chartered surveyor to launch dollar-denominated feeder funds for property portfolios
Chartered surveyor firm Cardales is to launch dollar- denominated feeder funds next month on its Glanmore Property and British Real Estate vehicles.
This is to be followed by euro share classes on both funds launched in the spring of next year.
Robert Court, chief executive of Cardales and manager of both portfolios, said the further share classes aimed to broaden the appeal of the portfolios, listed in Guernsey, to overseas investors.
The Glanmore Property fund yields around 5% per annum and has delivered a compound annual total return of 10.5% since launch. Glanmore is around £480m in size, while the British Real Estate fund is £22m. Both are managed by Cardales, a firm of chartered surveyors acquired by Tilney in February this year.
The difference between the Glanmore Property fund and the British Real Estate fund is that the latter is a higher risk/reward portfolio. While Glanmore is geared by 55%, the British Real Estate fund is geared by 66%, for example.
Glanmore was launched in 1987 and has been managed by Court, with the help of a team of surveyors, since that date. The fund is fully invested in commercial property, and because of its Guernsey listing, there is no requirement to hold shares for liquidity purposes unlike the case with UK-based funds.
Court said while the Glanmore fund has 55% gearing, rising interest rates present little risk as borrowing is at fixed rates. That said, Court warned that if interest rates were to rise sharply, that could affect occupancy rates. In choosing properties for the fund, Court pays little attention to sectors, tending to look at the prospects of the individual companies instead.
He does take a macroeconomic view however and will balance assets accordingly. For example, because there have been good opportunities among offices, the fund built up a 60% exposure to this sector earlier this year.
This has now been reduced to 50%, however, partially because Court did not want to be too heavily invested in offices, but also because he is finding good opportunities among shopping centres.
A further key strategy within the portfolio is to manage properties actively. For example, the fund recently bought an upmarket shopping centre in St Albans. Court explained that the shopping centre was highly geared toward women's fashion but there was one outlet on a long lease that did not fit the market.
His team negotiated with that tenant to cut the lease short, replacing it with two different tenants. "This had the net result of doubling the rent we were receiving while improving the value of the shopping centre because it has more appropriate shops for that clientele," he added.
Elsewhere in the Glanmore Property fund, Court is looking to sell smaller properties around the £1.5-£2m mark and replace them with larger holdings.