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Hermes Property Unit Trust

Key Features

The Trust is a balanced property unit trust which owns a diversified portfolio of real estate investments on behalf of underlying Unit Holders. Its key features are set out below.

• Performance objective - to outperform the benchmark by 50 basis points per annum on a three year rolling basis
• Investment philosophy - a core/satellite approach to portfolio construction. This reflects a core portfolio of property investments expected to broadly match property market returns, but with prospects for enhanced returns through exposure to higher risk/return investments
• Fees - to ensure alignment between the Real Estate Investment Manager and returns to Unit Holders, the Manager receives a base fee which is augmented with a performance fee for outperformance against the benchmark
• The Committee is wholly independent of the Real Estate Investment Manager and Trust Manager and is responsible for the appointment of both. The Committee of Management is the legal operator of the Trust.

Investment Strategy

The investments of the Trust consist primarily of freehold and leasehold land and buildings. It is the policy of the Committee of Management to spread these investments over a wide range of properties, so as to maintain a balanced investment portfolio with capital growth potential and beneficial yield. Properties may also be acquired, developed or otherwise dealt with jointly alongside other investors, particularly where these provide Unit Holders with exposure to property assets of a type or size that would not be appropriate for the Trust's portfolio if they were to be held directly.

The Real Estate Investment Manager follows policies and practices designed to enhance property returns whilst minimising risk, which are set out below.

• The portfolio of properties held by the Trust will be carefully balanced between retail, retail warehouse, office, industrial, and leisure properties dependent upon the potential returns from each sector. With the approval of the Committee of Management, the Trust may also invest in non-core sectors of the property market which display beneficial performance characteristics
• The Trust may invest alongside other investors in pooled investments where these provide exposure to assets of a size, type or location that are expected to provide enhanced returns. The amount of exposure to jointly held assets is carefully controlled in accordance with the Trust's investment restrictions
• Properties will be acquired where the characteristics of the investment itself indicate outperformance through a combination of above average rental growth prospects, or through advantageous movements in capitalisation yield.
• Properties acquired will mainly be let to tenants of a good financial covenant where risk of default is considered to be low, although this will be balanced with acquisition of investments which offer the potential of future value enhancement as a result of active management
• There will be a continuing programme of upgrading existing properties to improve rental growth prospects and capital values wherever possible by refurbishment, redevelopment or lease restructuring
• Before developments are undertaken, either directly or in association with third parties, a careful review of the risk to reward ratio of the potential development will take place to ensure an acceptable balance for that project and for the Trust as a whole
• Properties which are expected to underperform will usually be sold, and the receipts reinvested into investments with more attractive performance characteristics.

The information in this section of the website has been issued by the Committee of Management (the "Committee of Management") of the Hermes Property Unit Trust (the "Trust") in the United Kingdom. The Hermes Property Unit Trust Committee of Management is authorised and regulated by the Financial Services Authority. The Trust is categorised as an unregulated collective investment scheme, the promotion of which in the United Kingdom is restricted by section 238 of the Financial Services and Markets act 2000 ("FSMA"). Units in the Trust may only be promoted to persons specified by the FSA as defined under section 238 (5) of the FSMA. An unregulated collective investment scheme may not be promoted to a member of the general public. If you are such a person, you should leave the site immediately.