SLI converts UK property fund to PAIF
Standard Life Investments (SLI) has converted its GBP471m UK Property Fund into a Property Authorised Investment Fund (PAIF).
The move, which received unanimous investor support at an EGM held earlier this month, means that the authorised unit trust has converted into an open ended investment company (OEIC) with a tax efficient PAIF structure.
The PAIF, which remains known as the Standard Life Investments UK Property Fund, will enable tax exempt investors to receive income from the fund gross of the 20 per cent corporation tax previously applied to income Nigel Chapman, will continue to manage the PAIF and will follow the existing investment strategy, risk profile and objective – to invest primarily in UK commercial property and to provide a return from capital appreciation and income over the longer term.
Andrew Jackson, head of wholesale and listed real estate, Standard Life Investments, says: “PAIFs allow eligible, tax exempt investors such as registered pension schemes, ISA, charity and Self-Invested Personal Pension (SIPP) clients to benefit from a more tax efficient distribution of income via a property fund. Investors are attracted to commercial real estate because of the income yield it offers. Getting more of that income back into the hands of eligible investors without altering the risk profile of the Fund can only be a good thing. To quantify this, the estimated distribution yield on the Fund will increase from 3.61 per cent to 4.52 per cent for qualifying investors.
“In an environment of low growth and low yields, this is a particularly relevant time to provide long-term investors with the opportunity to access a more tax-efficient, diversified source of income through investment in real estate.”
The fund has delivered a net return to investors of 4.5 per cent per annum over the last three years placing the fund as the best performing out of 14 direct focused property funds in the IMA Property Sector. The authorised unit trust was originally launched in October 2005 and was opened to retail investors in August 2009 who have been able to access the fund directly from Standard Life Investments or via Standard Life’s and other major UK platforms.