Funds buy up UK property
PROPERTY fund managers are storming back into the UK market, believing the correction has now ended and bricks and mortar assets are looking cheap.
Managers believe the collapse of the property bubble has created a wealth of investment opportunities, with Henderson’s Herald fund and F&C’s Commercial Property Trust both diving back in to the UK market this week.
Henderson said Herald, managed by David Turner, has just bought a retail park in Manchester from Aviva Investors for £35.6m, in an official return to the UK market. The Stanley Green Retail Park is going to deliver a healthy initial yield of seven per cent per annum, said Turner.
The plot has 91,500 sq ft of retail space let to giant retail brands including TK Maxx, Next, B&Q, Halfords and Comet, with an average lease length of over nine years meaning secured future income from the plot.
“In a number of markets, particularly the UK, pricing is beginning to look attractive, despite the ongoing challenges many retailers are facing,” said Turner. He added the fund has €150m of equity available to snap up prime UK property spaces.
And Guernsey-domiciled, London-listed F&C Commercial Property Trust has made its first property acquisition since March 2005, after buying a distribution warehouse in Daventry for £17.25m.
Manager of the fund Richard Kirby said the UK investment will net the fund a stellar initial yield of 9.05 per cent a year.
But he cautioned that income from rental tenants of UK properties, rather than growth from improvements in property prices, is likely to remain the main driver of fund profits for the time being.