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 an inflation index
Amortising lease/Income strip
Aviva Investors fund purchases the freehold or a long leasehold (c125 years) at a peppercorn rent
- Sub lease to tenant (c.30 years)
- Rent reviewed annually in line with an inflation index
- Upon expiry of the sub lease the tenant benefits from an option to purchase the freehold or long leasehold for £1, this then collapses the structure
Commercial Ground Rent
Aviva Investors purchases the freehold or long leasehold
- Sub lease to tenant (c.50 years)
- Rent set against 10-15% of EBITDAR with an LTV of 40% or lower
- Rent reviewed annually in line with an inflation index
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
Key risks
For further information on the risks and risk profiles of our funds, please refer to the relevant KIID and Prospectus.
Investment risk and currency risk
The value of an investment and any income from it can go down as well as up and can fluctuate in response to changes in currency exchange rates. Investors may not get back the original amount invested.
Real estate / infrastructure risk
Investments can be made in real estate, infrastructure and illiquid assets. Investors may not be able to switch or cash in an investment when they want because real estate may not always be readily saleable. If this is the case we may defer a request to switch or cash in shares or units. Investors should bear in mind that the valuation of real estate / infrastructure is generally a matter of valuers’ opinion.