s investment manager said it had seen a ‘very active’ period between 1 November 2018 and 30 April of this year – which represents the company’s half year.

‘The portfolio reduced from 13 properties to 10 at the half year end, following a sale, in December 2019, of three properties in St Helier [Jersey] with combined average weight lease length of 5.5 years for a price of £30m., a £1.5m. uplift on valuation at the time,’ said the investment manager Ravenscroft in the fund’s half year interim report. ‘With shareholders having agreed an extension to the life of the company and new six-year debt facilities secured in October 2018, the sale represented the first step in reshaping the portfolio in order that it can continue to generate dividends over the long term.’

The investment manager went on to say that Royal Bank Place in St Peter Port was acquired in June of this year – one of the island’s premier office premises.

‘Following the acquisition, the company owns 11 grade A office properties, with floor space in excess of 480,000 sq. ft, let to 23 tenants producing a contracted rental income of around £16.73m.’

The changing portfolio means that the balance of ownership by value was 68.75% in Guernsey, 18.71% in Jersey and 12.54% in the Isle of Man.

‘Over time, as appropriate assets become available, it is the aim to rebalance the value of assets between Guernsey and Jersey.’

The report added: ‘At 30 April, the portfolio’s valuation was £225.99m. plus cash on deposit from the December sale which was subsequently utilised to acquire Royal Bank Place.

‘The loan to value (including cash) stood at 41.6%. During the six month period two leases have been extended by 10 years and 12 years respectively. Discussions are under way with a number of tenants regarding changes to leases and it is hoped that these will be concluded by the year end in October.’

It was also noted that the company, for the first time, had vacant floors within its portfolio. This was primarily due to the acquisition of Royal Bank Place, where the two vacant floors were accounted for in the purchase price.

‘Approximately 19,700 sq. ft over three floors in two buildings will be refurbished to a high standard to provide good quality accommodation which the investment manager expects, when let, to produce additional rental income in excess of £750,000 per annum,’ said the investment manager.

Overall the markets in which the company operated had been buoyant in the last six to 12 months – both on letting and investment. While the impact of Brexit remained unclear, the investment manager concluded by saying its primary focus was on maximising the portfolio value.