New Star releases details of International Property Fund

New Star announced its intent to launch the UK’s first authorised, open-ended international direct commercial property fund in February 2007. New Star is now pleased to disclose a selection of target properties and markets for the New Star International Property Fund, which opens for retail investment on 14 May 2007. The selection of properties disclosed later in this release is located across nine cities, six countries and three continents. These, and other target properties, aim to give investors in the New Star International Property Fund a broad geographic diversification from launch.

Until now, UK retail investors who have sought diversification from international property have been limited to global REITs – listed property securities. Global REITs, like UK property securities, have proven to be more volatile than direct property. As is the case in the UK, direct international property has a low level of volatility because it is underpinned by rental income, which has a tendency to rise and generate a stable inflation-proofing return. The New Star International Property Fund will comprise buildings and the associated land upon which they are built, neither of which are subject to the same changes of investor sentiment that can affect the markets for shares and bonds.

The New Star International Property Fund has few geographical constraints, which gives it the freedom to target a world of markets on a strategic basis. The fund’s geographic diversification will enable it to target different markets at different stages of their respective property cycles. For example, markets that are experiencing strong rental growth or markets that are on the verge of a turnaround – such as Germany –offer the potential for attractive capital growth.

The fund will predominantly own high quality properties in high quality locations leased to high quality tenants. The potential risks of investing in newer, developing markets will be balanced by exposure to more established ones. Initially, investment will focus on a diversified portfolio in the more established markets of Western Europe, Central Europe, Asia and the Pacific Rim. The fund management team will broaden international exposure to developing markets as the fund grows.