TIME Investments unveils £30 million social infrastructure fund
- Fund targets 4.5% annual income plus capital growth
- Daily dealing for enhanced liquidity and quarterly distributions
- Current Weighted Average Lease Term (WALT) of around 30 years providing secure long income from rents linked to inflation
TIME Investments, the leading property and infrastructure investment firm, has launched its £30 million open ended social infrastructure fund to the adviser market. TIME:Social Freehold seeks to offer investors consistent income with underlying rental income linked to inflation, whilst creating a positive impact on society.
The daily dealt fund, which TIME has been running privately for almost 18 months, targets a 4.5% annual income after fees with long term capital growth. The fund invests in a portfolio of social infrastructure including supported living accommodation (for those with a physical or learning disability), assisted living accommodation (for the elderly) and education facilities such as day care nurseries. Due to population growth and demographic changes, there is an increasing demand for high quality social infrastructure. The ever-increasing funding restrictions within the sector further limit the supply of social infrastructure. We believe that private investment can offer a helping hand by purchasing or developing high quality assets that provide a meaningful social benefit in return for a long term sustainable rent.
This unique fund is an addition to TIME’s suite of low volatility income solutions – TIME:Commercial Freehold and TIME:Defensive Income Securities Fund – and has already attracted seed funding of £30 million invested across 12 social infrastructure assets. The fund invests in properties with longer leases than traditional commercial properties and therefore avoids much of the volatility that those funds have experienced over the last three years. The stability of income comes from owning properties with average lease lengths ranging from 15 – 30 years as opposed to under ten years for traditional property funds. Typically, rent reviews are tied to an inflation index or fixed growth rates providing a form of inflation mitigation.
The fund has recently purchased a new development in Cannock, Staffordshire which provides specialist supported living. This has a 60-year lease to a social housing provider and an annual rent review which is linked to RPI. The net initial yield at purchase was 6.1%. Another investment is a Bright Horizons Day Nursery in Farnham which has a lease duration of 25 years with a five-year rent review which is linked to RPI with a minimum increase of 2% RPI and a maximum of 4%. The net initial yield at purchase was 5%.
Stephen Daniels, Head of Investments at TIME, said: “Our Social Freehold fund provides an opportunity to diversify from traditional commercial real estate and the volatility associated with them. Demographic changes are driving demand and funding restrictions are limiting supply. Combined, this makes social infrastructure an increasingly attractive sector for private investment, offering long term attractive risk adjusted return. Importantly assets can also create a positive social impact on society.”
Gary Lee of WTK Financial Services Ltd comments: “I have always found TIME to be a reliable fund manager who provides my investor base with relatively secure investments, especially through times of uncertainty. TIME:Social Freehold is another innovative fund being well received by my clients who would like exposure to social infrastructure assets.”
TIME’s funds are structured as Property Authorised Investment Funds (PAIF) – an Open Ended Investment Company (OEIC) specifically designed for FCA authorised property investments. The tax benefits of a PAIF are similar to those of a Real Estate Investment Trust (REIT) and are not subject to tax on capital gains within the fund. UK investors are taxed as if they invested directly in the underlying assets. The funds also benefit from NURS classification as FCA authorised funds, thereby offering enhanced investor protection.
The minimum investment for retail investors is £5,000. The funds have an initial fee and an annual management charge of 1%. Investors are able to access TIME:Social Freehold, TIME:Commercial Freehold and TIME:Defensive Income Securities fund through ISAs, SIPPs, SSASs and offshore bonds via income or accumulation shares.