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ANNUAL REPORT & ACCOUNTS June 2017 - …

MANAGER S REPORTLIST OF PROPERTIESKEY FUND DATAFINANCIAL STATEMENTSANNUAL REPORT & ACCOUNTSCHARITIES PROPERTY FUNDS avills Investment ManagementJune 2017 Savills Investment ManagementSavills Investment Management32 The Charities Property Fund REPORT & ACCOUNTS 2017 The Charities Property Fund REPORT & ACCOUNTS 2017 CONTENTSM anager s REPORT Manager s REPORT 4 Chairman of the Advisory Committee 6 Charities Property Fund Team 7 Investor Categorisation 8 Objectives 9 Strategy 11 Fund Performance 12 Fund Growth 13 Sector Weightings 14 Case Study - Greenwich 15 Portfolio REPORT - Purchases 16 Case Study - Bath 19 Portfolio REPORT - Sales 20 Case Study - Bury St Edmunds 22 Map

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Transcription of ANNUAL REPORT & ACCOUNTS June 2017 - …

1 MANAGER S REPORTLIST OF PROPERTIESKEY FUND DATAFINANCIAL STATEMENTSANNUAL REPORT & ACCOUNTSCHARITIES PROPERTY FUNDS avills Investment ManagementJune 2017 Savills Investment ManagementSavills Investment Management32 The Charities Property Fund REPORT & ACCOUNTS 2017 The Charities Property Fund REPORT & ACCOUNTS 2017 CONTENTSM anager s REPORT Manager s REPORT 4 Chairman of the Advisory Committee 6 Charities Property Fund Team 7 Investor Categorisation 8 Objectives 9 Strategy 11 Fund Performance 12 Fund Growth 13 Sector Weightings 14 Case Study - Greenwich 15 Portfolio REPORT - Purchases 16 Case Study - Bath 19 Portfolio REPORT - Sales 20 Case Study - Bury St Edmunds 22 Map of Properties 23 List of Properties Retail - High Street 24 Supermarkets 24 Retail Warehouses 25 London Offices

2 26 South East Offices 26 Rest of UK Offices 27 South East Industrials 27 Rest of UK Industrial s 28 Alternatives 29 Portfolio Statement 31 Key Fund Data Expense Ratio 34 Portfolio Turnover Rate 34 Distribution Yield 34 Annualised Performance 34 Investor Analysis 35 Fund History 36 Distribution Table 36 Financial StatementsStatement of the Manager s Responsibilities in respect of the Financial Statements 37 Statement of the Corporate Trustee s Responsibilities in respect of the Financial Statements and Corporate Trustee s REPORT 38 Independent Auditor s REPORT 39 Statement of Total Return and Change in Net Assets Attributable to Unitholders 41 Balance Sheet 42 Cash Flow Statement 43 Notes to the Financial Statements 44 General Information

3 56 Trustee, Manager and Advisors 60 Kentish Town, LondonLiverpoolChichesterFarringdon, LondonEpsomSolihullBrightonHarrogateMANA GER S REPORTLIST OF PROPERTIESKEY FUND DATAFINANCIAL STATEMENTS4 The Charities Property Fund REPORT & ACCOUNTS 2017 Savills Investment ManagementSavills Investment ManagementMANAGER S REPORTLIST OF PROPERTIESKEY FUND DATAFINANCIAL STATEMENTSM anager s REPORT Highlights - Five YearsChairman of the Advisory Committee Charities Property Fund Team Investor Categorisation Objectives Strategy Fund Performance Fund Growth Sector Weightings Case Study - Greenwich Portfolio REPORT - PurchasesAwards and Achievements Case Study - Bath Portfolio REPORT - Sales Case Study - Bury St Edmunds Map of Properties MANAGER S REPORTAs

4 A result, the demand for secondary or short-term income assets has declined whilst core, long term income and annuity-type investments with fixed rental uplifts have maintained their continues to play to our strengths - having built a quality portfolio based on real estate fundamentals and no use of debt, we succeeded in outperforming the market for the tenth year in succession. Our focus on long leases provides better risk adjusted returns and insulates the Fund in times of uncertainty. The Fund s average lease length is now almost 13 years (the highest it s ever been) and our percentage of index linked leases within the portfolio is close to 40%, which is attractive now that RPI inflation has crept back up to (July 2017).

5 Due to the large number of index linked rent reviews and through the completion of several pre-let construction projects (see our case studies on pages 15, 19 & 22) the portfolio is predicted to deliver double digit dividend growth over the next 12-18 months, which is a very attractive prospect in this low growth leave vote in the referendum on the UK s continued membership of the EU last June (Brexit) initiated a flash crisis of confidence in UK commercial real estate markets. However, this was quickly replaced by the dawning realisation that the fundamental supply and demand dynamics continued to be compelling and the level of income was difficult to replicate in other asset classes. In March this year the UK Government triggered Article 50 of the Lisbon Treaty, informing the EU of our intention to withdraw membership in 2019.

6 An election was subsequently called in June this year to strengthen the Prime Minister s hand and Brexit mandate, however the opposite occurred leaving more uncertainty. This constant desire to hold referendums and elections (or neverendums - we have had four in four years) has delegated decision making away from MP s and has created a very unpredictable political picture, which in turn has elicited caution amongst Charities Property Fund REPORT & ACCOUNTS 2016 HIGHLIGHTS - FIVE YEARS80 PurchasesPortfolio NAV +132% 182 million Capital growth in existing assets 204 million Income distributed 36 SalesUnit price +25% per annum Fund total returnInvestor base +52% 479 million Net new investmentKentish Town.

7 NW57 The Charities Property Fund REPORT & ACCOUNTS 2017 Savills Investment ManagementSavills Investment ManagementThe Charities Property Fund (The Fund ) has once again outperformed the AREF/MSCI All Balanced Property Funds Index with a total return of , and has delivered a consistent per annum over the last three and five year periods. The Fund has now outperformed for ten years in a row. Importantly for the investors, the current income element also remains above average, with the Fund continuing to deliver the top quartile income return it set out to do at inception; on average providing per annum (net of fees and costs) over the last five Investment Management is a dedicated specialist international property investment management business with c. billion of assets under management (as at 30 June 2017), with an experienced team of professionals located in 18 offices across Europe and Asia.

8 It has provided investment services for 30 years, comprising separate ACCOUNTS and investment mandates on an advisory or discretionary basis, and the establishment and management of pooled property funds. Clients include pension funds, insurance companies, endowments, charities and family offices on whose behalf we invest in office, retail, industrial, residential and alternative sectors in Investment Management is wholly owned by the Savills Group, a FTSE 250 company and international real estate consultancy. Savills Investment Management retains operational independence from the wider Savills Group to enable us to act on a best execution basis on behalf of our PROPERTY FUND TEAMPROPERTY6 The Charities Property Fund REPORT & ACCOUNTS 2017 CHAIRMAN OF THE ADVISORY COMMITTEES avills Investment Management and in particular the Charities Property Fund team have once again ably navigated some rough waters over the last 12 months.

9 In particular I would note that following last year s Brexit referendum the team raised liquidity levels by selling assets already earmarked for sale and at prices ahead of valuation. This should provide comfort to investors that the portfolio is strong from a both a quality and liquidity CPF team are aided by the Advisory Committee which provides a sounding board to the investment manager and the comfort of an additional check and balance for investors, on top of Savills Investment Management s own internal processes and procedures. Whilst the Committee is advisory, we have a close working relationship with the management team and review the portfolio and their performance every quarter. We are also invited to comment and advise on all purchases and sales in advance.

10 The Committee benefits from the considerable knowledge and experience of the eight additional members listed below:Aidan Kearney, CIO, The Health FoundationAlan Fletcher, Investment committee member, Church of England Pension Board and Chairman of Investment Committee, Leicester Diocesan Board of Finance Andrew Chapman, Trustee of KidneyCare UK Chris Hills, CIO, Investec Wealth Management Nick Downer, Bursar, Selwyn College, Cambridge Paul Taylor, Investment committee member, Latymer Upper School Richard Robinson, Investment Director, Paul Hamlyn Foundation Wilf Stephenson, Bursar, Oriel College, Oxford We will endeavour to assist the continued success and strong governance of the Charities Property NaishChairman of the Charities Property Fund Advisory CommitteeAngy Benitz Fund ManagerJim Garland Assistant Fund ManagerINVESTOR RELATIONSFINANCELucy Auden Investor RelationsAmy Joslin Investor Relations Charities Property FundTammy Thomas Fund Finance ManagerHarry de Ferry Foster Fund DirectorShalin Syan Investor RelationsNatalie Chrimes Assistant Fund Finance ManagerMANAGER S REPORTLIST OF PROPERTIESKEY FUND DATAFINANCIAL STATEMENTSM anager s REPORT Highlights - Five YearsChairman of the Advisory Committee Charities Property Fund Team Investor Categorisation Objectives Strategy


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