Charities property fund

The Charities Property Fund (the ‘Fund’), a flagship fund of Cordea Savills, the international property investment manager, has delivered an average total return of 10.8% per annum in the past five years compared to 9.1% for the AREF All Balanced Funds Index, and has outperformed the Index in each of these years.

Assets under management grew by over 380% from £190 million to £735 million today over the same period. In the year to June 2014, the Fund has achieved a total return of 16.3% (AREF: 15.1%).

In the year to date, the Fund has already acquired eight assets, investing almost £50 million at an average yield of 7.6%. These assets included five modern industrial units in Ashford, Bristol, Redditch, Peterborough and Doncaster that were acquired for £30 million at an average yield of 7.9%. The leases have five years unexpired on average.

The Fund also acquired an attractive, newly refurbished office building on Cowper Street, close to the Old Street roundabout in the heart of London’s Tech City. The building is let for a further five years and was acquired for £4.5 million, reflecting a yield of 5.75%.

Harry de Ferry Foster, Fund Director, commented: “We are phenomenally proud of being able to deliver double-digit average total returns for each of the last five years despite the impact of the financial crisis while increasing the size of the Fund fourfold. It is not just the best performing charity-specific fund, it is also the best performing UK balanced property fund over the last three years.

“This success has been achieved by our exposure to the better performing sectors, the high quality of the existing portfolio and through pro-active asset management. Perhaps the most important factor though has been our ability to access the right investment opportunities. Significantly, 15 of the 19 properties that we have acquired this year, or currently have under offer, have been sourced off-market, meaning they offer better value due to the lack of competition. This is an outstanding achievement in a strong market starved of good opportunities.”

The Fund is diversified, with 83 properties let to strong tenants and an average unexpired lease term of 10.5 years. The vacancy rate is just 1.8% of rental value compared with 10.9% in the IPD Index and 83% of the Fund’s properties are secured on low/negligible risk covenants, compared with 73% in the IPD Index.

The Fund, which has 1,578 charities as investors, aims to deliver a high and secure level of income. Its current gross yield of 5.3% makes it highly attractive to charities seeking income and compares favourably with other property funds, gilts and equities.