Residential property fund closes its doors

Residential property fund closes its doors


In just a few weeks subscriptions for a specialist asset manager’s third fund will be closed following the success of the firm’s first two funds.

London Central Portfolio (LCP) has closed the doors of its third fund, London Central Apartments (LCA), after both its first fund, the London Central Residential Recovery Fund (closed 18 months ago), showed a 23 per cent growth in the last year and its second fund, the London Central Portfolio Property Fund (closed in 2008), showed a 16 per cent above target return over the same period.

Commenting on the news, Naomi Heaton CEO of LCP, said: “The Prime London Central (PLC) market has continued to hold its appeal for investors. PLC residential property has consistently outperformed other asset classes. Prices are now 25 per cent higher than the pre-credit crunch days (Q3 2007) whilst the FTSE100 is still down 12 per cent. Investors looking for alternative assets that can ride out market fluctuations have seen the advantages of these six square miles of prime real estate.”

LCA, which already has commitments of £30 million, will build up a diversified portfolio of one and two bedroomed properties in all the prime micro markets of PLC which offer strong capital growth potential. 

These will be interior designed to appeal to the discerning tenant and to achieve the highest possible rental yields.  

Naomi continued: “There has been particular interest in LCA in light of its unique mandate to invest exclusively in prime properties under the £1 million mark. It is an ideal investment solution for those wanting to access the market but who are nervous of the Government’s recent tax hikes for properties over £2m.”

LCP has also observed that their third fund is attracting a new breed of investor - with more than 50 per cent of the uptake coming from UK citizens for the first time. 

Many are professionals who have been priced out of investing directly but want to get a foothold in this safe haven as economic forecasts become more unpredictable. 

Moreover, with base rates at a historical low (0.5 per cent) and cash holdings generating almost no returns, investors have taken advantage of the fund’s SIPP and ISA eligibility. 

Since securing approval for inclusion in QROPS and offshore portfolio bonds, LCA has seen an influx of overseas investors, particularly from the Far East. These are investors who have traditionally seen the value in PLC residential but have been deterred by the hassles of sourcing, buying and managing a portfolio from abroad. LCA has now provided a simple way in.

However, at almost one third, the second biggest take-up in LCA, after the UK, has come from Middle Eastern investors. 

Faizal Karbani, CEO of financial advisory firm, Simply Sharia added: “LCP have provided access to a unique and attractive asset class whilst ensuring the fund remains within the bounds of Sharia statute. As a bricks and mortar product, often preferred by Muslim investors, the LCA fund was a perfect recipe for us. The projected returns are excellent and LCP provide a strong track record. As such, many of our clients have invested in this proposition.” 

LCP can reveal that the fund has now acquired its first five properties across Hyde Park, Marylebone, Kensington, South Kensington and the Pimlico grid and it has now started its refurbishment program. The fund is targeting a 10 -13 per cent IRR per annum over a five year hold. 

Naomi said: “In light of the very successful performances of the first two funds and the equity raise period for LCA coming to an end, LCP can also reveal that they are drawing up the plans for the launch of their fourth fund.”

In the meantime, LCA will continue to take subscriptions until October 16th after which it will be closed to new investors.


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