Cordea Savills, the international property fund manager, has acquired the Apex Retail Park in Twickenham, South West London for £14.4 million (approx. 15.8 mln.) on behalf of the Charities Property Fund. This is the Fund's first acquisition of 2010 and adds to the four transactions totalling more than £40 million, purchased in the second half of 2009.
The Apex Retail Park comprises two purpose-built retail warehouse units with 152 car parking spaces and excellent communication links. The property offers a net yield to the Fund of 6.4% and the prospect of capital growth given its excellent prominence and the shortage of retail warehousing in South West London.
The five transactions totalled £57 million and provide an average yield of 7.75% on gross costs. The properties are fully let, compared with a vacancy rate of 11.8% among properties included in the Investment Property Databank's UK index (IPD, January 2009). Furthermore, 87.3% of the income is secured on tenants of low or negligible risk rating, versus 67.6% for the IPD index as at December 2009.
The average lease length to expiry is nearly 12 years and length of time to the earliest break is 10 years, compared with 9.3 years in the IPD index.
Harry de Ferry Foster, Fund Director, commented: "We have been particularly successful in securing properties with above average lease lengths, excellent tenant quality and at yields, on average, that are significantly higher than the IPD average. The Fund now offers a net distribution yield of around 7.5%, which is extremely attractive to charities in the current environment of low interest rates and economic uncertainty. This, together with its tax efficiency, makes the Fund an ideal investment vehicle for charities."
The Fund has also undertaken an in specie transfer of assets from the Paul Hamlyn Foundation. Paul Hamlyn is one of the largest independent grant-making foundations in the UK, with a particular focus on children, young people and the disadvantaged. The Foundation has transferred eight properties into the Fund worth a total of £13 million in return for units in the Fund.
Launched in 2000, the Fund was the first common investment fund available to all charities in England and Wales - and more recently to all UK charities - that invests directly in UK commercial property. The Fund currently has £300 million of assets under management and invests in a diversified portfolio of assets with a focus on providing attractive levels of income while maintaining capital values in real terms. With a growing property portfolio, the Fund has been specifically designed to meet the needs of charities, allowing them access to professional property investment and management while avoiding the time and expense of property administration.