Let’s get physical
Insights

Let’s get physical

Previously, we’ve focused on real estate securities – the breadth of the opportunity set together with the diversification and active management benefits they afford. In our Property Growth & Income portfolio, we combine real estate securities with select physical holdings where again, careful selection and active management is key.

Sector positioning

Within the portfolio there’s a clear emphasis on industrial buildings. Income flows into the portfolio from over 50 underlying tenants operating across a range of industries, including logistics. We have zero exposure to UK high streets or shopping centres. With 30% (and rising) of all consumer purchases taking place online, these are structurally challenged areas of the property market that we are keen to avoid. Out of town retail parks are selectively attractive, however, with DIY specialists attracting footfall and ‘click & collect’ becoming more popular with both customers and retailers. Our office portfolio accounts for only 16% of the physical assets and is focused on the south east with either good parking allocations or exceptional public transport. From our office building in Reading, you’ll soon be able to reach Oxford Street in under one hour without changing trains.

The right locations

As in equities, we look for locations where the conditions for rental growth exist. That means areas where supply is tight, and demand is strong – think industrials and our avoidance of high street retail. Good transport links and local amenities are crucial. There’s a bias towards southern England but we do own some buildings in the Midlands. Hands-on management and strong relationships with our tenants are critical so it’s important we can reach our properties easily.

Lot sizes – small and nimble

We focus on relatively small lot sizes – with an average £6m value across the portfolio. Liquidity is often greater in this market segment as there is a wider pool of potential buyers so it’s quicker and easier to sell our properties. Average lease lengths are typically shorter, which means yields tend to be higher, but they also allow us to access underlying rental growth faster. We spend a lot of time understanding our tenants’ needs and making sure our buildings are fit for purpose. Why? Because we want to see leases renewed upon expiry – especially if we’re able to justify an increase in rent.

ESG matters

The investment world has seen sustainability-related considerations come to the fore in recent years and property is no exception. We recognise the potential impacts of property on the environment, the health and safety of occupiers and the communities in which they are located. We take our responsibility seriously. For example, we undertake robust environmental due diligence before acquiring an asset and proactively seek opportunities to enhance energy efficiency.

27 February 2022
George Gay
George Gay
Fund Manager
Share on linkedin
Share on email
Key topics
Related topics
Listen on Stitcher badge
Share on linkedin
Share on email
Key topics
Related topics

PDF

Let’s get physical

Risk Disclaimer

Past performance is not a guide to future performance.

The value of an investment is dependent on the supply and demand for the shares of the Investment Trust rather than its underlying assets. The value of an investment will not be the same as the value of the Investment Trust’s underlying assets.

Views and opinions have been arrived at by Columbia Threadneedle Investments and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

Related Insights

17 March 2023

Stewart Bennett

Global Head of Alternatives

Real estate – understanding the new normal

Where next for real estate? With sections on the UK, Continental European and US real estate our team take a closer look at the economic backdrop, activity in 2022, the outlook for 2023 plus strategy calls across various sub-sectors.
Read time - 9 min
22 December 2022

Joanna Tano

Head of Research, Europe, Real Estate (EMEA)

Real Estate: Preserving Value

There was a definite air of positivity in European real estate markets in January and February 2022.
Read time - 4 min
14 March 2022

Solutions Enhanced: Capital Market Assumptions 2022 Making a transition

The end of 2021 saw a continuing reminder of the impact of coronavirus, inflation occurring in major economies, and the world waking up to the stark choices presented by the climate emergency. We set out the expectations for what all this could mean for investors over the next five years and in the longer run. These capital market assumptions form the base case we use when constructing strategic asset allocations for clients.
Read time - 3 min
24 May 2024

Tochi Nwozuzu

Content Marketing Executive

Market Monitor – 24 May 2024

Global stock markets endured a difficult week after investors’ hopes of imminent cuts to interest rates in the United States and Europe were dampened by unexpectedly strong economic data.
Read time - 3 min
24 May 2024

Anthony Willis

Investment Manager

Multi-Manager Perspectives - Can the economic data save Rishi Sunak? Probably not.

It has been a busy week in the UK, not least with the announcement of a general election that no-one seems to think the incumbent Conservative party will be able to win.
Read time - 6 min
24 May 2024

Robert Plant

Director, Portfolio Manager, Multi Asset Solutions

UK overtakes the US in the race for rate cuts 

After a series of negative surprises in the US, the Fed is no longer expected to lead on rate cuts. Europe is now where all eyes are cast but will it be the ECB or BoE, that blinks first?
Read time - 3 min
true
true

Risk Disclaimer

Past performance is not a guide to future performance.

The value of an investment is dependent on the supply and demand for the shares of the Investment Trust rather than its underlying assets. The value of an investment will not be the same as the value of the Investment Trust’s underlying assets.

Views and opinions have been arrived at by Columbia Threadneedle Investments and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

You may also like

Investment approach

Teamwork defines us and is fundamental to our investment approach, which is structured to facilitate the generation, assessment and implementation of good, strong investment ideas for our portfolios.

Funds and Prices

Columbia Threadneedle Investments has a comprehensive range of investment funds catering for a broad range of objectives.

Our Capabilities

We offer a broad range of actively managed investment strategies and solutions covering global, regional and domestic markets and asset classes.

Thank you. You can now visit your preference centre to choose which insights you would like to receive by email.

To view and control which insights you receive from us by email, please visit your preference centre.

Play Video

CT Property Trust- Fund Manager Update

Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium