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Henderson plans launch of industrial income fund with Centurion Properties

Henderson Global Investors is engaging with investors on the launch of an industrial income fund.

Henderson Global Investors is engaging with investors on the launch of an industrial income fund.

The Fund, a partnership between Henderson Global Investor’s £12.5 billion Property Business and Centurion Properties, hopes to raises c.£100 million from investors with a target first close before Autumn 2013.

The Fund’s investment strategy is focused on multi-let industrial assets that offer diversified short to medium-term income streams in locations with sustainable tenant demand and underlying land value. It will target a net distribution yield of 6.5% per annum and an IRR of 8.5% on Invested Capital over the life of the Fund. It has a five year life.
The Fund will target institutional investors with a bias towards the private wealth and family office space, a group of investors whose focus is increasingly turning towards real estate investment opportunities due to its strong income characteristics.

Andy Schofield, Director of Research, at Henderson Property explained: “The industrial sector of the UK property market has typically attracted investors looking for sustainable income. The events of the last few years mean that many of the players that usually dominate the sector are hamstrung by a combination of legacy issues and the scarcity of bank debt. In short, there are very few viable buyers.
“This has created an opportunity to take advantage of a sector where the paucity of buyers has resulted in a historically large disconnect between prime yields and those offered by good quality secondary assets. Our recent experience demonstrates that this disconnect in value is overplayed and that compelling risk-adjusted returns, driven predominantly by sustainable income, is likely to make UK industrials the most attractive UK property sector over the next seven years.”

Julian Rooth, CEO at Centurion Properties, said: “This Fund represents an opportunity for investors to gain access to diversified multi-let industrial assets with sustainable high income streams. In the current low growth/low interest rate environment, investor attention is turning, and will continue to turn, towards income as the primary generator of total return. Over time, demand for assets that generate sustainable income will increase. The Henderson UK Industrial Income Fund will exploit this market trend."

Cameron Fraser, Director of Property, at Henderson Property, added: “The combination of Henderson and Centurion’s expertise means that this Fund will be perfectly positioned to exploit the opportunity in the industrial sector. Centurion Properties has a significant track record in this sector, having assembled a portfolio of 2,161,000 sq ft of multi-let industrial assets over the past three years. It’s experience in investing, managing and delivering investment performance across industrial assets will be instrumental in the success of the Fund."

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