F&C is set to launch an open-ended UK property fund managed by F&C Reit, the asset manager founded in 2008 through the merger of Reit Asset Management and F&C Property Asset Management.
F&C Reit currently manages some GBP7.5bn of property assets, making it one of the largest property asset managers headquartered in the UK.
The F&C UK Property Fund will be launched through a four week offer period commencing 28 June 2010, with a fixed price of 100p per unit, until 23 July 2010.
It is structured as a non-Ucits retail scheme, aiming to provide a total return based on income and capital appreciation through investment in UK commercial property. It gives investors the opportunity to buy into a “clean” portfolio of direct UK commercial properties at what the managers believe is an attractive point in the cycle. The fund will have daily pricing and liquidity with the underlying property investments valued on a monthly basis.
The fund’s property portfolio will be co-managed by Julian Smith and Guy Glover of F&C Reit, who between them bring more than 50 years' experience in property and investment management.
Smith and Glover aim to construct a balanced portfolio for the fund which will be diversified in terms of geographical positioning and sector weightings. They will seek to add value through asset allocation, stock selection and active management of property assets to enhance their rental value. Risks will be managed through diversification at a sector, geographic, property and tenant levels. Additionally, as the fund matures it is expected to retain a cash position to manage liquidity.
Unlike some previous open-ended property funds launched with a seed portfolio of legacy assets, the F&C UK Property Fund will build a clean portfolio of new assets specifically identified for the fund. Properties will be incrementally added to the fund following the launch, with Smith and Glover selecting assets which they believe offer both secure rental growth and asset management opportunities ranging from high street retail and industrial properties, to regional and Central London office space and alternative property classes.
Julian Lyne (pictured), head of global consultants at F&C, says: “The team at F&C Reit has a fantastic track record built on a strong entrepreneurial culture. The F&C UK Property Fund provides institutional investors with the opportunity to tap into that skill set through a portfolio which will reflect the best opportunities for the current market conditions, with no old or legacy assets which may act as a potential drag on returns. Returns from property normally have a low correlation with those from equities and fixed income assets and an allocation to property can reduce risk and smooth returns as part of a diversified portfolio.”
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