TR Property Investment Trust plc
Report & Accounts for the
year ended 31 March 2020
TR Property Investment Trust plc
The investment objective of TR Property Investment Trust plc is to maximise shareholders’
total returns by investing in the shares and securities of property companies and property
related businesses internationally and also in investment property located in the UK.
Introduction
TR Property Investment Trust plc (the “Company”) was formed in 1905 and has been a dedicated property investor
since 1982. The Company is an Investment Trust and its shares are premium listed on the London Stock Exchange.
Benchmark
The benchmark is the FTSE EPRA/NAREIT Developed Europe Capped Net Total Return Index in Sterling.
Investment Policy
The Company seeks to achieve its objective by investing in shares and securities of property companies and
property related businesses on an international basis, although, with a Pan-European benchmark, the majority of
the investments will be located in that geographical area. The Company also invests in investment property located
in the UK only.
Further details of the Investment Policies, the Asset Allocation Guidelines and policies regarding the use of gearing are
set out in the Strategic Report on pages 24 and 25 and the entire portfolio is shown on page 17.
Investment Manager
BMO Investment Business Limited acts as the Company’s alternative investment fund manager (“AIFM”) with
portfolio management delegated to Thames River Capital LLP (“the Portfolio Manager” or “the Manager”).
Marcus Phayre-Mudge has managed the portfolio since 1 April 2011 and been part of the Fund Management
team since 1997.
Independent Board
The directors are all independent of the Manager and meet regularly to consider investment strategy, to monitor
adherence to the stated objective and investment policies and to review performance. Details of how the Board
operates and fulfils its responsibilities are set out in the Report of the Directors on page 44.
Performance
The Financial Highlights for the current year are set out opposite and Historical Performance can be found on
page 2. Key Performance Indicators are set out in the Strategic Report on pages 26 and 27.
Retail Investors advised by IFAs
The Company currently conducts its affairs so that its shares can be recommended by Independent Financial
Advisers (“IFAs”) in the UK to ordinary retail investors in accordance with the Financial Conduct Authority (“FCA”)
rules in relation to non-mainstream investment products and intends to continue to do so. The shares are excluded
from the FCA’s restrictions, which apply to non-mainstream investment products, because they are shares in an
authorised investment trust.
Further information
General shareholder information and details of how to invest in TR Property Investment Trust plc, including an
investment through an ISA or saving scheme, can be found on pages 107 to 110. This information can also be
found on the Trust’s website www.trproperty.com
Financial Highlights and Performance
Year ended Year ended
31 March 31 March %
2020 2019 Change
Balance Sheet
Net asset value per share 358.11p 418.54p –14.4%
Shareholders’ funds (£’000) 1,136,453 1,328,254 –14.4%
Shares in issue at the end of the year (m) 317.4 317.4 +0.0%
Net debt1,6 7.6% 10.0%
Share Price
Share price 317.50p 394.00p –19.4%
Market capitalisation £1,008m £1,250m –19.4%
Year ended Year ended
31 March 31 March %
2020 2019 Change
Revenue
Revenue earnings per share 14.62p 14.58p +0.3%
Dividends2
Interim dividend per share 5.20p 4.90p +6.1%
Final dividend per share 8.80p 8.60p +2.3%
Total dividend per share 14.00p 13.50p +3.7%
Performance: Assets and Benchmark
Net Asset Value total return3,6 –11.5% +9.1%
Benchmark total return6 –14.0% +5.6%
Share price total return4,6 –16.8% +6.2%
Ongoing Charges (%)5,6
Including performance fee +0.80% +1.10%
Excluding performance fee +0.61% +0.63%
Excluding performance fee and direct property costs +0.59% +0.61%
1. Net debt is the total value of loan notes, loans (including notional exposure to CFDs and Total Return Swap) less cash as a proportion
of net asset value.
2. Dividends per share are the dividends in respect of the financial year ended 31 March 2020. An interim dividend of 5.20p was paid in
January 2020. A final dividend of 8.80p (2019: 8.60p) will be paid on be paid on 4 August 2020 to shareholders on the register on
19 June 2020.
The shares will be quoted ex-dividend on 18 June 2020.
3. The NAV Total Return for the year is calculated by reinvesting the dividends in the assets of the Company from the relevant ex-dividend
date. Dividends are deemed to be reinvested on the ex-dividend date as this is the protocol used by the Company’s benchmark and
other indices.
4. The Share Price Total Return is calculated by reinvesting the dividends in the shares of the Company from the relevant ex-dividend date.
5. Ongoing Charges are calculated in accordance with the AIC methodology. The Ongoing Charges ratios provided in the Company’s Key
Information Document are calculated in line with the PRIIPs regulation which is different to the AIC methodology.
6. Considered to be an Alternative Performance Measure as defined on page 97.
TR Property Investment Trust
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Historical Performance
For the years ended 31 March
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Performance for the year:
Total Return (%)
NAV(A) 52.6 15.4 –8.5 21.5 22.4 28.3 8.2 8.0 15.5 9.1 –11.5
Benchmark(B) 60.6 15.2 –8.9 17.8 14.9 23.3 5.4 6.5 10.2 5.6 –14.0
Share Price(C) 60.3 12.6 –9.5 25.8 37.7 29.5 –1.6 9.1 25.5 6.2 –16.8
Shareholders’ funds
(£’m)
Total 598 670 588 684 809 1,010 1,065 1,118 1,256 1,328 1,136
Ordinary shares 476 531 470 684 809 1,010 1,065 1,118 1,256 1,328 1,136
Sigma shares(D) 122 139 118 – – – – – – – –
Ordinary shares
Net revenue
(pence per share)
Earnings 5.18 6.94 7.07 6.74 8.09 8.89 8.36 11.38 13.22 14.58 14.62
Dividends(E) 5.75 6.00 6.60 7.00 7.45 7.70 8.35 10.50 12.20 13.50 14.00
NAV per share
(pence) 185.20 207.10 183.60 215.25 254.94 318.12 335.56 352.42 395.64 418.54 358.11
Share price
(pence) 159.40 177.10 154.50 186.30 247.50 310.50 297.50 314.50 382.50 394.00 317.50
Indices of growth
Share price(F) 100 111 97 117 155 195 187 197 240 247 199
Net Asset Value(G) 100 112 99 116 138 172 181 190 214 226 193
Dividend Net(E) 100 104 115 122 130 134 145 183 212 235 244
RPI 100 105 109 113 115 116 118 122 126 129 133
Benchmark (H) 100 110 96 109 116 139 143 148 159 163 135
Figures have been prepared in accordance with IFRS.
(A) The NAV Total Return for each year is calculated by reinvesting the dividends in the assets of the Company from the relevant ex-dividend date. Dividends are deemed
to be reinvested at the ex-dividend date as this is the protocol used by the Company’s benchmark and other indices. This is considered to be an Alternative
Performance Measure as defined on page 97.
(B) Benchmark Index: composite index comprising the FTSE EPRA/NAREIT Developed Europe TR Index up to March 2013, and thereafter the FTSE EPRA/NAREIT
Developed Europe Capped Index. Source: Thames River Capital.
(C) The Share Price Total Return is calculated by reinvesting the dividends in the shares of the Company from the relevant ex-dividend date.
(D) The Sigma share class was launched in 2007 and Sigma shares were redesignated as Ordinary shares on 17 December 2012.
(E) Dividends per share in the year to which their declaration relates and not the year they were paid.
(F) Share prices only. These do not reflect dividends paid.
(G) Capital only values. These do not reflect dividends paid.
(H) Price only value of the indices set out in (B) above.
2 TR Property Investment Trust
Contents
IFC Company Summary
68 Financial Statements
1 Financial Highlights and Performance
68 Group Statement of Comprehensive Income
69 Group and Company Statement of Changes in Equity
2 Historical Performance
70 Group and Company Balance Sheets
71 Group and Company Cash Flow Statements
72 Notes to the Financial Statements
97 Glossary and AIFMD Disclosure
97 Alternative Performance Measures
98 Glossary of Terms and Definitions
99 AIFMD disclosure
100 Notice of Annual General Meeting
100 Notice of Annual General Meeting
104 Explanation of Notice of Annual General Meeting
106 Shareholder Information
106 Directors and Other Information
107 General Shareholder Information
109 Investing in TR Property Investment Trust plc
4 Strategic Report
4 Chairman’s Statement
8 Manager’s Report
16 Portfolio
17 Investment Portfolio by Country
18 Twelve Largest Equity Investments
22 Investment Properties
24 Investment Objective and Benchmark
24 Business Model
25 Strategy and Investment Policies
26 Key Performance Indicators
28 Principal Risks and Uncertainties
32 Viability Statement
34 Corporate Responsibility
35 Governance
35 Directors
37 Managers
38 Report of the Directors
45 S.172 Statement
50 Report of the Nomination Committee
52 Report of the Management Engagement Committee
55 Directors’ Remuneration Report
58 Report of the Audit Committee
62 Statement of Directors’ responsibilities in relation to
the Group financial statements
63 Independent Auditor’s Report to the members of
TR Property Investment Trust plc
Front cover: Port House, Antwerp, Belgium. Image used under license from Shutterstock.com.
Pages 4 to 34 comprise the Strategic Report. The signature on page 34 is determined to cover the entire Strategic Report.
TR Property Investment Trust
TR Property Investment Trust
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Chairman’s Statement
businesses. As a result, up until mid-February performance
was strongly positive.
However, the unprecedented impact of COVID-19 has
swept aside much of the relevance of previous market
conditions, for the time being. The enormous state
support provided by governments and central banks is of
course crucial but the pace and scale of the recovery in
demand will dictate which parts of the property sector
rebound and to what extent. The crisis has reinforced
many long running convictions particularly around the
further degrading of retail property rents, the growth of
logistics and the stability of income from rented residential
assets.
This crisis, like many others which markets have endured,
reinforces the importance of liquidity and solvency. It is
worth reciting that TR Property was established in 1905
and, as an Investment Trust, is a closed ended company
meaning that its capital is permanent. This long-term
confidence means the Trust can invest in illiquid assets
such as direct property and smaller companies, in the
knowledge that we will not be subject to a call for capital
from investors as might happen with an open-ended
equivalent.
Our closed-ended structure means we can concentrate
entirely on the portfolio construction without concerns
about redemptions. In turbulent markets investors will
allocate a premium for liquidity, and this can lead to
investment opportunities, particularly amongst temporarily
unloved smaller companies. The Trust has a strong track
record of patiently building positions in good quality
smaller companies and our experience is that these
businesses either grow, merge or get taken private if the
public markets persistently undervalue them. The
manager’s report, which follows, provides some examples
of these types of successes this year. The Trust’s structure
also enables us to own physical property and again over
the years this has added value as well as providing our
team with direct market intelligence. This year our physical
portfolio was a strong contributor to performance
following several asset management successes. Therefore,
these illiquid investments have often proved to be
accretive to performance over time.
The longevity of permanent capital combined with an
independent Board of directors whose responsibility and
clear priority is to stakeholders, provides the foundation on
which we are able to get the best from the manager. On
the one hand, the manager is in no doubt that they are
appointed, monitored and will be challenged as necessary,
Hugh Seaborn
Chairman
Introduction
It was a punishing end to the year for the market and
TR Property was no exception. For the year ended
31 March 2020, the Trust delivered a Net Asset Value
(NAV) total return of –11.5% which although disappointing
was ahead of the benchmark total return of –14.0%. The
share price total return was lower at –16.8% as although
the Trust’s shares traded close to, and often at a premium
to the Net Asset Value for a large part of the year, the
discount widened as the sell-off in global equities began in
mid-February. The share price ended the financial year at
a discount to the Net Asset Value of 11.3%.
Rarely has any 12 month reporting period been so
dominated by the events of the last six weeks of the
financial year which moved the performance so
considerably. For the first 10 months of the year, pan
European real estate equities were enjoying a benign
economic backdrop. Although the outlook for global (and
European) growth had been slowing in 2019, central
banks around the world were determined to offer support
through further easing of monetary policy. This benefited
income focused assets such as property. The autumn was
dominated by the reversal of the previously negative
sentiment towards the UK with strong performance from
domestic focused businesses including many property
companies. This gained further momentum following the
large Conservative majority at the General Election in
December. As the new year got under way, earnings from
companies we were invested in continued to show steady
growth and, outside of the retail sector (which continued
to experience structural headwinds), management teams
remained confident of the return prospects for their
4 TR Property Investment Trust
Chairman’s Statement
continued
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Ordinary Share Class Performance: Total Return over 10 years (rebased)
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Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
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Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Benchmark Total Return
TR Property Share Price Total Return
TR Property Net Asset Value Total Return
by the Board. On the other hand, the long-term nature of
the Trust instils in the Manager a very strong commitment
to the success of the Company. Long-term investors and
especially those who have heard them speak will be in no
doubt about the strength of that commitment.
Looking back over the last decade, the Trust has delivered
a share price total return of 171% and a NAV total return
of 157% versus a benchmark figure of 97%. This
performance compares well to the FTSE All Share total
return of 53% and the STOXX Europe (in EUR) total return
of 72%. Income remains a crucial element of property’s
total return and our dividend payments over the same
10 year period (and including the final dividend
announced today) have recorded a compounded annual
growth rate of 9.3%.
Revenue Results and Dividend
Revenue earnings of 14.62p per share were marginally
ahead of the prior year earnings of 14.58p. Although the
interim earnings were 7.7% ahead of the prior year’s
interim earnings, changes to the portfolio in the second
half of the period, together with some dividend
suspensions very close to the year end resulted in lower
second half income.
The Board has announced a final dividend of 8.80p
bringing full year dividend to 14.00p an overall increase of
3.7% over the prior year dividend.
Revenue Outlook
A number of companies we invest in have announced
dividend suspensions or cuts and others may follow.
Therefore, we predict a fall in earnings for the next
financial year. As detailed in the Manager’s Report, the
portfolio continues to seek income resilience wherever
possible.
One of the advantages of the Investment Trust structure is
that the Board is able to look at the underlying sustainable
level of dividend and adjust the pay-out level accordingly.
The Board has been consistently cautious with pay-out
levels in recent years as often there have been one-off
factors boosting income. The Company has a healthy level
of revenue reserves which have been accumulated over
time to provide resilience in the event of a crisis. These
will be used to supplement short to medium term falls in
earnings until such a time as conditions settle and the
Board can determine the long-term income capability of
the portfolio.
Net Debt and Currencies
We have added to the borrowing capacity of the Company
during the financial year. A new facility widened our
banking relationships, and an existing facility was increased
on renewal. These are all revolving annual facilities and
provide flexibility to complement the longer-term private
placement fixed term debt that we have in place.
TR Property Investment Trust
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continued
The overall level of gearing began the year at 10.0% and
closed at 7.6%. Over the year, gearing levels have
fluctuated as market conditions and outlook have changed
from a high of 14.5% in early December 2019 to a low of
5.2% in mid March 2020. With the year end gearing at
7.6% and UK investment property exposure of 7.8%, the
Trust was marginally underweight equities against the
benchmark.
Sterling ended the year around 3.5% weaker versus the
Euro than at the beginning but traded through a 10%
range. The average value of Sterling versus the Euro over
the year was around 1% stronger than through the
previous year. This had a small negative impact on
earnings. Our currency strategy remains unchanged in that
capital exposure is hedged to match that of the
benchmark, but the income remains unhedged.
Discount and Share Repurchases
The discount of the share price to the Net Asset Value
averaged just under 2%. However, for a large part of the
year the share price stood close to or at a premium to the
Net Asset Value. In common with the Investment Trust
sector as a whole, the share price falls in late February and
early March were ahead of the falls in the asset value and
the discount widened sharply, ending the year at 11.3%.
There were no share repurchases in the year.
Board Changes
I have previously announced my intention to stand down
from the Board at the forthcoming AGM, having served for
a requisite period. I am succeeded as Chairman by David
Watson who, as well as being extremely experienced and
capable, has a thorough understanding of the Trust having
been a director for over 8 years during which time he has
served as Senior Independent Director and, until last year,
as Chairman of the Audit Committee. I am also very
grateful to Simon Marrison who continues to bring his
considerable knowledge of the European property markets
and will become the Senior Independent Director.
I have been particularly delighted to welcome two new
appointments to the Board over the past year. As
I mentioned in the Interim Report, Kate Bolsover joined
the Board in October bringing a wealth of experience in
Investment Trusts and at Board level. More recently, in
January, I announced that Sarah-Jane Curtis had also
joined bringing extensive experience in the London
property sector, and particularly in retail.
6 TR Property Investment Trust
These changes will help to ensure that this strong Board
maintains a healthy balance of commercial experience,
property and broader market skills, knowledge and
expertise combined with fresh and independent thought.
Outlook
As we all know, the COVID-19 virus, exacerbated by the
collapse in oil prices, has disrupted financial markets and
undermined global economic growth prospects.
The period of the pandemic and whether it will re-escalate
once containment measures are relaxed, is unpredictable.
Therefore, it is very difficult to gauge the extent of the
impact as the timing of this document coincides with the
first tentative steps in the relaxation of the lockdown
across much of Europe.
One of the strong characteristics of property as an
investment has been its healthy income prospects. It is
clear that rent receipts in the immediate future will be
severely disrupted across many of the companies we are
able to invest in and this will vary widely with consumption
focused properties likely to face disruption for longer.
However, it is pleasing to report high rates of rent
collection from healthcare, logistics and rented residential;
all sectors we favour.
There will be an increased polarisation between sectors;
the acceleration of the structural decline of retail is an
example of this. Those assets able to produce good quality
income streams with potential for growth are likely to be
defined more narrowly and be in greater demand.
Consequently, the level of divergence between those
businesses with growth prospects and those without has
widened enormously due to the pandemic.
The low costs of borrowing and skinny yields on fixed
income will remain a feature of the financial landscape,
increasing the value of income particularly where it is
index-linked. This will support the attractiveness of
property as an asset class although not necessarily protect
it against market fluctuations caused by macro events that
move global equity markets, such as that which we have
witnessed in the closing weeks of this financial year.
The delivery of performance in this environment requires
a meticulous and rigorous approach to evaluating
investment opportunities and this plays to the strengths of
the strategic approach of the Trust and of the manager.
TR Property has a long and successful track record of
delivering solid performance by investing in strong
management teams, in well-funded businesses with
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Chairman’s Statement
continued
strong cash flows and the potential for earnings growth.
We will maintain this approach combined with the
mitigation of risk through a diverse portfolio invested
across numerous submarkets and geographies.
Finally, I leave the Board with a strong sense of pride that
TR Property is in extremely good hands with an impressive
and eminently capable Board overseeing a manager with
immense experience and a strong track record.
Hugh Seaborn
Chairman
5 June 2020
TR Property Investment Trust
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Manager’s Report
We entered the new year with some optimism that low
inflation (and low rates) would underpin the hunt for
income and support real estate values. In our preferred
markets of logistics/industrial, offices in key major cities,
rented residential and alternatives such as student
accommodation and healthcare we saw steady demand
and (in most cases) a lack of speculative supply leading to
rising rental levels. This ambient environment was
exemplified by the collective performance of the Swedish
cohort of listed real estate companies. This group have
traditionally operated not only with higher levels of gearing
than the rest of the sector but also almost always focused
on short term (and cheaper) finance. When future debt
costs look stable (or falling) and the domestic economy is
humming along these stocks do well. In 2019, they
collectively returned 52.6% (in SEK). The proverbial
canary was quite perky on its perch.
As highlighted in the Interim Report, I remained focused
on those subsectors which I felt would continue to benefit
from these fundamental market conditions. This meant
that I stayed away from UK retail and increasingly that
applied to European shopping centre landlords as well.
I have in the past highlighted that the decline in the values
of UK retail property companies was on a faster trajectory
than their European counterparts given the higher rate of
online penetration, less affordable rents, higher property
taxes and broad management ineptitude (principally too
much leverage). Over the year, I have grown increasingly
pessimistic for this asset class in all markets. Our
underweight to both UK and European retail helped
relative performance.
The one corner of the retail landscape to which these
macro factors are far less applicable remains food. The UK
is dominated by a small group of national operators. The
existing store network is crucial to their online businesses.
Even before the current crisis we liked the long income,
covenant quality and operational necessity of key stores.
Supermarket Income REIT (1.8% of assets) returned
+13.4% in the year.
Whilst the exposure to our preferred sectors generally
aided relative performance I, once again, suffered from
our underweight to the two traditionally defensive regions
namely Switzerland and Belgium. Stocks in both markets
screen poorly on relative fundamental value but Swiss
property companies had a very strong year, driven (we
think), by the seemingly perpetual negative rate
Marcus Phayre-Mudge MRICS
Fund Manager
Performance
The Net Asset Value total return for the year was –11.5%,
the benchmark total return was a little poorer at –14.0%.
Disappointingly, the share price total return was –16.8%
as the discount to the net asset value widened in the
period. Reviewing the performance of the Trust
two months after the March year end always feels a little
like appraising historical and sometimes outdated events.
This time I can make that statement with absolute
conviction. The first ten months of the financial year bear
little resemblance to either of the last two (February and
March) or indeed what has transpired even more recently.
The figures speak for themselves. From 31 March 2019 to
19 February 2020, the NAV rose +21.4%, the benchmark
+17.1% and the share price total return reached +30.0%
as the stock touched a record premium to asset value of
5%. February saw the peak and the beginning of the
market correction which accelerated dramatically later in
the month and on into March. The 20 February to
31 March 2020 performance was –27.2% for the NAV,
–26.5% for the benchmark and –36.2% for the share
price. The shares bore the additional impact moving from
a 5% premium to a 11.3% discount.
Looking back, the steady march upwards in the asset
value and the share price through 2019 reflected the dual
drivers of sound property market fundamentals (in our
preferred markets) coupled with, in the second half of the
period, the positive effect of the removal of a crucial
amount of Brexit uncertainty. Whether one was in favour
of that outcome or not was not the issue; markets prefer
certainty and aided by the landslide Conservative majority
the UK (where we were overweight) performed strongly.
The collective outperformance of the UK’s listed property
companies versus their Continental European cousins is
a feature of the market we haven’t seen for several years.
8 TR Property Investment Trust
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Manager’s Report
continued
environment in Switzerland. Any stock yielding 3% seems
to be a buy regardless of fundamentals. I shouldn’t have
been such a purist. However, they also perform well when
investors are nervous and having outperformed in the first
9 months of the financial year they also did relatively well
in February and March.
Once again the strongest performance came not only
from our overweights to the best performing sectors but
from key stocks within those sectors. The best example is
Argan (4.1% of assets), the French logistics owner/
developer. During the year, the company acquired
a portfolio of big box logistics units let to Carrefour
increasing the portfolio size by 40% to 2.8m sq metres.
The stock’s total return was a top performing +19.7%
over the period.
The portfolio has some gearing although this was heavily
reduced in late February and March. In a period of
negative returns it is important to explain the rationale for
having any at all. The Trust has often taken advantage of
its closed ended structure and held a number of illiquid
small cap stocks. These well run companies exposed to
outperforming subsectors often suffered from investor
oversight being deemed too small. As a consequence, in
rising markets they often underperform their larger
brethren (in market parlance their ‘beta’ is less than 1).
Adding some gearing helps compensate for these lower
beta names. Our experience is that over time the
underlying property fundamentals would be recognised
and, if not, then the market would take them private or
merge them together. In the last 18 months we have seen
the privatisation of Green REIT (Ireland) and Terreis
(France) alongside the merger of AJ Mucklow with
LondonMetric. All of these situations added value to the
portfolio as has our physical property portfolio (7.8% of
assets) and this exposure also sits outside of our
benchmark.
Offices
The resilience of the London office market in terms
of both rents and capital values in 2019 surprised us.
Our concerns that the Brexit ‘drag’ would defer
decision-making appears to have had only a marginal
impact. The key feature of the market has been the strong
performance of new and Grade A space as companies
continue to focus on the best quality environment for their
workforce. The strongest forward looking indicator was that
60% of all space under construction and due to complete
by the end of 2023 (12.5m sq ft) was under offer or
pre-let. The impact of COVID-19 will be a deferral of both
physical completions and potential starts coupled with
reduced demand due to fewer job creations. The first
impact (reduced/deferred supply) is a positive and the
second clearly a negative. The unknown is the scale of
reduced demand. We expect the flexible office suppliers to
bear the brunt of this short term impact. According to
CBRE estimates, if 25% of all flex space was returned to
the market, vacancy would rise to 6% overall. For context
the 20 year average vacancy for Central London is 5%.
Prime rents are currently £110 per ft in the West End and
£73 per ft in the City with rent frees of c.20-24 months for
a 10 year term certain. Incentives will rise and rents will
come under pressure in the near term. However capital
values may not fall significantly as London’s prime office
yields didn’t tighten over 2019 as investors still priced in
Brexit uncertainty. As a result it looks cheaper than many
of the European alternatives.
Across Europe, 2019 was another busy year for many
office markets with occupier momentum maintained even
in the face of a broader economic slowdown. There were
numerous instances of markets beating pre-GFC rent
peaks – Brussels, Berlin, Milan, Barcelona and Lyon to
name a few. Office vacancy across Europe reached a
record low of 5.8% (according to BNP Paribas). This
positive occupation momentum also drove investor
demand with yields tightening by 26bps to an average of
4.2% for the 40 markets analysed by them. Geneva, Paris
and Hamburg all saw transactions break through the 3%
initial yield level. The same themes run across these
Continental European markets, a lack of high quality new
space and little sign of a supply surge with a handful of
small exceptions. This market backdrop will be helpful in
a post COVID-19 environment where demand will be
deferred and/or reduced.
Paris, as the largest office market in our universe warrants
more detail. Take up at 2.1 million sqm was 6% lower
than 2018 due to a smaller number of the largest
transactions (+10,000 sqm). As importantly, the lack of
take up in the CBD was actually a function of reduced
supply. Vacancy in Paris Inner City (the core of the CBD)
was just 2.2%. However, not all sub-markets look that
attractive La Defense, traditionally a volatile market, saw
no large transactions (over 20,000m2) in 2019 and where
there is significant supply due in the next two years.
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Investment volumes reached €20.5bn, an increase of 7%
on 2018 with 57 separate transactions over €100m.
South Korean capital invested over €4bn.
will continue to require a lot less space and at a lower
cost.
Retail
It will come as little surprise that UK shopping centre
transaction volumes reached multi-decade lows, totalling
just £0.7bn, of which local authorities (mainly buying in
their own regions) comprised a third. The outlook for all
retail continues to look bleak. I have written many times
about the structural headwinds affecting the sector. Rents
continue to fall as retailers trim their estates and rates
(property taxes) don’t correct in line with open market
rents so becoming an ever greater burden for property
owners who desperately try to reduce vacancies with
more concessions to potential tenants. With future income
streams so unstable it is not difficult to see why investors
shy away and banks are nervous of lending.
Retail parks also continue to suffer significant value
corrections. Income uncertainty, particularly in a post
COVID-19 world, is a real issue. In April 2020, Orion
Capital walked away from its £21m deposit having
contracted to buy £400m of retail parks from Hammerson
such were their concerns about the value of these assets
looking forward.
Online penetration continues its inexorable rise and is
close to reaching 25% of all retail sales (ex food and fuel)
in the UK by 2023 (Forrester’s research). Whilst this is a
much higher level than any other European market, one
feature of the lockdown has been the introduction of
online purchasing to a whole new group of consumers
particularly in markets with low levels of penetration such
as Italy and Spain. Forrester’s estimate that Western
Europe’s online sales will be 18% of total sales by 2024
up from 11.8% in 2018. Even prior to the current crisis
investor appetite for European shopping centres was
beginning to wane. Unibail had spent most of a year
attempting to sell up to €5bn of French assets. With their
year end results in February they were able to announce
an agreement to sell a partial interest in a reduced
portfolio of €3bn. Shopping habits have been evolving at
varying paces across different cultural and demographic
groups; this crisis has accelerated that evolution. Retailers
and investors will all be responding to these changes in
behaviour. However globally all retailers’ business models
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Distribution and Industrial
The supply response to sustained demand particularly in
the UK ‘big box’ units did reduce the rate of rental growth
over the last 18 months. This return to more sustainable
levels of rental growth is healthy. However last mile
logistics across Europe, particularly in dense conurbation
and suburban markets, remain highly sought after. For this
relatively new form of property usage there are literally not
enough suitable sites and rent is a modest element of the
business overhead. Being in the right place is far more
important. We experienced this first hand in November
with the lease renewal of our 50,000 sq ft ‘last mile’
logistics unit on the edge of Bristol. The new rent was
agreed at 47% ahead of the previous passing.
European logistics take up also powered ahead reaching
26.5 million sqm, 5% ahead of the five year average
(Savills data). Vacancy rates remain below long term
averages which is a surprise given the contraction in
Eurozone manufacturing PMI data over the year. Our view
is that structural shifts in supply chains and business
practice remain a powerful force. Despite the well flagged
reduction in German automotive production, Poland –
seen as a potential victim of that slowdown – recorded its
second highest take up figure ever.
Investment levels remain elevated with transaction
volumes reaching €36bn, 6% ahead of the 2018 figure.
The weight of capital compressed yields by an average of
37bps. We don’t expect this to be repeated in 2020 given
the heightened uncertainty but two key drivers remain in
place. Firstly, the continued structural demand for logistics
space and, secondly, the acceptance by occupiers of long
leases reflecting their capital spend on each site. These
factors will maintain, if not fuel, investor demand for this
asset class.
Residential
We have maintained our exposure to the private rented
sector (PRS), with the bulk of our exposure in Germany
but also Sweden, Finland and the UK. In Germany and
Sweden rents are regulated (and below open market
levels) and the value of these apartment buildings are
below the cost of reconstruction. The rate of rental growth
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does bear some relation to open market growth rates and
in sub-markets with rapidly rising private rental levels, such
as Berlin, there has been a political drive to control the
pace of growth even in regulated rents. Notwithstanding
the Berlin situation we remain convinced that this sector
offers both income security (close to 100% occupation
rates) and rental growth.
In the UK, the number of households in PRS has more
than doubled between 2000 and 2013 whilst the number
of mortgaged occupiers fell by 1.5m (Savills). This
reflected both increasing barriers to home ownership
(higher deposits etc) but also the huge increase in ‘buy to
let’ (BtL) amateur landlords. Over the last 4 years mainly
due to changes in the tax regime the UK has seen a fall in
the number of BtL units. Further regulatory changes which
will reduce fees which can be charged to tenants, cap
deposits and the abolition of no-fault evictions will further
reduce this large, disparate group of private landlords. We
expect a professional PRS to continue to grow rapidly and
absorb tenant demand which is no longer catered for in
the traditional ‘mom and pop’ operation. Compared to
Germany and Sweden the professionalisation of the sector
in the UK is embryonic. However it will grow and the
underlying structural drivers of demand and lack of supply
remain attractive.
Finland is a new market for us where we have invested
through the recent capital raising in Kojamo. This long
established (1969) business initially listed in 2018 and
now has over 35,000 apartments primarily in the Helsinki
region. Finland does not have rent controls and this
business is at the forefront of digitising the residential
management process driving up margins with occupancy
of over 97%.
Alternatives
These sub-sectors are now a core element of the portfolio
and include self storage, student accommodation,
healthcare, supermarkets and leisure/hotels. Prior to the
current crisis each of these subsectors was enjoying
attractive (or at least ambient) market conditions. This was
because they either offered long, often index-linked
income (healthcare, supermarkets) or they were enjoying
structural growth (self-storage, student accommodation).
During the year we saw heightened corporate activity with
Unite, our student accommodation stock, purchasing
Liberty Living (which we welcomed). Primary Health
Properties acquiring Medicx was also a strongly accretive
deal.
The COVID-19 crisis has driven huge divergence in the
performance of this group with the healthcare and
supermarket names being amongst the top performers in
our universe whilst student accommodation and budget
hotels have, as expected, suffered from a complete
demand strike. In the case of student accommodation we
expect recovery to be rapid once universities reopen but
for hotels and leisure the process of growing occupancy
will be much slower.
Debt and Equity Markets
The ongoing record low costs of debt meant that
refinancing remains a popular activity for a broad range of
property companies. EPRA recorded £14.4bn of debt
raised in the period which was a lower run rate than
previous years and reflects the fact that interest rates have
been so low for so long that companies have, in most
cases, completed all the debt cost reduction they can. The
prize for this year’s cheapest bond issuance goes,
unsurprisingly given the negative rate environment, to
a Swiss property company. Swiss Prime Site raised CHF
157m at 0.375% maturing in 2031.
There were no IPOs in the year but we did see £5.3bn of
capital raisings. These were dominated by businesses
raising capital to make corporate acquisitions. These
included Vonovia raising €744m to aid its acquisition of
Victoria Park in Sweden and Unite (£290m) to aid the
purchase of Liberty Living. Healthcare names were also
busy. Aedifica, raised €600m to acquire a UK portfolio
(£450m). Primary Health Properties and Target Healthcare
raised £675m between them to aid expansion.
Aroundtown, the aggressively expanding German
commercial and residential investor was the most prolific
issuer of debt, raising a total of €3.0bn in a mix of straight
bonds, senior unsecured and perpetual subordinated
notes.
Property Shares
Property equity markets moved broadly sideways until late
July when the background (rumbling) noise of the Brexit
debacle once again rose in volume and pitch, driving
investors away from UK domestic stocks. Property
companies are a disproportionately large component of
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UK domestic ‘baskets’ due to their high level of GBP
earnings. UK property names which had been weakening
over the summer fell –7.5% in the first two weeks of
August. What was almost more surprising was the
subsequent rally for UK property shares which then ran
from mid August right up to the start of the COVID-19
crisis. Over the late summer and into the autumn,
investors changed their views entirely with PM Johnson
appearing to be more determined than ever to drive
matters to a conclusion. The landslide Conservative victory
in the December General Election under the slogan ‘Get
Brexit Done’ gave them the mandate to do exactly that
and a huge chapter of pan European history duly closed.
UK property stocks continued to climb as the uncertainty
dissipated recording +28% gains between mid August
and mid February.
Continental stocks returned +22% over the same period
which keeps the scale of the ‘relief rally’ in perspective. So,
what drove property stocks upwards outside of the UK’s
particular political situation? Once again the central banks
have played a leading role in investor behaviour.
ECB President Draghi delivered his parting shot, another
rate cut and a renewed bond buying programme. More
QE saw the 10-year Bund yield fall to –0.6% at the end
of September and then rally into 2020 reaching –0.2% in
early January. Whilst a significant pricing rally for
bondholders the nominal yield remained negative.
Property income continued to offer a much higher yield
than corporate bonds as well as an opportunity to
participate in rental growth and development gains.
However this ambient economic environment came to
a grinding halt in mid February as global equity markets
began to price in the real threat from COVID-19. Between
19 February and 18 March, the pan European property
equity benchmark fell –35.7% but then recovered
somewhat to record a six week fall to the end of March of
–26.5%. The last six weeks of the financial year drove the
12 month returns from the sector (and this Trust) from
double digit positive to double digit negative.
The sell off was hugely dramatic and market conditions
since then have been immensely volatile. However at the
stock and sub-sector level there has been a clear pattern
of investment sentiment. With risk premiums rising and
income sustainability falling investors have focused on
those businesses with the strongest income profiles whilst
avoiding the most leveraged entities. Healthcare, PRS,
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supermarkets, logistics have all outperformed whilst those
businesses let to consumer facing companies have fared
much more poorly. Non-food retail, leisure, bars,
restaurants, cinemas and gyms have all seen a collapse in
income. As investors are well aware, all shopping centre
names had underperformed the wider property equity
market long before this crisis as they continued to grapple
with the structural shifts in consumer behaviour. We
believe that this ongoing evolution will accelerate as safety
(avoiding a busy shopping centre) joins cost and
convenience as drivers of online growth.
Whilst the sell off since mid February has been very
dramatic, the performance at the subsector level has been
rational with investors focused on owning those
businesses with the strongest income streams, and
avoiding those which will experience the greatest valuation
falls which may evolve to balance sheet risk. It will come
as little surprise that German and Swedish residential
names have performed well, not only in this crisis but also
prior to it. With rents controlled below open market levels
and occupancy at close to 100% the defensive
characteristics are clear. The one area of concern is the
political risk of even more stringent rent controls as we
have seen in Berlin (covered extensively in the Interim
Report) but we now believe the likelihood of contagion to
elsewhere in Germany is low.
Scandinavian property companies were strong relative
performers this year. Almost all Nordic property companies
operate with higher leverage and shorter duration debt
structures than the average pan European property
company. The ongoing dovish response of the Riksbank
(mirroring the ECB) was to supercharge earnings
expectations given the strong performance of the Swedish
(in particular) economy. As the current crisis evolved, we
have been surprised at how well many of these
companies with elevated debt levels have performed. The
‘light touch’ approach to lockdown and high quality
healthcare systems coupled with lower population
densities across the region have all contributed to better
investor expectations.
Logistics and light industrial were already the sub-sector
outperformers (again) as we entered the last quarter of
the financial year. Increased online purchasing as well as
supply chain disruption will lead to greater demand for
warehousing. Industrial based businesses will return to
work before densely populated offices. The case for
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relative outperformance of companies such as Segro,
LondonMetric, Tritax Bigbox, Argan, Warehouses de Pauw,
VIB Vermoegen, Montea and Catena is clear. The issue is
how far is this already reflected in pricing.
Investment Activity
Turnover (purchases and sales divided by two) totalled
£440m, equating to 32% of the average net assets over
the period. This compares to £262m (20% of average
assets) in the previous 12 months. There were two major
drivers of this increased turnover. Firstly, the Brexit debate
in the first half of the year resulted in significant changes
in our UK exposure. Added to this was the significant
degearing in February and March, only for reinvestment to
take place in late March. The other major factor was
heightened corporate activity. This year we saw the
privatisation of Green REIT which was acquired by a
private equity investor group, Henderson Park. At our peak
position the investment reached 4% of net assets. The
shares had traded at between €1.30 and €1.60 per
shares for much of the company’s 4 year life.
Management (large owners of equity) were, quite rightly,
frustrated by the persistent discount to net asset value and
put the business up for sale. The exit price was a very
satisfactory €1.94 per share. Much more real estate is
owned privately than publicly and, if public capital markets
won’t value it fairly, then privatisation is inevitable. We are
therefore drawn to businesses with family and
management ownership where we see alignment.
A&J Mucklow, the family run West Midlands industrial
owner/developer was a case in point. The Trust owned
5% of the company and supported the agreed takeover
by LondonMetric in May last year.
The residential sector remains a popular asset class and
we saw multiple capital events. Kojamo in Finland raised
capital after listing in 2018. Swedish neighbour, John
Mattson was a small IPO of a Stockholm focused
affordable housing landlord which rose 27% on its debut.
Later in the year, another small Swedish residential
business, Hembla was acquired by the German behemoth
Vonovia. Back in Germany, ADO Properties which has a
Berlin focused portfolio acquired Adler, the owner of lower
quality residential units across Germany. We don’t own
these businesses.
Elsewhere in Germany, we saw a very convoluted series of
transactions between Aroundtown and TLG, more akin to
a soap opera. In series 1, we saw TLG acquire c.2/3 of
Aroundtown’s founder’s holding at a significant premium
to the undisturbed share price. Attached to this deal,
TLG announced a potential merger with Aroundtown but
that would require a large capital raise given that they
were the much smaller cousin. In series 2, minority
institutional investors (such as us) are astonished to hear
that the deal has reversed with Aroundtown now acquiring
TLG. Due to the Luxembourg listing the transaction doesn’t
require an EGM so minority shareholders couldn’t reach
for the red button on their remote controls.
In Spain, we were pleased to see Arima announce a
€150m raise with Ivanhoe Cambridge as a new
cornerstone investor. We backed this business at IPO in
2018 which saw the return to the listed sector of the
management team behind Axiara which was acquired by
Colonial in 2018.
Revenue and Revenue Outlook
Earnings at 14.62p for the year were only marginally
ahead of the prior year level of 14.58p. Although earnings
at the interim stage were ahead of the prior year by some
6.7%, growth in the second half of the year had been
expected to be slower than in the first half and this was
compounded by market events as the impact of the
COVID-19 pandemic became evident. Investment
turnover has been greater than usual in the current year,
particularly in the second half. Portfolio repositioning
reduced gearing and saw further reductions in exposure to
a range of high yielding names particularly European retail
stocks many of whom previously paid dividends close to
our year end. In addition, the cancellation of the Landsec
interim dividend (after it had been declared) close to the
year-end added to the reduction.
Although these changes sacrificed some income in the
year under review, the portfolio rotation increases
exposure to sectors where we believe income streams are
both more secure and sustainable. However these
invariably carry a lower dividend yield.
Since mid March we have seen a range of further
company announcements of either dividend cancellations,
reductions or deferrals which will impact upon the
forthcoming year. Our view is that some of these were
precautionary as the companies evaluate their income risk
and ensure their balance sheets are as robust as possible.
We are also encouraged by the large number of
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companies who have reconfirmed their dividend forecasts
and payout ratios. For the more precautionary names, we
don’t expect the return to a clear picture of distributions
until the path out of lockdowns across Europe has
successfully materialised.
In our own direct property portfolio, we are well
positioned, evidenced by a strong rent collection rate in
April. Our non-food retail exposure is limited to two retail
units and a gym, whilst our largest tenant is Waitrose. At
Wandsworth we have some smaller occupiers exposed to
the hospitality sector where we have negotiated rental
deferrals or new lease terms. The overall expected drop in
income from our direct portfolio is not material.
Although we expect the earnings to fall next year, as the
Chairman has pointed out, as an Investment Trust we
have the luxury of being able to call on income reserves to
supplement dividends, until the longer term revenue
pattern emerges.
Gearing and Debt
Over the first 10 months of the financial year, the levels of
borrowing remained in a tight band of between 10% and
13% of assets. Through February and March, the absolute
amount of borrowings fell by £50m through short term
loan repayments and £20m (notional debt) through the
reduction in exposure through CFDs, but due to the
dramatic share price reductions the gearing ratio only fell
from a high of 13.9% in early February to a low of 5.2%
in late March. In the last few days of the year the gearing
increased again to 7.6%. Given the increased levels of
market risk it may surprise investors that we had any
gearing in the Trust at the year end. The physical portfolio
accounts for 7.8% of our investment exposure and
adjusting for that, the Trust was ungeared to the equity
market.
Direct Property Portfolio
The physical property portfolio produced a total return of
+8.5%, a combination of +5.3% capital return and
income return of +3.2%. The capital return was driven by
a variety of asset management initiatives across the
portfolio from refurbishments, lease renewals and
planning gains set off by reductions in the value of our city
centre non-food retail units.
The sale of our office building in Harlow, was reported at
the interim. The property was sold for £10.5m which
reflects a net profit over the book cost of 3%.
At the Colonnades in Bayswater, we completed the
refurbishment of the old public house which included the
separation of the 3 bed flat and the recladding of the pub.
Towards the end of the year, we completed the sale of the
flat for £2.02m which reflected a price of just over
£1,500 per sq. ft. We were waiting for a sale of the flat
before marketing the public house which is an interesting
space and will allow an occupier some really exciting fit
out possibilities.
As mentioned earlier, in February we completed the lease
extension on our last mile logistics unit in north Bristol.
The tenant has taken a new 5 year lease at a rent which
reflects an increase of 47% on the previous rent.
The largest valuation gain was at our industrial estate in
Wandsworth. We received, subject to a s.106 agreement,
planning permission to redevelop the 35,000 sq. ft.
industrial estate. The consent is for 106 residential units,
55,000 sq. ft of office space and 62,500 sq ft of light
industrial. The development of this mixed-use scheme will
significantly transform this dated 1970s industrial estate
into a modern mixed-use destination adjacent to
Wandsworth Town train station.
Outlook
It is important that we have the ability to gear when the
conditions are favourable and, as the Chairman has
commented, we added to the short term debt facilities
available during the year with a new relationship and loan
facility of £20m with the ICBC and adding a further £25m
to our facility with RBS. In addition, a new derivative
instrument which commercially is very similar to a CFD
was added which has widened the counterparties
available to us for derivative transactions.
At the time of writing much of the world is in the grip of
the second phase of the COVID-19 dilemma. Infection
and death rates have been brought under control through
the strict discipline of lockdown and social distancing.
However the huge economic cost of effectively
furloughing vast swathes of the economy means that this
strategy must now evolve quickly to restart business and
consumption. The dilemma is over the pace, timing and
focus of the relaxation of the lockdown across so many
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countries, each with their own set of particular issues. The
lack of visibility makes forecasting extremely difficult.
However there are several market features which look
sustainable. Firstly the commitment of central banks and
governments (to varying degrees) to support the recovery.
This means that the challenge from this crisis is less about
liquidity and more about solvency. Which brings me to my
second point. We will remain focused on those businesses
where we are confident of the underlying tenants’ ability
to pay. Borrowing will remain very cheap and banks will
remain accommodative. At this stage we see the issue as
one of tenant demand not leverage risk. At the sector
level, some outcomes seem highly predictable while
others are much more balanced. The structural shifts in
consumer behaviour, particularly towards online retailing
will, in our view, accelerate. Other behavioural adjustments
such as increased home working would logically impact
office demand but that may be offset by reduced desk
densities. Decentralised offices may prove more attractive
than skyscrapers but such questions will be answered in
years not months.
In the near term we will continue to protect the Company
from those business strategies most at risk whilst
acknowledging that income has become an even more
precious commodity. The right type of real estate will
continue to deliver that income.
On a personal note, I would like to extend a huge thank
you to Hugh Seaborn for all his unwavering support and
wise counsel over a great many years. He joined the
Board in July 2007 just as we entered an earlier crisis and
then guided us through further choppy times after
becoming Chairman in 2016. He has been instrumental in
assembling the current Board and their collective
experience will be hugely important to the Trust as we
weather this current crisis.
Marcus Phayre-Mudge
Fund Manager
5 June 2020
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Distribution of Investments
as at 31 March
Distribution of Investments
as at 31 March
2020 2020 2019 2019
£’000 % £’000 %
UK Securities
30.4%
UK Investment Properties 94,510 8.1 101,929 7.9
– quoted 352,188 30.4 427,175 33.2
61.1%
UK Total 446,698 38.5 529,104 41.1
8.1%
0.4%
– quoted 708,597 61.1 762,338 59.1
Continental Europe Securities
UK Securities
UK Property
Continental Europe
Derivatives – net debtor
Investment Exposure
as at 31 March
7.8%
Investments held at fair value 1,155,295 99.6 1,291,442 100.2
– CFD debtor/(creditor)1 8,698 0.7 (3,210) (0.2)
– TRS creditor2 (3,808) (0.3) – –
Total Investment Positions 1,160,185 100.0 1,288,232 100.0
Investment Exposure
as at 31 March
2020 2020 2019 2019
£’000 % £’000 %
UK Securities
– quoted 352,188 28.9 427,175 29.3
– CFD exposure3 32,257 2.6 99,521 6.8
– TRS exposure4 6,598 0.5 – –
UK Investment Properties 94,510 7.8 101,929 7.0
92.2%
UK Total 485,553 39.8 628,625 43.1
Continental Europe Securities
– quoted 708,597 58.2 762,338 52.3
– CFD exposure3 24,471 2.0 67,135 4.6
UK Property
Equities
Total Investment Exposure5 1,218,621 100.0 1,458,098 100.0
Portfolio Summary
as at 31 March
2020 2019 2018 2017 2016
£’000 £’000 £’000 £’000 £’000
Total investments £1,155m £1,291m £1,316m £1,145m £1,099m
Net assets £1,136m £1,328m £1,256m £1,118m £1,065m
UK quoted property shares 31% 33% 31% 29% 31%
Overseas quoted property shares 61% 59% 62% 63% 60%
Direct property (externally valued) 8% 8% 7% 8% 9%
Net Currency Exposures
as at 31 March
Company Benchmark
%
%
27.0
53.0
7.9
11.0
1.1
26.8
53.1
7.9
11.3
0.9
GBP
EUR
CHF
SEK
NOK
1 Net unrealised gain/(loss) on CFD contracts held as balance sheet debtor/(creditor).
2 Net unrealised loss on total return swap (TRS) contract held as balance sheet creditor.
3 Gross value of CFD positions.
4 Gross value of TRS position.
5 Total investments illustrating market exposure including the gross value of CFD and TRS positions.
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Investment Portfolio by Country
as at 31 March 2020
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Austria
CA Immobilien 8,032 0.7
Spain
Arima Real estate 17,486 1.5
8,032 0.7
17,486 1.5
Belgium
Warehousing and Distribution de Pauw 25,231 2.2
Cofinimmo 6,414 0.6
Xior 3,544 0.3
Care Property 3,543 0.3
Intervest Offices & Warehouses 2,248 0.2
Montea 2,243 0.2
Aedifica 1,568 0.1
Wereldhave 302 —
Sweden
Fabege 34,961 3.0
Kungsleden 24,911 2.2
Wihlborgs 19,111 1.6
Cibus 8,482 0.7
Catena 6,575 0.6
Pandox 3,778 0.3
Nyfosa 2,166 0.2
John Mattson 852 0.1
45,093 3.9
100,836 8.7
Finland
Kojamo 22,964 2.0
Switzerland
PSP 27,658 2.4
22,964 2.0
27,658 2.4
France
Argan 46,823 4.0
Gecina 24,228 2.1
Covivio 8,936 0.8
Mercialys 1,736 0.1
Altarea 1,023 0.1
82,746 7.1
Germany
Vonovia 144,362 12.4
LEG 75,310 6.5
Deutsche Wohnen 36,374 3.1
VIB Vermoegen 22,970 2.0
TAG Immobilien 22,451 1.9
Aroundtown 20,273 1.8
Alstria 8,661 0.7
Grand City Properties 3,080 0.3
333,481 28.7
Ireland
Irish Residential Properties 2,323 0.2
Hibernia REIT 1,748 0.2
United Kingdom
SEGRO 38,693 3.3
LondonMetric Property 38,460 3.3
Unite Group 33,026 2.8
Landsec 31,949 2.8
Assura 31,468 2.7
Safestore Holdings 25,920 2.2
CLS Holdings 21,616 1.9
Stenprop 20,691 1.8
Supermarket Income REIT 19,232 1.7
Secure Income REIT 12,763 1.1
Sirius 11,636 1.0
Workspace 11,516 1.0
Great Portland Estates 10,628 0.9
Phoenix 10,296 0.9
McKay Securities 9,958 0.9
PRS REIT 7,879 0.7
Picton 6,298 0.5
Target Healthcare 5,030 0.4
Shaftesbury 2,954 0.3
Capital & Regional 1,493 0.1
Atrato Capital 682 0.1
4,071 0.4
352,188 30.4
Netherlands
Unibail-Rodamco-Westfield 22,737 2.0
Eurocommercial Properties 11,073 1.0
NSI 3,893 0.3
37,703 3.3
Norway
Entra 28,527 2.4
28,527 2.4
Direct Property 94,510 8.1
CFD Positions (included in
current assets) 8,698 0.7
TRS Positions (included in
current liabilities) (3,808) (0.3)
Total Investment Positions 1,160,185 100.0
Companies shown by country of listing.
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Vonovia
1 (Germany)
LEG
2 (Germany)
Gecina
3 (France)
31 March
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31 March
2019
31 March
2020
31 March
2019
31 March
2020
31 March
2019
Shareholding value
£144.4m £150.0m
Shareholding value
£75.3m
£78.7m
Shareholding value
£47.5m
£50.5m
% of investment
portfolio†
% of equity owned
Share price
11.8%
11.2%
0.7%
q44.86
0.7%
q46.22
% of investment
portfolio†
% of equity owned
Share price
6.2%
5.9%
1.2%
q102.7
1.3%
q109.45
% of investment
portfolio†
% of equity owned
Share price
3.9%
3.8%
0.6%
q120.7
0.6%
q131.8
LEG is a German residential company focused on the
economically strong region of North Rhine-Westphalia.
It is one of the largest real estate companies in
Germany with more than 134,000 units under
management with a combined value of €12bn. In
addition to the strong focus on NRW, the company is
exploring opportunities on B and C locations in adjacent
states with the view to leverage their market access as
well as their existing platform still within strict and
conservative financial criteria. The company has a
distinct advantage to be less exposed to regulatory risk
than peers with a Berlin exposure and to benefit from a
relatively high share of state subsidised tenants (25% of
the total). The very low average rent per sqm at
EUR5.82 as well as the relatively low value per sqm of
EUR,1353 per sqm make the company particularly well
suited to weather any potential macro-economic shock.
In addition, the company has shown over the years a
conservative management on the liabilities side which
continued to be the case in 2019 with a LTV of 37.7%
(maximum target set at 43% for 2020), an average
debt maturity of 8.1 years (7.6 years in 2018) and a net
debt to adjusted EBITDA of 10.7x which compares
favourably with all its residential peers. In 2019, LEG
delivered solid results with a total accounting return of
17% in line with the sector average illustrating the
better risk/reward of the company. The five-year total
shareholder return has been 62.6%.
listed
is a German
Vonovia
residential company
managing a housing stock of around 355,700 of its own
apartments across Germany. It also manages a portfolio
of around 38,000 units in Sweden and approximately
22,500 in Austria. Over the last years, the company has
been the consolidator of the listed residential sector,
successively acquiring Gagfah in 2014, Sudewo in 2015,
Conwert in 2016, Buwog in 2017 and Victoria Park in
2018. In 2019, the company continued to expand in
Sweden via the acquisitions of Hembla (portfolio of
around 21,000 units largely located in the Greater
Stockholm region) and Akelius (2,340 units).
At the end of 2019, the company owned a portfolio of
EUR51.5bn split between Germany (84%), Sweden
(11%) and Austria (5%). These different phases of
expansion have allowed Vonovia to become the real
estate company with the largest market capitalisation in
Europe despite having been floated only seven years
ago. Although critical, the size effect (and economies of
scales associated with it) was not the only contribution
factor of this positive development. Vonovia has
developed a large in-house craftsman organisation which
allows the company to run an innovative strategy
focusing on improving and modernizing its portfolio and
creating sustainable value for all stakeholders. In addition,
Vonovia is involved in the whole value chain of the
residential sector via its rental business (82% of group
EBITDA), its value-add branch (energy and multimedia
related services, 8% of group EBITDA), its recurring sales
program (5% of group EBITDA) and its third-party
development business (5% of group EBITDA). This
diversification will allow the company to benefit from
further levers of growth in the future which is a strong
traditional
competitive
residential companies focusing mostly on the rental
business. Finally, the residential sector is subject to strict
regulations
Vonovia
management has been particularly pro-active with public
authorities, complying with regulations and assuming a
social role which should allow them to benefit from
critical political goodwill in the future. This also constitutes
an important differentiation element against other
companies despite being more intangible. In 2019,
Vonovia delivered again strong results in absolute and
relative terms. The company delivered a +19% total
accounting return over the year (computed as the growth
in NAV + dividend paid over the year) against +17% on
average for the main listed residential peers. The Lfl rental
growth at +3.9% (+4.4% in 2018) was particularly
resilient and one of the highest in the residential sector.
The total shareholder return since listing in July 2013 has
been 223%.
against more
in particular.
in Germany
advantage
the
Gecina is the largest office landlord in Europe with a
portfolio of more than €15bn focused almost
exclusively on the Paris region (96% of the total office
value) and with a high share in Paris city (close to 70%
of the total office value). In addition, the company
owns a portfolio of €3.4bn of residential assets (of
which EUR356m in student housing) predominantly
located in the Paris region. Finally, the company owns
a portfolio of exclusive high street retail assets for a
value of €1.6bn located in Paris city (LVMH flagship
store on 101 Champs Elysees in particular). The
management is capitalising on a large development
pipeline of more than €3.5bn (17% of GAV) to be
delivered in the next five years and of which EUR2.4bn
have already been invested. Committed projects
represent an investment of EUR1.7bn or close to half
of the total pipeline investments and showed a pre-let
level of around 25% at the end of 2019 while delivery
dates range from 2020 to 2023. This is a continuation
of
return strategy which has been
implemented by the company over the last couple of
years:
redeveloping assets where
management sees value creation potential and
disposing mature ones crystalising capital gains. In the
last two years, the company has delivered 15 projects
and generated around EUR780m of value creation
since their launch. At the end of 2019, the company
also completed or signed for EUR1.2bn of disposals at
an average 12% premium to last appraised value. The
management announced the creation of a dedicated
subsidiary for its residential portfolio in order to further
grow this segment and unlock its value potential
(current average value per sqm of the portfolio stands
at a conservative EUR7,049). In 2019, the company
posted solid results with a total accounting return of
+12% and LfL rental growth of its office portfolio at
+2.5%. The financial position of the company is very
solid with a LTV at 36% and an average debt maturity
of 7.5 years. The five-year shareholder total return has
been 21.8%.
in essence,
total
†Notes
• The Percentage of Investment portfolio positions set out above include exposures through CFD for both the individual positions and the portfolio.
• The Investment Portfolio by Country positions set out on page 17 are the physical holdings only included in the Investments held at fair value in the Balance Sheet. The profit or loss
positions on the CFD and TRS contracts (ie not the investment exposure) are also shown on page 17 and are included in the Balance Sheet as debtors or creditors in the Current assets.
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Argan
4 (France)
Segro
5 (UK)
LondonMetric
6 (UK)
31 March
2020
31 March
2019
31 March
2020
31 March
2019
31 March
2020
31 March
2019
Shareholding value
£46.8m
£34.1m
Shareholding value
£38.7m
£50.4m
Shareholding value
£38.5m
£29.7m
% of investment
portfolio†
% of equity owned
Share price
3.8%
3.5%
q67.6
2.5%
3.0%
q58.0
% of investment
portfolio†
% of equity owned
Share price
3.2%
3.8%
% of investment
portfolio†
3.2%
2.2%
0.5%
764p
0.7%
% of equity owned
2.4%
1.8%
673.0p
Share price
176.0p
200.0p
to navigate LondonMetric
LondonMetric owns c.£2.3bn of assets, with the
portfolio split 76% logistics, 24% “long income” –
assets primarily in the food and convenience retail
space, which carry long WAULTS (13 year average)
and dependable income. We have been long-term
supporters of CEO Andrew Jones (one of the few
CEO’s who both predicted and then executed a
portfolio repositioning to counter the structural decline
in the retail sector), and continue to believe he is well
placed
the
COVID-19 crisis. The company recently raised an
additional £125m of equity in an upscaled deal to take
advantage of pricing dislocations in the market at a
time of turbulence. As with our wider overweight
logistics positioning we think that the asset class is set
to offer attractive returns over the medium term, and
LondonMetric has pivoted its portfolio to focus
particularly on last mile logistics, where rental growth is
strongest. The LondonMetric equity valuation is rarely
cheap, but we believe it is worth paying up for quality
in this instance. The five-year total shareholder return
has been 38%.
through
imbalance,
fuelled by
Segro has become the largest UK REIT by market cap,
and is the largest operator of logistics and industrial
property listed in the UK, with a total portfolio of
£12.2bn including its share of JVs (55% in the UK,
45%
in Continental Europe, with 67% urban
warehouses, 31% big boxes and 2% other uses). In
the UK, the group is exposed to Greater London
industrial and logistics space and national logistics
space. Rental growth in these markets has been
remains an acute
extremely strong as
there
supply-demand
tenants’
requirements to deal with the growth in e-commerce.
In Europe, Germany and France are the group’s largest
markets with Poland third; these markets have a lower,
but still positive, rental growth outlook (and are
geographically less space-constrained) but continue to
see yield compression as investors have paid keener
yields for access to strong income. While it is early days
the logistics sector appears one of the more resilient to
any impacts from COVID-19. The group also has
extensive development exposure that it manages to
largely pre-let and develop at yields significantly in
excess of investment values (c.7% yield on cost vs. an
EPRA net initial yield of 3.8% at FY19). We expect this
to drive both earnings and NAV growth over the short
to medium term, as well as high shareholder total
returns. In our view the LTV is relatively low risk at
c.24%, and the development pipeline has been
funded by fresh equity. The five-year total shareholder
return has been 125%.
This
transformational
Argan is a French company, created in 2000 by
Jean-Claude Le Lan, which has been listed since 2007.
The objective of the company has been to build a
portfolio of premium logistic assets which guarantee a
stable and high occupancy rate at around 100%. The
company is vertically integrated and has full control of
the entire value chain by identifying future needs of
prospective and current tenants and developing assets
on their behalf. Therefore, Argan is able to capture the
developer margin while having little to no risk on the
letting side. In 2019, the company acquired the Cargo
portfolio from Carrefour (22 premium assets for
EUR900m).
transaction
(representing an equivalent of eight years of
development) allowed Argan to reach a portfolio value
of EUR2.7bn at the end of 2019 and a GLA of 2.9m
sqm. The average age of the Argan portfolio is relatively
recent at 8.4 years while the occupancy rate at the end
of 2019 stand at 99%. The average residual lease term
was 5.8 years at the end of 2019 while the company
tends to start renewal discussions with tenants well
ahead of expiry dates. 58% of the rents are derived
from food retail with Carrefour being the first tenant of
the company (36% of the total rents) and 57% of the
portfolio are assets with a GLA above 50k sqm. The
company has delivered a solid and sustainable financial
growth since its creation: rents have increased annually
by 23% between 2000 and 2019 while the EPRA
NNNAV (excl duties) has grown annually by 23%
between 2013 and 2019. The funding of the company
is based on a conservative mix of 90% amortisable
mortgage loans with an average maturity of 9 years and
10% of bonds. The relatively low dividend payout at
below 50% allows the company to retain cash and
reinvest in new development projects while repaying
debts. The management of the company has been
assumed by its founder Jean-Claude Le Lan who owns
alongside family members 40% of the share capital
which is a strong guarantee of alignment. The five-year
total shareholder return has been 255%
†Notes
• The Percentage of Investment portfolio positions set out above include exposures through CFD for both the individual positions and the portfolio.
• The Investment Portfolio by Country positions set out on page 17 are the physical holdings only included in the Investments held at fair value in the Balance Sheet. The profit or loss
positions on the CFD and TRS contracts (ie not the investment exposure) are also shown on page 17 and are included in the Balance Sheet as debtors or creditors in the Current assets.
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Deutsche Wohnen
7 (Germany)
Fabege
8 (Sweden)
Assura
9 (UK)
31 March
2020
31 March
2019
31 March
2020
31 March
2019
31 March
2020
31 March
2019
Shareholding value
£36.4m
£69.5m
Shareholding value
£35.0m
£44.3m
Shareholding value
£34.1m
£8.3m
% of investment
portfolio†
% of equity owned
Share price
3.0%
5.2%
0.3%
q34.7
0.5%
q43.2
% of investment
portfolio†
% of equity owned
2.9%
1.0%
3.3%
% of investment
portfolio†
1.2%
% of equity owned
Share price
SEK127.30 SEK135.00
Share price
2.8%
0.6%
1.7%
84.0p
0.6%
57.0p
Deutsche Wohnen is Germany’s second largest
residential company with the bulk of its exposure to
Greater Berlin (76% of the total portfolio FV). The
company owns a high-quality portfolio consisting of
more than 161,000 units with a combined value of
€24bn. In addition to the rental business, the
company is present in the Nursing and Assisted Living
business which around represented 10% of the Group
EBITDA in 2019. The company announced at their
FY19 results the acquisition of a development
business (‘’Isaria’’) for EUR600m which should result
in a total investment of EUR1.8bn for around 2,700
residential units principally in the Munich region (more
than 70% of the total area). The company showed a
solid financial performance in 2019 with a total
accounting return of 13% albeit lower than peers
average at 17% while LfL rental growth was +3.4%
ahead of the guidance at +3.0%. The Greater Berlin
portfolio was valued at EUR2,584 per sqm on average
which leaves significant upside potential in the future
once the regulatory pressures alleviate. On this topic
and more specifically on the Berlin rental freeze which
will be implemented this year, management reiterated
that in their view the likely impact would be around 4
to 5% of their total income (most of it materializing in
2021). The management also reiterated (in line
with other
is
anti-constitutional and that a constitutional review will
be submitted this year. The five-year total shareholder
return has been 64%.
residential peers)
that
this
law
Assura holds c.£2bn of assets in a single asset class:
560 medical centres spread across the UK. While the
outlook for rental growth in this asset class is relatively
limited, income from these assets is extremely reliable
(being effectively underwritten by the NHS), and the
portfolio benefits from a long-dated WAULT, currently
11.6 years. The shares carry have a bond-like quality,
and the company’s dependability of income meant
that it was one of the best performers during the
COVID-19 crisis, and offered good downside
protection when the market crashed. The company
looks to enhance its existing portfolio through selective
developments and acquisitions, and recently raised
£185m to finance future growth opportunities in this
below
pipeline, while maintaining
management’s 40%
total
shareholder return has been 57%.
limit. The
five-year
leverage
Fabege is an owner and developer of Stockholm
offices, with a SEK 65bn portfolio. The Stockholm
office market has seen, and in our view over the
medium-term is set to continue to see, strong rental
growth – prime rents in Stockholm reached c.SEK
8,000 psm, up from SEK 4,500 psm just 4 years ago.
In addition to capturing this strong rental growth
(rental growth in an identical portfolio over the course
of the year was 14% in FY19) in its investment
portfolio, Fabege undertakes a large amount of
development (it is responsible for c.50% of all new
office developments in Stockholm) and has enjoyed
very strong returns on its project portfolio (the
company targets >50% ROIC, but often exceeds this
by a distance to achieve 100%+). Having executed
large scale development in Arenastaden the company
has now turned its focus to Flemingsberg to the South
of the city, and has recently confirmed its first pre-let
tenant in the area. We continue to back Fabege’s
development focused strategy under the stewardship
of new CEO Stefan Dahlbo, and note that Sweden’s
COVID-19 strategy at a country-wide level has involved
far fewer restrictions than other European cities –
developments have not been postponed or cancelled
for example. The five-year shareholder total return has
been 135% in GBP terms.
†Notes
• The Percentage of Investment portfolio positions set out above include exposures through CFD for both the individual positions and the portfolio.
• The Investment Portfolio by Country positions set out on page 17 are the physical holdings only included in the Investments held at fair value in the Balance Sheet. The profit or loss
positions on the CFD and TRS contracts (ie not the investment exposure) are also shown on page 17 and are included in the Balance Sheet as debtors or creditors in the Current assets.
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10(UK)
McKay Securities
11 (UK)
Landsec
12 (UK)
31 March
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31 March
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31 March
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31 March
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31 March
2020
31 March
2019
Shareholding value
£33.0m
£49.6m
Shareholding value
£32.1m
£34.8m
Shareholding value
£31.9m
£74.9m
% of investment
portfolio†
% of equity owned
2.7%
1.1%
3.7%
% of investment
portfolio†
2.6%
2.6%
% of investment
portfolio†
2.1%
% of equity owned
19.5%
15.7%
% of equity owned
2.6%
0.8%
5.6%
1.1%
Share price
802.0p
918.0p
Share price
175.0p
235.0p
Share price
557.0p
913.40p
Unite is the UK’s largest purpose-built student housing
developer, owner and operator. The group manages
just over 74,000 student beds either wholly-owned or
within joint ventures, having increased its total beds by
c.54% through the acquisition of Liberty Living, which
it completed in late 2019. Unite offers a strong
development pipeline of c.5,000 beds funded through
retained resources and active portfolio recycling.
Student accommodation was one of the sectors
directly impacted by the COVID-19 pandemic, and
universities were forced to close to protect students’
health. Facing this, the company elected to help its
customers and allow them to cancel contracts once
universities closed,
lease
agreements. We believe this was the right course of
action, and expect that in a normalised environment,
where UK higher education remains globally attractive
the
with a
landlord’s favour, UTG will return to its position as
sector leader and the partner of choice for UK
universities, likely achieving consistent 3%+ rental
growth as it did in the past. Leverage is running slightly
ahead of normal levels with LTV at 37%, however this
was due to the Liberty Living acquisition, and is
expected to trend down over time. The five-year total
shareholder return has been 57%.
large supply/demand
than enforcing
imbalance
rather
in
McKay Securities’ £492m portfolio is focused on
markets where we believe the fundamentals remain
attractive. The geographical split of its portfolio is 52%
South East Offices, 25% London Offices, 18% South
East Industrial and 5% in Other sectors. We continue
to view the share price as a severe undervaluation of
the strong fundamentals of its underlying assets, not
least the significant (24%) reversion within the
portfolio. The company successfully agreed the sale of
30 Lombard Street
its
redevelopment in January 2019, and we believe the
letting up of its recently completed, speculatively
developed, Theale Logistics Park will trigger further
upside in the company’s earnings outlook. Leverage
remains well controlled (LTV 35%) as does the
company’s approach to development risk, completing
its only speculative development before the COVID-19
crisis struck. The five-year total shareholder return has
been -15%.
for £76.5m
following
Landsec is one of the UK’s largest REITs by portfolio
value, managing £13bn of assets (including its share of
joint ventures and developments). The company is
often thought of as “half retail, half London offices” but
in reality the portfolio (by value) is 50% London offices,
with 38% traditional retail (retail parks and shopping
centres) and 12% leisure assets, while the geographical
weighting is 67% London. We believe Landsec’s retail
assets are better placed than most to weather the
structural storm facing the retail landscape, with its
much smaller quantum of retail parks compared with
peer British Land a case in point. With CEO Rob Noel
stepping down in 2020 Mark Allan, the highly respected
former CEO of Unite Group and St Modwen, is set to
take the reins to lead Landsec through this next chapter
in its history. The company’s leverage is low (28%), and
its development exposure is modest, so while the retail
outlook is tough the company’s balance sheet is in no
way stretched. We also believe that the current equity
valuation (c.50% discount to NAV and c.8.5% earnings
yield) offers a level of downside protection for the
shares, despite the retail exposure. The five-year total
shareholder return has been -46%.
†Notes
• The Percentage of Investment portfolio positions set out above include exposures through CFD for both the individual positions and the portfolio.
• The Investment Portfolio by Country positions set out on page 17 are the physical holdings only included in the Investments held at fair value in the Balance Sheet. The profit or loss
positions on the CFD and TRS contracts (ie not the investment exposure) are also shown on page 17 and are included in the Balance Sheet as debtors or creditors in the Current assets.
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as at 31 March 2020
Spread of Direct Portfolio by Capital Value (%)
as at 31 March 2020
Residential
and
Ground
Retail Industrial Rents Other
West End of London 43.9% – 14.8% 0.6%
Inner London* 1.6% 24.0% – –
South West – 15.1% – –
Total
59.3%
25.6%
15.1%
Total 45.5% 39.1% 14.8% 0.6%
100.0%
*Inner London defined as inside the North and South Circular.
Lease Lengths within the Direct Property Portfolio
as at 31 March 2020 Gross rental income
0 to 5 years 40%
5 to 10 years 14%
10 to 15 years 6%
15 to 20 years 39%
20+ years 1%
100%
Contracted Rent
Year 1 £2,950,000
Years 2-5 £10,100,000
Years 5+ £15,500,000
Value in excess of £10 million
The Colonnades, Bishops Bridge Road, London W2
Sector Mixed Use
Tenure Freehold
Size (sq ft) 64,000
Principal tenants Waitrose Ltd 1Rebel
Graham & Green Specsavers
The property comprises a large mixed-use block in
Bayswater, constructed in the mid-1970s. The site
extends to approximately 2 acres on the north east
corner of the junction of Bishops Bridge Road and
Porchester Road, close to Bayswater tube station and
the Whiteleys Shopping Centre. The commercial
element was extended and refurbished in 2015 with
a new 20 year lease being agreed with Waitrose.
Ferrier Street Industrial Estate, Wandsworth, London SW18
Sector Industrial
Tenure Freehold
Size (sq ft) 36,000
Principal tenants Mossimans
Kougar Tool Hire Ltd Page Lacquer
Site of just over an acre, 50 metres from Wandsworth
Town railway station in an area that is predominantly
residential. The estate comprises 16 small industrial
units generally let to a mix of small to medium-sized
private companies. Planning permission granted in
December 2019 for a mixed-use employment led
redevelopment.
22 TR Property Investment Trust
Investment Properties
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Value less than £10 million
Yodel Unit, Woodlands Park, Almondsbury, Bristol BS32
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Tenure Freehold
Size (sq ft) 53,000
Principal tenants Yodel Delivery
Network Ltd
Located on the junction of the M4 and M5, this
industrial building is let to Yodel, the parcel delivery
company, on a lease expiring in 2025. The building
sits on a 5.75-acre site giving a low site density and
a large yard offering a variety of alternative uses for
the site.
IO Centre, Gloucester Business Park, Gloucester GL3
Sector Industrial
Tenure Freehold
Size (sq ft) 63,000
Principal tenants Infusion GB
The IO Centre comprises six industrial units occupied
by two tenants and sits on a 4.5-acre site. Gloucester
Business Park is located to the east of Junction 11A
of the M5 and one mile to the east of Gloucester City
Centre. The property also has easy access to the
A417 providing good links to the M4 via junction 15.
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Investment Objective and Benchmark
The Company’s Objective is to maximise shareholders’ total return by investing in the shares and securities of property
companies and property related businesses internationally and also in investment property located in the UK.
The benchmark is the FTSE EPRA/NAREIT Developed Europe Capped Net Total Return Index in Sterling. The index,
calculated by FTSE, is free-float based and currently has 108 constituent companies. The index limits exposure to any one
company to 10% and reweights the other constituents pro-rata. The benchmark website www.epra.com contains further
details about the index and performance.
Business Model
The Company’s business model follows that of an externally managed investment trust.
The Company has no employees. Its wholly non-executive Board of Directors retains responsibility for corporate strategy;
corporate governance; risk and control assessment; the overall investment and dividend policies; setting limits on gearing
and asset allocation and monitoring investment performance.
The Board has appointed BMO Investment Business Limited as the Alternative Investment Fund Manager with portfolio
management delegated to Thames River Capital LLP. Marcus Phayre-Mudge acts as Fund Manager to the Company on
behalf of Thames River Capital LLP and Alban Lhonneur is Deputy Fund Manager. George Gay is the Direct Property
Manager and Joanne Elliott the Finance Manager. They are supported by a team of equity and portfolio analysts.
Further information in relation to the Board and the arrangements under the Investment Management Agreement can be
found in the Report of the Directors on pages 35 and 53 to 54.
In accordance with the AIFMD, BNP Paribas has been appointed as Depositary to the Company. BNP Paribas also provide
custodial and administration services to the Company. Company secretarial services are provided by Link Company
Matters.
The specific terms of the Investment Management Agreement are set out on pages 53 and 54.
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Strategy and Investment Policies
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The investment selection process seeks to identify well managed companies of all sizes. The Manager generally regards
future growth and capital appreciation potential more highly than immediate yield or discount to asset value.
Although the investment objective allows for investment on an international basis, the benchmark is a Pan-European
Index and the majority of the investments will be located in that geographical area. Direct property investments are
located in the UK only.
As a dedicated investor in the property sector the Company cannot offer diversification outside that sector, however,
within the portfolio there are limitations, as set out below, on the size of individual investments held to ensure
diversification within the portfolio.
Asset allocation guidelines
The maximum holding in the stock of any one issuer or of a single asset is limited to 15% of the portfolio at the point of
acquisition. In addition, any holdings in excess of 5% of the portfolio must not in aggregate exceed 40% of the portfolio.
The Manager currently applies the following guidelines for asset allocation:
UK listed equities
Continental European listed equities
Direct Property – UK
Other listed equities
25 – 50% Other listed equities 0 – 5%
45 – 75% Listed bonds 0 – 5%
0 – 20% Unquoted investments 0 – 5%
0 – 5%
Gearing
The Company may employ levels of gearing from time to time with the aim of enhancing returns, subject to an overall
maximum of 25% of the portfolio value.
In certain market conditions the Manager may consider it prudent not to employ gearing on the balance sheet at all, and
to hold part of the portfolio in cash.
The current asset allocation guideline is 10% net cash to 25% net gearing (as a percentage of portfolio value).
Property Valuation
Investment properties are valued every six months by an external independent valuer. Valuations of all the Group’s properties
as at 31 March 2020 have been carried out on a “Red Book” basis and these valuations have been adopted in the accounts.
Allocation of costs between Revenue & Capital
On the basis of the Board’s expected long-term split of returns in the form of capital gains and income, the Group
charges 75% of annual base management fees and finance costs to capital. All performance fees are charged to capital.
Holdings in Investment Companies
It is the Board’s current intention to hold no more than 15% of the portfolio in listed closed-ended investment
companies.
Some companies investing in commercial or residential property are structured as listed externally managed closed-ended
investment companies and therefore form part of our investment universe. Although this is not a model usually favoured by
our Fund Manager, some investments are made in these structures in order to access a particular sector of the market or
where the management team is regarded as especially strong. If these companies grow and become a larger part of our
investment universe and/or new companies come to the market in this format the Manager may wish to increase exposure
to these vehicles. If the Manager wishes to increase investment to over 15%, the Company will make an announcement
accordingly.
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Key Performance Indicators
The Board assesses the performance of the Manager in meeting the Trust’s objective against the following Key
Performance Indicators (“KPIs”):
KPI
Board monitoring and outcome
Net Asset Value Total Return
relative to the benchmark
The Directors regard the out-performance of
the Company’s net asset value total return in
comparison with the benchmark as being an
overall measure of value delivered to the
shareholders over the longer-term.
l The Board reviews the performance in detail at each meeting and
discusses the results and outlook with the Manager.
NAV Total Return* (Annualised)
Benchmark Total Return
(Annualised)
Outcome
1 Year
–11.5%
5 Years
5.4%
–14.0%
2.4%
* NAV Total Return is calculated by re-investing the dividends in the assets of the Company
from the relevant ex-dividend date. Dividends are deemed to be re-invested on the
ex-dividend date for the benchmark.
Delivering a reliable dividend which
is growing over the longer term
l The Board reviews statements on income received to date and
income forecasts at each meeting.
The principal objective of the Company is
a total return objective, however, the Fund
Manager also aims to deliver a reliable
dividend with growth over the longer-term.
The Discount or Premium at
which the Company’s shares trade
compared with Net Asset Value
Whilst expectation of investment performance
is a key driver of the share price discount or
premium to the Net Asset Value of an
investment trust over the longer-term, there
are periods when the discount can widen.
The Board is aware of the vulnerability of a
sector-specialist trust to a change of investor
sentiment towards that sector, or periods of
wider market uncertainty and the impact that
can have on the discount.
Compound Annual Dividend
Growth*
Compound Annual RPI
Outcome
1 Year
5 Years
3.7%
2.6%
12.7%
2.6%
* The final dividend in the time series divided by the initial dividend in the period raised to
the power of 1 divided by the number of years in the series.
l The Board takes powers at each AGM to buy-back and issue
shares. When considering the merits of share buy-back or
issuance, the Board looks at a number of factors in addition to the
short and longer-term discount or premium to NAV to assess
whether action would be beneficial to shareholders overall.
Particular attention is paid to the current market sentiment, the
potential impact of any share buy-back activity on the liquidity of
the shares and on Ongoing Charges over the longer-term.
Average discount*
Total number of shares
repurchased
Outcome
1 Year
2.0%
5 Years
4.9%
Nil
Nil
* Average daily discount throughout the period of share price to NAV. with income. Source:
Bloomberg.
26 TR Property Investment Trust
Key Performance Indicators
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KPI
Board monitoring and outcome
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l Expenses are budgeted for each financial year and the Board
reviews regular reports on actual and forecast expenses
throughout the year.
Outcome
1 Year
5 Years
Ongoing charges excluding
performance fees
0.61%
0.66%
Ongoing charges
excluding Performance Fees and
Direct Property Costs
0.59%
0.62%
l The ongoing charges are competitive when compared to the peer
group.
Level of Ongoing Charges
The Board is conscious of expenses and aims
to deliver a balance between excellent service
and costs.
The AIC definition of Ongoing Charges
includes any direct property costs in addition
to the management fees and all other
expenses incurred in running a publicly listed
company. As no other investment trusts hold
part of their portfolio in direct property (they
either hold 100% of their portfolio as
property securities or as direct property), in
addition to Ongoing Charges as defined by
the AIC, this statistic is shown without direct
property costs to allow a clearer comparison
of overall administration costs with other
funds investing in securities.
The Board monitors the Ongoing Charges, in
comparison to a range of other Investment
Trusts of a similar size, both property sector
specialists and other sector specialists.
Investment Trust Status
The Company must continue to operate
in order to meet the requirements for
Section 1158 of the Corporation Tax Act
2010.
l The Board reviews financial information and forecasts at each
meeting which set out the requirements outlined in Section 1158.
l The Directors believe that the conditions and ongoing
requirements have been met in respect of the year to 31 March
2020 and that the Company will continue to meet the
requirements.
The KPIs are considered to be Alternative Performance Measures as defined on page 97.
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Principal Risks and Uncertainties
In delivering long-term returns to shareholders, the Board must also identify and monitor the risks that have been taken in
order to achieve that return. The Board has included below details of the principal risks and uncertainties facing the
Company and the appropriate measures taken in order to mitigate these risks as far as practicable.
The Board also considers new and emerging risks adding appropriate monitoring and mitigation measures accordingly.
The impact of the COVID-19 pandemic, the response of financial markets, ongoing impact on economies around the
world and operational changes in response to government guidelines has increased some of the risks listed below in
comparison with the prior year.
Risk Identified
Board monitoring and mitigation
Share price performs poorly in comparison
to the underlying NAV
The shares of the Company are listed on the London Stock
Exchange and the share price is determined by supply and
demand. The shares may trade at a discount or premium to
the Company’s underlying NAV and this discount or premium
may fluctuate over time.
l The Board monitors the level of discount or premium
at which the shares are trading over the short and
longer-term.
l The Board encourages engagement with the shareholders.
The Board receives reports at each meeting on the activity
of the Company’s brokers, PR agent and meetings and
events attended by the Fund Manager.
l The Company’s shares are available through the BMO
share schemes and the Company participates in the active
marketing of these schemes. The shares are also widely
available on open architecture platforms and can be held
directly through the Company’s registrar.
l The Board takes the powers to buy-back and to issue
shares at each AGM.
Poor investment performance of the
portfolio relative to the benchmark
The Company’s portfolio is actively managed. In addition to
investment securities the Company also invests in commercial
property and accordingly, the portfolio may not follow or
outperform the return of the benchmark.
l The Manager’s objective is to outperform the benchmark.
The Board regularly reviews the Company’s long-term
strategy and investment guidelines and the Manager’s
relative positions against these.
l The Management Engagement Committee reviews the
Manager’s performance annually. The Board has the
powers to change the Manager if deemed appropriate.
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Principal Risks and Uncertainties
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Board monitoring and mitigation
l The Board receives and considers a regular report from the
Manager detailing asset allocation, investment decisions,
currency exposures, gearing levels and rationale in relation
to the prevailing market conditions.
l The report considers the potential impact of Brexit and the
Manager’s response in positioning the portfolio.
l The report considers the current and potential future
impact of the COVID-19 pandemic and the ongoing
implication for the property market and valuations overall
and by each sector.
Risk Identified
Market risk
Both share prices and exchange rates may move rapidly and
adversely impact the value of the Company’s portfolio.
Although the portfolio is diversified across a number of
geographical regions, the investment mandate is focused on
a single sector and therefore the portfolio will be sensitive
towards the property sector, as well as global equity markets
more generally.
Property companies are subject to many factors which can
adversely affect their investment performance, these include
the general economic and financial environment in which their
tenants operate, interest rates, availability of investment and
development finance and regulations issued by governments and
authorities.
As highlighted since the result of the UK referendum in June 2016,
parts of the UK property market may be adversely affected by
Brexit. Although we are now in the withdrawal period, the
negotiations continue and until the structure of our future
relationship with Continental Europe is clearer we cannot fully
assess the likely final impact on occupation across each sector.
The impact of Brexit has been dwarfed by the COVID-19 global
pandemic. This has created unprecedented uncertainty regarding
the impact on economies and property markets around the world
both in the short and longer term.
Any strengthening or weakening of Sterling in response to either
COVID-19 or Brexit will have a direct impact as a proportion of our
Balance Sheet is held in non-GBP denominated currencies. The
currency exposure is maintained in line with the benchmark and
will change over time. As at 31 March 2020, 73% of the Trust’s
exposure is to currencies other than GBP.
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Principal Risks and Uncertainties
continued
Risk Identified
Board monitoring and mitigation
l The Board receives and considers regular income
forecasts.
l Income forecast sensitivity to changes in FX rates is also
monitored.
l The Company has revenue reserves which can be drawn
upon when required.
l The Board will continue to monitor the impact of
COVID-19 and the long term implications for income
generation.
The Company is unable to maintain dividend
growth
Lower earnings in the underlying portfolio putting pressure on the
Company’s ability to grow the dividend could result from a number
of factors:
l lower earnings and distributions in investee companies.
Companies are being negatively impacted by the COVID-19
pandemic. Lockdown and companies furloughing employees
has had an immediate impact and companies in some sectors
have already cancelled or reduced dividends as a
precautionary measure to protect their balance sheets in the
short term. We expect this to continue until the longer term
implications are understood;
l prolonged vacancies in the direct property portfolio and lease
or rental renegotiations as a result of COVID-19;
l strengthening Sterling reducing the value of overseas dividend
receipts in Sterling terms. The Company has seen a material
increase in the level of earnings in recent years. A significant
factor in this was the weakening of Sterling following the Brexit
decision. This may reverse in the near or medium term as the
longer term implications of Brexit and the COVID-19 pandemic
and the impact on the UK and European economies are
understood, leading to a fall in earning;
l adverse changes in the tax treatment of dividends or other
income received by the Company; and
l changes in the timing of dividend receipts from investee
companies.
Accounting and operational risks
l Third party service providers produce periodic reports to the
Disruption or failure of systems and processes underpinning
the services provided by third parties and the risk that these
suppliers provide a sub-standard service.
The impact of the COVID-19 pandemic and the operational
response from the Manager and service providers has been
considered.
Board on their control environments and business
continuation provisions on a regular basis.
l The Management Engagement Committee considers the
performance of each of the service providers on a regular basis
and considers their ongoing appointment and terms and
conditions.
l The Custodian and Depositary are responsible for the
safeguarding of assets. In the event of a loss of assets the
Depositary must return assets of an identical type or
corresponding amount unless able to demonstrate that the loss
was the result of an event beyond their reasonable control.
l Monitoring the quality and timeliness of services as service
providers respond to COVID-19 regulations and guidelines, in
particular with widespread home working, and consideration of
the durability of the arrangements.
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Risk Identified
Financial risks
The Company’s investment activities expose it to a variety of
Board monitoring and mitigation
l Details of these risks together with the policies for
managing these risks are found in the Notes to the
financial risks which include counterparty credit risk, liquidity
Financial Statements on pages 72 to 96.
risk and the valuation of financial instruments. Any impact of
the COVID-19 pandemic has been considered.
Loss of Investment Trust Status
l The Investment Manager monitors the investment
The Company has been accepted by HM Revenue & Customs
as an investment trust, subject to continuing to meet the
relevant eligibility conditions. As such the Company is exempt
from capital gains tax on the profits realised from the sale of
investments.
Any breach of the relevant eligibility conditions could lead to
the Company losing investment trust status and being subject
to corporation tax on capital gains realised within the
Company’s portfolio.
portfolio, income and proposed dividend levels to ensure
that the provisions of CTA 2010 are not breached. The
results are reported to the Board at each meeting.
l The income forecasts are reviewed by the Company’s tax
advisor through the year who also reports to the Board on
the year-end tax position and on CTA 2010 compliance.
Legal, regulatory and reporting risks
Failure to comply with the London Stock Exchange Listing
Rules and Disclosure Guidance and Transparency rules; failure
to meet the requirements under the Alternative Investment
Funds Directive, the provisions of the Companies Act 2006
and other UK, European and overseas legislation affecting
UK companies. Failure to meet the required accounting
l The Board receives regular regulatory updates from the
Manager, Company Secretary, legal advisors and the
Auditors. The Board considers these reports and
recommendations and takes action accordingly.
l The Board receives an annual report and update from the
Depositary.
standards or make appropriate disclosures in the Interim and
l Internal checklists and review procedures are in place at
Annual Reports.
service providers.
Inappropriate use of gearing
Gearing, either through the use of bank debt or through the
use of derivatives may be utilised from time to time. Whilst the
use of gearing is intended to enhance the NAV total return, it
will have the opposite effect when the return of the
Company’s investment portfolio is negative.
l The Board receives regular reports from the Manager on
the levels of gearing in the portfolio. These are considered
against the gearing limits set in the Investment Guidelines
and also in the context of current market conditions and
sentiment.
Personnel changes at Investment Manager
l The Chairman conducts regular meetings with the Fund
Loss of portfolio manager or other key staff.
Management team.
l The fee basis protects the core infrastructure and depth
and quality of resources. The fee structure incentivises
good performance and is fundamental in the ability to
retain key staff.
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Viability Statement
In accordance with provision 31 of the UK Corporate Governance Code, which requires the Company to assess the prospects of
the Company over the longer term, the Directors have assessed the prospects of the Company over the coming five years. This
period is used by the Board during the strategic planning process and the Board consider this period of time appropriate for a
business of our nature and size.
This assessment takes account of the Company’s current position and the policies and processes for managing the principal and
emerging risks set out on pages 28 to 31 and the Company’s ability to continue in operation and meet its liabilities as they fall
due over the period of assessment. In making this statement the Board carried out a robust assessment of the principal and
emerging risks facing the Company, including those that might threaten its business model, future performance, solvency and
liquidity.
In reaching their conclusions the Directors have reviewed five-year forecasts for the Company with sensitivity analysis to a number
of assumptions; investee company dividend growth, interest rate, foreign exchange rate, tax rate and asset value growth.
In the assessment of the viability of the Company the Directors have noted that:
l The Company has a long-term investment strategy under which it invests mainly in readily realisable, publicly listed securities
and which restricts the level of borrowings.
l Of the current portfolio, 69% could be liquidated within ten trading days.
l On a Group basis, Current assets exceed current liabilities at the Balance Sheet Date.
l The external valuation of the direct property portfolio as at 31 March 2020 contains a material uncertainty clause from
Knight Frank which is in line with the current RICS guideline to valuers and reflects the increased difficulty in
determining asset values when few, if any, comparable transaction have occurred in the current environment.
Consequently less certainty can be attached to the valuation than would otherwise be the case. The direct property
portfolio represents less than 8% of the Company’s investment exposure.
l The Company invests in real estate related companies which hold real estate assets, and invests in commercial real estate
directly. These investments provide cash receipts in the form of dividends and rental income.
l The Company is able to take advantage of its closed-ended Investment Trust structure and able to hold a proportion of its
portfolio in less liquid direct property with a view to long-term outperformance.
l At the Balance Sheet Date the Company had £70 million undrawn on its revolving loan facilities.
l The structure has also enabled the Company to secure long-term financing. EUR 50m loan notes issued in 2016 are due to
mature at par in 2026 and GBP15m loan notes issued on the same date are due to mature at par in 2031.
l The impact of COVID-19 and its impact on the UK and European commercial property markets has been considered.
A reduction in dividend receipts from investee companies is anticipated for the forthcoming year. The longer term impact is
harder to assess at this stage, but the long term capital of the Investment Trust structure is beneficial.
l The direct property portfolio is well positioned in respect of the COVID-19 crisis and rental collection to date has been
robust. We have very limited exposure to retail and some smaller occupiers in the hospitality sector, however, overall the
expected drop in income from the direct portfolio in 2020/21 is not material.
l The expenses of the Company are predictable and modest in comparison with the assets. Regular and robust monitoring of
revenue and expenditure forecasts are undertaken throughout the year. The Company could suffer a reduction in earnings of
75% and still be able to meet its liabilities as they fell due.
32 TR Property Investment Trust
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l The Company has no employees and consequently does not have redundancy or other employment related liabilities or
responsibilities.
l The Company retains title to its assets held by the Custodian which are subject to further safeguards imposed on the
Depositary.
l The impact of Brexit and COVID-19 have been considered in terms of the potential effect on Sterling. 73% of the portfolio is
exposed to currencies other than Sterling.
The following assumptions have been made in assessing the longer-term viability:
l Real Estate will continue to be an investable sector of international stock markets and investors will continue to wish to have
exposure to that sector.
l Closed-ended Investment Trusts will continue to be wanted by investors and regulation or tax legislation will not change to
an extent to make the structure unattractive in comparison to other investment products.
l The performance of the Company will continue to be satisfactory. Should the performance be less than the Board deems to
be satisfactory, it has the appropriate powers to replace the Investment Manager.
The Board has concluded that the Company will be able to continue in operation and meet its liabilities as they
fall due over the coming five years. The Company’s business model, capital structure and strategy have enabled
the Company to operate over many decades, and the Board expects this to continue into the future.
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Corporate Responsibility
Exercise of voting power
The Board has approved a corporate governance voting policy which, in its opinion, accords with current best practice
whilst maintaining a primary focus on financial returns.
The exercise of voting rights attached to the Company’s portfolio has been delegated to the Manager who takes a global
approach to engagement with issuers and their management in all of the jurisdictions in which it invests. The Manager is
required to include disclosure about the nature of their commitment to the Financial Reporting Committee’s Stewardship
Code and details may be found at www.fandc.com.
Environmental policy & Socially Responsible Investment
The Company considers that good corporate governance extends to policies on the environment, employment, human
rights and community relationships. Corporates are playing an increasingly important role in global economic activity and
the adoption of good corporate governance enhances a company’s economic prospects by reducing the risk of
government and regulatory intervention and any ensuing damage to its business or reputation.
The Company has adopted an environmental policy in respect of its investments in both physical property and listed
property companies. Within the context of the overall aim of the Company to maximise shareholders’ returns the
Directors will seek to limit the Company’s and its investee companies’ impact on the environment and will comply with
all relevant legislation relating to its operations and activities.
The environmental policies and behaviour of all the companies in which the Company invests are taken into account in
decision making.
Good environmental management can play a role in overall risk management and also have a financial impact in terms
of savings through energy and water efficiency. Where appropriate the Manager will engage with investee companies to
raise concerns about environmental matters.
So far as direct property investments are concerned, the Company conducts environmental audits prior to purchase to
identify contamination or materials considered environmentally harmful. The Company will take remedial action or
enforce tenant obligations to do so wherever appropriate. The Company’s advisers assess the environmental impact of its
properties on an ongoing basis and will take all necessary action to comply with environmental responsibilities.
The Company has no greenhouse gas emissions to report from the operations of the Company, nor does it have
responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors’
Reports) Regulations 2013, including those within its underlying investment portfolio.
Diversity, Gender Reporting and Human Rights Policy
The Board recognises the requirement under Section 414 of the Companies Act 2006 to detail information about employee
and human rights; including information about any policies it has in relation to these matters and effectiveness of these
policies. As the Trust has no employees, this requirement does not apply. The Company is not within the scope of the
UK Modern Slavery Act 2015 because it has not exceeded the turnover threshold and is therefore not obliged to make
a slavery and human trafficking statement. The Directors are satisfied that, to the best of their knowledge, the Company's
principal suppliers, which are listed on page 106, comply with the provisions of the UK Modern Slavery Act 2015.
The Board currently comprises four male Directors and two female Directors. The activities of the Nomination Committee
in relation to the board changes are referred to in the Nomination Committee Report on pages 50 and 51. The Board’s
diversity policy is outlined in more detail in the Corporate Governance Report. The Manager has an equal opportunity
policy which is set out on its website www.bmo.com.
By order of the Board
Hugh Seaborn
Chairman
5 June 2020
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Directors
Hugh Seaborn
Chairman of the Board
Appointed: July 2007
Experience: Currently, Hugh is Chief Executive Officer of Cadogan, a £6bn property company with assets
in central London. He was a member of the Council and Audit Committee of the Duchy of Lancaster until
December 2013. From 2000 to 2009, he was Chief Executive Officer of the Portman Estate, which has
extensive property holdings in Marylebone, London. He is past Chairman of the Estates Business Group
and past Chairman of the Westminster Property Association. He is a Chartered Surveyor with considerable
experience in the property sector.
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Skills and Contribution to the Board: Hugh’s long and successful career through senior leadership roles in the property sector equips him with
the key skills and experience to lead the Trust and its investments in the property sector. He has considerable experience in real estate, leadership,
implementing changes, and investor and shareholder engagement.
Other Appointments: Chairman of the Knightsbridge Business Group.
David Watson
Senior Independent Director
Appointed: April 2012
Experience: David became the Senior Independent Director on 30 September 2018 and simultaneously
handed Chairmanship of the Audit Committee to Tim, a position he was appointed from 1 January 2013.
He spent 9 years as Finance Director of M&G Group plc, where he was a director of four equity investment
trusts, and more recently at Aviva plc as Chief Finance Officer of Aviva General Insurance. He is a Chartered
Accountant and has had a distinguished career in the Financial Services Industry.
Skills and Contribution to the Board: Throughout his executive career, David has accumulated relevant skills in finance, audit and risk
management and experience in the investment industry. In addition, his experience in a number of boards gives him the skills in investor and
shareholder engagement, making him the most appropriate to be the Senior Independent Director.
Other Appointments: David is currently Deputy Chairman of Countrywide plc, Chairman of Kames Capital plc and a non-executive director of
Hermes Fund Managers Limited, where he Chairs the Audit Committee.
Tim Gillbanks
Chairman of the Audit Committee
Appointed: January 2018
Experience: Tim is a Chartered Accountant, with 30 years’ experience in the financial services and
investment industry. Most recently he spent 13 years at Columbia Threadneedle Investments, initially as
Chief Financial Officer, then Chief Operating Officer and finally as interim Chief Executive Officer.
Skills and Contribution to the Board: Tim brings a wide experience, particularly in financial services
and investment management. His previous financial experience during his executive career informs him in
his role as the Chairman of the Audit Committee.
Other Appointments: Tim is currently a Non-Executive Director for Henderson Global Investors Limited and Henderson Group Holdings Asset
Management Limited. He is also Vice-Chair of the Board of Trustees of Blood Cancer UK.
All directors are independent of the manager and are members of the Audit Committee.
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Directors
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Simon Marrison
Non-Executive Director
Appointed: September 2011
Experience: Since July 2019 he has been Chairman of Europe at LaSalle Investment Management, having
previously been European CEO for 12 years with responsibility for a portfolio of over €20 billion across
Europe. Mr Marrison has been based in Paris since 1990 having started his career in London. Until 1997
he was a partner at Healey & Baker (now Cushman & Wakefield) and from 1997 to 2001 he was at
Rodamco where he became Country Manager for France. He joined LaSalle in 2001 as Managing Director
for Continental Europe.
Skills and Contribution to the Board: Simon brings in a wealth of experience, particularly in the European property market. He has gained
leadership and management skills in his executive roles and relevant skills in investment management.
Other Appointments: Chairman of Europe at LaSalle Investment Management.
Kate Bolsover
Non-Executive Director
Appointed: October 2019
Experience: She previously worked for Cazenove Group and J.P. Morgan Cazenove between 1995 and
2005 where she was managing director of the mutual fund business, and latterly director of Corporate
Communications. Prior to this, she worked extensively in the investment fund industry and was managing
Director of Baring’s mutual fund group. Kate was also previously a non-executive director of JP Morgan
American Investment Trust PLC until 2016, Senior Independent Director of Montanaro UK Smaller
Companies Trust until 2019 and Chairman and Trustee of Tomorrow’s People until 2017.
Skills and Contribution to the Board: From her executive experience, Kate contributes significant and relevant skills of the investment industry to
the Trust. Kate’s role in various boards also gives her the relevant experience in investor and shareholder engagement.
Other Appointments: Kate is currently Chairman of Fidelity Asian Values Trust and of Invesco Enhanced Income Trust. She is also a non-executive
Director of Baillie Gifford & Co Ltd.
Sarah-Jane Curtis
Non-Executive Director
Appointed: January 2020
Experience: Sarah-Jane is a Member of the Royal Institution of Chartered Surveyors. Sarah-Jane was
previously Business Director at Bicester Village for Value Retail. Before this, Sarah-Jane was Director, Covent
Garden for Capital and Counties PLC. She has also worked for Grosvenor for 24 years including as London
Estate Director (retail/Residential) and Fund Manager for LiverpoolONE.
Skills and Contribution to the Board: Sarah-Jane has gained extensive experience during her varied
career, particularly in the retail, and experience sectors and for Fund and Investment management activities.
Other Appointments: Sarah-Jane is currently Property Director of Bicester Motion as well as a consultant to Value Retail PLC.
All directors are independent of the manager and are members of the Audit Committee.
36 TR Property Investment Trust
Managers
Marcus Phayre-Mudge
Jo Elliott
George Gay
Alban Lhonneur
Marcus Phayre-Mudge, Fund Manager, joined the Management team for the Company at Henderson
Global Investors in January 1997, initially managing the Company’s direct property portfolio and latterly
focusing on real estate equities, managing a number of UK and Pan European real estate equity funds
in addition to activities in the Trust. Marcus moved to Thames River Capital in October 2004 where he is
also fund manager of Thames River Property Growth & Income Fund Limited. Prior to joining Henderson,
Marcus was an investment surveyor at Knight Frank (1990) and was made an Associate Partner in the
fund management division (1995). He qualified as a Chartered Surveyor in 1992 and has a BSc (Hons)
in Land Management from Reading University.
Jo Elliott, Finance Manager, has been Finance Manager since 1995, first at Henderson Global Investors
then, since January 2005, at Thames River Capital, when she joined as CFO for the property team. She
joined Henderson Global Investors in 1995, where she most recently held the position of Director of
Property, Finance & Operations, Europe. Previously she was Corporate Finance Manager with London
and Edinburgh Trust plc and prior to that was an investment/treasury analyst with Heron Corporation plc.
Jo has a BSc (Hons) in Zoology from the University of Nottingham and qualified as a Chartered
Accountant with Ernst & Young in 1988. Jo is a Non-Executive Director and Audit Committee Chair of Polar
Capital Global Financials Trust plc.
George Gay, Direct Property Fund Manager, has been the Direct Property Fund Manager since 2008.
He joined Thames River Capital in 2005 as assistant direct property manager and qualified as a
Chartered Surveyor in 2006. George was previously at niche City investment agent, Morgan Pepper where
as an investment graduate he gained considerable industry experience. He has an MA in Property
Valuation and Law from City University.
Alban Lhonneur, Deputy Fund Manager, joined Thames River Capital in August 2008. He was previously
at Citigroup Global Markets as an Equity Research analyst focusing on Continental European Real Estate.
Prior to that he was at Societe Generale Securities, where he focused on transport equity research. He has
a BSc in Business and Management from the ESC Toulouse including one year at the Brunel University,
London. He also attended CERAM Nice High Business School. In 2005 he obtained a post-graduate
Specialised Master in Finance in 2005 from ESCP-EAP.
TR Property Investment Trust
37
Report of the Directors
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The Directors present the audited financial statements of the Group and the Company and their Strategic Report and
Report of Directors for the year ended 31 March 2020. The Group comprises TR Property Investment Trust plc and its
wholly owned subsidiaries. As permitted by legislation, some matters normally included in the Report of the Directors
have been included in the Strategic Report because the Board considers them to be of strategic importance. Therefore,
the review of the business of the Company, recent events and outlook can be found on pages 4 to 34.
Status
The Company is an investment company, as defined in Section 833 of the Companies Act 2006, and operates as an
investment trust in accordance with Section 1158 of the Corporation Tax Act 2010.
The Company has a single share class, Ordinary shares, with a nominal value of 25p each which are premium listed on
the London Stock Exchange.
The Company has received confirmation from HM Revenue & Customs that the Company has been accepted as an
approved investment trust for accounting periods commencing on or after 1 April 2012 subject to the Company
continuing to meet the eligibility conditions of Section 1158 Corporation Tax Act 2010 and the ongoing requirements for
approved companies in Chapter 3 of Part 2 Investment Trust (Approved Company) (Tax) Regulations 2011 (Statutory
Instrument 2011/2999).
The Directors are of the opinion that the Company has conducted and will continue to conduct its affairs so as to
maintain investment trust status. The Company has also conducted its affairs, and will continue to conduct its affairs, in
such a way as to comply with the Individual Savings Accounts Regulations. The Ordinary shares can be held in Individual
Savings Accounts (ISAs).
Results and Dividends
At 31 March 2020 the net assets of the Company amounted to £1,136m (2019: £1,328m), on a per share basis
358.11p (2019: 418.54p) per share.
Revenue earnings per share for the year amounted to 14.62p (2019: 14.58p) and the Directors recommend the
payment of a final dividend of 8.80p (2019: 8.60p) per share bringing the total dividend for the year to 14.00p (2019:
13.50p), an increase of 3.7% for the full year. In arriving at their dividend proposal, the Board also reviewed the income
forecasts for the year to March 2021.
Performance details are set out in the Financial Highlights on page 1 and the outcome of what the Directors consider to
be the Key Performance Indicators on pages 26 and 27. The Chairman’s Statement and the Manager’s Report give full
details and analysis of the results for the year.
Share Capital and Buy-back Activity
At 1 April 2020 the Company had 317,350,980 (2019: 317,350,980) Ordinary shares in issue.
At the AGM in 2019 the Directors were given power to buy back 47,570,911 Ordinary shares. Since this AGM the
Directors have not bought back any Ordinary shares at the nominal value of 25p each under this authority. The
outstanding authority is therefore 47,570,911 shares.
This authority will expire at the 2020 AGM. The Company will seek to renew the power to make market purchases of
Ordinary shares at this year’s AGM.
Since 1 April 2020 to the date of this report, the Company has made no market purchases for cancellation. The Board
has not set a specific discount at which shares will be repurchased.
38 TR Property Investment Trust
Report of the Directors
continued
Management Arrangements and Fees
Details of the management arrangements and fees are set out in the Report of the Management Engagement
Committee beginning on page 53. Total fees paid to the Manager in any one year (Management and Performance Fees)
may not exceed 4.99% of Group Equity Shareholders’ Funds. Total fees payable for the year to 31 March 2020 amount
to 0.8% (2019: 0.9%) of Group Equity Shareholders’ Funds. Included in this were performance fees earned in the year
ended 31 March 2020 of £2,683,000 (2019: £6,110,000).
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Basis of Accounting and IFRS
The Group and Company financial statements for the year ended 31 March 2020 have been prepared on a going
concern basis in accordance with International Financial Reporting Standards (IFRS), which comprise standards and
interpretations approved by the International Accounting Standards Board (IASB), together with interpretations of the
International Accounting Standards and Standing Interpretations Committee approved by the International Accounting
Standards Committee (IASC) that remain in effect, to the extent that they have been adopted by the European Union and
as regards the Group and Company financial statements, as applied in accordance with the provisions of the Companies
Act 2006.
The accounting policies are set out in note 1 to the Financial Statements on pages 72 to 76.
Financial Instruments
The Company’s Financial Instruments comprise its investment portfolio, cash balances, borrowings and debtors and
creditors that arise directly from its operations such as sales and purchases awaiting settlement, profit or loss balances on
derivative instruments and accrued income and expenses. The financial risk management objectives and policies arising
from its financial instruments and exposure of the Company to risk are disclosed in note 11 to the financial statements.
Going Concern
The Directors’ assessment of the longer-term viability of the Company is set out on pages 32 and 33.
In assessing Going Concern, the Board has made a detailed assessment of the ability of the Company and Group to
meet its liabilities as they fall due, including stress and liquidity tests which considered the effects of substantial falls in
investment valuations, substantial reductions in revenue received and reductions in market liquidity including the effects
and potential effects of the current economic impact caused by the Coronavirus pandemic.
In light of testing carried out, the overall levels of the investment liquidity held by the Company and the significant net
asset portfolio position, and despite the net current liability position of the Parent Company, the Directors are satisfied
that the Company and the Group have adequate financial resources to continue in operation for at least the next
12 months following the signing of the financial statements and therefore it is appropriate to adopt the going concern
basis of accounting.
Internal Controls
The Board has overall responsibility for the Group’s systems of internal controls and for reviewing their effectiveness.
The Portfolio Manager is responsible for the day to day investment management decisions on behalf of the Group.
Accounting and company secretarial services have both been outsourced.
The internal controls aim to ensure that the assets of the Group are safeguarded, proper accounting records are
maintained, and the financial information used within the business and for publication is reliable. Control of the risks
identified, covering financial, operational, compliance and risk management, is embedded in the controls of the Group by
a series of regular investment performance and attribution statements, financial and risk analyses, AIFM and Portfolio
TR Property Investment Trust
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Report of the Directors
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Manager reports and quarterly control reports. Key risks have been identified and controls put in place to mitigate them,
including those not directly the responsibility of the AIFM or Portfolio Manager. The key risks are explained in more detail
in the Strategic Report on pages 28 to 31.
The effectiveness of each third party provider’s internal controls is assessed on a continuing basis by the Compliance and
Risk departments of the AIFM and Portfolio Manager, the Administrator and the Company Secretary. Each maintains its
own system of internal controls, and the Board and Audit Committee receive regular reports from them. The control
systems are designed to provide reasonable, but not absolute, assurance against material misstatement or loss and to
manage, rather than eliminate, risk of failure to achieve objectives.
As the Company has no employees and its operational functions are undertaken by third parties, the Audit Committee
does not consider it necessary for the Company to establish its own internal audit function. Instead, the Audit Committee
relies on internal control reports received from its principal service providers to satisfy itself as to the controls in place.
The Board has established a process for identifying, evaluating and managing any major risks faced by the Group.
The Board undertakes an annual review of the Group’s system of internal controls in line with the Turnbull guidance.
Business risks have also been analysed by the Board and recorded in a risk map that is reviewed regularly. Each quarter
the Board receives a formal report from each of the AIFM, Portfolio Manager, the Administrator and the Company
Secretary detailing the steps taken to monitor the areas of risk, including those that are not directly their responsibility, and
which report the details of any known internal control failures.
The Board also considers the flow of information and the interaction between the third party service providers and the
controls in place to ensure accuracy and completeness of the recording of assets and income. The Board receives
a report from the Portfolio Manager setting out the key controls in operation.
The Board also has direct access to company secretarial advice and services provided by Link Company Matters
(previously called Capita Company Secretarial Services) which, through its nominated representative, is responsible for
ensuring that the Board and Committee procedures are followed and that applicable regulations are complied with.
These controls have been in place throughout the period under review and up to the date of signing the accounts.
Key risks identified by the Auditors are considered by the Audit Committee to ensure robust internal controls and
monitoring procedures are in place in respect of these risks on an ongoing basis.
Annual General Meeting (the “AGM”)
The AGM will be held on 28 July 2020 at 2.30pm. In light of the current measures in place in the UK and in order to
protect the health and safety of the Company’s shareholders and directors, the AGM will be conducted as a closed
meeting and will be held to complete the formal business only. The Notice of AGM is set out on pages 100 and 101.
The full text of the resolutions and an explanation of each is contained in the Notice of AGM and explanatory notes on
pages 104 and 105.
Material Interests
There were no contracts subsisting during or at the end of the year in which a director of the Company is or was
materially interested and which is or was significant in relation to the Company’s business. No Director has a contract
of service with the Company. Further details regarding the appointment letters can be found on page 51.
Donations
The Company made no political or charitable donations during the year (2019: £nil).
40 TR Property Investment Trust
Report of the Directors
continued
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Listing Rule Disclosure
The Company confirms that there are no items which require disclosure under Listing Rule 9.8.4R in respect of the year
ended 31 March 2020.
Voting Interests
Rights and Obligations Attaching to Shares
Subject to applicable statutes and other shareholders’ rights, shares may be issued with such rights and restrictions as the
Company may by ordinary resolution decide, or (if there is no such resolution or so far as it does not make specific
provision) as the Board may decide. Subject to the Articles, the Companies Act 2006 and other shareholders’ rights,
unissued shares are at the disposal of the Board.
Voting
At a general meeting of the Company, when voting is by a show of hands, each share affords its owner one vote.
Restrictions on Voting
No member shall be entitled to vote if he has been served with a restriction notice (as defined in the Articles) after failure
to provide the Company with information concerning interests in those shares required to be provided under the
Companies Act 2006.
Deadlines for Voting Rights
Votes are exercisable at the general meeting of the Company in respect of which the business being voted upon is being
heard. Votes may be exercised in person, by proxy, or in relation to corporate members, by corporate representatives.
The Articles provide a deadline for submission of proxy forms of not less than 48 hours (or such shorter time as the
Board may determine) before the meeting (not excluding non-working days).
Transfer of Shares
Any shares in the Company may be held in uncertificated form and, subject to the Articles, title to uncertificated shares
may be transferred by means of a relevant system. Subject to the Articles, any member may transfer all or any of his
certificated shares by an instrument of transfer in any usual form or in any other form which the Board may approve.
Significant Voting Rights
At 31 March 2020, no shareholders held over 3% of voting rights on a discretionary basis. However, at 31 March 2020
the following shareholders held over 3% of the voting rights on a non-discretionary basis:
% of
Ordinary share
Shareholder voting rights*
Brewin Dolphin Ltd 11.20%
Individuals & Private Trusts 9.54%
Interactive Investor Share Dealing Services 6.13%
Rathbone Investment Management Ltd 5.91%
Hargreaves Lansdown Asset Management Ltd 5.03%
Quilter Cheviot Investment Management Ltd 4.33%
Investec Wealth & Investment Ltd 4.27%
Charles Stanley Group plc 3.10%
* See above for further information on the voting rights of Ordinary shares.
Since 31 March 2020 to the date of this report, the Company has not been informed of any notifiable changes with
respect to the Ordinary shares.
TR Property Investment Trust
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Report of the Directors
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Corporate Governance Report
The Board of Directors is accountable to shareholders for the governance of the Company’s affairs.
This statement describes how the principles of the 2018 edition of UK Corporate Governance Code (“the Code”) issued
by the Financial Reporting Council (the “FRC”) in 2018 have been applied to the affairs of the Company. The Code can
be viewed at www.frc.org.uk.
Application of the AIC Code’s Principles
In applying the principle of the Code, the Directors have also taken account of the 2019 Code of Corporate Governance
published by the AIC (the “AIC Code”), of which the Company is a member of. The AIC Code establishes the framework
of best practice specifically for the Boards of investment trust companies. Furthermore, the AIC Code has full
endorsement of the FRC, which means that AIC members who report against the AIC Code, on the whole, meet their
obligations under the Code and the related disclosure requirements contained in the Listing Rules. The AIC Code can be
viewed at www.theaic.co.uk.
The Directors believe that during the period under review they have complied with the main principles and relevant
provisions of the Code, insofar as they apply to the Company’s business, and with the provisions of the AIC Code.
Compliance Statement
The Directors note that the Company did not comply with the following provisions of the Code in the year ended
31 March 2020:
Provision 9. Due to the nature and structure of the Company the Board of non-executive directors does not feel it is
appropriate to appoint a chief executive.
Provision 24. The Board believes that all Directors, including the Chairman, should sit on all of the Board’s Committees.
Provision 26. As the Company has no employees and its operational functions are undertaken by third parties, the
Audit Committee does not consider it appropriate for the Company to establish its own internal audit function.
The Company’s service providers provide assurance of their effective internal processes and controls.
Provision 32. The Board does not have a separate Remuneration Committee. The functions of a Remuneration
Committee are carried out by the Management Engagement Committee.
Composition and Independence of the Board
The Board currently consists of six directors, all of whom are non-executive and are independent of the Manager. None of
the Directors have any other links to the Manager. Mr Seaborn continues to qualify as independent, despite his length of
service due to being independent of the Manager and from any other business that could materially interfere with his
judgment. The Board believes that diversity of experience and approach, including gender diversity, amongst board
members is of great importance and it is the Company’s policy to give careful consideration to issues of board balance
and diversity when making new appointments.
Powers of the Directors
Subject to the Company’s Articles of Association, the Companies Act 2006 and any directions given by special resolution,
the business of the Company is managed by the Board who may exercise all the powers of the Company, whether relating to
the management of the business of the Company or not. In particular, the Board may exercise all the powers of the Company
to borrow money and to mortgage or charge any of its undertakings, property, assets and uncalled capital and to issue
debentures and other securities and to give security for any debt, liability or obligation of the Company to any third party.
There are no contracts or arrangements with third parties which affect, alter or terminate upon a change of control of the
Company.
42 TR Property Investment Trust
Report of the Directors
continued
Directors
The Chairman is Mr Seaborn and the Senior Independent Director is Mr Watson. The Directors’ biographies, on pages 35
and 36, demonstrate the breadth of investment, commercial and professional experience relevant to their positions as
Directors of the Company.
Directors’ retirement by rotation and re-election is subject to the Articles of Association. In accordance with the Code, all
directors will be subject to annual re-election.
Mr Gillbanks, Mr Marrison and Mr Watson will retire at the forthcoming AGM in accordance with the Code and, being
eligible, will offer themselves for re-election. Ms Bolsover and Ms Curtis were appointed on to the Board with effect from
October 2019 and January 2020 respectively and will offer themselves for election at the upcoming AGM. All Directors
are regarded as being free of any conflicts of interest and no issues in respect of independence arise. The Board has
concluded that all Directors continue to make valuable contributions and believe that they remain independent in
character and judgement.
Mr Seaborn, who has served on the Board since 2007, will not be seeking re-election and he will retire from the Board of
Directors following the AGM on 28 July 2020. He will be succeeded by Mr Watson, at which time Mr Marrison will
become Senior Independent Director.
Directors are not compensated by the Company for loss of office in an event of a takeover bid.
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Board Committees
The Board has established an Audit Committee, a Nomination Committee and a Management Engagement Committee,
which also carries out the functions of a Remuneration Committee. All the Directors of the Company are non-executive
and serve on each Committee of the Board. It has been the Company’s policy to include all Directors on all Committees.
This encourages unity, clear communication and prevents duplication of discussion between the Board and the
Committees. The roles and responsibilities of each Committee are set out on the individual Committee reports which
follow. Each Committee has written terms of reference which clearly defines its responsibilities and duties. These can be
found on the Company’s website, are available on request and will also be available for inspection at the AGM.
Board Meetings
The number of meetings of the Board and Committees held during the year under review, and the attendance of
individual Directors, are shown below:
Board Audit MEC Nomination
Attended Eligible Attended Eligible Attended Eligible Attended Eligible
Hugh Seaborn 6 6 2 2 1 1 2 2
David Watson 6 6 2 2 1 1 2 2
Tim Gillbanks 6 6 2 2 1 1 2 2
Simon Marrison 6 6 2 2 1 1 2 2
Kate Bolsover* 3** 4 0** 1 1 1 2 2
Sarah-Jane Curtis*** 1 1 0 0 1 1 1 1
*Kate Bolsover was appointed to the Board on 1 October 2019.
**Kate Bolsover was unable to attend a scheduled Board and Audit meeting owing to a prior commitment which could not be changed.
***Sarah-Jane Curtis was appointed to the Board on 28 January 2020.
In addition to formal Board and Committee meetings, the Directors also attend a number of informal meetings to
represent the interests of the Company, and to discuss operational markets and succession planning.
TR Property Investment Trust
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Report of the Directors
continued
The Board
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The Board is responsible for the effective stewardship of the Company’s affairs. Certain strategic issues are monitored by
the Board at meetings against a framework which has been agreed with the Manager. Additional meetings may be
arranged as required. The Board has a formal schedule of matters specifically reserved for its decision, which are
categorised under various headings, including strategy, management, structure, capital, financial reporting, internal
controls, gearing, asset allocation, share price discount, contracts, investment policy, finance, risk, investment restrictions,
performance, corporate governance and Board membership and appointments.
In order to enable them to discharge their responsibilities, all Directors have full and timely access to relevant information.
At each meeting, the Board reviews the Company’s investment performance and considers financial analyses and other
reports of an operational nature. The Board monitors compliance with the Company’s objectives and is responsible for
setting asset allocation and investment and gearing limits within which the Portfolio Manager has discretion to act and
thus supervises the management of the investment portfolio, which is contractually delegated to the Portfolio Manager.
The Board has responsibility for the approval of investments in unquoted investments and any investments in funds
managed or advised by the Portfolio Manager. It has also adopted a procedure for Directors, in the furtherance of their
duties, to take independent professional advice at the expense of the Company.
Conflicts of Interest
In line with the Companies Act 2006, the Board has the power to authorise any potential conflicts of interest that may
arise and impose such limits or conditions as it thinks fit. A register of potential conflicts is maintained and is reviewed
at every Board meeting to ensure all details are kept up-to-date. Appropriate authorisation will be sought prior to the
appointment of any new Director or if any new conflicts arise.
Relations with Shareholders
Shareholder relations are given high priority by the Board, the AIFM and the Portfolio Manager. The prime medium by
which the Company communicates with shareholders is through the Interim and Annual Reports which aim to provide
shareholders with a clear understanding of the Company’s activities and their results. This information is supplemented by
the daily calculation of the Net Asset Value of the Company’s Ordinary shares which is published on the London Stock
Exchange.
This information is also available on the Company’s website, www.trproperty.com together with a monthly factsheet
and Manager commentary.
Usually, at each AGM, a presentation is made by the Manager following the business of the meeting. Shareholders have
the opportunity to address questions to the Chairman and the Chairman of the Audit Committee at the AGM.
However, at the date of this report, the UK Government has prohibited large public gatherings, save in certain limited
circumstances. In light of these measures and in order to protect the health and safety of the Company’s shareholders
and directors, we hope that shareholders will understand that for 2020 the Company’s Annual General Meeting will be
run as a closed meeting and will be held to complete the formal business only. Shareholders will not be able to attend in
person. Full details are provided at the end of this Annual Report in the Notice of Meeting.
The Board and the Manager are keen to encourage shareholder engagement. Due to the different arrangements for the
Company’s 2020 Annual General Meeting, the Investment Manager will post a webcast in the format of the usual
presentation held at the AGM on the website www.trproperty.com on Wednesday, 1 July 2020. If shareholders would like
44 TR Property Investment Trust
Report of the Directors
continued
to ask questions for the Manager to respond to in the webcast then they should write to the Company Secretary or
submit their questions by e-mail to Enquiries@trproperty.co.uk to arrive no later than noon on 30 June.
It is the intention of the Board that the Annual Report and Accounts and Notice of the AGM be issued to shareholders so
as to provide at least twenty working days’ notice of the AGM. Shareholders wishing to lodge questions in advance of the
AGM, or to contact the Board at any other time, are invited to do so by writing to the Company Secretary at the registered
address given on page 106.
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General presentations are given to both shareholders and analysts following the publication of the annual results.
All meetings between the Manager and shareholders are reported to the Board.
s.172 Companies Act 2006
Section 172 of the Companies Act 2006 requires directors to act in good faith and in a way that is the most likely to
promote the success of the Company. In accordance with the requirements of the Companies (Miscellaneous Reporting)
Regulations 2018, below, the Company explains how the Directors have discharged their duty under section 172 during
the reporting period. Fulfilling this duty naturally supports the Company in achieving its Investment Objective and helps to
ensure that all decisions are made in a responsible and sustainable way.
Upon appointment, Directors’ are provided with a detailed induction outlining their duties, legally and regulatory, as a
Director of a UK public limited company and continue to regularly receive relevant technical updates and training. Under
their letter of appointment, the Directors also have access to the advice and services of the Company Secretary, and
when deemed necessary, the Directors have the opportunity to seek independent professional advice in the furtherance
of their duties as a director, at the Company's expense. The Company has a schedule of Matters Reserved for the Board
which clearly describes the Board’s duties and responsibilities. In addition, there are also the Terms of References of the
Board’s Committees which outline the responsibilities that are delegated from the Board. The Terms of References are
reviewed at least annually to consider any regulatory and best practice developments.
Decision Making
The importance of stakeholder considerations, in particular in the context of decision-making, is regularly brought to the
Board’s attention by the Company Secretary and taken into account at every Board meeting, and a paper reminding
Directors of that is tabled at the start of every Board meeting. The Board considers the impact that any material decision
will have on all relevant stakeholders to ensure that it is making a decision that promotes the long-term success of the
Company, whether this be, for example, in relation to dividends, new investment opportunities or the Company’s forward
strategy, In addition, the Board, along with the Manager, hold a meeting focused on strategy on an annual basis to look
ahead in the market and anticipate potential scenarios and how this may impact the Company’s stakeholders.
Stakeholders
The Board recognises the needs and importance of the Company’s stakeholders and ensures that they are considered
during all its discussions and as part of its decision-making. Since the Company is an investment trust that is externally
managed, the Company does not have any employees (the Directors have a Letter of Appointment and are not
employees of the Company), nor does it have a direct impact on the community or environment in the conventional
sense. The Board recognises its key stakeholders and explains below why these stakeholders are considered important to
the Company and the actions taken to ensure that their interests are taken into account.
TR Property Investment Trust
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Report of the Directors
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Stakeholders Why they are important Board engagement
Shareholders
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Shareholder support is
essential to the existence of
the Company and delivery of
long term strategy of the
business.
The Company has over 3,378 Shareholders, including
institutional and retail investors. The Board is committed to
maintaining open channels of communication and to engage
with Shareholders in a manner they find most meaningful in
order to gain an understanding of their views. These include
the channels below:
l Annual General Meeting – the Company welcomes and
encourages attendance and participation from
Shareholders at its AGM. Shareholders have the
opportunity to meet the Directors and Manager and to
address questions to them directly. The Manager attends
the AGM and provides a presentation on the Company’s
performance and the future outlook. The Company
values any feedback and questions it may receive from
Shareholders ahead of and during the AGM and takes
action or makes changes, when and as appropriate.
l Publications – The annual and half year reports are made
available on the website and sent to shareholders. These
publications provide information on the Company and its
portfolio of investments and a better understanding of
the Trust’s financial position. This is supplemented by
daily publication of the NAV on the Stock Exchange and
monthly factsheets on the Company’s website. The
Company is open to feedback from shareholders to
improve its publications.
l Shareholder meetings – The Manager meets with
shareholders periodically and often and feedback is
shared with the Board.
l Working with the Brokers – The Manager and Brokers
work together to maintain dialogue with shareholders
and prospective investors at scheduled meetings. The
Board is provided with regular updates at meetings and
outside meetings if required.
l Shareholder concerns - in the event that Shareholders
wish to raise issues or concerns with the Board, they are
welcome to do so at any time by writing to the Chairman
at the registered office. The Senior Independent Director
is also available to Shareholders if they have concerns
that contact through the normal channel of the Chairman
has failed to resolve or for which such contact is
inappropriate.
46 TR Property Investment Trust
Report of the Directors
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Stakeholders Why they are important Board engagement
The Manager
Holding the Company’s shares
offers investors a liquid
investment vehicle through
which they can obtain
exposure to the Company’s
diversified portfolio. The
Investment Manager’s
performance is critical for the
Company to successfully
deliver its investment strategy
and meet its objective.
Maintaining a close and constructive working relationship
with the Manager is crucial, as the Board and the Manager
both aim to continue to achieve consistent, long-term returns
in line with the Company's investment objective. Important
components in the collaboration with the Manager,
representative of the Company’s culture include those listed
below.
l Encouraging open, honest and collaborative discussions
at all levels, allowing time and space for original and
innovative thinking.
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l Ensuring that the impact on the Manager is fully
considered and understood before any business decision
is made.
l Ensuring that any potential conflicts of interest are
avoided or managed effectively.
The Board holds detailed discussions with the Manager on all
key strategic and operational topics on an ongoing basis. In
addition, the Chairman regularly meets with the Manager to
ensure a close dialogue is maintained.
The Board maintains regular contact with its key external
providers and receives regular reporting from them through
the Board and committee meetings, as well as outside of the
regular meeting cycle. Their advice, as well as their needs
and views are routinely taken into account. The Management
Engagement Committee formally assesses their performance,
fees and continuing appointment at least annually to ensure
that the key service providers continue to function at an
acceptable level and are appropriately remunerated to deliver
the expected level of service. The Audit Committee reviews
and evaluates the control environments in place at each
service provider as appropriate.
The Board needs to demonstrate to lenders that it is a
well-managed business, capable of consistently delivering
long-term returns.
The Board regularly considers how it meets various regulatory
and statutory obligations and follows voluntary and best-
practice guidance, including how any governance decisions it
makes can have an impact on its stakeholders, both in the
shorter and in the longer-term.
TR Property Investment Trust
47
External Service
Providers,
particularly the
Company Secretary,
the Administrator,
the Registrar and
the Depository and
the Broker
A range of advisers enables
the Company to function as an
investment trust and a
constituent of the FTSE 250 to
ensure it meets its relevant
obligations.
Lenders
Regulators
Availability of funding and
liquidity are crucial to the
Company’s ability to take
advantage of investment
opportunities as they arise.
The Company can only
operate with the approval of its
regulators who have a
legitimate interest in how the
Company operates in the
market and treats its
shareholders.
Report of the Directors
continued
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Culture and Business Conduct
The Board is in agreement that having a good corporate culture, particularly in its engagement with the Manager,
shareholders and other key stakeholders will aid delivery of its long term strategy. The Board promotes a culture of
openness, in line with this purpose through ongoing engagement with its service providers and the Manager.
The Directors agree that establishing and maintaining a healthy corporate culture within the Board and in its interaction
with the Manager, Shareholders and other stakeholders will support the delivery of its purpose, values and strategy. The
Board seeks to promote a culture of openness, debate and integrity through ongoing dialogue and engagement with its
service providers, principally the Manager. The Board strives to ensure that its culture is in line with the Company’s
purpose, values and strategy.
The Company has a number of policies and procedures in place to assist with maintaining a culture of good governance
including those relating to diversity, Directors’ conflicts of interest and Directors’ dealings in the Company’s shares. The
Board assesses and monitors compliance with these policies as well as the general culture of the Board regularly through
Board meetings and in particular during the annual evaluation process which is undertaken by each Director (for more
information see the performance evaluation section on page 50.
The Board seeks to appoint the best possible service providers and evaluates their service on a regular basis as described
on page 52. The Board considers the culture of the Manager and other service providers, including their policies, practices
and behaviour, through regular reporting from these stakeholders and in particular during the annual review of the
performance and continuing appointment of all service providers.
Employee, Social Impact And Wider Community
The Board recognises the requirement under the Companies Act 2006 to detail information about human rights,
employees and community issues, including information about any policies it has in relation to these matters and the
effectiveness of these policies. These requirements, practically, are not applicable to the Company as it has no
employees, all the Directors are non-executive and it has outsourced all operational functions to third-party service
providers. Therefore, the Company has not reported further in respect of these provisions.
Directors’ Indemnity
Directors’ and Officers’ liability insurance cover is in place in respect of the Directors. The Company’s Articles of
Association provide, subject to the provisions of UK legislation, an indemnity for Directors in respect of costs which they
may incur relating to the defence of any proceedings brought against them arising out of their positions as Directors, in
which they are acquitted or judgement is given in their favour by the court.
To the extent permitted by law and by the Company’s Articles of Association, the Company has entered into deeds of
indemnity for the benefit of each Director of the Company in respect of liabilities which may attach to them in their
capacity as Directors of the Company. These provisions, which are qualifying third party indemnity provisions as defined
by section 234 of the Companies Act 2006, were introduced in January 2007 and currently remain in force.
48 TR Property Investment Trust
Report of the Directors
continued
Directors’ statement as to disclosure of information to auditors
The Directors who were members of the Board at the time of approving the Directors’ report are listed on pages 35
and 36. Having made enquiries of fellow directors and of the Company’s auditors, each of these Directors confirms that:
l to the best of each Director’s knowledge and belief, there is no information (that is, information needed by the
Company’s auditors in connection with preparing their report) of which the Company’s auditors are unaware; and
l each Director has taken all the steps a Director might reasonably be expected to have taken to be aware of relevant
audit information and to establish that the Company’s auditors are aware of that information.
This information is given and should be interpreted in accordance with the provisions of Section 418 of the Companies
Act 2006.
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By order of the Board
Hugh Seaborn
Chairman
5 June 2020
TR Property Investment Trust
49
Report of the Nomination Committee
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Nomination Committee
Chairman: Mr Seaborn
Key Responsibilities
l Review the Board and its Committees and make recommendations in relation to structure, size and composition, the
balance of knowledge, experience and skill ranges;
l Consider succession planning and tenure policy and oversee the development of a diverse pipeline;
l Consider the re-election of Directors; and
l Review the outcome of the board evaluation process.
The Nomination Committee meets at least on an annual basis, and more frequently as and when required and last met
in March 2020.
Activity during the year
The Committee discussed succession planning of the Board, in particular the roles of the Chairman and SID to ensure
appropriate plans were in place.
In January 2020, Mr Seaborn announced his intention to retire from the Board as a Non-executive Director and Chair,
with effect from the conclusion of the 2020 AGM. After careful consideration between Directors in the form of a
committee of the Board and by reviewing the responsibilities of the Chairman, it was agreed that Mr Watson would
succeed Mr Seaborn as Chairman. Mr Watson has been a director of the Board since July 2012 and have served as the
Audit Committee Chair and Senior Independent Director since his appointment. Mr Watson’s relevant skills and
experience in the investment sector, as well has his tenure within the Company building corporate knowledge were
considered to make him the most suitable candidate. Further to the discussions, it was agreed that Mr Marrison will
succeed Mr Watson as the Senior Independent Director at the same time.
During the year, a key issue that the Committee considered was the appointment of a new Non-Executive Director,
following the resignation of Suzie Procter in March 2019 and Mr Seaborn’s intention to step down following the 2020
AGM. The Committee engaged Spencer Stuart, an independent recruitment agency, who did not have any connections
with the Directors, in the extensive search for a new Non-Executive Director. A range of candidates from various
backgrounds and industries were considered and a short list was compiled. Those on the shortlist were then formally
interviewed by the Chairman and the Senior Independent Director, where they considered the balance of skills, knowledge
and experience, including gender diversity, on the Board. The preferred candidates then met with the other Directors.
Following this process the Committee concluded that Kate Bolsover was the best candidate for the role, due to her robust
knowledge of fund management and her senior executive experience and Ms Bolsover joined the Board on 1 October
2019. In addition, the Committee followed a similar process to search for a further non-executive Director and, in January
2020, concluded that Sarah-Jane Curtis was the best candidate with her wealth of experience in the London property
sector, specifically in retail, which was a key skill that the Committee considered would add value to the Board. On the
recommendation of the Committee, the Board agreed both appointments.
The Committee annually reviews the size and structure of the Board and will continue to review succession planning and
further recruitment and take into account the recommendations of external Board evaluations.
Board Evaluation
During the year the Board engaged Tim Stephenson of Stephenson & Co, an independent company which specialises in
investment trust board evaluations, to facilitate an independent evaluation of the effectiveness of the Board, its
committees and the performance of each director. In addition to the Directors, the most senior members of the
Investment Management teams were interviewed. The report was presented and discussed by the Committee.
50 TR Property Investment Trust
Report of the Nomination Committee
continued
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The evaluation was provided by Tim Stephenson to the Chairman to discuss with the Board. The evaluation was
considered by the Committee to be constructive in terms of identifying areas for improving the functioning and
performance of the Board and the Committees, the contribution of individual directors, as well as building on and
developing individual and collective strengths.
The Chairman confirms that, in light of the external performance evaluation, the performance of each director continues
to be effective and demonstrates their commitment to their role. This includes extensive time for ad hoc communications
throughout the year in addition to formal board and committee meetings. The directors’ fulfilment of their s.172 duty is
outlined in pages 45 to 47.
The Board believes it has a good balance of skills, experience and length of service to ensure it operates effectively. After
careful consideration, particularly of the Board’s Policy Governing Board Members’ Tenure and Reappointment, all of the
directors, with the exception of Mr Seaborn, are offering themselves for re-election at the Company’s forthcoming AGM.
Since this will be Ms Bolsover’s and Ms Curtis’ first AGM since their appointment, they will be offering themselves for
election. It is considered that each of them merit election and re-election by shareholders. Further information on each
directors’ skills and their contribution to the Board are outlined in the directors’ biographies on pages 35 and 36.
In accordance with the provisions of the Code, it is the intention of the Board to engage an external facilitator to assist
with the performance evaluation every three years and the next external evaluation will be carried out for the year ended
31 March 2023. The Board will continue to complete an internal board evaluation annually within the intermittent years.
In accordance with the AIC Code Provision 9, the Directors are reminded at every meeting that additional external
appointments require approval of the Board. During the year, no external appointment was proposed and approved.
Board’s Policy on Tenure
In line with the update of the Code in 2018, the AIC has updated its Code of Corporate Governance in 2019. The AIC
recommended, under Provision 24, a different approach to tenure in relation to investment companies, considering how
they differ to chairs of operating companies, where the Board does not have a chief executive. The Board took into
consideration the approach and introduced the ‘Policy Governing Board Members’ Tenure and Reappointment’. This policy
outlines the Company’s approach to tenure and reappointment of non-executive directors. It highlights the Board’s belief
that the value brought through continuity and experience of Directors with longer periods of service is not only desirable,
but essential in an investment company. The Board did not feel that it would be appropriate to set a specific tenure limit
for individual Directors or the Chairman of the Board or its committees. Instead, the Board will seek to recruit a new
Director on average every 3-4 years so as regularly to bring the challenge of fresh thinking into the Board’s discussions,
ensuring that on each occasion that the Board enters into new investment commitments, at least half the Board members
have direct personal experience of negotiating previous commitments with the Manager.
Directors’ Training
When a new Director is appointed, he/she is offered training to suit their needs. Directors are also provided with key
information on the Company’s activities on a regular basis, including regulatory and statutory requirements and internal
controls. Changes affecting Directors’ responsibilities are advised to the Board as they arise. Directors ensure that they are
updated on regulatory, statutory and industry matters.
Letters of Appointment
No Director has a contract of employment with the Company. Directors’ terms and conditions for appointment are set out
in letters of appointment which are available for inspection at the registered office of the Company and will be on display
at the AGM.
Hugh Seaborn
Chairman of the Nomination Committee
5 June 2020
TR Property Investment Trust
51
Report of the Management Engagement Committee
Management Engagement Committee
Chairman: Mr Seaborn
Key Responsibilities
l Monitor and review the performance of the AIFM and Portfolio Manager;
l Review the terms of the Investment Manager Agreement;
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l Annually review the contract of terms and agreements of each external third party service provider; and
l Review, on an annual basis, the remuneration of the Directors.
In addition to the Investment Management role, the Board has delegated to external third parties the depositary and
custodial services (which include the safeguarding of assets), the day to day accounting, company secretarial services,
administration and registration services. Each of these contracts was entered into after full and proper consideration of the
quality of the services offered, including the control systems in operation insofar as they relate to the affairs of the
Company.
The Management Engagement Committee (the “MEC”) determines and approves Directors’ fees following proper
consideration, having regard to the level of fees payable to non-executive Directors in the industry generally, the role that
individual directors fulfil in respect of Board and Committee responsibilities and the time committed to the Company’s
affairs. For further details please see the Directors’ Remuneration Report on pages 55 to 57.
The MEC meets at least on an annual basis, towards the end of the financial year and last met in March 2020.
Activity during the year
At the MEC meeting in March 2020, the Committee reviewed the overall performance of the AIFM and Portfolio Manager
and considered both the appropriateness of the Manager’s appointment and the contractual arrangements (including the
structure and level of remuneration) with the Manager. As noted in earlier in the report, Mr Seaborn will be resigning from
the Board of the Trust at the conclusion of the 2020 AGM, where Mr Watson will succeed Chairmanship. Subsequently,
Mr Watson will also succeed Chairmanship of the MEC.
In addition to the reviews by the MEC, the Board reviewed and considered performance reports from the Portfolio
Manager at each Board meeting. The Board also received regular reports from the Administrator and Company Secretary.
The Board believe that the Manager’s track record and performance remains outstanding. As a result, the MEC confirmed
that the AIFM and Portfolio Manager should be retained for the financial year ending 31 March 2021 being in the best
interests for all shareholders. A summary of the significant terms of the Investment Management Agreement and the third
party service providers who support the Trust are set out below.
During the year the MEC also reviewed the performance of all their third party service providers including BNP Paribas,
Link Company Matters, Computershare, both the Company’s brokers and PwC (as tax advisors). The Portfolio Manager
provides regular updates on the performance of all third party providers during the year and attended this part of the
MEC Meeting. The MEC confirmed that they were satisfied with the level of services delivered by each third party
provider.
52 TR Property Investment Trust
Report of the Management Engagement Committee
continued
Management Arrangements and Fees
On 11 July 2014, the Board appointed BMO Investment Business Limited as the Alternative Investment Fund Manager
(in accordance with the Alternative Investment Fund Managers Directive) with portfolio management delegated to the
Investment Manager, Thames River Capital LLP.
The significant terms of the Investment Management Agreement with the Manager are as follows:
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Notice Period
The Investment Management Agreement (“IMA”) provides for termination of the agreement by either party without
compensation on the provision of not less than 12 months’ written notice.
Management Fees
The fee for the period under review was a fixed fee of £3,565,000 plus an ad valorem fee of 0.20% pa based on the net
asset value (determined in accordance with the AIC method of valuation) on the last day of March, June, September and
December, payable quarterly in advance.
The fee arrangements have been reviewed by the Board for the year to 31 March 2021 and the fixed element of the fee
will increase to £3,745,000 with the ad valorem element unchanged.
The Board continues to consider that the fee structure aligns the interests of the shareholder and the Manager as well as
being highly competitive.
The fee arrangements will continue to be reviewed on an annual basis.
Performance Fees
In addition to the management fees, the Board has agreed to pay the Manager performance related fees in respect of an
accounting period if certain performance objectives are achieved.
A performance fee is payable if the total return of adjusted net assets (after deduction of all Base Management Fees and
other expenses), as defined in the IMA, at 31 March each year outperforms the total return of the Company’s benchmark
plus 1% (the “hurdle rate”); this outperformance (expressed as a percentage) is known as the “percentage
outperformance”. Any fee payable will be the amount equivalent to the adjusted net assets at 31 March each year
multiplied by the percentage outperformance, then multiplied by 15%. The maximum performance fee payable for
a period is capped at 1.5% of the adjusted net assets. However, if the adjusted net assets at the end of any period are
less than at the beginning of the period, the maximum performance fee payable will be limited to 1% of the adjusted net
assets.
If the total return of shareholders’ funds for any performance period is less than the benchmark for the relevant
performance period, such underperformance (expressed as a percentage) will be carried forward to future performance
periods.
If any fee exceeds the cap, such excess performance (expressed as a percentage) will be carried forward and applied to
offset any percentage underperformance in future performance periods. In the event that the benchmark is exceeded but
the hurdle is not, that outperformance of the benchmark can be used to offset past or future underperformance. These
amounts can be used for offset purposes only and therefore cannot have the effect of creating a fee in a year where
a fee would not otherwise be payable or increasing the fee in that year. At 31 March 2020 there is a carry forward of
outperformance of 1.8% (2019: 1.8%).
TR Property Investment Trust
53
Report of the Management Engagement Committee
continued
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No fee will be payable unless the adjusted net assets outperform the hurdle rate, after taking into account any
accumulated percentage underperformance brought forward at the beginning of the financial year. Performance fees
earned in the year ended 31 March 2020 were £2,683,000 (2019: £6,110,000). Total fees paid to the Manager in any
one year (Management and Performance Fees) may not exceed 4.99% of Group Equity Shareholders’ Funds. Total fees
payable for the year to 31 March 2020 amount to 0.8% (2019: 0.9%) of Group Equity Shareholders’ Funds.
Depositary Arrangements and Fees
BNP Paribas was appointed as Depositary on 14 July 2014 in accordance with the Alternative Investment Fund Managers
Directive. The Depositary’s responsibilities include: cash monitoring; segregation and safe keeping of the Company’s
financial instruments; and monitoring the Company’s compliance with investment and leverage requirements. The
Depositary receives for its services a fee of 2.0 basis points per annum on the first £150m of the Company’s assets,
1.4 basis points per annum on assets above £150m and below £500m and 0.75 basis points on assets above £500m.
Review of Third Party Providers’ Fees
Custody and Administration Services are provided by BNP Paribas and Company Secretarial Services by Link Company
Matters. The fees for these services are charged directly to the Company and are contained within other administrative
expenses disclosed in notes to the accounts.
Hugh Seaborn
Chairman of the Management Engagement Committee
5 June 2020
54 TR Property Investment Trust
Directors’ Remuneration Report
Introduction
The Board has prepared this report and the Directors’ Remuneration Policy, in accordance with the requirements of
Schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2013. An
ordinary resolution for the approval of this report will be put to the members at the forthcoming Annual General Meeting.
The law requires the Company’s Auditors, KPMG LLP, to audit certain of the disclosures provided. Where disclosures have
been audited, they are indicated as such. The Auditor’s opinion is included in the ‘Independent Auditor’s Report’.
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Annual Statement from the Chairman of the Committee
The MEC met in March 2020 and considered the results and feedback from the externally facilitated board evaluation
alongside other factors. The MEC considered the frequency of remuneration increases for the Trust, the external board
evaluation, feedback from the market and investors on the level of frequency and the current impact of the outbreak of
coronavirus (COVID-19). Following the MEC meeting in March 2020, it was agreed that the current level of remuneration
for the Board of the Trust remained appropriate. It was also agreed that the Non-executive Director’s fee would remain at
£35,000 per annum with effect from 1 April 2020. It was further agreed that the Directors holding the role of the Audit
Committee Chairman and Senior Independent Director would continue to receive an additional £5,000 to reflect the
increase in their responsibilities. Moreover, it was agreed that the Chairman's remuneration would remain at £70,000.
Directors’ Remuneration Policy
The Company’s policy is that the fees payable to the Directors should reflect the time spent by the Board on the
Company’s affairs and the responsibilities borne by the Directors and should be sufficient to enable candidates of high
calibre to be recruited. The policy is for the Chairman of the Board, the chairman of the Audit Committee and the Senior
Independent Director to be paid higher fees than the other Directors in recognition of their more onerous roles. This policy
was approved by the members at the 2017 AGM, and the Directors’ intention is that this will continue for the year ending
31 March 2021. In accordance with the regulations, an ordinary resolution to approve the Directors’ remuneration policy
will be put to Shareholders at the upcoming AGM on 28 July 2020, as required every three years.
The Directors are remunerated in the form of fees, payable monthly in arrears, to the Director personally or to a
third party specified by that Director. There are no long-term incentive schemes, share option schemes or pension
arrangements and the fees are not specifically related to the Directors’ performance, either individually or collectively.
The Board consists entirely of Non-executive Directors, who are appointed with the expectation that they will serve for
a period of three years. Directors’ appointments are reviewed formally every three years thereafter by the Board as
a whole. None of the Directors have a contract of service and a Director may resign by notice in writing to the Board at
any time; there are no notice periods. The terms of their appointment are detailed in a letter to them when they join
the Board. As the Directors do not have service contracts, the Company does not have a policy on termination payments.
TR Property Investment Trust
55
Directors’ Remuneration Report
continued
There is no notice period and no payments for loss of office were made during the period. The Company’s Articles of
Association currently limit the total aggregate fees payable to the Board to £300,000 per annum.
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Shareholders’ views in respect of Directors’ remuneration are communicated at the Company’s AGM and are taken into
account in formulating the Directors remuneration policy. At the last AGM, over 98.9% of shareholders voted for the
resolution approving the Directors’ Remuneration Report (1% against). At the 2017 AGM, over 98% voted for the
resolution approving the Directors' Remuneration Policy (1.4% against), showing significant shareholder support.
The components of the remuneration package for Non-executive Directors, which are comprised in the Directors’
remuneration policy of the Company are set out below, with a description and approach to determination.
Remuneration Type
– Fixed Fees
Remuneration Type
– Additional Fees
Remuneration Type
– Expenses Fees
Remuneration Type
– Other
Additional fees may be paid
to any Director who fulfils
the role of the Chairman,
who chairs any committee
of the Board or who is
appointed as the Senior
Independent Director.
These fees will be set at a
competitive level to reflect
experience and time
commitment.
The Directors are entitled to
be paid all reasonable
expenses properly incurred
by them attending
meetings with shareholders
or other Directors or
otherwise in connection
with the discharge of their
duties as Directors.
Board members are not
eligible for bonuses,
pension benefits, share
options, long-term incentive
schemed or other non-cash
benefits or taxable
expenses.
The aggregate limit for the
fees for the Board as a
whole is £300,000 per
annum, in accordance to
the Articles of Association,
which is divided between
the Directors as they may
deem appropriate.
Annual fees are set to
reflect the experience of
each board member and
time commitment required
by Board members to carry
out their duties and is
determined with reference
to the appointment of
Directors of similar
investment companies.
56 TR Property Investment Trust
Directors’ Remuneration Report
continued
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Annual Remuneration Report
For the year ended 31 March 2020, Directors’ fees were paid at the annual rates of Chairman: £70,000 (2019:
£70,000) and all other directors: £35,000 (2019: £34,000). An additional £5,000 is paid per annum for each of the
roles of Audit Committee Chairman and Senior Independent Director. The actual amounts paid to the Directors during
the financial year under review are as shown below.
Amount of each Director’s emoluments (audited)
The fees payable in respect of each of the Directors who served during the financial year were as follows:
31 March 2020 31 March 2019
£ £
Hugh Seaborn 70,000 70,000
Simon Marrison 35,000 34,000
David Watson 40,000 41,500
Tim Gillbanks 40,000 36,500
Kate Bolsover (joined 1 October 2019) 17,500 —
Sarah-Jane Curtis (joined 28 January 2020) 6,372 —
Suzie Proctor (retired 28 February 2019) — 31,167
Total 208,872 213,167
Company Performance
The graph below compares, for the ten years ended 31 March 2020, the percentage change over each period in the
share price total return to shareholders compared to the share price total return of benchmark, which the Board considers
to be the most appropriate benchmark for investment performance measurement purposes. An explanation of the
performance of the Company is given in the Chairman’s Statement and Manager’s Report.
Directors’ Interests in Shares (audited)
The interests of the Directors in the shares of the
Company, at the beginning and at the end of the year, or
date of appointment, if later, were as follows:
31 March 31 March
2020 2019
Ordinary Ordinary
shares of shares of
25p 25p
S Marrison 42,326 26,547
H Seaborn 66,168 34,668
D Watson 35,692 10,370
T Gillbanks 0 0
Kate Bolsover 2,360 N/A
Sarah-Jane Curtis 0 N/A
Since 31 March 2020 to the date of this report, there
have been no subsequent changes to the Directors’
interests in the shares of the Company.
Relative Importance of Spend on Pay
Percentage
2020 2019 increase/
£’000 £’000 (decrease)
Dividends paid 43,794 39,510 10.8%
Directors’ fees 209 213 –1.9%
Performance Graph – Share Price Total Return
for Ordinary Share Class
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
Mar
2010
Mar
2011
Mar
2012
Mar
2013
Mar
2014
Mar
2015
Mar
2016
Mar
2017
Mar
2018
Mar
2019
Mar
2020
Share Price Total Return assuming investment of £1,000 on
31 March 2010 and reinvestment of all dividends (excluding
dealing expenses). (Source: Thames River Capital)
Benchmark Total Return assuming notional investment into the
index of £1,000 on 31 March 2010. (Source: Thames River Capital)
For and on behalf of the Board
Hugh Seaborn
Chairman of the Management Engagement Committee
5 June 2020
TR Property Investment Trust
57
Report of the Audit Committee
Audit Committee
Chairman: Mr Gillbanks
Key Responsibilities
l Review the internal financial and non-financial controls;
l Review reports from key third party service providers;
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l Consider and recommend to the Board for approval the contents of the draft Interim and Annual Reports;
l Review accounting policies and significant financial reporting judgements;
l Monitor, together with the Manager, the Company’s compliance with financial reporting and regulatory requirements;
l The review and subsequent proposal to the Board of the interim and final dividends; and
l Considering the impact of providing non-audit services on the external Auditor’s independence and objectivity.
Representatives of the Manager’s internal audit and compliance departments may attend these committee meetings at
the Committee Chairman’s request.
Representatives of the Company’s Auditor attend the Committee meetings at which the draft Interim and Annual Report
and Accounts are reviewed, and are given the opportunity to speak to the Committee members without the presence of
the representatives of the Manager.
The Board recognises the requirement for the Audit Committee as a whole to have competence relevant to the sector
and at least one member with recent and relevant financial experience. The Chairman and Mr Watson are Chartered
Accountants with extensive and recent experience in the Financial Services Industry. The other members of the
Committee have a combination of property, financial, investment and business experience through senior positions held
throughout their careers.
Activity during the year
During the year the Committee met twice with all members at each meeting and considered the following:
l Consideration of the Risk Map, any changes to the likelihood or impact of risks and consequential changes required to
Board Monitoring and mitigation procedures. Consideration of any new or emerging risks and inclusion in the Risk
Map if appropriate. This has included consideration of the COVID-19 pandemic and impact across a range of risk
categories;
l The Group’s Internal Controls and consideration of the Reports thereon;
l The ISAE/AAF and SSAE16 reports or their equivalent from BMO and BNP Paribas;
l Whether the Company should have its own internal audit function;
l The External Auditor’s Planning Memorandum setting out the scope of the annual audit and proposed key areas of
focus;
l The reports from the Auditors concerning their audit of the Financial Statements of the Company and Consideration of
Significant issues in relation to the Financial Statements;
l The appropriateness of, and any changes to, the accounting policies of the Company, including the reasonableness of
any judgements required by such policies;
58 TR Property Investment Trust
Report of the Audit Committee
continued
l The Viability Statement and consideration of the preparation of the Financial Statements on a Going Concern Basis
taking account of forward looking income forecasts, the liquidity of the investment portfolio and debt profile;
l The financial and other disclosures in the Financial Statements;
l The information presented in the Interim and Annual Reports to assess whether, taken as a whole, the Reports are
fair, balanced and understandable and the information presented will enable the shareholders to assess the
Company’s position, performance, business model and strategy;
l The performance of the external auditors, to approve their audit fees and consider the assessment of independence;
l The review and subsequent proposal to the Board of the interim and final dividends; and
l The reviewal of the Committee’s Terms of Reference, ensuring they remain appropriate and compliant with the 2018
G
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UK Corporate Governance Code.
Internal controls and management of risk
The Board has overall responsibility for the Group’s system of Internal Controls and for reviewing their effectiveness. Key risks
identified by the Auditors are considered by the Audit Committee to ensure that robust internal controls and monitoring
procedures in respect of these are in place on an ongoing basis. Further details can be found on pages 28 to 31.
The Audit Committee received and considered reports on Internal Controls from the key service providers. No areas of
concern were highlighted.
The Company’s Risk Map was considered to identify any new risks and whether any adjustments were required to
existing risks, and the controls and mitigation measures in place in respect of these risks. The impact of COVID-19, the
response of financial markets, the ongoing impact on economies around the world and operational changes made by our
service providers in response to government guidelines were considered and the risk map adjusted accordingly.
Based on the processes and controls in place within the BMO Group and other significant service providers, the Board
has concurred that there is no current need for the Company to have a dedicated internal audit function.
Significant Issues in relation to the Financial Statements
The Committee has considered this report and financial statements and the Viability Statement on pages 32 and 33. The
Committee considered the Auditor’s assessment of risk of material misstatement and reviewed the internal controls in
place in respect of the key areas identified and the process by which the Board monitors each of the procedures to give
the Committee comfort on these risks on an ongoing basis. These risks are also highlighted in the Company’s Risk Map.
l Carrying amount of listed investments (Group and Parent Company) – The Group’s investments are priced
for the daily NAV by BNP Paribas. The quoted assets are priced by the Administrator’s Global Pricing Platform which
uses independent external pricing sources. The control process surrounding this is set out in the BNP Paribas AAF
01/06 Internal Controls Report and testing by the reporting accountant for the period reported to 31 December 2019
did not reveal any significant exceptions. The quarterly control report to the Board from BNP Paribas covering the
period up to 31 March 2020 had no significant issues to report. In addition the Manager estimates the NAV using an
alternative pricing source on a daily basis as an independent check.
l Valuation of Direct Property Investments (Group and Parent Company) – The physical property portfolio is
valued every six months by professional independent valuers.
TR Property Investment Trust
59
Report of the Audit Committee
continued
E
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Knight Frank LLP value the portfolio on the basis of Fair Value in accordance with the RICS Valuation – Professional
Standards VPS4 (1.5) Fair Value and VPGA 1 Valuations for Inclusion in Financial Statements, which apply the
definition of Fair Value adopted by the International Financial Reporting Standards. IFRS 13 defines Fair Value as:
“The amount for which an asset could be exchanged, a liability settled, or an equity instrument granted could be
exchanged, between knowledgeable, willing parties in an arm’s length transaction”.
In undertaking their valuation of each property, Knight Frank make their assessment on the basis of a collation and
analysis of appropriate comparable investments, rental and sale transactions, together with evidence of demand
within the vicinity of each property. This information is then applied to the properties, taking into account size,
location, terms, covenant and other material factors. However, the external valuation of our portfolio at 31 March
2020 contains a material uncertainty clause from Knight Frank, which is in line with the RICS guidance to valuers and
reflects the increased difficulty in determining asset values when few, if any, comparable transactions have occurred in
the current environment.
The market uncertainty clause in the valuation is as follows:
“The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a “Global
Pandemic” on the 11 March 2020, has impacted global financial markets. Travel restrictions have been implemented
by many countries. In the UK, market activity is being impacted in all sectors. As at the valuation date, we consider
that we can attach less weight to previous market evidence for comparison purposes, to inform opinions of value.
Indeed, the current response to COVID-19 means that we are faced with an unprecedented set of circumstances on
which to base a judgement. Our valuation is therefore reported on the basis of ‘material valuation uncertainty’ per
VPGA 10 of the RICS Valuation – Global Standards. Consequently, less certainty – and a higher degree of caution –
should be attached to our valuation than would normally be the case. Given the unknown future impact that
COVID-19 might have on the real estate market, we recommend that you keep the valuation of these properties
under frequent review.”
Consequently, the Auditors have included an Emphasis of Matter clause in their Audit report drawing attention to this
fact.
The board has reviewed reports from the Manager and the external valuer and determined the valuation to be
reasonable.
The Auditors have set out their methodology and testing in respect of the Direct property valuation and concluded
that they found the Company’s calculation of investment properties to be acceptable.
There has been nothing brought to the Committee’s attention in respect of the financial statements for the period ended
31 March 2020, other than the valuation of the investment properties detailed above which was material or significant or
that the Committee felt should be brought to shareholders’ attention.
Auditor assessment and independence
The Company’s external auditor, KPMG LLP was appointed as the Company’s auditors at the 2016 AGM. The Committee
expects to repeat a tender process no later than 2026 in respect of the audit for the following 31 March year end, in line
with the latest Corporate Governance provisions and EU Requirements.
During the year, KPMG presented their Audit Plan for the year end at the interim Committee meeting and the Committee
considered the audit process and fee proposal. The Committee also reviewed KPMG’s independence policies and
60 TR Property Investment Trust
Report of the Audit Committee
continued
procedures including quality assurance procedures. It was considered that these policies are fit for purpose and the
Directors are satisfied that KPMG are independent.
Total fees payable to the Auditor in respect of the audit for the year to 31 March 2020 were: £80,000 (2019: £70,000),
which were approved by the Audit Committee.
The Committee has approved and implemented a policy on the engagement of the Auditor to supply non-audit services,
taking into account the recommendations of the Accounting Practices Board with a view to ensuring that the external
Auditor does not provide non-audit services that have the potential to impair or appear to impair the independence of
their audit role. In addition, the Committee reviewed the actions put in place by the Auditor to ensure there was a clear
separation between audit and advisory services. The Committee does not believe there to be any impediment to the
Auditor’s objectivity and independence.
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The fees for non-audit services for the year to 31 March 2020 were nil (2019: nil).
Full details of the Auditor’s fees are provided in note 6 to the accounts on page 78.
The Board noted that Mr Kelly, the current partner, was appointed for the 2017 year-end audit and will continue as
partner only until the conclusion of the 2021 year-end audit.
Following each audit, the Committee reviews the audit process and considers its effectiveness and the quality of the
services provided to the Company. Within this process, the Committee takes into consideration their own assessment, the
self-evaluation of the auditor and the Audit Quality Review Report produced by the FRC in order to monitor the progress
of the Auditor’s performance comparable with its peer and the targets set by the FRC. The review following the
completion of the 2020 Audit concluded that the Committee was satisfied with the Auditor’s effectiveness and
performance. The Committee felt that KPMG had run an effective and efficient audit process with appropriate challenge.
Subsequently, a resolution to re-appoint KPMG LLP as the Company’s Auditor will be put to shareholders at the
forthcoming AGM.
Tim Gillbanks
Chairman of the Audit Committee
5 June 2020
TR Property Investment Trust
61
Statement of Directors’ responsibilities in relation to
the Group financial statements
The Directors are responsible for preparing the Annual Report, the Strategic Report, the Directors’ Report and the financial
statements in accordance with applicable law and regulations.
E
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Company law requires the Directors to prepare group and parent company financial statements for each financial year.
Under that law they have elected to prepare both the group and the parent company financial statements in accordance
with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and
applicable law.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing
each of the group and parent company financial statements, the Directors are required to:
l select suitable accounting policies and then apply them consistently;
l make judgements and estimates that are reasonable, relevant and reliable;
l state whether they have been prepared in accordance with IFRSs as adopted by the EU;
l assess the group and parent company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and
l use the going concern basis of accounting unless they either intend to liquidate the group or the parent company or
to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent
company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent company
and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for
such internal control as they determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Responsibility statement
Each of the Directors listed on pages 35 and 36 confirms that to the best of their knowledge:
l the financial statements, prepared in accordance with IFRs as adopted by the European Union, give a true and fair
view of the assets, liabilities, financial position and profit of the Group and Company and the undertakings included in
the consolidation taken as a whole; and;
l the Annual Report, includes a fair review of the development and performance of the business and the position of
the Trust, together with a description of the principal risks and uncertainties that it faces; and
l the accounting records have been properly maintained; and
l the Annual Report, taken as a whole, is fair, balanced and understandable and provides the necessary information for
shareholders to assess the company’s position and performance, business model and strategy.
By order of the Board
Hugh Seaborn
Chairman
5 June 2020
62 TR Property Investment Trust
Independent
auditor’s report
to the members of TR Property Investment Trust plc
1. Our op inion is unmodified
We have audited the financial statem ents of TR Property
Investm ent Trust Plc (“the Com pany”) for the year ended
31 March 2020 which com prise the Group Statem ent of
Com prehensive Incom e, Group and Com pany Statem ent of
Changes in Equity, Group and Com pany Balance Sheets,
Group and Com pany Cash Flow Statem ents, and the related
notes, including the accounting policies in note 1.
In our opinion the financial statem ents:
— give a true and fair view of the state of the Group’s and
of the Com pany’s affairs as at 31 March 2020 and of the
Group’s return for the year then ended;
— have been properly prepared in accordance with
International Financial Reporting Standards as adopted
by the European Union (IFRSs as adopted by the EU);
and
— have been prepared in accordance with the
requirem ents of the Com panies Act 2006 and, as
regards the Group financial statem ents, Article 4 of the
IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities are described below. We believe
that the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion is
consistent with our report to the audit com m ittee.
We were first appointed as auditor by the shareholders on 2
Novem ber 2016. The period of total uninterrupted
engagem ent is for the four financial years ended 31 March
2020. We have fulfilled our ethical responsibilities under, and
we rem ain independent of the Com pany in accordance with,
UK ethical requirem ents including the FRC Ethical Standard
as applied to listed public interest entities. No non-audit
services prohibited by that standard were provided.
Em phasis of m atter – valuation of direct property
investm ents
We draw attention to note 10 to the consolidated financial
statem ents which states that the independent external
valuations of investm ent properties at the reporting date are
reported on the basis of ‘m aterial valuation uncertainty’ due
to the potential econom ic effect of the coronavirus pandem ic.
Consequently, m ore subjectivity is associated with the
valuation of investm ent property than would norm ally be the
case. Our opinion is not m odified in respect of this m atter.
Overview
Materiality:
group financial
statem ents as a
whole
Coverage:
£12.5m (2019: £13.9m )
1% (2019: 1%) of Total Assets
100% of the Group’s assets
(2019: 100%)
Key audit matters vs 2019
Recurring risks
Valuation of direct
property investm ents
Carrying value of listed
investm ents
◄►
2. Key audit matters: our assessment of risks of material misstatement
Key audit m atters are those m atters that, in our professional judgm ent, were of m ost significance in the audit of the financial statem ents
and include the m ost significant assessed risks of m aterial m isstatem ent (whether or not due to fraud) identified by us, including those
which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagem ent team . We sum m arise below the key audit m atters, in decreasing order of audit significance, in arriving at our audit opinion
above, together with our key audit procedures to address those m atters and, as required for public interest entities, our results from those
procedures. These m atters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the
purpose of, our audit of the financial statem ents as a whole, and in form ing our opinion thereon, and consequently are incidental to that
opinion, and we do not provide a separate opinion on these m atters.
Valuation of direct p rop erty
investments
(Group and Parent Comp any)
£94.5m (2019: £101.9m )
Refer to pages 59 - 60 (Audit
Com m ittee Report), page 74
(accounting policy) and pages 81
– 85 (financial disclosures).
The risk
Our resp onse
Subjective valuation
Our procedures included:
7.5% (2019: 7.3%) of the Group’s total assets
(by value) is held in investm ent properties.
The fair value of each property requires
significant estim ation, in particular over the key
assum ptions of the estim ated rental value and
the yield. The key assum ptions will be
im pacted by a num ber of factors including
location, quality and condition of the building
and tenant credit rating.
The effect of these m atters is that, as part of
our risk assessm ent, we determ ined that the
valuation of unquoted investm ents has a high
degree of estim ation uncertainty, with a
potential range of reasonable outcom es
greater than our m ateriality for the financial
statem ents as a whole.
— Assessing valuer’s credentials: Using our own
property valuation specialist, we evaluated the
com petence, experience and independence of the
external valuer;
— Methodology choice: We held discussions
with the external valuer to understand the
valuation m ethodology used;
— Benchmarking assump tions: With the
assistance of our own property valuation specialist,
we held discussions with the Group’s external
property valuer to understand m ovem ents in
property values. For a sam ple of properties where
the fair value m ovem ents were outside our
predeterm ined thresholds, we challenged the key
assum ptions used by the valuer upon which these
valuations were based, including those relating to
forecast rents and yields, by m aking a com parison
to our own understanding of the m arket and to
industry benchm arks;
— Assessing transp arency: We also considered
the adequacy of the Group’s disclosures about the
degree of estim ation and sensitivity to key
assum ptions m ade when valuing the investm ent
properties, particularly as regards the m aterial
uncertainty reported by the external valuers.
Our results:
— We found the valuation of investm ent
properties and the disclosure of the associated
level of uncertainty to be acceptable (2019 result:
acceptable). We have included an em phasis of
m atter in respect of the m aterial uncertainty in the
valuation in section 2 of this report (2019: no
em phasis of m atter).
Carrying amount of listed
investments
(Group and Parent Comp any)
£1,060.1m (2019: £1,189.1m )
Refer to page 59 (Audit
Com m ittee Report), page 75
(accounting policy) and pages 81
– 85 (financial disclosures).
Low risk, high value
Our procedures included:
The Group’s portfolio of listed investm ents
m akes up 84.4% (2019: 85.0%) of the Group’s
total assets by value and is considered to be
one of the key drivers of results. We do not
consider these investm ents to be at a high risk
of significant m isstatem ent, or to be subject to
a significant level of judgem ent because they
com prise liquid, quoted investm ents.
However, due to their m ateriality in the
context of the financial statem ents as a whole,
they are considered to be one of the areas
which had the greatest effect on our overall
audit strategy and allocation of resources in
planning and com pleting our audit.
— Tests of detail: Agreeing the valuation of 100%
of listed investm ents in the portfolio to externally
quoted prices; and
— Enquiry of custodians: Agreeing 100% of
investm ent holdings in the portfolio to
independently received third party confirm ations
from investm ent custodians.
Our results:
— We found the carrying am ount of listed
investm ents to be acceptable (2019: acceptable).
We continue to perform procedures over the Im pact of the UK exiting the European Union. However, following the fact that the UK has
now left the European Union, we have not assessed this as one of the m ost significant risks in our current year audit and, therefore, it is
not separately identified in our report this year.
3. Our ap p lication of materiality and an overview of the
4. We have nothing to rep ort on going concern
The Directors have prepared the financial statem ents on the
going concern basis as they do not intend to liquidate the
Com pany or the Group or to cease their operations, and as
they have concluded that the Com pany’s and the Group’s
financial position m eans that this is realistic. They have also
concluded that there are no m aterial uncertainties that could
have cast significant doubt over their ability to continue as a
going concern for at least a year from the date of approval of
the financial statem ents (“the going concern period”).
Our responsibility is to conclude on the appropriateness of the
Directors’ conclusions and, had there been a m aterial
uncertainty related to going concern, to m ake reference to that
in this audit report. However, as we cannot predict all future
events or conditions and as subsequent events m ay result in
outcom es that are inconsistent with judgem ents that were
reasonable at the tim e they were m ade, the absence of
reference to a m aterial uncertainty in this auditor's report is not
a guarantee that the Group and the Com pany will continue in
operation.
In our evaluation of the Directors’ conclusions, we considered
the inherent risks to the Group’s and the Com pany’s business
m odel and analysed how those risks m ight affect the Group’s
and the Com pany’s financial resources or ability to continue
operations over the going concern period. We evaluated those
risks and concluded that they were not significant enough to
require us to perform additional audit procedures.
Based on this work, we are required to report to you if:
— we have anything m aterial to add or draw attention to in
relation to the Directors’ statem ent in Note 1 to the
financial statem ents on the use of the going concern basis
of accounting with no m aterial uncertainties that m ay cast
significant doubt over the Group’s and the Com pany’s use
of that basis for a period of at least twelve m onths from
the date of approval of the financial statem ents; or
— the related statem ent under the Listing Rules set out on
page 39 is m aterially inconsistent with our audit
knowledge.
We have nothing to report in these respects, and we did not
identify going concern as a key audit m atter.
scop e of our audit
Materiality for the Group financial statem ents as a whole was
set at £12.5m (2019: £13.9m ), determ ined with reference to a
benchm ark of total assets, of which it represents 1% (2019:
1%).
In addition, we applied m ateriality of £3.2m (2019: £3.3m ) to
investm ent incom e, other operating incom e, gross rental
incom e, service charge incom e and net revenue returns on
contracts for difference, for which we believe m isstatem ents
of lesser am ounts than m ateriality for the financial statem ents
as a whole could reasonably be expected to influence the
com pany’s m em bers’ assessment of the financial
perform ance of the com pany.
Materiality for the Parent Com pany financial statem ents as a
whole was set at £12.0m (2019: £13.2m ), determ ined as 0.9%
of the total assets of the Parent Com pany (2019: 0.9%).
We agreed to report to the Audit Com m ittee any corrected or
uncorrected identified m isstatem ents exceeding £625,000
(2019: £695,000), in addition to other identified m isstatem ents
that warranted reporting on qualitative grounds.
Our audit of the Com pany was undertaken to the m ateriality
level specified above and was perform ed by a single audit
team .
The audit team perform ed the audit of the Group as if it was a
single aggregated set of financial inform ation. This approach is
unchanged from the prior year. The audit of the Group was
perform ed using the Group m ateriality level set out above.
Total assets
£1,256m (2019: £1,399m )
Group Materiality
£12.5m (2019: £13.9m )
£12 .5m
Whole financial
statements materiality
(2019: £13 .9m)
£12 .0m
Parent Company materiality
(2019: £13 .2m)
Total Assets
Group materiality
£62 5k
Misstatements reported to the
audit committee (2019: £6 95k)
5. We have nothing to rep ort on the other information in
the Annual Rep ort
The Directors are responsible for the other inform ation
presented in the Annual Report together with the financial
statem ents. Our opinion on the financial statem ents does not
cover the other inform ation and, accordingly, we do not
express an audit opinion or, except as explicitly stated below,
any form of assurance conclusion thereon.
Our responsibility is to read the other inform ation and, in doing
so, consider whether, based on our financial statem ents audit
work, the inform ation therein is m aterially m isstated or
inconsistent with the financial statem ents or our audit
knowledge. Based solely on that work we have not identified
m aterial m isstatem ents in the other inform ation.
Strategic report and Directors’ report
Based solely on our work on the other inform ation:
— we have not identified m aterial m isstatem ents in the
strategic report and the Directors’ report;
— in our opinion the inform ation given in those reports for the
financial year is consistent with the financial statem ents;
and
— in our opinion those reports have been prepared in
accordance with the Com panies Act 2006 .
Directors’ rem uneration report
In our opinion the part of the Directors’ Rem uneration Report
to be audited has been properly prepared in accordance with
the Com panies Act 2006.
Disclosures of em erging and principal risks and longer-term
viability
Based on the knowledge we acquired during our financial
statem ents audit, we have nothing m aterial to add or draw
attention to in relation to:
— the Directors’ confirm ation within the viability statem ent on
pages 32 and 33 that they have carried out a robust
assessm ent of the em erging and principal risks facing the
Group, including those that would threaten its business
m odel, future perform ance, solvency and liquidity;
— the Principal Risks and Uncertainties disclosures describing
these risks and explaining how they are being m anaged
and m itigated; and
— the Directors’ explanation in the viability statem ent of how
they have assessed the prospects of the Group, over what
period they have done so and why they considered that
period to be appropriate, and their statem ent as to whether
they have a reasonable expectation that the Group will be
able to continue in operation and m eet its liabilities as they
fall due over the period of their assessm ent, including any
related disclosures drawing attention to any necessary
qualifications or assum ptions.
Under the Listing Rules we are required to review the longer-
term viability statem ent. We have nothing to report in this
respect.
Our work is lim ited to assessing these m atters in the context
of only the knowledge acquired during our financial statem ents
audit. As we cannot predict all future events or conditions and
as subsequent events m ay result in outcom es that are
inconsistent with judgm ents that were reasonable at the tim e
they were m ade, the absence of anything to report on these
statem ents is not a guarantee as to the Group’s longer-term
viability.
Corporate governance disclosures
We are required to report to you if:
— we have identified m aterial inconsistencies between the
knowledge we acquired during our financial statem ents
audit and the Directors’ statem ent that they consider that
the annual report and financial statem ents taken as a whole
is fair, balanced and understandable and provides the
inform ation necessary for shareholders to assess the
Group’s position and perform ance, business m odel and
strategy; or
— the section of the annual report describing the work of the
Audit Com m ittee does not appropriately address m atters
com m unicated by us to the Audit Com m ittee.
We are required to report to you if the Corporate Governance
Report does not properly disclose a departure from the
provisions of the UK Corporate Governance Code specified by
the Listing Rules for our review.
We have nothing to report in these respects.
6. We have nothing to rep ort on the other matters on
which we are required to rep ort b y excep tion
Under the Com panies Act 2006, we are required to report to
you if, in our opinion:
— adequate accounting records have not been kept by the
Com pany, or returns adequate for our audit have not been
received from branches not visited by us; or
— the Com pany financial statem ents and the part of the
Directors’ Rem uneration Report to be audited are not in
agreem ent with the accounting records and returns; or
— certain disclosures of Directors’ rem uneration specified by
law are not m ade; or
— we have not received all the inform ation and explanations
we require for our audit.
We have nothing to report in these respects.
7. Resp ective resp onsibilities
Directors’ responsibilities
As explained m ore fully in their statem ent set out on page 62,
the Directors are responsible for: the preparation of the
financial statem ents including being satisfied that they give a
true and fair view; such internal control as they determ ine is
necessary to enable the preparation of financial statem ents
that are free from m aterial m isstatem ent, whether due to
fraud or error; assessing the Group and Com pany’s ability to
continue as a going concern, disclosing, as applicable, m atters
related to going concern; and using the going concern basis of
accounting unless they either intend to liquidate the Group or
the Com pany or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statem ents as a whole are free from
m aterial m isstatem ent, whether due to fraud or other
irregularities (see below), or error, and to issue our opinion in
an auditor’s report. Reasonable assurance is a high level of
assurance, but does not guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a m aterial
m isstatem ent when it exists. Misstatem ents can arise from
fraud, other irregularities or error and are considered m aterial
if, individually or in aggregate, they could reasonably be
expected to influence the econom ic decisions of users taken
on the basis of the financial statem ents.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
Irregularities – ability to detect
We identified areas of laws and regulations that could
reasonably be expected to have a m aterial effect on the
financial statem ents from our general com m ercial and sector
experience and through discussion with the Directors, the
m anager and the adm inistrator (as required by auditing
standards) the policies and procedures regarding com pliance
with laws and regulations. We com m unicated identified laws
and regulations throughout our team and rem ained alert to any
indications of non-com pliance throughout the audit.
The potential effect of these laws and regulations on the
financial statem ents varies considerably.
Firstly, the Com pany is subject to laws and regulations that
directly affect the financial statem ents including financial
reporting legislation (including related com panies legislation)
and its qualification as an Investm ent Trust under UK taxation
legislation, any breach of which could lead to the com pany
losing various deductions and exem ptions from UK corporation
tax, and we assessed the extent of com pliance with these
laws and regulations as part of our procedures on the related
financial statem ent item s.
Secondly, the Com pany is subject to m any other laws and
regulations where the consequences of non-com pliance could
have a m aterial effect on am ounts or disclosures in the
financial statem ents, for instance through the im position of
fines or litigation. We identified the following areas as those
m ost likely to have such an effect: the Listing Rules and
certain aspects of com pany legislation recognising the financial
and regulated nature of the Com pany’s activities and its legal
form .
Auditing standards lim it the required audit procedures to
identify non-com pliance with these laws and regulations to
enquiry of the Directors, the m anager and the adm inistrator
and inspection of regulatory and legal correspondence, if any.
These lim ited procedures did not identify any actual or
suspected non-com pliance.
Owing to the inherent lim itations of an audit, there is an
unavoidable risk that we m ay not have detected som e m aterial
m isstatem ents in the financial statem ents, even though we
have properly planned and perform ed our audit in accordance
with auditing standards. For exam ple, the further rem oved
non-com pliance with laws and regulations (irregularities) is
from the events and transactions reflected in the financial
statem ents, the less likely the inherently lim ited procedures
required by auditing standards would identify it. In addition, as
with any audit, there rem ained a higher risk of non-detection of
irregularities, as these m ay involve collusion, forgery,
intentional om issions, m isrepresentations, or the override of
internal controls. We are not responsible for preventing non-
com pliance and cannot be expected to detect non-com pliance
with all laws and regulations.
8. The p urp ose of our audit work and to whom we owe
our resp onsib ilities
This report is m ade solely to the Com pany’s m em bers, as a
body, in accordance with Chapter 3 of Part 16 of the
Com panies Act 2006 and the term s of our engagem ent by the
com pany. Our audit work has been undertaken so that we
m ight state to the Com pany’s m em bers those m atters we are
required to state to them in an auditor’s report and the further
m atters we are required to state to them in accordance with
the term s agreed with the com pany, and for no other purpose.
To the fullest extent perm itted by law, we do not accept or
assum e responsibility to anyone other than the Com pany and
the Com pany’s m em bers, as a body, for our audit work, for
this report, or for the opinions we have form ed.
Richard Kelly (Senior Statutory Auditor)
for and on b ehalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
Canary Wharf
London
E14 5GL
5 June 2020
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Group Statement of Comprehensive Income
for the year ended 31 March 2020
Year ended 31 March 2020 Year ended 31 March 2019
Revenue Capital Revenue Capital
Return Return Total Return Return Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Income
Investment income 2 47,112 — 47,112 44,771 — 44,771
Other operating income 4 35 — 35 674 — 674
Gross rental income 3 3,415 — 3,415 3,659 — 3,659
Service charge income 3 1,786 — 1,786 1,608 — 1,608
(Losses)/gains on investments
held at fair value 10 — (153,614) (153,614) — 96,594 96,594
Net movement on foreign
exchange; investments
and loan notes — 11,296 11,296 — (1,463) (1,463)
Net movement on foreign
exchange; cash and cash
equivalents — 302 302 — (508) (508)
Net returns on contracts
for difference 10 5,724 (41,276) (35,552) 6,469 (18,380) (11,911)
Net return on total return swap 10 — (3,808) (3,808) — — —
Total Income 58,072 (187,100) (129,028) 57,181 76,243 133,424
Expenses
Management and performance fees 5 (1,570) (7,392) (8,962) (1,514) (10,653) (12,167)
Direct property expenses, rent
payable and service charge costs 3 (1,984) — (1,984) (1,940) — (1,940)
Other administrative expenses 6 (1,398) (615) (2,013) (1,271) (564) (1,835)
Total operating expenses (4,952) (8,007) (12,959) (4,725) (11,217) (15,942)
Operating profit/(loss) 53,120 (195,107) (141,987) 52,456 65,026 117,482
Finance costs 7 (814) (2,443) (3,257) (851) (2,554) (3,405)
Profit/(loss) from operations
before tax 52,306 (197,550) (145,244) 51,605 62,472 114,077
Taxation 8 (5,912) 3,149 (2,763) (5,351) 3,479 (1,872)
Total comprehensive income 46,394 (194,401) (148,007) 46,254 65,951 112,205
Earnings/(loss) per
Ordinary share 9 14.62p (61.26)p (46.64)p 14.58p 20.78p 35.36p
The Total column of this statement represents the Group’s Statement of Comprehensive Income, prepared in accordance
with IFRS. The Revenue Return and Capital Return columns are supplementary to this and are prepared under guidance
published by the Association of Investment Companies. All items in the above statement derive from continuing
operations.
The Group does not have any other income or expense that is not included in the above statement therefore “Total
comprehensive income” is also the profit for the year.
All income is attributable to the shareholders of the parent company.
The notes on pages 72 to 96 form part of these Financial Statements.
68 TR Property Investment Trust
Group and Company Statement of Changes in Equity
Group
Share Share Capital Retained
Capital Premium Redemption Earnings
Ordinary Account Reserve Ordinary Total
For the year ended 31 March 2020 Notes £’000 £’000 £’000 £’000 £’000
At 31 March 2019 79,338 43,162 43,971 1,161,783 1,328,254
Total comprehensive income — — — (148,007) (148,007)
Dividends paid 17 — — — (43,794) (43,794)
At 31 March 2020 79,338 43,162 43,971 969,982 1,136,453
Company
Share Share Capital Retained
Capital Premium Redemption Earnings
Ordinary Account Reserve Ordinary Total
For the year ended 31 March 2020 Notes £’000 £’000 £’000 £’000 £’000
At 31 March 2019 79,338 43,162 43,971 1,161,783 1,328,254
Total comprehensive income — — — (148,007) (148,007)
Dividends paid 17 — — — (43,794) (43,794)
At 31 March 2020 79,338 43,162 43,971 969,982 1,136,453
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Group
Share Share Capital Retained
Capital Premium Redemption Earnings
Ordinary Account Reserve Ordinary Total
For the year ended 31 March 2019 Notes £’000 £’000 £’000 £’000 £’000
At 31 March 2018 79,338 43,162 43,971 1,089,088 1,255,559
Total comprehensive income – – – 112,205 112,205
Dividends paid 17 – – – (39,510) (39,510)
At 31 March 2019 79,338 43,162 43,971 1,161,783 1,328,254
Company
Share Share Capital Retained
Capital Premium Redemption Earnings
Ordinary Account Reserve Ordinary Total
For the year ended 31 March 2019 Notes £’000 £’000 £’000 £’000 £’000
At 31 March 2018 79,338 43,162 43,971 1,089,088 1,255,559
Total comprehensive income – – – 112,205 112,205
Dividends paid 17 – – – (39,510) (39,510)
At 31 March 2019 79,338 43,162 43,971 1,161,783 1,328,254
The notes on pages 72 to 96 form part of these Financial Statements.
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Group and Company Balance Sheets
as at 31 March 2020
Group Company Group Company
2020 2020 2019 2019
Notes £’000 £’000 £’000 £’000
Non-current assets
Investments held at fair value 10 1,155,295 1,155,295 1,291,442 1,291,442
Investments in subsidiaries 10 — 50,429 – 50,442
1,155,295 1,205,724 1,291,442 1,341,884
Deferred taxation asset 12 — — 243 243
1,155,295 1,205,724 1,291,685 1,342,127
Current assets
Debtors 12 60,094 59,972 54,892 54,770
Cash and cash equivalents 40,129 40,127 52,282 52,280
100,223 100,099 107,174 107,050
Current liabilities 13 (59,711) (110,016) (12,520) (62,838)
Net current assets/(liabilities) 40,512 (9,917) 94,654 44,212
Total assets less current liabilities 1,195,807 1,195,807 1,386,339 1,386,339
Non-current liabilities 13 (59,354) (59,354) (58,085) (58,085)
Net assets 1,136,453 1,136,453 1,328,254 1,328,254
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Capital and reserves
Called up share capital 14 79,338 79,338 79,338 79,338
Share premium account 15 43,162 43,162 43,162 43,162
Capital redemption reserve 15 43,971 43,971 43,971 43,971
Retained earnings 16 969,982 969,982 1,161,783 1,161,783
Equity shareholders’ funds 1,136,453 1,136,453 1,328,254 1,328,254
Net Asset Value per:
Ordinary share 19 358.11p 358.11p 418.54p 418.54p
These financial statements were approved by the directors of TR Property Investment Trust plc (Company No:84492) and
authorised for issue on 5 June 2020.
H Seaborn
Director
The notes on pages 72 to 96 form part of these Financial Statements.
70 TR Property Investment Trust
Group and Company Cash Flow Statements
for the year ended 31 March 2020
Group Company Group Company
2020 2020 2019 2019
£’000 £’000 £’000 £’000
Reconciliation of (loss)/profit from operations before tax
to net cash (outflow)/inflow from operating activities
(Loss)/profit from operations before tax (145,244) (145,244) 114,077 114,077
Finance costs 3,257 3,257 3,405 3,405
Losses/(gains) on investments and derivatives held at
fair value through profit or loss 198,698 198,711 (78,214) (78,186)
Net movement on foreign exchange; cash and cash
equivalents and loan notes 859 859 (292) (292)
Decrease/(increase) in accrued income 584 584 (1,129) (1,129)
Net (purchases)/sales of investments (66,833) (66,833) 115,685 115,685
Increase in sales settlement debtor (1,417) (1,417) (3,334) (3,334)
Increase in purchase settlement creditor 4,501 4,501 1,474 1,474
Decrease/(increase) in other debtors 4,447 4,447 (18,350) (18,350)
Increase/(decrease) in other creditors 2,047 2,034 (3,711) (3,737)
Scrip dividends included in investment income and
net returns on contracts for difference (3,818) (3,818) (9,162) (9,162)
Net cash (outflow)/inflow from operating activities
before interest and taxation (2,919) (2,919) 120,449 120,451
Interest paid (3,421) (3,421) (3,391) (3,391)
Taxation paid (2,321) (2,321) (1,872) (1,872)
Net cash (outflow)/inflow from operating activities (8,661) (8,661) 115,186 115,188
Financing activities
Equity dividends paid (43,794) (43,794) (39,510) (39,510)
Drawdown/(repayment) of loans 40,000 40,000 (41,000) (41,000)
Net cash used in financing activities (3,794) (3,794) (80,510) (80,510)
(Decrease)/increase in cash (12,455) (12,455) 34,676 34,678
Cash and cash equivalents at start of year 52,282 52,280 18,114 18,110
Net movement on foreign exchange; cash and cash equivalents
302 302 (508) (508)
Cash and cash equivalents at end of year 40,129 40,127 52,282 52,280
Note
Dividends received 52,003 52,003 46,249 46,249
Interest received 37 37 669 669
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The notes on pages 72 to 96 form part of these Financial Statements.
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Notes to the Financial Statements
continued
1 Accounting policies
The financial statements for the year ended 31 March 2020 have been prepared on a going concern basis, in accordance with
International Financial Reporting Standards (IFRS), which comprise standards and interpretations approved by the International
Accounting Standards Board (IASB), together with interpretations of the International Accounting Standards and Standing
Interpretations Committee approved by the International Accounting Standards Committee (IASC) that remain in effect, to the
extent that they have been adopted by the European Union and as regards the Company financial statements, as applied in
accordance with the provisions of the Companies Act 2006. The financial statements have also been prepared in accordance with
the Statement of Recommended Practice (SORP), “Financial Statements of Investment Trust Companies and Venture Capital
Trusts” issued in October 2019, to the extent that it is consistent with IFRS.
In assessing Going Concern the Board has made a detailed assessment of the ability of the Company and Group to meet its
liabilities as they fall due, including stress and liquidity tests which considered the effects of substantial falls in investment
valuations, substantial reductions in revenue received and reductions in market liquidity including the effects and potential effects
of the current economic impact caused by the Coronavirus pandemic.
In light of the testing carried out, the liquidity of the level 1 assets held by the Company and the significant net asset value
position, and despite the net current liability position of the Parent Company, the Directors are satisfied that the Company and
Group have adequate financial resources to continue in operation for at least the next 12 months following the signing of the
financial statements and therefore it is appropriate to adopt the going concern basis of accounting.
The Group and Company financial statements are expressed in Sterling, which is their functional and presentational currency.
Sterling is the functional currency because it is the currency of the primary economic environment in which the Group operates.
Values are rounded to the nearest thousand pounds (£’000) except where otherwise indicated.
Key estimates and judgements
The preparation of the financial statements necessarily requires the exercise of judgement, both in application of accounting
policies, which are set out below, and in the selection of assumptions used in the calculation of estimates. These estimates and
judgements are reviewed on an ongoing basis and are continually evaluated based on historical experience and other factors.
However, actual results may differ from these estimates. The only key estimate is considered to be the valuation of investment
properties. See section (f) of this note. There are not considered to be any key judgements.
a) Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and its subsidiaries to 31 March 2020. All
the subsidiaries of the Company have been consolidated in these financial statements.
In accordance with IFRS10 the Company has been designated as an investment entity on the basis that:
l It obtains funds from investors and provides those investors with investment management services;
l It commits to its investors that its business purpose is to invest solely for returns from capital appreciation and investment
income; and
l It measures and evaluates performance of substantially all of its investments on a fair value basis.
Each of the subsidiaries of the Company was established for the sole purpose of operating or supporting the investment operations of
the Company (including raising additional financing), and is not itself an investment entity. IFRS 10 sets out that in the case of controlled
entities that support the investment activity of the investment entity, those entities should be consolidated rather than presented as
investments at fair value. Accordingly the Company has consolidated the results and financial positions of those subsidiaries.
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Company obtains control, and
continue to be consolidated until the date that such control ceases. The financial statements of subsidiaries used in the preparation
of the consolidated financial statements are based on consistent accounting policies. All intra-group balances and transactions,
including unrealised profits arising therefrom, are eliminated. This is consistent with the presentation in previous years.
72 TR Property Investment Trust
Notes to the Financial Statements
continued
1 Accounting policies continued
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b) Income
Dividends receivable on equity shares are treated as revenue for the year on an ex-dividend basis. Where no ex-dividend date is
available, dividends receivable on or before the year end are treated as revenue for the year. Provision is made for any dividends not
expected to be received. Where the Group has elected to receive these dividends in the form of additional shares rather than cash
the amount of cash dividend foregone is recognised as income. Differences between the value of shares received and the cash
dividend foregone are recognised in the capital returns of the Group Statement of Comprehensive Income. The fixed returns on debt
securities are recognised on a time apportionment basis so as to reflect the effective yield on each such security. Interest receivable
from cash and short term deposits is accrued to the end of the year. Stock lending income is recognised on an accruals basis.
Underwriting commission is taken to revenue, unless any shares underwritten are required to be taken up, in which case the
proportionate commission received is deducted from the cost of the investment.
Recognition of property rental income is set out in section (f) of this note.
Recognition of income from contracts of difference is set out in section (g) of this note.
c) Expenses
All expenses and finance costs are accounted for on an accruals basis. An analysis of retained earnings broken down into revenue and
capital items is given in note 16. In arriving at this breakdown, expenses have been presented as revenue items except as follows:
l Expenses which are incidental to the acquisition or disposal of an investment;
l Expenses are presented as capital where a connection with the maintenance or enhancement of the value of the investments
can be demonstrated, this includes irrecoverable VAT incurred on costs relating to the extension of residential leases as
premiums received for extending or terminating leases are recognised in the capital account;
l One quarter of the base management fee is charged to revenue, with three quarters allocated to capital return to reflect the
Board’s expectations of long term investment returns. All performance fees are charged to capital return;
l The fund administration, depositary, custody and company secretarial services are charged directly to the Company and are
included within ‘Other administrative expenses’ in note 6. These expenses are charged on the same basis as the base
management fee; one quarter to income and three quarters to capital.
d) Finance costs
The finance cost in respect of capital instruments other than equity shares is calculated so as to give a constant rate of return on
the outstanding balance. One quarter of the finance cost is charged to revenue and three quarters to capital return.
e) Taxation
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities,
based on tax rates and laws that are enacted or substantively enacted by the balance sheet date.
Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise income
tax is recognised in the Group Statement of Comprehensive Income.
The tax effect of different items of expenditure is allocated between capital and revenue using the Group’s effective rate of tax for
the year. The charge for taxation is based on the profit for the year and takes into account taxation deferred because of temporary
differences between the treatment of certain items for taxation and accounting purposes.
In accordance with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented
against capital returns in the supplementary information in the Statement of Comprehensive Income is the “marginal basis”.
Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the
Statement of Comprehensive Income, then no tax relief is transferred to the capital column.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
Balance Sheet and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet
liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
The Company is an investment trust under s.1158 of the Corporation Tax Act 2010 and, as such, is not liable for tax on capital
gains. Capital gains arising in subsidiary companies are subject to capital gains tax.
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Notes to the Financial Statements
continued
1 Accounting policies continued
f) Investment property
Investment property is measured initially at cost including transaction costs. Transaction costs include transfer taxes, professional
fees for legal services and initial leasing commissions to bring the property to the condition necessary for it to be capable of
operating. The carrying amount also includes the cost of replacing part of an existing investment property at the time that cost is
incurred if the recognition criteria are met. The purchase and sale of properties is recognised to be effected on the date
unconditional contracts are exchanged.
Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in the fair values
are included in the Group Statement of Comprehensive Income in the year in which they arise.
Investment property is derecognised when it has been disposed of or permanently withdrawn from use and no future economic
benefit is expected from its disposal. Any gains or losses are recognised in the Group Statement of Comprehensive Income in the
year of disposal.
Gains or losses on the disposal of investment property are determined as the difference between net disposal proceeds and the
carrying value of the asset at the date of disposal.
Revaluation of investment properties
The Group carries its investment properties at fair value in accordance with IFRS 13, revalued twice a year, with changes in fair
values being recognised in the Group Statement of Comprehensive Income. The Group engaged Knight Frank LLP as
independent valuation specialists to determine fair value as at 31 March 2020.
Valuations of investment properties
Determination of the fair value of investment properties has been prepared on the basis defined by the RICS Valuation – Global
Standards (The Red Book Global Standards) as follows:
“The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an
arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”
The valuation takes into account future cash flow from assets (such as lettings, tenants’ profiles, future revenue streams, capital values
of fixtures and fittings, plant and machinery, any environmental matters and the overall repair and condition of the property) and
discount rates applicable to those assets. These assumptions are based on local market conditions existing at the balance sheet date.
In arriving at their estimates of fair values as at 31 March 2020, the valuers have used their market knowledge and professional
judgement and have not only relied solely on historical transactional comparables. Examples of inputs to the valuation can be
seen in the sensitivity analysis disclosed in note 10(e).
The external valuation of the portfolio at 31 March 2020 contains a material uncertainty clause from Knight Frank, which is in line
with the RICS guidance to valuers and reflects the increased difficulty in determining asset values when few, if any, comparable
transactions have occurred in the current environment. Consequently less certainty can be attached to the valuation than would
otherwise be the case.
Rental income
Rental income receivable under operating leases is recognised on a straight-line basis over the term of the lease, except for
contingent rental income which is recognised when it arises.
Incentives for lessees to enter into lease agreements are spread evenly over the lease term, even if the payments are not made
on such a basis. The lease term is the non-cancellable period of the lease together with any further term for which the tenant has
the option to continue the lease, where, at the inception of the lease, the directors are reasonably certain that the tenant will
exercise that option. Premiums received to terminate or extend leases are recognised in the capital account of the Group
Statement of Comprehensive Income when they arise.
Service charges and expenses recoverable from tenants
Income arising from expenses recharged to tenants is recognised in the period in which the expense can be contractually
recovered. Service charges and other such receipts are included gross of the related costs in revenue as the directors consider
that the Group acts as principal in this respect.
74 TR Property Investment Trust
Notes to the Financial Statements
continued
1 Accounting policies continued
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g) Investments
When a purchase or sale is made under contract, the terms of which require delivery within the timeframe of the relevant market,
the investments concerned are recognised or derecognised on the trade date.
All the Group’s investments are defined under IFRS as investments designated as fair value through profit or loss but are also
described in these financial statements as investments held at fair value.
All investments are designated upon initial recognition as held at fair value, and are measured at subsequent reporting dates at
fair value, which, for quoted investments, is deemed to be closing prices for stocks sourced from European stock exchanges and
for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange electronic trading service covering
most of the market including all the FTSE All -Share and the most liquid AIM constituents. Unquoted investments or investments
for which there is only an inactive market are held at fair value which is based on valuations made by the directors in accordance
with IPEVCA guidelines and using current market prices, trading conditions and the general economic climate.
In its financial statements the Company recognises its investments in subsidiaries at adjusted net asset value. The subsidiaries
have historically been holding vehicles for direct property investment or financing vehicles. No assets are currently held through
the subsidiary structure and all financing instruments are directly held by the company.
Changes in the fair value are recognised in the Group Statement of Comprehensive Income. On disposal, realised gains and
losses are also recognised in the Group Statement of Comprehensive Income.
Derivatives
Derivatives are held at fair value based on traded prices. Gains and losses on derivative transactions are recognised in the Group
Statement of Comprehensive Income. Gains and losses on CFDs and total return swaps resulting from movements in the price of
the underlying stock are treated as capital. Dividends from the underlying investment and financing costs of CFDs and total return
swaps are treated as revenue/capital expenses.
Gains and losses on forward currency contracts used for capital hedging purposes are treated as capital.
Contracts for Difference (“CFDs”) are synthetic equities and are valued by reference to the investments’ underlying market values.
The sources of the returns under the derivative contract (e.g. notional dividends, financing costs, interest returns and capital
changes) are allocated to the revenue and capital accounts in alignment with the nature of the underlying source of income and
in accordance with the guidance given in the AIC SORP. Notional dividend income or expenses arising on long or short positions
are apportioned wholly to the revenue account. Notional interest expense on long positions is apportioned between revenue and
capital in accordance with the Board’s long term expected returns of the Company (currently determined to be 25% to the
revenue account and 75% to capital reserves). Changes in value relating to underlying price movements of securities in relation
to CFD exposures are allocated wholly to capital reserves.
h) Borrowings, loan notes and debentures
All loans and debentures are initially recognised at the fair value of the consideration received, less issue costs where applicable.
After initial recognition, all interest bearing loans and borrowings are subsequently measured at amortised cost.
Amortised cost is calculated by taking into account any discount or premium on settlement. The costs of arranging any interest
bearing loans are capitalised and amortised over the life of the loan on an effective interest rate basis.
i) Foreign currency translation
Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction.
Foreign currency monetary assets and liabilities are translated into Sterling at the rate ruling on the balance sheet date. Foreign
exchange differences are recognised in the Group Statement of Comprehensive Income.
j) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits.
k) Dividends payable to shareholders
Interim dividends are recognised in the period in which they are paid and final dividends are recognised when approved by
shareholders.
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Notes to the Financial Statements
continued
1 Accounting policies continued
l) Adoption of new and revised Standards
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Standards and Interpretations effective in the current period
The accounting policies adopted are consistent with those of the previous consolidated financial statements except as noted
below.
IFRS 16 – Leases. The objective of IFRS 16 is to specify the principles for recognition, measurement, presentation and disclosure
of leases primarily for lessees. The Group has not entered into any leases as a lessee and acts only in its capacity as a lessor. The
Group’s commercial leases on its property portfolio continue to be classified as operating leases with the leased assets recognised
in the balance sheet. The adoption of the Standard has not had any impact on equity or profit in the current period as the
approach to lessor accounting under IFRS 16 is substantially unchanged from its predecessor, IAS 17.
IFRIC– 23 Uncertainty over Income Tax Treatments. The interpretation addresses the determination of taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12.
Companies must consider circumstances which give rise to uncertain tax treatment and whether it is probable the treatment
adopted would be accepted by the tax authority. IFRIC – 23 has not had a material impact on the Group as it continued to ensure
compliance with relevant tax legislation and consulted with its tax advisers throughout the period.
Early adoption of standards and interpretations
The standards issued before the reporting date that become effective after 31 March 2020 are not expected to have a material
effect on equity or profit for the subsequent period. The Group has not early adopted any new International Financial Reporting
Standard or Interpretation. Standards, amendments and interpretations issued but not yet effective up to the date of issuance of
the Group’s financial statements are listed below:
IFRS 3 amendments (effective 1 January 2020). The amendments provide more guidance on the definition of a business to
assist in determining whether a transaction results in an asset or a business acquisition. The amendments are not expected to
have a material impact on the Group's financial statements.
Interest Rate Benchmark Reform – Amendments to IFRS 9, IAS 39 and IFRS 7 (effective 1 January 2020). The amendments
provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the replacement of
an existing interest rate benchmark with an alternative risk free interest rate. The amendments are not expected to have a material
impact on the Group's financial statements.
Amendments to IAS 1 and IAS 8 – Definition of Material (effective 1 January 2020) The International Accounting Standards Board
has refined its definition of “material” and issued practical guidance on applying the concept of materiality. The amendments are
not expected to have a material impact on the Group's financial statements.
The Conceptual Framework for Financial Reporting (effective 1 January 2020). The Conceptual Framework is not a standard
however its purpose is to outline a set of concepts for financial reporting, standard setting, guidance for preparers in developing
consistent accounting policies and assistance to others in understanding and interpreting the standards.
IFRS 17 – Insurance Contracts (effective 1 January 2021) The IFRS introduces a comprehensive model for all insurance and
re-insurance contracts, based on fulfilment objective, using current assumptions and discount rates. Given the nature of the
Group's business, the IFRS is not expected to have a material impact on the financial statements.
Classification of Liabilities as Current or Non-Current – Amendments to IAS 1 (effective 1 January 2022). The amendments
specify the requirements for classifying liabilities as current or non-current. The amendments are not expected to have a material
impact on the Group's financial statements.
Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture.
(effective date postponed until completion of broader review) The amendments seek to resolve a conflict between existing
guidance on consolidation and equity accounting when a parent company loses control of a subsidiary in a transaction with an
associate or joint venture. The amendments are not expected to have a material impact on the Group's financial statements.
76 TR Property Investment Trust
Notes to the Financial Statements
continued
2 Investment income
2020 2019
£’000 £’000
Dividends from UK listed investments 4,911 2,304
Dividends from overseas listed investments 26,631 23,085
Scrip dividends from listed investments 3,370 8,226
Property income distributions 12,200 11,156
47,112 44,771
3 Net rental income
2020 2019
£’000 £’000
Gross rental income 3,415 3,659
Service charge income 1,786 1,608
Direct property expenses, rent payable and service charge costs (1,984) (1,940)
3,217 3,327
Operating leases
The Group has entered into commercial leases on its property portfolio. Commercial property leases typically have lease terms
between 5 and 15 years and include clauses to enable periodic upward revision of the rental charge according to prevailing
market conditions. Some leases contain options to break before the end of the lease term.
Future minimum rentals under non-cancellable operating leases as at 31 March are as follows:
2020 2019
£’000 £’000
Within 1 year 2,950 3,600
After 1 year but not more than 5 years 10,100 10,750
More than 5 years 15,500 16,725
28,550 31,075
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4 Other operating income
2020 2019
£’000 £’000
Interest receivable 32 39
Interest on refund of overseas withholding tax 3 351
Underwriting commission — 284
35 674
Underwriting is part of the process of introducing new securities to the market. The Company may participate in the underwriting
of investee companies’ securities, as one of a number of participants, for which compensation in the form of commission is
received. The Company only participates in underwriting having assessed the risks involved and in securities in which it is
prepared to increase its holding should that be the outcome. The commission earned is taken to revenue unless any securities
underwritten are required to be taken up in which case the proportionate commission is deducted from the cost of the
investment. During the year the Company did not participate in any (2019: one) underwriting. In the prior year all commission
earned was taken to revenue and shown under Other operating income.
TR Property Investment Trust
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Notes to the Financial Statements
continued
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5 Management and performance fees
2020 2020 2020 2019 2019 2019
Revenue Capital Total Revenue Capital Total
Return Return Return Return
£’000 £’000 £’000 £’000 £’000 £’000
Management fee 1,570 4,709 6,279 1,514 4,543 6,057
Performance fee — 2,683 2,683 – 6,110 6,110
1,570 7,392 8,962 1,514 10,653 12,167
A summary of the terms of the management agreement is given on pages 53 and 54.
6 Other administrative expenses
2020 2019
£’000 £’000
Directors’ fees (Directors’ Remuneration Report on pages 55 to 57) 209 213
Auditor’s remuneration:
– for audit of the consolidated and parent company financial statements 80 70
Legal fees 31 –
Taxation fees 103 182
Other administrative expenses 199 185
Other expenses 562 490
Irrecoverable VAT 214 131
Expenses charged to Revenue 1,398 1,271
Expenses charged to Capital 615 564
2,013 1,835
Other administrative expenses include depositary, custody and company secretarial services. These expenses are charged on the
same basis as the base management fee; one quarter to income and three quarters to capital. Total other administrative
expenses charged to both income and capital are £796,000 (2019: £740,000).
Other expenses include broker fees, marketing and PR costs, Directors’ National Insurance and recruitment, Registrars and listing
fees, and annual report and other publication printing and distribution costs. These expenses are charged solely to the revenue
account.
VAT on costs incurred in connection with the extension of the residential leases on The Colonnades are charged to the capital
account.
7 Finance costs
2020 2019
£’000 £’000
Bank loans and overdrafts repayable within 1 year 1,866 2,017
Loan notes repayable after 5 years 1,391 1,388
3,257 3,405
Amount allocated to capital return (2,443) (2,554)
Amount allocated to revenue return 814 851
78 TR Property Investment Trust
Notes to the Financial Statements
continued
8 Taxation
a) Analysis of charge in the year
2020 2020 2020 2019 2019 2019
Revenue Capital Total Revenue Capital Total
Return Return Return Return
£’000 £’000 £’000 £’000 £’000 £’000
UK corporation tax at 19% (2019: 19%) 3,362 (3,149) 213 3,488 (3,484) 4
Overseas taxation 2,606 — 2,606 2,729 – 2,729
5,968 (3,149) 2,819 6,217 (3,484) 2,733
(Over)/under provision in respect of prior years (406) — (406) (866) 5 (861)
5,562 (3,149) 2,413 5,351 (3,479) 1,872
Deferred taxation 350 — 350 — — —
Current tax charge for the year 5,912 (3,149) 2,763 5,351 (3,479) 1,872
b) Factors affecting total tax charge for the year
The tax assessed for the year is lower (2019: lower) than the standard rate of corporate tax in the UK for a large company of 19%
(2019: 19%).
The difference is explained below:
2020 2020 2020 2019 2019 2019
Revenue Capital Total Revenue Capital Total
Return Return Return Return
£’000 £’000 £’000 £’000 £’000 £’000
Net profit/(loss) on ordinary activities before taxation 52,306 (197,550) (145,244) 51,605 62,472 114,077
Corporation tax charge at 19% (2019:19%) 9,938 (37,535) (27,597) 9,805 11,870 21,675
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Effects of:
Non taxable gains on investments — 29,187 29,187 – (18,353) (18,353)
Currency movements not taxable — (2,204) (2,204) – 374 374
Tax relief on expenses charged to capital — (1,038) (1,038) – (939) (939)
Non-taxable returns — 8,566 8,566 – 3,492 3,492
Non-taxable UK dividends (1,043) — (1,043) (841) – (841)
Non-taxable overseas dividends (5,540) — (5,540) (5,546) – (5,546)
Overseas withholding taxes 2,606 — 2,606 2,729 – 2,729
(Over)/under provision in respect of prior years (406) 5 (401) (866) 5 (861)
Disallowable expenses 69 (43) 26 64 (27) 37
Deferred tax not provided 288 (87) 201 6 99 105
5,912 (3,149) 2,763 5,351 (3,479) 1,872
The Group has no deferred tax assets (2019: £1,106,000) arising as a result of losses carried forward.
Due to the Company’s status as an Investment Trust, and the intention to continue meeting the conditions required to obtain
approval for the forseeable future, the Company has not provided deferred tax on any capital gains arising on the revaluation or
disposal of investments.
TR Property Investment Trust
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Notes to the Financial Statements
continued
8 Taxation continued
c) Provision for deferred taxation
The amounts for deferred taxation provided at 19% (2019: 19%) comprise:
2020 2020 2020 2019 2019 2019
Revenue Capital Total Revenue Capital Total
Return Return Return Return
Group £’000 £’000 £’000 £’000 £’000 £’000
Accelerated capital allowances 108 — 108 107 – 107
Unutilised losses carried forward — — — – (350) (350)
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Shown as:
Deferred tax liability/(asset) 108 - 108 107 (350) (243)
2020 2020 2020 2019 2019 2019
Revenue Capital Total Revenue Capital Total
Return Return Return Return
Company £’000 £’000 £’000 £’000 £’000 £’000
Accelerated capital allowances 108 — 108 107 – 107
Unutilised losses carried forward — — — – (350) (350)
Shown as:
Deferred tax liability/(asset) 108 — 108 107 (350) (243)
The movement in provision in the year is as follows:
2020 2020 2020 2019 2019 2019
Revenue Capital Total Revenue Capital Total
Return Return Return Return
Group £’000 £’000 £’000 £’000 £’000 £’000
Provision at the start of the year 107 (350) (243) 107 (350) (243)
Accelerated capital allowances 1 350 351 – – –
Provision at the end of the year 108 — 108 107 (350) (243)
2020 2020 2020 2019 2019 2019
Revenue Capital Total Revenue Capital Total
Return Return Return Return
Company £’000 £’000 £’000 £’000 £’000 £’000
Provision at the start of the year 107 (350) (243) 107 (350) (243)
Accelerated capital allowances 1 350 351 – – –
Provision at the end of the year 108 — 108 107 (350) (243)
80 TR Property Investment Trust
Notes to the Financial Statements
continued
9 Earnings/(loss) per share
Earnings/(loss) per Ordinary share
The earnings/(loss) per Ordinary share can be analysed between revenue and capital, as below.
Year ended Year ended
31 March 31 March
2020 2019
£’000 £’000
Net revenue profit 46,394 46,254
Net capital (loss)/profit (194,401) 65,951
Net total (loss)/profit (148,007) 112,205
Weighted average number of shares in issue during the year 317,350,980 317,350,980
pence pence
Revenue earnings per share 14.62 14.58
Capital (loss)/earnings per share (61.26) 20.78
(Loss)/earnings per Ordinary share (46.64) 35.36
The Group has no securities in issue that could dilute the return per Ordinary share. Therefore the basic and diluted return per
Ordinary share are the same.
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10 Investments held at fair value
a) Analysis of investments
Group Company Group Company
2020 2020 2019 2019
£’000 £’000 £’000 £’000
Listed in the United Kingdom 351,506 351,506 426,798 426,798
Unlisted in the United Kingdom 682 682 377 377
Listed Overseas 708,597 708,597 762,338 762,338
Investment properties 94,510 94,510 101,929 101,929
Investments held at fair value 1,155,295 1,155,295 1,291,442 1,291,442
Investments in subsidiaries at fair value — 50,429 – 50,442
1,155,295 1,205,724 1,291,442 1,341,884
b) Business segment reporting
Gross Gross
Valuation Net Net Valuation revenue revenue
31 March additions/ appreciation/ 31 March 31 March 31 March
2019 (disposals) (depreciation) 2020 2020 2019
£’000 £’000 £’000 £’000 £’000 £’000
Listed investments 1,189,136 30,388 (159,421) 1,060,103 46,964 44,682
Unlisted investments 377 — 305 682 148 89
Contracts for difference (3,210) 53,184 (41,276) 8,698 5,724 6,469
Total return swap — — (3,808) (3,808) — —
Total investments segment 1,186,303 83,572 (204,200) 1,065,675 52,836 51,240
Direct property segment 101,929 (12,921) 5,502 94,510 5,201 5,267
1,288,232 70,651 (198,698) 1,160,185 58,037 56,507
TR Property Investment Trust
81
Notes to the Financial Statements
continued
10 Investments held at fair value continued
b) Business segment reporting continued
In seeking to achieve its investment objective, the Company invests in the shares and securities of property companies and
property related businesses internationally and also in investment property located in the UK. The Company therefore considers
that there are two distinct reporting segments, investments and direct property, which are used for evaluating performance and
allocation of resources. The Board, which is the principal decision maker, receives information on the two segments on a regular
basis. Whilst revenue streams and direct property costs can be attributed to the reporting segments, general administrative
expenses cannot be split to allow a profit for each segment to be determined. The assets and gross revenues for each segment
are shown above.
The property costs included within note 3 are £1,984,000 (2019: £1,940,000) and deducting these costs from the direct
property gross revenue above would result in net income of £3,217,000 (2019: £3,327,000) for the direct property reporting
segment.
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c) Geographical segment reporting
Gross Gross
Valuation Net Net Valuation revenue revenue
31 March additions/ appreciation/ 31 March 31 March 31 March
2019 (disposals) (depreciation) 2020 2020 2019
£’000 £’000 £’000 £’000 £’000 £’000
UK listed equities and convertibles 426,798 (36,934) (38,358) 351,506 16,963 13,371
UK unlisted equities 377 — 305 682 148 89
UK direct property1 101,929 (12,921) 5,502 94,510 5,201 5,267
Continental European listed equities 762,338 67,322 (121,063) 708,597 30,001 31,311
1,291,442 17,467 (153,614) 1,155,295 52,313 50,038
UK contracts for difference2 (2,924) 20,414 (12,419) 5,071 2,714 3,635
European contracts for difference2 (286) 32,770 (28,857) 3,627 3,010 2,834
UK total return swap3 — — (3,808) (3,808) — —
1,288,232 70,651 (198,698) 1,160,185 58,037 56,507
Included in the above figures are purchase costs of £460,000 (2019: £276,000) and sales costs of £199,000 (2019:
£114,000). These comprise mainly stamp duty and commission.
The Company received £367,977,000 (2019: £259,469,000) from investments, including direct property, sold in the year. The
book cost of these investments when they were purchased was £317,581,000 (2019: £164,177,000). These investments have
been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
1 Net additions/(disposals) includes £981,000 (2019: £1,496,000) of capital expenditure. Net appreciation/(depreciation) includes amounts in respect of
rent free periods.
2 Gross revenue for contracts for difference relates to dividends receivable, on an ex dividend basis, on the underlying positions held. The
appreciation/(depreciation) in CFDs relates to the movement in fair value in the year.
3 The depreciation in the TRS relates to the movement in fair value since inception.
d) Substantial share interests
The Group held interests in 3% or more of any class of capital in 8 companies (2019: 12 companies) we invest in. None of
these investments is considered significant in the context of these financial statements. See note 21 on pages 95 and 96 for
further details of subsidiary investments.
82 TR Property Investment Trust
Notes to the Financial Statements
continued
10 Investments held at fair value continued
e) Fair value of financial assets and financial liabilities
Financial assets and financial liabilities are carried in the Balance Sheet either at their fair value (investments) or the balance sheet
amount is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals
and cash at bank).
Fair value hierarchy disclosures
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value
measurement of the relevant asset as follows:
Level 1 – valued using quoted prices in an active market for identical assets.
Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices within Level 1.
Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.
The valuation techniques used by the Group are explained in the accounting policies in notes 1 (f) and 1 (g).
The table below sets out fair value measurements using IFRS 13 fair value hierarchy.
Financial assets/(liabilities) at fair value through profit or loss
Level 1 Level 2 Level 3 Total
At 31 March 2020 £’000 £’000 £’000 £’000
Equity investments 1,060,103 — 682 1,060,785
Investment properties — — 94,510 94,510
Contracts for difference — 8,698 — 8,698
Total return swap — (3,808) — (3,808)
Foreign exchange forward contracts — (5,609) — (5,609)
1,060,103 (719) 95,192 1,154,576
Level 1 Level 2 Level 3 Total
At 31 March 2019 £’000 £’000 £’000 £’000
Equity investments 1,189,136 – 377 1,189,513
Investment properties – – 101,929 101,929
Contracts for difference – (3,210) – (3,210)
Foreign exchange forward contracts – 1,969 – 1,969
1,189,136 (1,241) 102,306 1,290,201
The table above represents the Group’s fair value hierarchy. The Company’s fair value hierarchy is identical except for the
inclusion of the fair value of the investment in Subsidiaries which at 31 March 2020 was £50,429,000 (2019: £50,442,000).
These have been categorised as level 3 in both years. The movement in the year of £13,000 (2019: £28,000) is the change in
fair value in the year. The total financial assets at fair value for the Company at 31 March 2020 was £1,214,422,000
(2019: £1,343,853,000).
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TR Property Investment Trust
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Notes to the Financial Statements
continued
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10 Investments held at fair value continued
e) Fair value of financial assets and financial liabilities continued
Reconciliation of movements in financial assets categorised as level 3
31 March Appreciation/ 31 March
2019 Purchases Sales (Depreciation) 2020
At 31 March 2020 £’000 £’000 £’000 £’000 £’000
Unlisted equity investments 377 — — 305 682
Investment Properties
– Mixed use 54,962 545 (3,619) 735 52,623
– Office & Industrial 46,967 436 (10,283) 4,767 41,887
101,929 981 (13,902) 5,502 94,510
102,306 981 (13,902) 5,807 95,192
All appreciation/(depreciation) as stated above relates to movements in fair value of unlisted equity investments and investment
properties held at 31 March 2020.
The Group held one unquoted investment at the year end (see 11.6 overleaf).
Transfers between hierarchy levels
There were no transfers during the year between any of the levels.
Key assumptions used in value in use calculations are explained in the accounting policies in note 1(f).
Sensitivity information for Investment Property Valuations
The fair values of the properties are derived from an open market (Red Book) valuation of the properties on the Balance Sheet
date by an independent firm of valuers (Knight Frank). For the valuation as at 31 March 2020, the valuers included a market
uncertainty clause in their valuation as follows:
“The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a “Global Pandemic” on the
11 March 2020, has impacted global financial markets. Travel restrictions have been implemented by many countries. In the UK,
market activity is being impacted in all sectors. As at the valuation date, we consider that we can attach less weight to previous
market evidence for comparison purposes, to inform opinions of value. Indeed, the current response to COVID-19 means that we
are faced with an unprecedented set of circumstances on which to base a judgement. Our valuation is therefore reported on the
basis of ‘material valuation uncertainty’ per VPGA 10 of the RICS Valuation – Global Standards. Consequently, less certainty – and
a higher degree of caution – should be attached to our valuation than would normally be the case. Given the unknown future
impact that COVID-19 might have on the real estate market, we recommend that you keep the valuation of these properties
under frequent review.”
The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy of
investment properties are:
l Estimated rental value: £6.5 – £65 per sq ft (2019: £5.0 – £50)
l Capitalisation rates: 2.0% – 6.0% (2019: 3.2% – 9.0%)
Significant increases (decreases) in estimated rental value and rent growth in isolation would result in a significantly higher
(lower) fair value measurement. A significant increase (decrease) in long-term vacancy rate in isolation would result in
a significantly lower (higher) fair value measurement.
There are interrelationships between the yields and rental values as they are partially determined by market rate conditions.
The sensitivity of the valuation to changes in the most significant inputs per class of investment property are shown below:
84 TR Property Investment Trust
Notes to the Financial Statements
continued
10 Investments held at fair value continued
Office &
Estimated movement in fair value of investment Retail Industrial Other Total
properties at 31 March 2020 arising from £’000 £’000 £’000 £’000
Increase in rental value by 5% 1,300 1,780 — 3,080
Decrease in rental value by 5% (1,225) (1,720) — (2,945)
Increase in yield by 0.5% (5,025) (6,005) (950) (11,980)
Decrease in yield by 0.5% 6,750 9,355 1,365 17,470
Office &
Estimated movement in fair value of investment Retail Industrial Other Total
properties at 31 March 2019 arising from £’000 £’000 £’000 £’000
Increase in rental value by 5% 500 2,075 — 2,575
Decrease in rental value by 5% (575) (2,120) — (2,695)
Increase in yield by 0.5% (5,425) (5,550) (960) (11,935)
Decrease in yield by 0.5% 7,175 7,650 1,350 16,175
11 Financial Instruments
Risk management policies and procedures
The Group invests in equities and other instruments for the long term in the pursuit of the Investment Objective set out on
page 24. The Group is exposed to a variety of risks that could result in either a reduction or an increase in the profits available for
distribution by way of dividends.
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The principal risks the Group faces in its portfolio management activities are:
l Market risk (comprising price risk, currency risk and interest rate risk).
l Liquidity risk.
l Credit risk.
The Manager’s policies and processes for managing these risks are summarised on pages 28 to 31 and have been applied
throughout the year.
11.1 Market price risk
By the very nature of its activities, the Group’s investments are exposed to market price fluctuations.
Management of the risk
The Manager runs a diversified portfolio and reports to the Board on the portfolio activity and performance at each Board
meeting. The Board monitors the investment activity and strategy to ensure it is compatible with the stated objectives.
The Group’s exposure to changes in market prices on its quoted equity investments, CFDs and investment property portfolio, was
as follows:
2020 2019
£’000 £’000
Investments held at fair value 1,155,295 1,291,442
CFD long gross exposure 56,728 166,656
TRS long gross exposure 6,598 —
Concentration of exposure to price risks
As set out in the Investment Policies on page 25, there are guidelines to the amount of exposure to a single company,
geographical region or direct property. These guidelines ensure an appropriate spread of exposure to individual or sector price
risks. As an investment company dedicated to investment in the property sector, the Group is exposed to price movements across
the property asset class as a whole.
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Notes to the Financial Statements
continued
11 Financial Instruments continued
11.1 Market price risk continued
Price risk sensitivity
The following table illustrates the sensitivity of the profit after taxation for the year and the value of shareholders’ funds to an
increase or decrease of 15% in the fair values of the Group’s equity, fixed interest, CFD and direct property investments. The level
of change is consistent with the illustration shown in the previous year. The sensitivity is based on the Group’s equity, fixed
interest, CFD and direct property exposure at each balance sheet date, with all other variables held constant.
2020 2020 2019 2019
Increase Decrease Increase Decrease
in fair value in fair value in fair value in fair value
£’000 £’000 £’000 £’000
Statement of Comprehensive Income – profit after tax
Revenue return (77) 77 (87) 87
Capital return 173,817 (173,817) 193,000 (193,000)
Change to the profit after tax for the year/shareholders’ funds 173,740 (173,740) 192,913 (192,913)
Change to total earnings per Ordinary share 54.75p (54.75)p 60.79p (60.79)p
11.2 Currency risk
A proportion of the Group’s portfolio is invested in overseas securities and their Sterling value can be significantly affected by
movements in foreign exchange rates.
Management of the risk
The Board receives a report at each Board meeting on the proportion of the investment portfolio held in Sterling, Euros or other
currencies. The Group may sometimes hedge foreign currency movements outside the Eurozone by funding investments in
overseas securities with unsecured loans denominated in the same currency or through forward currency contracts.
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Cash deposits are held in Sterling and/or Euro denominated accounts.
Foreign currency exposure
At the reporting date the Group had the following exposure:
(Sterling has been shown for reference)
Currency 2020 2019
Sterling 27.0% 27.1%
Euro 53.0% 57.1%
Swedish Krona 11.0% 9.6%
Other 9.0% 6.2%
The following table sets out the Group’s total exposure to foreign currency risk and the net exposure to foreign currencies of the
net monetary assets and liabilities:
Swedish
Sterling Euro Krona Other
2020 £’000 £’000 £’000 £’000
Receivables (due from brokers, dividends and other income receivable) 31,552 27,495 634 413
Cash at bank and on deposit 25,602 11,922 962 1,643
Bank loans, loan notes and overdrafts (40,000) — — —
Payables (due to brokers, accruals and other creditors) (8,026) (6,076) — —
FX forwards (133,731) 62,014 22,525 43,583
Total foreign currency exposure on net monetary items (124,603) 95,355 24,121 45,639
Investments held at fair value 446,698 551,576 100,836 56,185
Non-current liabilities (15,108) (44,246) — —
Total currency exposure 306,987 602,685 124,957 101,824
86 TR Property Investment Trust
Notes to the Financial Statements
continued
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11 Financial Instruments continued
11.2 Currency risk continued
Foreign currency exposure continued
Swedish
Sterling Euro Krona Other
2019 £’000 £’000 £’000 £’000
Receivables (due from brokers, dividends and other income receivable) 6,033 46,556 – 334
Cash at bank and on deposit 8,060 34,212 8,498 1,512
Bank loans, loan notes and overdrafts (15,000) (43,085) – –
Payables (due to brokers, accruals and other creditors) (10,867) (274) (1,379) –
FX forwards (157,239) 104,396 – 54,812
Total foreign currency exposure on net monetary items (169,013) 141,805 7,119 56,658
Investments held at fair value 529,104 617,028 120,312 24,998
Non-current assets 243 – – –
Total currency exposure 360,334 758,833 127,431 81,656
Foreign currency sensitivity
The following table illustrates the sensitivity of the profit after tax for the year on the Group's equity in regard to the exchange
rates for Sterling/Euro and Sterling/Swedish Krona and other currencies.
It assumes the following changes in exchange rates:
Sterling/Euro +/–15% (2019:15%).
Sterling/Swedish Krona +/–15% (2019:15%).
Sterling/Other +/–15% (2019:15%).
If Sterling had strengthened against the currencies shown, this would have had the following effect:
Swedish Swedish
Euro Krona Other Euro Krona Other
£’000 £’000 £’000 £’000 £’000 £’000
Year ended March 2020
Year ended March 2019
Statement of Comprehensive Income – profit after tax
Revenue return (3,016) (340) (99) (2,776) (328) (177)
Capital return (71,091) (13,132) (7,317) (75,341) (15,669) (3,256)
Change to the profit after tax for
the year/shareholders’ funds (74,107) (13,472) (7,416) (78,117) (15,997) (3,433)
2020 2019
Change to total earnings per Ordinary share (29.93)p (30.74)p
If Sterling had weakened against the currencies shown, this would have had the following effect:
Swedish Swedish
Euro Krona Other Euro Krona Other
£’000 £’000 £’000 £’000 £’000 £’000
Year ended March 2020
Year ended March 2019
Statement of Comprehensive Income – profit after tax
Revenue return 4,971 423 113 4,596 401 233
Capital return 97,685 17,780 9,909 108,472 21,214 4,407
Change to the profit after tax for the year/shareholders’
funds 102,656 18,203 10,022 113,068 21,615 4,640
2020 2019
Change to total earnings per Ordinary share 41.24p 43.90p
TR Property Investment Trust
87
Notes to the Financial Statements
continued
11 Financial Instruments continued
11.3 Interest rate risk
Interest rate movements may affect:
l the fair value of any investments in fixed interest securities;
l the fair value of the loan notes;
l the level of income receivable from cash at bank and on deposit;
l the level of interest expense on any variable rate bank loans; and
l the prices of the underlying securities held in the portfolios.
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Management of the risk
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account
when making investment decisions. Property companies usually have borrowings themselves and the level of gearing and
structure of its debt portfolio is a key factor when assessing the investment in a property company.
The Group has fixed and has had variable rate borrowings during the year. The interest rates on the loan notes is fixed, details are
set out in note 13. In addition to the loan notes the Group has unsecured, multi-currency revolving loan facilities which carry
variable rates of interest based on the currencies drawn, plus a margin. These facilities total £110,000,000 (2019: £65,000,000).
The Manager considers both the level of debt on the balance sheet of the Group (i.e. the loan notes and any bank loans drawn)
and the “see-through” gearing, taking into account the assets and liabilities of the underlying investments, when considering the
investment portfolio. These gearing levels are reported regularly to the Board.
The majority of the Group’s investment portfolio is non-interest bearing. As a result the Group’s financial assets are not directly
subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates.
Interest rate exposure
The exposure at 31 March of financial assets and financial liabilities to interest rate risk is shown by reference to:
l floating interest rates: when the interest rate is due to be re-set.
l fixed interest rates: when the financial instrument is due to be repaid.
The Group’s exposure to floating interest rates on assets is £79,651,000 (2019: £92,415,000)
The Group’s exposure to fixed interest rates on liabilities is £99,246,000 (2019: £58,085,000)
The Group’s exposure to floating interest rates on liabilities is £nil (2019: nil)
Interest receivable and finance costs are at the following rates:
l Interest received on cash balances, or paid on bank overdrafts, is at a margin over LIBOR or its foreign currency equivalent (2019: same).
l Interest paid on borrowings under the multi-currency loan facilities, is at a margin over LIBOR or its foreign currency equivalent
for the type of loan (2019: same).
l The finance charges on the €50m and £15m loan notes are at interest rates of 1.92% and 3.59% respectively.
The year end amounts are not representative of the exposure to interest rates during the year as the level of exposure changes as
investments are made in fixed interest securities, borrowings are drawn down and repaid, and the mix of borrowings between
floating and fixed interest rates changes.
Interest rate sensitivity
A change of 2% on interest rates at the reporting date would have had the following direct impact:
2020 2020 2019 2019
2% 2% 2% 2%
Increase Decrease Increase Decrease
£’000 £’000 £’000 £’000
Change to shareholders’ funds (317) 317 556 (556)
Change to total earnings per Ordinary share (0.10)p 0.10p 0.18p (0.18)p
This level of change is not representative of the year as a whole, since the exposure changes throughout the period. This
assessment does not take into account the impact of interest rate changes on the market value of the investments the Group
holds.
88 TR Property Investment Trust
Notes to the Financial Statements
continued
11 Financial Instruments continued
11.4 Liquidity risk
Unquoted investments in the portfolio are subject to liquidity risk. The Group held one unquoted investment at the year end
(see 11.6 below).
In certain market conditions, the liquidity of direct property investments may be reduced. At 31 March 2020, 8% (2019: 7%) of
the Group’s investment portfolio was held in direct property investments.
At 31 March 2020, 92% (2019: 93%) of the Group’s investment portfolio is held in listed securities which are predominantly
readily realisable.
Bank loan facilities are short term revolving loans which it is intended are renewed or replaced but renewal cannot be certain.
The table shows the timing of cash outflows to settle the Group's current liabilities together with anticipated interest costs.
Debt and Financing maturity profile:
Within Within Within Within Within More than
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Total
At 31 March 2020 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Bank loans* 40,000 — — — — — 40,000
Loan notes — — — — — 59,246 59,246
Projected interest cash flows on bank and
loan notes 1,388 1,388 1,388 1,388 1,388 4,081 11,021
Accruals and deferred income 3,812 — — — — — 3,812
Other creditors 294 — — — — — 294
45,494 1,388 1,388 1,388 1,388 63,327 114,373
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Within Within Within Within Within More than
1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Total
At 31 March 2019 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Bank loans – – – – – – –
Loan notes – – – – – 58,085 58,085
Projected interest cash flows on bank and
loan notes 1,366 1,366 1,366 1,366 1,366 5,423 12,253
Accruals and deferred income 7,440 – – – – – 7,440
Other creditors 392 – – – – – 392
9,198 1,366 1,366 1,366 1,366 63,508 78,170
* A £40m multicurrency facility with RBS was renewed for one year in January 2020 and extended to £60m in February 2020. £10m (2019: £nil) was drawn
on this facility at the balance sheet date. A £30m one year facility with ING Luxembourg was renewed in July 2019. £30m (2019: £nil) was drawn on this
facility at the balance sheet date. A new £20m facility was arranged with ICBC in November 2019. £nil was drawn on this facility at the balance sheet date.
Management of the risk
The Manager sets guidelines for the maximum exposure of the portfolio to unquoted and direct property investments. These are
set out in the Investment Policies on page 25. All unquoted investments with a value over £1m and direct property investments
with a value over £5m must be approved by the Board for purchase.
The Company maintains regular contact with the banks providing revolving facilities and renewal discussions commence well ahead
of facility renewal dates. In addition the Company is exploring new opportunities for the provision of debt on an ongoing basis.
11.5 Credit risk
The failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Group suffering
a loss. At the period end the largest counterparty risk, which the Group was exposed to was within Debtors and Cash and cash
equivalents where the total bank balances held with two counterparties was £46,731,000 (2019: £41,620,000 one counterparty).
Management of the risk
Investment transactions are carried out with a number of brokers, whose credit standing is reviewed periodically by the Manager,
and limits are set on the amount that may be due from any one broker. Cash at bank is only held with banks with high quality
external credit ratings.
TR Property Investment Trust
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Notes to the Financial Statements
continued
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11 Financial Instruments continued
11.5 Credit risk continued
Credit risk exposure
In summary, compared to the amounts in the Balance Sheet, the maximum exposure to credit risk at 31 March was as follows:
2020 2020 2019 2019
Balance Maximum Balance Maximum
Sheet exposure Sheet exposure
£’000 £’000 £’000 £’000
Debtors 60,094 60,094 54,892 54,892
Cash and cash equivalents 40,129 40,129 52,282 52,282
100,223 100,223 107,174 107,174
Offsetting disclosures
In order to better define its contractual rights and to secure rights that will help the Group mitigate its counterparty risk, the Group
may enter into an ISDA Master Agreement or similar agreement with its OTC derivative contract counterparties. An ISDA Master
Agreement is an agreement between the Group and the counterparty that governs OTC derivatives and foreign exchange
contracts and typically contains, among other things, collateral posting terms and netting provisions in the event of a default
and/or termination event. Under an ISDA Master Agreement, the Group has a contractual right to offset with the counterparty
certain derivative financial instruments payables and/or receivables with collateral held and/or posted and create one single net
payment in the event of default including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency
laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or
other events.
The disclosures set out in the following table include financial assets and financial liabilities that are subject to an enforceable
master netting arrangement or similar agreement.
At 31 March 2020 and 2019, the Group’s derivative assets and liabilities (by type and counterparty) are as follows:
Net amounts of Net amounts of
financial financial
assets/(liabilities) assets/(liabilities)
presented presented
in the Cash in the Cash
Balance collateral Balance collateral
Sheet pledged Sheet pledged
£’000 £’000 £’000 £’000
Year ended 2020
Year ended 2019
CFD positions:
Goldman Sachs 8,698 31,525 — —
ING — — (3,210) 40,133
8,698 31,525 (3,210) 40,133
TRS position:
ING (3,808) 7,997 — —
(3,808) 7,997 — —
FX forward contracts:
Bank of Montreal (2,582) — — —
Barclays (2,398) — 1,440 –
BNP Paribas (620) — (33) –
CIBC — — 651 –
JP Morgan — — (112) –
Societe Generale — — 23 –
Westpac (9) — — —
(5,609) — 1,969 –
90 TR Property Investment Trust
Notes to the Financial Statements
continued
11 Financial Instruments continued
11.6 Fair values of financial assets and financial liabilities
Except for the loan notes which are measured at amortised cost (refer to Note 13), the fair values of the financial assets and
financial liabilities are either carried in the balance sheet at their fair value (investments) or the balance sheet amount is a
reasonable approximation of fair value (debtors, creditors, cash at bank and bank overdrafts, accruals and prepayments).
The fair values of the listed investments are derived from the closing price or last traded price at which the securities are quoted
on the London Stock Exchange and other recognised exchanges.
The fair value of contracts for difference are based on the underlying listed investment value as set out above and the amount
due from or to the counterparty under the contract is recorded as an asset or liability accordingly, which is disclosed in Note 13
for the current year.
The fair values of the properties are derived from an open market (Red Book) valuation of the properties on the Balance Sheet
date by an independent firm of valuers (Knight Frank). The external valuation of the portfolio at 31 March 2020 contains a
material uncertainty clause from Knight Frank, which is in line with the RICS guidance to valuers and reflects the increased
difficulty in determining asset values when few, if any, comparable transactions have occurred in the current environment.
Consequently less certainty can be attached to the valuation than would otherwise be the case. Details are set out in note 10 e).
There was one unquoted investment at the Balance Sheet date, Atrato, with a total value of £682,000 (2019: Atrato, £377,000).
The amounts of change in fair value for investments including net returns on CFDs and TRS recognised in the profit or loss for the
year was a loss of £198,698,000 (2019: profit of £78,214,000).
11.7 Capital management policies and procedures
The Group’s capital management objectives are:
l to ensure that it will be able to continue as a going concern; and
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l to maximise the total return to its equity shareholders through an appropriate balance of equity capital and debt.
The equity capital of the Group at 31 March 2020 consisted of called up share capital, share premium, capital redemption and
revenue reserves totalling £1,136,453,000 (2019: £1,328,254,000). The Group does not regard the loan notes and loans as
permanent capital.
The loan notes agreement requires compliance with a set of financial covenants, including:
l Total Borrowings shall not exceed 33% of Adjusted Net Asset Value;
l the Adjusted Total Assets shall at all times be equivalent to a minimum of 300% of Total Borrowings; and
l the Adjusted NAV shall not be less than £260,000,000.
12 Debtors
Group Company Group Company
2020 2020 2019 2019
£’000 £’000 £’000 £’000
Amounts falling due within one year:
Securities and properties sold for future settlement 5,020 5,020 3,603 3,603
Tax recoverable 1,414 1,292 1,296 1,174
Prepayments and accrued income1 5,082 5,082 5,666 5,666
Foreign exchange forward contracts for settlement — — 1,969 1,969
Amounts receivable in respect of Contracts for Difference 8,698 8,698 – –
CFD margin cash 31,525 31,525 40,133 40,133
TRS margin cash 7,997 7,997 – –
Other debtors 358 358 2,225 2,225
60,094 59,972 54,892 54,770
Non-current assets
Deferred taxation asset — — 243 243
1 Includes amounts in respect of rent free periods.
TR Property Investment Trust
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Notes to the Financial Statements
continued
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13 Current and non-current liabilities
Group Company Group Company
2020 2020 2019 2019
£’000 £’000 £’000 £’000
Amounts falling due within one year:
Bank loans and overdrafts 40,000 40,000 – –
Securities and properties purchased for future settlement 5,975 5,975 1,474 1,474
Amounts due to subsidiaries — 50,342 – 50,359
Amounts payable in respect of Contracts for Difference — — 3,210 3,210
Amounts payable in respect of Total Return Swap 3,808 3,808 — —
Tax payable 213 213 4 4
Accruals and deferred income 3,812 3,783 7,359 7,324
Foreign exchange forward contracts for settlement 5,609 5,609 — —
Other creditors 294 286 473 467
59,711 110,016 12,520 62,838
Non-current liabilities
1.92% Euro Loan Notes 2026 44,246 44,246 43,085 43,085
3.59% GBP Loan Notes 2031 15,000 15,000 15,000 15,000
Deferred taxation 108 108 — —
59,354 59,354 58,085 58,085
Loan Notes
On the 10 February 2016, the Company issued 1.92% Unsecured Euro 50,000,000 Loan Notes and 3.59% Unsecured GBP
15,000,000 Loan Notes which are due to be redeemed at par on the 10 February 2026 and 10 February 2031 respectively.
The fair value of the 1.92% Euro Loan Notes was £44,418,000 (2019: £43,255,000) and the 3.59% GBP Loan Notes was
£15,553,000 (2019: £15,373,000) at 31 March 2020. Using the IFRS 13 fair value hierarchy the Loan Notes are deemed to be
categorised within Level 2.
The loan notes agreement requires compliance with a set of financial covenants, including:
l Total Borrowings shall not exceed 33% of Adjusted Net Asset Value;
l the Adjusted Total Assets shall at all times be equivalent to a minimum of 300% of Total Borrowings; and
l the Adjusted NAV shall not be less than £260,000,000.
The Company and Group complied with the terms of the loan notes agreement throughout the year.
Multi-currency revolving loan facilities
The Group also had unsecured, multi-currency, revolving short-term loan facilities totalling £110,000,000 (2019: £65,000,000) at
31 March 2020. At 31 March 2020 £40,000,000 was drawn on these facilities (2019: £nil).
The maturity of these facilities is shown in notes 11.3 and 11.4.
Reconciliation of liabilities arising from financing activities
Long term Short term
debt debt Total
Group and Company £’000 £’000 £’000
Opening liabilities from financing activities at 31 March 2019 58,085 — 58,085
Cash flows:
Drawdown of bank loans — 40,000 40,000
Movement on foreign exchange 1,161 — 1,161
Closing liabilities from financing activities at 31 March 2020 59,246 40,000 99,246
92 TR Property Investment Trust
Notes to the Financial Statements
continued
13 Current and non-current liabilities continued
Net debt
Net debt includes the value of the loan notes, loans, the notional exposure to CFDs and TRS, less cash (including cash collateral
held by the CFD and TRS providers which are shown as debtors in the Financial Statements) as a proportion of equity
shareholders’ funds.
The net gearing has been calculated as follows:
Group Group
2020 2019
£’000 £’000
Loan notes 59,246 58,085
Loans 40,000 –
CFD positions (notional exposure) 56,728 166,656
TRS position (notional exposure) 10,405 —
Less: Cash (40,129) (52,282)
Less: Cash collateral (included within ‘Other debtors’ in Note 12) (39,522) (40,133)
86,728 132,326
Equity shareholders’ funds 1,136,453 1,328,254
Net gearing 7.6% 10.0%
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14 Called up share capital
Ordinary share capital
The balance classified as Ordinary share capital includes the nominal value proceeds on the issue of the Ordinary equity share
capital comprising Ordinary shares of 25p.
Issued, allotted
and fully paid
Number £’000
Ordinary shares of 25p
At 1 April 2019 317,350,980 79,338
At 31 March 2020 317,350,980 79,338
The voting rights are disclosed in the Report of the Directors on page 41.
During the year, the Company made no market purchases for cancellation of Ordinary shares of 25p each (2019: none).
Since 31 March 2020 no Ordinary shares have been purchased and cancelled.
15 Share premium account and capital redemption reserve
Share premium account
The balance classified as share premium includes the premium above nominal value from the proceeds on issue of the equity
share capital comprising Ordinary shares of 25p.
Capital redemption reserve
The capital redemption reserve is used to record the amount equivalent to the nominal value of purchases of the Company’s own
shares in order to maintain the Company’s capital.
TR Property Investment Trust
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Notes to the Financial Statements
continued
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16 Retained earnings
Group Company Group Company
2020 2020 2019 2019
£’000 £’000 £’000 £’000
Investment holding gains 206,072 238,531 402,635 435,107
Realised capital reserves 691,148 664,465 688,986 662,303
897,220 902,996 1,091,621 1,097,410
Revenue reserve 72,762 66,986 70,162 64,373
969,982 969,982 1,161,783 1,161,783
Group investment holding gains at 31 March 2020 include a £643,000 loss (2019: £955,000 loss) relating to unlisted
investments and gains of £51,882,000 (2019: £45,164,000) relating to investment properties.
Company investment holding gains at 31 March 2020 include gains of £83,697,000 (2019: £76,680,000) relating to unlisted
and subsidiary investments with a £50,742,000 revaluation gain (2019: £44,024,000 gain) relating to investment properties.
Dividends are only distributable from the revenue reserve.
17 Dividends
Year ended Year ended
31 March 31 March
2020 2019
£’000 £’000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2019 of 8.60p
(2018: 7.55p) per Ordinary share 27,292 23,960
Interim dividend for the year ended 31 March 2020 of 5.20p
(2019: 4.90p) per Ordinary share 16,502 15,550
43,794 39,510
Amounts not recognised as distributions to equity holders in the year:
Proposed final dividend for the year ended 31 March 2020 of 8.80p
(2019: 8.60p) per Ordinary share 27,927 27,292
The final dividend has not been included as a liability in these financial statements in accordance with IAS 10 “Events after the
Balance Sheet Date”.
Set out below is the total dividend to be paid in respect of the year. This is the basis on which the requirements of s.1158 of the
Corporation Tax Act 2010 are considered.
Year ended Year ended
31 March 31 March
2020 2019
£’000 £’000
Interim dividend for the year ended 31 March 2020 of 5.20p
(2019: 4.90p) per Ordinary share 16,502 15,550
Proposed final dividend for the year ended 31 March 2020 of 8.80p
(2019: 8.60p) per Ordinary share 27,927 27,292
44,429 42,842
94 TR Property Investment Trust
Notes to the Financial Statements
continued
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18 Company Statement of Comprehensive Income
As permitted by Section 408 of the Companies Act 2006, the Company has not presented its own Statement of
Comprehensive Income. The net loss after taxation of the Company dealt with in the accounts of the Group was
£148,006,000 (2019: £112,205,000 profit)
19 Net asset value per Ordinary share
Net asset value per Ordinary share is based on the net assets attributable to Ordinary shares of £1,136,453,000 (2019:
£1,328,254,000) and on 317,350,980 (2019: 317,350,980) Ordinary shares in issue at the year end.
20 Commitments and contingent liabilities
At 31 March 2020 the Group had capital commitments of £132,000 (2019: 337,000) but no contingent liabilities (2019: nil).
21 Subsidiaries
The Group has the following subsidiaries, all of which are registered and operating in Scotland, England and Wales:
Name Reg. Number Principal activity
New England Properties Limited 788895 Non-trading company
The Colonnades Limited 2826672 Non-trading company
Showart Limited 2500726 Non-trading company
Trust Union Properties Residential Developments Limited 2365875 Non-trading company
The Property Investment Trust Ltd 2415846 Non-trading company
The Real Estate Investment Trust Limited 2416015 Non-trading company
The Terra Property Investment Trust Limited 2415843 Non-trading company
Trust Union Property Investment Trust Limited 2416017 Non-trading company
Trust Union Properties (Number Five) Limited 2415839 Non-trading company
Trust Union Properties (Number Six) Limited 2416018 Non-trading company
Trust Union Properties (Number Seven) Limited 2415836 Non-trading company
Trust Union Properties (Number Eight) Limited 2416019 Non-trading company
Trust Union Properties (Number Nine) Limited 2415833 Non-trading company
Trust Union Properties (Number Ten) Limited 2416021 Non-trading company
Trust Union Properties (Number Eleven) Limited 2415830 Non-trading company
Trust Union Properties (Number Twelve) Limited 2416022 Non-trading company
Trust Union Properties (Number Thirteen) Limited 2415818 Non-trading company
Trust Union Properties (Number Fourteen) Limited 2416024 Non-trading company
Trust Union Properties (Number Fifteen) Limited 2416026 Non-trading company
Trust Union Properties (Number Sixteen) Limited 2415806 Non-trading company
Trust Union Properties (Number Seventeen) Limited 2416027 Non-trading company
Trust Union Properties (Number Eighteen) Limited 2415768 Non-trading company
Trust Union Properties (Bayswater) Limited 2416030 Property investment
Trust Union Properties (Cardiff) Limited 2415772 Non-trading company
Trust Union Properties (Theale) Limited 2416031 Non-trading company
Trust Union Properties (Number Twenty-Two) Limited 2415765 Non-trading company
Trust Union Properties (Number Twenty-Three) Limited 2416036 Non-trading company
Skillion Finance Limited 2420758 Non-trading company
Trust Union Finance (1991) Plc 2663561 Investment financing
FGH Developments Limited 1481476 Non-trading company
FGH Developments (Aberdeen) Limited (E18030) SC68799 Non-trading company
FGH (Newcastle) Limited 1466619 Non-trading company
NEP (1994) Limited 977481 Non-trading company
TR Property Investment Trust
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Notes to the Financial Statements
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21 Subsidiaries continued
Name Reg. Number Principal activity
New England Developments Limited 1385909 Non-trading company
New England Investments Limited 2613905 Non-trading company
New England Retail Properties Limited 1447221 Non-trading company
New England (Southern) Limited 1787371 Non-trading company
Sapco One Limited 803940 Non-trading company
Trust Union Properties Limited 2134624 Non-trading company
Trust Union Finance Limited 1233998 Investment holding and finance company
TR Property Finance Limited 2415941 Investment holding and finance company
Trust Union Properties (South Bank) Limited 2420097 Non-trading company
The Company has provided a guarantee for each of these subsidiaries in order for them to take the exemption from the
requirement of an audit, in line with the requirements of S.479A of the Companies Act 2006.
All the subsidiaries are fully owned and all the holdings are ordinary shares.
All companies have the registered office of 11-12 Hanover Street, London, W1S 1YQ with the exception of FGH Developments
(Aberdeen) Limited which is registered to 50 Lothian Road, Festival Square, Edinburgh EH3 9BY.
22 Related party transactions disclosures
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on
consolidation. The balances are interest free, unsecured and repayable on demand.
Amounts due by the Company to subsidiaries per note 13.
2020 2019
£’000 £’000
The Colonnades Limited 22,619 22,619
TR Property Finance Limited 27,743 27,760
New England Properties Limited (20) (20)
50,342 50,359
Remuneration of key management personnel
The remuneration of the directors, who are the key management personnel of the Company for each of the relevant categories
specified in IAS 24: Related Party Disclosures is provided in the audited part of the Directors’ Remuneration Report on pages 55
to 57.
Directors’ transactions
Transactions in shares by directors are considered to be a related party transaction due to the nature of their role as directors.
Movements in directors’ shareholdings are disclosed within the Directors’ Remuneration Report on page 57.
Dividends totalling £10,000 (2019: £11,000) were paid in the year in respect of shares held by the Company's directors.
96 TR Property Investment Trust
Glossary and AIFMD disclosure
1.0 Alternative Performance Measures
Alternative Performance Measures are numerical measures of the Company’s current or historical performance, financial position
or cash flows, other than the financial measures defined or specified in the Financial Statements.
The measures defined below are considered to be Alternative Performance Measures. They are viewed as particularly relevant
and are frequently quoted for closed ended investment companies.
Total Return
The NAV Total Return is calculated by reinvesting the dividends in the assets of the Company from the relevant ex-dividend date.
Dividends are deemed to be reinvested on the ex-dividend date as this is the protocol used by the Company’s benchmark and
other indices. The Share Price Total Return is calculated by reinvesting the dividends in the shares of the Company from the
relevant ex-dividend date.
Net Debt
Net debt is the total value of loan notes, loans (including notional exposure to CFDs and TRSs) less cash as a proportion of net
asset value. The calculation is set out in note 13 to the Financial Statements.
Ongoing Charges
The Ongoing Charges ratio has been calculated in accordance with the guidance issued by the AIC as the total of investment
management fees and administrative expenses expressed as a percentage of the average Net Asset Values throughout the year.
The definition of administrative expenses does include property related expenses, the Ongoing Charges calculation is shown
inclusive and exclusive of these expenses to allow comparison of the direct administrative and management charges with the
majority of Investment Trusts which do not hold any direct property investments.
The Ongoing charges ratio provided in the Company’s Key Information Document is calculated in line with the PRIIPs regulations
which is different to the AIC methodology above.
Key Performance Indicators
The Board assesses the performance of the Manager in meeting the Trust’s objective against a number of Key Performance
Indicators, these are considered to be Alternative Performance Measures. These are set out on pages 26 and 27 of this report
together with information about any calculations or the source of data.
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Glossary and AIFMD disclosure
continued
2.0 Glossary of Terms and Definitions
AIFMD The Alternative Fund Managers Directive is European legislation which created a
European wide framework for regulating the managers of “alternative investment
funds” (AIFs). It is designed to regulate any fund which is not a UCITS (Undertakings
for Collective Investment in Transferable Securities) fund and which is managed or
marketed in the EU.
AIC The Association of Investment Companies – the AIC is the representative body for
closed-ended investment companies.
Alternative Performance Measure A financial measure of financial performance or financial position other than a financial
measure defined or specified in the accounting statements.
Discount The amount by which the market price of a share of an investment trust is lower than
the Net Asset Value per share expressed as a percentage of the NAV per share.
Key Information Document Under the PRIIPs Regulations a short, consumer friendly Key Information Document is
required setting out the key features, risks, rewards and costs of the PRIIP and is
intended to assist investors to better understand the Trust and make comparisons
between Trusts.
The document includes estimates of investment performance under a number of
scenarios. These calculations are prescribed by the regulation and are based purely on
recent historical data. It is important for investors to note that there is no judgement
applied and these do not in any way reflect the Board or Manager’s views.
Key Performance Indicator “KPI” A “KPI” is a quantifiable measure that evaluates how successful the trust is in meeting
its objectives. The Trust’s KPIs are discussed on pages 26 and 27.
MiFID The Markets in Financial Instruments Directive is the EU legislation that regulates firms
who provide services to clients linked to “financial instruments” (shares, bonds, units
in collective investment schemes and derivatives) and the venues where those
instruments are traded.
Net Asset Value (NAV) per share The value of total assets less liabilities (including borrowings) divided by the number
of shares in issue.
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Glossary and AIFMD disclosure
continued
3.0 Alternative Investment Fund Managers Directive (“AIFMD”)
In accordance with the AIFMD, information in relation to the Company’s leverage and remuneration of the Company’s AIFM,
F&C Investment Business Limited, is required to be made available to investors. Detailed regulatory disclosures including those on
the AIFM’s remuneration policy are available on the F&C website or from F&C on request. The numerical remuneration disclosures
in relation to the AIFM’s first relevant accounting period will be made available in due course.
Leverage
Under the AIFM Directive, it is necessary for AIFs to disclose their leverage in accordance with prescribed calculations.
Although leverage is often used as another term for gearing, under the AIFMD leverage is specifically defined. Two types of
leverage calculations are defined; the gross and commitment methods. These methods summarily express leverage as a ratio of
the exposure of the AIF against its net asset value. ‘Exposure’ typically includes debt, the value of any physical properties subject
to mortgage, non-Sterling currency, equity or currency hedging at absolute notional values (even those held purely for risk
reduction purposes, such as forward foreign exchange contracts held for currency hedging) and derivative exposure (converted
into the equivalent underlying positions). The commitment method nets off derivative instruments, while the gross method
aggregates them.
The table below sets out the current maximum permitted limit and the actual level of leverage for the Company as at 31 March
2020:
Leverage exposure Gross method Commitment method
Maximum permitted limit 200% 200%
Actual 122% 124%
The leverage limits are set by the AIFM and approved by the Board and are in line with the limits set out in the Company’s
Articles of Association.
This should not be confused with the gearing set out in the Financial Highlights which is calculated under the traditional method
set out by the Association of Investment Companies. The AIFM is also required to comply with the gearing parameters set by the
Board in relation to borrowings.
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Notice of Annual General Meeting
THIS NOTICE IS IMPORTANT AND REQUIRES YOUR
IMMEDIATE ATTENTION
IN ACCORDANCE WITH UK GOVERNMENT PUBLIC HEALTH
GUIDELINES RELATING TO COVID-19, SHAREHOLDERS
SHOULD NOT ATTEND THE AGM IN PERSON THIS YEAR.
If you are in any doubt as to the action you should take you should
seek your own advice from a stockbroker, solicitor, accountant or
other independent professional adviser.
If you have sold or otherwise transferred all of your shares, please
pass this document, together with the accompanying documents
to the purchaser, or transferee, or to the person who arranged the
sale or transfer so they can pass these documents to the person
who now holds the shares.
COVID-19 PANDEMIC
As at the date of this document, the UK Government has
prohibited large public gatherings, save in certain limited
circumstances. In light of these measures and in order to protect
the health and safety of the TR Property Investment Trust plc’s (the
“Company”) shareholders and directors, we hope that
shareholders will understand that the Company’s Annual
General Meeting (“AGM”) will be run as a closed meeting.
Shareholders will not be able to attend in person. Instead,
the Company will make arrangements to ensure that the legal
requirements to hold the meeting can be satisfied through the
attendance of two shareholders constituting the minimum quorum
for the AGM. The format of the AGM will be purely functional and
will comprise only the formal votes of the AGM resolutions, without
any business update or Q&A.
Shareholders are therefore strongly encouraged to submit
a proxy vote in advance of the meeting. A form of proxy for
use at the AGM is enclosed with this document. To be valid, the
form of proxy should be completed, signed and returned in
accordance with the instructions printed thereon, as soon as
possible, and in any event, to reach the Company’s registrars,
Computershare Investor Services PLC, no later than 2.30 p.m. on
Friday, 24 July 2020 or, in the event of an adjournment, not less
than 48 hours (excluding non-working days) before the time fixed
for the adjourned meeting.
Given the restrictions on attendance set out above, shareholders
are strongly encouraged to appoint the “Chair of the
meeting” as their proxy, rather than a named person who will
not be permitted to attend the meeting. All resolutions will be
decided by way of a poll so that the votes of shareholders who do
not attend in person will be counted.
In light of the restrictions outlined above and to ensure shareholders
still have an opportunity to engage with the Company’s
management, the Investment Manager will post a webcast in the
format of the usual presentation held at the AGM, on the website
www.trproperty.com on Wednesday 1 July. This will cover the results
100 TR Property Investment Trust
to 31 March 2020 and an update to the end of June. If shareholders
would like to ask questions for the Manager to respond to in the
webcast, then please write to the Company Secretary or submit
questions by e-mail to Enquiries@trproperty.co.uk to arrive no later
than noon on 30 June.
This situation is constantly evolving, and the UK Government may
change current restrictions or implement further measures relating
to the holding of general meetings during the affected period. Any
changes to the arrangements for the AGM (including any change
to the location of the AGM) will be communicated to shareholders
before the meeting through the Company’s website
(www.trproperty.com) and, where appropriate, by RNS
announcement.
Notice is hereby given that the Annual General Meeting of
TR Property Investment Trust plc (the “Company”) will be held at
2.30 pm on 28 July 2020 at Cadogan Estate Ltd, 10 Duke of York
Square London SW3 4LY for the purpose of transacting the
following business:
To consider and, if thought fit, pass the following Resolutions,
of which Resolutions 1 to 12 will be proposed as Ordinary
Resolutions and Resolutions 13 and 14 shall be proposed as
Special Resolutions.
1 To receive the Report of the Directors and the Audited
Accounts for the year ended 31 March 2020.
2 To approve the Directors’ Remuneration Report for the year
ended 31 March 2020.
3 To approve the Directors’ Remuneration Policy.
4 To declare a final dividend of 8.80p per Ordinary share.
5 To re-elect Simon Marrison as a Director.
6 To re-elect David Watson as a Director.
7 To re-elect Tim Gillbanks as a Director.
8 To elect Kate Bolsover as a Director.
9 To elect Sarah-Jane Curtis as a Director.
10 To re-appoint KPMG LLP as auditors of the Company to hold
office until the conclusion of the next Annual General Meeting
of the Company.
11 To authorise the Directors to determine the remuneration of
the Auditor.
12 THAT, in substitution for all such existing authorities, the Directors
be generally and unconditionally authorised pursuant to and in
accordance with Section 551 of the Companies Act 2006 (the
“Act”) to exercise all the powers of the Company to allot shares in
the Company and to grant rights to subscribe for, or to convert
any security into, shares in the Company up to a nominal value
of £26,181,455 (being approximately 33% of the total issued
share capital of the Company as at the latest practicable date
prior to publication of this Notice) provided that this authority
shall expire at the date of the next Annual General Meeting of the
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Company (or, if earlier, at the close of business on 28 October
2021), save that the Company shall be entitled to make offers or
agreements before the expiry of this authority which would or
might require shares to be allotted or rights to be granted after
such expiry and the Directors shall be entitled to allot shares and
grant rights pursuant to any such offers or agreements as if this
authority had not expired.
13 THAT
(a) (in substitution for all such existing authorities and subject
to the passing of Resolution 12 set out above) the directors
be empowered pursuant to Section 570 and Section 573
of the Act to allot equity securities (as defined in Section
560 of the Act) for cash pursuant to the authority conferred
by Resolution 12 above and/or to sell shares held by the
Company as treasury shares for cash as if Section 561(1)
of the Act did not apply to any such allotment, provided
that this power shall be limited to:
(i) the allotment of equity securities and sale of treasury
shares for cash in connection with an offer of, or
invitation to apply for, equity securities:
(aa) to shareholders in proportion (as nearly as may
be practicable) to their existing holdings; and
(bb) to holders of other equity securities, as required
by the rights of those securities, or as the Board
otherwise considers necessary,
and so that the Board may impose any limits or
restrictions and make any arrangements which it
considers necessary or appropriate to deal with treasury
shares, fractional entitlements, record dates, legal,
regulatory or practical problems in, or under the laws of,
any territory or any other matter; and
(ii) in the case of the authority granted under Resolution 12
and/or in the case of any sale of treasury shares for
cash, to the allotment (otherwise than under
paragraph (i) above) of equity securities or sale of
treasury shares up to a nominal amount of £3,966,887
(being approximately 5% of the total issued share
capital of the Company as at the latest practicable date
prior to publication of the notice of meeting),
(b) the power given by this resolution shall expire upon the
expiry of the authority conferred by Resolution 12 above,
save that the Company shall be entitled to make offers or
agreements before the expiry of such power which would
or might require equity securities to be allotted after such
expiry and the directors shall be entitled to allot equity
securities pursuant to any such offer or agreement as if
the power conferred hereby had not expired.
14 THAT the Company be and is hereby generally and
unconditionally authorised in accordance with Section 701
of the Act to make market purchases (within the meaning
of Section 693(4) of the Act) of Ordinary shares of 25p each
in the capital of the Company on such terms and in such
manner as the directors may from time to time determine
provided that:
(a) the maximum number of Ordinary shares hereby
authorised to be purchased shall be 14.99% of the
Company’s Ordinary shares in issue at the date of the
Annual General Meeting (equivalent to 47,570,911
Ordinary shares of 25p each at 5 June 2020, the latest
practicable date prior to publication of this Notice);
(b) the maximum price (exclusive of expenses) which may
be paid for any such share shall not be more than the
higher of:
(i) 105% of the average of the middle market
quotations for an Ordinary share as taken from the
London Stock Exchange Daily Official List for the
five business days immediately preceding the date
on which the Company agrees to buy the shares
concerned; and
(ii) the higher of the price of the last independent trade
and the highest current independent bid for an
Ordinary share in the Company on the trading venue
where the purchase is carried out at the relevant time;
(c) the minimum price (exclusive of expenses) which may
be paid for an Ordinary share shall be 25p, being the
nominal value per Ordinary share; and
(d) the authority hereby conferred shall expire at the
conclusion of the Annual General Meeting of the
Company in 2021 (or, if earlier, at the close of business
on 28 October 2021), save that the Company shall be
entitled to enter into a contract to purchase Ordinary
shares which will, or may, be completed or executed
wholly or partly after the power expires and the Company
may purchase Ordinary shares pursuant to such contract
as if the power conferred hereby had not expired.
Registered Office:
Registered in England No: 84492
11–12 Hanover Street
London
W1S 1YQ
By Order of the Board
For and on behalf of
Link Company Matters Limited
Secretary
5 June 2020
TR Property Investment Trust
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Notes to the Notice of Annual General Meeting
1 As explained above, shareholders will not be permitted to
attend the AGM and are strongly encouraged to appoint a
proxy to exercise all or any of their rights to attend and to
speak and vote on their behalf at the AGM. Shareholders are
strongly encouraged to appoint the “Chair of the meeting” as
their proxy, rather than a named person who will not be
permitted to attend the meeting. A shareholder may appoint
more than one proxy in relation to the Annual General
Meeting (“AGM”) provided that each proxy is appointed to
exercise the rights attached to a different share or shares held
by that shareholder. A proxy need not be a shareholder of the
Company. To appoint more than one proxy, the proxy form
should be photocopied and the name of the proxy to be
appointed indicated on each proxy form together with the
number of shares that such proxy is appointed in respect of.
To be valid any proxy form or other instrument appointing
a proxy must be returned by post, by courier or by hand to the
Company’s Registrars, Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol BS99 6ZY, or
alternatively, by going to www.eproxyappointment.com and
following the instructions provided. All proxies must be
appointed by no later than 48 hours before the time of the
AGM. In the case of joint holders, where more than one of the
joint holders purports to appoint a proxy, only the
appointment submitted by the most senior holder will be
accepted. Seniority is determined by the order in which the
names of the joint holders appear in the Company’s register
in respect of the joint holding (the first named being deemed
the most senior).
2 In order to be able to attend and vote at the AGM or any
adjourned meeting (and also for the purpose of calculating
how many votes a person may cast), a person must have
his/her name entered on the Register of Members of the
Company by 2.30 pm on 24 July 2020 (or 6.00 pm on the
date two days before any adjourned meeting). Changes to
entries on the Register of Members after this time shall be
disregarded in determining the rights of any person to attend
or vote at the meeting.
3 Shareholders should note that it is possible that, pursuant to
requests made by shareholders of the Company under
Section 527 of the Companies Act 2006, the Company may
be required to publish on a website a statement setting out
any matter relating to: (i) the audit of the Company’s accounts
(including the auditor’s report and the conduct of the audit)
that are to be laid before the AGM; or (ii) any circumstance
connected with an auditor of the Company ceasing to hold
office since the previous meeting at which annual accounts
and reports were laid in accordance with Section 437 of the
Companies Act 2006.
102 TR Property Investment Trust
The Company may not require the shareholders requesting
any such website publication to pay its expenses in complying
with Sections 527 or 528 of the Companies Act 2006. Where
the Company is required to place a statement on a website
under Section 527 of the Companies Act 2006, it must
forward the statement to the Company’s auditor not later than
the time when it makes the statement available on the
website. The business which may be dealt with at the AGM
includes any statement that the Company has been required
under Section 527 of the Companies Act 2006 to publish on
a website.
4 Any corporation which is a member of the Company can
appoint one or more corporate representatives who may
exercise on its behalf all of its powers as a member provided
that they do not do so in relation to the same shares.
5 The right to appoint a proxy does not apply to persons whose
shares are held on their behalf by another person and who
have been nominated to receive communication from the
Company in accordance with Section 146 of the Companies
Act 2006 (“nominated persons”). Nominated persons may
have a right under an agreement with the registered
shareholder who holds shares on their behalf to be appointed
(or to have someone else appointed) as a proxy. Alternatively,
if nominated persons do not have such a right, or do not wish
to exercise it, they may have a right under such an agreement
to give instructions to the person holding the shares as to the
exercise of voting rights.
6 CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service may
do so for the AGM to be held on 28 July 2020 and any
adjournment(s) thereof by using the procedures described in
the CREST Manual. CREST personal members or other CREST
sponsored members, and those CREST members who have
appointed a voting service provider should refer to their
CREST sponsors or voting service provider(s), who will be able
to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made by means
of CREST to be valid, the appropriate CREST message
(a “CREST Proxy Instruction”) must be properly authenticated in
accordance with Euroclear UK & Ireland Limited’s specifications
and must contain the information required for such instructions,
as described in the CREST Manual. The message must be
transmitted so as to be received by the Company’s agent,
Computershare Investor Services PLC (CREST Participant ID:
3RA50), no later than 48 hours before the time appointed for
the meeting. For this purpose, the time of receipt will be taken
to be the time (as determined by the time stamp applied to the
message by the CREST Application Host) from which the
Company’s agent is able to retrieve the message by enquiry to
CREST in the manner prescribed by CREST.
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Notice of Annual General Meeting
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CREST members and, where applicable, their CREST sponsor
or voting service provider should note that Euroclear UK &
Ireland Limited does not make available special procedures in
CREST for any particular messages.
Normal system timings and limitations will therefore apply in
relation to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take (or, if
the CREST member is a CREST personal member or sponsored
member or has appointed a voting service provider, to procure
that his CREST sponsor or voting service provider takes) such
action as shall be necessary to ensure that a message is
transmitted by means of the CREST system by any particular
time. In this connection, CREST members and, where
applicable, their CREST sponsor or voting service provider are
referred in particular to those sections of the CREST Manual
concerning practical limitations of the CREST system and
timings. The Company may treat as invalid a CREST Proxy
Instruction in the circumstances set out in Regulation 35(5)(a)
of the Uncertificated Securities Regulations 2001.
7 Any member attending the meeting (subject to the restrictions
set out above) has the right to ask questions. The Company must
cause to be answered any such question relating to the business
being dealt with at the meeting but no such answer need be
given if: (a) to do so would interfere unduly with the preparation
for the meeting or involve the disclosure of confidential
information; (b) the answer has already been given on a website
in the form of an answer to a question; or (c) it is undesirable in
the interests of the Company or the good order of the meeting
that the question be answered.
8 A copy of this notice, and other information required by
section 311A of the Companies Act 2006, can be found at
www.trproperty.com.
9 Members satisfying the thresholds in section 338 of the
Companies Act 2006 may require the Company to give, to
members of the Company entitled to receive notice of the
AGM, notice of a resolution which those members intend to
move (and which may properly be moved) at the AGM.
A resolution may properly be moved at the AGM unless:
(i) it would, if passed, be ineffective (whether by reason of
any inconsistency with any enactment or the Company’s
constitution or otherwise); (ii) it is defamatory of any person;
or (iii) it is frivolous or vexatious. A request made pursuant to
this right may be in hard copy or electronic form, must identify
the resolution of which notice is to be given, must be
authenticated by the person(s) making it and must be
received by the Company not later than six weeks before the
date of the AGM.
10 Members satisfying the thresholds in section 338A of the
Companies Act 2006 may request the Company to include in
the business to be dealt with at the AGM any matter (other
than a proposed resolution) which may properly be included
in the business at the AGM. A matter may properly be
included in the business at the AGM unless: (i) it is
defamatory of any person; or (ii) it is frivolous or vexatious.
A request made pursuant to this right may be in hard copy or
electronic form, must identify the matter to be included in the
business, must be accompanied by a statement setting out the
grounds for the request, must be authenticated by the
person(s) making it and must be received by the Company
not later than six weeks before the date of the AGM.
11 Biographical details of the directors are shown on pages 35
and 36 of the Annual Report & Accounts.
12 As at 5 June 2020 (being the latest practicable day prior to
publication of this Notice), the issued share capital of the
Company is 317,350,980 Ordinary shares of 25p each.
Therefore, the total number of voting rights in the Company at
5 June 2020 is 317,350,980.
13 The terms of reference of the Audit Committee, the
Management Engagement Committee, the Nomination
Committee and the Letters of Appointment for directors will
be available for inspection for at least 15 minutes prior to and
during the Company’s AGM.
14 You may not use any electronic address provided either in this
Notice or any related documents to communicate for any
purposes other than those expressly stated.
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Explanation of Notice of Annual General Meeting
Resolutions 1, 2, 3 and 4: Accounts,
Directors’ Remuneration Report and
Dividend
These are the resolutions which deal with the presentation
of the audited accounts, the approval of the Directors’
Remuneration Report and the declaration of the final
dividend.
The vote to approve the Remuneration Report is advisory
only and will not require the Company to alter any
arrangements detailed in the report should the resolution
not be passed.
All UK listed companies must seek shareholder approval
of their remuneration policy every three years.
Shareholders approved our current remuneration policy at
the Company’s 2017 AGM. We are proposing a revised
Directors’ Remuneration Policy, details of which are set out
in the Directors’ Remuneration Policy Report on pages 55
and 56. The vote to approve the remuneration policy is
binding.
The Board is proposing a final dividend for the year ended
31 March 2020 of 8.80p per ordinary share. If approved
at the AGM, the Company would pay the dividend on
4 August 2020 to those shareholders on the Company’s
register at the close of business on 19 June 2020.
Resolutions 5, 6, 7, 8 and 9: Election and
Re-election of Directors
These resolutions deal with the re-election of Simon
Marrison, Tim Gillbanks and David Watson, and the election
of Kate Bolsover and Sarah-Jane Curtis. In accordance with
the UK Corporate Governance Code, all directors will retire
on an annual basis and have confirmed that they will offer
themselves for re-election.
An external performance evaluation has been completed
and your Board has determined that each of the directors
continues to be effective and demonstrates their
commitment to their role. Their biographical details, which
are set out on pages 35 and 36, demonstrate how the
Board has the appropriate balance of skills, experience
independence and knowledge to lead the Company’s
long-term sustainable success. Accordingly, the Board
unanimously recommends their election or re-election
(as applicable).
104 TR Property Investment Trust
Resolutions 10 and 11: Auditor
These deal with the reappointment of the Auditor,
KPMG LLP, and the authorisation for the directors to
determine their remuneration.
Resolution 12: Allotment of share capital
Our Board considers it appropriate that an authority be
granted to allot shares in the capital of the Company up
to a maximum nominal amount of £26,445,915
(representing approximately one third of the Company’s
issued share capital as at 5 June 2020, being the latest
practical date prior to publication of this Notice of the
meeting). As at the date of this notice the Company does
not hold any shares in treasury.
The directors have no present intention of exercising this
authority and would only expect to use the authority if
shares could be issued at, or at a premium to, the Net
Asset Value per share.
This authority will expire at the earlier of close of business
on 28 October 2021 and the conclusion of the Annual
General Meeting of the Company to be held in 2021.
Resolution 13: Disapplication of statutory
pre-emption rights
This resolution would give the directors the authority to
allot shares (or sell any shares which the Company elects
to hold in treasury) for cash without first offering them to
existing shareholders in proportion to their existing
shareholdings.
This authority would be limited to allotments or sales in
connection with pre-emptive offers and offers to holders
of other equity securities if required by the rights of those
shares or as the board otherwise considers necessary, or
otherwise up to an aggregate nominal amount of
£3,966,887. This aggregate nominal amount represents
5% of the total issued share capital of the Company as at
5 June 2020, the latest practicable date prior to
publication of this Notice. In respect of this aggregate
nominal amount, the directors confirm their intention to
follow the provisions of the Pre-Emption Group’s
Statement of Principles regarding cumulative usage of
authorities within a rolling 3-year period where the
Principles provide that usage in excess of 7.5% should not
take place without prior consultation with shareholders.
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The authority will expire at the earlier of close of business
on 28 October 2021 and the conclusion of the Annual
General Meeting of the Company to be held in 2021.
immediately preceding the date on which the
Company agrees to buy shares concerned; and
Resolution 14: Authority to make Market
Purchases of the Company’s Ordinary
shares
At the AGM held on 23 July 2019, a special resolution was
proposed and passed, giving the directors authority, until
the conclusion of the AGM in 2020, to make market
purchases of the Company’s own issued shares up to
a maximum of 14.99% of the issued share capital.
Your Board is proposing that they should be given
renewed authority to purchase Ordinary shares in the
market. Your Board believes that to make such purchases
in the market at appropriate times and prices is a suitable
method of enhancing shareholder value. The Company
would, within guidelines set from time to time by the
Board, make either a single purchase or a series of
purchases, when market conditions are suitable, with
the aim of maximising the benefits to shareholders.
Where purchases are made at prices below the prevailing
Net Asset Value per share, this will enhance the Net Asset
Value for the remaining shareholders. It is therefore
intended that purchases would only be made at prices
below Net Asset Value. Your Board considers that it will be
most advantageous to shareholders for the Company to be
able to make such purchases as and when it considers the
timing to be favourable and therefore does not propose to
set a timetable for making any such purchases.
The Companies (Acquisition of Own Shares) (Treasury
Shares) Regulations 2003 enable companies in the United
Kingdom to hold in treasury any of their own shares they
have purchased with a view to possible resale at a future
date, rather than cancelling them. If the Company does
re-purchase any of its shares, the directors do not currently
intend to hold any of the shares re-purchased in treasury.
The shares so re-purchased will continue to be cancelled.
The Listing Rules of the UK Listing Authority limit the
maximum price (exclusive of expenses) which may be
paid for any such share. It shall not be more than the
higher of:
(i) 105% of the average of the middle market quotations
for an Ordinary share as taken from the London Stock
Exchange Daily Official List for the five business days
(ii) the higher of the price of the last independent trade
and the highest current independent bid for an
Ordinary share in the Company on the trading venue
where the purchase is carried out.
The minimum price to be paid will be 25p per Ordinary
share (being the nominal value). The Listing Rules also limit
a listed company to purchases of shares representing up to
15% of its issued share capital in the market pursuant to a
general authority such as this. For this reason, the Company
is limiting its authority to make such purchases to 14.99%
of the Company’s Ordinary shares in issue at the date of the
AGM; this is equivalent to 47,570,911 Ordinary shares of
25p each (nominal value £11,892,727) at 5 June 2020,
the latest practicable date prior to publication this Notice.
The authority will last until the Annual General Meeting of
the Company to be held in 2021.
Recommendation
Your Board believes that the resolutions contained in this
Notice of Annual General Meeting are in the best interests
of the Company and shareholders as a whole and
recommends that you vote in favour of them as your
Directors intend to do in respect of their beneficial
shareholdings.
TR Property Investment Trust
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Directors and Other Information
Directors
H Seaborn (Chairman)
K Bolsover¹
S-J Curtis²
T Gillbanks
S Marrison
D Watson
¹ Appointed since 1 October 2019.
² Appointed since 28 January 2020.
Registered Office
3rd Floor
11–12 Hanover Street
London W1S 1YQ
Registered Number
Registered as an investment company in England
and Wales No. 84492
AIFM
BMO Investment Business Limited
Exchange House
Primrose Street
London EC2A 2NY
Portfolio Manager
Thames River Capital LLP, authorised and regulated by the
Financial Conduct Authority
3rd Floor
11–12 Hanover Street
London W1S 1YQ
Telephone: 020 7011 4100
Fund Manager
M A Phayre-Mudge MRICS
Finance Manager and Investor Relations
J L Elliott ACA
Deputy Fund Manager
A Lhonneur
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106 TR Property Investment Trust
Direct Property Manager
G P Gay MRICS
Secretary
Link Company Matters Limited
6th Floor, 65 Gresham Street
London EC2V 7NQ
Registrar
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS99 6ZY
Telephone: 0370 707 1355
Auditor
KPMG LLP
15 Canada Square
London E14 SGL
Stockbrokers
Panmure Gordon (UK) Limited
One, New Change
London EC4M 9AF
Stifel Nicolaus Europe Limited
150 Cheapside
London EC2V 6ET
Solicitors
Slaughter and May
One Bunhill Row
London EC1Y 8YY
Depositary, Custodian and Fund
Administrator
BNP Paribas Securities Services
10 Harewood Avenue
London NW1 6AA
Website
www.trproperty.com
Tax Advisers
PricewaterhouseCoopers LLP
Central Square South
Orchard Street
Newcastle upon Tyne NE1 3AZ
General Shareholder Information
Release of Results
Benchmark
The half year results are announced in late November. The
full year results are announced in early June.
Annual General Meeting
The AGM is held in London in July.
Dividend Payment Dates
Dividends are usually paid on the Ordinary shares as
follows:
Interim: January
Final: August
Dividend Payments
Dividends can be paid to shareholders by means of BACS
(Bankers’ Automated Clearing Services); mandate forms
for this purpose are available from the Registrar.
Alternatively, shareholders can write to the Registrar
(the address is given on page 106 of this report) to give
their instructions; these must include the bank account
number, the bank account title and the sort code of the
bank to which payments are to be made.
Dividend Re-investment Plan (“DRIP”)
TR Property Investment Trust plc now offers shareholders
the opportunity to purchase further shares in the
Company through the DRIP. DRIP forms may be obtained
from Computershare Investor Services PLC through their
secure website www.investorcentre.co.uk, or by phoning
0370 707 1694. Charges do apply; dealing commission
of 0.75% (subject to a minimum of £2.50). Government
stamp duty of 0.5% also applies.
Share Price Listings
The market prices of the Company’s shares are published
daily in The Financial Times. Some of the information is
published in other leading newspapers. The Financial
Times also shows figures for the estimated Net Asset
Values and the discounts applicable.
Details of the benchmark are given in the Strategic Report
on page 24 of this Report and Accounts. The benchmark
index is published daily and can be found on Bloomberg;
FTSE EPRA/NAREIT Developed Europe Capped Net Total
Return Index in Sterling
Bloomberg: TR0RAG Index
Internet
Details of the market price and Net Asset Value of the
Ordinary shares can be found on the Company’s website
at www.trproperty.com.
Shareholders who hold their shares in certificated form
can check their holdings with the Registrar, Computershare
Investor Services PLC, via www.computershare.com.
Please note that to gain access to your details on the
Computershare site you will need the holder reference
number stated on the top left hand corner of your
share certificate.
Disability Act
Copies of this Report and Accounts and other documents
issued by the Company are available from the Company
Secretary. If needed, copies can be made available in
a variety of formats, including Braille, audio tape or larger
type as appropriate.
You can contact the Registrar, Computershare Investor
Services PLC, which has installed textphones to allow
speech and hearing impaired people who have their own
textphone to contact them directly, without the need for
an intermediate operator, by dialling 0870 702 0005.
Specially trained operators are available during normal
business hours to answer queries via this service.
Alternatively, if you prefer to go through a ‘typetalk’
operator (provided by the Royal National Institute for Deaf
People) you should dial 18001 followed by the number
you wish to dial.
Share Price Information
ISIN GB0009064097
SEDOL 0906409
Bloomberg TRY.LN
Reuters TRY.L
Datastream TRY
TR Property Investment Trust
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General Shareholder Information
continued
Nominee Share Code
Where notification has been provided in advance, the
Company will arrange for copies of shareholder
communications to be provided to the operators of
nominee accounts. Nominee investors may attend general
meetings and speak at meetings when invited to do so by
the Chairman.
CGT Base Cost
Taxation of capital gains for shareholders who
formerly held Sigma shares
Upon a disposal of all or part of a shareholder’s holding
of Ordinary shares, the impact on the shareholder’s capital
gains tax base cost of the conversion to Sigma shares in
2007 and the redesignation to Ordinary shares in 2012
should be considered.
In respect of the conversion to Sigma in 2007, agreement
was reached with HM Revenue & Customs (“HMRC”) to
base the apportionment of the capital gains tax base cost
on the proportion of Ordinary shares that were converted
by a shareholder into Sigma shares on 25 July 2007.
Therefore, if an Ordinary shareholder converted 20% of
their existing Ordinary shares into Sigma shares on 25 July
2007, the capital gains tax base cost of the new Sigma
shares acquired would be equal to 20% of the original
capital gains tax base cost of the Ordinary shares that they
held pre-conversion. The base cost of their remaining
holding of Ordinary shares would then be 80% of the
original capital gains tax base cost of their Ordinary shares
held pre-conversion.
As part of the re-designation of the Sigma shares into
Ordinary shares in December 2012, a further
shareholder’s agreement was reached with HMRC that
a shareholders capital gains tax base cost in their new
Ordinary shares should be equivalent to their capital gains
base cost in the pre-existing Sigma shares (i.e. their capital
gains base cost under the existing agreement if
applicable).
If in doubt as to the consequences of this agreement
with HMRC, shareholders should consult with their own
professional advisors.
108 TR Property Investment Trust
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Investing in TR Property Investment Trust plc
Market Purchases
Alliance Trust Savings (ATS) & interactive investor (ii)
The shares of TR Property Investment Trust plc are listed
and traded on the London Stock Exchange. Investors may
purchase shares through their stockbroker, bank or other
financial intermediary.
Following the acquisition of Alliance Trust Savings by
interactive investor, ATS self-directed accounts were
transferred to the interactive investor platform on
14 October 2019.
Holding shares in Certificated Form
Investors may hold their investment in certificated form.
Our registrars, Computershare operate a dealing service
which enables investors to buy and sell shares quickly and
easily online without a broker or the need to open
a trading account. Alternatively the Investor Centre allows
investors to manage portfolios quickly and securely,
update details and view balances without annual charges.
Further details are available by contacting Computershare
on 0370 707 1355 or visit www.computershare.com.
TR Property Investment Trust plc now offers shareholders
the opportunity to purchase further shares in the company
through the Dividend Re-investment Plan (“DRIP”)
through the registrar, Computershare. Shareholders can
obtain further information on the DRIP through their
secure website www.investorcentre.co.uk, or by phoning
0370 707 1694. Charges do apply. Please note that to
gain access to your details or register for the DRIP on the
Computershare site you will need the holder reference
number stated on the top left hand corner of your share
certificate.
Saving Schemes, ISAs and other plans
A number of banks and wealth management organisations
provide Savings Schemes and ISAs through which UK
clients can invest in TR Property Investment Trust plc.
ISA and savings scheme providers do charge dealing and
other fees for operating the accounts, and investors
should read the Terms and Conditions provided by these
companies and ensure that the charges best suit their
planned investment profile. Most schemes carry annual
charges but these vary between provider and product.
Where dealing charges apply, in some cases these are
applied as a percentage of funds invested and others as
a flat charge. The optimum way to hold the shares will be
different for each investor depending upon the frequency
and size of investments to be made.
Details are given below of two providers offering shares in
TR Property Investment Trust, but there are many other
options.
Interactive investor offer investors in TR Property and other
investment trusts a free opt-in online shareholder voting
and information service that enables investors to receive
shareholder communications and, if they wish, to vote on
the shareholdings held in their account.
Interactive investor provide and administer a range of
self-select investment plans, including tax-advantaged ISAs
and SIPPs (Self-Invested Personal Pension), and Trading
Accounts. For more information, interactive investor can be
contacted on 0345 607 6001, or by visiting
https://www.ii.co.uk/
BMO Asset Management Limited (“BMO”)
BMO offer a number of Private Investor Plans, Investment
Trust and Junior ISAs and Children’s Investment Plans.
Investments can be made as lump sums or through
regular savings. For more information see inside the back
cover. BMO can be contacted on 0800 136 420, or visit
www.bmogam.com.
Please remember that the value of your investments and
any income from them may go down as well as up. Past
performance is not a guide to future performance. You
may not get back the amount that you invest. If you are in
any doubt as to the suitability of a plan or any investment
available within a plan, please take professional advice.
Saving Schemes and ISAs transferred from
BNP Paribas
In 2012 BNP Paribas closed down the part of their business
that operated Savings Schemes and ISAs. Investors were
given the choice of transferring their schemes to Alliance
Trust Savings (“ATS”) or to a provider of their own choice,
or to close their accounts and sell the holdings.
If investors did not respond to the letters from BNP
Paribas, their accounts were transferred to ATS.
Following the acquisition of Alliance Trust Savings by
interactive investor, ATS self-directed accounts were
transferred to the interactive investor platform on
14 October 2019.
TR Property Investment Trust
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Investing in TR Property Investment Trust plc
continued
Share Fraud and boiler room scams
Shareholders in a number of Investment Trusts have been
approached as part of a share fraud where they are
informed of an opportunity to sell their shares as the
company is subject to a takeover bid. This is not true and
is an attempt to defraud shareholders. The share fraud
also seeks payment of a “commission” by shareholders to
the parties carrying out the fraud.
Shareholders should remain alert to this type of scam and
treat with suspicion any contact by telephone offering an
attractive investment opportunity, such as a premium price
for your shares, or an attempt to convince you that
payment is required in order to release a settlement for
your shares. These frauds may also offer to sell your
shares in companies which have little or no value or may
offer you bonus shares. These so called “boiler room”
scams can also involve an attempt to obtain your personal
and/or banking information with which to commit identity
fraud.
The caller may be friendly and reassuring or they may take
a more urgent tone, encouraging you to act quickly
otherwise you could lose money or miss out on a deal.
If you have been contacted by an unauthorised firm
regarding your shares the FCA would like to hear from you.
You can report an unauthorised firm using the FCA helpline
on 0800 111 6768 or by visiting their website, which also
has other useful information, at www.fca.org.uk.
If you receive any unsolicited investment advice make
sure you get the correct name of the person and
organisation. If the calls persist, hang up. If you deal with
an unauthorised firm, you will not be eligible to receive
payment under the Financial Services Compensation
Scheme.
Please be advised that the Board or the Manager
would never make unsolicited telephone calls of
such a nature to shareholders.
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110 TR Property Investment Trust
How to Invest
One of the most convenient ways to invest in TR Property Investment Trust plc is through one of the savings plans run by
BMO.
BMO Investment Trust ISA
You can use your ISA allowance to make an annual
tax-efficient investment of up to £20,000 for the
2020/21 tax year with a lump sum from £500 or
regular savings from £50 a month per Trust. You
can also transfer any existing ISAs to us whilst
maintaining the tax benefits.
BMO Junior ISA (JISA)*
You can invest up to £9,000 for the tax year
2020/21 from £500 lump sum or £30 a month
per Trust, or a combination of both. Please note, if
your child already has a Child Trust Fund (CTF),
then you cannot open a separate JISA, however you
can transfer the existing CTF (held either with BMO
or another provider) to a BMO JISA.
BMO Child Trust Fund (CTF)*
If your child has a CTF you can invest up to £9,000
for the 2020/21 tax year, from £100 lump sum or
£25 a month per Trust, or a combination of both. You
can also transfer a CTF from another provider to a
BMO CTF. Please note, the CTF has been replaced by
the JISA and is only available to investors who
already hold a CTF.
BMO General Investment Account (GIA)
This is a flexible way to invest in our range of
Investment Trusts. There are no maximum
contributions, and investments can be made from
£500 lump sum or £50 a month per Trust. You can
also make additional lump sum top-ups at any time
from £250 per Trust.
BMO Junior Investment Account (JIA)
This is a flexible way to save for a child in our range
of Investment Trusts. There are no maximum
contributions, and the plan can easily be set up
under bare trust (where the child is noted as the
beneficial owner) or kept in your name if you wish
to retain control over the investment. Investments
can be made from a £250 lump sum or £25 a
month per Trust. You can also make additional lump
sum top-ups at any time from £100 per Trust.
*The CTF and JISA accounts are opened in the child’s name and they
have access to the money at age 18. **Calls may be recorded or
monitored for training and quality purposes.
Charges
Annual management charges and other charges apply according to the type
of plan.
Annual account charge
ISA: £60+VAT
GIA: £40+VAT
JISA/JIA/CTF: £25+VAT
You can pay the annual charge from your account, or by direct debit (in
addition to any annual subscription limits).
Dealing charges
ISA: 0.2%
GIA/JIA/JISA: postal instructions £12, online instructions £8 per Trust.
Dealing charges apply when shares are bought or sold but not on the
reinvestment of dividends or the investment of monthly direct debits for
the GIA, JIA and JISA.
There are no dealing charges on a CTF but a switching charge of £25
applies if more than 2 switches are carried out in one year.
Government stamp duty of 0.5% also applies on the purchase of shares
(where applicable).
There may be additional charges made if you transfer a plan to another
provider or transfer the shares from your plan.
The value of investments can go down as well as up and you may not
get back your original investment. Tax benefits depend on your individual
circumstances and tax allowances and rules may change. Please ensure
you have read the full Terms and Conditions, Privacy Policy and relevant
Key Features documents before investing. For regulatory purposes, please
ensure you have read the Pre-sales cost disclosures related to the
product you are applying for, and the relevant Key Information
Documents (KIDs) for the investment trusts you are wanting to invest
into.
How to Invest
To open a new BMO plan, apply online at bmogam.com/apply
Note, this is not available if you are transferring an existing plan with another
provider to BMO, or if you are applying for a new plan in more than one
name.
New Customers
Call: 0800 136 420** (8.30am – 5.30pm, weekdays)
Email: info@bmogam.com
Existing Plan Holders
Call: 0345 600 3030** (9.00am – 5.00pm, weekdays)
Email: investor.enquiries@bmogam.com
By post: BMO Administration Centre
PO Box 11114
Chelmsford
CM99 2DG
You can also invest in the trust through online dealing platforms for private
investors that offer share dealing and ISAs. Companies include:
Barclays Stockbrokers, EQi, Halifax, Hargreaves Lansdown, HSBC,
Interactive Investor, Lloyds Bank, The Share Centre
BMO Asset Management Limited
0345 600 3030, 9.00am – 5.00pm, weekdays, calls may be recorded or monitored for training and quality purposes.
BMO Asset Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of BMO Global Asset Management EMEA of which the ultimate parent company is the
Bank of Montreal. 737510_G19-1804_L56_04/20_UK
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TR Property Investment
Trust plc is managed by
This document is printed on Amadeus 50 White Silk; a paper containing 50% recycled fibre and 50% virgin fibre sourced from well-managed,
responsible, FSC® certified forests. The pulp used in this product is bleached using an Elemental Chlorine Free (ECF) process.