Residential care and student accommodation funds will be fixed for five years, with 8% pa and 7% PA targets
Sonecho Wealth Management has launched two property funds for that both have a fixed term of five years, one investing in retirement homes and the other in student accomadation.
The first will be the Residential Care & Close Care fund. This product aims to achieve capital growth through investment in a broad mix of UK nursing homes and the development of care apartments and care villages. A return in excess of 8% pa is hoped to be achieved and will be paid at maturity.
The fund will only invest in physical properties and not in the shares of other property companies. Initially up to 75% of the fund will be used to develop the Bowood Care Group nursing homes where the emphasis for the fund will rely on the rental income from the sale of beds. The remaining 25% will be used in the development of close care apartments.
Sonecho favours residential care because the industry to date has been fragmented and largely dominated by smaller private family-run nursing homes. The Standards Care Act, which is to be introduced in 2007, will make it harder for smaller nursing homes to be cost effective. The rising cost of staff and the introduction of stringent standards of care, let alone the regional difficulties of sourcing qualified staff, will make it increasingly difficult to maintain a family-owned business.
Ian Du Feu, managing director of Sonecho, said: "Within the sector, there is a very real need to address the shortage of care homes and close care apartments. Demographically, the problem facing the UK is not going to diminish and therefore with demand far outstripping supply, those groups willing to face the challenge and take an early lead in the development of this sector stand to gain the most benefit."
Sonecho has also launched a Student Accommodation fund. This product aims to achieve capital and income growth with security via the purchase of wholly owned subsidiary companies investing in commercial buildings and, if appropriate, development sites for occupation by students.
The underlying companies will invest in a portfolio of properties and development sites with the aim of providing investors with a broad range of student accommodation, while trying to maximise the geographical spread in order to maintain a low risk, low volatility portfolio.
The fund aims to achieve net returns in excess of 7% pa with all proceeds paid at maturity.
According to Du Feu, student numbers are expected to grow at around 3% pa, helped by an increase in overseas students. The majority of students live in private accommodation and expectations of the quality of the accommodations are rising.| | International Investment July 2005 | | www.intinv.com |
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