Aim: The Fund offers the opportunity to participate in the growing sector of student accommodation. It aims to provide a spread of provider exposure through a fund of funds approach
Minimum investment: None
Place of registration: Luxemburg
Charges: Annual management charge 1.5%
Commission: The fund does not pay commission. It is available through life platforms and other institutional wrapper products.
Tel: 00353 1 4126869
This fund is available mainly through offshore bonds and takes a fund of funds approach to investments in student accommodation.
IPFM director Luke Gibbon observes that the fund provides an opportunity to invest in student accommodation.
‘In the UK we have seen a significant increase in the number of people going on to further education, as well as an increase in overseas students. There is a lack of good quality, yet affordable, accommodation so it should not be too difficult to fill such accommodation and obtain a reliable income stream from such properties.”
He adds that these properties will offer the potential to sell additional services such as internet access and parking. “ Obviously any investment into the property arena will benefit or lose by the changing value of the buildings.”
Gibbon says the fund is run by Coral Portfolio and in effect is a fund of funds as it will invest in funds that are only available to institutional investors. These funds will develop and manage student accommodation, in conjunction with the educational establishments.
“The Coral student portfolio will be available to advisers primarily through offshore insurance companies as an investment for bond holders. The fund has no initial charge but a penalty on encashment during the first five years. The annual management charge is 1.5 per cent a year. The ultimate charge via the bond will depend on the insurance company,” he says.
The fund is using Strutt and Parker Real Estates as property advisors, Deutche Bank as custodians and Ernst & Young as auditors. “I believe that the fact that these are well known companies gives a comfort element as this is a totally new fund and company,” says Gibbon.
He believes this is one of the main downsides. “The fund has no track record, the spread of investment is likely to be limited at least in the early period and as there are a number of layers in terms of the underlying funds. Coral and the chosen insurance company all of whom will be looking to make a gain the potential profit for the end purchaser is going to be diluted.”
Discussing potential competitors, Gibbon says: “The obvious competition is the Brandeaux student accommodation fund as this also invests into the student accommodation and has performed well.”
Summing up, Gibbon says: “I considered the timing of the investment due to current market conditions. This is difficult to judge as one argument would be that property prices have fallen and that now, or in the near future, is a good time to invest.
“The other side of the argument is that investors are being cautious, property funds have fallen and investment in such areas will be avoided. I would tend to lean towards the former as this fund is investing in student property, which I believe has great potential.”
Suitability to Market: Good
Investment Strategy: Good