Close Property Investment has created the healthcare and leisure property fund, an offshore Oeic that invests in the hotel, care home, house building and leisure sectors.
The fund is registered in the Isle of Man and co-invests alongside the Close Brothers venture capital trust (VCT) and the Close Brothers protected VCT. It aims to provide income of 7.5 per cent a year, with capital growth of 2.5 per cent a year. The fund will be used to finance the construction of new buildings and facilities for companies operating in those sectors.
Every project is asset backed, so Close Property Investment will own the assets of any investee company that goes bust. Each investment is expected to be disposed of after a holding period of between three and five years. There may be cases where the investment is retained beyond five years, for example, if it is a care home that is producing a high level of income.
Hotels are seen as attractive, as long as the focus is on new-build budget hotels. Close Property Investment cites market research from Mintel, which shows that the number of budget hotel rooms in the UK rose from 17,550 in 1995 to 60,000 in 2001. Care homes are also seen as a good opportunity due to the ageing population and the closure of small care homes due to the owners being subjected to increased regulation.
The fund could suit investors whose main priority is income and who are seeking refuge from volatile equity markets. However, achieving the target return depends upon finding suitable investment opportunities and that the businesses go on to be successful once the developments are complete.