PropertySep 22 2017

F&C property trust manager checks for Grenfell risk

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F&C property trust manager checks for Grenfell risk
Aidan Crawley/Bloomberg

Richard Kirby, the long-serving manager of the £1.35bn F&C Commercial Property investment trust, is reviewing the properties he owns in the portfolio to assess the fire risks to his portfolio in light of the Grenfell tragedy.

On 14 June, a fire at the Grenfell Tower in West London resulted in the deaths of at least 80 people.

Mr Kirby said: “Due to the disastrous fire and tragic loss of life at Grenfell Tower and specifically the concerns associated with fire risk from existing building cladding systems, we are progressing a review to determine risk within the company’s portfolio.

"We are viewing risk on two levels, initially in terms of risk to life and property and secondly, in respect of liquidity of individual assets. The exercise is backed by advice from the government and our own longstanding fire consultancy partner.”

He said he is working through the full portfolio of properties to compile a database of the types of cladding and other builder materials used.

Mr Kirby said priority is being given to any of the properties in the portfolio which are residential as well as commercial, and buildings taller than 18 metres are being examined first.

Mr Kirby said that while the commercial property market has returned to normality in terms of transactions, political uncertainty means investors are likely to remain risk averse.

He said in the current climate he is wary of investing more capital into central London office space, and instead is trying to grow returns through better management of the properties he already owns.

The F&C Commercial Property trust has a yield of 4 per cent a year.

David Wise, who runs the £527m Kames Property Income fundm said: “London is showing some signs of slowing down a little but that is not unexpected and as much due to the natural cycle as Brexit.

"City of London offices are the market most exposed to Brexit. Regional office markets are generally in very good health with a positive supply/demand dynamic."

He added that a lack of quality properties is likely to keep valuations high.

Robert Ward, chartered wealth manager at Walker Cripps, said: “Generally most of client portfolios will hold a proportion of UK commercial property.

"Commercial property tends to provide a good source of long term total returns through a combination of both capital appreciation and natural yield from rental income.

"Over the last few years, the proportion of cash being held has been very high within a number of open ended investment companies and this has led to a drag on performance and yield. An investment trust provides a defence against this and also liquidity issues.”

david.thorpe@ft.com