IPS exploits the global recession with its London Central Residential Recovery Fund
It takes a shrewd investor to effectively exploit the opportunities of a global recession, but International Property Solutions (IPS) is doing just that with its £23 million London Central Residential Recovery Fund (LCRRF), the only closed-ended fund of its kind targeting distressed properties in London’s most desirable neighbourhoods.
IPS CEO Scott Picken, speaking from the firm's SA headquarters in Bryanston north of Johannesburg, points to an increased demand for tangible assets as a direct result of uncertainty in world equity and bond markets, and argues that property offers a real alternative for many investors.
IPS provides solutions for people to invest internationally and is constantly looking for “Best of Breed” partners to strategically partner with so that investors can take advantage of great opportunities in prime markets. IPS has strategically partnered with London Central Portfolio (LCP) as IPS, after extensive due diligence, is confident that they are best placed to provide an effective solution to take advantage of the current conditions in the UK.
Picken founded his business when in London buying property, renovating and renting out the properties. He says, “I was so excited when we partnered with LCP as it provides the perfect solution for investing in London and, best of all, they have 20 years experience in some of the best real estate globally! “Our goal for the LCRRF is 15% average growth per year, to double an investor’s equity stake in five years,” explains Picken, adding that forecasts put initial yields at 5%.
The fund’s strategy is simple and sound. Distressed properties – especially in the wake of a global meltdown – offer exceptional value and upside potential, as long as they are well-located and effectively managed.
Another strategic importance of the LCRRF is that finance has been prearranged from Fortis Bank at base plus one percent. Therefore effectively LCRRF are borrowing at 1.5% and have the ability to fix rates as well. Very few investors have the opportunity to take advantage of the market and also secure financing at these levels.
“The LCRRF has these key pieces in place,” he explains.
Location-wise the fund will only acquire properties in Knightsbridge, Mayfair, Chelsea and Kensington – the Zone One areas of London. Property management is being provided by London Central Portfolio Limited and administration by Fortis Fund Services (Guernsey) Limited.
“After we acquire the properties, we refurbish them and lease them to blue-chip tenants,” says Picken.
“This approach allows us to generate both rental income and capital growth, and capture the bottom of the market cycle.”
The LCRRF is being listed on the Channel Islands Stock Exchange, and has been structured for a maximum 8-year investment term, with early exit options available to investors. “Low investment criteria make it very affordable to investors,” says Picken.
The closing date for investment is 24th of December 2009.For local SA investors, the fund has several extra advantages.
Non-resident and non-domiciled investors are exempt from Capital Gains Tax in the UK. Plus, the average annual growth projection of 15 %, points out Picken, excludes the anticipated 5% annual devaluation of the Rand.
With the strong rand, low asset values, great financing structures and good yields, this is certainly something all investors can consider,” notes Picken.
