Nick Wilson

Property Editor

UK-BASED property fund CIREF, which has a South African shareholding of about 50%, yesterday reported that its net profit — excluding the effects of investment and interest rate swap revaluations — had increased 251% to £4,56m for the six months to March, compared with the same period in the previous year.

The fund, which has a market capitalisation of about £105m and gross property assets of about £250m, said it had achieved these results in spite of a difficult and volatile UK property market because of its exposure to German and Swiss markets.

Speaking from Ireland, chairman Gavin Tipper said the UK property market had “come off quite a bit” with the Investment Property Databank’s UK all property index declining 11,6% during the six months to March.

Tipper said the downturn in fortunes was primarily due to the credit crisis, which had been driven by the global subprime crisis.

Although conditions had been difficult, CIREF’s net asset value per share increased to 151,04p compared with 150,39p at year end.

“Operationally, we had a good six months,” said Tipper.

He said the benefits of CIREF having diversified into the German and Swiss property markets showed through with the fund “benefiting from the strength of the Swiss franc and Euro versus Sterling”.

CIREF has a 20% exposure to the German and Swiss property markets, with the rest of its portfolio based in the UK.

Its portfolio consisted primarily of office and retail properties. He said CIREF had also been able to buy back a number of CIREF shares at below net asset value during the period under review and that this had also “contributed to an increase in NAV (net asset value) per share”.

But CIREF did report a £4,5m devaluation of gross assets, which was “necessitated by the international banking and credit crisis” that had weakened demand for real estate assets and diminished property yields.

Source: Business Day