Property heads cut cash to invest as liquidity returns
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British commercial property fund managers are putting their cash to work once more, amid signs that liquidity is returning to the sector.
Several high-profile property directors are lowering their cash levels and investing more heavily in the asset class, while last week Henderson said it would reopen the New Star International Property fund.
December 2009 saw the largest monthly capital growth of commercial property in Britain for 23 years at 3%, according to figures released by the Investment Property Databank last week. (article continues below)
Among those reducing their cash levels to take advantage of new opportunities are Michael Barrie, the director of property at Legal & General, Richard Kirby, the director of property funds at F&C, and Gerry Ferguson, the head of UK property fund management for Swip.
Barrie has lowered his cash level to a single digit after holding more than 20% in cash at the height of the credit crunch. “Acquisitions are still going to be high on the agenda across the sector, and we are involved in many conversations, particularly looking to capitalise on sell-offs from the banks,” he says.
Kirby, the lead manager of the £753.4m F&C Commercial Property trust, says his main focus is also to find more investment opportunities.
Ferguson says the £1.5 billion Swip Property Trust has invested in some prime British properties, committing £550m since the middle of last year. As Fund Strategy reported last month, the trust bought a £260m portfolio from Aviva Investors. “We’ve taken advantage of high liquidity in the trust to purchase quality assets for the fund and our latest acquisition represents a well-diversified 12-property portfolio,” he says.
Portfolio activities in L&G’s property funds have also been brisk. Within the UK Property trust Barrie made six acquisitions totalling £54m in December. Over 2009 he made 10 acquisitions.
The F&C team bought four distribution warehouses in the second half of last year.
Meanwhile, New Star International Property is set to reopen on February 12. Dealing in the fund was suspended on November 25, 2008, after unusually heavy redemptions.
Henderson’s Mark Carpenter, the director of retail property funds, says the fund now has a “decent portfolio” and a “very healthy liquidity buffer”. At the time of re-opening, the fund will have a cash level of more than 20%.
