Ediston Property Investment Company (Epic) has reported a solid year of trading but warned of a more muted commercial property market in 2019.
Releasing results for the 12 months to the end of September, Epic – which is managed by Edinburgh-based Ediston Properties – posted a net asset value (NAV) total return of 8.9 per cent.
NAV per share at the end of the period stood at 115.3p, an increase of 3.6 per cent after taking into account capital expenditure and transaction costs. The dividend was raised by 4.5 per cent to 5.75p per share.
The company, which is structured as a real estate investment trust (Reit), with its shares listed on the stock market, raised some £90 million of new equity during the year and invested £146.8m in acquiring five new assets, including a development site in East Lothian.
Epic said it had taken significant strides forward over the period, including enlarging its capital base by 75 per cent, without any significant dilution to shareholders.
Calum Bruce, investment manager at Ediston Properties, said the UK commercial property sector had performed well in 2018, underpinned by demand from overseas buyers. However, he is conscious of a more muted market in the year ahead.
“It is anticipated there might be a reduction in activity in 2019, as investors adopt a wait-and-see position in relation to Brexit,” Bruce noted. “The implications of Brexit remain the biggest unknowns at the moment. Regardless of whether or not it is a ‘hard Brexit’, the UK property market will be impacted in some way.
“There is no consensus view as to what will happen, but it is likely there will be a pause and more subdued property market activity. In the meantime, we will continue to intensively manage the property portfolio to protect and improve income.
“There are opportunities in the retail warehouse market, where yields look more attractive relative to other sectors. As ever, stock selection is key.”
In February, Epic announced the acquisition of a key site in Haddington that already has planning permission for a supermarket and filling station.
The property fund said it had paid £2.75m plus costs to acquire the seven acres of development land. It noted that there was a “general shortage” of retail warehouse space in East Lothian, particularly in Haddington, leading to “pent-up demand from retailers who want to have representation in the town”.