Hearthstone Investments, the specialist residential property fund manager, has secured a second seed investment for the newly launched TM Hearthstone UK Residential Property Fund, attracting up to £15 mln (approx. 18.6 mln) in backing from Bovis Homes. An initial transaction of 30 properties, amounting to around half the total deal value, will be invested into the fund immediately.
The transaction, which follows a £22.5 mln (approx. 27.9 mln) deal with Barratt Developments announced in July, will see Bovis Homes contributing some of its showhome stock into the fund. These will then be licensed back, providing the fund with immediate income from a diverse portfolio of assets. Eventually the properties will be let to private tenants or sold once the development site completes.
The deals with Barratt Developments and Bovis Homes form part of a staged set of seeding arrangements with housebuilders and developers which are expected to reach a total of around £50m.
The TM Hearthstone UK Residential Property Fund was soft launched last month and will be rolled out fully by the end of September 2012. It is the UK's first FSA authorized residential property fund and is eligible for tax efficient wrappers such as ISAs and SIPPs. The fund will be available within standard investment platforms to both private and institutional investors.
Commenting on the latest seed funding deal, Christopher Down, founder and Chief Executive of Hearthstone, said:
"I am very pleased to announce a further £15 mln of seeding so soon after our inaugural transaction. This deal underlines the potential for Hearthstone's unique residential PAIF, which provides investors with a more liquid and tax efficient way of investing in residential property.
"The addition of Bovis Homes properties to the fund adds further diversification and income, and will increase confidence among investors. By assembling a portfolio of good quality properties from the beginning, we are able to look forward to launching the fund formally later this month with the benefit of existing scale."
"The overall launch of this fund is an important milestone in our strategy to change the way the UK invests in residential property and provide a genuine alternative to existing commercial property funds. It is widely acknowledged that the UK needs significant new investment in housing, but this can only be achieved with investment vehicles that suit the needs of mainstream investors.
"The growth of professionally managed, onshore, regulated funds like ours is a vital step in connecting this capital to residential investment opportunities."
Source: FTI Consulting