New fund to focus on North and UK markets

Investment VehiclesA €60 million property investment fund is being created to allow ordinary investors to buy into the UK and Northern Ireland property markets. The new "Orion property development fund" matches an existing fund established to support investment within Ireland.

Liberty Asset Management and Castleway Developments are behind the new fund. "The fund represents a different opportunity for investors to participate in a series of property development projects across the UK and Northern Ireland's major cities and towns," says Liberty's managing director, Ian Lawrie.

Large property deals are generally inaccessible to many investors given cost, risk and the need for specialist knowledge. The new fund helps ordinary investors to get around these difficulties, the company argues.

Liberty is also behind the earlier "crystal property development fund" launched last year. This will focus on deals within Ireland, with the second fund looking for UK opportunities.

The fund managers plan to raise a minimum of €35 million and a maximum of €60 million. The fund will run for seven years at most, with the intention being to begin unwinding the fund after about five years.

The fund is now open and will close on March 23rd or when the target €60 million is reached, according to Liberty Asset Management. The minimum investment is €100,000 and the maximum is €1.5 million.

The fund manager is Castleway Orion Ltd, a subsidiary of Castleway Developments. Two of the team, John McCann and Jim Osborne, have committed €10 million of their own money in the venture. Castleway Orion Ltd also says it has already received €25 million in investor commitments to the fund.

The fund managers are also investors, which the company argues provides an incentive for the managers to ensure the fund performs well. It has created an incentive/profit-share arrangement for the managers, who will also receive a 2 per cent annual management fee.

The fund must earn "a hurdle internal rate" of 10 per cent per annum before the managers share in any of the fund profits. For return rates of 10-20 per cent, the manager becomes entitled to 25 per cent of these profits. Above the 20 per cent per annum return level, the manager is entitled to 50 per cent of the profits, according to details provided by Orion.

"Our initial activity will focus on those areas with excellent growth prospects over the next three to five years, including London and the south-east, the north-west, Scotland and Northern Ireland," says Castleway Orion managing director, Jim Osborne. The company already has five projects underway.