Fiducia Wealth Management
Posted in Investing, Tax Planning on 30.05.14

What is the underlying methodology behind the fund?

The fund’s investment process is a blend of top-down economic and bottom-up property analysis. When purchasing a property we consider five key credentials: location; lease length; building specification; tenant strength; and whether or not institutional-class (landlord friendly) lease terms are in place. If the property has strong characteristics for all five then it is deemed to be prime. Typically, we look for properties with at least three of these attributes, which are considered core. On top of the portfolio construction, commercial property as an asset class affords unique opportunities to add value through asset management initiatives. These include renegotiating existing leases with tenants to deliver longer or more favourable terms, diversifying the tenant mix, refurbishments and increasing use-value through planning consents.

Is more focus placed on region and sector, or on the specific properties?

With strong support from our economists and teams of sector specialists we implement extensive research to identify those regions, sectors and businesses where out-performance is expected and to identify individual investment opportunities within those markets. A property cannot work in isolation, we have to take into account sector trends, prospects for tenants, transport links and the like. It is a very holistic approach.

In terms of location, the fund has a South East bias where we believe economic growth is set to be strongest. Experience tells us that this region remains the most liquid market through the economic cycle, which is an important consideration when managing an open-ended, daily traded fund. We do, however, continue to find opportunities across the rest of the UK and own some particularly attractive regional properties. These include an office park in Cambridge, a cinema complex in Cardiff and a key distribution unit in the North West of England let to Kellogg’s.

How do you see the property market performing over the next one to two years?

We expect recent monthly market capital value gains to continue in the short term and for evidence of rental growth to increase as the asset class mirrors the recovery taking place in the wider UK economy. The market is likely to normalise further as we go through 2014 and into 2015, with the greatest movement in capital values likely to come in the regions. Income is expected to remain a key component of total returns. In London and the South East, for example, there is already evidence that strong occupier demand is supporting notable rental growth. This is a welcome return to the more traditional drivers of commercial real estate performance: income and incremental capital growth. Returns, however, remain distinctly split by asset quality and location, highlighting the need for market and tenant knowledge and a focused investment approach.

What do you anticipate the biggest challenges will be for the fund throughout 2014?

Demand for high-quality assets has driven down yields and increased the capital values of prime properties, so investors are spreading their nets more widely as risk aversion continues to ease. Bidding on assets has also become more competitive outside of London. Sourcing high-quality properties in a competitive market is, therefore, the main challenge. Despite this, we have managed to invest more than £250m in bricks and mortar commercial property assets for the fund across 15 assets since the start of 2014. This, we feel, is testament to our ability to source off-market opportunities as a result of our strong position in the market place.

Which areas have offered the most value over the last year?

Markets are repricing selectively but with the help of our extensive research capabilities, we have managed to find value across a range of sectors and regions including London offices. Our focus, however, has been on purchasing properties used for logistical purposes, such as a new distribution hub in Derby used by Heineken, and within the alternatives sector. Assets in the latter, which include gyms, cinemas and hotels, provide further diversification and often come with longer term inflation-linked leases.

We remain light in our sector weighting to high street retailers given the changes to consumer behaviour. However, market adjustments in 2013 have left selective high street assets looking mis-priced in certain dominant regional locations. This, combined with the improving economic environment, has led us to increase the fund’s high street exposure in key locations such as London, Nottingham, Cardiff and Manchester. Nevertheless, within retail we continue to favour properties that play into current and future shopping trends, such as distribution units and retail warehouse parks for their convenience.

Please be advised that the value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

 

Andrew Friend, acting co-manager, and Marcus Langlands Pearse, co-manager, Henderson UK Property Unit Trust

 

Please read all scheme documents before investing.   Before entering into an investment agreement in respect of an investment referred to in this document, you should consult your own professional and/or investment adviser.

Past performance is not a guide to future performance.  Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change.

If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially.

Due to the specialist nature of property investment, in certain circumstances there may be constraints on the redemption or switching of units/shares in the fund(s). The funds invest in a specialist sector that may be less liquid and produce more volatile performance than an investment in other investment sectors. The value of capital and income will fluctuate as property values and rental income rise and fall. The valuation of property is generally a matter of valuer’s opinion rather than fact. The amount raised when a property is sold may be less than the valuation.

Nothing in this document is intended to or should be construed as advice.  This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.

Any investment application will be made solely on the basis of the information contained in the Prospectus (including all relevant covering documents), which will contain investment restrictions.  This document is intended as a summary only and potential investors must read the prospectus, and where relevant, the key investor information document before investing.

Issued in the UK by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management Limited (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), Henderson Alternative Investment Advisor Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. Telephone calls may be recorded and monitored. Ref:34R

If you would like to know more about how we as Financial Advisers can help you  with your Investments then visit the Investment Management section of  our website: Investment Management or send us email at: email@fiduciawealth.co.uk

The information contained in website is for guidance only and does not constitute advice which should be sought before taking any action or inaction. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occasioned in connection with the content hereof and any such action or inaction. Professional financial advice is necessary for every case.

Fiducia are an award winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border. www.fiduciawealth.co.uk

Fiducia Wealth Management Ltd. Dedham Hall Business Centre, Brook Street, Dedham, Colchester, Essex, CO7 6AD.

Fiducia Wealth Management Ltd. is authorised and regulated by the Financial Conduct Authority. FCA No. 408210

Fiducia Wealth Management
Posted in Investing, Tax Planning on 30.05.14