Year End 2017 - Results Presentation - UK Commercial Property REIT

 
Year End 2017 - Results Presentation - UK Commercial Property REIT
Year End 2017 - Results Presentation
                                                                                                      Presented by:
                                                                                                      Andrew Wilson, Chairman of UKCPT
                                                                                                      Will Fulton, Standard Life Investments
                                                                                                      Graeme McDonald, Standard Life Investments

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                                           This presentation is for professional clients and investment professionals
                                                     only and should not be relied upon by retail clients.
Picture: CGI of Maldron Hotel, Newcastle
Year End 2017 - Results Presentation - UK Commercial Property REIT
Agenda
•   Chairman’s Overview
•   The Market and 2017
•   Financial Highlights
•   Portfolio and Performance
•   Chairman’s Concluding Remarks
Year End 2017 - Results Presentation - UK Commercial Property REIT
February 2018
UK Commercial Property Trust

Overview
Market and UKCPT

    UK real estate surprised on the upside in 2017, delivering strong total returns, despite the political uncertainty
    Following its restructuring in 2015 the UKCPT’s portfolio total return has outperformed the market (MSCI/IPD Monthly
     Index) for the second year running
    Strategic sales at above valuation, which continued after the period end, have enhanced performance with proceeds being
     reinvested into assets in favoured sectors that have secure income characteristics
    £8.4m of annualised income secured through 30 new lettings and 38 lease renewals / rent reviews
    Strong tenant base with 99% of rent collected within 21 days of due date during 2017
    Sustainable and attractive dividend yield, underpinned by a portfolio that also has significant reversionary potential
    Income returns will be crucial to future performance
    UKCPT well positioned with a strong portfolio, significant cash resources, and low gearing

                    * Source: Standard Life Investments.                                                                                                              3
                    ** Guernsey based, London listed Property Investment Companies
                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
Year End 2017 - Results Presentation - UK Commercial Property REIT
Agenda
•   Chairman’s Overview
•   The Market and 2017
•   Financial Highlights
•   Portfolio and Performance
•   Chairman’s Concluding Remarks
Year End 2017 - Results Presentation - UK Commercial Property REIT
February 2018
UK Commercial Property Trust

Economic Momentum

                          70                                                                  Markit/CIPS UK Purchasing Managers' Index

                          65

                          60
            PMI Balance

                          55

                          50

                          45
                                                                                                                UK Manufacturing PMI                                                                                                             UK Services PMI
                                                                                                                UK Construction PMI                                                                                                              Balance
                          40
                                                                   Jun-12

                                                                                                                         Jun-13

                                                                                                                                                                               Jun-14

                                                                                                                                                                                                                                     Jun-15

                                                                                                                                                                                                                                                                                           Jun-16

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                                                 Feb-12

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                                                                                                                                                                                                                   Feb-15

                                                                                                                                                                                                                                                                         Feb-16

                                                                                                                                                                                                                                                                                                                               Feb-17
                                        Dec-11

                                                                            Aug-12

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                                                                                                                                                                                                                                                                                                                                                          Aug-17

                                                                                                                                                                                                                                                                                                                                                                            Dec-17
                               Oct-11

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                                                                                                                                                                                                 Oct-14

                                                                                                                                                                                                                                                       Oct-15

                                                                                                                                                                                                                                                                                                             Oct-16

                                                                                                                                                                                                                                                                                                                                                                   Oct-17
                                                          Apr-12

                                                                                                                Apr-13

                                                                                                                                                                      Apr-14

                                                                                                                                                                                                                            Apr-15

                                                                                                                                                                                                                                                                                  Apr-16

                                                                                                                                                                                                                                                                                                                                        Apr-17
                               The economy is holding up better than expected and forecasts are generally resilient
                                        Source: Thomson Reuters Eikon, Standard Life Investments                                                                                                                                                                                                                                                                                     5
Year End 2017 - Results Presentation - UK Commercial Property REIT
February 2018
UK Commercial Property Trust

Standard Life Investments – UK recession indicator – 12 months ahead from Q3 2017

                                           12 month outlook - low probability of UK recession

                    Source: Standard Life Investments, January 2018                             6
Year End 2017 - Results Presentation - UK Commercial Property REIT
February 2018
UK Commercial Property Trust

                                                                       UK Investment Volume
                     80000

                                                                             UK Investors   Overseas Investors
                     70000

                     60000
                £m

                     50000

                     40000
                                                                                                                 H2

                     30000

                                                                                                                 H1
                     20000

                     10000

                         0

                                             UK liquidity expected to continue
                     Source: Standard Life Investments, January 2018                                                  7
Year End 2017 - Results Presentation - UK Commercial Property REIT
February 2018
UK Commercial Property Trust

2018 Economics and Forecasts

 Politics continues to dominate the headlines
 The economy is expected to slow this year, recession is likely to be avoided though

 Forecasting, we expect relatively modest returns this year and reasonable relative returns thereafter

 Despite strong performance to date, industrial property is expected to continue to lead the sectors with
  alternatives also doing well
 City of London offices and poorer quality retail present most downside risk

 The market is rewarding resilient income in good locations with positive fundamentals

                                BREXIT decreases forecasting confidence level

                                                                                                             8
Year End 2017 - Results Presentation - UK Commercial Property REIT
Agenda
•   Chairman’s Overview
•   The Market and 2017
•   Financial Highlights
•   Portfolio and Performance
•   Chairman’s Concluding Remarks
Year End 2017 - Results Presentation - UK Commercial Property REIT
February 2018
UK Commercial Property Trust

Financial Highlights as at 31 December 2017

 ■ NAV per share of 92.8p (31 December 2016: 86.2p)

 ■ Strong NAV total return over the year of 12.2% (Q4: 3.4%; H2: 6.5%)

 ■ EPRA earnings per share (excl deferred tax) has been broadly stable over the year at 3.42p (2017 – 3.43p)

 ■ Low net gearing of 12.8% (gross gearing of 17.2%), one of the lowest in Company’s peer group at a blended rate of interest
     of 2.89% with covenants comfortably met

 ■ Uncommitted Cash of £59 million and £50 million RCF available*

 ■ Dividend yield of 4.1%*

                  Strong Balance Sheet with considerable financial resources available for investment
                    * As at 30 January 2018                                                                                                                           10
                    Source: Standard Life Investments
                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

NAV Movement for 12 month period to 31 December 2017

                    Source: Standard Life Investments                                                                                                                 11
                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

EPRA Earnings have remained broadly flat in the year

                  Acquisitions and Successful asset management has been key to maintaining earnings
                    Source: Standard Life Investments as at 31 December 2017                                                                                          12
                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

REIT Conversion

 ■ Base erosion and profit shifting (“BEPS”) legislation reduces the ability of UKCPT to deduct interest for tax purposes and
     will affect UKCPT from 2020

 ■ Proposals in 2017 Budget, if implemented, will mean that Guernsey companies who hold UK commercial property may be
     subject to capital gains tax

 ■ Both these changes would only apply if the Company was not a REIT

 ■ REIT conversion discussions progressing well with final decision due in Q2, leading to summer conversion

                    Source: Standard Life Investments, 31 December 2017                                                                                               13
                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
Agenda
•   Chairman’s Overview
•   The Market and 2017
•   Financial Highlights
•   Portfolio and Performance
•   Chairman’s Concluding Remarks
February 2018
UK Commercial Property Trust

Portfolio Structure (after Shrewsbury sale)

                 UKCPT Sector Weighting Relative to Benchmark (%)                                                     Sector Weightings - Dec 2017
                                                                                                                             10%
   15

   10
                                                                                                                                                                    36%

     5

                                                                                                           34%
     0

    -5

  -10
                                                                                                                                                  20%
                Industrial              Offices                Retail                  Other
                                                                                                                 Industrials      Offices     Retail     Other (leisure)

                       Source: Standard Life Investments, Benchmark September 2017, UKCPT Portfolio December 2017 adjusted for sale of Shrewsbury                          15
                       Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

Direct Portfolio Performance (12 months to 31 December 2017)

                                Portfolio                       Total Return                           Income Return                        Capital Growth
                                exposure
                                                           UKCPT                Benchmark            UKCPT         Benchmark             UKCPT           Benchmark
                                                             %                    Proxy*               %             Proxy*                %               Proxy*
                                                                                    %                                  %                                     %

 Industrial                         35%                      19.7                    20.0               5.2              5.7              14.5                14.3

 Office                             19%                      11.2                    8.7                5.4              4.5               5.8                4.2

 Retail                             36%                      7.8                     7.2                5.0              5.6               2.9                1.6

 Other (incl Leisure)               10%                      6.6                     13.2               5.0              5.4               1.7                7.8

 Total                             100%                      12.2                    11.1               5.1              5.2               7.1                5.8

        ALSO Long Term Outperformance - Annualised Portfolio total return of 5.8% v Benchmark of 4.9%**
                    *Source: Standard Life Investments, MSCI/IPD Balanced Quarterly & Monthly Benchmark for 9mths to Sep 17 plus MSCI/IPD Monthly Index for
                                                                                                                                                                      16
                    3mths to Dec 17 ** Annualised since inception (December 2006)
                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

Direct Portfolio Performance to 31 Dec 2017
                                                                        Portfolio     Benchmark*

   14%

                                              12.2%
   12%
                                                        11.1%                                                 11.1%    11.0%

   10%
                                                                                         9.1%
                                                                               8.6%

    8%

                                                                                                                                               5.8%
    6%
                                                                                                                                                        4.9%

    4%          3.5%        3.4%

    2%

    0%
                       Q4                          1 year                      3 years (% p.a.)               5 years (% p.a.)               Since Inception**

         Outperformance Since Inception - Annualised Portfolio total return of 5.8% v Benchmark of 4.9%**

                    * Source: Standard Life Investments, MSCI/IPD Balanced Monthly & Quarterly Funds to September 2017 & IPD Monthly for Q4 2017                      17
                    ** Since inception date - September 2006
                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

UKCPT portfolio alignment with SLI House View
                                                                                                                                            House View 3yr
                                                                                                                                                             Fund weighting
                                                                                                                 Sector                      Total Return
                                                                                                                                                             December 2017
                                                                                                                                            Forecasts (pa)
      Industrials to outperform – UKCPT ‘overweight’ @ 36% exposure                                        South East Industrial
                                                                                                         Dist Warehouse (London)
                                                                                                     Dist Warehouses (SE ex London)
      City of London offices struggle – UKCPT 2.2% exposure                                              Build to Rent (Rest UK)              6.6%              36%
                                                                                                            Provincial Industrial
                                                                                                     Distribution Warehouses (RoUK)

                                                                                                   Rest of South East Offices (ex London)
      Pressures in the retail sector rising;                                                                   Leisure Parks
       shopping centres only 4.2% of portfolio after Shrewsbury sale                                       Major City Prime Shops                                23%
                                                                                                         Grade A Rest of UK Offices
                                                                                                           Build to Rent (London)

      Resilience and selectivity are key                                                                         Hotels
                                                                                                           Retail Fashion Parks
                                                                                                      Regional Shop Centre (>50k m²)
                                                                                                                Bulky Parks                                      23%
                                                                                                        Medium Town Prime Shops
                                                                                                              Supermarkets
                                                                                                          Outer London Offices
                                                                                                           Grade A City Offices
                                                                                                                Solus Unit
                                                                                                             Business Parks                                      13%
                                                                                                         Other Rest of UK Offices
                                                                                                            West End Offices

                                                                                                        District Shopping Centres
                                                                                                          Inner London Offices
                                                                                                            Secondary Shops
                                                                                                           Grade B City Offices
                                                                                                                                               -1.3%              4%
                               Positive alignment                                                      Secondary Shopping Centres

                    Source: Standard Life Investments Real Estate Research UK (Draft) House View 3yr Total Returns from Q1 2018
                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed     118
                                                                                                                                                                        8
February 2018
    UK Commercial Property Trust

    Investment Purchases
Total investment volume 2017 : £74 million
      June 2017
          Hartshead House, Sheffield, £20.2 million, 5.0%
          fully let to Capita for 22 years with annual RPI inflation linked rent increases

      July 2017
           Burton upon Trent, £22.2 million, 5.8%
                                                                                                                          Industrial Unit at Centrum West, Burton Upon Trent
           completion of 258,000 sq ft distribution unit development pre-let to
            Palletforce for 15 years with 5 yearly RPI inflation linked rent increases

 November 2017
    Maldron Hotel (Dalata Group plc), Newcastle, £32 million, 5.4%
    35 year lease on hotel with ancilliary retail/food unit to let
    forward funding, 265 bedroom 4 star city centre
 Following these acquisitions 15.2% of UKCPT’s income is in RPI-linked and long
  dated income
                                                                                                                          Hartshead House, Sheffield

                                   Increasing exposure to preferred sectors and longer-dated secure income
                        Source: Standard Life Investments                                                                                                                 19
                        Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
 UK Commercial Property Trust

Investment Sales
Total sales volume 2017: £42 million (c£93 million including Shrewsbury)

    January 2017
     - 13 Great Marlborough Street, London Soho office, £30.5 million
     - ahead of valuation, net initial yield of 3.3%
    July 2017                                                                                                        Ensco Office, Aberdeen Gateway, Aberdeen

     - Loudwater, High Wycombe industrial warehouse, £4.7 million
     - ahead of valuation
    December 2017
     - Aberdeen Gateway, Ensco office, £6.5 million
     - ahead of valuation
    January 2018 (exchanged December 2017)
     - three Shrewsbury Shopping Centres, approximately £51 million
     - sold to Shropshire Council ahead of valuation (post year-end completion)
                                                                                                                Charles Darwin Shopping Centre, Shrewsbury

                                 Reducing exposure to assets which were expected to underperform
                     Source: Standard Life Investments                                                                                                                 20
                     Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February
February 2018
         2018
UK Commercial Property Trust

Retail Exposure & Structure

                                                      Reducing retail with most income risk
                    Source: Standard Life Investments, Benchmark September 2017, UKCPT Portfolio December 2017                                                        21
                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

Asset Management – Ventura Park, Radlett, London
        Radlett 60% let to 11 tenants totalling 576,000 sqft
        Well located edge-of-London distribution industrial estate (M25/M1)

        Largest unit: 159,000 sqft
        Became vacant November 2016; strong investor & occupational demand
        Despite muted supply, false start with letting in H1 2017

        Extensive £1.2m refurbishment completed Jan 2018
        Targeting rent of £8.50 psf, £1.3m pa (42% rental growth from purchase Sept 2015)
        Advanced leasing discussions taking place

                                       Value for money drives tenant demand in strong location
                     Source: Standard Life Investments                                                                                                                 22
                     Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

Asset Management: ex-Argos Warehouse, Lutterworth, Magna Park

         Prime distribution unit: 377,000 sqft
         Located in one of the UK’s key distribution parks
         Close to M1 / M6 / M69 known as ‘Golden Triangle’

         As anticipated, unit fell vacant late December 2017 (Argos/Sainsbury’s merger)
         Strong investor & occupational demand against muted supply
         16 enquiries v 4 competing warehouses in region
         Increased efficiency of cross-docked layout should differentiate

         Potential rent reversion of 29% (c.£1.9m pa to £2.5m pa / £5.05psf to £6.50psf)
         Plus anticipated future capital growth

         Full refurbishment commenced (9 month project)
         Grade A specification with aesthetic appeal
         Total budget of £6.95m less dilapidations receipt

                                                                     Investing for Income
                     Source: Standard Life Investments                                                                                                                 23
                     Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

 Asset Management: Hannah Close, Neasden, Wembley
 Prime urban distribution unit: 180,000 sqft / 10 acres
 Close proximity to Wembley Stadium & Wembley Park tube station

 M&S plc lease extended in December 2017 from March 2018 to March 2019
 Lease removed from Landlord & Tenant Act providing certainty on expiry
 Dilapidations settlement pre-agreed with M&S plc

 Rent increased by 12% from £2.10m pa to £2.35m pa (c £13.50psf)

 Refurbishment plan prepared with project management team
 Aim to start on site April 2019
 Pre-letting campaign also underway

 Exploring longer term alternative use options

                                          Strong urban logistics location with growth potential
                    Source: Standard Life Investments                                                                                                                 24
                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

                                                          Key Vacancy* & Lease Events to Dec 2019
 Key Vacancy        Location         Area (sqft)                           June ’17 Status                   Dec ’17 Status

                    Radlett          160,000          Vacant               Marketing - good interest.        Decision taken to refurbish – just completed;
                                                                                                             marketing & in detailed leasing discussions.
                    Lutterworth      381,000         Vacant                Argos tenant but expected to      Argos vacated;
                                                                           relocate.                         extensive refurbishment underway plus early marketing.

          (Event table below represents 61% of income that could expire before Dec 2019 representing 12% of total income**)
 Tenant             Location         Area (sqft)     Lease Event           June ’17 Status                   Dec ’17 Status

 GAP                Kew              10,000          June 2017             Lease renewal in discussion.      Renewal terms agreed – with GAP Board to approve.
 CFUK               Dartford         71,000          Jun 2018 (rolling)    Lease renewal terms offered.      Lease renewal terms offered.

 Toys r Us          Leicester        34,000          Apr 2018              In discussion.                    CVA announced – will vacate April 2018.

 M&S                Neasden          181,000         Mar 2019              In discussion.                    Lease extended from March 2018 to March 2019

 DHL                Radlett          86,000          Jun 2018 (break)      Lease re-gear – in discussion.    Lease re-gear – in discussion.

 Wickes             Leicester        26,000          Dec 2018              Lease expiry – will vacate.       Lease expiry – will vacate at expiry (building own unit).

 Veerstyle          Dartford         68,000          Apr 2019              N/A                               Lease renewal – in discussion.
 DSG                Leicester        14,500          Nov 2019              N/A                               Lease renewal – in discussion.
 Sony               No.15, GMSt      38,500          Nov 2019 (break)      N/A                               Expect to stay
                                                                                                             (low rent, refurbished space, and additional 9 month rent free).

                          Industrial asset management should increase the dividend cover significantly
                     Source: Standard Life Investments, 31 December 2017; Colour key: Industrial, Retail, Office                                                          25
                     Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
                     * total void rate 7.6% versus Benchmark 6.8% as at 30 September 2017; ** 31 December 2017, excluding Shrewsbury
February 2018
       UK Commercial Property Trust

      Portfolio has significant reversionary potential

            84
            82
            80                                                                                                                                               3.1
                                                                                                    2.7                2.4
            78
            76                                                                   4.0
Rent (£m)

            74
            72
                                                              6.0                                                                                                                  81.3
            70
                                                                                                                                          78.2
            68
            66                            2.7

            64
            62         65.2

            60
                 Portfolio Current     Rent Free          Vacancies         Reversionary         Pre Let          Over Rented        Portfolio ERV      Investment of Potential Portfolio
                       Rent                                                   Potential        Development                                           Uncommitted cash        ERV
                                                                                                                                                      - £59m @ 5.25%

                                                              Considerable potential to improve earnings
                                 Source: Standard Life Investments as at 31 Dec 17 (all excl Shrewsbury assets)                                                                           26
                                 Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
Agenda
•   Chairman’s Overview
•   The Market and 2017
•   Financial Highlights
•   Portfolio and Performance
•   Chairman’s Concluding Remarks
February 2018
UK Commercial Property Trust

Chairman's Concluding Remarks

    UK commercial real estate market returns expected to slow after a period of robust growth but will continue to provide strong income returns

    Successful asset management initiatives will be key to driving performance in the next phase of the property cycle

    New Board members have proven track record of success in their respective fields and will be valuable additions in helping the Company grow

    UKCPT is well positioned to deliver value going forward:
            •   Positively aligned portfolio of prime assets geared towards secure income generation
            •   Strong tenant base with good covenants
            •   Opportunity to deliver successful asset management initiatives, especially in the favoured Industrial sector
            •   Delivering an attractive and sustainable yield to investors in the current stock market environment
            •   Strong balance sheet with low gearing and considerable financial resources available

                      Source: Standard Life Investments as at 31 December 2017                                                                                          28
                      Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
Questions & Data Pack
February 2018
UK Commercial Property Trust

Selection of UKCPT assets…

INDUSTRIAL                                                 RETAIL

OFFICE                                                     LEISURE

                    * Source: Standard Life Investments.             30
February 2018
UK Commercial Property Trust

                                                                      Portfolio Strategy 2017/2018

 Sales
      Exit assets where there is significant capital expenditure anticipated with limited return prospects, or low long term return prospects
      Reduce retail exposure
 Purchases
      Acquire selective institutional grade assets which retain an income focus:
 (a) Longer secure income streams, ideally index-linked, where the entry yield supports dividend cover and the investment prospects are sound;
 (b) Well located investments which will either benefit from wider infrastructure improvements delivered by others, such as transport links, and/or require a degree of planned
     active management, including limited capital expenditure, to grow rent;
 (c) Selective assets where rental growth is anticipated
 Preferred asset lot size of £20 million to £50 million
 Asset Management Activity
      Asset management activity focused on enhancing income;
      Control void level
      Accept investment into/refurbishment of well placed assets with short term leases expected to generate stronger total return
 Overall
      Retain prime nature of portfolio for long term sustainable performance and focus on growing income

                        Source: Standard Life Investments                                                                                                                   31
                        Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

NAV & share price performance

                                   UKCPT NAV return v comparators                                                                                                            UKCPT Share Price return v comparators
   120.0                                                                                                                                       120.0

                                                                                                                                    106.3                                                                                                                          106.3

   100.0                                                                           93.4
                                                                                                                                               100.0

                                                                                                               83.5
                                                                                                                                                                                                                        80.3
    80.0                                                                                                              76.7                      80.0
                                                                            72.2                                                                                                                                 73.3                         72.5
                                                                                          70.8                                          70.8                                                                                   70.8
                                                                                                        68.6
                                                                                                 63.0                                                                                                                                 63.0
    60.0                                                                                                                                        60.0                                                                                                 54.0

                                                37.5
    40.0                                                      33.3                                                                              40.0
                                                                     29.7                                                                                                                              33.3
                                         27.0

                                                                                                                                                                                         21.2
    20.0                                               15.4
             12.2 12.0 12.2 13.1 11.0                                                                                                           20.0                              14.5          15.4
                                                                                                                                                                 12.2 13.1
                                                                                                                                                       9.4 8.0

     0.0
                                                                                                                                                 0.0
                                                                                                                             -4.4
                                                                                                                                                                                                                                                            -4.4
   -20.0
                     1 Year                        3 Year                             5 Year                           Inception               -20.0
                                                                                                                                                           1 Year                         3 Year                         5 Year                      Inception

     UKCPT         GIC Sector           FTSE REITs               FTSE All-Share Index                    IPD Quarterly Benchmark                                 UKCPT          GIC Sector               FTSE REITs            FTSE All-Share Index

                              Source: Standard Life Investments, 31 December 2017, Thomson Reuters, 31 December 2017, IPD December 2017)                                                                                                                               32
                              Past performance is not a guide to the future The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

Portfolio Structure

                                                                 Dec 2017                  Dec 2016
   Direct portfolio value                                      £1,397.3m                 £1,280.8m
   No of properties                                                    42                        42
   No of tenancies                                                    343                       346
   Annualised Rental income*                                      £68.9m                    £69.4m
   Estimated rental value (ERV) **                                £83.2m                    £79.7m
   Net Initial Yield                                                 4.5%                      4.9%
   Reversionary yield***                                             5.6%                      5.8%
   Void levels (% of income and excl dev)                            7.6%                      3.7%
   Gearing (Investment Policy limit 25%) (Net)              17.2% (12.8%)             18.2% (11.4%)
   Weighted Average Lease Length (Sep 17)                        8.5 years                 8.1 years

                       * Passing rent ** Reversionary income: A change in income that will arise following a rent review or renewal of a lease or re-letting of a property *** Reversionary yield is the          33
                       anticipated yield which the initial income yield will move to once the rent reaches the estimated rental value; it is calculated by dividing the ERV by the valuation (allowing for 6.8%
                       Costs) # Source: all figures Standard Life Investments at Q4 2017 and MSCI /IPD Quarterly & Monthly Benchmark Report Sep 2017 unless otherwise stated
                       Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

A Diversified Portfolio
(Portfolio sub-structure, Dec 2017 – Post sale of Shrewsbury)

                    Source: All figures Standard Life Investments at Q4 2017 (adjusted for sale of Shrewsbury) and MSCI Quarterly & Monthly Benchmark Report,         34
                    September 2017
                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

Industrial Exposure & Structure

                                                                     11%

                                                         36%                                                                                                                        12%

                                                                                                                   25%

74%                                                                                                                         24%

                Industrial           Rest of Portfolio                        South East          Rest of UK                      Logistics     Urban & Light Industrial

                             Source: Standard Life Investments, Benchmark September 2017, UKCPT Portfolio December 2017                                                        35
                             Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

Top Ten Assets by Market Value

                               Top Ten Properties                                    Sector                           Value Range
                               Ventura Park, Radlett                                 Industrial                        £70-100m
                               Junction 27, Birstall, Leeds                          Retail Warehouse                  £70-100m
                               15 Great Marlborough Street, London                   Office – West End                  £50-70m
                               Great Lodge Retail Park, Tunbridge Wells              Retail Warehouse                   £50-70m
                               Ocado Distribution Unit, Hatfield                     Distribution Warehouse             £50-70m
                               The Rotunda Leisure Scheme, Kingston upon Thames Leisure                                 £50-70m
                               Kew Retail Park, Richmond, London                     Retail Warehouse                   £50-70m
                               The Parade, Swindon                                   Shopping Centres                   £50-70m
                               Dolphin Estate, Sunbury-on-Thames                     Industrial                         £50-70m
                               Hannah Close, Neasden                                 Industrial                         £30-50m

                    Source: Standard Life Investments, 31 December 2017                                                                                               36
                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

Low Risk Tenant Base – Top 10 Tenants by Annual Rent

                                      Rank         Company Name                IPD Risk Band   % of Income

                                        1          B & Q plc                    Negligible        5.8%

                                        2          Public Sector                Negligible        4.7%

                                        3          Ocado Retail Limited            Low            3.9%

                                        4          Sainsbury’s (incl Argos)     Negligible        3.8%

                                        5          Sony Centre Entertainment    Negligible        3.1%

                                        6          Marks & Spencer plc          Negligible        3.1%

                                        7          DSG Retail Limited           Negligible        2.9%

                                        8          Odeon Cinemas Limited       Low/medium         2.7%

                                        9          Total E&P UK Limited         Negligible        2.7%

                                        10         Cine-UK limited              Negligible        2.6%

                                                                                                 35.3%

                    Source: Standard Life Investments, 31 December 2017                                      37
February 2018
UK Commercial Property Trust

UKCPT Debt – Covenants

                                                       Barings Facility                    Barclays Facility                                 Overall*
Amount drawn down                                       £100,000,000                        £150,000,000                                  £250,000,000
Period to Maturity                                       9yrs 3mths                          2yrs 3mths                                       5.0 yrs
Remaining to draw down                                       £0                            £50,000,000 RCF                               £50,000,000 RCF
Current Margin                                             1.25%                                1.50%                                            -
Current All in rate on drawn down amounts                  3.03%                                2.80%                                         2.89%

SWAPs entered                                                N/a                             £150,000,000                                 £150,000,000
Current SWAP asset/(liability) end of Dec                    N/a                             (£2,090,000)                                 (£2,090,000)

Covenant Reporting & Gearing Levels

LTV - Current                                               47.3%                                30.6%                                            -
      Covenant                                               75%                                  60%                                             -
Int Cover - Current                                         437%                                 439%                                             -
           Covenant                                         200%                                 160%                                             -
Projected Int Cover - Current                               410%                                 386%                                             -
                    Covenant                                200%                                 160%                                             -

                                   Low overall net gearing of 12.8% (17.2% gross) at blended rate of 2.89%

                     Source: Standard Life Investments, December 2017                                                                                                  38
                     Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

Consistently excellent rent collection and strong tenant base

  Rent                          Q4 Dec 2017          Q1 Mar 2017          Q2 June 2017         Q3 Sep 2017        Q4 2017
                                                                                                                                Average rent
                                                                                                                             collection over last
  Within 21 Days                    99.5%                99.8%                99.6%                99.3%          97.9%     12 months – 99.2%*

                                                                                                                             Portfolio strongly
                                                                                                                            ranked for covenant
                                                                                                                                strength **

                    * Source : JLL / Standard Life Investments * Within 21 days ** MSCI IRIS, 30 September 2017                               39
February 2018
UK Commercial Property Trust

The asset class demonstrates a stable track record
41 of last 47 years delivered positive returns

                                                                                                                                      2017
                                                                                                                                      2015
                                                                                                                                      2014
                                                                                                                                      2013
                                                                                                                                      2010
                                                                                                                                      2006
                                                                                                                                      2005
                                                                                                                                      2004
                                                                                                                                      2003
                                                                                                                                      2000
                                                                                                                                      1999
                                                                                                                                      1998
                                                                                                                 2016                 1997
                                                                                                                 2011                 1996                 1993
                                                                                                                 2002                 1994                 1988
                                                                                                                 2001                 1989                 1987
                                                                                                                 1985                 1986                 1979
                                                                                                                 1984                 1981                 1978
                                                                      2007                  2012                 1983                 1980                 1977
                                                                      1992                  2009                 1982                 1975                 1973
           2008                1974              1990                 1991                  1995                 1976                 1971                 1972

                    Source: Standard Life Investments                                                                                                                40
                    Past performance is not a guide to the future The value of investments and the income from them can fall as well as rise and is not guaranteed
February 2018
UK Commercial Property Trust

Sustainability

                    Source: Standard Life Investments, 2017   41
February 2018
UK Commercial Property Trust

Directors & Investment Manager

 Directors
 Andrew Wilson, Chairman
 Ken McCullagh, Senior Non-Executive Director / Audit Committee Chairman
 Michael Ayre
 Robert Fowlds (Effective April 2018)
 Margaret Littlejohns
 Sandra Platts
 John Robertson (Retiring March 2018)

 Investment Manager
 Standard Life Investments
 Will Fulton
 will.fulton@aberdeenstandard.com - Telephone 0131 245 2799
 Graeme McDonald
 graeme.mcdonald@aberdeenstandard.com - Telephone 0131 245 3151

                    Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed   42
February 2018
UK Commercial Property Trust

Advisors

 Administrator, Secretary and Registrar                  Investment Manager                                         Property Valuer
 Northern Trust International Fund                       Standard Life Investments                                  CBRE Limited
 Administration Services (Guernsey) Limited
 Independent Auditors                                    Guernsey Legal Advisors                                    UK Legal Advisors
 Deloitte LLP                                            Ozannes                                                    Dickson Minto WS
                                                                                                                    Maples Teesdale
 Principal Banker                                        Principal Lenders                                          Corporate PR Advisor
 Barclays Bank Plc                                       Barclays Bank Plc &                                        FTI Consulting
                                                         Barings Real Estate Advisers Europe LLP
 Corporate Broker                                        Registered Office
 J.P. Morgan Cazenove                                    Trafalgar Court
                                                         Les Banques
                                                         St Peter Port
                                                         Guernsey

                     Past performance is not a guide to the future. The value of investments and the income from them can fall as well as rise and is not guaranteed   43
February 2018
UK Commercial Property Trust

Disclosure

                The information shown relates to the past. Past performance is not a guide to the future. The value of investment can go down as well as up.

Any data contained herein which is attributed to a third party ("Third Party Data") is the property of (a) third party supplier(s) (the “Owner”) and is licensed for use
by Standard Life**. Third Party Data may not be copied or distributed. Third Party Data is provided “as is” and is not warranted to be accurate, complete or timely.
   To the extent permitted by applicable law, none of the Owner Standard Life** or any other third party (including any third party involved in providing and/or
compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data. Past performance is no guarantee of future results.
                Neither the Owner nor any other third party sponsors, endorses or promotes the fund or product to which Third Party Data relates.

     **Standard Life means the relevant member of the Standard Life group, being Standard Life plc together with its subsidiaries, subsidiary undertakings and
                                            associated companies (whether direct or indirect) from time to time."

                               Standard Life Investments Limited is registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL.

                                     Standard Life Investments Limited is authorised and regulated by the Financial Conduct Authority.
                                      Calls may be monitored and/or recorded to protect both you and us and help with our training.

                                                                    www.standardlifeinvestments.com

                                                          © 2018 Standard Life, images reproduced under licence

                                                                                                                                                                   44
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