PRIVATE EQUITY
SELECTED INVESTMENTS - AFFORDABLE PROPERTY FUND
- SUMMARY:
- An actively managed affordable housing property fund established to profit from the downturn in house prices and the economic cycle but focusing on a demographic and geography that has good defensive qualities
- Delivering a target IRR of 9% with low volatility and limited correlation with other asset classes
- The fund will be investing in predominantly ex council properties with the following characteristics:
- positive spread of at least 0.75% between the external cost of funding and gross rental yield
- a mix of 1,2,3 and 4 bedroom flats with an average property value of £200,000
- located in London with a particular focus on South West London
- located within close proximity to universities, schools and hospitals
- tenants will be students, immigrants, housing associations and key workers employed in health, education and community safety – not exposed to an increase in unemployment in the City
- Demand for rented property in the fund’s target market is underpinned by:
- higher mortgage costs and reducing mortgage availability precluding first time buyers from home ownership and increasing the demand for rented property
- an increase in student numbers to achieve government targets
- sustained levels of immigration into the UK and a growing number of foreign students
- a rising number of single family households and down sizing in the economic downturn
- Supply of housing in the fund’s target market will be constrained by:
- restraints on government spending in the UK
- a lack of funding available to universities to build new accommodation
- stricter lending covenants imposed on developers and buy-to-let landlords
- limited space
- Hibridge Capital has a combined 15 year track record of investment in the affordable housing sector and its owners have £9.4m exposure to this sector. Any future investment will be through the Fund
- Key investment terms and structure:
- target size - £8m equity, first closing £4 million by 30 September 2008
- minimum investment - £100,000
- 1% initial fee, 1% annual fee, 20% performance fee in excess of achieving the UK base rate
- maximum gearing 70% loan to value of property and 1.5x interest cover
- unauthorised investment in the shares of a BVI domiciled private company
- term of investment - 8 years with redemptions on a matched bargain basis
HOME
TRELLIDOR