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A general view of the London skyline from the 69th floor of the Shard at over 800 feet high. Photo: AFP

New | London Central Portfolio takes aim at prime locations in the city

Naomi Heaton is the founder and chief executive of London Central Portfolio (LCP), which advises on US$1 billion worth of clients’ assets in central London. She sees good locations as the top priority for investors when they come to buy properties overseas.

Her firm, set up in 1990, has treated prime London central as an alternative asset class. Her company has launched four funds since 2008 and saw capital growth of 39 per cent to 70 per cent as at March.

LCP is now launching its fifth fund, London Central Apartments III (LCA III), with a target to raise US$150 million.

After graduating from Oxford University, she joined advertising agency Leo Burnett. She was subsequently appointed a board director at Saatchi & Saatchi and Young & Rubicam, advising blue chip multinational clients.

How your property funds different from others?

We only concentrate in central London where some units are located in heritage buildings with beautiful architecture design. It is a very small area with limited supply. A clever investor will buy the jewel of the crown which is in scarce supply and drive up value.

Where is prime central London?

It means the London borough of Westminster and Kensington and Chelsea only. Available stock in prime cental London is limited with only 289 new units being developed each year on average.

What will be the fund’s acquisition target?

We bought old apartments, some of them 100 to 200 years-old, which require complete refurbishment. We leverage on our expertise and strong connections, we manage to buy properties in prime locations at competitive prices and add value through renovation. Although these properties look old outside, we will achieve higher rental after we upgrade the apartments with modern design like a hotel room.

LCP provides one-stop services for investors. We source on and off-market investment opportunities, refurbish, interior design, let and manage properties in London’s premier addresses. As we can control both logistic and the financial point of view, we maximise the return to our investors.

What price range of properties will the fund focus in?

We are interested in one to two-bedroom flats which are most sought after among blue-chip tenants. For instance, one- bedroom cost £600,000 and £850,000 for two-bedroom flats. Taking into account stamp duties and renovation, average spending of £1 million on a property.

As Asian investors, including Chinese, like brand new buildings, do you think your firm’s model of buying old apartments and renovating them hard to appeal to them?

What we find is that Asians like new buildings as they associate it with good quality and expense.

Lots of agents are hosting exhibition in five star hotels to launch new projects in Hong Kong, and they are very successful.

But the thing is these brand new projects are never in central London because no land is available for development. In addition, these “new shiny” developments tend to be very large and lots of supply when they are being put on the market for rent or for sell. The risk in investing in new development can be quite high.

But think about central London, what made it special and unique is the fact it is full of very old beautiful buildings, and they are irreplaceable. The old architectural buildings are barred from redeveloping into higher skyscrapers.

Chinese students account for 15 per cent of our tenants in the last six months.

Why is the fund, LCA III, listed on Channel Islands Securities Exchange (CISE)?

LCA III is a closed end investment company and domiciled in Guernsey, and listed on CISE. It is manily for the benefit of lower taxes. We are highly regulated by the Financial Service Commission in Guernsey and by CISE.

LCP has launched closed end funds in 2008, 2010 and 2013. Any of them forced to extend the wind up period and investors cannot exit at the fund maturity date?

The simple answer to your question is “no”.

Our end of the market (i.e. the mainstream Private Rented Sector with values below one million pound) is very liquid and good properties go under offer within 24 to 48 hours of becoming available, so we have never had a problem selling properties out of our portfolios.

Only the first fund which we launched in 2008 has actually exited its defined investment period of eight years. Ninty-one per cent of shareholders in The London Central Portfolio Property Fund actually voted extend the fund by a further five to seven years back in July this year, as they were so happy with the performance and did not want to exit what has proven to be an excellent performer in a balanced investment portfolio. Those shareholders who wanted to divest were able to sell their shares at net asset value.

Will the recent Chinese President Xi Jinping state visit to Britain lure more Chinese property investment in London?

I think building up our relationship with China is going to increase our bond, and Chinese will look more towards to UK than before. Chinese will continue to increase their appetite for properties in London and their attention will focus in the central area.

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