W&F Issue 1 2018

www.wealthandfinance-news.com 16 Wealth & Finance International - Issue 1 2018 Having worked through many business cycles, particularly post the financial crisis we have witnessed a remarkable trend towards consensus performance within the investment management industry. The result was a near extinction of genuine investment ability amongst traditional managers in favour of mediocrity and a focus upon damage limitation. Mansard was created to help investors benefit from various market opportunities and the niche skills of our partners bring, delivering consistent investment outperformance. Who is your partner on your “flagship” fund the “Sellar Development Fund”? Sellar Group is one of the UK’s leading property development companies with a core focus on London. Sellar has an outstanding reputation within the property community and has been a pioneer on the regeneration of many London suburbs. Design- led development projects have helped transform many areas for the local community, unlocking true value and a vast improvement to the infrastructure. Sellar are world renowned for the development of The Shard Quarter, transforming the Borough of Southwark and bringing London the award-winning and Europe’s tallest building, The Shard, which won the Emporis Skyscraper of the Year for 2014 and was shortlisted for the Stirling Architectural ward 2014. Tell us about your relationship with “Sellar” and the goals of your fund Our relationship with James Sellar, CEO of the Sellar Group started around 5 years ago and after considerable due diligence, research and consideration on the right investment structure, we successfully launched the Sellar Development Fund in 2014. Sellar Group is the property development manager on the fund and we are the fund manager and it falls under our regulatory and compliance oversight as a regulated asset manager by the Malta Financial Services Authority. The Sellar Development Fund brings investors a unique opportunity to co-invest with other institutional investors and the Sellar Group on leading off market development projects. The fund invests into a diverse pipeline of opportunities across London which is predominately mixed-use developments, capitalising on the housing shortage and long term structural imbalance, but also the commercial sector. The fund invests into sites that have been bought at an off-market discount, providing investors with capital protection and security; as we structure loans that are secured against properties that are purchased way below market values. The fund seeks to deliver a net return of 10-12% to investors over a business cycle and has successfully achieved this since inception. Why invest into London? The history of London can be tracked back to the Roman’s, as can its property law. London constantly reinvents itself, rising to the challenges set by many developing countries across the globe. Many investors see London as a “safe haven” and it has always attracted foreign investment. The UK population is set to pass 70 million before the end of the next decade, according to official figures. Demographers project that the population will rise by 3.6 million, or 5.5%, over the next 10 years, rising from an estimated 65 million last year to 70 million in mid-2026. Between mid-1991 and mid-2016 the UK population grew by 8.2 million. It is estimated by the government that London requires around 50,000 new homes a year to be built to cater for the current demands of population growth. There is a significant shortfall on the amount of properties being delivered and this provides a Mansard, founded in 2010 provides professional investors access to superior returns via some of leading investment managers globally. Delivering Consistent Investment Outperformance 1801WF13 great opportunity for developers like Sellar. Why should you invest into a fund instead of exploring direct investment into a physical property? The real question is whether the investor wants to be a landlord and deal with the sometimes time consuming and laborious task of dealing with tenants. In addition, owning a physical asset as opposed to owning shares in a fund that lends against world class development projects, could provide far less liquidity and not as much upside potential in terms of annual returns. The “buy to let” sector in London is attractive with rental yields circa 3.5% and growth opportunities still exist, however government policy in the past few years has become increasing unattractive in the UK with a hike in property income taxes and stamp duty. How does the fund invest into Sellar Groups projects and how does this benefit investors? Pre-2008, the development market was thriving, and almost 100% of financing was provided by household name banks like HSBC, Barclay’s, RBS and Lloyds, with tighter regulation and monetary policy, the appetite for lending in the development sector is no longer as strong. The banking sector with government intervention and support is very focused on residential lending and particularly first- time lenders. This has created a number of different sectors within development lending, such as peer to peer lending, mezzanine lending, bridge financing and crowd funding. Today most major development sites are funding by institutional investors, pension funds, ultra-high net worth’s and lending options as listed above. Our fund allows investors to participate in off-market structured finance deals which are secured against London real estate and tends to co- invest with larger institutional investors, but on equal deal terms. The fund typically provides loans over a development cycle of 3-5 years, but the fund often negotiates various exit clauses in the deal terms