January 2010
Market Review
The Aberdeen Life UK Property Fund invests in the RREEF UK Core Property Fund (the Fund),
which in turn invests in RREEF’s Retail Property Fund, Office and Industrial Property Funds. The
commentary that follows is based upon information provided by RREEF.
The Fund is currently operating in a postponement mode with redemptions being paid out in
sequential order as they fall due.
The performance of the Fund in the fourth quarter was 6.9% compared with an IPD benchmark
return of 9.4%. Despite a good performance by the Industrial Fund (12.1% versus 8.0%), the
Core Fund’s return continued to be below benchmark due to the underperformance of the
Retail Fund (8.4% versus 11.3%) and the Office Fund (1.8% versus 7.7%).
The Fund’s annual return for 2009 was negative 7.4% compared with an IPD benchmark
return of 2.2%. In the Retail Fund both The Moor, Sheffield and Castle Marina (formerly Castle
Meadow) Retail Park, Nottingham continued to underperform with negative capital returns of approximately 24% in 2009. With part of The Moor under offer at current valuation and Castle
Marina now valued at an initial yield of 9.5%, we are confident that the performance of this
fund should improve in 2010.
However, the Office Fund continues to be held back by a high void rate, particularly at
the Fund’s asset in Bracknell (Capitol). Until voids are let, the Fund will continue to find it
challenging to compete favourably against a benchmark with a much lower void rate (Office
Fund voids 35.2% versus IPD Office void rate of 15.2%). It is clearly our aim, therefore, to let
the voids as soon as possible.
The long term performance of the Industrial Fund has been good and we anticipate that this
will continue to be the case in 2010.