Not for Retail Clients For marketing purposes
Triton Quarterly Flash Report 3Q18, Triton Property Fund LP
Triton is a core, actively managed balanced UK fund focusing on strategic assets in growth locations with sustainable income streams.
Fund highlights Performance and strategy – Triton produced a total return of 1.8% in 3Q18. – Triton has again achieved a five-star rating in the 2018 Total returns (%) to 30 September 2018 st GRESB Real Estate Assessment, ranking 1 out of all UK 3 mths 6 mths 1 yr 2 yrs 3 yrs 4 yrs 5 yrs 10 yrs S.I diversified strategies for the second year running. p.a. p.a. p.a. p.a. p.a. p.a.1 – Joules Ltd and White Stuff Ltd sign leases at Springfields. – The Fund's 3Q18 WebEx call is being held at 10.00 BST 1.8 4.5 9.7 9.6 7.7 9.5 11.4 3.8 7.5 on Tuesday, 23 October 2018. Source: UBS Asset Management, Real Estate & Private Markets (REPM). Reflects total return performance (net of fees) for the Triton Property Fund LP (Partnership level). Benchmark figures from AREF/IPD are due to be released after mid-October 2018. 1 Since inception p.a. Strong sustainability results in 2018 GRESB assessment from 1 July 1994. Please note that past performance is not a guide to the future.
The results of the 2018 GRESB Real Estate Triton produced a total return of 1.8% in 3Q18, comprising Assessment were released in September income and capital returns of 0.8% and 1.0%, respectively. 2018, and we are delighted that Triton Performance continues to be driven by the Fund's sector maintained its UK leadership. The Fund weighting strategy and ongoing asset management across the achieved another five-star rating and for portfolio. The portfolio remains well positioned to take the second year running, ranked 1st in its advantage of current market conditions with an active asset peer group (81 UK diversified strategies in 2018). Triton out- management pipeline, which will continue to drive income scored its peer group in all areas of the survey, which and capital growth. Income continues to be Triton's key focus, measures management, policy and disclosure, risks and and once a number of current asset management initiatives opportunities, monitoring, performance data, building have been completed, this will help boost the Fund's certifications and stakeholder engagement. distribution yield.
Ongoing initiatives include: Asset management activity – Assessing KPIs on compliance and best practice for our Key lettings in the industrial/logistics sector included three managing agents on an annual basis; leases at Stakehill Industrial Estate in Manchester – ranging – Ensuring that Energy Performance Certificates for Triton’s from five to ten years in length – signed with Vita Cellular properties are commissioned and updated; Foams (UK) Ltd, LED Hut Fulfilment Services Ltd and Event – Incorporating green lease clauses into all new leases; Furniture Ltd for base rents of between GBP 18,000- – Continuing to roll-out energy reduction plans; GBP 285,000 per annum (p.a.). We also signed two leases at – Engaging with tenants to optimise the health and Gatwick Distribution Point in Crawley: a five-year lease with wellbeing of their employees; and Tructyre Fleet Management Ltd for total annual rent of – Obtaining environmental assessment certification, such as GBP 67,000, and a four-year lease Seaspace International BREEAM, to assess, rate and certify buildings. Forwarders Ltd for rent of GBP 80,000 p.a. The Fund also
undertook a rent review with UK Cables Ltd at Torc:MK in Future initiatives for the programme will include: Milton Keynes, which led to an annual increase from – Installation of smart metering at all of our properties to GBP 93,000 to GBP 108,000. allow us to interact with building management systems in
real time for even greater consumption savings; In the retail sector, Triton completed three 10-year leases with – "BREEAM In Use" certifications for the top five assets in Shoe Zone Retail Ltd at Grand Junction Retail Park in Crewe the portfolio to better assess the sustainability for annual rent of GBP 134,000 p.a.; The Entertainer performance of our assets; and (Amersham) Ltd at 40-41 High Street in Chelmsford for rent of – A Health and Wellbeing Programme to be rolled out for GBP 82,000 p.a.; and Leonard F. Jollyes at St Helens' Retail the benefit of our occupiers. Park in St Helens for annual rent of GBP 82,000. The Fund
also completed three leases at Springfields Outlet Centre in In total, UBS-AM submitted 21 of Real Estate & Private Springfields – ranging from five to ten years in length – signed Markets' (REPM) flagship funds – across real estate equity, real with White Stuff Ltd, Joules Ltd and Rodeo Ltd (trading as estate debt and infrastructure globally – including Switzerland, Designer Warehouse) for base rents of up to circa GBP 60,000 Japan, Germany, the UK and US – representing 96% of p.a. plus turnover top-ups of up to 9%. REPM's direct pooled assets under management.
Triton Quarterly Flash Report 3Q18, 30 September 2018
Supervisory Board Meeting and WebEx conference call Sector weightings The latest meeting of the Fund's Supervisory Board was held on 4 October 2018, the minutes of which will be distributed to Unitholders later this month. The 3Q18 WebEx call is being Industrial 40.8% held at 10.00 BST on Tuesday, 23 October. Details for this Retail warehouse 24.5% meeting can be found in this report's covering email. Office 19.8% Market commentary Other commercial 12.1% The UK commercial property market has continued to deliver property strong returns in 2018, with the first eight months of the year Unit shops 2.8% producing a total return of 5.7%.
Performance has been largely driven by the industrial sector, as a combination of rental growth and weight of capital have delivered a total return of 12.2%. A lack of investment stock has continued to drive yields down, particularly in the South Geographic weightings1 East where there are several examples of estates trading at yields below 4%. London & Rest of 57.9% Office markets have also continued to exceed exepectations, South East delivering a return of 4.7% so far in 2018. This has been North 30.2% supported by a stronger than expected performance in Central London, which has been helped on the occupational side by Midlands 6.4% the rapid growth on serviced office providers now accountting Eastern 3.0% for circa 20% of take-up. Foreign buyers continue to see the South West 0.9% market as an attractive destination for capital, but this remains Northern Ireland 1.6% heavily skewed to prime assets in traditional core locations.
The retail sector, however, is facing challenging times in both the occupational and investment market. Numerous retailers Source: UBS Asset Management, Real Estate & Private Markets (REPM) have announced CVAs/store closures in 2018, which have 1 Reflects property portfolio only. Properties located in Hatfield and St Albans forced valuations down on affected schemes. To date, this has (Hertfordshire) and Chelmsford (Essex) are classified as "London & Rest of South East". resulted in a relatively small write down in rental and capital values, but with weak investor sentiment, it is likely that there will be further adjustments in values as the market adjusts to the ongoing structural challenges over the next 12 months.
Fund facts Partnership level Feeder vehicle level Triton UBS Triton Triton Property Property Fund LP Property Unit Trust7 Fund (Jersey)7 Net asset value (NAV) (GBPm)1 927.1 834.7 92.6 Yield (% p.a.) (Based on NAV price)2 3.38 3.38 3.258 Bid price (GBP per unit)3 1.67404 1,673.56 0.9905 NAV price (GBP per unit)3 1.69044 1,690.47 1.0003 Offer price (GBP per unit)3 1.80014 1,799.70 1.0652 Total bid/offer spread (%) 7.01 - Bid price spread (% vs. NAV price)9 -0.98 - Offer price spread (% vs. NAV price)9 6.10 Number of investors 60 45 17 Number of direct properties 31 Gearing (% of NAV)5 2.58 Capital cash holdings (% of NAV)6 0.02
1. Reflects capital net asset value reported under EU-IFRS. 2. Reflects income (gross of tax and net of expenses) for the year to 30 September 2018 as a percentage of the NAV price on 30 September 2018. Net asset value and yield are unaudited. The Jersey yield is lower than the yield for Triton Property Fund LP, reflecting the higher fees and costs associated with this vehicle. 3. Prices for Triton Property Fund LP (Triton), UBS Triton Property Unit Trust (UBS Triton Trust) and Triton Property Fund (Jersey) (Triton Jersey) are ex-dividend (XD) prices. From 31 March 2016, pricing reflects increase in SDLT. 4. Participations (ie. units) in the Partnership can only be purchased by the two feeder vehicles in multiples of 10,000. 5. Reflects Triton's direct net debt (ie. debt less cash) as at 30 September 2018. Gross debt was 2.60% of NAV at 30 September 2018. 6. Reflects Triton's capital cash at 30 September 2018. 7. SEDOLs at feeder-vehicle level are 0923828, 3228207 and B9NMTCO for UBS Triton Trust, Triton Jersey (‘A’ units) and Triton Jersey (‘B’ units), respectively. 8. Reflects distribution yield for Triton Jersey ‘B’ units; the distribution yield for ‘A’ units is available upon request. 9. Bid and Offer price spreads shown are as at 30 September 2018 and will vary intra quarter when monthly valuations and any property acquisitions or dispositions are taken into account.
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For more information please contact: Portfolio Manager, Head of Real Estate UK Triton Property Fund LP Jonathan Hollick Howard Meaney Tel. +44-20-7901 5988 Tel. +44-20-7901 5327 jonathan.hollick@ubs.com [email protected]
Business Development Business Development UK EMEA ex Switzerland Asher Garnett Eoin Bastible Tel. +44-20-7901 5802 Tel. +44-20-7901 5204 [email protected] [email protected]
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