Time Investments is planning to convert its Freehold Income Trust into a property authorised investment fund (PAIF), to improve performance through tax efficiency.
The £158 million fund, which has a 19-year track record and invests in residential freehold ground rents, will initially convert from a unregulated collective investment scheme (Ucis) into an authorised open-ended fund, subject to investor approval.
The conversion into an authorised fund, which should be completed before the end of January next year, will occur before it becomes a Paif. This will remove the requirement to pay tax on capital gains in the fund.
Time Investments said that it has secured strong interest from investors and advisers looking to invest in the trust once the conversion is complete.
Nigel Ashfield, manager of the fund, said: ‘This has been a very challenging year for Ucis Investments but because of FIT’s strong track record our shareholder base has remained very loyal.
‘We have a number of investors waiting to invest in the New Year following FIT’s conversion and we have a reservation list of potential inflows in eight figures.
‘We are confident that the conversion to a Paif will receive investor support and we will be sending a circular to them and their advisers in the next few weeks requesting their approval. However, we have already approached the largest unit holders, who together represent over 20% of advisers, and they have told us that they will be voting in favour of the change.’
The move to convert the fund comes as the Financial Services Authority intends to ban Ucis funds from being sold to retail investors next year.
Over three years to the end of November, the fund has delivered 17.4% versus the benchmark’s 14.2%