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LCP’s Prime London PRS Fund extends listing date for investors

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London Central Portfolio has announced a three-week extension for investors looking to buy shares in its latest property investment fund, London Central Apartments III (LCA III), which invests in Prime Central London’s private rented sector (PRS).

The find will now be open for subscriptions until 25 July.
 
Despite the fund launching in a time of uncertainty, LCP is confident it will prove popular. The firm’s second fund was launched in early 2009, when all other commentators predicted a further slump of up to 30 per cent in prices. LCP, on the other hand, predicted a significant market rally and the fund has returned an annual IRR of 13.5 per cent.
 
According to LCP, with the UK’s vote to leave the European Union, Prime Central London (PCL) real estate is expected to benefit from a similar impetus. A flight to quality and the security of blue-chip tangible assets will be underpinned by a weak pound and a widely anticipated cut in interest rates on 14 July.
 
Naomi Heaton, CEO of LCP, says: “There is every reason to anticipate an influx in investors following the unexpected ‘leave’ vote. Notwithstanding the referendum, the fundamental attractions of PCL as a centre of culture, excellence and education and as a beacon of democracy with absolute rule of law and unequivocal title to property are still very much in place.
 
“With a loose parallel to the Global Financial Crisis when PCL showed enormous resilience, the current weak sterling and low interest rates will be a major draw for investors. Indeed, with most equity markets trading well, including the FTSE 100, investors are generally in a much better position than in 2009. We anticipate a high level of appetite and have already received investment mandates from clients wishing to take opportunistic advantage of the current market dynamics.”
 
Alongside the currency-play, LCA III has tax benefits for foreign investors, not available if they ‘go-it-alone’ and invest directly. It is exempt from both non-resident CGT and the forthcoming ‘look-through’ inheritance tax. It is also an attractive choice for investors wanting to access residential property as a safe haven.
 
Heaton says: “There are many benefits for UK investors who have previously banked on cheaper regional buy-to-lets for budgetary reasons. Unlike PCL, regional property is likely to suffer as a result of Brexit, as uncertainty impacts employment, mortgage availability and the feel-good factors which drive price growth outside the core of the capital. Most investors are aware of the resilient returns that can be achieved by PCL in times of global economic turmoil and with a minimum investment of GBP25,000 (subject to eligibility) the fund is providing an entry way.”
 
UK investors also have tax advantages. The fund is eligible for government approved, tax-efficient saving schemes such as SIPPs, SSASs and ISAs, whilst the March Budget offered an eight per cent reduction in CGT. For all shareholders, the fund is unaffected by the controversial reductions in mortgage interest relief and can capitalise from the commercial rate of Stamp Duty (under five per cent) which applies to buildings of six or more properties.
 
“Despite the negative market outlook being reported for the UK, it is now an opportune time for both British and foreign investors to look at PCL. Prices had cooled, pre-EU referendum but given the current tailwinds and the long term fundamentals for the PRS, there is little doubt that prices will now harden, providing significant upside for the strategic investor,” says Heaton.
 
LCA III is a listed investment company that invests exclusively in the mainstream private rented sector in Prime Central London. It cherry-picks properties with added value potential across all the prime postcodes which then undergo a full refurbishment and interior design program. LCA III is targeting returns in excess of 10 per cent per annum over a four-year period.

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