Graham Gould’s Coba Asset Management has teamed up with wealth management firm BDO Stoy Hayward Investment Management to launch a UK strategic income property fund targeting 10% returns.
The limited partnership fund will have a life of seven years and its 10% target return, includes an annual distribution of 5% to 6% once fully invested. Profits will be distributed as proceeds from sales, or at the end of the funds term. It has target leverage of 50% and capped at a maximum of 65%.
The fund has an initial charge of 2% and has an annual management fee of 1% of the gross asset value of the fund. The management team will be entitled to a performance fee of 20% above a 10% hurdle. The minimum investment is £100,000. Strutt & Parker will be an adviser to the fund..
Graham Gould, managing director of COBA Asset management will lead the management team. Roger Carey, formerly Chief Executive of Slough Estates will act as an independent adviser to the fund as will Philip Ingman, founding partner of Ingman-Jones. Other team members include Charles Lochrane, partner at Strutt & Parker and Robert Walters, investment director for property at BDO Stoy Hayward Investment Management.
The limited partnership venture said the fund has been created to ‘generate income by exploiting high initial yields from a depressed property market and acquire quality properties with strong tenants’. It said property prices were down 44% since 2007 and yields up from 4.6% to 7.9%.
Robert Walters, investment director property at BDO Stoy Hayward Investment Management, said: ‘Investors need income and want the security of tangible assets to create it. We think that they will be attracted to the combination of market timing, a formidable investment team and a tax efficient fund structure in a property market primed for acquisitions.’
Graham Gould, managing director of COBA Asset Management said: ‘Income from commercial property tends to be relatively stable over time and is the long term driver behind property returns. Property values, however, have plummeted creating a window of opportunity for the acquisition of assets to target income. This market will not last forever as asset prices will eventually grow but as the market bottoms out, now is the ideal time to invest.’
Charles Lochrane, partner at Strutt & Parker, said:'Capital values have fallen 44% since June 2007 which has created a unique opportunity to buy at historically low prices. With rental yields from property increasing from 4.6% to over 7% over the same period, the asset class now offers a very attractive income return.'