Offshore Investment

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UK Property Investment
First World Hybrid Real Estate Plc

Following the global financial crisis in 2007 and 2008, UK investment property values dropped significantly, largely due to the effects of excessive and aggressive debt funding that had been employed in the preceding decade. Banks pulled back loan to value ratios, resulting in forced sales as investors reduced their debt levels in the face of repossessions, which in turn led to further price weakness.

Throughout this period and notwithstanding the general economic slowdown, occupational demand in the UK for investment grade property remained reasonably robust and in the last two years the fundamentals have pointed to a recovery and an opportunity to re-enter this market. This recovery is now well entrenched and yields have firmed consistently since mid-2013. Excellent properties let to substantial UK and global companies on long leases can be acquired at yields of 6% plus and debt funding is currently available at a variable rate of 3%, giving rise to positive debt leverage.

Given the forecast positive economic growth in the UK and improving occupier and investor sentiment, Sequelprops identified an opportunity to target these investments and in conjunction with Marriott Asset Management (Pty) Ltd and FIM Capital has been actively involved in the establishment of a real estate investment vehicle, registered in the Isle of Man and regulated by the Isle of Man Financial Supervision Commission in terms of the Isle of Man Collective Investment Schemes Regulations.

First World Hybrid Real Estate Plc (FWHRE) is a Regulated real estate investment company that invests in a combination of direct UK real estate and listed real estate investment trusts (REITs). Historically, property investment products in South Africa offering offshore exposure have been limited by a lack of liquidity in the underlying investment units as well as opaque pricing mechanisms. The hybrid structure, which is unique to FWHRE, addresses both of these areas of concern and offers investors both ease of exit and liquidity at transparent quoted pricing.

Sequelprops is the mandated Real Estate Manager to FWHRE and is responsible for the sourcing, acquisition and ongoing management of the direct properties owned by the fund. Through our presence in the UK and our association with established and reputable property practitioners we have access to a high degree of local professional expertise, which is complemented by regular direct interaction with the fund's tenants.

FWHRE offers prospective investors an attractive yield in Sterling in a firming investment and occupational market. The FWHRE brochure and current fact sheets are available on the Marriott website and accessed through the International Solutions link. Full details on investing in FWHRE via a mandate for investment in the International Investment Portfolio with FIM Capital as well as the application form are available on the site.