IVG has set up the new closed-end property fund âEuroSelect 09â with a fully leased office property in the London Southbank district. IVG is thus continuing the successful âEuroSelectâ product line, whose â08â fund â" also with a property in London â" was quickly taken up by the market.
With a minimum investment of â¬15,000 (plus 5% premium), investors can now participate in the architecturally outstanding âRiverside Houseâ, situated right beside the Thames and close to the City. IVG purchased the fund property, which was completely renovated in 2002 and has 15,900 mÂ² lease space, for â¬156 million. The initial distribution is 6.5% per year, which is largely tax-free up to an investment of approx. â¬75,000 per person as a result of applying the UK tax allowance.
Secure rental income: Financial Times Ltd and UK regulatory body
The main tenant is the media company Financial Times Ltd, which is the source of around 95% of the rental revenue. It is backed by the media group Pearson, which is listed on the New York, London and Frankfurt stock exchanges. Financial Times Ltd does not use the space itself. Instead, it has sublet it in full to the UK Office of Communications (Ofcom), the state regulatory body for telecommunications and TV. The rental agreement with Financial Times Ltd runs until 2022 at a current rent of around â¬48/mÂ²/month with a break option for the tenant in 2018. Five-yearly rent adjustments are planned, which only allow for an increase in line with UK practice in accordance with market development (upwards-only clause).
Largely tax-free income
The payout of an initial 6.5% per year is subject to taxation in the UK, where there is a tax allowance, currently Â£4,745 per person. If this allowance is fully utilised, German investors will receive their income almost tax-free up to a subscription amount of around â¬75,000. This allowance is expected to increase to Â£4,895 from April.
Increased investor flexibility through return options and secondary market listing
The new 09 fund also has the high level of investor flexibility of the EuroSelect line. In specific cases of need, the fund share can be returned at 80% of the nominal amount up to and including 2009, and then at 90% up to 2015. In addition, the shareholdersâ meeting can apply for a listing on the fund exchanges in Dusseldorf (GEFOX) and Hamburg (Fonds-X). Shares in EuroSelect 09 then participate in an organised secondary market.
Entry into Europeâs most popular business location
London is setting the pace in the current recovery of the European office property markets. With around 67%, the UK capital posted the highest growth rate in leasing in 2004 compared with 2003, according to the European Real Estate Barometer of IVG and Cushman & Wakefield Healey & Baker (CWHB). For several years, London has been number one in the European Cities Monitor, with which CWHB measures the attractiveness of commercial locations according to European companies.
Southbank: dynamic addition to the city of London
In the Southbank submarket, the vacancy rate of 4.6% for office space is significantly below the level of the banking district, which can be reached on foot by crossing the Millennium Bridge. âSouthbank is the new hotspot in London, which combines proximity to the City with high-quality jobs and lifestyleâ, says Klaus-Dieter Schmidt, Managing Director of IVG ImmobilienFonds GmbH, of the development potential of this property investment. The architecture of Riverside House underlines this upbeat assessment: the front facing onto the Thames is reminiscent of a billowing sail.