The Charities Property Fund has delivered an average of 7% income return over the three years to end-December 2010, and outperformed the All Balanced Funds total return index by an average of 3.3% per annum over the same period. The Fund now stands at £389 million (approx. 455 million) and is set to pass the £400 million mark, reflecting its increasing popularity with charities.
The Fund was particularly active during 2010, acquiring nine properties and selling two at prices in excess of their valuation in eight separate transactions totaling more than £100 million. The average yield on these new assets is 6.8% and the average lease length is 12.6 years. Nearly a third of the income generated by the properties benefit from RPI-linked increases. The Fund remains the fourth highest yielding Fund out of 29 in the All Balanced Index at 6.7%.
The Fund is widely diversified, with 55 properties let to reliable tenants on long leases with few voids. Leases in the Fund have an average of 9.8 years to lease expiry. The vacancy rate is just 4.2% of rental value compared with 9.8% in the IPD Index and 86% of the Fund's properties are secured on covenants rated as low/negligible risk, compared with 70% in the IPD Index.
The Fund, which has 1,193 charities as investors, has no borrowing and aims to deliver a high and secure level of income. Its current gross yield of 7.3% makes it highly attractive to charities seeking income and compares favorably with other property funds, Gilts and equities.
Harry de Ferry Foster, Fund Director, commented: "We fully expect the Fund to pass the £400 million milestone in March. Its performance goes some way to explaining our success in raising equity and proves it is more than just an Income Fund. This performance is particularly striking considering the Fund has doubled in size over the last 18 months and has therefore had to absorb significant transaction costs and the 'valuation drag' often experienced on new purchases."
Source: Citigate Dewe Rogerson