Property Investment can provide charities with a relatively high, sustainable and tax-efficient source of income to help fulfill their charitable purposes over the long term.
Mayfair Capital’s charity exempt fund, The Property Income Trust for Charities (PITCH) has a track record of market leading returns and out-performance. PITCH has been structured with charity investors in mind, from a risk management perspective and has formal ethical and environmental policies.
Property remains the highest yielding mainstream asset class at a time of low bond yields and interest rates. Given property’s limited correlation with other asset classes, in our view, it can play an important role as a diversifier.
By buying units in PITCH with a portfolio of c.£500m of assets, charities benefit from the skills of a fund manager, who is expert in stock selection and ongoing asset management to maximize returns and minimise risks from tenant failure and building obsolescence. This allows the charity to benefit from the diversification and an attractive income without taking on the expensive and time consuming responsibility of managing direct property themselves.
Correlation between long-term UK commercial property returns and other asset classes (1992-2016)
|Correlation of returns||UK Commercial Property1||Equities2||Gilts3|
|UK Commercial Property1||1.00||—||—|
Source: MSCI / IPD Annual Index 2015, MSCI / IPD Quarterly Index Q4 2016, Financial Times
- IPD all Property
- FTSE All Share
- 5-15 year Gilts
In April 2016, the UK Government raised stamp duty (SDLT) for commercial transactions over £250,000 from 4% to 5%. For charity investors who are exempt from SDLT this has increased their competitive advantage in the property market.
The ‘spread’ between the bid and the offer price on a non-exempt fund is around 8% compared with a charity exempt Fund of 3%. This has a significant impact on the cost of investing and enhances the income to charity investors.
Mayfair Capital anticipates that property yields will remain attractive to investors seeking income as part of their total return, in particular relative to yields available through the other main asset classes.
The Property Income Trust for Charities (PITCH) is Mayfair Capital's tax efficient, pooled property fund designed solely for charity investors.
- 5.6 – Income distribution yield (rolling 12 months)*
- 11.5% p.a. – Total return annualised over last 5 years
- £630m – Assets Under Management (gross)
PITCH is managed by Mayfair Capital. Over the past 14 years Mayfair Capital has grown to become a leading and respected UK property fund manager.
- Authorised and regulated by the FCA
- Acquired by Swiss Life Asset Managers in Nov 2016
- Over 1000 clients
- Over £1bn assets under management