UK Edition
Transformative changes have been made to this portfolio in recent weeks and we are starting to get updates from some of the new holdings.
As the changes were made with the aim of making our income more secure, we will be looking for any evidence that our new holdings are actually achieving this.
Early signs are promising. We bought Urban Logistics Reit in April and last week the property fund announced results for the year to the end of March.
Two things stood out. First, the full-year dividend rose by 8.6pc to 7.6p a share, indicating confidence that the trust, which focuses on warehouses, can thrive in spite of the virus crisis. Second, the fund said that all rents due for the quarter to June 2020 had been collected in full and that “tenants continue to trade well, with only two sites not fully operational due to Covid-19”.
Nigel Rich, the chairman, said: “The long-term economic impact of Covid-19 on the economy will take time to emerge. However, it will change the way business is conducted, with many more people working from home and doing their shopping on the internet, a trend which started well before the virus. Against this backdrop, the fundamentals of the urban logistics market remain attractive.”
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It is a surprise to Questor that the shares have slipped slightly since we bought them but we are confident about the fund and its income and will hold.
Questor says: hold
Ticker: SHED
Share price at close: 131p
Update: Sirius Real Estate
It’s a similar story at Sirius, the Germany-focused property fund that we added to the portfolio in November last year. It too has announced annual results in recent days and it too raised its dividend, by 6.3pc, and said rents had been little affected by coronavirus.
“The impact of Covid-19 on the company has, thus far, been manageable and related mainly to a small number of requests for rent deferrals,” it said. “April collections [were] within 98.8pc of normal working practice and May collections [were] in line with April.”
It added that it continued to receive inquiries from potential customers “at normal levels” and had agreed 130 new lettings last month. Hold.
Questor says: hold
Ticker: SRE
Share price at close: 78.2p
Update: portfolio value
In recent weeks we have focused on this portfolio’s ability to meet its income target but readers have also asked us how we are doing in capital terms.
Table source: sharesight.com
Our table shows annualised figures but in total we are sitting on a paper capital loss of about 16pc relative to the amount invested at the outset in 2016. This capital loss is outweighed, if only just, by the income produced and our total return is about 4pc, or an annualised 1.1pc.
While this meagre figure, broadly what we might have achieved from cash, is hardly a cause for celebration, it is perhaps acceptable at a time of extreme economic stress, particularly in view of our hope that our income is now sustainable.
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