Horizon Asset Management has launched a new Cayman Islands domiciled bond offering, promising a 5% return per annum from investments in UK properties and 100% return of capital after five years.
The Income Bond Series One has been launched offering investors a regular 5% return, based on rental income received from Horizon’s Alpha Property fund, which is domiciled in the Cayman Islands, but invests in UK property, primarily based in South-East England.
The new bond will be available to institutional, retail and family office investors and is secured against assets held by the boutique asset management house’s Alpha Property fund.
The Alpha Property fund will issue a quarterly income (or coupon) from the new bond generated from the regular rental income of the fund’s tenanted properties. Any gains or losses to the property portfolio will be attributed to the shareholders of the fund.
Horizon pointed that the bond is a debt instrument and as such, bondholders take preference over shareholders. By issuing this type of debt instrument the firm said that the fund aims to raise money to reduce its reliance on bank borrowing while continuing to increase its property portfolio.
The fund is currently invested 71% in purpose-built flats, 11% in converted flats and 18% in terraced houses in the South East of England.
Bill McClintock, director of Horizon Asset Management, said: “Investors are increasingly seeking income and a return of 5% per annum is an outstanding proposition in the current savings and investment environment. The fact that the capital is secured against a real asset base should also be highly reassuring to investors.
“We are seeing some great opportunities in the UK residential market and this is a cost-effective way to enhance returns for investors in the Alpha Property fund, too.”
The minimum investment in the Bond is £5,000 and is available directly or through wrappers such as fund platforms, personal portfolio bonds, Qualified Recognised Overseas Pension Schemes (QROPS) and Self Invested Personal Pensions (SIPPs).
The fund is an exempted company (OEIC) domiciled in the Cayman Islands and registered as a regulated mutual fund. It was launched in December 2007 with institutional capital and was later registered as a mutual fund in February 2015.