Core UK commercial property fund established

Cordea Savills, the international property fund manager, has secured a contract to manage a £300m UK commercial property fund via a competitive tender process.

The fund, known as The Bishopsgate Long Term Property Fund Unit, is geared towards establishing a core of balanced funding for commercial property within the UK.

Cordea Savills will now be acting as property advisor to the fund, with its initial strategy focusing in on assets offering secure income characteristics in prime locations.

The first acquisition of the newly established fund (November 2012) was a multi-let office building in London’s Covent Garden for £32.4m. The property is expected to raise a net yield of 4.6% (£1.49m), climbing to 6.25% once residency is established on the first floor of the property.

Portfolio manager, Patrick Lowther commented on the funds progress to date: “The fund has £250m to invest during 2013 and is targeting investments with a lot size of between £10m and £30m with yields of 6.5% plus, in order to complement the recent investments.'

The head of UK investment for the fund, George Tindley, said that he will be taking a conservative approach to acquiring new properties, and emphasised the importance of conversion of investment into positive net yields within a medium term.

“With the UK commercial property market still some way off the market peak in 2007, and with the gap between gilts and initial yields at a 25-year high it is a particularly exciting time to be awarded such a mandate.

“It is always challenging to source the best quality assets but our opportunity here is to construct a portfolio with no legacy and a fresh strategy. We will be pursuing a conservative acquisition strategy in the initial stages with a strong focus on income, quality covenants and the prospect for capital growth in the medium term.”