Figures released today reveal that between the beginning of April and the end of June this year 59 new investors and over 50 existing investors committed around £29 million to The Charities Property Fund - a record number of investors for one quarter. This takes the total number of investors to 426 and the Fund value to £197 million.
Charles Mesquita, charities specialist at Carr Sheppards Crosthwaite, says: "These figures demonstrate that commercial property continues to be an attractive asset class for charities. We are seeing a significant shift away from owning direct property to indirect investment vehicles, such as The Charities Property Fund. This reflects similar movements in the institutional investment market (corporate pension funds and life companies) where there has been a boom in indirect property investment over the past 12 months."
Pension funds and insurance companies are raising their portfolio weightings in the commercial property market from around 5 per cent to 10 per cent. But rather than taking the traditional route of owning individual properties, many institutions are demonstrating a preference for indirect property investment via vehicles such as property unit trusts and limited partnerships. Data released in June from Oxford Property Consultants (OPC) reveal a 25 per cent increase in the UK's indirect commercial property market to around £40 billion over the past 12 months alone.
Mr Mesquita explains that there are many advantages to an investment in vehicles like The Charities Property Fund: "Investments in commercial property offer an attractive income at around 6% and the potential for growth in income and capital. The performance has been delivered with lower volatility compared to equities and bonds. It also has a low correlation to these asset classes. Investing through funds removes the hassle of managing the assets, gives access to professional management on a cost effective basis and increases the liquidity as investors purchase units in a fund rather than the properties themselves.
He adds: "The Charities Property Fund has attracted a broad cross-section of charities including arts and culture organisations, educational institutions and grant making trusts."
Over the past quarter, four new properties have been added to the investment portfolio. These include two offices, one in Stevenage let to IT giant Fujitsu and the other in Sunderland occupied by Barclays Bank. Additionally, we have purchased a warehouse in Swindon let to building material supplier Jewson and a parade of shops in Worthing whose tenants include fashion chain Laura Ashley.
Mr Mesquita says: "These additions demonstrate that we continue to build upon a solid basis focussing on location, tenant quality and being able to add value through active management."