Alternative Income REIT PLC on Wednesday said its annual net asset value has fallen, amid high inflation, rising interest rates and low rental growth.

The London-based investor in commercial property assets said net asset value per share for the year to June 30 was 80.90 pence, down 3.9% from 84.16p per share last year. Net asset value fell 4.0% to £65.1 million from £67.8 million.

Net asset value total return was 3.5%, compared to negative 6.7% at the same time last year.

Alternative Income REIT declared a total dividend per share of 5.90p, falling 2.5% on-year from 6.05p and covered by cash earnings.

The group said its portfolio suffered a ‘relatively modest’ reduction of £4.3 million when compared with the group’s peers, from a £10.9 million reduction in value in financial 2023. At June 30, the portfolio was valued at £102.7 million, down 4.0% on-year from £107.0 million.

Chair Simon Bennett said: ‘The period under review was characterised by high inflation, low rental growth and rising interest rates. This has proved to be somewhat of a mixed blessing for the group. From an income standpoint, the economic environment has seen our portfolio continuing to perform well, benefitting from long-dated and high-yielding leases with index-linked rental increases. 96% of the portfolio’s income stream is reviewed periodically. In the coming financial year, approximately 47% of the group’s income will be subject to rent reviews, 36% as annual index-linked rent reviews and the remaining 10% being periodic 5 early index-linked reviews. During the past financial year, a total of 11 rent reviews took place, which resulted in a combined rental uplift of £300,000, which represents a 4.3% increase on contracted rent across the portfolio on a like-for-like basis.

‘The recent announcement by the Bank of England to reduce interest rates together with the recent fall in inflation, might mark the bottom of the property market. Accordingly, the board remains confident that the company is well-positioned for the future, with a resilient portfolio well-placed to continue to provide secure, index-linked income with the potential for capital growth.’

Shares in Alternative Income REIT were down 1.3% at 71.84 pence each in London on Wednesday afternoon.

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