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LCP’s newest fund announces SIPP eligibility as it makes its first three purchases

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London Central Portfolio has just completed the first acquisition for their fourth and newest listed property fund, London Central Apartments II (LCA II). 

The purchase was made against a backdrop of heightened investor interest in the Fund’s second share issue as increased volatility has plagued European financial markets.

Last week, LCP reported a 10 fold increase in Swiss enquiries following shock moves from the SNB. It is now seeing further subscription requests from European investors and institutions as they retrench to blue-chip tangible assets in the face of the new QE programme and Greek election.

The first acquisition is an unmodernised one bedroom property, located in Ambrosden Avenue in the Westminster Cathedral conservation area, for GBP485,000. It fits perfectly within LCA II’s mandate to acquire a diversified portfolio of 1 and 2 bedroom properties, offering exceptionally good value, in the prime postcodes surrounding Hyde Park. These are then renovated and interior designed before being released onto the rental market. As a whole, the fund is projecting returns in excess of 12% per annum.

“The purchase price under half a million pounds may be hard to believe, when average prices in PCL stand at over GBP1.7m. However, it is the small but well located units which generate maximum returns for investors as these are the most sought after by the majority of tenants in PCL. LCP target unmodernised properties adding immediate value rather than paying a premium at buying stage.” comments Naomi Heaton, CEO of LCP.

The company has already lined-up two further properties for the fund, both secured under the GBP1m mark. One unit is located in Paddington Basin and the other in Marylebone, so the fund will benefit from immediate diversification. The Fund’s GBP1m purchase price cap per individual unit, mean it has benefited from reduced Stamp Duty charges introduced in the Autumn Statement.    

Completion of the third purchase will also represent a crucial point in the fund’s investment cycle when LCP is able to open subscriptions up to SIPP investors. Widely known that commercial property can be directly held in a SIPP, LCA II’s eligibility, as residential fund, may come as a surprise. However, LCA II qualifies as it will comply with HMRC’s criteria of being a ‘Genuinely Diversified Commercial Vehicle’ (GDCV).

“As global markets suffer increased volatility, savers may be looking into ways of diversifying their SIPP investments, which have recently been given further tax breaks. Top end London property has been a prime performer, not only over the credit crunch but over the past five decades, showing average annual growth at over 10% per annum. Values in PCL are up 63% on a pre-recession high, whilst the stock market is up just 1% despite shooting up after the QE announcement last week. PCL is now set for a further boost as Europe flounders once again” adds Heaton.

The minimum subscription for LCA II is GBP85,000, but smaller subscriptions can be accepted from eligible investors through a trustee consolidation scheme and through SIPPs and ISAs. The fund enables investors to access this previously out of reach asset class for a fraction of the cost of direct investment, whilst benefiting from buying power, professional expertise and diversification. 
 

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