HC Mansion Student Accommodation Class A Net Accumulation Feeder Trust ( A Sub Fund of HC Mansion UK Student Accommodation Income and Growth Feeder Trust) Half-yearly Unaudited Short Report 1 July 2013
Contents Investment Structure 2 Comparative Table 3 4 Investment Manager s Report 5 7 Portfolio Statement 8 b
The half yearly unaudited long form report for the HC Mansion UK Student Accommodation Income & Growth Feeder Trust is published on the Manager s website www.hostcapital.com or is available from the Manager on request by calling +44 (0)207 290 9490 during normal business hours. Manager s Report This Report has been prepared in accordance with the requirements of the Collective Investment Schemes Sourcebook as issued and amended by the Financial Conduct Authority. Director Host Capital Limited 30th August 2013 1
Investment Structure HC Mansion Student Accommodation Class A Net Accumulation Feeder Trust ( the Trust ) is a feeder non-ucits retail fund for the Class A Accumulation Shares of HC Mansion UK Student Accommodation Income and Growth Fund. HC Mansion UK Student Accommodation Income and Growth Fund ( the HC Mansion PAIF ) is an Investment Company with Variable Capital ( ICVC ) non-ucits retail scheme and Property Authorised Investment Fund ( PAIF ). Head Office: 73 New Bond Street, London W1S 1RS Authorised Corporate Director ( ACD ): Host Capital Limited Depository: National Westminster Bank Plc Property Manager: Mansion Property Management Limited Standing Independent Valuer: DTZ The investment objective of the HC Mansion PAIF is to carry on Property Investment Business and to manage cash raised from investors for investment in Property Investment Business with the aim of providing investors with regular income and some capital growth over the longer term. Its investment policy is to invest not less than 60% of its assets in UK commercial and residential property and in shares or units of UK or non-uk real estate investment trusts. The property assets the HC Mansion PAIF intends to acquire will be freehold interests or long-term leasehold interests in properties located in the top 30 (measured by student population) university towns and cities of the UK. The properties will be either purpose built student accommodation or other buildings (i.e. offices or hostels, hotels, serviced apartments or residences which can be adapted for use as student accommodation). In some instances, the assets acquired will also contain some ancillary retail, office or other commercial accommodation but these areas will rarely amount to any more than 20% of the overall accommodation. The ACD will endeavour to ensure the HC Mansion PAIF maintains an appropriate level of liquidity for the purposes of redemptions on a normal basis. For this purpose, the HC Mansion PAIF may invest up to 25% of its Net Asset Value in liquid assets which may include cash and deposits, transferable securities, money market instruments and government and public securities. The half yearly unaudited short and long form reports for the HC Mansion PAIF are published on the ACD s website www.hostcapital.com or is available from the ACD on request by calling +44 (0)207 290 9490 during normal business hours. 2
Comparative Table Accounting and Distribution dates Accounting Distribution Initial offer period commenced 15 November 2012 Launch date 14 December 2012 Interim 1 July 2013 1 April 2013* 1 July 2013* 1 October 2013 Final 1 January 2014 1 January 2014 *No distributions were paid for these dates Ongoing Charge for the accounting period Actual Per KIID Net Accumulation (standalone basis) 0.11% Net Accumulation (look through basis) 0.61% 2.88% The Ongoing Charge represents the total annualised expenses of the Trust excluding transaction costs and interest payable expressed as a percentage of the average net assets during the accounting period. Figures are shown on a standalone basis for the Trust and also on a look through basis, including the ongoing charge figures for the HC Mansion PAIF. During the period, the Property Manager of the HC Mansion PAIF subsidised a proportion of the accrued expenses. This is in order to cover the fixed costs of the Trust whilst the Trust has a low level of investment and no income. The subsidies and current small size of the Trust distort the calculation of the ongoing charge so the table also shows the expected ongoing charge as published in the Key Investor Information Document (KIID). 3
Comparative Table (continued) Performance Record Calendar Year Unit Class Highest published unit price (p) Lowest published unit price (p) Net Distribution per unit (p) 2013** Net Accumulation 104.55 100.00 2012* Net Accumulation 100.00 99.98 *From launch to 31st December 2012 **From 1st January 2013 to 1st July 2013 Allocated for Accumulation Units Units were launched on 14th December 2012 Net asset value Date Unit Class Net Asset Value of unit class ( ) Units in issue Net Asset Value per unit (p) 1 July 2013 Net Accumulation 8,425,315.00 8,058,561.602 104.55 The table above shows the net asset value per unit class at the end of the accounting period, 1st July 2013. These figures are different to the published net asset value per share class at 12 noon on 1st July 2013 due to transactions which occurred in the intervening period. Risk Warning Investors should be aware that there are risks inherent in the holding of investments: An investment in a unit trust should be regarded as a medium to long term investment. Investors should be aware that the price of units and the income from them can fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. 4
Investment Manager s Report Investment Objective The investment objective of the Trust is to provide investors with regular income and some capital growth over the longer term. Investment Policy The Trust will invest solely in the Class A Accumulation Shares issued by the HC Mansion PAIF. Please see page 2 for the investment objectives, policy of the HC Mansion PAIF. While the Trust will normally be solely invested in the HC Mansion PAIF, cash and near cash may be held by the Trust where the Manager regards this as necessary in order to enable the making of payments to unitholders and creditors. Investment of the assets of the Trust must comply with the COLL Sourcebook. Risk Profile The value of units and the income from them can go down as well as up and is not guaranteed. You may not get back the full amount invested. The Trust invests in shares of the HC Mansion PAIF. Please note the following specific risks of investing in that HC Mansion PAIF which will therefore also apply to this Trust: Property investments can take significantly longer to buy and sell than other investments, such as bonds and company shares, if properties have to be sold quickly this could result in lower prices being obtained for them. In extreme circumstances redemptions could be deferred and take up to 6 months. Dealing in the HC Mansion PAIF can be suspended for a period which means you may not be able to buy or sell shares for several months or longer. The valuation of property is generally a matter of valuer s opinion. Property may sell for less than valued which would reduce the HC Mansion PAIF value. Because the HC Mansion PAIF invests mainly in property and is also focussed on student accommodation, it is particularly vulnerable to market sentiment towards the sector when compared to funds that spread risk in a range of assets. Where the property is purchased by the Preferred Property Procurer, the ACD intends to agree with the Preferred Property Procurer guaranteed levels of rent to help protect the HC Mansion PAIF s income. The guarantee will only remain valid if the Preferred Property Procurer remains solvent. For further risk information please see the prospectus of the Trust and the HC Mansion PAIF 5
Investment Manager s Report (continued) Review of investment activities during the period During the period, the Trust was fully invested in Class A Accumulation Shares of the HC Mansion PAIF. Please see below for the review of investment activities in the period for the HC Mansion PAIF. Student Accommodation Sector Over the first half of 2013, university applicants have been seen to increase compared to the previous year. Universities and Colleges Admissions Service ( UCAS ) recently released the 2013 cycle applicant figures. These figures include all applicants until the end of June 2013 which typically represents 95% of total applicants with the remaining 5% coming through the clearing process. The key highlights of UCAS statistics are 1 : 3.1% increase in applicants to circa 637,000 for all courses across the UK for the 2013/14 intake applicant rates of 18 year olds across the UK increased by 0.7% compared to 2012/13 applicants from EU countries have increased by 4.3% for the 2013/14 intake applicants from outside the EU have increased by 6% for the 2013/14 intake Portfolio Update The HC Mansion UK Student Accommodation Income and Growth Fund ( the Company ), completed its first property purchase on 19th April 2013 at Haigh Court, Liverpool. Haigh Court is a well located asset situated in the heart of the student district, within five minutes walking distance of The University of Liverpool and Liverpool John Moore s University and comprises of 158 en-suite bed spaces in 1 7 bedroom flat configurations. This summer the property is undergoing a full refurbishment to bring it up to the Mansion Standard and is already demonstrating positive occupancy levels for the next academic year. On the 28th June 2013 the Company purchased a 219 bed asset in Exeter located minutes from the University campus with the property offering a high-level specification in a great location. Constructed approximately 3 years ago this property provides a combination of en-suite cluster flat and studio accommodation close to Exeter University s main campus at highly competitive rental levels. The property is being refurbished this summer to further enhance its current specification and is already posting good occupancy levels for the next student year. Exeter is a highly regarded and established university town with improving student numbers in attendance and is experiencing a high level of student demand with applications outstripping supply. In addition, the university has further plans in progress for a continued expansion of the university and therefore this purchase represents a rare opportunity to purchase a trading asset in an established and growing market. 1 UCAS 2013 cycle applicant figures June deadline. 6
Post Period End Review The Company continues to raise capital and on 17th July 2013 the Company acquired its third property, Poland House, situated in London being the largest university city in the UK. Poland House contains 100 non en-suite rooms, in 23 cluster flats and is targeted at a much neglected end of the market, providing lower cost accommodation in a generally expensive city. The property will be subject to a comprehensive refurbishment during summer 2014. The refurbishment of Haigh Court and Exeter One is ongoing and will be finalised during September 2013. The occupancy rate across the portfolio for the 2013/2014 academic year currently stands at 91%. Host Capital Limited Investment Manager 30th August 2013 7
Portfolio Statement as at 1st July 2013 Holdings Market Value 000 Total Net Assets % Investments in Collective Investment Schemes HC Mansion UK Student Accommodation Income & Growth Fund Class A Income Shares 8,058,103.50 8,429 100.05 Portfolio of Investments 8,429 100.05 Net other Liabilities (4) (0.05) Total Net Assets per the Financial Statements 8,425 100.00 Summary of Material Portfolio Changes for the period 14th December 2012 to 1st July 2013 Cost 000 Proceeds 000 Total purchases for the period 8,849 Total sales for the period 751 Major purchases HC Mansion UK Student Accommodation Income & Growth Fund Class A Accumulation Shares 8,849 Major sales HC Mansion UK Student Accommodation Income & Growth Fund Class A Accumulation Shares 751 8
Trust and Head Office HC Mansion UK Student Accommodation Income & Growth Feeder Trust 73 New Bond Street London W1S 1RS Manager (and Investment Manager) Host Capital Limited 73 New Bond Street London W1S 1RS Directors of the Manager CT Finch (Chief Executive) CP Chapman GL Brooks B Primrose Trustee National Westminster Bank Plc Registered Office: 135 Bishopsgate London EC2M 3UR Administrator Capita Sinclair Henderson Limited The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Legal Advisers to the Trust Eversheds LLP One Wood Street London EC2V 7WS Registrar Capita Financial Administrators Limited 17 Rochester Row Westminster London SW1P 1QT Auditors Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU Principal Place of Business: 1st Floor Younger Building 3 Redheughs Avenue Edinburgh EH12 9RH Custodian: Citibank International plc