Property: understand what you own

Ainslie McLennan

Portfolio Manager, Janus Henderson UK Property PAIF

28 Jan 2019

In this video update, Ainslie McLennan, Co-Manager of the Janus Henderson UK Property PAIF, discusses the key factors that UK commercial property investors should consider in 2019 and beyond. Ainslie also explains how the fund is positioned.

Key takeaways:

Income is expected to be the key driver of returns, with asset management activity providing potential opportunities for growth
Focusing on the underlying assets owned rather than just headline news enables deeper evaluation of the opportunities and risks
The fund retains a broad mix of high-quality properties across UK regions and sectors, with a South East bias, that are well placed to benefit from long-term consumer, demographic and technological trends

Recorded January 2019

Glossary

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. Core assets – the managers define core assets as being top class in at least three of the following five criteria: location, quality of tenant, lease duration, lease structure, and building specification. Coworking – typically involves individuals or small groups, usually self-employed or freelancing, working independently or collaboratively in a shared office space. Fixed kickers – periodic rental increases at pre-arranged dates in the lease. Occupational market – relates to the demand for property by commercial tenants / occupiers seeking a property in which to conduct their business. Regional office properties – in the context of this video update, UK office assets outside of London and the South East of England. RPI/CPI-linked leases – periodic increases in rent based on the retail prices index / consumer prices index measure of inflation. Void or vacancy 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.

Property: understand what you own

Ainslie McLennan

Key takeaways:

Glossary

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Ainslie McLennan

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