Fund Profile


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by UK Commercial Property REIT. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

UKCM looks well-placed to grow the dividend this year and further on…

UK Commercial Property REIT (UKCM) aims to offer exposure to sectors and properties in the UK commercial property market which are benefitting from structural changes in the economy and society. The portfolio is mostly invested in the industrials sector, with significant exposure to logistics, which has been a source of strong performance through the pandemic.

In the most recent quarterly results, the dividend was increased from 0.46p per share for Q4 2020 to 0.75p per share for Q4 2021. As we discuss under Dividend, recent investments are due to see income received rise this year with the prospect of a further boost when the manager deploys its remaining £88m of capital available for investment, mostly through unused gearing, meaning we believe prospects for income growth are good. Roughly 26% of the income is either explicitly linked to inflation or has fixed uplifts agreed in the contract, which could be significant in a period of high inflation.

UKCM’s low gearing and advantageous sector positioning led it to perform steadily during the pandemic, and be rewarded with a narrow discount versus its peers. However, the discount remains wide at c. 10% at the time of writing. Annualising the most recent dividend gives a yield of 3.3%, but this does not take into account the possibility for income growth.

UKCM has been managed by Will Fulton since 2015. Kerri Hunter was appointed interim manager in September 2021 as Will sought treatment for a medical condition. Kerri reports a strong pipeline of ideas for the uninvested funds, in industrials, retail warehouses and modern offices. As we discuss under Portfolio, the trust has used abrdn’s extensive resources to take on development or asset management projects which should boost the income earned on the portfolio and its market valuation.

Kepler View

UKCM is in a strong position following prudent management of the portfolio in recent years. The portfolio is strongly tilted to the outperforming areas of the market, chiefly industrials and retail warehouses. It also has low gearing compared to its peers and Kerri has plenty of firepower to put to work. The board has taken a prudent approach to the dividend and has not reflected in the current payout income growth which will be received when development projects are completed this year. This alone will provide a boost to the revenue account, notwithstanding any new investments still to be made. While the current yield is not high relative to the peer group or the real assets trusts, we believe the prospects for income growth are very good, and there is real momentum behind the portfolio as commercial property prices recover from the impact of the pandemic and associated lockdowns.

We think commercial property has many of the attractions of other real assets trusts: for example, inflation-linkage, either explicit or implicit in rents which feeds through into valuations, strong asset backing, with plenty of diversification by sector and geography, and some sectors being the beneficiary of long-term structural changes in the economy and society. On the other hand, it is potentially more sensitive to the economy. However, UKCM is available on a wide discount, compared to high premiums on some real assets trusts and on specialist logistics portfolios.


  • A portfolio tilted to the top-performing and resilient industrial sector
  • Useful uninvested capital on hand
  • Scope for dividend growth


  • Commercial property is sensitive to GDP and the UK could pass through a downturn
  • Yield is low relative to peers
  • Concentration in industrials is high, creating exposure to any down market
Continue to Portfolio

Fund History

04 May 2022 Time to change the record
We ask whether equities can still offer meaningful diversification or whether investors need to turn to alternatives…
26 Apr 2022 Fund Analysis
UKCM looks well-placed to grow the dividend this year and further on…
09 Sep 2021 Fund Analysis
UKCM is in a strong position to take advantage of post-pandemic opportunities...
30 Mar 2021 Fund Analysis
UKCM has weathered the pandemic, and now has cash to invest for income growth…
17 Mar 2021 After the storm
We look at the outlook for dividends in the UK commercial property sector and consider how the portfolio of the future will look after COVID…
26 Aug 2020 Fund Analysis
UKCM’s portfolio is well set up to be resilient to the current downturn…
10 Jun 2020 Pick your poison
We try to identify the best compromises between yield, value and security in the property sectors…
09 Dec 2019 Fund Analysis
UKCM is well positioned to take advantage of property market volatility…
21 Mar 2019 Fund Analysis
A commercial property trust focused on sectors and locations benefiting from structural change in society and the economy...
13 Mar 2019 Carry on doctor
With a sector average yield of 4.5% and a highly differentiated risk profile, the primary healthcare sector could be a healthy addition to the property portfolios of income-hungry investors...
28 Nov 2018 Fund Analysis
UKCM aims for an attractive income with the potential for income and capital growth from commercial property investments.
14 Nov 2018 Future shock
How the commercial property sector is coping with widespread disruption caused by the rise of the internet...
16 Oct 2018 The Investment Trust Advantage
Our recent conference for discretionary fund managers saw some of the UK's leading fund managers discussing the outlook for the world's major regions and asset classes...
29 May 2018 Fund Analysis
UK Commercial Property Trust (UKCM) is a large and liquid portfolio of commercial properties that aims to generate an attractive income with the potential for capital growth...
22 Mar 2018 Property income: opportunities for growth during structural change
Standard Life Investments' Will Fulton thinks income will play an important role for property investors in 2018 as capital growth continues to wane...
30 Oct 2017 Fund Analysis
A conservatively managed UK property trust with a focus on industrial and defensive, dominant ‘out of town’ retail properties
30 Oct 2017 Bricking it
As equity income stocks continue to soar, we examine commercial property as an alternative for those who fear a correction is imminent...
08 Aug 2016 New fund research for August
We identify four investment trusts which stand our for different reasons and examine them in detail...
08 Aug 2016 Hot property
We examine the battered property sector in the wake of Brexit and highlight three trusts which we think are worth a closer look...
08 Aug 2016 Fund Analysis
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