“It is not an exact science and you ultimately have to go with your gut – you have to try and be quite ‘Miss Marple’ about it.”
Good detection
For Ainslie McLennan, it helps if investors in commercial property have something of the super sleuth about them and, after years of under-representation in portfolios, she makes a compelling case for the asset class.
As director of property, McLennan has been lead manager of the £1.25bn Henderson UK Property Unit Trust for four and a half years, having joined Henderson Global Investors in 2002. The firm’s property capability is actually about 200 people, running £13bn of assets across different specialisms, with funds covering a variety of areas including retail warehouses, central London offices and shopping centres.
With this in mind, McLennan regards her retail fund, which she runs alongside Marcus Langlands Pearse, as representing “best in class”.
“Marcus and I are clear about what we are trying to achieve and the team should be the all-singing, all-dancing result of that. They can give us the extra help,” she explains.
“For example, asset management of retail warehousing has a specific tenant base and the market operates in a very specific way, and we can use their knowledge and intelligence when we are doing deals on the part of our portfolio invested in that area.”
Shared resources
McLennan also makes use of other resources within Henderson, exchanging views on her tenants with the bond and equity teams. This, she explains, allows her to get a different perspective from the “tales of woe” she gets from companies as their perceived landlord.
“If I talk with John Pattullo [head of retail fixed income], Neil Hermon [manager of Henderson Smaller Companies Trust] or any managers that have the tenant as a stock or a bond, they are getting publicly available information but a much more balanced picture,” she says.
“They can give you their view and back it up with numbers, and I can get the on-the-ground view. You begin to stitch a tapestry for yourself in terms of what you think fits your fund and what doesn’t.”
For example, McLennan recently purchased a Cineworld franchise in Cardiff at the same time that Hermon was upping his stake in its equity, meaning the pair could combine “top-down” and “grassroots” views on the firm.
For the full interview, look out for January’s edition of Portfolio Adviser which will be published early in 2014.
