LCP and Al Rayan Bank to launch new property fund, targeting Prime Central London's buoyant private rented sector
London Central Portfolio (LCP), residential fund and asset managers, has announced that it has teamed up with Al Rayan Bank PLC to finance its latest Sharia-compliant property fund, London Central Apartments III (LCA III).
LCA III, a quoted investment company, is LCP's largest fund to date, targeting Prime Central London's buoyant private rented sector. It will offer investors shares in an existing high performing portfolio of around 50 properties in some of the capital's most desirable postcodes. Click here to see the existing portfolio. It will be open for subscriptions until March 2016.
The fund, LCP's fifth, is targeting a £100m fund raise which will be invested to expand the existing portfolio, acquiring, renovating, letting and managing a combination of studio, one and two bedroom units. It is projecting returns in excess of 10% per annum over a five year period. The minimum subscription is set at £75,000 for direct investors or £25,000 for those investing into the vehicle through regulated entities such as SIPPs, SSAS, ISAs or off-shore pension schemes.
Al Rayan Bank, which celebrated the launch of its flagship Knightsbridge branch in May, is a keen supporter of Central London property.
Keith Leach, Chief Commercial Officer for Al Rayan Bank said:
"Two key objectives for Al Rayan Bank have been to provide bespoke Sharia-compliant investment opportunities and to expand our presence in the real estate sector – particularly in Prime Central London, a favourite of both our Middle Eastern and British clients. Last year, our commercial real estate finance book grew substantially, mirroring the recent growth of our retail assets. We are keen to strengthen our product range by bringing new, innovative products to our clients, so exploring the residential space was an obvious next step."
"We're delighted to be partnering with LCP in this project. Investment in prime central London property has outperformed many other investments over the last decade, and we believe that this is an exciting opportunity for investors."
According to London Central Portfolio, almost one third of subscriptions into its Sharia-compliant funds have been from the Middle East or from Sharia conscious British Muslims, highlighting the growing demand for Sharia-compliant investment products.
Naomi Heaton, CEO of London Central Portfolio, commented:
"Muslim institutional and retail wealth is increasingly mobile. Political instability is encouraging Middle Eastern investors to actively look at opportunities to diversify into global markets. In the wake of the UK's Sovereign Sukuk – the first outside the Islamic world – a number of other commercial property funds have come onto the market. However, LCA III is the only option to invest Sharia-compliantly into the UK's residential fund sector. This is despite the well-known love of 'resi' among Muslim investors – with Qatari and Malaysian investors a stone's throw away from each other in Chelsea Barracks and Battersea Power Station".
Heaton added that, the extremely beneficial tax exemptions offered by LCA III are of particular appeal to the global client base of both LCP and Al Rayan Bank:
"Alongside the attraction of providing a Sharia-compliant solution for Muslims to ethically access Prime Central London's residential sector, investors' interests have been further stimulated by the fact that LCA III is exempt from a range of new taxes, which buyers, acting on their own will now pay. Its 'Genuine Diversity of Ownership' status means it is free from both the new capital gains charges levied on non-residents and the non-domiciled inheritance tax soon to be introduced for all privately owned residential property in the UK. For British investors, there is also the plus of tax benefits by investing via their SIPPs and ISAs."