Sterling weakness enhances TR Property's profits - annual report summary

Our annual report summary series delivers a condensed analysis of a selected investment trust's annual report, including details of the trust's aim, investment style, portfolio focuses, gearing policy, charges and performance.


TR Property investment trust (TRY) aims for total returns from investing in the shares of pan-European property companies and directly in UK real estate. Its report and accounts for the year to 31 March 2016 shows shareholders' funds of £1.065 billion.

Marcus Phayre-Mudge of Thames River Capital has been lead manager since April 2011, and part of the management team since 1997. His approach is active, with turnover up from 27.4 per cent to 29 per cent of assets last year.

UK equity exposure was reduced from 42.8 per cent to 31.7 per cent of total assets, with sales focused on companies exposed to larger retail centres, central London offices and high-end London residential property.

tr-property-performanceContinental European equity exposure rose from 50.6 per cent to 60.1 per cent, boosted by increased exposure to German residential property companies and good gains on highly leveraged Swedish real estate businesses.

UK physical exposure increased from 6.6 per cent to 8.2 per cent, helped by the completion of TRY's large Bayswater redevelopment.

Around 60 per cent of income was euro-denominated, so sterling weakness is enhancing this year's earnings, as is the February 2016 replacement of TRY's 11.5 per cent debenture with lower cost debt.

Net debt, including CFD exposure, was equal to 11.9 per cent of shareholders' assets at the year end. Ongoing charges were down to 1.06 per cent, including property costs and performance fees.

The NAV per share total return of 8.2 per cent exceeded the 5.4 per cent rise in TRY's benchmark, the FTSE EPRA/NAREIT Developed Europe Capped Net Total Return index.

However, with the discount widening to 10 per cent, share price total returns were -1.6 per cent.

Over the past 10 years on a capital-only basis, TRY's NAV per share gained 50 per cent to 335.6p and its share price gained 42 per cent to 297.5p, while annual dividends rose 146 per cent to 8.35p.

Over the same period, TRY's benchmark fell 1 per cent and the retail prices index gained 34 per cent.

See the full annual report on the TR Property website.

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