Buy-to-let syndicate targets Olympic residential investors

Property Week | 25.11.2005
Buy-to-let syndicate targets Olympic residential investors
UrbanShare Residential Investment Fund aims to capitalise on boom in Docklands market

Private investors looking to take advantage of an expected property boom around the Olympic Games site have been given the chance to become landlords with the launch of a buy-to-let property syndicate.

The fund, called the UrbanShare Residential Investment Fund, is the brainchild of property entrepreneur Richard Klin, a well-known private investor and residential landlord in London’s East End.

It aims to acquire around 70 houses and flats comprising at least three bedrooms and located within a 15-minute commute to Canary Wharf or Stratford. The properties will then be refurbished and let on a flat-share basis on six-month assured shorthold tenancies.

Rents will rise in line with the Retail Prices Index at each renewal.

The scheme has been inspired by the growing demand for short-term but high-specification housing in Docklands, from graduates who have moved to London to complete a training placement or start their first job, and from more senior professionals seeking temporary accommodation after a relocation.

Klin and Real Estate Associates, the fund’s Financial Services Authority-authorised operator, will select properties they believe have the potential to generate a 10% annual yield.

‘The UrbanShare fund is designed to exploit a real arbitrage of opportunity in this part of London,’ said Klin. ‘The area is full of undervalued housing stocks, in spite of growing demand for accommodation and compelling prospects for future capital growth on the back of the Olympics and the expansion of Canary Wharf. The unitised structure of this investment means that private investors can gain exposure to this growth without taking on the risk and management problems associated with individual buy-to-let investments.’

The fund is targeting an annual 8% priority return based on rental income. Any capital growth will be distributed when the portfolio is sold off at the end of the fund’s life.

The investment will be structured as a limited partnership and will be wound up in April 2012, unless 75% of participants agree to an extension. The fund hopes to raise Ł4m of equity from investors in minimum tranches of Ł12,500.

The opportunity is open to SIPP (self-invested personal pension) and SSAS (small self-administered scheme) investors.

The fund will be invested on a ‘blind’ basis, but Klin is confident he can find enough suitable assets to make UrbanShare perform.

Klin added: ‘We’ve done a lot of research to identify strong sources of properties, and we have built up solid relationships with all the local agents.

‘One of the advantages of knowing an area so well is you come to understand where most of the market activity is.

By Sinead Cruise