Mayfair fund bets £5.3m on buoyancy of property

A charity property fund has bought a new £5.3m property for its portfolio, despite continuing uncertainty in the property markets.

The purchase, by Mayfair Capital Investment Management, comes at a time when other charity property funds are considering selling off parts of their portfolios to pay for redemption requests from investors (Third Sector, 9 January).

However, managers of the Property Income Trust for Charities said they believed the distribution unit they are buying, which is near the M5 in Tewkesbury, was in a good location and had a solid tenant base of international manufacturing companies.

At £5.3m, the Tewkesbury building is worth slightly more than the fund's average, which is £4.6m. Mayfair managers raised new funds last summer and had been waiting for a potential investment. They also had the advantage of receiving no redemption notices from clients.

"The unit was offered to us at a very discounted yield and it more than made the absolute return objective for the fund," said James Thornton, fund director at Mayfair Capital Investment Management. "The yield was very attractive and remains so now.

"We decided to buy because we had cash available and the yield on cash is 5 per cent at the moment. The property is producing a 7.5 per cent return, so this was a good opportunity."

Thornton added that there was good news for property investors, with markets showing signs of recovery. "The market is showing huge volatility this week and has fallen, but buyers have come in heavily for property stocks," he said. "There's a feeling property is starting to move again."

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