Secure Income boosted by acquisitions

While some areas of the real estate market faced considerable challenges, well-let property assets fared a lot better. So, while the CBRE long income index for UK commercial property gave a return of 9.2 per cent in 2018, Secure Income achieved an accounting return of 11.9 per cent.

Just two acquisitions were made, but they were big ones, costing £436m and part-funded by an oversubscribed share placing, and valued at a 2.4 per cent premium to the gross purchase cost. In fact, the number of properties in the portfolio more than doubled to 175 after the purchase of 96 hotel and leisure assets.

All rents are either index linked or with a fixed rate increase built in, and earnings visibility is considerable, given that the weighted average lease length at 20.9 years is the longest in the sector.

Acquisitions and a valuation uplift helped to reduce the loan-to-value ratio from 49.6 per cent to 43 per cent, while the weighted average interest cost eased back from 5.1 per cent to 4.8 per cent. And whereas the LTV was nearer 80 per cent when the company started out, this is expected to slip below 40 per cent.