The Local Authorities Property Fund Interim Report

Transcription

The Local Authorities’
Property Fund
Interim Report and Audited Interim Financial Statements
Half Year ended 30 September 2015
CCLA Fund Managers Limited
Contents
3
Structure of the Fund
5
Report of the Trustee
6
Report of the Manager*
11
Independent Auditors’ Report
13
Report of the Valuer
14
Net asset value, unit price range, net distribution, unit prices and expense ratios
17
Portfolio analysis
19
Portfolio statement
19
Ownership of the Fund
20
Property portfolio
33
Statement of total return
33
Statement of change in net assets attributable to unitholders
34
Balance sheet
35
Cash flow statement
36
Note to the financial statements
37
Distribution table
38
Statement of Trustee and Manager responsibilities
Details of Trustee and Manager*
(inside back cover)
*Collectively, these comprise the Manager’s Report.
CCLA Investment Management Limited (Registered in England No. 2183088) and CCLA Fund
Managers Limited (Registered in England No. 8735639) are authorised and regulated by the Financial
Conduct Authority.
Disability Discrimination Act 1995
Extracts from the Interim Report and Financial Statements
are available in large print and audio formats.
2
for the half year ended 30 September 2015
Structure and management
The Local Authorities’ Property Fund (the
Fund) is established under a Scheme approved
by HM Treasury under Section 11 of the
Trustee Investments Act 1961 and is subject
to the provisions of a Trust Deed dated 6 April
1972 and a Supplemental Trust Deed dated
13 September 1978.
The Local Authorities’ Mutual Investment
Trust (the Trustee) is a company limited by
guarantee. It does not have share capital and
acts as the Trustee and Operator of the Fund.
The Trustee is controlled by Members
of its Council under the provisions of the
Memorandum and Articles of Association of
the Trustee.
The Members of the Council are members and
officers appointed by the Local Government
Association, the Convention of Scottish
Local Authorities, the Northern Ireland
Local Government Officers’ Superannuation
Committee and representative unitholders.
The Members of the Council meet regularly
to receive reports and monitor the progress of
the Fund.
The Fund is an open-ended, unregulated
collective investment scheme. It is classified
as an Alternative Investment Fund (AIF) under
the Alternative Investment Fund Managers
Directive (AIFMD). It is domiciled in the United
Kingdom and subject to appropriate UK laws
and regulations.
by the Trustee as the Manager of the Fund.
The Manager has appointed CCLA Investment
Management Limited as the Investment
Manager of the Fund under an Investment
Management Agreement. The Manager has
delegated to the Investment Manager the fund
management, administration and secretarial
functions of the Fund. CCLA Fund Managers
Limited is a wholly owned subsidiary of CCLA
Investment Management Limited.
The Trustee has delegated to CCLA
Investment Management Limited the registrar
functions of the Fund under a Registrar
Agreement. CCLA Fund Managers Limited and
CCLA Investment Management Limited are
both authorised and regulated by the Financial
Conduct Authority (FCA). The Trustee owns
13.7% of the ordinary share capital of CCLA
Investment Management Limited.
HSBC Bank plc, an AIFMD authorised
Depositary, has been appointed in
accordance with the AIFMD requirements
as the Depositary of the Fund. The primary
functions of the Depositary are cash flow
monitoring, safekeeping of assets and
oversight of operational functions.
Objective
The Fund provides facilities exclusively for local
authorities and other public sector organisations
to invest in commercial and industrial property
on a collective basis so as to obtain a spread of
risk with constant expert property management.
Its objective is to provide a good total capital and
income return over the long term.
CCLA Fund Managers Limited, an AIFMD
authorised manager, has been appointed
3
Investment policy
The Fund’s powers of investment are not
restricted either to particular types of property
or, subject to the consent of HM Treasury,
to specific parts of the world. However, it is
the present policy to confine investment to
commercial and industrial properties and property
pooled funds within the United Kingdom.
A suitable spread is maintained between
different types of property and geographic
location. Overriding importance is attached
to location, standard of construction and to
covenant quality of the tenants. The portfolio
is kept under constant review with the object
of disposing of any property if appropriate
returns have not been achieved or if future
growth prospects diminish unacceptably.
Properties are regularly inspected to ensure
that the tenants comply with maintenance and
other contractual obligations. Finance may be
provided for suitable property developments.
Any proposed amendment to the investment
objective or policy of the Fund must be
approved by HM Treasury and sanctioned by a
special resolution of the Trustee.
Benchmark
The performance benchmark for the Fund is
the IPD Other Balanced Property Funds Index
calculated on a net asset value basis, after
all expenses.
The benchmark covers the investment
performance of 19 property funds valued at
£15.7bn as at 30 September 2015, ranging in
size from £106.1m to £3.2bn.
An IPD Direct Property Benchmark is also
used to review and monitor the performance
of the Fund’s property portfolio. This provides
an appropriate and durable index for measuring
4
the performance of the Fund’s property assets
and details can be supplied on application to
the Manager.
Eligible contributors
Units of the Fund can only be issued to and
owned by local authorities in the United
Kingdom which are entitled to receive
distributions from the Fund gross of tax.
Monthly subscription dates
Investment in the Fund may be made by
a local authority on any month end dealing
day. Withdrawals from the Fund may be
requested by a local authority on any month
end dealing day. The Fund may, however,
at its discretion, defer the processing of any
application or withdrawal for a period, as it
may deem fit, to allow time for the purchase
or sale of properties to utilise funds, meet the
withdrawals or to protect the interest of the
unitholders in the Fund, if required.
Borrowing powers
The Trustee believes that the management
of a property portfolio is facilitated by the
exercise of a limited power to borrow and the
Scheme provides for borrowings of up to 25%
of value of the Fund. The Fund has in place
borrowing facilities which permit the Manager
to borrow up to 10% of the value of the Fund
under the terms of the facility agreements.
These facilities can also be used to
accommodate timing differences between
the availability of funds for investment and the
making of suitable property purchases.
The Fund does not use any financial
instruments or derivatives for the purpose of
interest rate hedging or for any other purpose.
Report of the Trustee
We have pleasure in presenting our interim
report of The Local Authorities’ Property Fund
(the Fund) to the unitholders of the Fund.
Responsibilities of the Trustee
The Trustee is responsible for approving
the Fund’s property investment strategy,
monitoring diversification, suitability and
risk, reviewing the performance of the Fund
and approving its distribution payments. In
addition, we have monitored the administration,
expenses and property valuations of the Fund.
The Trustee meets four times in each calendar
year to undertake the responsibilities detailed
above. In addition, the Fund’s Property Sub
Committee meets quarterly with the property
manager to review the Fund’s property
portfolio, transactions and policies.
Compliance with Trust Deed and
Management Agreement
Following our regular meetings and
consideration of the reports and papers we
have received, we are satisfied that the
Manager, to whom we have delegated the
administration and management of the Fund,
has complied with the terms of the Fund’s
Trust Deeds and the Management Agreement.
T Salmon
Chairman of The Local Authorities’ Mutual
Investment Trust
16 November 2015
Controls and risk management
CCLA Fund Managers Limited has a risk
management framework which provides a
methodology for the assessment, mitigation
and reporting of risk, ensuring a high quality
of risk management and control is maintained
for all funds under the Manager’s control. The
effectiveness of risks and controls is assessed
by the directors and senior management of the
Manager, with the help of the operational risk
manager, on a continuing basis. On an annual
basis, the Trustee receives and considers an
operational risk report from the Manager.
During the period, the Board reviewed the
annual operational risk report, which records
any residual risks outside the risk appetite set
by the Manager and the actions being taken to
mitigate those risks.
5
Report of the Manager
Performance
The Fund has continued to perform
satisfactorily, producing a total return after
expenses of 6.7% over the half year and 15.2%
over the last twelve months. In comparison,
the IPD Other Balanced Fund Index recorded
returns of 6.6% and 14.8% for the respective
periods. Details of the Fund’s performance and
comparative benchmark over the longer term
are shown in the table below.
The unit price increased from 276.31 pence to
287.62 pence, giving a capital return of 4.1%.
Distributions in the period rose to a total of
6.9155 pence as compared with 6.8411 pence
for the previous six months and 6.5800 pence
for the comparative period to give an income
return for the half year of 2.5% and 5.2%
over the last twelve months. The comparable
benchmark income returns are 2.0% and 4.2%
respectively. Income yield at the half year was
4.8% compared to a benchmark of 3.8%.
Market review
recovery in the property sector. As the upturn
has become established, investors have
been increasingly willing to consider assets in
regional markets and secondary and shorter
lease properties where valuations have lagged
as compared with top quality, secure income
assets in London.
Occupier markets however have remained
challenging. Void rates have risen back to over
10% and generous incentives have been a
feature of lease negotiations.
New money flows into the sector have
continued at a high level, with the effect of
creating increased competition in the market
for assets where demand has exceeded supply,
with a resulting upward pressure on prices.
The IPD Monthly Index has now recorded all
property capital growth for 29 consecutive
months since April 2013. By the end of
September 2015, the rate of annual growth had
moderated to 9.1% as compared with 13.0% in
2014, but it still remains attractive.
The steady improvement in the domestic
economy has been fundamental to the
Total return against benchmark to 30 September 2015 (after expenses)
Six months
%
1 year
%
3 years
% p.a.
5 years
% p.a.
10 years
% p.a.
Property Fund
+6.7 +15.2+13.2+10.1 +4.9
IPD Other Balanced Property
+6.6
Funds Index
Source: The Manager/IPD.
6
+14.8
+11.8
+9.0
+3.8
At the sector level, office and industrial
properties gave the strongest returns,
supported by an upturn in occupier conditions
which include improved prospects for letting
vacant accommodation, lease renegotiation and
rental growth. In contrast, sentiment towards
the retail sector remained fragile. This was due
primarily to concerns over the sustainability of
rental income levels rather than with finding
suitable tenants; the void rate in the retail
sector is significantly lower than those in the
other principal sectors.
Activity
The Fund continued to experience strong growth
due mainly to a steady inflow of capital from a
growing unitholder base. As a result acquisitions
have dominated activity within the portfolio.
Ten new investments have been added in the
last six months, at a total cost of £133.0m
including purchase expenses. Details are noted
by lot size in the table below.
Purchase
LocationSector Tenant Price
Yield
London,
Office with
Multi-let
£39.85m
4.2%
KingswayShops
Nottingham
Retail
Homebase
£16.70m
6.8%
WarehouseLtd
Dartford
Office
Mazda, Balfour £14.39m
6.4%
Beatty and Sky
Bracknell,
Office
JDA
£12.40m
8.0%
The Arena
Software
UK Ltd
DartfordOffice Multi-let£11.86m7.4%
London,
Warehouse
Vow
£9.45m
6.2%
Croydon
Europe Ltd
York,
Shops
Multi-let incl, £7.62m
5.4%
Coney Street
Waterstones
and Three UK
Edinburgh,
Office
Regus Ltd
£5.95m
8.0%
Edinburgh Park
Grimsby
Retail
CDS
£4.45m
6.3%
Warehouse(Superstores
International)
Ltd
Aberdeen
Warehouse
IKM
£4.14m
7.3%
Testing Ltd
Date
June 2015
May 2015
August 2015
August 2015
May 2015
July 2015
May 2015
May 2015
May 2015
August 2015
7
This is a good result given the competitive nature
of the bidding environment and the shortage
of quality assets. The new holdings add an
attractive and diverse set of investments to the
portfolio which support the yield and maintain
asset quality. A key driver in the selection of
these properties has been the potential for future
rental growth and overall asset performance,
whether this is achieved through upward only
rent reviews on existing leases, the potential
for rental growth in the local area through
increasing occupier demand combined with
decreasing supply or the potential for re-gearing
and extending existing leases with tenants with
strong covenants.
The void rate has fallen to 3.1% compared to
5.1% six months ago following the letting of
the vacant industrial warehouse property on
Inter-Link Park, Coalville, Leicestershire and
in spite of a unit on the Beckton Retail Park,
London becoming vacant following the exercise
of a break clause. Over the same period the
average level of voids recorded by IPD for the
All Property Index has increased to 10.7%,
compared to 9.4% at the start of the year.
8
Gearing and liquidity
During the period, the existing facilities with
HSBC bank were extended by £20.0m to
£40.0m to facilitate the acquisition process
during what has been a particularly busy time.
Although the facilities had been drawn on to
cover short term liquidity requirements during
the six month period, neither were being
utilised at 30 September.
Available liquidity at 30 September amounted
to £56.4m, being comprised of available debt
facilities of £40.0m and cash of £16.4m. Of
the amount held in cash, £3.0m was held on
deposit with the Public Sector Deposit Fund
(‘PSDF’). The total amount on deposit at PSDF
at 30 September was £5.0m, comprising £3.0m
of capital cash and £2.0m of cash generated
from operating activities.
The Fund has exposure to gearing through its
holding in the Henderson UK Retail Warehouse
Fund. At 30 September 2015, the Fund’s
exposure to the underlying debt attributable to
its unit holding in the Henderson Fund amounts
to £2.4m.
Strategy
The Local Authorities’ Property Fund aims to
provide unitholders with a competitive total
return over the long term from a relatively high
income together with some capital appreciation
over time. To achieve that objective the
investment strategy is focused on asset
selection and the active management of the
portfolio. We believe that this approach is
appropriate reflecting the size of the LAPF, the
imperfect nature of the commercial property
market, current market conditions and our
expectations for the future.
Risks are controlled in the asset selection
process, the approach to property management
and in the overall structure of the Fund, which
is diversified by asset, tenant, sector and
geography, reducing the impact of property
specific risk.
Investor activity
The Fund continued to receive strong inflows of
new capital, sourced from both investors with
existing holdings in the Fund and new investors
to the Fund. The inflows during the period were
£124.4m resulting in the creation of 41,867,490
units, bringing the total number of units in issue
to 159,782,987. New investors to the Fund
accounted for 16,422,203 of the units created
during the period. There were no redemptions.
At 30 September, the number of investors
participating in the Fund had risen by 26, from
97 at the start of the period to 123 at the end.
Outlook
Rental value growth will increasingly replace
yield compression as the main driver to rising
values, and this process has already been
seen to have started in London and the South
East. An attractive valuation gap continues to
exist between short and long lease assets,
but with yield compression largely complete,
it will require lease management to narrow
the gap further.
We expect overall demand levels to remain
strong, keeping markets competitive and
providing support to capital values. Occupier
markets should improve, but gradually and
unevenly across the asset class.
Within the asset class, it is clear that the
recovery is at different stages of maturity.
In London, and for many prime assets,
valuations have reached levels which are
now dependent upon rising rents for further
improvement. In regional markets and for
shorter lease assets where ratings lag historic
peaks, there is still potential for prices to be
supported by lower yields.
9
After a strong start to the year it appears
that 2015 is going to be a rewarding one
for property investors. Although returns are
unlikely to match those of 2014, they should
be comfortably into double figures. There
are, of course, risks including the possibility
of the economic recovery faltering or interest
rates rising sharply which could impact market
sentiment and so returns, but this aside, the
asset class continues to offer reasonable value
on an absolute basis and also relative to other
asset classes.
P Hannam
Head of Property
16 November 2015
Risk warning
The Fund’s units and the revenue from them
can fall as well as rise and an investor may not
get back the amount originally invested. Past
performance is no guarantee of future returns.
affected by changes in general economic
climate and local conditions.
Property and property related assets are
inherently difficult to value because of the
individual nature of each property. As a result,
valuations are open to substantial subjectivity.
There is no assurance that the valuations of the
properties will reflect the sale price achieved,
even where such sale occurs shortly after the
valuation point.
The performance of the Fund could adversely
be affected by a downturn in the property
market in terms of capital value or a weakening
of rental yields. The revenue received by the
Fund is dependent to a large extent upon the
occupancy levels of any property owned by
the Fund and the rents paid by these tenants.
Rental revenues and property values are
10
Property values are dependent in particular on
current rental values, prospective rental growth,
lease lengths, tenant credit worthiness and
the valuation yield (which is itself related to
interest rates, the market appetite for property
investment in general and with reference to the
specific property in question) together with the
nature, location and physical condition of the
property concerned.
The Fund’s units are intended only for longterm investment and are not suitable for money
liable to be spent in the near future. They are
realisable only on each monthly dealing day
and a period of notice may be imposed for
application or redemption of units depending on
Fund liquidity.
The Fund is permitted to borrow up to 25% of
the value of the Fund which may increase the
volatility within the Fund.
to the unitholders of The Local Authorities’ Property Fund
Report on the Financial Statements
Our opinion
In our opinion, the Interim Financial Statements
have been properly prepared, in all material
respects, in accordance with the basis of
preparation and accounting policies in note 1
to the Interim Financial Statements.
This opinion is to be read in the context of
what we say in the remainder of this report.
Emphasis of matter – Basis
of preparation
Without further modifying our opinion on
the interim financial statements, we draw
attention to note 1 of the interim financial
statements which describes the basis of
preparation. The interim financial statements
are prepared by the Manager for the specific
purpose as described in our responsibilities
and those of the Manager paragraph below.
As a result, the interim financial statements
may not be suitable for another purpose.
What we have audited
The Interim Financial Statements, which are
prepared by The Local Authorities’ Property
Fund, comprise:
• the balance sheet at 30 September 2015;
• the statement of total return for the half
year then ended;
• the cash flow statement for the half year
then ended;
• the statement of change in net assets
attributable to unitholders for the half year
then ended;
• the note to the Financial Statements,
which describes the basis of preparation of
Financial Statements and other explanatory
information; and
• the distribution table
The financial reporting framework that has
been applied in the preparation of the interim
financial statements is in accordance with the
basis of preparation and accounting policies in
note 1 to the interim financial statements.
In applying the financial reporting framework,
the Manager has made a number of subjective
judgements, for example in respect of
significant accounting estimates. In making
such estimates, they have made assumptions
and considered future events.
What an audit of Financial
Statements involves
We conducted our audit in accordance
with ISAs (UK & Ireland). An audit involves
obtaining evidence about the amounts and
disclosures in the Financial Statements
sufficient to give reasonable assurance that
the financial statements are free from material
misstatement, whether caused by fraud or
error. This includes an assessment of:
• whether the accounting policies are
appropriate to the Fund’s circumstances
and have been consistently applied and
adequately disclosed;
11
to the unitholders of The Local Authorities’ Property Fund
• the reasonableness of significant accounting
estimates made by the Manger; and
• the overall presentation of the Financial
Statements.
In addition, we read all the financial and nonfinancial information in the Interim Report
and Audited Interim Financial Statements
to identify material inconsistencies with
the audited Financial Statements and to
identify any information that is apparently
materially incorrect based on, or materially
inconsistent with, the knowledge acquired
by us in the course of performing the audit. If
we become aware of any apparent material
misstatements or inconsistencies we consider
the implications for our report.
Responsibilities for the Financial
Statements and the audit
(UK & Ireland). Those standards require us to
comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
This report, including the opinion, has been
prepared for and only for the unitholders of
the Fund as a body in accordance with the
Trust Deed and for no other purpose. We do
not, in giving this opinion, accept or assume
responsibility for any other purpose or to any
other person to whom this report is shown or
into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
16 November 2015
Our responsibilities and those of the Manager
As explained more fully in the Statement
of Trustee and Manager Responsibilities
Statement set out on page 38, the Manager is
responsible for the preparation of the Financial
Statements and for being satisfied that they
give a true and fair view.
Our responsibility is to audit and express
an opinion on the financial statements in
accordance with applicable law and ISAs
The maintenance and integrity of the CCLA
Investment Management Limited website is
the responsibility of the Manager; the work
carried out by the auditors does not involve
consideration of these matters and, accordingly,
the auditors accept no responsibility for any
changes that may have occurred to the financial
statements since they were initially presented
on the website.
12
Legislation in the United Kingdom governing
the preparation and dissemination of financial
statements may differ from legislation in other
jurisdictions.
Report of the Valuer
Dear Sirs,
The Local Authorities’ Property Fund
valuation as at 30 September 2015
In accordance with your instructions, we have
valued all the property investments owned
by the Fund as at 30 September 2015. The
valuation has been prepared on the basis
of Market Value in accordance with the
current edition of the Appraisal and Valuation
Standards of the Royal Institution of Chartered
Surveyors (RICS). We understand that our
valuation is required for unit pricing and
accounting purposes.
We are of the opinion that the aggregate
market values of all the properties held by the
Fund, before any lease incentive adjustments,
as at 30 September 2015 was:
£438,090,000
Details of the basis of our valuation and the
individual properties are set out in our Report
and Valuation addressed to you and dated
30 September 2015.
Yours faithfully,
BNP Paribas Real Estate
5 Aldermanbury Square
London EC2V 7BP
16 November 2015
13
Net asset value, unit price range,
net distribution, unit price and
expense ratios
Net asset value
At
31 March
2011
2012
2013
2014
2015
At 30 September 2015
Net asset
value
£’000
Net asset
value pence
per unit
Number
of units
in issue
74,988
76,942
76,679
132,667
325,815
459,566
227.63
227.78
223.48
243.06
272.03
283.16
32,943,101
33,779,012
33,779,012
53,735,568
117,915,497
159,782,987
The net asset value is calculated on the bid-market value basis compared to the balance sheet
where the assets are valued on a market value basis in accordance with the current RICS
Appraisal and Valuation Standards.
The difference between the net asset value disclosed above (as at the Fund’s pricing point) and
the net asset value as disclosed on the balance sheet is primarily the result of the re-classification
of lease incentive and rent free receivables for the purposes of statutory financial reporting.
Unit price range
Year to 31 March
2011
2012
2013
2014
2015
Six months to 30 September 2015
Highest offer
pence per unit
Lowest bid
pence per unit
241.03
241.85
241.18
261.09
292.20
304.16
215.94
225.96
223.48
222.85
242.92
274.76
Distribution
pence per unit*
Yield on unit
held for the
period %**
14.3310
13.4041
12.8380
11.4788
13.4211
6.9155
6.20
5.79
5.66
4.65
4.86
4.81
Net distribution
Year to 31 March
2011
2012
2013
2014
2015
To 30 September 2015
*Distributions are stated after management expenses.
**Yield is expressed as a percentage of the unit mid price at the end of the reporting period on
a twelve month rolling basis. Historically yield was expressed as a percentage of the unit offer
price; prior periods have been restated.
14
expense ratios
Unit prices at 30 September 2015
Income units
Bid price
pence per unit
Offer price
pence per unit
283.16
304.16
The Fund’s units were first issued on 18 April 1972 at a price of 100.00p.
The monthly unit prices are published in the Financial Times and on the Fund’s dedicated website
at www.lapf.org.uk.
The bid and offer prices are calculated on the net asset value minus or plus a 1.55% deduction or
5.75% surcharge respectively.
Expense ratios
Half year ended
30.09.2015
Half year ended
30.09.2014
Fund management fees
Fund expenses
Total expense ratio
0.60%
0.06%
0.66%
0.59%
0.13%
0.72%
Property expense ratio
0.30%
0.31%
Real estate expense ratio
0.96%
1.03%
The total expense ratio of the Fund is made up of the Fund management fee ratio and the Fund
expenses ratio. The ratio is calculated by comparing the direct costs of operating the Fund to its
average net assets for the reporting period. These costs do not include any costs relating to the
ownership and management of the properties in the portfolio.
The property expense ratio is calculated by comparing the total costs of the day to day ownership
of the property assets which are not recoverable from tenants to the Fund’s average net assets
for the reporting period.
The real estate expense ratio combines all the elements of the individual ratios described above.
No performance fees are charged to the Fund and the performance fee ratio is not calculated.
15
expense ratios
The portfolio turnover rate gives an indication of how frequently the Fund is buying or selling
assets by comparing the cash flows to or from the fund resulting from this activity to the Fund’s
average net assets for the reporting period.
Portfolio turnover rate
16
Half year ended
30.09.2015
Half year ended
30.09.2014
32.81%
38.49%
Portfolio analysis
at 30 September 2015
Tenure
30.09.2015
31.03.2015
£’000
%£’000
%
Freehold or heritable 375,69085.76
244,375
62,40014.24
50,675
Leasehold
82.82
17.18
438,090100.00
295,050
100.00
Tenants’ unexpired lease terms
30.09.201531.03.2015
Unexpired term
%%
Over 10 years
18.94
5-10 years
20.40
Under 5 years
57.53
Void
3.13
14.30
24.80
55.80
5.10
100.00
100.00
Lease termination is calculated at first break clause, if any. The values are based upon the
percentage of total revenue from contracted leases plus estimated rental values of unlet
units/developments.
Use of capital
30.09.2015
31.03.2015
£’000
%£’000
%
Completed properties
Indirect investments
Net other assets
438,09095.84
295,050
4,9791.09
4,872
14,0383.07
23,257
91.30
1.50
7.20
457,107100.00
323,179
100.00
17
Portfolio analysis
Asset by type
Shops 9.3%
Offices 45.1%
Industrial & W’houses 23.1%
Retail Warehouses 17.8%
Indirect 1.1%
Cash 3.6%
Geographical distribution
Shops South East 7.5%
Shops rest of UK 1.8%
Retail Whse 18.9%
Offices City 3.7%
Offices West End 8.1%
Offices rest of South East 21.3%
Offices rest of UK 12.1%
Industrial South East 5.0%
Industrial rest of UK 18.0%
Cash 3.6%
18
Portfolio statement
£’000
% of Fund
33,840
7.40
Valued between £5m and £10m
17 properties
130,500
28.55
4 properties
51,550
11.28
Valued at over £15m
10 properties
222,200
48.61
Indirect investments
Net
other assets
4,979
14,038
1.09
3.07
457,107
100.00
Number
of investors
Number of
units in issue
‘000
%
of units
in issue
86
20
13
4
123
32,014
42,111
53,539
32,119
159,783
20.04
26.36
33.50
20.10
100.00
Properties
10 properties
Net assets
Ownership of the Fund
Ownership band at
30 September 2015
Less than 1%
1% or greater but less than 2%
The largest single investor held 6.63% of the units in issue at 30 September 2015. The largest five
investors in the Fund held 23.84% in aggregate of the units in issue at 30 September 2015.
19
Property portfolio
Standard retail
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
84,85 & 86
East St
CHICHESTER
Swarovski
10 yrs
UK Ltd
5 yrs
14.04.08
–
85,000
River Island
10 yrs
Clothing Co. Ltd 10.03.08
5 yrs
–
300,000
15-17 Gallowtree
Gate
LEICESTER
Sabina Hair
& Cosmetics
(London) Ltd
10 yrs
25.07.14
5 yrs
2019
650,000
0-5
22 and 23
The White
Gentleman’s Walk Company
NORWICH
(U.K.) Limited
10 yrs
24.03.14
5 yrs
2019
270,000
5-10
89-89A
Monsoon
Broad Street
Holdings
READINGLimited
25 yrs
25.08.94
5 yrs
–
99,000
5-10
Waterstones
20 yrs
Booksellers24.06.95
Limited
5 yrs
–
340,000
13-17 Coney
Street
YORK
3 UK Retail
20 yrs
Limited23.12.97
0 yrs
–
85,250
Waterstones
10 yrs
Booksellers30.12.13
Limited
5 yrs
2018
285,000
5 yrs
2016
65,000
20
Ritual Cosmetics 10 yrs
UK Limited
29.11.11
5-10
5-10
Property portfolio
Offices
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
2 The
Arena
BRACKNELL
IGE Energy
10 yrs
Services17.11.14
(UK) Limited
5 yrs
2019
1,142,286
15+
3 The Arena
BRACKNELL
JDA Software
UK Limited
20 yrs
29.10.98
5 yrs
–
1,041,572
10-15
Milton Road
CAMBRIDGE
AstraZeneca
UK Limited
5 yrs
28.11.13
0 yrs
–
1,356,864
15+
Lakeview
Kuehne & Nagel 10 yrs
East & West
12.10.09
DARTFORD
5 yrs
–
338,420
10-15
True
10 yrs
Telecom02.06.14
Limited
5 yrs
2019
202,092
Swan Staff
11 yrs
Recruitment12.12.14
Limited
5 yrs
2019
202,092
HSBC Bank Plc 10 yrs
5 yrs
2016
116,298
23.05.11
Vacant – ––
–
Crossways
Business Park
DARTFORD
Mazda
15 yrs
Motors UK Ltd 17.07.15
5 yrs
2020
588,500
Sky In-Home
10yrs
Service Limited 29.08.14
5 yrs
2019
97,160
Balfour Beatty
Group Ltd
5 yrs
–
286,700
10 yrs
04.09.09
10-15
21
Property portfolio
Offices
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
9-10 Lochside
Place
EDINBURGH
Regus (Edinburgh24 yrs
Lochside Place) 27.02.01
5 yrs
2018
329,700
Bluefin Insurance 7 yrs
Services Limited14.07.14
0 yrs
–
56,380
Rental Guarantee 1 yrs
20.05.15
0 yrs
–
37,769
Computershare 10 yrs
Limited06.09.13
5 yrs
2018
87,885
6-20 Bell
Scottish
5 yrs
Street
Consortium09.01.12
GLASGOW
for Learning
Disabilty
0 yrs
–
55,000
Vacant
–
––
–
Vacant
–
––
–
Scottish
Children’s
10 yrs
Reporter11.02.14
Administration
2019
221,155
5 yrs
2019
49,045
34 yrs
0 yrs
01.11.85
2017/
2019
270,000
0-5
–
430,000
0-5
ICA Architects
10 yrs
Limited15.12.14
292 St Vincent
Street
GLASGOW
McClure
Naismith LLP
22
0-5
5 yrs
2-4 Blythswood
Brodies LLP
Square
GLASGOW
5-10
29 yrs
29.09.88
5 yrs
Property portfolio
Offices
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
202-216 Silbury
Boulevard
MILTON KEYNES
Grant Thornton 28 yrs
Nominees15.12.89
5 yrs
–
260,000
0-5
Castle
Gala Group II Ltd 15 yrs
Boulevard
06.08.03
NOTTINGHAM
5 yrs
–
515,000
5-10
UPS Limited
5 yrs
0 yrs
–
197,750
30.04.14
Vacant – ––
–
Telefonica
UK Ltd
15 yrs
08.03.01
0 yrs
–
18,186
Trinity Park
SOLIHULL
Allianz
32 yrs
Management25.03.92
Services Limited
8 yrs
2022
420,000
5-10
5-10
Castle Street
Secretary of
TAUNTON
State for
Communities
25 yrs
25.03.91
0 yrs
–
409,000
Secretary of
UK State for
Communities
25 yrs
25.03.91
0 yrs
–
404,000
Warwick
Rolls Royce PLC 9 yrs
Technology
09.07.12
Park
WARWICK
5 yrs
2016
387,300
5 yrs
2016
387,300
5 yrs
2017
203,520
Industrial
Turbine
10 yrs
Company24.02.11
(UK) Limited
Alliance
10 yrs
Medical Limited 24.04.12
15+
23
Property portfolio
Offices
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
Siemens PLC
7 yrs
03.12.14
5 yrs
2016
213,265
7 Roundwood
Avenue
WEST LONDON
5 yrs
2016
1,288,980
24
Fiserve (Europe) 17 yrs
Limited03.02.01
15+
Property portfolio
Offices/shops
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
Imperial House
Wasabi Co
15 yrs
LONDON Limited17.07.07
New England
Food
15 yrs
Ventures25.12.10
Limited
5 yrs
2017
102,000
5 yrs
2015
80,000
Sweet Ventures 5 yrs
Limited29.07.13
0 yrs
–
34,440
Individual
20 yrs
Restaurant22.11.00
Company Limited
5 yrs
2016
38,100
Huntress
10 yrs
Search Limited 19.01.07
5 yrs
2012
196,000
Finance &
10 yrs
0 yrs
Leasing05.08.07
Association
–
174,304
Huntress Search 10 yrs
Limited 19.01.07
0 yrs
–
197,500
I Davies,
11 yrs
C Farmer, 03.10.12
S Gupta, P Guin
5 yrs
2018
218,440
Sphere Digital
5 yrs
Recruitment30.03.15
Limited
0 yrs
–
123,075
Thornton &
10 yrs
Baines21.01.14
5 yrs
2019
114,750
The British Nutrition10 yrs
Foundation01.11.12
5 yrs
2017
112,133
0 yrs
–
89,950
Sphere Digital
5 yrs
Recruitment30.03.15
Limited
15+
25
Property portfolio
Offices/shops
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
Limited17.01.08
5 yrs
2013
138,500
Prager Metis LLP 15 yrs
27.07.06
0 yrs
2016
110,900
Limited19.01.07
0 yrs
–
3,280
Frixou, Koschland 5 yrs
& Fothergill
29.09.06
0 yrs
–
3,250
Finance & 10 yrs
0 yrs
Leasing05.08.07
Association
–
2,470
Limited01.11.07
–
1,410
Vacant
AC Priggen
& TP Gale
5 yrs
19.01.07
0 yrs
–
1,000
DX Network
5 yrs
0 yrs
–
1,316
BCL Burton
5 yrs
Copeland26.11.06
Solicitors
0 yrs
–
5,540
Limited10.09.07
0 yrs
–
4,190
I Davies,
C Farmer, S Gupta
5 yrs
2018
2,700
The British
10 yrs
5 yrs
Nutrition01.11.12
Foundation
2017
4,840
–
1,180
26
–
10 yrs
12.02.13
Sweet Ventures 5 yrs
Limited29.07.13
0 yrs
––
0 yrs
–
Property portfolio
Offices/shops
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
Individual
20 yrs
Restaurant22.11.00
Company Limited
5 yrs
2016
3,600
34 Threadneedle
Street
LONDON EC2
Replete
30 yrs
Limited29.09.07
5 yrs
2018
160,000
Replete Limited 24 yrs
19.07.13
0 yrs
2018
57,120
China CITIC Bank 5 yrs
04.11.14
0 yrs
–
64,258
Scorpeo Asset
2 yrs
Management23.11.14
Limited
0 yrs
–
61,080
Professional
10 yrs
Assured26.11.10
Financial Services
5 yrs
2015
30,680
Mssrs Stewart
5 yrs
M Pope
and others
29.09.12
0 yrs
–
32,190
157-159
Fenchurch Street
LONDON EC3
TM Lewin
and Sons Ltd
15 yrs
20.02.07
5 yrs
2017
325,000
O2 (UK) Limited 10 yrs
17.07.06
5 yrs
–
3,851
EE Limited
10 yrs
23.07.15
5 yrs
2020
4,428
Central Bank of 10 yrs
the Republic
10.08.10
of Turkey
5 yrs
2015
73,161
Bircroft Insurance 10 yrs
5 yrs
2015
69,469
0 yrs
–
109,890
IF P & C
5 yrs
Insurance24.08.14
Limited
5-10
15+
27
Property portfolio
Offices/shops
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
Mapfre Re
5 yrs
Compania De 01.10.14
Reaseguros S.A.
0 yrs
–
111,150
Mapfre
5 yrs
Asistencia01.10.14
Compania
Internacimal
De Segures
0 yrs
–
95,750
28
Property portfolio
Industrial
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
Aker Solutions
Aker Business
15 yrs
ABERDEENVillage 20.12.02
Services Limited
0 yrs
–
570,490
5-10
Peregrine Road
IKM Testing
ABERDEEN
Facility (UK)
Limited
15 yrs
17.03.14
5 yrs
2019
318,606
0-5
Unit 16
BSS Group plc
15 yrs
Junction Six
04.02.05
BIRMINGHAM
5 yrs
2015
500,000
5-10
BSS Group plc
13 yrs
10.03.0615.08.07
0 yrs
–
30,000
Plot 5
Interlink Park
COALVILLE
MTS Logistics
Limited
5 yrs
15.05.15
0 yrs
–
388,375
5-10
Torrington
Avenue
COVENTRY
Peugeot Motor 15 yrs
Company Plc
13.12.13
3 yrs
2016
1,481,200
15+
5 yrs
2016
620,000
5-10
Stadium Gate
Whistl UK
5 yrs
LEEDS
(Doordrop24.02.11
Media)
Limited
0 yrs
–
315,762
0-5
5 Pickett’s
Lock Lane
LONDON
Abra
15 yrs
Wholesales Ltd 02.09.11
5 yrs
2016
498,468
5-10
3310 Hunter
Boulevard
LUTTERWORTH
DHL Supply
Chain Limited
0 yrs
–
921,993
15+
Unit 4
VOW Europe
500 Purley Way
Limited
CROYDON
25 yrs
13.05.96
5 yrs
16.01.14
29
Property portfolio
Industrial
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
Units 7-11
Ridgeons Ltd
Marriot Close
NORWICH
10 yrs
29.09.08
5 yrs
2013
21,850
Toolstation
10 yrs
Limited11.05.09
5 yrs
2014
41,866
Miller West Ltd 15 yrs
23.11.04
5 yrs
2014
28,900
Kent Blaxill
and Co Ltd
5 yrs
2014
28,000
Vacant
15 yrs
05.03.04
–
––
–
Greggs Plc
10 yrs
16.03.12
5 yrs
2017
55,500
Home Solar
20 yrs
Power Limited 18.12.13
3 yrs
2033
2016
22,500
Thompson
Swan Limited
5 yrs
20.02.14
0 yrs
–
20,000
Robinsons
15 yrs
Autoservices Ltd01.09.02
5 yrs
–
3,908
R Robinson
& Co (Motor
Spares) Ltd
5 yrs
23.02.10
0 yrs
–
8,000
SFF (UK) Ltd
5 yrs
07.05.14
0 yrs
–
30,544
Vacant
Alexandra Way
TEWKESBURY
Moog
Controls Ltd
15 yrs
25.12.08
5 yrs
2018
270,000
0-5
Winwick Quay
WARRINGTON
Royal Mail
Group Limited
10 yrs
20.10.08
5 yrs
2013
630,000
5-10
30
–
––
0-5
–
Property portfolio
Retail warehouses
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
Goodliffe Park
BISHOPS
STORTFORD
Wickes Building 42 yrs
Supplies Ltd
29.09.89
5 yrs
2016
457,050
5-10
Tewkesbury
CDS
35 yrs
Road
(Superstores14.06.85
CHELTENHAMInternational)
Limited
5 yrs
2015
510,000
5-10
Victoria Street
CDS
20 yrs
North
(Superstores25.03.15
GRIMSBYInternational)
Limited
5 yrs
2020
292,952
0-5
5 yrs
2018
125,000
15+
Beckton Retail
Iceland
Park
Food Limited
LONDON
10 yrs
15.07.13
Vacant
–
––
–
Multi-Tile Limited 10 yrs
29.09.12
5 yrs
2017
135,000
Poundstretcher 20 yrs
Limited09.01.01
5 yrs
2016
115,000
99P Stores
10 yrs
Limited02.04.12
5 yrs
2017
250,000
TJ Morris Limited 15 yrs
09.09.13
5 yrs
2018
250,000
Vacant
–
––
–
Dreams Limited 20 yrs
29.09.03
5 yrs
2018
150,000
Lituanica UK
15 yrs
Limited17.07.08
5 yrs
2013
144,540
ExpertEffect
15 yrs
Limited07.08.02
0 yrs
–
128,371
31
Property portfolio
Retail warehouses
Market
Lease review Next
value
Property
Tenant
Term/from
period
review
Rent £ Range £m
Matalan
20 yrs
Retail Limited 05.10.00
5 yrs
2015
514,085
Queens Drive
Homebase Ltd 25 yrs
NOTTINGHAM
25.03.03
5 yrs
2018
1,200,000
15+
Albion Mills
Retail Park
WAKEFIELD
DSG Retail
20 yrs
Ltd t/a PC World29.09.00
5 yrs
2015
206,500
10-15
Wickes Building 25 yrs
Supplies Ltd
25.05.05
5 yrs
2015
602,325
32
Statement of total return
30.09.2015
30.09.2014
£’000
£’000£’000 £’000
Income
Net capital gains
9,8287,189
Revenue
13,1615,922
Expenses
(3,078)(1,190)
Interest payable and similar charges
(127)(171)
9,9564,561
Total return before distributions
19,78411,750
(9,941)(4,561)
Distributions
Change in net assets attributable to
unitholders
from investment activities
9,8437,189
Statement of change in net assets
attributable to unitholders
30.09.2015
30.09.2014
£’000
£’000£’000 £’000
Opening net assets attributable
to unitholders at 1 April
323,179131,253
Amounts receivable on issue of units 124,37692,189
Amounts
payable on cancellation of units
–(20,382)
124,37671,807
Change in net assets attributable
9,8437,189
to unitholders
Closing net assets attributable
457,398210,249
to unitholders at 30 September
The note on page 36 and the distribution table on page 37 form part of these financial statements.
33
Balance sheet
30.09.2015
31.03.2015
£’000
£’000£’000 £’000
ASSETS
Investments assets 440,758297,532
Debtors
2,9923,076
Cash and bank balances
40,21131,143
Cash equivalents
5,00033,450
Total current assets
48,20367,669
Total
assets
488,961365,201
LIABILITIES
Creditors
Bank overdrafts
–5,000
Distribution payable
5,5803,894
Other creditors
25,98333,128
Total liabilities
31,56342,022
Net
assets
457,398323,179
Approved on behalf of the Trustee
16 November 2015
34
Cash flow statement
30.09.2015
30.09.2014
Net cash flow from operating activities
£’000£’000
11,873
216
Taxation paid–
(414)
Net cash generated/(used) from operating activities
11,873
(198)
Cash flow from investing activities
Purchase of investment properties(133,063)
(66,697)
Capital expenditure on investment properties(334)
(402)
Proceeds from the disposal of investment properties–
750
Interest received84
56
Dividends and distributions received93
102
Net cash used in investing activities
(133,220)
(66,191)
Cash flow from financing activites
Proceeds from the issue of units124,376
92,189
Receipts of future issuance of units(9,156)
5,900
Payments made on the cancellation of units–
(20,382)
Receipts from the draw-down of bank borrowings10,000
9,000
Repayments of bank borrowing(15,000)
(11,125)
Distributions paid(8,255)
(2,926)
Net cash generated from financing activities
101,965
72,656
Net (decrease)/increase in cash at bank and in hand(19,382)
6,267
Cash and cash equivalents at the beginning of the period64,593
18,136
Cash
and cash equivalents at the end of the period
45,211
24,403
35
Note to the financial statements
1. Accounting policies
Basis of preparation
The interim Financial Statements have been prepared on a going concern basis, in accordance
with FRS 102 as applied by the “Financial Statements of UK Authorised Funds” Statement
of Recommended Practice (SORP) issued by The Investment Association in May 2014 and
the Trust Deed. In applying the financial reporting framework, recognition and measurement
principles are in accordance with FRS 102 and presentation and disclosure are in compliance
with the SORP.
This is the first set of Financial Statements to be prepared for the Fund under the 2014 SORP,
however the impact of this change is minimal for an interim reporting period and limited to
some presentational amendments to the Statement of Total Return, the Statement of Change
in Net Assets Attributable to Unitholders and the Balance Sheet. The full disclosures under the
new SORP will first be presented for the annual financial statements prepared for the year to
31 March 2016. Unless otherwise stated all other accounting policies applied are consistent
with those of the annual financial statements for the year ended 31 March 2015 and are
described in those financial statements.
36
Distribution table
30.09.201530.06.2015 30.09.201430.06.2014
pence per
pence per
pence per pence per
unitunit unitunit
Net revenue before
management expenses
Management expenses
4.1031
0.4374
Gross distribution after management
expenses and distribution payable
3.66573.2498
3.6614
0.4116
3.96633.3545
0.38250.3583
3.5838 2.9962
37
Statement of Trustee and
Manager responsibilities
The Trustee of the Fund is required by the
Trust Deed to prepare financial statements
which give a true and fair view of the financial
position of the Fund at the end of each halfyearly accounting period and the movement in
net assets for the period then ended, together
with the information set out in clause 15(1) of
the Trust Deed. In preparing these financial
statements the Trustee is required to:
• select accounting policies that are
appropriate for the Fund and apply them
on a consistent basis;
• comply with the disclosure requirements of
the Statement of Recommended Practice
relating to Authorised Funds issued by The
Investment Association in May 2014;
• follow generally accepted accounting
principles and applicable United Kingdom
accounting standards;
• keep proper accounting records which
enable the Manager to demonstrate that the
financial statements, as prepared, comply
with the above requirements;
• make judgments and estimates that are
reasonable and prudent; and
38
• prepare the financial statements on a going
concern basis that the Fund will continue
in operation unless it is inapproproate to
presume this.
The Trustee has delegated to the Manager
the day-to-day management, accounting and
administration as permitted by the Trust Deed
and the Manager is required to carry out these
duties in accordance with the terms of the
Trust Deed.
The Trustee is also required to manage the
Fund in accordance with the Trust Deed and
take reasonable steps for the prevention and
detection of fraud and other irregularities.
Under AIFMD the Manager acquired certain
additional responsibilities including, ensuring
compliance with AIFMD and that any delegation
by the Manager is in accordance with AIFMD.
Should the Manager wish to retire, the
Manager can only be discharged from its duties
under the Scheme following the appointment
of a replacement Manager who is eligible under
AIFMD to act as Manager of the Fund.
Property Fund
Members of the Council and the Trust
Chairman
T Salmon
Secretary
J Fox
Local Government Association
R Dennison (retired 11 May 2015)
E Eyre
S Fielding
P Findlow
N Keats
R Kemp
Northern Ireland Local Government
Officers’ Superannuation Committee
T Salmon
Unitholder Member
P Clokie
The Manager
Investment Manager and Adminstrator
CCLA Investment Management Limited
Registrar
Senator House, 85 Queen Victoria Street
London EC4V 4ET
Telephone: 0207 489 6000
Client Service:
Freephone: 0800 022 3505
Email: clientservices@ccla.co.uk
www.ccla.co.uk
Both CCLA Fund Managers Limited and
CCLA Investment Management Limited are
authorised and regulated by the Financial
Conduct Authority
Directors responsible for the Fund
M Quicke (Chief Executive)
J Bevan (Chief Investment Officer)
A McMillan (Chief Financial and Chief
Operating Officer)
C Peters (Investment Director) (retired
25 June 2015)
A Robinson (Director Market Development)
Head of Property
P Hannam
Company Secretary
J Fox
Head of Assurance
P Burgess (resigned 25 June 2015)
S Forrest (from 25 June 2015)
External Property Valuer
5 Aldermanbury Square, London EC2V 7BP
Depositary
HSBC Bank plc
8 Canada Square, London E14 5HQ
Banker
HSBC Bank plc
60 Queen Victoria Street
London EC4N 4TR
Solicitors
Farrer & Co LLP
66 Lincoln’s Inn Fields
London WC2A 3LH
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40

The Local Authorities Property Fund Interim Report

Transcription

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