UK property PAIF: diversification & scale

In this video update, Simon Hillenbrand, Head of UK Retail, discusses the Financial Conduct Authority’s (FCA’s) ongoing consultation into notice periods for redemptions from authorised open-ended direct property funds. Meanwhile, Ainslie McLennan, Co-Manager of the Janus Henderson UK Property PAIF, provides an update on the portfolio, highlighting the fund’s strong relative performance and that diversification and scale remain key fund attributes.

Key takeaways

• The FCA will not be taking a final decision on its policy position in response to its consultation into notice periods for redemptions from authorised open-ended property funds until the third quarter of 2021 at the earliest.
• The PAIF has provided strong relative performance year to date and over the longer term (see tables below) and has a healthy cash balance of 16.9%* which is supplemented by an ongoing sales programme spread across sectors and tenant profiles.
• A balanced approach to the £1.2bn* fund provides scale and diversification across the industrial, office, alternatives and retail sectors.
• Sustainability continues to be a key focus for the fund, which remains committed to becoming operationally net zero carbon by 2030.

Video Recorded 24 May 2021

*Source: Janus Henderson, as at 30 April 2021.

Alternatives sector – includes assets such as cinemas, datacentres, 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.

Fixed or RPI leases – periodic increases in rent that are either fixed or based on the retail prices index measure of inflation. Approximately a third of the fund’s income is currently from leases with fixed increases or increases based on the RPI.

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.