Fund manager commentary
Property Market Overview
The six month period to December 2012 saw portfolio total returns of 1.6 per cent, according to the IPD Quarterly Index, with performance remaining constrained by a lack-lustre domestic economy and concerns about the outlook for the Eurozone. Capital values declined by 1.3 per cent during the period.
Performance in the second half of 2012 was driven by income, with the six month portfolio income return totalling 2.9 per cent. The market has been polarised with prime property generally out-performing more secondary stock and the London market being stronger than the regions. The office market delivered the strongest total return but with relative strength in London outweighing a negative performance outside the South East.The investment market was buoyed by large inflows of money from overseas
which further benefited London, but some other purchasers, including institutions, have been net dis-investors over the period.
The Group’s retail properties outperformed, returning 1.8 per cent, whereas in the industrial and regional offices sectors, the effect of shortening leases on certain properties were reflected in valuation reductions resulting in disappointing returns of 0.3 per cent and minus 1.5 per cent respectively over the period.
The Manager continues to seek out asset management deals in order to preserve value with specific focus on retaining and enhancing income streams. The Group has generally enjoyed low vacancy levels in the portfolio, and over the period, void levels reduced from 5.3 per cent at 30 June 2012 to 4.4 per cent at 31 December 2012. The portfolio had a weighted unexpiredlease term of 7.5 years (assuming breaks) as at 31 December 2012.
As at 31 December 2012
The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market movements. Past performance is not a guide to future performance. When you sell your shares, you might get back less than you originally invested. If markets fall, gearing can magnify the negative impact on performance. A fund investing in a specific country carries a greater risk than a fund diversified across a range of countries. The value of property related securities are likely to reflect valuations determined by professional valuers. Such valuations are the opinion of valuers at a particular point in time and are likely to be revised. Property and property related assets can sometimes be illiquid.