A wealth management firm is set to invest heavily in property after launching a new £50 million fund.
Bromsgrove-based AFH Financial Group says it has created the first property authorised investment fund to be made available to retail investors in the UK.
It will see an initial investment of £20 million, growing to around £50 million over a three to four year period.
The St John’s High Yield Property Fund is the brainchild of Alan Hudson, chairman and chief executive of AFH Financial Group, who said the firm would begin by investing in Midland properties.
He said: “Not only is this an important milestone in AFH’s growth but it also demonstrates our ability to be innovative in our approach to delivering good client outcomes.”
Mr Hudson said the FSA-authorised fund would offer yields of between six and nine per cent.
He said it would be offered to AFH clients seeking to diversify their investment portfolios and although acquisitions will be made across the country the focus will initially be on building up a property portfolio within the Midlands region.
The fund has been designed to pursue a core strategy focssing on well-let industrial, office and retail properties.
It will concentrate on properties costing between £2 million and £5 million but will also consider smaller or larger investments and will be managed by lead property consultant Terry Corns.
Mr Corns said: “With a bank deposit someone would be likely to be getting a two to three per cent return on their capital.
“We are expecting to produce a return somewhere in the seven to eight per cent region based on the properties we expect to buy and we are already beginning to assemble our portfolio.”
Mr Corns said the fund would benefit from its ability to close deals quickly by taking advantage of its position as “a cash source”
“It is clients’ money and doesn’t rely on bank lending at all,” he added.
“In recent years the unavailability of bank finance was one of the main reasons why all sorts of people have not been willing or able to invest – whether it’s industry investing in new plant or property or people who have been unable to develop properties and buy properties because bank lending is so restricted.
“We are free of that completely and once we have shaken hands on a deal we expect to be able to complete without too many formalities.
“There is an advantage – particularly in the present climate – in having ready finance available.”
Mr Corns said the focus on the region initially was down to the fact AFH was a Midland company and many of its clients were Midlands based.
“The intention is to use this as a marketing tool to promote Midlands industry and commerce,” he said. “It will not be exclusively Midlands but the early properties we are looking at are Midlands-based. We expect to grow over the years ahead as the market becomes aware of the fund and its buying power.”