Braemar Group PCC Limited
Ground Rents
Quarterly Summary December 2011
Market Overview – Focus on 2012
The end of the year saw continued volatility in the currency and financial markets, which we expect to continue for the next 12 months,
with long term borrowing rates confirming the gloomy outlook for 2012 and beyond. Whilst gold continues to perform, it and other
precious metals still have a degree of volatility. Oil and its impact on inflation will continue to be influenced by the OPEC political
environment and the decisions on Iranian oil imports.
Inflation as a whole is expected to fall back from the current highs we have seen as the proportional impact of the VAT rise is reduced.
However, rising energy/food prices and higher levels of unemployment from the austerity package, which the UK government is
implementing, will undoubtedly lead to a continuation of the difficult economic climate.
The fundamentals of Grounds Rents within this context are therefore attractive to investors. The contracted income and security afforded
to Shareholders of the Ground Rents Fund make this a defensive holding, which is expected to continue to perform in line with the last
6 months’ data, following the Sponsor’s decision to underwrite a TER cap at 2%.
Total Return Performance
SHARE
CLASS
NAV
PER SHARE
ONE
MONTH
THREE
MONTHS
SIX
MONTHS
TWELVE
MONTHS
SINCE
LAUNCH
DIVIDEND
YIELD
A
106.48p
(106.18p Nov 11)
+0.3%
+0.3%
+1.7%
+0.4%
+6.5%
n/a
n/a
B
101.27p
(100.92 Nov 11)
+0.3%
+0.5%
+2.1%
+1.2%
+1.3%
n/a
n/a
Quick Facts
Portfolio
• A Shares
Minimum initial subscription £10,000
Initial charge 5% (of which Introducing Advisers can take up to 3%)
AMC 1.5%
• B Shares
Minimum initial subscription £100,000
Initial charge 0.5% (no commission payable to Introducing Advisers)
AMC 0.75%
• Monthly subscription and redemption
459 Units
219 Units
84 Units
• No bid/offer spread
• Listed on Channel Islands Stock Exchange which is recognised by UK
FSA and HMRC
Brooks Macdonald Funds Limited
Richmond House Heath Road Hale Altrincham Cheshire WA14 2XP
T 0161 870 3860 F 0161 332 1601 I www.brooksmacdonald.com/funds
358 Units
MANCHESTER
EAST ANGLIA
173 Units
167 Units
BIRMINGHAM
25 Units
OXFORDSHIRE
40 Units
• Authorised by Guernsey Financial Services Commission.
51 Units
HULL
NORTH
WEST
BRISTOL
Investor Relations - Julie Serrage
Tel: 0161 870 3860 Email: [email protected]
Dealing - Thomas Barber
Tel: 0161 870 3860 Email: [email protected]
Brooks Macdonald Funds Limited is authorised and regulated by the Financial Services Authority. Registered in England No. 5730097
Ground Rents OEIC
SEDOL
ISIN
MEXID
LAUNCH DATE
A Shares
B666CX0
GG00B666CX01
BRGRC
05/05/2009
B Shares
B61TFK2
GG00B61TFK29
BRGROU
14/09/2010
TOTAL FUND SIZE
£9.5m
Investment Update
Current Market Conditions
This quarter, the Fund has purchased the ground rent of a significant
development in Birmingham with a gross yield of 5.45% per annum.
Savills, the Fund’s valuer and a leading auction house for Ground Rents,
has commented that capital values for Ground Rent investments have not
been volatile like other sectors of the real estate market because the capital
value of the individual units has negligible effect on the investment value of
the Ground Rent. Capital values continue to be stable for this market sector
and purchasers buy on the basis of a guaranteed return. Ground Rents
produce a secure, stable, low risk and long-term income.
The property, Hive, which forms part of the £600m mixed-use Masshouse
scheme, is located in the heart of ‘Eastside’, Birmingham’s learning,
heritage and technology headquarters and comprises 167 residential units
(studio, one and two bedroom apartments) and commercial space.
The Fund acquired the ground rent of Phase One of the Masshouse
development in October 2009.
The Directors are also pleased to announce the Fund has purchased the
ground rents of a portfolio of 459 houses in the north west with a gross
yield of 6.07%, along with the ground rent of a property in Banbury,
Oxfordshire at a gross yield of 6.00%.
The Fund has approximately £4m in cash and has a number of other
acquisitions in the pipeline, all of which fulfill the Fund’s investment criteria
of buying long-dated, index-linked Ground Rents in well located mixed-use
and residential schemes.
Performance (A Shares)
160
140
120
100
80
60
Braemar Group PCC Limited
Ground Rents Total Return
40
FTSE 350 Real Estate Investment Trusts
20
A desire for security of income and recession-proof assets has led to a
resurgence in the popularity of residential Ground Rents being sold at
auction. The Auctioneer, Cushman & Wakefield believes Ground Rents are
attractive due to their annual RPI uplifts, which makes them suitable for
pensions. They are rather like an annuity with a cast iron guaranteed income.
Portfolio
ASSET
NO. OF UNITS
VALUE
Banbury
25
£90,000
Birmingham
173
£819,000
Birmingham
167
£1,065,000
Bristol
40
£235,000
East Anglia
358
£525,000
Hull
51
£250,000
Manchester*
219
£1,010,000
Manchester
84
£438,000
North West
459
£565,000
Total
1,576
£4,997,000
*Includes Hilton Hotel Headlease.
FTSE All Share
0
Sep
09
Dec
09
Mar
10
Jun
10
Sep
10
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
(Source: Thomson Reuters)
Key Operating Statistics
GROSS YIELD
GROSS ASSET
VALUE
TOTAL DEBT
FUND
GEARING
5.53%
£9.5m
nil
nil
Risk Warning
Investment in this Fund means that your capital is at risk and that there is no certainty that you will receive your capital back or that a positive return on
your investment will be made. Past performance of the Fund or the assets is no guide to future performance. There is no guarantee that the taxation
position outlined in this website or its tax efficient nature will remain. Investment into this Fund may not be suitable for everybody and potential investors
should take their own independent advice. Only individual investors who are sophisticated investors or investment professionals within the meaning of the
Financial Services and Markets Act (Promotion of Collective investment Schemes) Order 2001 are able to register their interest in investing in the Ground
Rents Fund.
Braemar Group PCC Limited Ground Rents is administered by Ardel Fund Services Limited, Frances House, Sir William Place, St. Peter Port, Guernsey GY1
4HQ and the Custodian is Royal Bank of Canada (Channel Islands) Limited. This Quarterly Update should be read in conjunction with, and in the context
of, the Information Memorandum of the Braemar Group PCC Limited Ground Rents Cell dated 14 September 2010 (the “Scheme”) which has been
prepared to comply with the terms of rule 10.01 of The Collective Investment Schemes Class B Rules 1990 (the “Rules”) as issued by the Guernsey Financial
Services Commission (the “Commission”) pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (the “Law”). The Scheme has been
authorised by the Commission as a Class B Scheme under the Law. In giving this authorisation the Commission does not vouch for the financial soundness
of the Scheme or for the correctness of any statements made or opinions expressed with regard to it. Investors in the Scheme are not eligible for payment
of any compensation under the Collective Investment Schemes (Compensation of Investors) Rules 1988 made under the Law. Brooks Macdonald Funds
Limited does not guarantee the accuracy, adequacy or completeness of information contained herein and is not responsible for any omissions or for the
results obtained from such information. Expressions of opinion herein are subject to change without notice. The materials do not constitute an offer to sell
or solicitation of an offer to buy shares in the Scheme. The Scheme referred to in this Quarterly Update constitutes an “unregulated collective investment
scheme” for the purposes of the restriction on the promotion of unregulated schemes under section 238 of the UK FSMA and, accordingly, the Scheme
cannot be marketed in the UK to the general public. Past performance is no guide to future performance and the value of the shares in the funds may go
down as well as up.