Property has always been difficult to package for investors in public funds, but a new Irish fund targeting the UK residential property market has been put together with an initial target of Ā£15 million to do just that.
First UK Residential Property has been set up to purchase IRĀ£15 million worth of residential property in the UK. First UK has been developed by Sherry FitzGerald Management Limited, a subsidiary of Sherry FitzGerald Group plc, in concert with Tansey Webster Stewart & company, economic and financial consultants.
The new company will allow Irish investors to buy into the UK market from as little as IRĀ£10,000 without the headaches associated with buying and managing individual properties in a foreign jurisdiction.
There are reports of a large number of Irish purchases of UK properties in recent months. With continuing positive economic indicators from the UK and interest rates having reached a 22-year low, this trend is likely to continue. The Halifax Building Society's Index of UK House Prices (1983=100) stood at 239.5 for April 1999, an increase of just 7.1% on average house prices in 1989, a decade earlier. The legislation resulting from the Bacon Report has restricted tax relief for UK, as well as Irish, residential property for Irish investors. However, the structure of First UK Residential Property Plc is such that interest expenses will be fully allowable for tax.
First UK Residential Property Plc is being brought to the market by Harvest Financial Services, the independent brokerage specialising in innovative investment products. Gerry Devitt of Harvest said "we are delighted to be associated with this unique investment opportunity, combining as it does quality management, low charges and a market which we believe shows great potential for capital growth".
The chairman of First UK is Gerry Murphy, who is deputy chairman of Sherry FitzGerald and was previously operations director of First National Building Society and a director of Mortgage Trust Limited, their UK subsidiary. James Meagher, commercial director of Sherry FitzGerald, is executive director with responsibility for property strategy.
The managing director of First UK is Peter Stewart, who is a financial consultant and a chartered accountant with broad experience in financial and general management. Paul Tansey, the leading economic consultant and commentator, completes the board.
First UK is structured in a similar manner to a direct investment in residential property: shareholders funds, together with bank borrowings, will be used to purchase a range of residential properties which will be held for a period of ten years. During this time the properties will be leased to tenants and rental income will be used to pay bank interest and other costs and to repay bank debts.
Sherry FitzGerald Management Limited, part of the Sherry FitzGerald Group Plc, will manage First UK's property investments, ensuring that investors can buy into a diverse portfolio of UK residential properties without assuming the day-to-day management of the properties and their tenants. Once the ten years of the fund have elapsed, the property portfolio will be sold, borrowings discharged and proceeds divided amongst shareholders.
Participation in First UK is a long-term investment as no dividends will be paid out during the ten year life of First UK. The gains to investors will derive from the trading profits of the period, which will be reflected in bank repayments, and in the capital appreciation of the properties. The Company proposes to set up a trading facility on Ofex in London, which should provide some limited liquidity in the Company's shares. |
