(Alliance News) - UK Commercial Property REIT Ltd on Friday said that returns fell behind its benchmarks in 2023, though it reported narrowed losses on investment properties and cautiously celebrated improvements in the property market.

The FTSE 250-listed real estate investment trust's net asset value per share dipped 1.3% to 78.7 pence at December 31 from 79.7p a year prior.

In 2023 the company's NAV total return was positive 3.0%, behind the benchmark FTSE REIT and All-Share indexes which rose 11.6% and 7.9%, respectively.

Rental income in the year totalled GBP66.6 million, down 0.5% from GBP66.9 million in 2022. Service charge income decreased 3.4% to GBP6.2 million from GBP6.5 million.

However, UK Commercial Property narrowed its loss on investment properties to GBP8.5 million from GBP263.1 million a year prior.

As a result, pretax net profit was GBP31.7 million in 2023, swinging from a loss of GBP222.3 million. Earnings per share also swung to 2.44p from a loss of 17.11p.

UK Commercial Property paid four interim dividends totalling 3.40p per share in 2023, representing a 4.6% increase on its 3.25p total payout in 2022.

Chair Peter Gray said: "The board can report that the UK market has recovered a little of the poise that was lost in the steep decline in commercial property values experienced in the second half of 2022."

Looking ahead, Gray said: "2024 has started with a renewed confidence and whilst 'caution' is the watchword, the market is displaying the hallmarks of producing a positive annual return for the year which would be welcomed by many.

"The real estate investment trust market is seen by some as a leading indicator of the direct market, and share prices have moved ahead in recent months, triggered by clear anticipation of an improving macroeconomic picture...The direct property market is expected to follow later in the year and should continue to improve into 2025 if lower interest rates result from inflation stabilising."

Shares in UK Commercial Property REIT were down 1.5% at 65.00 pence each in London on Friday afternoon.

By Hugh Cameron, Alliance News reporter

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