“With interest rates near zero globally, the investment case for U.K. property, which provides a high, resilient yield (~7%), alongside capital growth, is compelling. And whilst many asset classes appear fully valued at this time, the same cannot be said for this asset class, with house prices in U.K. cities (ex. London) comparatively low, at a median value of 160,000 GBP or ~4x price to household income ratio. Compare this to Sydney at 11x and Melbourne 9x. In addition, we feel the source of both income and capital returns will be uncorrelated to other assets, providing portfolio diversification.”
Kee Gan, Chief Investment Officer
L1 Capital has been successfully investing into U.K. residential property since 2017. The Fund’s strategy is focused on investing in existing and fully tenanted modern residential property in major U.K. cities (excluding London) that provide an attractive and reliable income stream with the potential for capital growth.
Unique Investing Methodology
L1 has a team based in London and has been managing the strategy for three years. The Fund is likely to benefit from being an early investor in the asset class and one of the few managers offering this strategy to high net worth individuals. L1 finds competition for these assets to be limited, as the transaction sizes are typically too small for the institutional investor, and too large for high net worth individuals. The Fund is able to transact at a significant discount to open market values (~20% discount) and rebuild costs (~35%).
- Fund I raised $65 million in equity and is currently yielding in excess of 6% p.a. (net of fees and expenses).
- Fund II raised $45 million in equity and is currently yielding in excess of 6% p.a. (net of fees and expenses).
- In addition to yield, Funds I and II have generated attractive capital gains for investors.
Kee Gan, Chief Investment Officer, leads a team of 6 in our London office. Prior to joining L1 in 2017, he spent ten years in investment banking at Deutsche Bank across London, Hong Kong and Australia advising private equity clients. U.K. real estate transactions include the IPO of Countrywide in 2014 (the U.K.s largest real estate agency). Prior to Deutsche he spent two years at Bain & Co. providing corporate strategy to Australian Blue-chip companies.
L1 Capital is looking to raise capital in line with Funds I, II and III. The minimum investment size is $50,000 AUD.
To date, fully invested Funds I and II are exceeding their income and growth return targets.