The first stamp duty-exempt unit trust designed specifically for charities to invest in is being launched by boutique fund manager Mayfair Capital Partners.
The National Trust for Scotland and Liverpool University are among founder investors in the tax-transparent unauthorised property unit trust, which preserves charities’ exemption from stamp duty.
Called the Property Income Trust for Charities, Mayfair hopes to buy £100m of property within two years and generate a 6% income return plus capital value growth at least in line with inflation.
The blind fund has £15-£20m committed at launch. It is initially sourcing investments in the range of £3-£5m and has its first property under offer in Scotland.
Mayfair Capital investment director James Thornton set up the Charities Property Fund when he was head of fund management at FPDSavills, before leaving in 2002 to form Mayfair with former Jones Lang LaSalle investment partner Guy Brogden.
The FPDSavills-managed fund and the only other existing property fund for charities — the CCLA-managed COIF Property Fund — are not available to UK charities outside England and Wales because they are structured as common investment funds, regulated by the Charity Commission. Thornton said the new fund “represents the first opportunity for charities in Scotland and Northern Ireland to invest in a tax efficient pooled property vehicle”.
He added: “A continuing issue for charities is how to generate high levels of income from their asset base. Our fund may appeal to charities from across the UK that are not large enough in their own right to invest in commercial property on a fully risk diversified basis.”
Thornton said the fund would gear up to 50% to enhance returns. Drivers Jonas will manage the portfolio; DTZ is the valuer.
