Investment policy and objective

The Company’s investment objective is to provide Shareholders with an attractive level of income together with the potential for income and capital growth by investing in a diversified portfolio of UK commercial property warehouse assets.

The Company may acquire property interests either directly or through corporate structures (whether onshore UK or offshore) and also through joint venture or other shared ownership or co-investment arrangements.

The Company will invest and manage its portfolio with an objective of spreading risk and, in doing so, will maintain the following investment restrictions:

  • the Company will only invest, directly or indirectly, in warehouse assets located in the UK;
  • no individual warehouse property will represent more than 20 per cent. of the last published gross asset value of the Company at the time of investment;
  • the Company will target a portfolio with no one tenant accounting for more than 10 per cent. of the gross Contracted Rents of the Company at the time of purchase. In any event, no more than 20 per cent. of the gross assets of the Company will be exposed to the creditworthiness of any one tenant at the time of purchase;
  • the portfolio will be diversified by location across the UK with a focus on areas with strong underlying investment fundamentals; and
  • the Company will not invest more than 10 per cent. of its gross assets in other listed closed-ended investment funds.

The Company will consider investments where there is potential for active asset management, including general refurbishment works.

The Company will not undertake speculative development (that is, development of property which has not been at least partially leased or pre-leased or de-risked in a similar way), save for refurbishment and/or extension of existing holdings. The Company may, provided that the exposure to these assets at the time of purchase shall not exceed 15 per cent. of the gross assets of the Company, invest directly, or via forward funding agreements or forward commitments, in developments including pre-developed land, where the structure is:

  • designed to provide the Company with investment rather than development risk
  • where the development has been at least partially pre-let or sold or de-risked in a similar way; and
  • where the Company intends to hold the completed development as an investment asset. The Company will be permitted to invest cash, held by it for working capital purposes and awaiting investment, in cash deposits and gilts.

The Company may also invest in derivatives for the purpose of efficient portfolio management. In particular, the Company may engage in interest rate hedging or otherwise seek to mitigate the risk of interest rate increases as part of the Company’s efficient portfolio management strategy.

It is envisaged that a LTV ratio of between 30 per cent. and 40 per cent. would be the optimal capital structure for the Company over the longer term. However, in order to finance value enhancing opportunities, the Company may temporarily incur additional gearing, subject to a maximum LTV ratio of 50 per cent., at the time of an arrangement.

In the event of a breach of the investment guidelines and restrictions set out above, the Investment Manager shall inform the Directors upon becoming aware of the breach and if the Directors consider the breach to be material, notification will be made to a Regulatory Information Service. Any material change to the investment policy of the Company may only be made with the approval of Shareholders. The Company intends to conduct its affairs to enable itself to qualify as the principal company of a REIT for the purposes of Part 12 of the CTA 2010 (and the regulations made thereunder).