New Star International property fund raises £206 million

The New Star International Property Fund has raised £206 million, making it the most successful independent UK retail fund launch of all time.

A large proportion of all asset managers’ sales now come via fund platforms. The successful launch of the New Star International Property Fund was all the more exceptional because these strong inflows of £206 million were received prior to links with most of the major fund platforms – of which most are expected to link to the fund in the coming weeks.

Only two platforms, Cofunds and Transact, were able to link during the fund’s offer period. The New Star International Property Fund was the best selling fund on the Cofunds platform for the month of May, despite being available for only two weeks of the month.

New Star’s property team, with its strategic partners, DTZ and CB Richard Ellis, has worked hard to ensure inflows have been fully committed to the market. New Star’s highly-experienced property team, which manages nearly £3 billion of property assets, has exchanged on £121 million of prime properties in the Netherlands, Germany, Japan, Singapore and Australia and has entered negotiations to purchase a further £40 million worth of properties in Australia, France, Sweden and Germany. These acquisitions give investors immediate access to the benefits of portfolio diversification and the potential for strong rental and capital growth in these attractive markets.

In anticipation of continued strong inflows, the property team has turned its attention to further markets including Denmark, Norway, Hong Kong, Korea, New Zealand and central Europe amongst others.

The fund utilises a tax-efficient structure that ensures investors receive the best income payments possible. Income from the fund is distributed as an interest distribution as with a bond fund. Eligible investors will be able to receive the income either gross or reclaim tax withheld on the distribution. For example, for retail investors, income paid as an interest distribution is tax free within an ISA, a PEP transfer and a SIPP. It is also the first UK regulated fund to offer retail investors access to international direct commercial property.

Roger Dossett, chief executive of property fund management at New Star, says: “To raise £206 million at launch is highly encouraging and I thank investors and the intermediary market for their tremendous support of this unique product.

“There is excellent value to be found in Continental Europe and Asia and strong inflows have enabled us to position our portfolio strategically in some of the most attractive countries and cities. Not only have we committed these inflows in a timely fashion, we have acquired a diverse range of prime assets and tenants for our investors. The acquisitions we have made and the properties we have identified for purchase represent 80% of the value of the fund. This is in line with the fund’s aim, which is to be 80% invested in direct commercial property. The remainder of the fund will be invested in a combination of property securities and cash for the purposes of liquidity.

“There is clearly a strong demand for international direct commercial property and we have already found a number of properties and markets that will form the next stage in the continued growth and diversification of the New Star International Property Fund.”