The Charities Property Fund www.cpfund.co.uk savillsim.com - PowerPoint PPT Presentation

The Charities Property Fund www.cpfund.co.uk savillsim.com

Economic Overview

UK property valuation remains attractive relative to other classes Property yield spread over 10-year UK government bonds 12 July 2016: 5.4% spread 11 10 9 8 7 6 6 5 30 year average = 2.13% 4 3 2 1 0 -1 -2 -3 3 Jul-87 Jul-88 Jul-89 Jul-90 Jul-91 Jul-92 Jul-93 Jul-94 Jul-95 Jul-96 Jul-97 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Spread All Property equivalent yield Gilt yield Average Source: IPD , Macrobond, Savills Investment Management 3

UK property income remains attractive relative to other classes Property yields relative to other asset classes Direct Property* Index-linked lease (20+ years) FTSE All-Share Index Dividend Yield I Investment Grade UK Inflation-linked Corporate Bond (20 year) t t G d UK I fl ti li k d C t B d (20 ) UK Government Inflation-linked Bond (20+ years) UK Government Inflation linked Bond (20+ years) -2% -1% 0% 1% 2% 3% 4% 5% * 20 year lease to Marks & Spencer’s Source: Bloomberg, Savills Investment Management 4

The lack of consensus among economists Source: Consensus Economics, Savills Investment Management -1.5 -1.5 -1.0 -1.0 -0.5 -0.5 0.0 0 0 0.0 0 0 0.5 0.5 1.0 1.0 1.5 1.5 2.0 2.0 2.5 2.5 3.0 3.0 Nomura Securitie Nomura Securitie es es C Credit Suisse Grou C Credit Suisse Grou up up range UK GDP growth (2017) forecast Barclay Barclay ys ys Danske Ban Danske Ban nk nk Credit Agricole C Credit Agricole C IB IB Wells Farg Wells Farg go go UniCre UniCre dit dit RB RB BC Capital Marke BC Capital Marke ets ets UnCredit Marke UnCredit Marke ets ets ING Grou ING Grou up up ING ING G Financial Marke G Financial Marke ets ets Bank of Am Bank of Am merica Merrill Lync merica Merrill Lync ch ch IHS Economi IHS Economi cs cs BMI Researc BMI Researc ch ch Goldman Sach Goldman Sach hs hs Natix Natix xis xis Nordea Marke Nordea Marke ets ets ABN Am ABN Am ro ro Commerzba Commerzba nk nk Morgan Stanle Morgan Stanle ey ey Standard Chartere S Standard Chartere S ed ed BMO Capit BMO Capit tal tal Pantheon Macro Pantheon Macro oeconomic Adviso oeconomic Adviso ors ors UB UB BS BS Fathom Consultin Fathom Consultin ng ng Roubini Economi R Roubini Economi R cs cs Standard Ban Standard Ban nk nk JP Morgan Chas JP Morgan Chas se se Banco Santand Banco Santand der der BNP Pariba BNP Pariba as as Helab Helab ba ba HSB HSB C C Deutsche Ban Deutsche Ban nk nk Bank Jaco Bank Jaco ob Safra Suisse L ob Safra Suisse L td td Societe Genera Societe Genera ale ale Citigrou Citigrou up up Handelsbank Handelsbank en en Action Economi Action Economi cs cs DekaBan DekaBan nk nk Oxford Economi Oxford Economi cs cs Raboba Raboba nk nk Berenberg Ba Berenberg Ba nk nk Capital Economi Capital Economi cs cs Emirates NB Emirates NB BD BD Beacon Consultin Beacon Consultin ng ng 5 Liverpo Liverpo ool ool

Income returns in perspective 10 10 9 8 7 6 % % 5 5 4 3 2 1 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 FTSE 100 dividend yield Repo Rate/Official Bank Rate All balanced property fund index (median annual income return) The Charities Property Fund (annual income return) Source: Bloomberg, Bank of England, AREF, Savills Investment Management 6

7 The Fund

Charities Property Fund  Original and largest charity specific property fund - £1,064m Track record  Broad investor base - 1,898 investors  15 year history  Income: high and secure level of income (4.9% net) with prospect of Investment growth in income objectives   Capital: maintain capital value Capital: maintain capital value  Strong Experienced advisory committee governance & governance &   Common Investment Fund (CIF) Common Investment Fund (CIF) risk controls  Ungeared; no speculative development  Th The Fund is a charity F d i h it Tax efficient &  Low TER of 0.60% cost effective A low risk, diversified property fund delivering high and secure income 8

Fund level performance - total return 18 16.3 16.1 15.5 16 15.1 14 14 13 3 13.3 12.5 12 11.1 annum 10.1 9.7 10 8.7 8.4 8.4 % per a 7.7 7 7 8 7.6 7.2 6.0 6 4.8 4.0 4 1.7 2 0 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 3 years 4 years 5 years (per annum) (per annum) (per annum) (per annum) (per annum) (per annum) The Charities Property Fund All Balanced Property Funds Consistently outperforming Source: Savills Investment Management, AREF (June 2016) 9

Fund level performance – income and capital 17 11.2 7.7 12 6.5 5.4 nnum 5.2 4.5 1.4 1.4 7 7 % per a 5.8 6.1 5.7 5.7 5.6 5.5 5.6 5.2 2 -2.2 -3 2011 2012 2013 2014 2015 3 years 4 years 5 years (per annum) (per annum) (per annum) (per annum) (per annum) (per annum) Income Capital Interest Rates High and secure income and growing capital Source: Savills Investment Management (December 2015) 10

Fund growth (Net Asset Value) 115 115 37 3 Properties Properties £1,064 1,000 £864 800 n £ million £62 £627 600 £492 £456 £357 £357 400 400 £229 200 0 Greater size brings greater diversification Source: Savills Investment Management (June 2016) 11

Total return indices (rebased 2000) 350 300 250 200 150 100 100 50 0 Dec 2000 Dec 2001 Dec 2002 Dec 2003 Dec 2004 Dec 2005 Dec 2006 Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 All balanced property fund index (TR) All balanced property fund index (TR) The Charities Property Fund total return indexed The Charities Property Fund total return indexed FTSE 100 Total Return Index RPIX Repo Rate/Official Bank Rate indexed Source: Bloomberg, Bank of England, AREF, IPD, Savills Investment Management 12

Acquisitions Acquisitions Strategy &

Sector weightings - purposeful bias towards Industrials and Alternatives AREF CPF Source: AREF (June 2016), Savills Investment Management (June 2016) 14

Redefining London’s office boundaries Number of start-up business searches for London office space Average prime rents for London office sub-sectors Infrastructure improvements 6 6 3 3 3 3 4 4 5 2 5 2 1 1 7 7 Source: Hubble, Savills Investment Management Source: CBRE 15

Alternatives – demand at a historic high Alternative investment volumes (£ billion – LHS) % invested in the Alternatives 18.0 30% 25% 16.0 25% 20% 14.0 12.0 20% 15% 10 0 10.0 15% 8.0 10% 6.0 10% 4.0 4.0 5% 5% 2.0 0.0 0% 0% 2010 2011 2012 2013 2014 2015 2009 2010 2011 2012 2013 2014 2015 Charities Property Fund Alternatives investment volumes AREF All Balanced Funds Index % of total UK investment volumes - RHS Source: Jones Lang LaSalle Research Source: AREF All Balanced Funds Index 16

The jury is no longer out on alternatives Jurys Inn, Brighton Jurys Inn, Derby   Excellent location next to Brighton railway station Well located mid range hotel   Recently refurbished Recently refurbished   Low rent and capital value per sq ft of only £180 Low capital value per sq ft   27 years unexpired 29 years unexpired   5 yearly rent reviews to the RPI Index 5 yearly rent reviews to the RPI Index   £28.0 million (5.5%) £15.0 million (8.3%) £43 million, 27.5 years unexpired, Yield: 6.6% 17 Source: Savills Investment Management (June 2016)

Leisure and automotive Derry’s Cross, Plymouth Mercedes - Poole, Salisbury & Dorchester   Town centre hotel, leisure and gym Portfolio of car dealerships   Prominent island site, local landmark Excellent brands and catchments   Average rent of only £10 per sq ft Prominent locations   Average lease length of 20 years unexpired 15 years unexpired at affordable rents   75% of income is fixed or RPI Guaranteed rental increase in 2017   £13.7 million (6.4%) £15.0 million (5.9%) £29 million, Yield: 6.2% 18 Source: Savills Investment Management (June 2016)

Retail warehousing – South East focus Homebase, Basingstoke 3 1 7 5 6 8 2 4 4  Affluent town and catchment  Undersupplied location  Consistent top quartile trader for the tenant  Large site with extensive frontage  11.5 years unexpired at an affordable rent   £17 3 million (6 4%) £17.3 million (6.4%) 19 Source: Savills Investment Management (June 2016)

Retail – discount shopping Brook Retail Park, Hereford Halewood Shopping Centre   Modern open A1 retail park p p Newly constructed town centre scheme y   Food and discount operators Food and discount operators   Low rents of £12.00 per sq ft Low average rents of £13.80 per sq ft   Low site cover and excellent parking ratio Low site cover and excellent parking ratio   £5.6 million (6.7%) Long leases and fixed increases on over 50%  £9.3 million (6.4%) £15.0 million, 12.5 years unexpired (10 to break), Yield: 6.5% 20 Source: Savills Investment Management (June 2016)