UK charities fund returns 9.3%

The Charities Property Fund, which is managed by Cordea Savills and boasts 1,239 charities as investors, has delivered returns on UK property of just over 9 percent in the last 12 months.

The Charities Property fund managed by London-based Cordea Savills, has managed an annual return of 9.3 percent from UK property.

The largest UK property fund for pooled charities, which boasts some 1,239 separate investors, has beaten its benchmark, the IPD All Balanced Fund index, which shows a return on 7.5 percent over the same 12 month period to 30 September.

It now has amassed an asset value of £456 million (€525 million; $728 million) having bought five properties in the third quarter of this year.

The fund, which has no borrowing, temporarily halted making fresh investments over the first and second quarters in order to protect returns to existing investors. However dealing has reopened and the fund is now fully invested, it said.

The five newly-acquired properties were purchased for a total of almost £60 million, reflecting an average yield to the fund of 6.9 percent and an average lease length of almost 20 years. The new assets include a Tesco supermarket outside of Bristol, a retail warehouse park in the Midlands, and the funding of a new Travelodge Hotel in Cambridge let on a new 35-year lease with rental increases in line with inflation.

Harry de Ferry Foster, fund director, said: “The Charities Property Fund’s popularity is primarily due to its strong performance, which has been particularly good over the last three years despite the fund doubling in size and the associated transaction costs and valuation drag on new purchases.”

He added the fund had added value to its diverse portfolio through active management, including lease extensions and refurbishments.

In 2011 so far, the fund has acquired sixteen assets and sold three in sixteen separate transactions totalling over £140 million.