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									         T H E C H A R I T I E S P ROP E RT Y FUN D
Interim Report for the period ended 31st December 2004 (unaudited)




                                             www.cpfund.org.uk
Contents


Fund Growth and Performance                                             2
The Portfolio                                                            3
The Commercial Property Market                                           8
Outlook                                                                 11
List of Properties                                                      14
Fund History                                                            18
Distribution Table                                                      18
Total Return and Movements in Unitholders’ Funds                        19
Balance Sheet                                                           20
Notes to the Financial Statements                                       21
General Information                                                     26
Trustee, Manager and Advisers                                           27



Benefits anticipated in The Charities Property Fund may be affected
by changes in UK tax legislation. Past performance is not necessarily
a guide to future performance. The price of units, and the income
generated from them, is not guaranteed and can go down as well as
up and investors may not get back the amount they have invested.


The Manager is Mayflower Management Company Limited,
a wholly owned subsidiary of Carr Sheppards Crosthwaite and
a member of the Investec Group.
Registered in England No: 966906.
Registered Office: 2 Gresham Street, London EC2V 7QN
Authorised and regulated by the Financial Services Authority.


The Charities Property Fund is a registered charity No: 1080290
    Fund Growth and Performance


    At the end of December, the Fund had              opportunity to access very large institutional
    grown to £242 million, thanks to a modest         properties that would ordinarily be outside its
    increase in its unit price and subscriptions of   reach. These include the shopping centres at
    £45 million in the last six months. These         Bluewater and Basingstoke and the Paddington
    subscriptions were almost double those            Central office complex.
    received in the corresponding period last
    year. The number of unit holders rose from        In another first, the Fund utilised its
    426 to 518 between the end of June and            short-term bridging facility in anticipation of
    31st December. Individual investments ranged      new subscriptions. It drew down £17 million
    from £10,000 to £6 million with around            at the beginning of December to purchase a
    20% of existing investors opting to increase      number of properties, having already received
    their holdings. With £98 million of new           significant commitments for new subscriptions
    subscriptions coming into the Fund in 2004,       at that stage. At the end of the quarter we
    we averaged £24 million per quarter.              received £24 million in new money and this
                                                      left the Fund with approaching £7 million cash
    The unit offer price rose over the half year      on deposit.
    from 117.37p to 120.24p, an uplift of 2.4%.
    Distribution payments delivered in the last two   The Fund continues to receive positive
    quarters totalled 3.55p, an uplift of nearly      interest and is on course to reach its target
    3% on the same period last year and meeting       of £350 million. We will continue to control
    our target of maintaining unitholder income in    the inflows of new money into the Fund to
    real terms. Total return for the six months to    protect the interests of our unitholders and
    December was 5.4%, giving a return for the        have decided to self impose a restriction of not
    year of 12.8%.                                    holding more than 10% in cash at any one
                                                      time. We also intend to utilise our bridging
    There were nine acquisitions and one disposal     loan facility in anticipation of new money if we
    in the last six months which brings the number    can find the right properties and to provide us
    of directly owned properties to 39. The final     with more flexibility in the timing of purchases.
    quarter of 2004 saw the Fund indirectly invest
    in property for the first time via the Insight
    Property Portfolio Fund, realising the




2    The Charities Property Fund
The Portfolio


Acquisitions                                        evidence. The Fund paid about £3.5 million
The first purchase in July was the four-storey      representing a yield of 6.5%.
office building known as Royalty House in
central Watford, located in an established office   The following two properties, both let at
location at the junction of King Street and         market rents, were bought at the end of
St Mary’s just off the High Street. The             October. The Fund paid around £3.2 million
property, built in 1991, is let to Watford and      for ACR House on Sunrise Parkway, Linford
Three Rivers Primary Care Trust on a lease          Wood, Milton Keynes representing a yield of
expiring in November 2010 with a rent               7.7%. The modern office building is located
review in 2007. Unlike many offices, the            on the well-established Linford Wood Business
property is not over rented, with its current       Park, approximately one mile to the north
rent at market level, and we anticipate             west of central Milton Keynes. It has a good
potential for rental growth. It has excellent       car parking ratio and is let to ACR Logistics
car parking for an office in the town centre and    (UK) Limited on a 15-year lease to June 2013.
its value is underpinned by the potential for       The second building, Hanimex House on the
conversion to residential use in the future.        Dorcan Road Industrial Estate in Swindon, was
It was bought for just under £4.5 million and       bought for just over £4.5 million – a yield of
generates a yield to the Fund of 7.5%.              8.2%. It comprises an early 1970s industrial
                                                    unit with two-storey integral offices that can
This acquisition was followed by the                be split into four or more units on a 4.3-acre
off-market purchase of the Focus DIY unit           site. It is let to Bacchus Holding Limited on a
at the Parkway Centre in Coulby Newham,             25-year lease to June 2013. There is potential
Middlesbrough. The property comprises a             to increase the income levels on this property
modern retail warehouse with a garden               through creating a multi-let estate if a
centre. It benefits from a long lease until June    surrender premium can be negotiated with
2023 as well as an unrestricted A1 (non-food)       the tenant.
planning consent. It is located next to the
largest out-of-town shopping centre in the          In November the Fund spent about
area, a location enhanced by a recent 80,000        £2.9 million to buy Unit 2 on Western Wood
sq ft development by Safeway, and the rent is       Way at the Langage Business Park in Plymouth,
low in the context of local retail warehouse        which is subject to an outstanding rent review




                                                                  The Charities Property Fund         3
    The Portfolio                 continued




    that could push income levels up. The single         are re-occupying the property having
    storey detached warehouse with two-storey            previously sub-let and are carrying out a
    ancillary offices is let to Pending plc for a term   substantial refurbishment programme. The
    of 28 years to December 2017; the tenant has         office rent, at £40 per sq ft, is above current
    shown interest in expanding the size of their        market levels but it is low in comparison to
    unit, which is possible because only 30% of          prime City (£45 per sq ft) and West End (£80
    the site has been built on. The purchase             per sq ft) office markets. The flexible space
    reflected a yield of 7.8%.                           does allow for multi-occupation should this be
                                                         required in the future.
    The remaining four property purchases
    all took place in December and include a
    modern warehouse let to John Menzies on
    Rosevale Business Park (part of the well
    established Parkhouse Industrial Estate) in
    Newcastle-Under-Lyme for which the Fund
    paid around £6.8 million – a yield of 7.2%.
    The property benefits from a good
    specification and high office content and is
    let on a 25-year lease to 2015.


    Also purchased and, at £18.5 million the single
    largest asset in the Fund, was Denning House,
    reflecting a yield of 7.1%. It is located at
    90 Chancery Lane in London’s Midtown,
    being between the West End and the City of
    London. It comprises an office building and
    two shops arranged on basement, ground
    and four upper floors, and was substantially
    rebuilt and refurbished in the early 1980s.
    It is let to chartered surveyor Atisreal, who        Denning House, Chancery Lane




4    The Charities Property Fund
This deal was closely followed by the                In the fourth quarter we also took a
£3.5 million purchase of the Tetley Distribution     £16.5 million stake in the Insight Property
Centre on St Andrew’s Way in Newton                  Portfolio Fund. This allows the Fund to access
Aycliffe, which has potential income growth          holdings in 10 individual property funds with
as the property is under rented when                 a combined value of more than £5 billion,
compared to similar assets. The property,            which incorporate 190 commercial properties
comprising a detached modern warehouse               throughout the UK, spread across the three
with two-storey integral offices and a large         sectors of retail, office and industrial space.
concrete yard, was built around 1987 and             This open ended fund is designed to provide
extended in 1992 on a 4.2 acre site. It is let       investors with exposure to prime UK
for a term of 20 years, expiring in June 2012        commercial properties through a fund of funds
and represents Tetley’s sole distribution facility   approach. Launched in October 2004, it has
in the UK. This purchase provides a yield to         an estimated income yield of over 4.5% and
the Fund of 7.8%.                                    an estimated total return between 8 – 9.5%
                                                     per annum on average over the next 10 years.
The final property acquisition of the six month      This fund is the only medium by which this
period was The Pavilions at 3010 & 3020 The          combination of assets can be accessed.
Crescent, Birmingham Business Park – an
established and attractive business park –
comprising two modern self-contained office
buildings, constructed in 1996 and arranged
on ground and first floors. The buildings are
let to Spring Technology Staffing Services
Limited (with surety from the Spring Group
plc) and The Harpur Group Limited (with
surety from Arval PHH Limited) on leases
expiring in August 2019 and November 2014
respectively. The Fund paid £9.4 million             The Pavilions, Birmingham
reflecting a yield of 7.5%.




                                                                   The Charities Property Fund         5
    The Portfolio                         continued




    Disposals                                                          average lease length in the portfolio. There is a
    There was a single disposal in this period: the                    trend across the property market of declining
    £4 million sale of the shop at 113-114 High                        lease lengths, which is one of the reasons
    Street & 8 St George’s Street in Winchester to                     behind the Government’s decision against
    the tenant C & J Clark International Limited. The                  introducing legislation enforcing the removal of
    property was originally bought in December                         upward only rent reviews. We would expect
    2001 for just under £2.8 million and the price                     this trend to continue, albeit slowly.
    achieved on sale was well above its valuation at
    the end of September of £3.65 million. Rental                      Lot Size Distribution
    growth prospects and further yield compression                     The average lot size now stands at £5.6
    for this property were limited.                                    million, an increase on the same period last
                                                                       year of 27%; with the Fund now standing at
    Lease Length                                                       nearly £250 million, the largest direct property
    The average unexpired lease length at 10.5                         investment stands just below £19 million and
    years has fallen compared to June 2004 (11.1                       the smallest is around £2 million.
    years) and reflects the purchase of a number
    of properties with leases shorter than the                         Sector Weightings
                                                                       Since inception the Fund has been overweight
      Unexpired term to lease expiry                                   in the industrial sector for income and the retail
                                                                       warehouse sector for growth. Historically, the
             20+
                                                                       Fund has shied away from offices, which have
             15-20                                                     seen relatively poor performance, and kept a
                                                                       low exposure to high street retail due to its
     years




             10-15
                                                                       inadequate income yield. Over the past 12
              5-10                                                     months the Fund has maintained its high
                                                                       industrial weighting through new purchases,
               0-5
                                                                       reflecting the continuing attractive yield available
                     0     10      20      30          40       50
                                   % of income                         in this sector. The low yield of the retail
                                                                       warehouse sector means that the Fund made
             The Charities Property Fund December 2004
               Source: Cordea Savills Fund Management, December 2004   only one purchase in this sector in the last six
                                                                       months. The Fund will continue to make




6    The Charities Property Fund
purchases in this segment but this will need to            has already been agreed with the tenant to
be balanced with higher yielding assets.                   take occupation shortly. This void rate equates
However, the relative high yield that is now               to 0.1% of rental value of the whole portfolio,
available from offices, together with improved             compared to the IPD Annual average void rate
rental prospects, means it is now an attractive            of 8.2% for the whole property market.
sector for investment. As a result, we have
bought four offices over the last six months.                Tenant Covenant Distribution
                                                             Percentage of Rent
Tenant Quality                                                               5A1                                       48.0
The Fund continues to focus on tenant quality
                                                                               1                           25.0
and at December 2004 the ratings by Dun &
                                                               D&B Ratings


                                                                               2               10.8
Bradstreet show that 83.8% of the income is
from tenants with minimal or low risk.                                         3           9.5

                                                                               4         6.3
Voids                                                                          Not
                                                                             rated 0.4
As at 31 December 2004 there was one void                                          0   10             20    30      40        50
(a small industrial unit in the Fund’s multi-let                                Source: D&B / Cordea Savills Fund Management
                                                                                                                  January 2005
estate in Uckfield) and a lease to a new tenant


                           Structure Comparison (% of Fund by value)

     Other UK Industrial
     Southern Industrial
        Other UK Offices
                                                                                                 31/12/2003
        Southern Offices
                                                                                                 31/12/2004
         London Offices
     Retail Warehouses
                  Retail
                           0         5             10        15                     20                25          30
                                                        % of Fund                         Source: Cordea Savills Fund Management




                                                                                    The Charities Property Fund                    7
    The Commercial Property Market


    Economic Review                                 After a couple of years of increasing profit
    The UK economy grew again in 2004, with         growth, business investment started to
    the rate of growth increasing from 2.2% in      recover in 2004 following over-investment
    2003 to an estimated 3.2%. While satisfactory   during the dot-com boom and the lead-up to
    by UK standards, this is a more sedate level    the Millennium. Businesses are now looking to
    than that shown in the World Economy, which     update through capital expenditure; the IT
    registered 4% in 2004 – the fastest rate for    replacement cycle has started and is expected
    more than 20 years.                             to continue into 2005. However, with
                                                    business sentiment moderating through the
    The high level of growth should have boosted    second half of 2004, and most commentators
    confidence. However, higher oil prices and      forecasting a slowdown in the economy in
    interest rates, as well as concerns over the    2005, the chances of a strong period of
    housing market, caused consumer confidence      investment growth are probably no more
    to dip and retail sales slowed in the second    than modest.
    half of 2004 – noticeably in December,
    despite further discounting and sales on the    Manufacturers, according to the December
    high street.                                    CBI survey, are looking to raise prices due
                                                    to increasing oil and other input costs. The
    The labour market remains tight, with           balance of firms planning to do this stands
    employment continuing to grow and               at +10%, the second highest reading for
    unemployment edging downwards. Wage             10 years. The price level of imported goods
    inflation has not been a problem so far, but    has also been drifting upwards. From a
    may become an increasing problem in the         property market view, it is likely that these
    future. The Manpower Employment Outlook         higher costs could have a negative impact on
    Survey suggests further employment growth is    margins, which would ultimately affect the
    expected, while respondents to the CBI’s        affordability of property, in particular shops
    survey reported that a shortage of skilled      and distribution warehouses.
    labour is restricting output.




8    The Charities Property Fund
Property Market Overview                          Retail Property
The IPD Monthly Index shows that 2004             This was the strongest of the commercial
annual returns for commercial property of         sectors over the last six months of 2004,
19.0% put it clearly ahead of equities at         achieving a total return of 10.8% according to
12.8% and gilts at 6.6%. For the six months       the IPD Monthly Index. It is differentiated from
to December, property was placed second           the other sectors by its rental value growth of
at 9.5% behind equities at 9.7% with gilts        2.2% over six months, compared to 0.6% for
producing 6.0% in the second half of the year.    industrials and –0.2% for offices. Of the main
The retail sector continues to be the best        retail sectors, retail warehouses performed
performing sector at 10.8% total return           best (11.6%), with the highest rental growth
over six months but offices show the most         of 3.3%, although income return was lowest.
improvement over the last year: although their    Demand for retail warehouses continues from
total return of 7.5% means that they lie in       traditional high street retailers taking advantage
third place, this is not much behind industrial   of cheaper rents for a given floor area and
returns of 8.4%.                                  modern units with good car parking.
                                                  However, both standard shops and shopping
Rental growth rates have continued to             centres produced six monthly returns of over
improve, averaging 1.2% over six months           10%, largely due to yield compression in
across all sectors. However, the major            these markets. Average running yields across
part of total return performance for all          the retail sectors fell from 5.6% in June to
sectors has come from yield compression,          5.35% in December.
through capital appreciation which has been
driven by demand from investors for
commercial property.




                                                                The Charities Property Fund            9
     The Commercial Property Market                                                    continued




     Industrial Property                                     Office Property
     Industrial property delivered total returns             We have seen a recovery in the office sector
     over the six months to December 2004 of                 which delivered a total return of 7.5% in the
     8.4%. This was driven by strong capital                 six months which compares favourably to
     growth (4.6%) and continued high income                 2.5% for the same period in 2003. Rental
     returns (3.8%). However, this sector no                 growth remains negative for the six months at
     longer has such a significant yield differential        –0.2% but is a considerable improvement
     with average running yields at 6.8% in                  from the –2.7% last year. Midtown and West
     December 2004 compared to offices at 6.6%.              End offices in London outperformed the
     The reversionary potential is however higher            average office segment, supported by positive
     than in the office sector with an average               rental growth. One of the factors driving the
     gap between current rents, including voids,             improvement in performance across the
     and open market rental value of over                    sector as a whole was investor demand for
     12% of income. Void levels in the average               attractive income yields, driving the average
     market portfolio as at December 2004 were               running yield from 6.94% to 6.56% over six
     9.7% in the industrial sector compared to               months. However, city offices continued to
     offices at 14.2%.                                       underperform as there remains a surplus of
                                                             supply and it is difficult to see how this
                                                             imbalance will be corrected.


        Three Month Total Returns (annualised)
           30
                           Total Return of All Property   Total Return Retail
           25
                           Total Return Offices           Total Return Industrial
           20
           15
       %
           10
            5
            0
           -5
                    2000                    2001          2002                      2003                  2004
                                                                                    Source: IPD Monthly Index December 2004




10    The Charities Property Fund
Outlook


Economic Prospects                                 target ranges – but this has yet to become too
The balance of the UK economy is likely to         ingrained. Nevertheless, forecasts of falling
shift somewhat in 2005, as consumers               interest rates, which were focussed on this
moderate their spending patterns and the           coming summer, have now been deferred to
corporate sector accelerates its capital           the end of the year or even into 2006.
expenditure programme. In the past few years
economic growth has relied heavily on the          Rising costs bases and potentially softening
buoyancy of consumer spending – savings            household consumption are not the most
rates have been at low levels and borrowings       favourable combination of economic factors
have risen sharply, fuelled by record low          for the retail sector. We would expect a more
interest rates (at least for modern times) and     difficult outlook, especially for high street
surging house prices. Although the gloss has       occupiers, to restrain likely growth in property
come off the last two factors, as the Bank of      values, although present enthusiasm for out-of-
England has raised interest rates to 4.75%         town retail warehousing parks (with their lower
and house prices have reached a plateau            operating cost structures) is likely to remain.
in the past few months, the low level of           Strong corporate profitability and confidence
unemployment and high level of corporate           levels should bode well for employment growth
profitability should combine to support            in the service sector which should provide a
consumer confidence close to current values.       positive backdrop for the office segment to
                                                   continue its recovery into 2005. Industrial
The course of Government policy is clouded         properties, which have long been seen as the
by the imminence of a General Election             steadiest contributors to total property returns,
scheduled for May. Public Sector spending has      should maintain this stance in the coming year.
been very strong, contributing much to the
better than expected growth for the whole          Property Market Prospects –
economy; but the Chancellor has just about         2005 to 2009
been able to remain within his self-imposed        For the second year running, we are
guidelines for fiscal rectitude. There are clear   forecasting that investor demand in 2005 for
signs of an acceleration in many components        commercial property will continue to drive
of costs – raw material prices have surged and     capital values through yield compression, even
wage growth is at the top end of Government        in the face of limited rental growth but that this




                                                                  The Charities Property Fund           11
     Outlook                continued




     is likely to be more moderate than in 2004.                    The retail market is forecast to produce
     The Fund’s portfolio, with a relatively high                   returns of 8.7% per annum over the period
     yield of 6.9% compared to the market                           2005-2009, with 6.3% per annum of the
     average of 5.9% represents investments that                    returns generated by income. The retail
     are attractive to investors and this should lead               warehouse segment is expected to produce
     to capital growth in 2005. Beyond 2005, we                     the best performance over the five year
     anticipate that the returns to commercial                      period but offers the lowest rental income.
     property will moderate, with most of the                       Many of the retailers that traded well in the
     returns coming from income although towards                    last six months are trading in out of town
     the end of the five year period, improved                      locations and demand in these markets means
     rental growth will emerge to support the                       that the retail warehouse sector should
     market. Our forecast for total returns from                    continue to show the best rental growth. The
     commercial property average 9.2% per                           Fund should benefit from its large holdings in
     annum over the next five years. Anticipated                    Merthyr Tydfil and Bury where current rental
     performance differentials between the three                    levels are very low in comparison with other
     main sectors of retail, office and industrial are              retail parks in these towns and from rent
     modest and instead we expect that                              reviews due in 2005 and 2006, which bring
     performance of market segments, for example                    good prospects of rental uplifts. The Fund
     high street retail, retail warehouses and                      recently acquired a retail warehouse let to
     shopping centres, will show more variation.                    Focus DIY in Middlesbrough, with good
                                                                    potential for rental uplift at the next rent
       2005-2009 Market Average Projections                         review in 2008.

         12
                                                                    In contrast, retailer difficulties on the high
         10
                 3.8                                                street means that rental growth prospects are
          8               1.4       1.9       2.3       2.5
      % 6                                                           limited. Although performance in the high
                 6.7      6.8       6.9       6.8       6.8
          4                                                         street segment is expected to be relatively
          2                                                         strong, this relies on continued yield
          0                                                         compression rather than rental growth, with a
               2005      2006      2007      2008      2009
                                                                    low forecast income return. The Fund, having
              Source: Cordea Savills Fund Management January 2005




12    The Charities Property Fund
sold its only traditional high street holding,                            The recent poor capital performance of the
intends to adopt a cautious approach in this                              office sector has meant that the Fund has been
sector, preferring to focus on out of town                                able to make four acquisitions in this sector
retail properties.                                                        over the last six months and benefit from
                                                                          attractive income yields. The current strength
The industrial sector continues to benefit                                of the labour market suggests risks in terms of
from its high income yield and is forecast to                             take-up of office oversupply in some markets
produce attractive total annual returns of 9.6%                           and this should limit future rental growth.
with 7.2% of this coming from income return.                              However, our forecast for average rental
We expect this trend to continue as capital                               growth in the office sector as a whole over
values are forecast to be supported by rental                             five years is 3.2% per annum, the highest level
growth of 2.4% per annum. The Fund                                        of the three main sectors and reflecting the
benefited in 2004 from a number of successful                             current low base. A healthy income return of
rent reviews on its industrial units. Evidence to                         7.4% is also forecast with total returns at
support an uplift at Uckfield where a number                              9.7% per annum for offices, again the highest
of rent reviews are due in 2005 has already                               of the three sectors.The acquisition in
been generated through lettings and renewals.                             Chancery Lane in London’s mid-town is let at
                                                                          a rent above market levels. However, our
                                                                          forecasts show relatively strong rental growth
     2005-2009 Average Projections
                                                                          in this market segment, which will help to
           10                                                             close the gap between rental income and
                8       2.4                     2.4         2.3           market rental value over the remaining term
                                    2.4
  % per annum




                6       7.4                     7.2         6.9           of the lease at this property. The other office
                                    6.3
                4                                                         acquisitions, in Watford, Milton Keynes and
                2                                                         Birmingham, all have good rental growth
                0                                                         potential as they are let at rents in line with
                      Office       Retail    Industrial      All
                                                                          current market levels.
                                                          property
                    Source: Cordea Savills Fund Management January 2005




                                                                                        The Charities Property Fund         13
     List of Properties


                    Property          Tenure           Principal Tenants

                    Bury              Freehold         MFI, Carpetright, Harveys, Comet, KFC
                    Doncaster         Freehold         Wickes
                    Lincoln           Freehold         Petrogate
                    London            Freehold         Magnet
                    Merthyr Tydfil    Freehold         Halfords, B&Q, Comet
         RETAIL




                    Middlesbrough     Leasehold        Focus DIY
                    Rayleigh          Freehold         Somerfield
                    Sheffield         Freehold         AF Blakemore, JD Wetherspoon, ASK
                    Worthing          Freehold         Laura Ashley, Game, MVC, Northworld,
                                                       Select (Retail), Clinton Cards, Remainders,
                                                       Dolland & Aitchison, Standard Life



                    Property          Tenure           Principal Tenants

                    Birmingham        Freehold         Spring Group, Harpur Group
                    Chancery Lane     Freehold         Atisreal
                    Colchester        Leasehold        Care UK, Polar Motor Company
                    Gloucester        Freehold         Axsia Serck Baker
                    Leeds             Freehold         Car Care Plan
                    Leicester         Freehold         Ericsson
         OFFICES




                    London            Part freehold,   Close Brothers
                                      part leasehold
                    Milton Keynes     Freehold         ACR Logistics
                    Stevenage         Freehold         Fujitsu Services
                    Sunderland        Leasehold        Barclays Bank
                    Tunbridge Wells   Freehold         Cripps Harries Hall
                    Watford           Freehold         Watford & Three Rivers Primary Care Trust
                    Weybridge         Freehold         JTI, Crest Estates, Guillaumes Solicitors




14   The Charities Property Fund
Annual Rent £   Expiry / Breaks

  575,560            2021
  287,000            2018
  123,039            2023
  257,800            2011
  736,240        2015 to 2016
  220,300            2023
                                  Worthing, The Montague Centre
  332,000            2014
  274,000        2014 to 2034
  884,402       2007-2017, 2088




Annual Rent £   Expiry / Breaks

  714,000         2014-2019
                                  Greater Manchester, Leigh Commerce Park
 1,337,000           2013
  301,934         2010-2015
  283,500            2018
  251,100            2017
  251,000            2013
  280,000            2008


  247,250            2013
  867,400            2007
                                  Kettering, Telford Way Industrial Estate
  701,250            2013
  328,700        2005 to 2014
  341,300            2010
  160,965        2008 to 2014                  Properties purchased in six
                                               months to December 2004




                                            The Charities Property Fund      15
     List of Properties              continued




                      Property          Tenure        Principal Tenants

                      Ashford           Freehold      Keane Graphic Products, Hickson,
                                                      Sauflon Pharmaceuticals, BG Electrical
                      Basingstoke       Freehold      Debenhams
                      Biggleswade       Freehold      Smiths Metal Centres
                      Ipswich           Freehold      Mediterranean Shipping
                      Kettering         Freehold      Bunzl
                      Leicester         Freehold      Allied Domecq
                      Manchester        Freehold      Royal Mail, Wilkinson Star
                      Manchester        Leasehold     Volex
                      Newcastle UL      Freehold      John Menzies
                      Newton Aycliffe   Freehold      Tetley Group
         INDUSTRIAL




                      Plymouth          Freehold      Pending
                      Redditch          Leasehold,    Hydro Aluminium Profiler
                                        option over
                                        freehold
                      Southampton       Freehold      Nuance Global Traders
                      Swindon           LLH           Jewson
                      Swindon           Freehold      Bacchus Holding
                      Tewkesbury        Freehold      Oberthur Card Systems
                      Uckfield          Freehold      Challenge Packaging, American Express
                                                      Europe, Alexir Contract Packaging,
                                                      Absolute Self Storage, K2 Race Engineering,
                                                      Plastic Parts Centre, Window Fitters Mate




16   The Charities Property Fund
Annual Rent £   Expiry / Breaks

  303,410       2006 to 2014


  281,250            2017
  378,000            2018
  409,000            2017
  490,320            2014
                                  Swindon, Kembrey Park
  647,500            2014
  311,000       2017 to 2018
  412,500            2020
  495,034            2015
  283,500            2012
  227,643            2017
  274,298            2017



  355,000            2012         Worthing, The Montague Centre
  135,828            2023
  381,000            2013
  232,925            2020
  488,676         2005-2016




                                  Basingstoke, Houndmills




                                              Properties purchased in six
                                              months to December 2004




                                           The Charities Property Fund      17
     Fund History
     NET ASSET VALUE / FUND SIZE

       Date                         Net Asset Value                Units in Issue        Net Asset Value
                                                  £                                       pence per unit

       30th June 2001                      18,389,477                18,150,759                  101.32
       30th June 2002                      47,943,247                45,504,073                  105.36
       30th June 2003                     109,658,633               100,020,027                  109.64
       30th June 2004                     196,671,905               170,031,868                  115.67
       31st December 2004                 241,661,323               204,397,477                  118.23


     PRICE AND INCOME HISTORY
     An investment of £1,000 on 30th September 2000 would have purchased 1000 units

       Year                     Highest Buying Price         Lowest Selling Price   Net income per unit
       ended                                       p                            p                    p

       2000#                                   100.21                       99.52                       –
       2001                                    104.22                       99.51                     6.31
       2002                                    108.45                      103.05                     6.29
       2003                                    112.97                      105.74                     6.48
       2004                                    120.24                      111.48                     7.09
       2005*                                                                                          1.79

     *To 31st December 2004 (1 quarter)
     # from 30th September 2000


     Distribution table
     In pence per unit

       Distribution period                              Distribution per unit (p)         Date paid

       Distribution Number 1
       1st July 2004 to 30th September 2004                        1.85             15th November 2004

       Distribution Number 2
       1st October 2004 to 31st December 2004                      1.79               15th February 2005




18    The Charities Property Fund
Total Return and Movements in Unitholders’ Funds
FOR THE PERIOD ENDED TO 31st DECEMBER 2004



                                                               31.12.04                    31.12.03
Total return                            Note                          £                           £


Net gains on investments                 2                    4,101,949                   1,508,808


Gross income                             3     7,136,077                   4,139,934


Expenses                                 4      (697,984)                   (415,871)


Net income                                                    6,438,093                   3,724,063


Total return for the year                                    10,540,042                   5,232,871


Distributions                            5                   (6,449,407)                 (3,729,234)


Net increase in unitholders’
funds from investment activities                              4,090,635                   1,503,637


Movements in unitholders’ funds


Net assets at the start of the period                       196,671,905                 109,658,633


Amounts receivable on
creation of units                                            40,898,783                  24,693.273


Net increase in unitholders’
funds from investment activities                              4,090,635                   1,503,637


Net assets at the end of the period                         241,661,323                 135,855,543




                                                                     The Charities Property Fund       19
     Balance Sheet
     AS AT 31st DECEMBER 2004



                                                          31.12.04                   30.06.04
                                 Note             £              £           £              £


     Portfolio of investments                          234,702,180                160,775,000


     Net current assets
     Debtors                        6    23,808,248                  31,042,609
     Bank balances                      (11,266,458)                  8,846,908


                                        12,541,790                   39,889,517


     Less: current liabilities
     Creditors                      7    2,278,830                    1,523,723
     Distribution payable                3,303,818                    2,468,889


                                         5,582,648                    3,992,612


     Net current assets                                  6,959,142                 35,896,905


     Net assets                                        241,661,323                196,671,905


     Unitholders’ funds                                241,661,323                196,671,905




20    The Charities Property Fund
Notes to the Financial Statements
AS AT 31st DECEMBER 2004



1 Accounting Policies

   (a) Basis of accounting: The financial statements have been prepared under the historical cost basis,
       as modified by the revaluation of investments, and in accordance with the requirements of the
       Charities (Accounts & Reports) Regulations 1995. The value of assets and liabilities has been
       determined in accordance with methods and principles set out in the Statement of Recommended
       Practice (SORP) for Authorised Unit Trust Schemes issued in January 1997 and the Financial
       Services Authority’s Collective Investment Schemes Sourcebook published in November 2001.

   (b) Basis of valuation of investments: The property investments of the Fund are valued quarterly
       on an open market basis, as defined in the Appraisal and Valuation Manual prepared by the Royal
       Institution of Chartered Surveyors, and in accordance with the Scheme. The interests in property
       were last valued by Cushman & Wakefield Healey & Baker on 30th December 2004. In
       accordance with SSAP19; Accounting for Investment Properties, no depreciation has been
       provided for on the property assets.

   (c) Recognition of income: Rental income and interest on deposits are accounted for on an
       accruals basis.

   (d) Treatment of management expenses: The Manager’s periodic charge is deducted from income.

   (e) Distribution policy: Income arising from the Fund’s investments accumulates during each
       accounting period. Surplus income is allocated to unitholders of the Fund in accordance with the
       Regulations. It is the policy of The Charities Property Fund to distribute all income gross on a
       quarterly basis.

   (f) Taxation: As a charity, The Charities Property Fund is not currently liable to UK tax on gains arising
       on disposals of investments, nor on income from investments, and is not liable to pay stamp duty
       on purchases of property.

   (g) Set up costs: The costs incurred in relation to the establishment of the Fund have been capitalised
       and are being amortised over a period of five years in accordance with the Scheme Particulars 6.5.




                                                                       The Charities Property Fund              21
     Notes to the Financial Statements
     AS AT 31st DECEMBER 2004



                                                      31.12.04      31.12.03
                                                             £             £

     2 Net Gains on Investments
       Proceeds from sales of investments            4,000,000            –
       Original cost of investments sold             (2,811,904)          –
       Gains realised on investments sold            1,188,096            –
       Net appreciation thereon already recognised
       in prior periods                               (838,096)           –
                                                       350,000            –
       Net unrealised appreciation                   3,751,949     1,508,808
                                                     4,101,949     1,508,808

     3 Gross Income
       Rental Income                                 6,443,943     3,858,159
       Bank interest                                   692,134      281,775
                                                     7,136,077     4,139,934

     4 Expenses

       Payable to the Manager, associates of
       the Manager and agents of either of them:

       Manager’s periodic charge                       114,499       69,328

       Payable to the Trustee, associates of
       the Trustee and agents of either of them:

       Trustee’s fees                                   38,818       23,115
       Interest payable                                       –       3,372
                                                        38,818       26,487




22    The Charities Property Fund
Notes to the Financial Statements
AS AT 31st DECEMBER 2004



                                    31.12.04             31.12.03
                                           £                    £

4 Expenses continued
  Other expenses:
  Property management               413,080               259,262
  Registration fees                   2,558                 1,473
  Insurance                           (2,219)              (1,180)
  Audit fee                           1,000                 4,268
  Valuation fee                      61,818                26,396
  Legal and professional fees        41,389                16,869
  Printing costs                     12,996                 7,968
  Publication costs                   1,545                     –
  Set up costs                       12,500                 5,000
                                    544,667               320,056

                                    697,984               415,871




                                      The Charities Property Fund    23
     Notes to the Financial Statements
     AS AT 31st DECEMBER 2004



                                                                 31.12.04      31.12.03
                                                                        £             £

     5 Distributions

        Included in the income available for distribution is
        the income received on the creation of units and
        deducted on the cancellation of units, and comprise:

        1st interim distribution                                3,145,590     1,780,356
        2nd interim distribution                                3,303,818     1,948,878

        Distribution for the half year                          6,449,407     3,729,234

        Details of the distribution per unit are set out
        in the table on page 18.

        Represented by:
        Net income                                              6,438,093     3,724,063
        Set-up costs transferred to capital                       12,500          5,000
        Balance of income brought forward                         11,826         2,105
        Balance of Income carried forward                         (13,012)       (1,934)
                                                                6,449,407     3,729,234



                                                                 31.12.04      30.06.04
                                                                        £             £

     6 Debtors
        Amounts receivable for creation of units               23,782,064    29,039,453
        Accrued income                                              9,400       12,549
        Prepaid expenses – insurance                              16,784        45,720
                           – price publication                          –          995
        VAT Recoverable                                                 –     1,943,892
                                                               23,808,248    31,042,609




24    The Charities Property Fund
Notes to the Financial Statements
AS AT 31st DECEMBER 2004



                                                                 31.12.04                   30.06.04
                                                                        £                          £

7 Creditors
   Purchases awaiting settlement                                 544,215                        229,637
   Prepaid income                                                581,365                        944,904
   Managers fees                                                   59,792                        46,649
   Price publication                                                  550                            –
   Printing costs                                                   6,613                         4,961
   Trustee fees                                                    20,173                        15,830
   Property Management fees                                      213,744                        164,552
   Audit fees                                                       2,500                         6,500
   Valuation fees                                                  42,213                        29,597
   Legal and professional fees                                     36,114                        71,093
   Set up cost payable                                             12,500                        10,000
   VAT payable                                                   759,052                             –
                                                               2,278,830                   1,523,723


8 Related Party Transactions

   Amounts payable to the Manager or associates of the Manager are shown in note 4.
   The amount outstanding at the period end in respect of those fees was £59,792 (30.06.04 £46,649)
   Amounts payable to the Trustee or associates of the Trustee are shown in note 4.
   The amount outstanding at the period end in respect of those fees was £20,173 (30.06.04 £18,600)


9 Contingent Liabilities and Commitments
   There were no contingent liabilities or outstanding commitments at the balance sheet date.




                                                                   The Charities Property Fund            25
     General Information

     Fund Structure                                        clearly defined restrictions on the right to
     The Charities Property Fund is a Common               redeem and these restrictions are set out in the
     Investment Fund which is an open ended                Scheme Particulars (copies of which are available
     investment vehicle, similar to a unit trust, but      on request).
     designed specifically for charities and established
     under Section 24 of the Charities Act 1993.           Distribution
     Common Investment Funds are themselves                The income is paid gross on a quarterly basis
     charities with schemes approved and regulated         (15 February, 15 May, 15 August, 15 November),
     by the Charity Commission.                            six weeks after each valuation point .


     As a charity, the Fund is currently exempt not only   Charges
     from stamp duty (currently 4% on all property         To ensure that investors benefit from economies
     transactions over £500,000) but also capital gains    of scale, the majority of fees are on a sliding scale
     tax and income tax.                                   so that as the Fund grows the total proportionate
                                                           costs of managing the Fund will fall.
     Investment Objectives
     The Fund aims to deliver a yield of around            Minimum Investment
     6 per cent while maintaining capital values at        The minimum investment in the Fund is £25,000
     least in line with inflation.                         although smaller amounts may be accepted at the
                                                           manager’s discretion. There is no minimum
     Unit Dealing                                          investment for existing unitholders.
     As the Fund is valued quarterly, units can be
     purchased at the end of March, June, September        For further information on The Charities
     and December. Normally units will be redeemed         Property Fund please contact Charles Mesquita
     with effect from a quarter day (the redemption        on 020 7597 1450, or write to us at:
     price being paid at the time specified in the
     Scheme Particulars) though this is subject to cash    The Charities Property Fund
     being available for redemptions. We have also         2 Gresham Street, London EC2V 7QN
     created a secondary market where we seek to           Fax no: 020 7597 1000
     match sellers with buyers. To protect the overall     Email: cpf@carr-sheppards.co.uk
     position of unitholders there are however             www.cpfund.org.uk




26     The Charities Property Fund
Trustee, Manager and Advisers

Corporate Trustee                      Legal Adviser
Citicorp Trustee Company Limited       Farrer & Co
Citigroup Centre                       66 Lincoln’s Inn Fields
Canada Square                          London WC2A 3LH
Canary Wharf
London E14 5LB                         Valuers
                                       Cushman & Wakefield Healey & Baker
Manager                                43-45 Portman Square
Mayflower Management Company Limited   London W1A 3BG
2 Gresham Street
London EC2V 7QN                        Auditors
                                       Ernst & Young LLP
Investment Adviser                     1 More London Place
Carr Sheppards Crosthwaite Limited     London SE1 2AF
2 Gresham Street
London EC2V 7QN                        Registrar
                                       Capita Financial Administrators Ltd
Property Manager                       Beaufort House
Cordea Savills Fund Management         15 St Botolph Street
8 Bourdon Street                       London
London W1K 3PD                         EC3A 7HH


                                       Performance Measurement
                                       Investment Property Databank (IPD)
                                       7-8 Greenland Place
                                       London NW1 0AP




                                                       The Charities Property Fund   27
.
.
The Charities Property Fund
2 Gresham Street
London EC2V 7QN

Telephone: 020 7597 1450
Fax: 020 7597 1000
cpf@carr-sheppards.co.uk
www.cpfund.org.uk

								
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