Fairway Capital launches Prime Central London residential property fund
Boutique investment firm Fairway Capital has launched an Opportunity Fund to take advantage of an opportunistic time within the Prime Central London (“PCL”) residential property market.
The Fund plans to raise GBP120 million with the aim of making GBP200 million of acquisitions over the next 18 months and offers exclusive access to value-add opportunities in the ‘golden postcodes’ of Belgravia, Knightsbridge and Mayfair.
Its acquisition strategy will focus on prime garden squares, quickly delivering a premium product to a market where stock is in short supply.
Fairway Capital will work alongside development partner, Leconfield Property Group, a sophisticated and experienced developer in the PCL market, which has delivered some GBP500 million of projects in the target area, including flagship schemes such as the redevelopment of Margaret Thatcher’s former home on Chester Square. Leconfield’s significant in-house resources (construction, architects, surveyors, interior designers and bespoke joinery), combined with Fairway Capital’s financing and purchasing acumen, is the point of difference that will add value to each and every acquisition and will underpin the projected returns.
This investment strategy hedges against any further decline by acquiring assets at a discount (10-15 per cent inclusive of SDLT savings). By focusing exclusively on value-add opportunities the Fund is not reliant upon capital growth and can still achieve a double digit IRR even if the market declines by 10 per cent. However, the expected capital growth over the Fund’s lifetime (average weighted forecasts of the market’s top four agents CBRE, Knight Frank, Savills and Strutt & Parker predict that the PCL market will rise by 18 per cent over the next five years) is likely to further drive the IRR.
Investors will benefit from added security via a Put Option, which guarantees liquidity when the Fund’s term expires with the option of disposing of any unsold properties in to a third-party investment group.
George Brooksbank, founder and CEO of Fairway Capital, says: “This is a once-in-a-decade opportunity to invest in PCL following the longest suppression in the market, forecasted to bounce once there is clarity over Brexit. The top end of the market has been incredibly resilient to the various hurdles it has met over the past five years, which have seen SDLT reform, the EU referendum, two general elections and wider tax changes for non-domiciles.
The subsequent price correction (10-20 per cent), allied with recent sterling devaluation, means that foreign buyers – who make up around 80 per cent of this marketplace – are increasingly active and there is significant potential for capital growth for best-in-class properties given the lack of supply and pent up demand.”
The Fund provides investors a professionally managed means of accessing PCL real estate in a tax efficient vehicle (no CGT or IHT, commercial SDLT rather than residential rates, etc.) combined with a guaranteed exit at maturity and capital protection (via the Put Option) whilst delivering 12-15 per cent IRR.
James C Goldie, Chairman of Fairway Capital, says: “Leconfield have a best in class track record in PCL real estate. This will provide Fairway Capital with a solid base to deliver excellent risk adjusted returns.”
The Fund benefits from a first class Advisory Board made up of experienced finance and real estate experts including: James C Goldie, a senior banker who has served roles in Citigroup, Credit Suisse, Deutsche Bank and JP Morgan; Hani Obaid, CEO of NEO Capital in Dubai and Charles Delevingne, founder of Harvey White Properties Ltd. They are supported by some of the sector’s leading consultants and advisers, including CMS (lawyers), PwC (auditors), Savills (valuers) and VG (Jersey fiduciary).
The Fund is available to Expert Investors and is subject to a minimum subscription of GBP250,000.