UK's Kames Capital To Tap Property Investment With PAIF Next Year

Tom Burroughes and Austin Freitas

28 November 2013

In a world full of UCITS, REITS, OEICs and SIPPs, there is another fund acronym to get to grips with – the PAIF, or Property Authorised Investment Fund. One of these structures, which were established by government rules about three years ago, is to be launched in the first quarter of next year by Kames Capital, the UK investment house.

The fund, which will be co-managed by David Wise and Alex Walker, will aim to provide investors with high income as well as growth in income and capital over the longer term, Kames Capital said in a statement. The PAIF will invest primarily in direct property (around 80 per cent) but may also invest in indirect property and equities including property companies, real estate investment trusts and specialist property funds as well as cash.

Kames’ team already manages a number of institutional funds such as the Kames UK Active Value Property Fund. The investment strategy for the new fund will look to use the property team’s active value expertise focusing on properties that offer asset management opportunities in the £2 million ($3.3 million) to £10 million price bracket.

“These types of properties are often too big for most private buyers and too small for many institutional investors. In addition to active value style properties, a core property allocation will be maintained for liquidity purposes,” Kames Capital said.

In contrast to other UK-based funds holding property, PAIFs do not carry a charge on taxable income; they can pay gross dividends on property rental income and don't have to deduct corporation tax.

Kames oversees a total of £52 billion ($84.3 billion) of client money and employs around 270 people.