Cordea Savills, the international property investment manager, has completed the purchase of a portfolio of town centre foodstores on long leases with guaranteed rental increases for GBP8m on behalf of its UK Income and Growth Fund.
The fund now has 10 assets worth GBP88m offering diversification, high quality income and liquidity, currently distributing 5.7 per cent per annum net to investors.
The portfolio comprises a supermarket in Brackley, Northamptonshire, let on a long lease to Waitrose, offering potential to enhance value in the medium term through redevelopment and two further properties let on long leases to the Midcounties Co-operative Limited at Taw Hill, Swindon, Wiltshire and Bure Park, Bicester, Oxfordshire.
George Tindley, head of UK investment, says: “Our stock selection is focused on safe and reliable income streams with the aim of delivering a minimum five per cent income distribution to investors with potential to outperform in the medium term. All three of the assets have negligible risk of default income and guaranteed growth via RPI-linked or fixed uplifts.”
The fund has maintained an annual net distribution yield of 5.7 per cent with an unexpired average lease length of over 15 years, versus 2.8 per cent and 11.5 years respectively in the IPD All Balanced Property Funds Index for the year to 31 December 2012. The fund has also delivered consistent total return performance ahead of the index, being in the top two funds at the end of both 2011 and 2012.
The fund has recently introduced an additional class of units which allows investors to come into the fund at the current NAV rather than the offer price. This allows the amortisation of acquisition costs over a three year period rather than these costs impacting the value on entry.
Cordea Savills UK Income and Growth Fund is a Jersey Unit trust with a Luxembourg FCP feeder vehicle. The fund’s objective is to deliver a net income distribution in excess of five per cent as well as capital growth over the longer term. It invests in prime assets across all the main commercial sectors.