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