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Capita Buys up Land For Future Planning

Jul 8, 2008
Funds seeking the UK sites most likely to obtain planning permission for buildings.

Capita is to launch two funds to snap up land that could be used to meet the government's target to develop 4.2m homes over the next 20 years.

Connaught Asset Management has been appointed by Capita as the specialist asset manager for the funds, which have taken nine months to construct and package.

The Cautious Strategic Land Managed fund is targeted to deliver an 8 per cent annualised return over a five-year investment period after all fees and expenses.

The Diversified Land Managed fund aims to deliver a 15 per cent annualised return over a seven-year investment period after all fees and expenses.

Both funds, which are in the form of limited partnerships with exempt unit trusts, will solely acquire a range of land in the UK.

Each fund is designed to make strategic land investment accessible to a wider range of investors while reducing risk levels through site diversification, no gearing, constant monitoring with independent assessment of each site prior to purchase and throughout the term of the fund.

The two offerings will only purchase sites within the UK if there is a strong likelihood of obtaining change in their permitted planning use to generate an increase in the sites' value.

Sites are identified and purchased by land planning, development and management expertise in Connaught Land.

Potential changes in use could be, for example, a change from agricultural or redundant industrial use to residential or commercial use.

The funds will be offered as UK limited partnerships with exempt unit trusts for self-invested personal pension and Ssas investors.

Profit from successful projects will be paid out during the term of the funds and both funds can only be invested in via intermediaries in the form of IFAs.

John Doyle, asset director of Connaught Asset Manage-ment, said: "Through discussions with a wide range of businesses, including financial institutions and financial advisers, it became apparent that with the outlook for falling returns in property investments, and recent share price falls in the stock market, many sophisticated investors are looking to find a new asset-based investment opportunity.

"They want it to deliver significantly higher returns than they are currently able to achieve."

APITA Financial Managers has launched two new funds providing investors with exposure to land.

The Cautious Strategic Land Managed and the Diversified Land Managed funds will be run by Connaught Asset Management, and have been structured as limited partnerships with Exempt Unit Trusts.

This means investors can either put their money directly into the limited partnership or access it via a tax efficient unit trust route which is suitable for SIPP and SSAS investors.

The two offerings, which will operate solely in the UK, have been launched in a bid by Capita to make strategic land investment more accessible.

They will both invest in land which has a strong likelihood of obtaining a change in status and therefore an increase in value.

Brian Primrose, associate director at Capita, said the new funds would aim to exploit the ideal market conditions for strategic land investment that exist in the UK currently, as well as offer an alternative to commercial and residential property.

He added: "With the current volatility in the equity markets we believe that tangible asset based funds will be extremely successful."

The cautious fund is aiming to deliver an 8pc annualised return over five years while the diversified portfolio aims to deliver 15pc yearly for seven years.

Both will attempt to reduce risk levels via site diversification and pay out profits from the sale of sites to investors during the life of the products.

The close-ended vehicles will close to investors on May 10 or when they reach 100m in size.

Minimum investment into the offerings is 35,000 and investors can only access the funds via IFAs. There is a range of commission options available including 5pc initial and no trail, initial of 3pc and 0.5pc trail, or no initial and 1pc trail.

There is also an AMC of 1.5pc and a 6pc initial charge, though 5pc is payable as commission. Performance fees on the offerings kick in after they achieve their expected minimum annualised returns of 8pc and 15pc respectively.
About the Author
Nigel Walter is a Asset Investment expert who generously shares his expertise with budding UK investors. For more information Contact Nigel Walter at Connaught Asset Management.
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