Annual Report 2006 - Tamar European Industrial Fund

Investment Manager’s Review
Outlook
As a general statement on the industrial/warehouse market, we anticipate more of the same, increasing investor
interest putting downward pressure on yields, steady but cautious tenant demand and supply in check through lack of
development.
However, the market dynamics have changed slightly over the quarter. The significant rise in interest rates has reduced
the arbitrage between cost of money and property yields. This has occurred at the same time as there are more
entrants into the market place. Unfortunately, investment stock levels have not increased commensurately as the sector
is comparatively immature and corporates are only slowly releasing real estate assets from their balance sheets.
While we are well within business plan in terms of purchase yield and hedged interest rate, future purchases will be
more difficult to secure at those yields experienced historically, although this should indicate potential for capital growth
within the existing portfolio. Furthermore, the continued rise in construction costs will either push prime rents upward
or continue to act as a hold over new development – either way the existing stock could potentially experience rental
growth.
We continue to see excellent off-market opportunities through our office network and well established contacts in our
target markets.
Rob Brook
Kenmore Financial Services Limited
Investment Manager
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Portfolio Statistics
Geographical Analysis as at 31 December 2006 Tenure Analysis as at 31 December 2006
NETHERLANDS 11%
GERMANY 4%
Lease Expiry Profile
At 31 December 2006 the average lease length for the portfolio, assuming all break options are exercised, was 3.8
years.
80%
70%
60%
50%
40%
30%
20%
10%
0
FRANCE 49%
0-5 years
NORWAY 24%
Top Ten Tenants at 31 December 2006
SWEDEN 5%
BELGIUM 7%
5-10 years 10-15 years 15+ years
LEASEHOLD 2%
FREEHOLD 98%
Passing Rent % Total Portfolio
Tenant £’000s Passing Rent
Kuehne + Nagel Logistics 1,674 7.8%
EDEKA 1,127 5.2%
Bauda AS 970 4.5%
Kuehne + Nagel Chilled Logistics 677 3.1%
STS 526 2.4%
Grunnarbeid AS 459 2.1%
I.N.A. 444 2.1%
Nexans Distribution 405 1.9%
Bongs Konvolutter 398 1.8%
Black & Decker 338 1.6%
7,018 32.5%
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