Sunday, 2 June 2019

TR Property - Final Results

I hold this property trust in my ISA and also my Sipp drawdown portfolio. It is a little different to most property funds in that it mainly holds the shares of other property companies and has just 8% of the portfolio in property directly. This has advantages regarding flexibility and lower costs.

The fund is managed by Thames River and aims to maximise total return by investing in international property shares and direct property mostly in the south east of UK. Manager, Marcus Phayre-Mudge has been involved in property investment since 1992 and has been involved in running the Investment Trust since 2004.

At the end of April the largest geographic exposure was a 39% weighting in UK property shares and a further 8% in direct property, then property shares in European companies - France making up a further 15%, Sweden 9% and Germany 30%. 

Retail and office space accounted for 22% and 31% respectively, with another 33% in residential and the remainder divided between industrials and diversified such as student accommodation and storage.

Results

The trust has recently published results for the full year to end March 2019 (link via Investegate). Net asset total return has increased by 9.1% (last year 15.5%) and share price by 6.2%.

Commenting on the results, chairman Hugh Seaborn said:

"In an environment where investors are seeking income, property benefits from the characteristic of offering relatively high income returns, often growing with inflation. Our Manager continue to focus on real estate businesses in areas and sectors which offer the likelihood of rental growth. The divergence in performance between companies with those attributes and the remainder has widened to record levels. This does create the risk of the most popular names becoming overbought and the least popular are at risk of being oversold. Our Manager remain vigilant, keeping a very close eye on earnings - the bedrock of this asset class.
Our confidence in the stability of earnings and the relative attractiveness of the asset class versus other risk assets offers little succour in the event of broader market weakness. The impact on the UK, and to a lesser extent Continental Europe, inflicted by unprecedented levels of political uncertainty may well only become apparent in years to come. What we do know, at the time of writing, is that we remain in a period of great political uncertainty and I take the opportunity to remind shareholders of the broad pan European spread of our assets". 
Income

Revenues have increased and as a result the final dividend will be increased to 8.6p (last year 7.55p) making a total of 13.5p for the year, an increase of 10% compared to the previous year (12.2p). It has produced compound annual dividend growth of 12.5% p.a. over the past 5 years and this has been fully covered by property revenues. The shares yield 3.3% at the current price of 408p.
 
5 Yr Comparison v FTSE All Share

This trust has so far been a very positive addition to my portfolio - the share price is up 40% on my purchase price at the end of 2016, plus the dividend has increased by 80%. Obviously off to a good start but I expect a little volatility in the share price until the Brexit saga is resolved...could be a while yet. However, the income seems fairly secure and I am happy to continue with my current holding as property offers diversity to my portfolio.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

2 comments:

  1. Wow! These are incredible gains both in dividends and price! How did you come about deciding to go into this trust?

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    Replies
    1. Luck plays a big part! Here's a link to my post from 2016
      http://diyinvestoruk.blogspot.com/2016/11/tr-property-trust-portfolio-purchase.html

      Here's a link to the dividend growth
      https://www.dividenddata.co.uk/dividend-history.py?epic=TRY

      as you can see the last three years has seen higher than average increases - partly due to the fall in sterling post referendum vote.

      As for share price, I managed to pick up the first tranch when there was a wide discount to NAV, maybe 15% which always helps when dealing with investment trusts.

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