The launch of the Reserved Investor Fund (RIF) represents one of the most significant developments in the UK funds landscape for many years. Designed to provide a cost-effective, flexible and tax-efficient onshore alternative to established offshore structures, the RIF has the potential to reshape how institutional investors access UK real estate, while creating opportunities for fund managers, investors and their advisers.
RIFS: What are they and what are the benefits?
Partner Mark Cunningham talks to Financial Services Partner Mark Eade about Reserved Investment Funds (RIFS). They’ve been a long time in the making, but what are they, and what exactly are the benefits of such structures?
Why is the market paying attention?
An onshore alternative
The RIF provides a UK-based solution while maintaining flexibility and avoiding potential complexities of having to introduce more complicated structures and/or being in jurisdictions outside of the UK.
Lower cost and faster launch
The RIF is not itself an FCA-authorised fund. This can reduce setup costs, shorten launch times and simplify ongoing administration. It also removes the requirement to have additional presence and/or entities in another jurisdiction.
Institutional investor focus
The regime is primarily aimed at professional, institutional and other sophisticated investors, making it particularly relevant for institutional investors, including pension funds, insurance groups, and sovereign wealth funds, as well as other sophisticated investors.
Government policy support
The RIF aligns closely with wider UK policy objectives to encourage investment into housing, infrastructure and long-term productive assets, as well as providing support to wider UK businesses that can support onshore structures from an administrative, accounting and tax perspective.
The Reserved Investor Fund: A new opportunity for UK real estate?
The launch of the Reserved Investor Fund (RIF) represents one of the most significant developments in the UK funds landscape for many years.Designed to provide a cost-effective, flexible and efficient onshore alternative to established offshore structures, the RIF has the potential to reshape how institutional investors access UK real estate, while creating opportunities for fund managers, investors and their advisers.
The Opportunities, Limitations & Benefits of RIFs
When HMRC introduced the reserved investor fund, its goal was to provide a new type of fund structure with greater flexibility and lower costs. But RIFs have the potential to offer even more than that. The structure is already attracting investors with schemes that focus on affordable and social housing, providing a mechanism by which they can tackle the real shortage across the UK.With the first RIFs launching, Bisnow spoke to Mark Eade about who the fund is geared towards and how it could impact the UK housing market.
Where do we see the opportunity?
Fund managers
Managers launching new real estate or infrastructure products now have an additional UK-based option alongside corporates, limited partnerships, REITs and indeed offshore structures. It will be increasingly important to consider each structure in detail, to fully understand the feasibility and viability of each, and overlay the commercials, practicalities and overall expected return on investment.
Existing funds considering migration
Some existing offshore property funds may evaluate whether conversion or restructuring into a RIF offers commercial, tax or investor-relations benefits. Existing managers may also consider a different fund structure for follow-on funds.
Institutional investors
Pension schemes and tax-exempt investors may facilitate investment without creating an additional layer of fund-level taxation in appropriate circumstances. In particular, industry participants have already highlighted potential use cases for Local Government Pension Schemes (LGPS) pooling arrangements.
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