Stockbrokers WICO Galloway & Pearson are offering for sale by private placing up to 5m units at $10 per unit in a new venture-capital property trading vehicle, American Realty Venture Corporation.
The primary objective of the fund is to buy “well-located but under-managed” properties which currently fall short of US pension funds and institutions’ criteria. Holding periods on property bought are not expected to be longer than four years.
No single project will cost over 35% of the total invested in the fund and no new construction projects will be taken on. The properties will be upgraded and then sold on.
Proposed directors of the new company are Tom Wilson, chairman and senior partner of St Quintin, and Alan Carter, one of the property analysts team at WICO and who previously worked at St Quintin. The fund’s advisers in San Francisco, Sherwood Co, have David Sherwood, previously with St Quintin and Barclays Bank Trust in the UK, as one of its directors.
Meanwhile, Allsop & Co are thought to be looking for UK investors to go into partnership in the American market.
Allsop’s senior partner, David Morris, said: “We already have the Wells Fargo Property Unit Trust for pension funds investing in America. We have done a lot of work for insurance companies who can’t invest in the US through property unit trusts and up until now there has been no vehicle for them.
“We think we have designed a vehicle and are in touch with quite a lot of insurance companies. We will be working with Abacus in America, who are a very big lending organisation with a real estate division that checks all their lending.
“The real difficulty is tax. As insurance companies pay tax, it is essential to design a vehicle which is tax efficient.
“The vehicle is aimed at medium-sized insurance companies who, on their own, could only afford to own maybe one property in the States. By getting a number of funds to invest in the vehicle, a spread — both regionally and by type — is achieved.
“We have not asked for any money as such. What we are doing is finding the properties and then asking the potential investors how much they want of each one.”
