Legal and General Property Paif
«People always buy [L&G UK Property], but people sell for reasons related to anxiety. My only passionate appeal is that investors don`t panic about real estate because there is no need. According to a survey conducted by AJ Bell last year, about 54% of DIY investors on the Youinvest platform said they would sell their unlimited real estate exposure in its entirety if a three- to six-month notice period was adhered to. «In line with our fund strategy and based on our projections for the UK property market, the UK Property Fund continues to recycle its capital from secondary assets to more potent opportunities where we see prospects for appreciation. Following these recent acquisitions, the fund is making great strides in its reinvestment strategy, securing assets that are well positioned to deliver value and long-term returns. «Even though I`m biased because we manage the largest real estate fund on the market, it`s really a great investment. I get angry when I hear that end investors are being transferred from ownership to money or what`s actually beta because I`m afraid they`ll miss out. LGIM Real Assets manages £36.3 billion in assets (as of 31 December 2020) and is one of the UK`s largest private markets investment managers. LGIM Real Assets invests in both debt and equities across the risk/return spectrum, actively investing in commercial, operational and residential assets, as well as infrastructure, real estate, corporate, and alternatives. Michael Barrie is Co-Fund Manager for the UK Property Fund and Head of Legal & General Property. He joined Legal & General Property in 2005 from F&C Property Asset Management. Michael is a Fellow of the Royal Institution of Chartered Surveyors and holds a Postgraduate Diploma in Real Estate Investment from the University of Reading.
The fund manager manages a fund to achieve its goal, and you should expect a fund`s investments to change over time. The risk of the fund may also change in the future. Sometimes it can be difficult for the fund to make investments or sell assets to meet investors` desires to buy/sell shares. In this case, the fund may have a reduced investment return for a period of time or may have difficulty paying the proceeds to investors who wish to sell shares. Real estate can be difficult to buy or sell. This could mean: cash builds up waiting to be invested, so the fund underperforms when real estate returns are higher than the interest earned; and/or real estate may have to be sold for less than expected. If an exceptional number of withdrawals is requested, the fund manager may be forced to sell properties quickly. This could mean selling properties for less than expected, which would reduce the value of your investment. In times of market uncertainty or when an exceptional number of payments are requested, it may become less easy for your fund to sell real estate, and the manager may postpone withdrawals or suspend trading.
The AIFM may only defer payment if it is in the interest of all investors and with the authorisation of the trustee or custodian of the fund. Rent growth is not guaranteed and unpaid rents could affect the performance of your investment. The value of a property usually depends on the opinion of the appraiser rather than the fact, and the actual value of a property can only be known after the property has been sold. In some circumstances, we may not be able to seek the opinion of an evaluator and may apply our own assessment. The fund will undertake the development of properties where all the benefits of property appreciation or income from it will not be realized until after completion. During any development, the fund is exposed to delays, increased costs, or the inability to achieve the expected improvement in property appreciation or rent received. «Some people have sold properties – including our own fund – especially with the Janus Henderson fund, which is about to end. But when I take off my business hat and put on my personal hat, the travesty for investors is that open real estate offers them diversity, growth, stable income, and low correlation to other assets. Following the EU referendum (June to September 2016), the manager made fair value adjustments to the fund`s real estate values.
Fair value adjustments reduced property values to reflect the fair value of properties considered by the manager to be the fair value of properties until the valuation agent regained confidence in real estate valuations. The Fund will at all times be an investment fund authorized by the property for tax purposes. The goal is to create a combination of income and growth by investing in commercial real estate in general. The fund typically invests at least 80% in a range of commercial properties in the UK (but this figure can only be 60% if the fund manager believes it is in the best interests of the fund and its shareholders). The fund can invest in all types of commercial real estate. It may occasionally invest in residential real estate and also develop real estate. The Fund may also invest in commercial properties on the Isle of Man and the Channel Islands from time to time. The Fund may use derivatives to reduce risk or costs or to generate additional capital or income without risk or at an acceptable low risk. The Fund may also invest in other property-related assets (including UK real estate-related shares and authorised UK investment funds), money market instruments, deposits, authorised money market-linked investment funds and government bonds. Crossley, LGIM`s head of sales in the UK, warned that there had been a widespread negative approach to PAIFs, which raised its head in 2016 when funds had to close ahead of the UK referendum on the EU. Their further closure during the Covid crisis and subsequent scrutiny by the Financial Conduct Authority – which could lead to regulatory changes requiring 90-180 days` notice periods for real estate funds – have led to significant buyouts in IA UK`s direct real estate sector.
«Since we have made net redemptions and do not buy real estate and therefore do not pay stamp duty of 5%, we have temporarily reduced the spread from 6% to 1%. It`s closer to what you would pay for a stock or bond product,» the UK sales manager said. Performance for the Class C Acc device in GBP, launched on May 23, 2014. Return assumes that all fund costs have been accounted for and that all investment income remains in the fund after taxes. This fund was launched on 27 May 2014 following a restructuring of the former Property Unit Trust. The performance shown combines the past performance of this fund with the performance of the corresponding class in the previous real estate mutual trust. AI sector averages include both PAIF and feeders in their calculation. «The great irony is that many people already own their homes and when they don`t, they actively try to become homeowners themselves. Residential is different from commercial, but it`s still tangible and you can still touch it. If you like the property, then keep it, and if you want to add a property, add it. That being said, Crossley said LGIM Investment Week plans to launch a hybrid fund that will hold a combination of cash, REITs and direct ownership.