Tuesday, 1 November 2016

TR Property Trust - Portfolio Purchase

Following my acquisition of Tritax Big Box last month, I have recently added TR Property trust to my ISA portfolio.

TR Property (TRY) is a £1.2bn FTSE 250-listed closed-ended fund. The Trust was formed in 1905 and has been a dedicated property investor through the Ordinary share class since 1982.

Over the last five years the shares have generated a total return of 105%, but post Brexit the share price has retreated below 300p with the discount to NAV widening from an average of 2% to 15% which provides an attractive entry point for my new purchase.

The fund is managed by Thames River and aims to maximise the total return by investing in international property shares and direct property mostly in the south east of UK. Manager, Marcus Phayre-Mudge has been involved in property investment since 1992 and has been involved in running the Investment Trust since 2004.

At the end of September the largest geographic exposure was the 38% weighting in the UK, with France making up a further 17% and Germany 25%. Retail and office space accounted for 30% and 26% respectively, with another 27% in residential and the remainder divided between industrials and diversified. The main investment areas at the moment are shopping centres, residential property in Germany and offices in London’s West End.

The largest holding is the 10.4% exposure to Unibail-Rodamco, a pan-European REIT that invests in shopping centres in Europe’s capital cities, as well as convention and exhibition centres in Paris. Next is Vonovia (formerly named Deutsche Annington) the largest German residential landlord makes up 8.5% and third largest is Land Securities, the UK’s largest real estate investment trust (REIT) by market cap and portfolio value, with a portfolio of £14.3bn including share of joint ventures and developments comprises 7.4%

10 Yr Performance (click to enlarge)

TR Property has paid out 8.35p in dividends over the past year and will announce the next interim later this month. This provides a current yield of 2.8%. Dividends have increased by an average of 5% p.a. over the past 5 years. It has reasonable ongoing charges of 0.75% however there is also the provision for payment of a performance fee which added an extra 0.3% last year.

It is run by a specialist, well-resourced team who pick the holdings based on the underlying fundamentals and the strength of the managers. They have built up a good long-term track record and are upbeat about the prospects as they think that the lack of commercial property development over the last seven years will ensure that the demand from tenants will help drive rental growth.

The interim results are due later in November but here are the latest full year results for those who may want to look in more depth (link via Investegate).

2 comments:

  1. I hold this in my SIPP and happy to continue to do so. Interesting article by Nick Sudbury in Master Investor today on Secure Income REIT, not one I had heard of. Any thoughts?

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    Replies
    1. Bellabeck,

      Thanks for the mention of SIR which I have not heard of before. I will look in more detail at some point but I think probably my two recent property additions may be sufficient for the time being.

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