Talking Point  

Time Investments unveils Social Infrastructure fund

Time Investments unveils Social Infrastructure fund

Time Investments has made its £30m open-ended social infrastructure fund available to the adviser market.

The fund, called Time: Social Freehold, targets 4.5 per cent annual income as well as capital growth.

It aims to have a positive impact on society by helping to develop social infrastructure, such as daycare centres, assisted living accommodation for the elderly and accommodation for those with physical or learning disabilities.

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The fund is available for daily dealing, allowing investors greater liquidity, and aims to have a long-term focus, with a current weighted average lease term of about 30 years, which the managers claim will help provide a more secure long-term income from rents linked to inflation. 

According to Stephen Daniels, head of investments at Time, the fund has been running privately for about 18 months.

He said: “Our Social Freehold fund provides an opportunity to diversify from traditional commercial real estate and the volatility associated with them. Demographic changes are driving demand and funding restrictions are limiting supply.

"Combined, this makes social infrastructure an increasingly attractive sector for private investment, offering long term attractive risk adjusted return. Importantly assets can also create a positive social impact on society."

The fund invests in properties with longer leases than traditional commercial properties and therefore avoids much of the volatility that those funds have experienced over the past three years.  

The stability of income comes from owning properties with average lease lengths, ranging from 15 to 30 years, as opposed to less than 10 years for traditional property funds. 

Typically, rent reviews are tied to an inflation index or fixed growth rates providing a form of inflation mitigation.

For example, the fund has recently purchased a new development in Cannock, Staffordshire, which provides specialist supported living.

This has a 60-year lease to a social housing provider and an annual rent review that is linked to the retail prices index (RPI).

The net initial yield at purchase was 6.1 per cent.

Another investment is a Bright Horizons Day Nursery in Farnham, which has a lease duration of 25 years with a five-year rent review linked to RPI. This has a minimum increase of 2 per cent RPI and a maximum of 4 per cent.

The minimum investment for retail investors is £5,000. The fund has an initial fee and annual management charge of 1 per cent. 

It can be invested via an Isa, self-invested personal pension, small, self-administered scheme and offshore bonds through income or accumulation shares.

Gary Lee, director of WTK Financial Services, said: “I have always found Time to be a reliable fund manager that provides my investor base with relatively secure investments, especially through times of uncertainty.

"Time: Social Freehold is another innovative fund being well received by my clients who would like exposure to social infrastructure assets."