Becton Diversified Property Fund (BDPF)
Key fund data as at 31 March 2010
| Net asset value per unit - ex distribution($) | 0.4385 |
| Annualised distribution* (cpu) | 1.05 |
Number of properties (held indirectly) |
60 |
Occupancy rate (%) |
97.22 |
| Average lease expiry (years) | 3.75 |
| Look through gearing (%) | 71.77 |
* Please note historical performance is no indication of likely future performance.
Fund Overview
The Becton Diversified Property Fund is a fund of funds. It invests in other Becton managed funds and as such its income and capital performance is dependent on those funds.
While there are early signs that a recovery of property markets may be commencing, we remain cautious about the outlook as a number of risks in the broader economy remain. Despite improving sentiment, the funds in which the fund invests are still dealing with the impact of the global financial crisis on both distributions and value. Their ongoing performance is primarily being affected by:
- scarcity of available credit, meaning capital expenditure needs to be funded from operating income, which in turn reduces the amount of income available to pay distributions
- higher interest rate margins charged by lenders
- an inability to provide any liquidity
- lack of rent growth as while tenant demand is improving this has not translated into higher rents or lower incentives due to ongoing lack of depth in tenant demand and continued concerns about the economic outlook
- continued reductions in underlying asset values, although the extent of reductions has slowed in the first half of 2010.
We appreciate the performance of the fund and in particular distribution payments are important to investors. Becton is committed to actively managing the fund and its investments through these challenging times.
However, until underlying economic conditions improve significantly and there is more capital (both equity and debt) available to the property sector, the performance of the fund’s underlying investments is unlikely to improve. Becton continues to explore capital management initiatives to address the issues in its funds and improve distributions. This process is taking longer than initially anticipated. However, we aim to write to investors shortly with a proposed path forward.
For further information relating to the performance of the fund’s investments please refer to the updates on each fund within this edition of Review.
