under bought, page-16

Ok here goes and by no means is this exhaustive, further to that I have not looked at individual properties, gearing or financials. This is meant more as an over view of the market etc that each of the UK/EU funds that VPG manage.

Just some background info if you will to establish how the business may be tracking.

Osprey Fund - Estab 2002 - Target Return 10-12%
Property Target £2-£10mil (would take this to be small or very secondary property)

The property this fund would have been targeting would is (as per the blurb) property with impending rental uplifts coupled with attractive management opportunities.
Assuming they bought enough stuff in 02 and had been churning too many properties they should be sitting on good yield and still sitting on some capital gains. If they have good yield then they should still have positive yield spread and hence good cash income returns.
Possibly would have achieved some good rental uplifts if they still hold some of the original properties.
RISK - Unless they have used lots of leverage and churned alot of property in the last couple of years I would think this should be a solid fund.

Industrial Investment Partnership - 2004
Sole investor is GIC and it has a similar strategy to the industrial trust. Good rental growth with potential to reposition
RISK - NA as GIC have deep pockets and assuming the rental return is there they will not sell.

TAP - 2005
High Income diversified property trust listed on the UK & Chanel Islands stock exchange. (Could be some ouch factor as listed property trusts arent doing well at all)
Gearing is 50.8% with avg cost of 5.81%, 74 properties (total 233mil pounds), avg lease length 6.84yrs, 9.25% vacant, initial property yield 6.41%, net reversionary yield 7.66%.
RISK - Very sectorally & geographically diverse portfolio which is good. Assuming they can keep voids down and dont need to sell large chunks of the portfolio I think its a solid fund. They could continue to sell down small shops etc where they can get good value. They may benefit due to the significant number of small (owner occupier style assets)

The Industrial Trust - 2001 (25yr term) 12-14% (geared return)
Target as with the other industrial funds.
RISK - Assuming the fund spent the bulk of their money in 01 on assets with long leases to good covenants and didnt over gear, I think they would be fine. See little risk here

VOF1UK - 2008 - Vulture Fund (tought to say but the fact people invested money is heartining)

Euro Industrial Partnership - 2001 - 12%
Investing in France, Germany & Netherlands.
RISK - Again if the bulk of the purchases took place in 01-03 I cant see a problem as there would be good yeid and acquisition prices would have been sensible.

Euro High Income - 2004 - 12%
Industrial estates.
RISK - As with all of these 12% is a high annual income return on property and would have pushed the manager into some secondary property which will be more harshly effected in this down turn (especially given the timing of this fund, which is well into the upswing)

University Capital Trust - 2004
One of the first in the market over here.
RISK - These funds were by far the highest returing funds in the last year. Pre 04 they were not really around so they have 'first on scene' pricing mismatch benefits. With the push into UNI over here I think this is solid as a rock.

Central Euro Industrial Fund - 2005
Poland, Romania, Czech, Hungary.
This would again have been early investment into this market and as such may have taken some good earners due to price arbitrages.
RISK - Markets in this part of the world are far from opaque and as such can be alot more volatile and take partners on the ground to work properly. Could be risk here. No mention of gearing.

Nordik Activ - 2006 (second one post then)
Multi Sector secondary real estate.
RISK - Beware there will be some heavy capital losses in this fund given secondary yields have come right off in the Nordik market. Hopefully they have secure tenants and long lease terms.

German Activ - 2007 - 12-14%IRR
Commercial properties in secondary markets, intensive asset management.
RISK - Bought at the top of the market in secondary locations will provide some tough times coming up and they will be sure to see some heavy capital erosion in the short term.

Parc DActivities - 2008
RISK to be seen but there are bargains at the moment so may prove to be a good investment.



CAVEAT CAVEAT - all of the above is my assumption based on property knowledge and assumes good quality management (as I have been led to believe that Scarborough are good managers)

Bearing in mind these are funds attached to the fund management business and hence property value declines will only effect the management income derived on them.