Northern UK properties is available as an exempt unit trust for self-invested personal pension and small self-administered scheme investors, or as a limited partnership for direct investments. It will target an average distributable income of 6 per cent a year.
The managers are experienced in the northern property market. They believe the major cities in the north such as Manchester and Liverpool are well placed for a property market recovery and benefit from the decentralisation of government from London. They expect opportunities in university and cathedral towns such as Peterborough and Durham to be found particularly in the retail sector, while the region’s market towns do not have the over-supply of property that leads to excessive voids or static rents.
The managers say commercial rents in the north are more affordable, with higher growth potential and less volatility than in the south-east. Lower property prices make it possible to buy more properties with more tenants in more locations than would be possible in the south east, which should increase diversification and reduce risk.
The fund currently has no holdings, but will invest the proceeds from this offer in suitable properties where returns can be generated though active management. Examples include refurbishment, rent reviews, lease renewals and obtaining planning permission for change of use or creating additional space.
The portfolio will invest across sectors, but will have an initial bias towards retail because this is where the best opportunities are expected, particularly during a consumer-led recovery.
Holding no property at launch allows the fund to benefit fully from relatively low property values when buying. However, investors may have to sit in cash while suitable properties are found.