This property trust was added to my ISA last October and I also added it to my Sipp drawdown portfolio at the start of this year.
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 April the largest geographic exposure was the 45% weighting in the UK, with France making up a further 17%, Sweden 10% and Germany 21%. Retail and office space accounted for 31% and 32% 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 trust has recently published results for the full year to end March 2017 (link via Investegate). Net assets have increased by 8.0% and share price by 9.1% due to a narrowing of the discount.
Commenting on the results, chairman Hugh Seaborn said:
"The UK has performed better than many commentators expected but there are clear risks due to the uncertainty of the outcome of negotiations for the UK's exit from the European Union. Our concern is that businesses will be potentially less able to commit to longer term investment (such as new leases) without clarity on key aspects such as potential trade barriers and cross border supply chains. For similar reasons it is possible that there will be a deferral of the development cycle resulting in reduced speculative construction starts.
Expectations of global growth continue to improve. Although bond yields have risen as a result and there have been some inflationary response, they remain at historically low levels. In this context the income characteristics of real estate coupled to the emergence of economic growth which provides an environment for rental growth, will remain attractive to investors. The Manager continues to seek to invest in businesses with strong cash flows and the potential for earnings growth and this combined with the mitigation of risk through a diverse portfolio invested across numerous submarkets and geographies, is reflected in their decision to maintain gearing levels".
Revenues have increased by 36% partly as a result of the fall in the value of sterling against the Euro. As a result the final dividend will be increased to 6.4p making a total of 10.5p for the year, an increase of 26% compared to the previous year (8.35p). This gives a yield of 3.0% at the current price of 346p.
This trust has so far been a positive addition to my portfolio - the share price is up 17% on my purchase price last year, recently receiving a boost after the election outcome in France, and the dividend increased by 26%. Obviously the next couple of years will be mainly dominated by the Brexit negotiations so I expect a little volatility in the share price but the income seems fairly secure and I am happy to continue and may well add on any significant pull-back in the price.
As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!