Raise capital against existing assets or finance new developments
Most of our funds come from UK pension schemes and our annuity business. As they are ungeared, decisions are made and due diligence is performed in house, allowing for flexible solutions and quick, efficient delivery.
Contractual approach
Our contractual approach is flexible but broadly follows one of the structures outlined below. These structures are tried and tested allowing for quick execution.
Traditional structure
Aviva Investors fund purchases the freehold.
- Lease to tenant (c.25 years)
- Rent reviewed annually in line with RPI
Amortising lease/Income strip (freehold)
Aviva Investors fund purchases the freehold.
- Lease to tenant (c.30 years)
- Rent reviewed annually in line with RPI
- Upon expiry of the lease the tenant benefits from an option to purchase the freehold for £1
Amortising lease/Income strip (leasehold)
Tenant
- Long leasehold (c.125 years) peppercorn rent
Aviva Investors fund
- Sub lease to tenant (c.30 years)
- Rent reviewed annually in line with RPI
- Upon expiry of the sub lease the tenant benefits from an option to purchase the long leasehold for £1, this then collapses the structure
Funding for development
Having provided over £1 billion of funding for the development of real estate, we understand the risks and complexities and have a proven delivery structure.
Funding provided during the development of an asset broadly follows these steps.
1. Developer partner achieves planning permission
2. Tenant enters into an agreement for lease
3. An Aviva Investors fund purchases freehold or long leasehold
Aviva Investors funds the development and manages all construction risks
4. Tenant enters into a lease at practical completion over the agreed term
Tenant can choose to sub let or occupy the asset
5. At the end of the lease, depending on the structure agreed, the tenant can either:
A. Walk away or extend the lease
B. Purchase the freehold for £1