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Property fund looks to purchase entire street of 48 properties


British Opportunities Fund, a property fund run by boutique manager Managing Partners Limited, has bought 18 of the 48 properties in a street in Portsmouth in southern England, with offers

British Opportunities Fund, a property fund run by boutique manager Managing Partners Limited, has bought 18 of the 48 properties in a street in Portsmouth in southern England, with offers pending on a further 10, and is considering buying all of the properties in the road.

Given the current conditions in the housing market, the fund has been able to purchase properties from landlords who have overstretched themselves at prices as much as 40 per cent below what was previously considered to be market value.

The fund has paid between GBP89,000 and GBP100,000 for properties that two years ago were being sold for between GBP180,000 and GBP205,000 each. The fund sold one of its properties in the street for a profit of GBP24,000 within three weeks of purchase.

The fund, which was launched in February this year, is looking to acquire residential properties that offer good rental yield at bargain prices. Since its launch, the fund has returned of 6.16 per cent, and annualised growth is running at 12.71 per cent.

An MPL team has carried out non-structural refurbishments on the properties, and the manager has hired a caretaker to manage improvement of its overall look, for example by collecting litter. This has enabled the company to let out all of the properties it has purchased at a rental rate considerably higher than the rates paid before they owned them.

MPL managing director Jeremy Leach (photo) says: ‘Our new property fund has no legacy and as a result of being managed by a team of highly professional and experienced property investors, we have been able to secure a multi-million pound funding programme from a high street bank. This means that in the current housing market we are able to pick up properties that are attractive investments at prices significantly below their market value.’

The British Property Opportunities Fund targets an annual return exceeding 10 per cent by investing in both residential and commercial property, including distressed portfolios, high-yield rental units, development opportunities, leasebacks and reversionary gains schemes.

MPL believes this year is an opportune time to launch a property fund because the market has softened. Deep discounts are appearing, not least because many property funds are fully invested with leverage and have to physically dispose of properties to meet redemption requests from investors at a time when sentiment has cooled.

‘We believe that the UK property market is providing one of the great investment opportunities of 2008,’ Leach says. ‘We are seeing discounts to market value averaging more than 30 per cent offered on both private and commercial property, and a leveraged fund such as ours can produce high returns in a very short time.’

The minimum investment in the fund is GBP50,000, or GBP2,500 if an investment is made via an insurance bond or UK self-invested personal pension wrapper.

Managing Partners is a multi-disciplined investment company that specialises in managing alternative asset classes for institutions and sophisticated investors and has more than USD100m in assets under management. It specialises in funds that invest in US traded life policies, which it says offer characteristics such as low risk, inherent guarantees and balanced growth.

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