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Close centres Romulus on business

Close Property Investment is aiming to raise 10m for the Romulus high income fund, an unauthorised unit trust investing in high-yielding UK business centres.

The fund, which is also available to self-invested personal pensions and small self-administered schemes through an exempt unit trust, will generate income of at least 7.25 per cent a year.

Business centres, which provide office space and facilities on flexible terms, started to appear in the UK during the1980s. They are used by large companies who work on a contract basis and may also be more cost effective than a conventional lease for smaller companies who rely on facilities such as broadband.

However, while staff and facilities are provided, extra services such as requiring staff to help with a sales presentation will create additional revenue for the fund.

According to Close Property Investment, demand for commercial property in general has pushed up property values and reduced income yields. It believes most of the reduction in income yield has been in prime sectors, leaving less fashionable sectors such as business centres with higher income yields. When falling yields start to effect the business centre sector, investors will then benefit from capital growth.

The management of the properties within the portfolio will be contracted out to experienced business centre operators. Close Business Centre Capital founder Jonathan Price will advise on the selection of the operators and the acquisition of the property portfolio.

The latest figures from the Business Centre Association show average occupancy levels for business centres across the UK rose by 2.5 per cent during the six month period up to July 2004. Fluctuating occupancy levels, which are inherent in the business centre industry, may impact on the funds returns but its focus on active management could mitigate this.

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