PCL Fund Fairway Capital Completes Third Raise
Window of opportunity extended in wake of New Year pandemic restrictions.
Fairway Capital, investment advisor to the Fairway Capital Property Fund, successfully closed on a third round of fund-raising. The additional funds, sourced from institutions, family offices and HNWI’s, will bolster purchasing power to make further acquisitions in the prime Central London (PCL) residential market.
The Fund launched in March 2020 to take advantage of what Fairway Capital believed to be a once in a decade opportunity created by Brexit, with Covid providing further opportunity. It has since purchased ten properties in Belgravia and Knightsbridge with a combined value of £70m and is seeking to deploy a further £50m on further acquisitions for the Fund.
The Fund’s cornerstone investor, Catalyst Capital, a leading European real estate Investment and asset management group, has topped up on its initial investment, which, alongside the existing debt facility with Investec, reflects the ongoing interest from institutions into the PCL market.
Other investors include a number of high-net-worth individuals introduced by Coutts & Co., via its investment club, which supports the view that PCL remains attractive to investors seeking both safe haven status and the potential for significant “value-add”.
Hans Prottey, head of Coutts Investment Club said, “Fairway is the type of business and opportunity we like to support and give our clients access to. George and his team offer a wealth of experience and commercial expertise, which not only excited us, but our club members too (including those with property backgrounds!). Many saw this as an attractive alternative and more diversified proposition to building their own PCL portfolio. We look forward to following Fairway’s achievements over the next few years.”
With the introduction of a third national lockdown in the UK on the 5th January, it is anticipated that the window of opportunity to capitalise on the suppressed PCL market, currently experiencing a lull in transaction volumes and discounted prices, has briefly lengthened. Strategic purchasing now should place the Fund in a strong position to maximise projected returns when the market recovers.
With Brexit now over the line and any associated uncertainty removed, the market is poised for recovery in 2021 with a resurgence of investor sentiment. This should hopefully be accelerated by the continued roll out of the Covid vaccination and the eventual return of overseas buyers.
Given the strength of PCL market fundamentals and its longstanding global desirability, a return to long-term price growth is forecasted by all the major advisories. The Fund’s focus on value-add acquisitions ensures no reliance is placed on capital growth, although investors will be reassured to see such predictions, which are likely to boost their risk adjusted returns further into the late teens (IRR).
Chairman, James Goldie, said: “2020 will be remembered as a harrowing year with seemingly daily negative news regarding Covid and its sad impact. Notwithstanding this, the fourth quarter of 2020 yielded better news around exogenous shocks that had been buffeting UK confidence. Covid vaccine breakthroughs and an early 2021 roll out, a Brexit resolution in the last days of December, the US Election result ushering in a more cohesive calm style of government as well as global stock markets continuing to rally buoyed by world governments trying to heal the economic hardships of Covid.”
George Brooksbank, founder and CEO of Fairway Capital, added: “The market has continued to show its resilience amid further government restrictions, particularly in the £5-10m price bracket where transactions in 2020 were at their highest level since 2016. When travel restrictions ease, we can expect overseas buyers to return to the market as their spending power has been restored by a rebound in stock and commodity prices.
Global economic uncertainty typically encourages a flight to quality and PCL’s safe haven status and associated prestige asset class has always attracted global wealth. The Fund bought very well in 2020 and has a strong pipeline. This places the Fund on a firm runway to develop the assets, with the assistance of a first-class development partner in Leconfield, and to derive maximum value as we move through 2021.”