Arlington Securities, one of Europes leading independent investment management and property services businesses, is predicting that the recent run of funds being converted to Non-Ucit Retail Schemes (NURS) will lead to extremely high demand for open-ended property funds this year. The predictions were made as Arlington announced on 17 May 2006 that it has acquired a £33 million (approx. €45 million) property portfolio with the intention of transferring it to the Arlington UK Balanced Property Fund.
This acquisition will increase the fund size from £68.4 million (approx. €105 million) to over £100 million (approx. €155 million) and this could rise to over £150 million (approx. €230 million) by the end of the year. The growth is expected due to investors being attracted by the increased size of the Fund, the targeted income yields of 5.5% to 6%, and demand from funds that are looking to invest in the asset class, including those that have been converted to NURS.
Rod Ross, fund manager for the Arlington UK Balanced Property Fund, commented: "Our market intelligence, coupled with the increasing number of funds that are converting to NURS, tell us that demand will soar for open-ended property vehicles, such as the Arlington UK Balanced Property Fund, this year."
"This acquisition means that, unlike some of our competitors, our Fund is and will be fully invested in commercial property. We now expect to reap the added benefits of size. This is a significant milestone and we are confident of more than doubling the size of the Fund to 150million by the end of the year."
The £33.3m portfolio contains seven properties let to 19 tenants and is a mixture of retail, leisure and office accommodation across the UK. Its initial yield is 7%.
Rod Ross continued: "Arlingtons excellent deal flow ensures we do not have high cash holdings within the fund, which is great news for our investors. We are looking at more portfolios such as this which meet our key requirements and expect to make further announcements later this year."