The portfolio has a strong weighting to warehousing (predominantly distribution warehousing but also standalone retail warehousing) in addition to regional office properties. Consideration is also given to location in relation to the property type and usage.
The properties are well let on fully repairing and insuring (FRI) leases to strong tenants. The leases are subject to 5-yearly upwards only rental adjustments, either in terms of fixed contractual increases, linked to RPI increases or to market rental levels.
FWHRE targets a portfolio weighted average unexpired lease term (WAULT) of not less than 10 years to ensure good contractual income flows. This together with the lease structure and the financial standing of the tenants enhances the predictability of future rental flows.
Careful attention is given to tenant’s financial strength when a property is acquired. Not only their balance sheet but also the nature and sustainability of their business. A CreditSafe business rating is obtained on each tenant as part of the due diligence when considering a property for acquisition. Tenants are required to have a minimum CreditSafe score of 60, this being the midway point between a Low Risk and Very Low Risk rating. Regular CreditSafe assessments are obtained on all tenants within the portfolio.
In terms of the Fund’s valuation policy each property is independently valued twice annually at acquisition and on six monthly intervals thereafter.
FWHRE invests into substantial, diversified REITs to maintain liquidity. These contribute substantially to the liquidity of FWHRE in that they are readily traded on first world stock exchanges.
The REITs chosen for FWHRE are all market leaders which are committed to dividend payments. The REIT portfolio in FWHRE has geographical diversification, as well as sectoral diversification, with an emphasis towards distribution type property.
The current REIT portfolio is summarised in the table below:
| Security | Gross Dividend Yield | Market Cap | Index | Property Sector Exposure |
|---|---|---|---|---|
| LXI REIT | 6.8% | £1.6bn | FTSE 250 | 22% Healthcare, 21% Hotels, 19% Theme Parks, 9% Foodstores, 7% Industrial, 22% Other |
| Segro PLC | 3.6% | £8.8bn | FTSE 100 | 100% Industrial (Warehousing / Logistics) |
| LondonMetric Property PLC | 5.4% | £1.7bn | FTSE 250 | 44% Urban Logistics, 31% Distribution, 22% Long Income, 3% Retails Parks & Offices |
| Tritax Big Box REIT PLC | 4.9% | £2.3bn | FTSE 250 | 24% Online Retail, 19% Food Retail, 15% Homeware & DIY, 17% Other Retail, 11% Manufacturing, 9% Logistics & Distribution, 5% Other |
| Urban Logistics REIT PLC | 6.8% | £0.6bn | FTSE 250 | 100% Urban Logistics |