Offer period to commence for new open-ended UK property fund
F&C is set to launch a new open-ended UK property fund, managed by F&C REIT, the specialist asset manager founded in 2008 through the merger of REIT Asset Management and F&C Property Asset Management.
F&C REIT currently manages some £7.5 billion of property assets, making it one of the largest property asset managers headquartered in the UK. The F&C UK Property Fund will be launched through a 4 week offer period, commencing 28 June 2010, with a fixed price of 100p per unit, until 23 July 2010.
The F&C UK Property Fund is structured as a Non-UCITS Retail Scheme (NURS), aiming to provide a total return based on income and capital appreciation through investment in UK commercial property. It gives investors the opportunity to buy into a ‘clean' portfolio of direct UK commercial properties at what the managers believe is an attractive point in the cycle. The Fund will have daily pricing and liquidity with the underlying property investments valued on a monthly basis.
The Fund's property portfolio will be co-managed by Julian Smith and Guy Glover of F&C REIT, who between them bring more than fifty years' experience in property and investment management. They will draw upon a team of over 100 at F&C REIT which has built an enviable track record across its UK property investments. Investment Property Databank Ltd has independently verified that F&C REIT core portfolios benchmarked against the IPD Index have, in aggregate, delivered a top quartile peer group return over the last 1, 3 and 5 years. During the unprecedented market conditions of 2009, the returns were 7th percentile.
Since its inception F&C REIT has demonstrated its exceptional access to deal flow by securing landmark transactions such as the acquisition of the £600 million Dawnay Day property portfolio and concluding total deals worth more than a £1 billion in the last eighteen months.
Julian Smith and Guy Glover aim to construct a balanced portfolio for the Fund which will be diversified in terms of geographical positioning and sector weightings. They will seek to add value through asset allocation, stock selection and active management of property assets to enhance their rental value. Risks will be managed through diversification at a sector, geographic, property and tenant levels. Additionally, as the Fund matures it is expected to retain a cash position to manage liquidity.
Unlike some previous open-ended property funds launched with a seed portfolio of legacy assets, the F&C UK Property Fund will build a ‘clean' portfolio of new assets specifically identified for the Fund. Properties will be incrementally added to the Fund following the launch, with Julian Smith and Guy Glover selecting quality assets which they believe offer both secure rental growth and asset management opportunities ranging from High Street retail and Industrial properties, to regional and Central London office space and alternative property classes.
Julian Lyne, Head of Global Consultants at F&C, commented: "The team at F&C REIT has a fantastic track record built on a strong entrepreneurial culture. The F&C UK Property Fund provides institutional investors with the opportunity to tap into that skill set through a portfolio which will reflect the best opportunities for the current market conditions, with no old or legacy assets which may act as a potential drag on returns. Returns from property normally have a low correlation with those from equities and fixed income assets and an allocation to property can reduce risk and smooth returns as part of a diversified portfolio."
Julian Smith, Fund Director of the F&C UK Property Fund, said: "Market forecasters are currently predicting upgrades for 2010, whilst the sharp falls from 2008 and 2009 suggest that downside risk is considerably reduced. As the economy slowly recovers, we anticipate the demand for property will increase and, given low cash returns, believe that the opportunity cost and yield for commercial property is very attractive. The Fund will retain a cash position to manage liquidity."