F&C UK Property Fund. Contact us. Quarterly update Q3 2017

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1 For professional investors only PAGE 1 F&C UK Property Fund Quarterly update Q It has been a busy quarter for the F&C UK Property Fund with the completion of 9 acquisitions totalling some 60 million. Guy Glover Fund Manager Contact us Adviser sales: sales.support@bmogam.com Discretionary sales: The impact of these acquisitions is to not only boost the fund s income return by reducing cash levels to 18%, but it also improves diversification and offers some scope for earlier asset management initiatives to enhance performance. With the additional properties we have under offer, once completed, cash levels will be very close to 12%, which is our target. In summary, the acquisitions comprise: Price 59,755,000 Initial yield of 4.8% increasing to 5.4% on 1 November 2017 and then steadily to over 6% in 2018 Average unexpired lease length Sector split Retail 7.1% 5.1 years client.service@bmogam.com bmogam.com/adviser Retail warehousing 22.5% Offices 35.9% Industrial 34.5% Source: BMO Real Estate Partners, as at 30 September It is worth mentioning that the average unexpired lease length of some of these assets is below our current average of around 9 years. We have more recently been avoiding long-term income assets as these have been the focus of local councils and investors pricing the assets more as a corporate bond rather than based on the underlying property fundamentals. Importantly, we are confident in the quality of the assets, the opportunities for lease renegotiations and the commitment of the occupiers to the buildings.

2 PAGE 2 Rather than sending 9 separate updates below is a run through of each asset: IY = Initial yield EY = Equivalent yield Manchester Fountain Street Price 9,640,000 IY: 0.67% EY: 5.77% The property is situated in the heart of Manchester City Centre s prime financial and professional district, close to Manchester Town Hall and St Peter s Square. The property has undergone a 2.7 million refurbishment, providing 25,137 square foot (sq ft) of air conditioned office space. The offices have all been let to Traveljigsaw Limited, an excellent covenant on separate leases to December The ground floor now provides a new 2,725 sq ft retail unit which is currently being let, providing scope to improve the income. The low initial yield improves on 1 November and progresses again in February and March 2018 to 5.19%. Effectively, the fund has been reimbursed for this rent free period by a reduction in the purchase price of the asset. Richmond Upon Thames Onslow Hall Price 6,000,000 IY: 4.50% EY: 4.70% Richmond upon Thames is an affluent town approximately 9 miles south-west of Central London, located on the A316 providing direct access to Central London and within close proximity to the M3 motorway. Onslow Hall is situated on the east side of the Little Green in Richmond a few metres from the high street and Richmond mainline station. The building is a Grade II listed multi-let office comprising 8,109 sq ft predominantly let to Barclays Bank, as well as three smaller occupiers at an average rent of per sq ft. The property is well located within an area with good demand characteristics and strong prospects for rental growth in the medium term. This asset is highly liquid due its location and is a long-term hold as its value is underpinned by the potential for change of use including residential, education or healthcare, subject to planning. Nottingham NG2 Business Park Price 5,840,000 IY: 7.20% EY: 7.20% NG2 Business Park is the premier out-of-town business destination in Nottingham, situated at the junction of Queen s Drive and Enterprise Way. The park benefits from direct access to the Nottingham Tram network with nearby office occupiers including HSBC, The Co- Operative, Speedo and Specsavers. The property comprises 30,006 sq ft and is arranged over the ground and two upper floors to provide a modern high quality office building with open plan accommodation. The property is let in its entirety to VF Northern Europe Limited for a term expiring on 22 December 2023 (6.33 years unexpired) at a rent of 450,000 per annum ( per sq ft) subject to a rent review on 22 December The property is considered to be reversionary given the quality of the space. Grade A rents in the town centre are currently at per sq ft.

3 PAGE 3 Basildon Burnt Mills Price 5,910,000 IY: 5.60% EY: 6.40% Basildon is an established commercial centre in the county of Essex and a key industrial centre in the eastern M25 region. Basildon is located 34 miles (54 km) east of Central London. The town benefits from excellent road connection, with the A127 and A13 dual carriageways providing direct access to Central London and Junctions 29 and 30 of the M25 Motorway. The property comprises a 57,314 sq ft distribution warehouse and ancillary two-storey office accommodation. The property is let to Yodel Delivery Network Limited on a lease expiring on 12 August 2023 (5.87 years unexpired) at a rent of 356,431 ( 6.21 per sq ft), which is subject to an open market review on the 13 August 2018, providing the opportunity to step up the rent. Basildon sits in a strong South East location with rents for logistics units being agreed in excess of 7.00 per sq ft due to a lack of supply and strong levels of demand. Staines-upon-Thames Apex 30, London Road Price 8,890,000 IY: 5.01% EY: 5.06% Staines is a suburban town in Surrey and a popular Greater London industrial location. The town benefits from excellent road connections, located within close proximity of Junction 13 of the M25 motorway providing direct access to Junction 2 of the M3 Motorway, Junction 4B of the M4 Motorway and Junction 1A of the M40 Motorway. The property is located 3.2 miles (5.1 km) to the south west of Heathrow Airport. The property comprises two well specified logistic units with an ancillary two-storey office accommodation totalling 42,370 sq ft. Unit A comprising 20,973 sq ft is let to SRCL Limited until 19 June 2024 at a rent of 235,000 per annum ( per sq ft) subject to a rent review on the 19 June Unit B, comprising 21,397 sq ft, is let to Grocery Delivery E-Services Ltd (trading as Hello Fresh) expiring on 05 November 2025 at a rent of 239,822 per annum ( per sq ft), subject to a rent review on 6 November In both instances the current passing rents are reversionary with upcoming rent reviews providing an opportunity to crystallise a rent increase. Tewkesbury Units Ashchurch Business Centre Price 5,830,000 IY: 4.70% EY: 6.05% Tewkesbury is an attractive Gloucestershire market town which is famous for its abbey, situated approximately 9 miles (14.4 km) north of Gloucester and 40 miles (64.3 km) northeast of Bristol, immediately adjacent to Junction 9 of the M5 motorway and close to Junction 1 of the M50. The property is located within Ashchurch Business Centre, the premier business/ industrial area in the town and consists of four self-contained warehouse units totalling 56,669 sq ft. Three of the four units are let to Weatherford UK Ltd, Bowmill Engineering Ltd, and Allen-Vanguard Ltd with the remaining unit vacant but was acquired with the benefit of an 18-month rent guarantee. Discussions are ongoing to conclude a letting of this unit. We remain confident in extending the income of this asset and driving the rents forward over time.

4 PAGE 4 Buxton Staden Lane Price 4,900,000 IY: 6.22% EY: 6.22% Buxton is a spa town in Derbyshire and is described as the gateway to the Peak District National Park. The asset is located on Staden Lane business park in Buxton, the town s primary retail/business park, with the unit occupying a prominent roadside location on the A515, one of the main arterial routes into the town. The building comprises a purpose-built retail warehouse constructed in 2011 and arranged over ground floor and first floors to provide 26,840 sq ft of retail accommodation plus ancillary garden centre. The property is let to B&Q Plc on a lease to 10 August 2026 at a rent of 325,000 pa ( per sq ft). The asset is a modern, well-configured unit with ample parking, let to a strong covenant for a further nine years. Ipswich Felixstowe Road Price 8,520,000 IY: 6.73% EY: 6.35% Ipswich is the county town of Suffolk, about 60 miles north-east of London. The property is situated in the Ipswich suburb of Warren Heath on Felixstowe Road (A1156), the primary arterial route from the town centre to Felixstowe, and adjacent to a large Sainsbury s supermarket. The property is located within close proximity of the Euro and Futura retail parks, the latter being the pre-eminent out of town shopping destination in Ipswich. Nearby occupiers include John Lewis at Home, B&Q, Halfords and Sports Direct. The asset is a 1980s-built retail warehouse providing 34,968 sq ft with an ancillary garden centre. The property is held on a 150-year lease expiring 21 March 2155 at a peppercorn rent, and benefits from an open planning consent. The property is let to HHGL Limited (trading as Homebase) on a 15-year lease expiring 23 June The passing rent is 612,000 pa ( per sq ft). Homebase have recently been acquired by Wesfarmers, who have announced a 500 million investment in existing Homebase stores, which may shortly include this property. Additionally, there is the potential to extend and reconfigure the space to provide either two or three retail units. Dorchester South Street Price 4,225,000 IY: 4.31% EY: 7.07% Dorchester is the county town of Dorset situated between Poole and Bridport. It is a historic market town with an affluent catchment population of around 19,000 people. The property comprises a block of five high street retail units constructed in the 1980s and arranged over ground and first floors. Three units front onto the prime pitch of South Street in a 100% prime location and are occupied by Waterstones (Unit 1), Card Factory (Unit 2) and Clinton Cards (Unit 3). The other units on Trinity Street are occupied by Weldmar Hospice Care and Sue Ryder on long-term leases to 2026 and 2028 respectively. The asset is fully occupied with 91% of the income secured to national multiple operators and 87% coming from the 3 units occupying a 100% prime location on South Street. While Dorchester is a small retail market, the prime pitch has low void rates and the town has remained remarkably resilient.

5 PAGE 5 Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any products that may be mentioned. Past performance should not be seen as an indication of future performance. The value of investments and income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested. If you are unsure of the suitability of an investment, you should speak to a professional adviser. F&C Management Limited accepts no liability for any loss arising from the use of, nor make any representation as to the accuracy or completeness BMO Global Asset Management. All rights reserved. BMO Global Asset Management is a trading name of F&C Management Limited, which is authorised and regulated by the Financial Conduct Authority. Calls may be recorded. CM14515 (10/17) UK