Longcross property fund makes first residential buys
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The Longcross Property Investment fund has bought its first residential holdings in a recent off-market deal.
The £10.4m fund, which is managed by Ripley Asset Management, has taken its allocation to residential from 0% to about 20% with the acquisition of three homes in a Surrey commuter town.
Michael Hardman, manager with Ripley Asset Management, says he has been planning to add four and five-bedroom homes to the portfolio since the fund launched in August 2010.
The manager was looking to buy three or more homes at a discount of between 15% and 20% as its first residential investment. These will then be let to temporary senior executives working for UK companies with a rent of about £3,000 a month.
“This purchase hits all those parameters in terms of discount as the developer has already sold the remaining nine units on the scheme and in order to close the final sales will look to discount if it means he can move on to the next project,” Hardman explains.
The holdings could be sold in three to five years as the property market improves. As the homes were bought a discount, the fund is well-placed to see a healthy return on capital, the managers argues.
Further residential purchases are expected in the future, as Hardman envisages the allocation to the sector rising to about 30% with the remainder being in the commercial holdings more typically found in a property fund.gary
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