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Prime London property fund open to new investors

London Central Apartments III (LCA III), the latest property investment fund to invest in prime central London’s private rented sector (PRS) remains open to investors after asset advisors London Central Portfolio (LCP) announced a three week extension to buy shares in the scheme. 

The LCA III fund, which will be open for subscriptions until 25 July, is a listed investment company that invests exclusively in the mainstream PRS in prime central London by cherry-picking properties with added value potential across all the prime postcodes which then undergo a full refurbishment and interior design programme. LCA III is targeting returns in excess of 10% per annum over a four year period.

LCP’s previous fund, launched in early 2009, has returned an annual IRR of 13.5%, and Naomi Heaton, CEO of LCP, believes that there is "every reason" to anticipate an influx in investors following the unexpected ‘leave’ vote in last month’s EU referendum.

She commented: “Notwithstanding the referendum, the fundamental attractions of prime central London as a centre of culture, excellence and education and as a beacon of democracy with absolute rule of law and unequivocal title to property are still very much in place.”

Heaton continued: “With a loose parallel to the Global Financial Crisis when PCL showed enormous resilience, the current weak sterling and low interest rates will be a major draw for investors. Indeed, with most equity markets trading well, including the FTSE 100, investors are generally in a much better position than in 2009. We anticipate a high level of appetite and have already received investment mandates from clients wishing to take opportunistic advantage of the current market dynamics.”

Alongside the currency-play, LCA III has some tax benefits investors. The LCA III fund is eligible for government approved, tax-efficient saving schemes such as SIPPs, SSASs and ISAs, whilst the March Budget offered an 8% reduction in capital gains tax. For all shareholders, the fund is unaffected by the reductions in mortgage interest relief and can capitalise from the commercial rate of stamp duty (under 5%) which applies to buildings of six or more properties.

Heaton added: “Despite the negative market outlook being reported for the UK, it is now an opportune time for both British and foreign investors to look at prime central London. Prices had cooled, pre-EU referendum but given the current tailwinds and the long term fundamentals for the PRS, there is little doubt that prices will now harden, providing significant upside for the strategic investor.”

Key Features of London Central Apartments III

Property Type: Diversified portfolio of 1 & 2 bedroom flats in prime central London

Structure: Closed-end investment company, listed on Channel Islands Security Exchange

Objective: Capital Growth IRR > 10% (hurdle rate: 8%)

Size: £100m+

Investment: From £25,000 (subject to eligibility)        

Term: 4 years (+ 2 annual options to extend)

Eligibility: UK res, non-res and non-dom investors. SIPPs, SSASs, ISAs, QROPS, Sharia-compliant.

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