First Property raises £182 million commercial real estate Brexit fund



A
British protestor poses as he takes part in a pro-EU
demonstration in downtown Rome, Italy, March 25,
2017.

REUTERS/Alessandro
Bianchi


LONDON – A fund backed by eight institutional investors has
raised £182 million to snap up post-Brexit offices and business
parks across England at bargain prices.

First Property
said in a statement on Monday it raised the money

to
“take advantage of the slowdown in the UK commercial
property market since” the June referendum last year.

The recent round of financing brings the fund’s total post-Brexit
influx of cash to £250 million.

First Property CEO Ben Habib said: “The UK’s decision to leave
the EU has created opportunities on which we, as a niche fund
manager, are well placed to capitalise.”

The Brexit referendum hit commercial property investments hard.
At least nine investment firms
suspended trading in their property funds
in the aftermath of
the June vote, freezing £15 billion of assets. Investors rushed
to pull their money out but fund managers could not liquidate, or
sell-off, the underlying property assets fast enough to meet the
demand for cash.

Here’s how the market looked in the weeks after the Brexit
vote:Investing

This Brexit-driven slump presents potential opportunities for
First Property: if other funds become forced sellers to meet
their liquidity obligations, it drives down prices, creating
bargains in the market.

The fund has a different fee structure to most of its peers, and
won’t charge a management fee. Instead, managers will take a
share in the profits over the seven-year life of the fund, with
the level determined by the annual rate of return.

“Our confidence in the fund’s prospects is also demonstrated by
our decision to determine our entire economic benefit from it by
reference only to the profits it earns,” Habib said.

First Property…

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