UK commercial property values continue to fall due to factors that are impacting all financial markets. These factors are dramatically reducing bank lending to all sectors including commercial property which is in turn reducing the volume of transactions. Reduced transactional evidence makes valuing property more difficult with a greater number of sellers that have to sell to realise cash.Investors with cash over the next year or so should be able to take advantage of these conditions to acquire good quality assets at discount prices. This strategy should add to the long term performance of the fund. As at the 30 September 2008 the fund holds twelve direct UK assets comprising six industrial properties, three retail properties and three office properties.The fund also holds five indirect assets comprising shares in UK listed property funds. The funds average unexpired lease term is at 11.1 years compared to its peer group average of 9.6 years. Finally, the fund has a zero vacancy rate while the peer group average is currently running at 8.0%. Our short term strategy is to build on these defensive metrics through pro-active active management.
