Closed-Ended Property Funds
These property Funds usually have a minimum subscription of £25,000 and are suitable for SIPPs/SSAS as well as private investors. These schemes provide access to sectors of the property market that have hitherto been the domain of larger investors such as insurance companies, pension funds and property companies. Property partnerships enable the Sponsor. Close Investments, to pool investors’ equity to which debt (or gearing) may be added.
By structuring these funds as limited partnerships each investor has a direct equity stake in the assets held by the fund. At the end of the investment term, typically between 3 – 7 years later, investors receive a share of the sale proceeds that is directly proportionate to their original level of investment. Exempt trust investors do not have a direct equity stake in the assets of the LP because they invest through the Exempt Trust.
Gearing
The use of gearing can be very effective and often property partnerships are “highly geared” to take advantage of this. Gearing may offer a potentially greater return on investment, conversely the effects of gearing can result in losses having a greater impact on investors’ equity share in the project. Gearing will typically account for between 50% - 85% of the purchase cost. In a limited partnership the gearing is arranged on a non recourse basis, this means that as a limited partner, the investors’ liability is limited to their initial investment.
Liquidity
There is no established secondary market for participations in limited partnerships. Investment into a Closed-Ended Property fund should be viewed as a medium term investment. Consequently, partnerships may not be suitable for short term investment and investors should not invest if the need to realise their investment prematurely.
No Closed-Ended Property fund propositions are currently open for new investment.
You can review the progress of our previous Closed-Ended Property funds by clicking on the corresponding update in the menu.
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