Savills Investment Management (“Savills IM”), the international real estate investment manager, has today announced that its Charities Property Fund produced a total return of 6.4% for investors in 2016 compared to a return of 2.8% by the AREF/MSCI All Balanced Property Funds Index. The Fund, which launched in 2000 and now has almost 1,900 investors, currently has £1.1bn assets under management and is the largest charity-specific fund in the UK.
The Fund, which has 111 properties and 237 tenants, was the top performer out of a total of 27 funds included in the 2016 index. Over 10 years it ranked as the second best performer and the third best over five years. Over all three time periods, the Fund was the best performing charity fund. The outperformance and continued dividend growth (almost 15% increase since 2012) has also been achieved without the use of any leverage.
The Charities Property Fund recently completed the sale of three high street shops in Chichester and Worcester for a combined price of £8.25 million (reflecting a yield of 3.95%), the sale of the freehold interest in a 109,000 sq. ft. industrial unit in Kettering for £7.37 million (reflecting a net initial yield of 6.25%) and the acquisition of Whiteladies House in Clifton, Bristol, for £4.15 million (6.1%).
Harry de Ferry Foster, Fund Director of The Charities Property Fund, commented:
“2016 was a fantastic year for the Fund and we expect to continue this trend in 2017. We were largely unaffected by Brexit as our focus on improving the quality of the portfolio and driving net operating income through longer leases, guaranteed rental increases and asset management initiatives reaped dividends. This commitment to driving value has been the basis of our long-term success since the Fund launched in 2000 and positions us well for 2017 and beyond.
“The Fund offers a very secure platform for investors, with a vacancy rate of only 1%, an average unexpired lease term of almost 12 years across the entire portfolio, very strong covenants and a high percentage of fixed- or RPI-linked rental increases (almost 40% of portfolio income).”
The Charities Property Fund is the original and largest tax efficient pooled property vehicle available to all charities in the UK. The Fund’s objective is to invest in property throughout the UK to provide a balanced portfolio to deliver a high and secure level of income and to maintain the capital value of assets held.
Citigate Dewe Rogerson
Patrick Evans / Stephen Sheppard / James Madsen / Alice Stewart
Tel: +44 (0)20 7282 2966
Savills Investment Management