Annual Report 2006 - Tamar European Industrial Fund

Chairman’s Statement
As at 31 December 2006, the Company had drawn £172 million of debt from its facilities to finance the acquisition
of the portfolio. The Company has hedged the risk of interest rate increases by the use of derivative instruments.
On acquiring the seed portfolio, the Company also acquired certain debt facilities which were described in the
prospectus. Arrangements in Norway have been refinanced following the year-end and the swapped element of the
facilities replaced with new five year arrangements. The refinancing of the Belgian and Dutch seed assets has also
been completed with new hedging arrangements implemented.
As at the date of this statement, a total of 94% of the Company’s debt has been protected against adverse movements
in interest rates. Although interest rates across Europe have increased since flotation, the blended cost of money based
on debt drawn to date is currently 4.06% and the Fund is now well protected by the hedging instruments in place.
The results reflect an improvement in the mark to market value of the Company’s hedge instruments since Admission
of £1.1 million.
Dividends
In launching the Fund, the board stated that, in the absence of unforeseen circumstances, it expected to pay a total
dividend of 7.5 pence per share in the period from Admission to 31 December 2007, representing an annualised
dividend of 6 pence per share.
I am delighted to report that, in light of the strong progress made, the board has decided to declare a first dividend
of 1.5 pence per share, which will be paid on 25 April 2007 to shareholders on the register on 10 April 2007.
Shareholder Communication
The Board considers it important that shareholders are kept regularly informed of the progress of the Fund. The
adjusted Net Asset Value per share will be published quarterly.
Corporate Governance
The Company is registered in Guernsey. As such, it is not formally required to comply with the Combined Code on
Corporate Governance. However, the directors intend to comply with the Code, and our statement on compliance is
contained in this annual report.
Prospects
The west European and Scandinavian industrial property markets have performed well in recent years.
The markets on which the Company focuses have generally been characterised by consistent tenant demand, limited
development of new stock and an increase in investor demand for industrial/warehouse investments. We see these
conditions continuing, alongside other market dynamics. These include the active management of secondary assets
and hardening yields over the next 12 months, as a result of ongoing investor demand.
Against this background, the application of the Investment Manager’s specialist asset management skills and the
understanding of local market dynamics will be a key factor in driving the Company’s performance. The continuing
ability to source acquisitions through a local network of contacts is also of primary importance.
The Kenmore European Industrial Fund already has an attractive income profile which, including acquisitions in the
pipeline, has a yield of 7.6%, and a portfolio which has already delivered capital growth of 3.4% over the reporting
period to December 2006. A robust pipeline of further acquisitions has also been identified. The Board believes that
the Fund is well on course to build on this sound foundation as the Investment Manager continues to create and
manage a diversified portfolio with strong potential for income and capital growth.
Giles Weaver
Chairman
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Investment Manager
Kenmore Financial Services Limited is the Investment Manager of the Company and the Luxembourg Subsidiary (and
their subsidiaries) pursuant to the Investment Management Agreement. The Investment Manager is responsible for
advising the Group on the overall management of the Group’s investments and for managing the Group’s cash and
investments in fixed income instruments in accordance with the Company’s investment objective and policy and subject
to the overall control and supervision of the Directors.
The Directors have satisfied themselves that the Investment Manager has procedures in place to address potential
conflicts of interest.
Kenmore Property Group Limited (‘‘Kenmore’’) is the parent company of the Investment Manager. Kenmore was
founded in 1986. Its principal activities are property trading, development and fund management. Kenmore currently
has offices in Edinburgh, London, Manchester, Birmingham, Bristol, Leeds, Stockholm, Paris and Dubai. In addition
to its office network it currently has ten joint venture partners with four of these being in Europe. The Kenmore Group
has 57 full time and attached staff in total and encompasses all the disciplines associated with property investment
management: research, acquisitions, disposals, development, finance, property management and administration.
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