Premier Pan European Property Share Fund - FUND UPDATE - SECOND QUARTER 2019 - Premier Asset ...
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Q2 2019 FOR PROFESSIONAL ADVISERS ONLY, NOT FOR DISTRIBUTION TO RETAIL CLIENTS Premier Pan European Property Share Fund FUND UPDATE - SECOND QUARTER 2019
2 PREMIER PAN EUROPEAN PROPERTY SHARE FUND Q2 2019
Premier Pan European Property Share Fund
Need to know Contents
The Fund’s five essential characteristics: 3. Performance summary
Aims to provide income and long-term capital growth.
4. Performance drivers - asset allocation
A portfolio of indirect property investments; the Fund invests in
property companies, not directly in bricks and mortar. 5. Performance drivers - holdings
Diversification through a portfolio of UK and Continental European 6. Asset allocation
commercial property companies.
The Fund is mainly hedged back to GBP Sterling. 7. Holdings allocations
For long-term investors – not for those seeking short-term gains. 8. The complete portfolio
9. General investment risks
12. Important information
As the fund invests in real estate investment trusts in Europe, we
believe the GPR 250 Europe Capped Index (GBP Hedged) is a
meaningful benchmark to help investors assess the performance of
the fund.3
Performance summary
zz After a strong Q1, the pan European property securities sector had QUARTER ENDING 30.06.2019
a weak second quarter, principally driven by politically-induced
weakness in the German residential sector. The Fund was down
4%, with the comparator index down 3.7%. 0 Premier Pan European
Total return - dividends
zz Berlin residential property has delivered strong returns for the Property Share Fund
reinvested (%)
-1
Fund in recent years, driven by the attractive fundamentals
of strong demand, structurally limited supply and healthy GPR 250 Europe Capped
affordability. This combination has seen rental growth accelerate in -2 (GBP hedged)
recent years. However, ahead of local elections, the socialist Berlin
government has proposed an onerous 5 year rental freeze on -3
Berlin housing. Berlin residential property stocks saw steep share
price falls as a result of this unexpected proposal, as investors built -4
in the potential lack of rental growth to share price valuations. We
believe this proposal, if enacted, would further exacerbate root
cause of these rising rents – a shortage of supply.
CALENDAR YEARS
zz UK retail continued to perform poorly, regardless of underlying
retail positioning and despite the deep discounts to NAV.
30
zz Discounts to NAV can spark corporate action, and the Fund
Total return- dividends
benefitted from Mucklow’s takeover and Green REIT’s proposal to 20
prove their values and sell their portfolio.
reinvested (%)
10
0
-10
2015
2014
2018
2016
2017
Chart source: FE Analytics, bid to bid, total return (dividends reinvested), UK
2019 ytd
sterling basis, data based on class C accumulation shares. Data to 30.06.2019.
Past performance is not an indication of future returns.
Q2 20194 PREMIER PAN EUROPEAN PROPERTY SHARE FUND Q2 2019
Performance drivers - asset allocation
Country breakdown at end of quarter, Relative to index:
by property exposure (30.06.2019)
Helped
zz Small cap UK industrial
zz German industrial
zz Dublin offices
Hurt
UK 31.0%
Germany 30.2%
zz Small cap Berlin residential
France 12.3% zz UK convenience retail
Scandinavia 7.4% zz Lack of Swiss exposure
Southern Europe 6.9%
Ireland 2.1% UNDERWEIGHT / OVERWEIGHT INDEX AS AT 30.06.2019
Central/Eastern Europe 1.1%
Benelux 1.1% Germany 3.2%
Switzerland/Austria 0.8%
UK 2.5%
Other (inc. cash) 6.8%
Ireland 1.9%
Sou thern Europ e 1.1%
Central/Eastern Europe -0.5%
France -0.9%
Benelux -1.2%
Switzerland/Austria -1.7%
Other -1.8%
Please note that the asset allocation may be above or below 100% due to Scandinavia -3.1%
rounding. Comparative Index is GPR 250 Europe Capped (GBP hedged).
-5.0% 0.0% 5.0% 10.0%5
Performance drivers - holdings
Notable Contributors Notable Detractors
zz VIB Vermoegen zz NewRiver
Strongly positioned industrial/logistics assets, focused in Shares weakened with major shareholder, Woodford,
Bavaria, with a unique and accretive pipeline in the supply reducing its stake. This overshadowed solid operational
constrained southern German logistics market. results, with their convenience retail asset base with
zz Green REIT profitable rents seeing limited impact from CVAs. They are
Proven management team, with a substantial now positioned as one of the few opportunist buyers in
shareholding, announced their confidence in their property distressed UK retail, through the announced joint venture
values despite the continued share price discount to NAV with Pimco.
by offering the business for sale. zz Swiss Prime Site
zz Mucklow Not held in the fund due to their high leverage and
Focused Midlands industrial/office specialist agreed to a underlying operational risk. Swiss property proved
takeover offer by LondonMetric Property at a premium to defensive, in the market sell-off.
NAV and a substantial premium to the prevailing share zz Aroundtown
price. Not held in the fund due to the high underlying leverage
zz Assura and our concern on the balance valuation transparency.
Re-rating on consolidation in the niche primary healthcare Benefited from positioning as a liquid German commercial
sub-sector, with shoots of rental growth re-emerging stock, as German residential weakened.
and an earnings accretive pipeline further enhancing the zz Phoenix Spree Deutschland
income outlook. Berlin residential specialist shares de-rated to a wide
discount to NAV, following the surprise Berlin rent freeze
proposal.
Q2 20196 PREMIER PAN EUROPEAN PROPERTY SHARE FUND Q2 2019
Asset allocation (by property exposure)
Geographic exposure 31.03.2019 30.06.2019 Change
zz We had been reducing our exposure to Berlin residential
UK 30.2% 31.0% +0.8%
specialist, ADO Properties, at the start of the quarter and
Germany 33.9% 30.2% -3.7% exited the holding following the Berlin rent freeze proposal,
France 12.0% 12.3% +0.3% partly re-investing in peer Phoenix Spree Deutschland,
with its opportunity to convert a substantial portion of
Scandinavia 7.3% 7.4% +0.1%
rental properties to higher value condominiums. We also
Southern Europe 5.9% 6.9% +1.0% reduced our holding in Deutsche Wohnen both before and
Ireland 1.5% 2.1% +0.6%
after the rent freeze proposal, partly re-investing in German
commercial company TLG Immobilien, which has healthy
Central/Eastern Europe 1.1% 1.1% 0.0% rental growth potential.
Benelux 1.0% 1.1% +0.1%
zz The Fund participated in a placing in the long income
Switzerland/Austria 0.8% 0.8% 0.0% specialist, LXI REIT, partly switching out of Land Securities.
Other (inc Cash) 6.2% 6.8% +0.6% We also used these proceeds to participate in the placing
of new stock in the regional UK property company, Picton,
Sub-sector exposure 31.03.2019 30.06.2019 Change
where we see better income growth prospects.
Residential 30.8% 26.4% -4.4%
zz We remain positive on the outlook for urban warehouses
Office 22.5% 23.5% +1.0% and built on the position in Hansteen at a discount to NAV.
Retail 20.7% 20.5% -0.2% The Fund benefited from the acquisition of Mucklow by
LondonMetric Property. We are supportive, as this increases
Industrial 11.1% 12.3% +1.2%
LondonMetric’s exposure to urban warehouses, and we
Healthcare 2.3% 3.1% +0.8% increased our holding in LondonMetric through the part
Storage 2.6% 3.0% +0.4% equity offer in the takeover.
Student 2.6% 2.9% +0.3%
Other (inc Cash) 7.3% 8.0% +0.7%
Please note that the asset allocation maybe above or below 100% due to rounding and exclusion of any individual sectors below 0.2%.7
Holdings allocations
Top increased allocations Top decreased allocations
zz TLG Immobilien (1.0%) zz Deutsche Wohnen (-2.8%)
zz Merlin Properties (0.9%) zz Land Securities (-1.7%)
zz LXI REIT (0.6%) zz ADO Properties (-1.3%)
zz Londonmetric Property (0.6%) zz Vonovia (-0.8%)
zz Assura (0.5%) zz Newriver REIT (-0.7%)
Q2 20198 PREMIER PAN EUROPEAN PROPERTY SHARE FUND Q2 2019
The complete portfolio (by property exposure)
Vonovia (8.7%) Castellum (1.0%)
Leg Immobilien (8.3%) Great Portland (1.0%)
Unibail-Rodamco-Westfield (7.0%) TLG Immobilien (1.0%)
Deutsche Wohnen (5.7%) Tritax Big Box REIT (1.0%)
Segro (4.7%) Derwent London (0.8%)
Gecina (4.5%) Target Healthcare (0.8%)
VIB Vermoegen (3.7%) Switzerland/Austria 0.8% Safestore Holdings (0.8%)
Merlin Properties (3.3%) Benelux 1.1% Other (inc Cash) 6.8% CLS Holdings (0.8%)
Unite Group (2.9%) Central/Eastern Europe 1.2% Kungsleden (0.7%)
Fabege (2.8%) Ireland 2.1% Secure Income REIT (0.7%)
Land Securities (2.6%) UK 31.0% St.Modwen Properties (0.7%)
Southern Europe 6.9%
Klepierre (2.3%) Lok'N Store Group (0.7%)
Newriver REIT (1.9%) LXI REIT (0.6%)
Inmobilia Colonial (1.9%) Scandinavia 7.4% Phoenix Spree Deutschland (0.6%)
Covivio (1.8%) Shurgard Self Storage (0.6%)
Icade (1.6%) Warehouses De Pauw (0.6%)
Green REIT (1.6%) Big Yellow Group (0.6%)
Assura (1.5%) France 12.3% Eurocommercial (0.6%)
Hammerson (1.5%) Picton Property Income (0.5%)
British Land (1.4%) Hansteen Holdings (0.5%)
Germany 30.2%
Londonmetric Property (1.4%) Palace Capital (0.5%)
Arima Real Estate (1.3%) Capital & Regional (0.5%)
Fastighets (1.3%) Helical (0.4%)
Shaftesbury (1.2%) Grainger (0.4%)
Supermarket Income (1.2%) Hibernia REIT (0.3%)
Mckay Securities (1.2%) PRS REIT (0.3%)
Sirius Real Estate (1.1%) Mucklow (0.3%)
Hufvudstaden (0.2%)
Data as at 30.06.2019. Workspace Group (0.2%)
Please note that the asset allocation may be above
CA Immobilien Anlagen (0.2%)
or below 100% due to rounding9
General investment risks
All types of investment carry a degree of risk and it is important If you withdraw part of your investment to supplement the income
that you understand and are comfortable with the level of risk to paid out to you, there is an increased risk that the residual amount
which your capital could be exposed. We recommend that you of your investment will be less than your original investment when
consult with a financial adviser if unsure in any way. you decide to sell.
There is the potential for loss of your original investment. The Other investment risks
amount of investment risk will depend on the fund’s risk profile.
The fund may invest directly into, or be exposed to via its underlying
We would typically expect investments that are perceived as
investments, a variety of assets which carry specific risks which
lower risk to offer less potential for loss but with potentially lower
could impact the returns from your fund. The main risks are
returns, whereas we would expect higher risk investments to
summarised here, with further detail available in the fund’s
generate higher returns albeit with the extra risk of potential loss
prospectus.
over the long-term. However, there are no guarantees as to how an
investment will perform in the future. Currency
Inflation could erode the relative value of your investment. Where investments are denominated in currencies other than
sterling, changes in exchange rates may cause their sterling value to
There is a risk that financial markets will fall, affecting the value of
rise or fall.
your investment.
Currency forward contracts
There is no guarantee that the investment objective of the fund will
be achieved. Typically used to help reduce the impact of currency movements,
but could also expose the fund to volatile returns from time to time.
Past performance of a fund is not a guide to future returns. The
price of shares and any income from them can go down as well as Equities
up and there is the possibility of a loss to your original investment.
As an asset class, equities can experience high levels of fluctuation
The levels of taxation and of relief from taxation will depend upon in prices.
individual circumstances.
Geographic concentration
There may be a variation in the performance between funds with
similar objectives due to the different assets selected. Funds that have a strong focus on a particular country or region,
can carry a higher risk than funds with a more diversified portfolio.
Performance of a fund will be affected by the fund manager’s
investment decisions.
Q2 201910 PREMIER PAN EUROPEAN PROPERTY SHARE FUND Q2 2019 General investment risks (continued) Industry concentration Property and Real Estate Investment Companies Funds that have a strong focus on a particular industry, can carry a Property as an asset class tends to experience cyclicality which can higher risk than funds with a more diversified portfolio. increase the volatility of returns. Inflation Smaller companies Higher inflation can negatively impact investment markets, in Investment in smaller companies is typically higher risk than particular, fixed interest securities such as government bonds and investment in larger companies. corporate bonds. Interest rate Unexpected movements in interest rates will affect all types of assets, in particular, fixed interest securities such as government bonds and corporate bonds. If interest rates go up, the value of the bond may fall, and vice versa. Legal/tax Arising from a change in legal/tax regulations or the application of them. Liquidity During difficult market conditions, securities may become more difficult to sell and buy at a desired price. Operational Processes, systems and controls can fail. This is more likely to happen with more complex products or investments in overseas markets, such as emerging market countries, which may not have the same level of safekeeping, infrastructure or controls as more developed markets.
11
Contact us
Fund information 0333 456 9033
info@premierfunds.co.uk
Fund administration 0333 456 6363
investorservices@premierfunds.co.uk
Literature requests 01483 306 090
Q2 2019IMPORTANT
2 INFORMATION
Important information
Whilst every effort has been made to ensure the accuracy of Awards and ratings: The Elite RatingTM system is proprietary to
the information contained within this document, we regret that FundCalibre Ltd, but should not be taken as a recommendation.
we cannot accept responsibility for any omissions or errors. This The methodology and calculations used by the companies or
document is directed only at authorised financial advisers and organisations that provide the fund or fund manager awards and
professional investors. The information given and opinions expressed ratings are not verified by Premier Asset Management and we
are subject to change and should not be interpreted as investment therefore are unable to accept responsibility for their accuracy.
advice. Reference to any particular stock does not constitute Ratings and awards should not be relied upon for making an
a recommendation to buy or sell the stock. All data is sourced investment decision, nor are they an indication, promise or
to Premier unless otherwise stated. Persons who do not have guarantee of future performance of a fund or fund manager.
professional experience in matters relating to investments should
not rely on the content of this document. Issued by Premier Asset Management. Premier Fund Managers
A free, English language copy of the Fund’s full prospectus, the Key Limited (registered no. 02274227) and Premier Portfolio Managers
Investor Information Document and Supplementary Information Limited (registered no. 01235867) are authorised and regulated by
Document, which include all the important information you need to the Financial Conduct Authority. Registered address: Eastgate Court,
consider before making an investment decision, are available on the High Street, Guildford, GU1 3DE. Premier Asset Management is the
Premier website, or you can request copies by calling us on 01483 marketing name used for the two companies. 22071915810.
306090. For your protection, calls may be monitored and recorded
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