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Is property still a good investment?
This article first appeared on professionaladviser.com on 30th May, 2023 Scottish-American...
TIME:Commercial Long Income
Time:Commercial Long Income aims to provide a secure and stable investment return primarily through acquiring commercial freehold ground rents and commercial freehold property (known as 'long income property'), which benefit from long leases. The fund targets an income return of 4% per annum and capital growth. Please note there may be an initial charge of up to 1%.
Previously TIME:Commercial Freehold
Our opinion
Income investing is usually associated with traditional assets such as equities, fixed income and bricks & mortar property funds. Time:Commercial Long Income offers investors an alternative source of income, and the long leases and ground rents provide a very stable backdrop when compared with many of the mainstream income generating assets. The yield target of 4% per annum is also very attractive. Owing to its low correlation to fixed income and equities, this fund could be an excellent diversifier and is well-suited as a building block of any income-oriented portfolio. It should do well in a low-inflationary and low interest rate environment.
Company description
Time Investments is part of the Alpha Real Group, a global co-investing fund management company with more than £3 billion assets under management. TIME Investments specialises in managing open-ended property funds, which invest in residential ground rents and commercial property, subject to long leases.
Fund manager
Time:Commercial Long Income is run by Nigel Ashfield and Roger Skeldon. Nigel has over two decades experience in fund management and finance and joined TIME as a partner in 2011. He is a qualified chartered accountant and holds the IMC, having originally graduated with a Bachelor of Laws from Southampton University. Roger has over 15 years’ experience in fund management, finance and commercial property and also worked at Close Brothers before joining TIME. Roger holds a BA in Business and Financial Economics and is also a chartered accountant.
My investment rational and the way I run the fund is based on me being able to sleep at night – and I sleep very well.
Nigel AshfieldFund manager
Investment process
The fund is invested primarily in commercial freehold ground rents and commercial freehold property, which benefit from long leases. Commercial freehold ground rents are paid by a tenant to a freeholder for the use of a property asset for an agreed period of term, typically 60 years plus. These rents are often inflation protected, either by having built in regular rental uplifts at a fixed amount, or are index linked on a periodic basis. Commercial freehold property is let to commercial tenants for long periods: typically 15 to 40 years. These leases often have either fixed rental step increases, or index linked increases built in. The tenant will also normally have a 'Fully Repairing and Insuring' lease, which means they will be responsible for all the property-related costs during their occupation.
ESG
ESG - Limited
The nature of this fund makes for full integration of ESG considerations difficult. The portfolio is very specialised; it purchases long-leased commercial property meaning the driver behind the investment decisions focuses on factors such as supply and demand, location and tenancy strength. As such, formal ESG considerations are not relevant to the investment decision and there is therefore limited formal policy.
Risk
The value of the assets held in the Time:Commercial Long Income fund are a matter of an independent valuer’s opinion and is usually a multiple of annual income of the properties based on the length and type of leases. Changes in property market conditions, such as over-supply and insufficient demand, could have an adverse impact on this fund. Deterioration in tenant quality could also have a negative impact. These assets are not quick or easy to buy and sell and the performance of the fund may suffer if there are a large number of redemptions.
Read more about this fund
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