In this Essentials video Ainslie McLennan and Marcus Langlands Pearse, Co-Managers of the Janus Henderson UK Property PAIF, introduce their approach to the UK commercial property market and the fund they manage. Discover why investors should consider the asset class on a long-term view and how the fund's dedicated investment team seek to generate long-term regular rental income and the potential for capital and income growth. Topics covered include:
- What does the fund seek to deliver for investors?
- Why should investors consider the fund on a long-term view?
- Is sustainability a key part of the investment process?
- How is the investment team structured?
- What saying best sums up the team's approach to investing?
Alternatives sector - includes assets such as cinemas, gyms, hotels, food outlets, restaurants and care homes.
Asset management - can include refurbishment work to improve valuations and attract a better quality of tenant, changing the planning use of assets to increase rental revenue, or renegotiating existing leases to extend tenancies.
Average lease length - The average time to expiry of leases across a multi-let asset or a portfolio. It is weighted by rental income and assumes that all tenant break clauses will be exercised.
Commercial property - Any property asset used for commercial purposes, the asset class is broken down into three main sectors: retail, office and industrial. There is also the growing alternatives sector.
Fixed rental increases - periodic rental increases at pre-arranged dates in the lease.
Inflation-linked leases - periodic increases in rent based on the retail prices index / consumer prices index measure of inflation.
Liquidity - The ability to buy or sell a particular asset in the market. Assets that can be easily traded in the market (without causing a major price move) are referred to as 'liquid'. Liquidity can also relate to having funds readily available to cover property purchase costs and for the purposes of supporting normal transactional flows into and out of a fund by investors.
Vacancy or void rate - The proportion, usually expressed as a percentage, of a property or property portfolio that is without a tenant. Individual properties with higher vacancy rates can be less attractive to investors looking for stable long-term income, but may be more attractive for asset managers looking to add value through asset management activity.
Yield - A measure of the percentage of income return you receive from a property investment. This is calculated as the gross annual rent generated by a property, divided by its current valuation. It is possible to calculate how much rents have increased or decreased since acquisition by using the original purchase price instead of current valuation.