Standard Life Investments Property Income Trust (SLI) has built a diverse portfolio of commercial property in the UK. A bias to industrial property is proving beneficial to the fund, but the manager, Jason Baggaley, is keen that all parts of the portfolio pull their weight. In an environment that is becoming more challenging, he stresses the importance of getting to know the fund’s tenants and ensuring that their needs are being met. This is one way of keeping vacancies low and the rent flowing.
A dividend yield over 5% and returns ahead of listed peers (see page 12) help to justify the premium to net asset value (NAV) that SLI currently trades at. This premium rating has allowed the fund to grow without diluting shareholders and it is reasonable to suppose that it will do so again, markets permitting.
SLI aims to generate an attractive level of income, along with the prospect of both income and capital growth, by investing in a diversified portfolio of UK commercial property assets. It invests in three principal commercial property sectors: office, retail (including leisure) and industrial. SLI borrows money with the aim of enhancing returns; the board’s intention is that SLI’s loan-to-value ratio (LTV) will not exceed 45%. The current LTV is 25% and the manager says that the intended range, at this point in the cycle is 25-30%.
Commercial UK property exposure
SLI aims to generate an attractive level of income, along with the prospect of both income and capital growth, by investing in a diversified portfolio of UK commercial property assets. It invests in three principal commercial property sectors: office, retail (including leisure) and industrial. SLI borrows money with the aim of enhancing returns; the board’s intention is that SLI’s loan-to-value ratio (LTV) will not exceed 45%. The current LTV is 25% and the manager says that the intended range, at this point in the cycle is 25-30%.