The theme of collaboration was topical at our latest Fund Focus event which took place earlier this month in London. The event focussed on the opportunities in credit and equity investing across the real estate landscape.
Our Director of Funds and Corporate for the UK, Nicola Le Brocq, was joined by experts Adam Knight, Head of Funds and Indirect Real Estate at Bedell Cristin and John Forbes, Partner at John Forbes consulting LLP for a fireside chat. The group discussed how the dynamics for real estate are volatile and that for investors, it can be daunting but could also be the best time for capital deployment.
Current landscape
Forming the backdrop to the event was the recent introduction of the Reserved Investor Fund (RIF). Introduced in March this year, this onshore fund is primarily targeted at professional and institutional investors. It offers pension schemes and other large investors access to illiquid assets opening up new avenues for UK fund managers and new opportunities for Jersey.
Opening the session Nicola reiterated the fact that Jersey remains the jurisdiction of choice for fund structures, noting that research by Capital Economics during 2022 on Jersey's value to Britain showed that Jersey is home to more than 780 billion in corporate asset values vehicles and that around 80% of that is thought to be invested in real estate with a strong emphasis on UK commercial real estate. These figures are likely to be higher today, owing to the continuing trend from fund vehicles towards corporate structures.
Reinforcing Jersey's position, Nicola stressed its political and economic stability, a key consideration for international investors. Added to this, she highlighted the proactive approach to adopting global regulatory and tax standards, championed by Jersey's regulator and government, which ultimately provides an optimum business environment for its 14,000-strong workforce to operate.
Jersey and the UK
The panel at the event agreed that collaboration was key for Jersey's IFC to remain competitive in the funds sector. Following the introduction of the RIF, they also agreed that UK fund managers already working with solutions such as the Jersey Property Unit Trusts (JPUTs) would find closer collaboration to be advantageous.
JPUTs are frequently used to acquire and hold interests in UK commercial real estate. Their simplicity from an administrative and tax perspective, combined with the flexibility to tailor the terms of the trust instrument to meet commercial and operational requirements, are key to their popularity and mean that they are a very familiar structure to principals, legal advisers, investors and lenders.
It was felt that compared to similar jurisdictions, Jersey's offering remains competitive for funds due to cost efficiency, ease and the catalogue of solutions available such as the National Private Placement Regimes (NPPRs), which provides professional investors throughout Europe access to Jersey funds. One observation from Adam Knight was that they are seeing smaller managers in equity and debt opting for Jersey and larger managers opting for a mix between Jersey and Luxemburg.
The theme of collaboration was also strong here with the experts reminding us of the use of European sleeves, which means you don't have to move the entire fund structure out of Jersey and can still have access to European markets.
Adam Knight, added: "I think one of the really exciting things is the combination of Jersey vehicles with onshore, UK vehicles and there's been a bit of a perception that these changes in the UK are a big threat to Jersey, but actually, I see a lot of it as a big opportunity".
The evolution of Jersey funds
All the experts agreed that Jersey needs to work collaboratively with UK fund managers and develop and evolve its product offering with the RIF in mind in order to stay ahead.
Throughout the event, the theme of adapting and evolving was evident, with John commenting: "The capital environment is changing, for example, with the pooling of the local government pension scheme; therefore, we need to be adapting too".
You can learn more about Jersey's funds for UK Real Estate Investment offering on our website.
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