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Trust Insider: can the new-school of property credit trusts deliver?
by James Carthew on Oct 15, 2013 at 00:01
The returns on these are just about in line with the prospectus – forecast IRR of 8.27% per annum and a coupon of 7.18% which, after knocking off forecast expenses of 1.55% on gross asset value (including a 1% management fee on net assets), is only a minor shortfall on income compared to a 6% yield target.
LBOW reckon that, after a slow start, they will still be in a position to start paying the circa 6% yield within three months.
Shareholders are always going to be uneasy about any fund that struggles to get itself invested but I think these new funds may turn out okay in the end. They are both still trading at a premium and my inclination would be to hold off for an announcement that they are fully invested before considering a purchase.
James Carthew is director of Sapient Research
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