Kreis property fund aims for 8% pa

Kreis Consulting is launching a geared property partnership fund aiming to provide a gross income of up to 8% a year for a minimum of five years.

The UK Industrial Income Limited Partnership will consist of a modest gearing level of 56% from an HBOS non-recourse loan, with the remaining 44% coming from the investor.

Typically, geared property funds employ gearing levels of up to 85%, with the other 15% coming from investor equity contributions, according to Richard Eliott Lockhart, director of Kreis Consulting.

As a result of this lower gearing, the fund will have to suffer a 44% fall in industrial property values before the lending bank would look for more equity, he noted.

The fund, which launched at the beginning of 2003 and closes to investment on 24 January, will invest in two properties, which have 25-year full repairing and insuring leases. Lockhart said the fund is similar to an interest-only mortgage except that it is on a large industrial property, with the investor benefiting from the surplus income from rent after loan interest for up to eight years.

The minimum investment into the fund is £20,000 and there are no annual or initial charges. For intermediaries, there is 2% commission on gross investments.

For more information, call 0141 564 1523.

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