UK charities plan to invest more in property

As pressure to generate income continues to mount, nearly two thirds (64%) of UK charities are positive about the prospects of investing in property in helping to secure their required income, according to a study conducted by Cordea Savills, the international property fund manager, and investment manager Rensburg Sheppards. Some 41% of the charities polled plan to increase their allocation to property over the next 18 months.

In the wake of the credit crunch, charities have seen investment income fall due to lower donations and legacies, the study found. Overall, income has shrunk by an estimated £239 mln across England and Wales. The findings are based on research amongst charities managing a total investment portfolio worth some £5.6 bn.

Commenting on the findings, Andrew Allen, Director of Research and Strategy at Cordea Savills said: 'With income generation a key priority, property is becoming an increasingly popular investment option for charities. Yields of over 7% are now available on UK property and such property can provide substantial income protection for the investor when reliable tenants are secured over long-time periods.'

'As the main asset classes continue to struggle, property is one of the highest yielding asset classes and it adds diversification to a portfolio. Rental income is protected by lease structures and upward-only rent reviews. It’s also a relatively transparent investment both through assessing individual properties and tenant quality.'

Cordea Savills and Rensburg Sheppards together manage the Charities Property Fund, a diversified commercial property fund with a focus on providing an attractive level of income while preserving capital values. Launched in 2000, the Charities Property Fund was the first Common Investment Fund available to all charities in England and Wales, and more recently to all UK charities, that invests directly in UK commercial property.