London-based investment management firm Smith & Williamson has launched Dualinvest, a short-term closed-ended vehicle investing in UK residential property.
In a statement the firm said it planned to raise a maximum of £25 million (€27 million; $41 million) to invest in residential property currently held by developers and housebuilders and has sourced more than £10m of assets, over which it has taken options.
The fund will acquire a 65 percent interest in the residential properties. The firm said it would arrange a two-year lease agreement with the sellers to provide a coupon of 13.5 percent to unit holders of the fund during the first year. It is targeting a cumulative income return of at least 7 percent a year during the life of the fund, it added.
Martin Sherwood, head of tax efficient solutions at Smith & Williamson, said this was a solution providing relief for distressed housebuilders as well as an “attractive risk, reward ratio” for investors.
The firm added Dualinvest was designed to take advantage of current market conditions without incurring some of the problems associated with direct buy-to-let investments. The investments would be tax exempt for various investors including UK charities.