Invista Real Estate Investment Management Holdings plc ("Invista" or the "Company") is today issuing an update on current trading in advance of its interim results announcement on July 30, 2009.
The business remains on course to report results in line with management's expectations for the half year. Despite the continuing deterioration in global property markets, Invista has still been able to continue to develop the business and, in doing so, increase the geographic spread of its operations.
In April 2009, Invista's Invista Real Estate International Fund completed the acquisition of the Big Orange Self Storage Fund ("BOSS"). The acquisition provides Invista with a fund management platform comprising a small team of experienced fund managers based in new offices in Hong Kong and Singapore.
Invista continues to look for new opportunities for growth across the other regions in which it has traditionally operated, in particular the UK and Western Continental Europe.
Assets under management
As at May 31, 2009, assets under management ("AUM") were £5.5 billion, having decreased by 13% since December 31, 2008.
AUM in the period to May 31, 2009 have reduced as a result of a combination of net outflows from open-ended funds totaling £133 million, other fund flows of £61 million and revaluations across all the funds totaling £638 million.
The open-ended funds that Invista manages are well placed with good cash balances. Although the open-ended funds are still experiencing some outflows, the volume during the course of the five months to May 31, 2009 has reduced significantly in comparison to net outflows experienced in the last five months of 2008.
Invista's strategic objectives remain as follows:
Maximizing the investment performance through the active management of funds remains a key priority for Invista. Investment performance for the first quarter of 2009 relative to benchmarks for approximately half of Invista's funds where relevant benchmarking data is available has been good with some 68% of those funds under management meeting or exceeding benchmarks. The Global Securities Fund has performed particularly well, outperforming its benchmark by over 2,000 basis points since its inception to May 31, 2009.
Invista continues to focus on growing recurring management fees and increasing the number of opportunities to earn performance related fees. The Company has achieved this through the launch of funds during 2008 at higher margins than the average fee rate across its existing range of funds.
In addition to the expansion of the International Fund's portfolio as noted above, the Invista Real Estate Opportunity Fund launched in 2007 has continued to look for acquisitions and further progress can be expected over the next 12 months as some pockets of the market are expected to bottom out. The Opportunity Fund and the new International Fund both have the ability to earn performance fees.
Underlying this strategy is Invista's continued commitment to managing its cost base, which is of increasing importance against a backdrop of falling market values and AUM. Including the acquisition of the Asian business platform, by the half year we will have reduced the total headcount at Invista by 8% since the end of 2008.
Balance sheet investments
Invista's principal balance sheet investment, the residential portfolio held by Invista Castle Limited remains resilient due to the nature of the underlying long term contractual arrangements with the Ministry of Defence. Invista expects to write down the value of the underlying portfolio by £2 million (-2%) at the half year. The recently acquired BOSS assets will first be revalued by the International Fund at the year end.
As at May 31, 2009, Invista held cash balances of £71.5m and had outstanding capital commitments to the International Fund and the Opportunity Fund of £32.6 million, in aggregate. Capital discipline remains a priority for the business in these uncertai