Standard Life Investments UK Real Estate Funds ICVC

Transcription

1 Interim Report Standard Life Investments UK Real Estate Funds ICVC For the six months ended 30 June 2018 (unaudited)

2

3 Contents 1 Company Information* 3 Statement of Authorised Corporate Director s Responsibilities 3 Authorised Corporate Director s (ACD s) Report* 4 Investment Report* 6 Comparative Table Disclosure 17 Portfolio Statement* 21 Financial Statements 24 Distribution Tables 30 Alternative Investment Fund Disclosures * These items comprise the Manager s Report for the purposes of the rules contained in the Collective Investment Schemes sourcebook ( the Sourcebook ).

4 Company Information Launch Date 3 May 2014 Standard Life Investments UK Real Estate Funds ICVC (the Company ) is an investment company with variable capital, having its head office in Scotland and with registered number IC989 and authorised by the Financial Conduct Authority with effect from 6 March The Company has one Sub-fund, the Standard Life Investments UK Real Estate Fund (the Fund ), therefore no disclosure of related sub-funds held within the umbrella is required. The Company is classed as a non-ucits retail scheme ( NURS ). The Company is also a UK AIF for the purposes of Investment funds Sourcebook (Fund), and is intended to be a property authorised investment fund ( PAIF ) at all times. The holders of shares in the Company are not liable for the debts of the Company. Objective It is intended that the Fund will be a PAIF at all times, and, as such, its investment objective is to carry on Property Investment Business and to manage cash raised for investment in the Property Investment Business. The objective of the Fund is to invest primarily in UK commercial property to provide a combination of income and capital growth over the long term. Policy The Fund will aim to diversify risk by seeking exposure to three main sectors: Retail (e.g. shopping centres, retail warehouses, standard shops, supermarkets and department stores); s (e.g. standard offices and business parks): and (e.g. standard industrial estates and distribution warehousing). In addition, the Fund may also gain exposure to other property sectors (e.g. leisure parks, restaurants, pubs, hotels, student accommodation and residential). The Fund will seek geographic diversification across the UK amongst properties held. The Fund may also invest in other property related assets (including property related transferable securities and property related collective investment schemes), money-market instruments, deposits, money-market related collective investment schemes and government and public securities. The Fund may also invest in derivatives and forward transactions but only for the purposes of hedging (which includes efficient portfolio management), not for the purpose of meeting the investment objective. Risk Profile Investors should be aware of the following risk factors: (a) Investment property is less liquid than other asset classes such as bonds or equities. Selling property can be a lengthy process so investors in the Fund should be aware that they may not be able to sell their investment when they want to; (b) Investment property transaction charges are higher than those which apply in other asset classes. Investors should be aware that a high volume of transactions would have a material impact on Fund returns; and (c) Property valuation is a matter of judgement by an independent valuer and is therefore a matter of the valuer s opinion rather than fact. Synthetic Risk and Reward Indicator For UCITS or NURS funds under the regime the figure for the synthetic risk and reward indicator would be disclosed and any changes to that figure that have taken place during the period. As the PAIF invests in property this figure does not adequately disclose the risk related to this investment. The indicator is derived from market price information making it suited to liquid assets. Reporting dates Interim Annual XD dates Interim Annual Interim payment dates Accumulation Income Annual payment dates Accumulation Income 30 June 31 December First day of each month 31 December Last day of each month Last day of each month 15 February 15 February 1 Standard Life Investments UK Real Estate Funds ICVC

5 Standard Life Investments UK Real Estate Funds ICVC Head Director Authorised Corporate Director (ACD) Directors of the ACD Secretary of the ACD 1 George Street Edinburgh EH2 2LL The Authorised Corporate Director (ACD) is Standard Life Investments (Mutual Funds) Limited which is the sole director and is authorised and regulated by the Financial Conduct Authority for investment business Standard Life Investments (Mutual Funds) Limited Registered 1 George Street Edinburgh EH2 2LL A.S. Acheson, BA (Hons), ACA S. Campell, MA ACA S.A. Fitzgerald, BA (Hons), ACA J. Lowe L. Scott BA, CA D.E. Thomas, BA, CA S.R. Wemyss H.S. Kidd, ACIS Independent Auditor Registrar Investment Adviser Standing Independent Valuers KPMG LLP Saltire Court 20 Castle Terrace Edinburgh EH2 2LL Standard Life Investments (Mutual Funds) Limited 1 George Street Edinburgh EH2 2LL Standard Standard Life Investments Life Investments UK CBRE Real Limited Estate Funds ICVC Limited St Martin s Court 1 George Street 10 Paternoster Row Edinburgh London EH2 2LL EC4M 7HP Jones Lang LaSalle Limited 30 Warwick Street London W1B 5NH Keeping you informed You can keep up to date with the performance of your investments by visiting our website aberdeenstandard.com. Alternatively, if you would rather speak to us, please call (+44 (0) if outwith the UK) between 8:30am and 5:30pm Monday to Friday. Standard Life Investments UK Real Estate Funds ICVC 2

6 Statement of Authorised Corporate Director s Responsibilities Authorised Corporate Director s (ACD) Report The Collective Investment Schemes sourcebook published by the FCA, ( the COLL Rules ) require the Authorised Corporate Director ( ACD ) to prepare financial statements for each annual accounting period which give a true and fair view of the financial position of the Company and of the net income and net gains or losses on the property of the Company for the period. In preparing the financial statements the ACD is responsible for: selecting suitable accounting policies and then apply them consistently; making judgements and estimates that are reasonable and prudent; following UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; complying with the disclosure requirements of the Statement of Recommended Practice for UK Authorised Funds issued by the Investment Management Association in May 2014; keeping proper accounting records which enable it to demonstrate that the financial statements as prepared comply with the above requirements; assessing the Company s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; using the going concern basis of accounting unless they either intend to liquidate the Company or its sub-funds or to cease operations, or have no realistic alternative but to do so; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; and taking reasonable steps for the prevention and detection of fraud and irregularities. The ACD is responsible for the management of the Company in accordance with its Instrument of Incorporation, the Prospectus and the COLL Rules. The Authorised Corporate Director (ACD) is Standard Life Investments (Mutual Funds) Limited which is the sole director, authorised and regulated by the Financial Conduct Authority, for investment business. Standard Life Investments UK Real Estate Funds ICVC ( the Company ) is an Open-Ended Investment Company with variable capital under Regulation 12 (Authorisation) of the Open-Ended Investment Companies Regulations 2001 ( the Regulations ) and the shareholders are not liable for the debts of the Company. The Company is classed as a non-ucits retail scheme (NURS). The Company is also an alternative investment fund AIF for the purposes of FUND, and is intended to be a property authorised investment fund PAIF at all times. Standard Life Investments UK Real Estate Funds ICVC is structured as an umbrella company. The Company has one Sub-fund (Fund), the Standard Life Investments UK Real Estate Fund. Further Funds may be established from time to time. The following items with in the fund report form part of the Authorised Corporate Director s report: Investment Report, Portfolio Statement, Comparative Tables and Treatment by Corporate Shareholders. Distributions are made from positive net revenue where gross revenue exceeds expenses and tax. The total return consists of investment and currency gains and losses in addition to net revenue. In situations where Funds have a negative total return but a positive net revenue position, there will be a distribution. Material differences may arise between a Fund s net revenue after tax and its distribution if the ACD s periodic charge and transaction costs are borne by the capital property of the Fund for distribution purposes. The expenses in the Statement of Total Return includes these expenses even if they are met from the capital property of the Fund. In such cases, the amount a Fund has to distribute will exceed its net revenue and this is detailed in the notes to the financial statements where it occurs. Copies of the most recent Prospectus are available, on request, from the ACD. I hereby certify the Interim Report and Financial Statements on behalf of the Directors of Standard Life Investments (Mutual Funds) Limited. Director Edinburgh 31 August Standard Life Investments UK Real Estate Funds ICVC

7 Investment Report UK Real Estate Fund Market Background In the UK, investors face ongoing indecision from the UK government regarding the Brexit end state. Our base case is for a free-trade agreement (FTA) with an all-uk customs union and some regulatory devolution to Northern Ireland. Real income growth should start to provide a modest tailwind to GDP growth. Business investment continues to be held back by elevated uncertainty over the UK s future trading relationship with the EU. Within UK real estate, difficulties in the retail sector dominated the headlines over the last few months. This is now reflected in retail rents, which are falling across the board according to MSCI s monthly index. News that half-year profits at John Lewis would be close to zero was further evidence of the mounting challenges in the industry. At the opposite end of the spectrum, industrial demand remains buoyant and in the supply-starved South East this has pushed rents 6.8% higher over the year to May, according to MSCI. Demand is broad-based, with the continued expansion of trade counters and urban logistics uses a feature. Early data on investment volumes in Q2 suggest a lower total than Q1 and the smallest number of quarterly deals for five years. There was a dramatic fall in the number of industrial deals, reflecting the dearth of stock as investors hold what they have and continue to compete very strongly for assets that do come to market. UK institutions were the major net investor in Q2, selling less real estate than any quarter since Overseas investors were only marginal net investors but a number of large deals are expected to complete early in the third quarter. The result of that competitive demand has been continued strong capital growth in the industrial sector 16.1% for the year to May, according to MSCI which we expect to continue through the rest of 2018 given prices achieved are far outstripping valuations. Performance The UK Real Estate Fund returned 2.69% over the period, compared with a total return of 2.65% from the IA Commercial Property Funds peer group* The Authorised Property Unit Trust ( APUT )/Property Authorised Investment Fund ( PAIF ) MSCI Benchmark for Q illustrating the relative performance of the underlying direct property assets is not currently available. Initial estimates indicate that the Fund s underlying direct property assets provided a total return of 1.8% over Q and 4.2% for H In line with the market, the Fund s industrial assets were the best performers, with performance in South East industrials particularly strong. * Source: IA/Morningstar/Standard Life Investments; Performance based on PAIF Platform 1 Acc; Peer group comprises eight comparable property funds. Investment Activity During the reporting period, the Fund disposed of Maiden House, Maidenhead, for 4.0 million. We also completed the leasehold disposal of a further residential unit located above the commercial holding at Hampstead High Street, London, realising an additional 0.77 million. Asset management activity remained a key focus. For example, we completed a new 10 year lease with CEVA Logistics at Trilogy, Fareham, at an initial rent of 363,000 per annum ( 8.50 per square foot (psf)). A lease renewal with Howard Hunt at Masthead, Dartford, also completed, providing an additional 10-year term at an initial rent of 355,000 per annum ( 8.50 psf), an uplift of 18.4%. At io Centre, Sutton, Screwfix renewed its lease for an additional 10-year term at an initial rent of 81,435 per annum ( psf) and we completed a rent review with Kuehne & Nahel at unit 17, securing a rent of 96,405 per annum (an uplift of 33%). Letting activity continued at Bligh s Meadow, Sevenoaks, which included: restructuring with an existing tenant, Kit for Kids, which has taken a new 10-year lease on additional premises alongside a re-gear of its existing lease, securing a combined initial rent of 70,000 per annum; a new 10-year lease with Manak Lawyers at an initial rent of 23,400 per annum; a new letting to Card Factory, providing a 10-year term at an initial rent of 61,000 per annum; 4AG, securing a five-year term at an initial rent of 12,300 per annum. The Fund also restructured existing leases with: Fifth Avenue, securing an additional 15 years at an initial rent of 27,600 per annum; Between The Lines, providing an additional 10 years at an initial rent of 51,800 per annum; Leaders, removing a break option and securing an additional seven-year term. A final highlight in the retail sector was the rent review with VF Northern (trading as The North Face ) at Stock Exchange, Glasgow, providing a revised rent of 423,000 per annum (an uplift of 18.5%). In the office sector, we completed a new lease with AHR Architects at 55 Princess Street, Manchester, which provides a new 10-year term at an initial rent of 198,792 per annum ( psf). At Central Square South, Newcastle, DWF took a 10-year lease over the second floor at a rent of 175,216 ( psf) and GVA took a five-year lease over the third floor at a rent of 75, ( psf). At One Eton Street, Richmond, British American Tobacco signed up to a five-year reversionary lease at a rent of 474,462 ( psf). Standard Life Investments UK Real Estate Funds ICVC 4

8 Investment Report Outlook and Future Strategy Investor sentiment and activity continues to illustrate that the hierarchy of sector preference remains largely unchanged. The industrial sector is likely to remain the favoured sector as investors seek to take advantage of the structural shift towards online retailing. We continue to believe that UK real estate dynamics remain supportive although returns are expected to be moderate. UK real estate continues to provide an elevated yield compared to other assets in a low growth environment. Given the backdrop of continuing heightened macro uncertainty, however, we expect to see more polarised performance between prime and secondary assets. Currently, around 80%+ of the Fund s assets by value are categorised within the Neutral to Very Heavy classification in our three-year House View. Finally, we will continue to implement asset management initiatives across the portfolio aimed towards maintaining income and capital preservation, alongside appraising select favourable investment opportunities. Cautionary note It should be remembered that past performance is not a guide to future performance. The value of investments may go down as well as up and, therefore, investors may not get back the amount originally invested. 5 Standard Life Investments UK Real Estate Funds ICVC

9 Comparative Table Disclosure 30 June December December December 2015 pence per share pence per share pence per share pence per share Retail accumulation^ Change in net assets per share Opening net asset value per share Return before operating charges* Operating charges** (0.74) (1.41) (1.49) (1.55) Property expenses# (0.17) (0.33) (0.31) (0.22) Return after operating charges* (1.00) 8.02 Gross distributions per accumulation share (2.19) (4.14) (4.22) (3.93) Net retained distribution on accumulation shares Closing net asset value per share * after direct transaction costs 0.16 Performance+ Return after charges 2.80% 7.26% -0.94% 8.12% Other information Closing net asset value ( 000) 31,447 34,374 55, ,930 Closing number of shares 27,356,649 30,676,277 52,769, ,322,288 Operating charges**** 1.31% 1.31% 1.41% 1.51% Property expenses ratio# 0.31% 0.31% 0.29% 0.22% Real Estate Property Expense Ratio 1.62% 1.62% 1.70% 1.73% Direct transaction costs*** 0.00% 0.00% 0.16% 0.00% Prices Highest share price^ Lowest share price^ # Property expenses are separate from fund operating charges. They represent the costs associated with property assets. The figure for property expenses should be combined with the operating charges to create a Real Estate Expense Ratio (REER) when comparing property funds. ^ Previously Class A Accumulation. Dual priced to 18 March 2016, single swing price thereafter. As the convention for a dual priced fund is to take the highest published offer and lowest bid in a period, this has been used for periods before the 18th of March ** The operating charges include all costs borne by the Fund, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. This figure may differ from the performance figure quoted in the Investment Report. Standard Life Investments UK Real Estate Funds ICVC 6

10 Comparative Table Disclosure 30 June December December December 2015 pence per share pence per share pence per share pence per share Institutional accumulation^ Change in net assets per share Opening net asset value per share Return before operating charges* Operating charges** (0.48) (0.92) (0.88) (0.78) Property expenses# (0.18) (0.34) (0.31) (0.22) Return after operating charges* (0.35) 8.90 Gross distributions per accumulation share (2.23) (4.21) (4.25) (3.95) Net retained distribution on accumulation shares Closing net asset value per share * after direct transaction costs 0.16 Performance+ Return after charges 3.05% 7.77% -0.33% 8.99% Other information Closing net asset value ( 000) 361, , , ,994 Closing number of shares 308,523, ,468, ,128, ,116,267 Operating charges**** 0.84% 0.84% 0.83% 0.76% Property expenses ratio# 0.31% 0.31% 0.29% 0.22% Real Estate Property Expense Ratio 1.15% 1.15% 1.12% 0.98% Direct transaction costs*** 0.00% 0.00% 0.16% 0.00% Prices Highest share price^ Lowest share price^ # Property expenses are separate from fund operating charges. They represent the costs associated with property assets. The figure for property expenses should be combined with the operating charges to create a Real Estate Expense Ratio (REER) when comparing property funds. ^ Previously Class I Accumulation. Dual priced to 18 March 2016, single swing price thereafter. As the convention for a dual priced fund is to take the highest published offer and lowest bid in a period, this has been used for periods before the 18th of March ** The operating charges include all costs borne by the Fund, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. This figure may differ from the performance figure quoted in the Investment Report. 7 Standard Life Investments UK Real Estate Funds ICVC

11 Comparative Table Disclosure 30 June December December December 2015 pence per share pence per share pence per share pence per share Retail Income^ Change in net assets per share Opening net asset value per share Return before operating charges* Operating charges** (0.65) (1.27) (1.37) (1.50) Property expenses# (0.15) (0.30) (0.29) (0.21) Return after operating charges* (0.86) 7.33 Gross distributions per income share (1.92) (3.65) (3.87) (3.79) Closing net asset value per share * after direct transaction costs 0.15 Performance+ Return after charges 2.77% 7.08% -0.85% 7.56% Other information Closing net asset value ( 000) 3,589 2,897 2,701 6,910 Closing number of shares 3,601,175 2,930,821 2,821,652 6,878,262 Operating charges**** 1.31% 1.31% 1.40% 1.51% Property expenses ratio# 0.31% 0.31% 0.29% 0.22% Real Estate Property Expense Ratio 1.62% 1.62% 1.69% 1.73% Direct transaction costs*** 0.00% 0.00% 0.16% 0.00% Prices Highest share price^ Lowest share price^ # Property expenses are separate from fund operating charges. They represent the costs associated with property assets. The figure for property expenses should be combined with the operating charges to create a Real Estate Expense Ratio (REER) when comparing property funds. ^ Previously Class A Income. Dual priced to 18 March 2016, single swing price thereafter. As the convention for a dual priced fund is to take the highest published offer and lowest bid in a period, this has been used for periods before the 18th of March ** The operating charges include all costs borne by the Fund, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. This figure may differ from the performance figure quoted in the Investment Report. Standard Life Investments UK Real Estate Funds ICVC 8

12 Comparative Table Disclosure 30 June December December December 2015 pence per share pence per share pence per share pence per share Institutional Income^ Change in net assets per share Opening net asset value per share Return before operating charges* Operating charges** (0.43) (0.83) (0.82) (0.75) Property expenses# (0.15) (0.31) (0.29) (0.21) Return after operating charges* (0.33) 8.53 Gross distributions per income share (1.97) (3.80) (3.96) (3.82) Closing net asset value per share * after direct transaction costs 0.15 Performance+ Return after charges 3.01% 7.62% -0.32% 8.78% Other information Closing net asset value ( 000) 73,346 82,112 87, ,565 Closing number of shares 71,703,824 81,128,646 89,625, ,492,381 Operating charges**** 0.84% 0.84% 0.82% 1.51% Property expenses ratio# 0.31% 0.31% 0.29% 0.22% Real Estate Property Expense Ratio 1.15% 1.15% 1.11% 1.73% Direct transaction costs*** 0.00% 0.00% 0.16% 0.00% Prices Highest share price^ Lowest share price^ # Property expenses are separate from fund operating charges. They represent the costs associated with property assets. The figure for property expenses should be combined with the operating charges to create a Real Estate Expense Ratio (REER) when comparing property funds. ^ Previously Class I Income. Dual priced to 18 March 2016, single swing price thereafter. As the convention for a dual priced fund is to take the highest published offer and lowest bid in a period, this has been used for periods before the 18th of March ** The operating charges include all costs borne by the Fund, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. This figure may differ from the performance figure quoted in the Investment Report. 9 Standard Life Investments UK Real Estate Funds ICVC

13 Comparative Table Disclosure 30 June December December 2016 pence per share pence per share pence per share Standard Life Income^ Change in net assets per share Opening net asset value per share Return before operating charges* Operating charges** (0.01) Property expenses# (0.08) (0.15) (0.14) Return after operating charges* (0.04) Gross distributions per income share (0.99) (1.89) (1.56) Closing net asset value per share * after direct transaction costs 0.07 Performance+ Return after charges 3.43% 8.52% -0.08% Other information Closing net asset value ( 000) 26,595 26,206 33,113 Closing number of shares 51,761,894 51,761,894 68,418,150 Operating charges**** 0.01% 0.01% 0.01% Property expenses ratio# 0.31% 0.31% 0.29% Real Estate Property Expense Ratio 0.32% 0.32% 0.30% Direct transaction costs*** 0.00% 0.00% 0.16% Prices Highest share price^ Lowest share price^ # Property expenses are separate from fund operating charges. They represent the costs associated with property assets. The figure for property expenses should be combined with the operating charges to create a Real Estate Expense Ratio (REER) when comparing property funds. ^ Launched 18 March ** The operating charges include all costs borne by the Fund, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. This figure may differ from the performance figure quoted in the Investment Report. Standard Life Investments UK Real Estate Funds ICVC 10

14 Comparative Table Disclosure 30 June December December 2016 pence per share pence per share pence per share Standard Life accumulation^ Change in net assets per share Opening net asset value per share Return before operating charges* Operating charges** (0.03) (0.05) (0.03) Property expenses# (0.08) (0.16) (0.14) Return after operating charges* (0.04) Gross distributions per accumulation share (1.05) (1.97) (1.58) Net retained distribution on accumulation shares Closing net asset value per share * after direct transaction costs 0.08 Performance+ Return after charges 3.41% 8.57% -0.09% Other information Closing net asset value ( 000) Closing number of shares 221, ,770 51,165 Operating charges**** 0.09% 0.09% 0.09% Property expenses ratio# 0.31% 0.31% 0.29% Real Estate Property Expense Ratio 0.40% 0.40% 0.38% Direct transaction costs*** 0.00% 0.00% 0.16% Prices Highest share price^ Lowest share price^ # Property expenses are separate from fund operating charges. They represent the costs associated with property assets. The figure for property expenses should be combined with the operating charges to create a Real Estate Expense Ratio (REER) when comparing property funds. ^ Launched 18 March ** The operating charges include all costs borne by the Fund, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. This figure may differ from the performance figure quoted in the Investment Report. 11 Standard Life Investments UK Real Estate Funds ICVC

15 Comparative Table Disclosure 30 June December December 2016 pence per share pence per share pence per share Platform 1 accumulation^ Change in net assets per share Opening net asset value per share Return before operating charges* Operating charges** (0.23) (0.45) (0.34) Property expenses# (0.08) (0.16) (0.14) Return after operating charges* (0.46) Gross distributions per accumulation share (1.04) (1.95) (1.60) Net retained distribution on accumulation shares Closing net asset value per share * after direct transaction costs of: 0.08 Performance+ Return after charges 3.03% 7.72% -0.92% Other information Closing net asset value ( 000) 27,148 24,132 37,814 Closing number of shares 49,890,772 45,574,242 76,523,317 Operating charges**** 0.89% 0.87% 0.89% Property expenses ratio# 0.31% 0.31% 0.29% Real Estate Property Expense Ratio 1.20% 1.18% 1.18% Direct transaction costs*** 0.00% 0.00% 0.16% Prices Highest share price^ Lowest share price^ # Property expenses are separate from fund operating charges. They represent the costs associated with property assets. The figure for property expenses should be combined with the operating charges to create a Real Estate Expense Ratio (REER) when comparing property funds. ^ Launched 18 March ** The operating charges include all costs borne by the Fund, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. This figure may differ from the performance figure quoted in the Investment Report. Standard Life Investments UK Real Estate Funds ICVC 12

16 Comparative Table Disclosure 30 June December December 2016 pence per share pence per share pence per share Platform 1 income^ Change in net assets per share Opening net asset value per share Return before operating charges* Operating charges** (0.22) (0.44) (0.34) Property expenses# (0.08) (0.15) (0.14) Return after operating charges* (0.38) Gross distributions per income share (0.97) (1.88) (1.56) Closing net asset value per share * after direct transaction costs 0.07 Performance+ Return after charges 2.99% 7.61% -0.76% Other information Closing net asset value ( 000) 28,780 22,831 16,762 Closing number of shares 57,150,418 45,809,249 34,876,553 Operating charges % 0.89% 0.89% Property expenses ratio# 0.31% 0.31% 0.29% Real Estate Property Expense Ratio 1.20% 1.20% 1.18% Direct transaction costs**** 0.00% 0.00% 0.16% Prices Highest share price^ Lowest share price^ # Property expenses are separate from fund operating charges. They represent the costs associated with property assets. The figure for property expenses should be combined with the operating charges to create a Real Estate Expense Ratio (REER) when comparing property funds. ^ Launched 18 March ** The operating charges include all costs borne by the Fund, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. This figure may differ from the performance figure quoted in the Investment Report. 13 Standard Life Investments UK Real Estate Funds ICVC

17 Comparative Table Disclosure 30 June December December December 2015 pence per share pence per share pence per share pence per share Feeder accumulation^ Change in net assets per share Opening net asset value per share Return before operating charges* Operating charges** (0.01) (0.02) (0.01) Property expenses# (0.19) (0.36) (0.33) (0.28) Return after operating charges* Gross distributions per accumulation share (2.41) (4.52) (4.54) (4.21) Net retained distribution on accumulation shares Closing net asset value per share * after direct transaction costs 0.17 Performance+ Return after charges 3.47% 8.65% 0.42% 10.82% Other information Closing net asset value ( 000) 1,480,838 1,475,816 1,615, ,396 Closing number of shares 1,168,011,498 1,200,398,164 1,417,777, ,777,450 Operating charges**** 0.01% 0.01% 0.01% 0.01% Property expenses ratio# 0.31% 0.31% 0.29% 0.22% Real Estate Property Expense Ratio 0.32% 0.32% 0.30% 0.23% Direct transaction costs*** 0.00% 0.00% 0.16% 0.00% Prices Highest share price^ Lowest share price^ # Property expenses are separate from fund operating charges. They represent the costs associated with property assets. The figure for property expenses should be combined with the operating charges to create a Real Estate Expense Ratio (REER) when comparing property funds. ^ Previously Class F Accumulation. Dual priced to 18 March 2016, single swing price thereafter. As the convention for a dual priced fund is to take the highest published offer and lowest bid in a period, this has been used for periods before the 18th of March ** The operating charges include all costs borne by the Fund, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. This figure may differ from the performance figure quoted in the Investment Report. Standard Life Investments UK Real Estate Funds ICVC 14

18 Comparative Table Disclosure 30 June December December December 2015 pence per share pence per share pence per share pence per share Feeder Income^ Change in net assets per share Opening net asset value per share Return before operating charges* Operating charges** (0.01) (0.01) Property expenses# (0.17) (0.33) (0.31) (0.22) Return after operating charges* Gross distributions per income share (2.14) (4.10) (4.23) (4.07) Closing net asset value per share * after direct transaction costs 0.16 Performance+ Return after charges 3.42% 8.51% 0.59% 9.49% Other information Closing net asset value ( 000) 375, , , ,854 Closing number of shares 337,586, ,454, ,528, ,368,126 Operating charges**** 0.01% 0.01% 0.01% 0.01% Property expenses ratio# 0.31% 0.31% 0.29% 0.22% Real Estate Property Expense Ratio 0.32% 0.32% 0.30% 0.23% Direct transaction costs*** 0.00% 0.00% 0.16% Prices Highest share price^ Lowest share price^ # Property expenses are separate from fund operating charges. They represent the costs associated with property assets. The figure for property expenses should be combined with the operating charges to create a Real Estate Expense Ratio (REER) when comparing property funds. ^ Previously Class F Income. Dual priced to 18 March 2016, single swing price thereafter. As the convention for a dual priced fund is to take the highest published offer and lowest bid in a period, this has been used for periods before the 18th of March ** The operating charges include all costs borne by the Fund, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. This figure may differ from the performance figure quoted in the Investment Report. 15 Standard Life Investments UK Real Estate Funds ICVC

19 Comparative Table Disclosure 30 June December December 2016 pence per share pence per share pence per share Institutional A accumulation++ Change in net assets per share Opening net asset value per share Return before operating charges* Operating charges** (0.36) (0.79) (0.62) Property expenses# (0.07) (0.16) (0.14) Return after operating charges* (0.62) Gross distributions per accumulation share (0.83) (1.94) (1.60) Net retained distribution on accumulation shares Redemption value at 7 June 2018 (53.61) Closing net asset value per share * after direct transaction costs 0.08 Performance+ Return after charges 3.11% 7.03% -1.24% Other information Closing net asset value ( 000) 1 1 Closing number of shares 2,398 2,398 Operating charges**** 1.59% 1.57% 1.59% Property expenses ratio# 0.31% 0.31% 0.29% Real Estate Property Expense Ratio 1.90% 1.88% 1.88% Direct transaction costs*** 0.00% 0.00% 0.16% Prices Highest share price^ Lowest share price^ # Property expenses are separate from fund operating charges. They represent the costs associated with property assets. The figure for property expenses should be combined with the operating charges to create a Real Estate Expense Ratio (REER) when comparing property funds. ^ Launched 18 March ** The operating charges include all costs borne by the Fund, except for direct transaction costs. *** The direct transaction costs are made up of; fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges as well as transfer taxes and duties. Direct transaction costs are stated after the proportion of the amounts collected from dilution adjustments in relation to direct transaction costs. **** The operating charges percentage shows the annualised operating expenses of the share class as a percentage of the average net asset value of the class over the same period. + The performance figures are calculated by taking the value of the share class per the financial statements compared to the value per the financial statements in the prior year. This figure may differ from the performance figure quoted in the Investment Report. ++ Share class closed on 07 June Standard Life Investments UK Real Estate Funds ICVC 16

20 Portfolio Statement As at 30 June 2018 Bid-market Percentage value of total 000 net assets Real Estate Investments (77.67%) 1,932, Million (0.34%) 4, Brunel Park, Chippenham* 5-10 Million (3.71%) 102, Retail Retail Retail Warehouse Retail Point 23, Haydock Estate, Haydock, Merseyside Ferry Lane, Rainham Units 1-5, 214 Purley Way, Croydon Tesco, Ruthin, Denbighshire Visteon, Chelmsford Sagittarius One & Two, Gemini Business Park, Warrington Units 8, 8A & 8B Farnham Trading Estate, Farnham* Geoffrey House, Maidenhead High Street & Regent Street, Cheltenham Tetron Point, Swadlincote Harwich Gate Retail Park, Harwich Brooklands Close, Sunbury Northgate Street & 1/3 Music Hall Passage, Chester Million (7.92%) 183, Retail Retail Warehouse Retail Warehouse Retail Warehouse Retail Warehouse Other Commercial Ellenborough House, Oriel Terrace, Cheltenham Lion & Churchill House, Aberdeen Annandale House, Hanworth Road, Sunbury Waitrose, High Street, Worthing The Gateway Retail Park, Trowbridge Building One, Aberdeen Plot H Kingsway BP, Rochdale Clarendon House, George Street, Edinburgh East Kilbride Retail Park, East Kilbride Duncan House, Enterprise Drive, Westhill, Aberdeen Omega Park, Collett Way, Didcot Castlemore Retail Park, Manchester The Link Retail Park, Thanet Eastgate Leisure Quarter, Llanelli* 17 Standard Life Investments UK Real Estate Funds ICVC

21 Portfolio Statement Bid-market Percentage value of total 000 net assets Million (10.33%) 260, Retail Warehouse Other Commercial Retail Warehouse Shopping Centre Retail Retail Retail Osprey House, Maidenhead Hollywood Retail Park, Barrow In Furness Hollywood House, Woking Building 7600, Valley Park, Rugby Baxter Gate, Loughborough Ascent Park, Harlow Chippenham Retail Park, Bath Road, Chippenham Tudor Arcade, Dorchester* The Felbridge Centre, Felbridge Lane, East Grinstead M&S Foodstore, 66 London Road, Sevenoaks* Woodside Estate, Bishop s Stortford 57-64A High Street, Hampstead, London* High Street, Guildford Trilogy, Fareham* Unit 3520, Magna Park, Lutterworth* Million (10.79%) 218, Retail Retail Retail Warehouse Units 120,130,140,200 & 210, Southern Cross, Southampton V277 First Point, Doncaster Units 1,3,4,5,6 & 7 Minto Commercial Park, Aberdeen 55 Princess Street, Manchester* WH Smith National Dist. Centre, Birmingham 2-14 Calverley Road, Tunbridge Wells Raith s House Complex, Raith Estate, Aberdeen The Delta Building, Reading Tesco, Congleton* Bishop Auckland Shopping Park, Bishop Auckland Million (20.21%) 379, Other Commercial Retail Retail Warehouse Central South Square, Newcastle Upon Tyne Knights Park, Tunbridge Wells 12 Central Way, Park Royal, London Direct Line House, Manchester 16/46 Calverley Road, Tunbridge Wells Cornhill, London 82 Charing Cross Road, London West End Retail Park, Glasgow Standard Life Investments UK Real Estate Funds ICVC 18

22 Portfolio Statement Million (continued) Bid-market Percentage value of total 000 net assets Other Commercial Shopping Centre Retail Avant Garde, Bethnal Green Road, Shoreditch, London* Cox Lane, Chessington Blighs Meadow Shopping Centre, Sevenoaks* Stock Exchange House, 153/159 Buchanan Street, Glasgow One Eton Street, Richmond 35+ Million (24.37%) 784, Retail Retail Retail Warehouse Retail Retail Retail Warehouse 1 America Street & 29 Guildford Street, London 85/89 Southwark Street, London Sainsbury s Superstore, 66 Cornard Road, Sudbury 1 Marsden Street, Manchester Solar Park, Highlands Road, Solihull Saxon Way Trading Estate, Heathrow 39 Charlotte Street, London Units 2,3,6,8,9,10 & 11 Masthead Estate, Dartford Royal Avenue House, 35/47 King s Road, Chelsea, London The Gateway Retail Park, Beckton IO Centre & Tradeway, Sutton* Arla Dairy Site, 430 Victoria Road, South Ruislip Isis Reach, Belvedere 45 Church Street, Birmingham Monument Mall, Newcastle Upon Tyne Leamington Shopping Park, Royal Leamington Spa Collective Investment Schemes (9.40%) 224, ,644,891 Standard Life Sterling CNAV Liquidity Fund** Total investment assets 2,156, Net other assets 252, Total Net Assets 2,409, % The percentage figures in brackets show the comparative holding as at 31 December There is no material difference between the 29 June 2017 valuation and the valuation conducted at close of business. *Denotes leasehold and mixed properties, those properties not highlighted are freehold properties. 19 Standard Life Investments UK Real Estate Funds ICVC

23 Portfolio Statement Market Value Reconciliation of assets and liabilities to the balance sheet 000 Investment assset as per balance sheet 1,932,126 **Collective Investment Schemes classified as Cash Equivalents 224,645 Net Investement assets 2,156,771 Other net assets 252,808 Total Net Assets 2,409,579 Standard Life Investments UK Real Estate Funds ICVC 20

24 Financial Statements Statement of Total Return for the six months ended 30 June 2018 (unaudited) 30 June June Income: Net capital gains 35,104 38,945 Revenue 50,820 51,084 Expenses (5,991) (6,320) Interest payable and similar charges (6) (14) Net revenue before taxation 44,823 44,750 Taxation Net revenue after taxation 44,823 44,750 Total return 79,927 83,695 Distributions (47,156) (47,181) Change in net assets attributable to shareholders from investment activities 32,771 36,514 Statement of Change in Net Assets Attributable to Shareholders for the six months ended 30 June 2018 (unaudited) 30 June June Opening net assets attributable to shareholders 2,444,070 2,601,214 Amounts receivable on the issue of shares 94,073 53,158 Amounts payable on cancellation of shares (193,291) (274,388) (99,218) (221,230) Dilution adjustment 1,142 2,501 Change in net assets attributable to shareholders from investment activities (see above) 32,771 36,514 Retained distribution on accumulation shares 30,814 30,378 Closing net assets attributable to shareholders 2,409,579 2,449, Standard Life Investments UK Real Estate Funds ICVC