FINANCE: TIAA Henderson Real Estate has secured a six-year extension for its circa £1.1bn flagship UK Retail Warehouse Fund.
The original fund, which was due to expire in December 2015, will now run until December 2021.
All 70 unit holders, comprising UK and European institutions, elected to continue the fund.
In addition to the six-year extension, the 16-strong vehicle has been restructured to accommodate a number of changes.
These include the introduction of an investor advisory committee and changes to the basis of the manager’s fees from a gross asset value to net asset value basis.
The restructure also introduces the ability for the fund to raise additional equity – up to 10% pa – in addition to an ‘in-specie’ allowance, which enables the vehicle to issue new units in exchange for retail assets.
A new redemption window was offered to investors to redeem up to June 2015. That window has now closed without any redemption notices being received.
TH Real Estate said through asset recycling and active management, the fund has delivered a five-year total return of 17.6% pa to June 2014 against an estimated benchmark of 12.2%.
Fund manager Michael Neal said: “We are delighted to have secured an extension for this fund, which we believe offers investors the optimum route into the strong returns available within this sector, complemented by our expertise and intensive approach to asset management of the portfolio. We worked collaboratively with our investors throughout to ensure full engagement at every stage of the process, which we initiated at the end of 2012.”
Alex Bignell, head of UK at CBRE Global Investment Partners, said: “We consider that the manager engaged effectively with investors and that all parties took a pragmatic approach to the key terms of the extension.”
Graeme Rutter, head of property multi-manager at Schroder Property Investment Management, said: “We are long-term supporters of the retail warehouse sector and this fund. In principle, we were supportive of a fund extension from the outset and were pleased that the manager took the opportunity to engage with investors to ensure that the new terms reflected industry best practice. The process was handled efficiently and this was reflected in the unanimous support received for the resolutions.”
Dan Batterton, head of product development at Legal & General Property, added: “To achieve consensus across such a diverse investor base is not a straightforward task, however TH Real Estate ensured that the unit holders met independently in order to allow open debate.
“Fund extension votes are an opportunity for the manager to embrace best practice; unit holders are often best placed to recommend changes as they have sight of many different vehicles and managers in the market. TH Real Estate embraced the consensus views expressed by unit holders to provide an outcome that worked for all and we feel that the fund is now very well placed for the next phase of its lifecycle.”
