The TB Walker Crips Income from Short-term Lending fund, due for launch on 1 August, is the first regulated bridging finance investment fund to be launched in the UK.
Targeting an annual income of 8.5 per cent gross – or 0.7 per cent per month – it will sit in the wealth manager’s newly created alternative investments division.
It will be managed by James Allen, a newcomer to Walker Crips. The fund will source its income by providing credit to short-term lending companies that offer residential bridging finance loans.
Its minimum initial investment is £20,000 with a 12-month minimum holding period and three months’ notice required for withdrawals. Charges will not exceed 2 per cent, with no initial fee.
This fund is looking to take advantage of the property market starting to pick up. As the Chart shows, there has been an increase – albeit small – in total gross mortgage lending over the past year, hopefully indicating the beginnings of a revival.
Instead of lending directly to those seeking bridging loans – which are short-term loans to provide finance while waiting on a longer-term arrangement, often a mortgage – the fund will provide credit to three bridge loan providers: Bridgebank Capital 6, Century Capital and Mayfair Bridging 3.
A target yield of 8.4 per cent is extremely attractive in today’s environment. With the nature of the business, there is no real prospect for capital growth and this fund should be seen as purely focusing on income.
Walker Crips suggests that it should be viewed by sophisticated investors and advisers as a “valuable diversifier as part of their tactical allocation”. It is not appropriate for the run-of-the-mill retail investor; apart from its relatively high initial investment and bespoke nature, the minimum holding period and notice required for withdrawals is enough to put off anybody who might need quick access to their assets.
The fund is certainly at the alternative end of investing in property, but does offer a method of access that is potentially easier and provides more liquidity – despite the difficult in getting out of it – than directly purchasing property.