Real Estate Long Income
Financial investments involve an element of risk. For further information, please see the risk warning section.
Unleveraged long-lease real estate assets can offer long-term secure income streams with inflation proofing in the form of either inflation-linked rent reviews or fixed rental uplifts.
These opportunities can be fully amortising or have reversionary features that allow for extension of the investment profile. The long-dated, predictable cash flows generated by such assets make them highly attractive for investors seeking to build a return profile that can potentially match long-dated liabilities.
We have a low-risk investment style tailored to deliver stable income streams. We concentrate on long-term secure-lease commercial real estate, social housing and ground rent assets with strong credit quality of tenants and counterparties. Our portfolios derive income from tenants in both the public and
private sectors. We seek assets that have either inflation linked rent reviews or fixed rental uplifts. This ensures we generate a consistent level of returns and reliable annual distributions, making our fund ideal for UK pension funds seeking secure, long term income streams.
Investment are made through bespoke mandates and our highly successful Lime Property Fund and REaLM (Returns Enhancing and Liability Matching) suite of funds. Established in July 2004, ‘Lime’ was one of the first long-lease property funds. Today the fund has grown to £2bn1 in size.
The REaLM range of funds was launched in 2011 to deliver long-term, inflation-linked cash flows largely through investing in fully amortising assets. Assets under management now exceed £1.3bn1. The funds invest either through freehold or amortising lease structures.
1Source: Aviva Investors as at 30 September 2017
The Lime Property Fund is one of the longest-running secure income real estate funds in the UK. Recognised as the most secure investable balanced fund and least volatile in the IPD.
Head of Long Income
- The Lime Property Fund was named winner of the ten-year award (all fund types) for achieving the highest absolute risk-adjusted return at the IPD/IPF UK Property Investment Awards 2016
- In 2016, the Real Estate Long Income Team committed in excess £350m1 of client investments across a range of real estate assets
Sample transaction: Marischal Square
- Income strips provide investors with fully amortising, long term, inflation linked income streams
- Long dated, flexible finance secured on tenant rent
- Counterparty retains control of asset which reverts at end of term
- Significant public contribution, creating jobs and kick start wider regeneration
|Counterparty||Aberdeen City Council|
|Investment size||£104 million|
|Yield (at inception)||480bps|
|Review basis||RPI 0%-4%|
Long-lease assets are expected to be comparatively resilient at stress points, but may lag when traditional real estate markets are booming.
Where funds are invested in real estate, investors may not be able to redeem any units in the fund when they want because real estate assets may not always be readily saleable. If this is the case, we may defer a request to switch or cash in shares or units.
Certain assets held in the fund could, by nature, be hard to value or to sell at a desired time or at a price considered to be fair (especially in large quantities), and as a result their prices could be very volatile.
The value of an investment and any income from it can go down as well as up. Investors may not get back the original amount invested.
Learn more about Alternative Income Solutions
For further information contact your Client Relationship Director or Rachel Green, Client Solutions Manager
+44 (0)20 7809 6809*
*Calls to this number may be recorded for training and monitoring purposes.