First World Hybrid Real Estate Plc

First World Hybrid Real Estate Plc ("FWHRE" or the "Fund") is a real estate investment company that invests in a combination of direct real estate and listed real estate investment trusts ("REITs") with the aim of generating a reliable, predictable and growing income which will make up the majority of the generated return. Read our latest Fund Update.

The fund invests in properties which:

  • Are well located in the United Kingdom and are not of a specialised nature.
  • Are tenanted by large, multinational and/or listed companies with a high Credit Safe rating.
  • Are on long term leases with upwards only reversions, where the tenant is responsible for all maintenance and insurance of each property.
  • Provide net income growth from rental increases which are contained in the leases.

The majority of the Fund is invested in direct real estate with a portion in REITS to provide liquidity for redemptions:

Direct Real Estate

  • Are well located in the United Kingdom and are not of a specialised nature.
  • UK commercial real estate, yielding approximately 6.0%.
  • Long leases and strong tenants.
  • Each property is independently appraised twice per annum on a rolling basis, therefore more consistent pricing.

Listed REITs

  • UK listed REITs yielding approximately 5.1%.
  • Priced on stock market, therefore readily traded and liquid.
  • Primarily to provide liquidity for redemptions.

Combine the Benefits of Direct and Listed First World Real Estate

Liquidity and Redemptions

The portfolio includes listed Real Estate Investment Trusts (REITs). These REITs are readily traded and sold on first world stock exchanges and hence provide reasonable liquidity for redemption requests. The cash and REITs provide liquidity, with cash managed to reasonable working capital levels to avoid unnecessary yield dilution.

FWHRE invests approximately 75% of its portfolio in direct real estate which can only be realised in the medium to long term. Whilst the Fund also invests in listed REIT's to provide a reasonable level of liquidity, in certain circumstances it may be appropriate to limit redemptions to ensure the interests of existing shareholders are protected at all times. Consequently, the Offering Document allows the manager to limit the weekly redemptions to a maximum of 5% of the Fund, and also allows for the suspension of all redemptions where, at the discretion of the manager, it is considered to be in the best interests of investors. For further information, please refer to the Offering Document.

Low Volatility

FWHRE property investment criteria should enhance the reliable and predictable nature of the income stream and because the direct real estate will be revalued twice annually on a rolling property basis, price volatility is likely to remain low.

Flexibility

Adjusting asset allocation to take advantage of the higher yields in either direct or listed real estate as listed prices move between premiums and discounts to net asset value, will enhance the investor's overall return.

Enhanced Yield Resulting in Enhanced Returns

Positive Leverage

A portion of the direct real estate is financed by debt resulting in positive leveraging due to the differential between the cost of financing and the yields offered by direct real estate. This enhances the yield of the portfolio. FWHRE limits debt to 50% of the cost of the direct real estate on acquisition. Including the listed REITs and cash, the leverage position is approximately 40% overall. FWHRE can manage the interest rate risk by potentially reducing the over debt ratio and/or taking out interest rate swaps to fix a portion of the interest charge, thereby enhancing the predictability of the income yield for investors.

High Income Return

The quality of the real estate and the tenants will ensure a good income return that can be anticipated with a reasonable degree of certainty.

Map of Marriott real estate holdings in the UK

Asset Swap

Where investors have reached their foreign investment allowance limit they can utilise Marriott's asset swap capacity to invest in FWHRE. This facility is also available to trusts and companies wishing to invest into FWHRE.

Probate

Death Bed Donation

Marriott recommends the use of either a death bed donation and/or a joint account. A death bed donation takes effect on the day preceding the death of the investor and is the legal mechanism for transferring ownership to surviving beneficiaries. As the investment is no longer owned by the original investor on the day of their death, the investment will not form part of an offshore estate for probate purposes.
From a South African tax perspective death bed donations are deemed to be dutiable property of the deceased estate* and therefore still attract estate duty. To avoid double taxation, however, they are excluded from donations tax**

* in terms of Section 3(3)(b) of the South Africa Estate Duty Act ** in terms of section 56(1) of the South African Income Tax Act
Joint Account Holders

An investor may elect to open a joint account with another investor. In the event of the death of one joint holder, the whole of the portfolio will automatically vest in the joint surviving holder or holders. If a joint account investor elects a death bed donation, the donation has precedence and the investor will be deemed to have donated their investment the day before their death. The investor's portion of the joint account will therefore be transferred to the listed beneficiaries effective the day before their death.
Joint accounts and death bed donations can be elected in the Investment Mandate. Investors are encouraged to seek independent tax advice suitable to their personal circumstances.

  • International Mandate – Minimum investment amount for new investors

Individuals: £25,000

Entities and Trusts: £100,000

  • Minimum FWHRE investment amount

£10,000 per class

  • Marriott Initial Fee

0

  • Investment Options

Class A (Distributing), or Class B (Accumulating)

  • Charges
  • Additional costs are deducted from the Fund's Net Asset Value (NAV) in respect of Fiduciary Custodian, Property Management, Audit and other services. Please see the Offering Document for more information.
  • There are no brokerage fees or duties in purchasing units in FWHRE.
  • Financial Advisor Initial Fee

Maximum 3% (excl RSA VAT). Payments processed twice a month. Deducted from consideration received.

  • Financial Advisor Annual Advisor Fee

Maximum 1% p.a. (excl RSA VAT). Paid quarterly in arrears. Deducted from income quarterly.
Class A – deducted quarterly from income.
Class B – deducted quarterly from capital.

  • Income Payments

Class A: Income reinvested or paid quarterly (Minimum payment of £400 applies.)
Class B: n/a

  • Client Reporting
  • Biannual Valuations (28 February & 31 August)
  • Consolidated tax voucher and interest certificate annually
  • Weekly Pricing and Trading
  • FWHRE is priced weekly, based on net asset value (as opposed to on a listed exchange
  • Shares can be purchased and redeemed weekly.
  • Instructions for redemptions need to reach us five clear business days before the next pricing date, for processing on that price date.
  • Investment Management Fee

Costs are based on a sliding scale depending on investment size:
Class A – deducted quarterly from income.
Class B – deducted quarterly from capital.

Investment amount

Total fee per annum, excluding VAT*

£10,000 – £49,999

0.75%

£50,000 – £99,999

0.70%

£100,000 – £249,999

0.65%

£250,000 – £499,999

0.60%

£500,000 – £999,999

0.55%

£1m – £1,999,999

0.50%

› £2m

0.45%

* For clients based outside of the EU the investment Management Fee does not attract Isle of Man VAT (20%).
  • Restrictions
  • US nationals and persons resident in the US
  • Any natural person under the age of 18
  • Prohibited Persons (see Offering Document for more details

For SA companies and trusts there are SARB restrictions; a solution to this is to use the Marriott Asset Swap Capacity option. Contact Marriott for more details.

  • Class Switches

Switches between classes are permitted.

  • Redemption charges

There are no discontinuation fees in terms of redemptions from the Fund. Bank charges will be incurred by the recipient for any forex handled before crediting the amount to your bank account. There is a £35 telegraphic transfer fee for all payments made to non-UK bank accounts.

Tax Clearance

SARS permits an annual foreign investment allowance of R10 million for individuals, and an annual discretionary allowance of R1 million per year. The latter does not require a tax clearance certificate.

If you have reached your individual limit for the year then you can make use of the Marriott asset swap capacity at no extra cost. Please contact the Communication Centre for more details.

Taxation of Income

The income received from FWHRE is considered a foreign dividend by the South African Revenue Service and as such is taxed at a maximum 20%.

Capital Gains Tax on redemptions
  • In terms of South African legislation, capital gains arising from redemptions of shares may give rise to CGT.
  • In terms of UK CGT. non-UK residents may be subject to UK capital gains tax on gains arising from a redemption of shares, or switches between classes. Individual investors will benefit from annual individual UK CGT tax allowances and where applicable will also be able to take advantage of specific Double Tax Agreements in place between the UK and their respective country of residence. This will also impact trusts and corporate investors.

Investor Information

Offering Document

FWHRE ESG Policy

Local Investments

What do you want to do?

Minimum investment

Product

Grow your wealth but have access to it when you need it.

R500 lump sum and/or R300 debit order

Unit Trusts

Draw an income from your retirement savings.

R50,000

Living Annuity

Draw an income from your personal wealth savings.

R50,000

Income Solution

Save for retirement in a tax efficient way.

R10,000 lump sum and/or R300 debit order

Retirement Annuity

Transfer your retirement savings when changing employment.

R50,000

Preservation Fund

Offshore Investments

What do you want to do?

Minimum investment

Product

Invest in an offshore share portfolio.

£25,000

International Investment Portfolio (GBP)

Invest in a direct UK real estate Fund.

£10,000

First World Hybrid Real Estate plc (GBP)

Invest in currency accounts in £ or $.

£25,000 or $30,000

Smart International Income Portfolio

Invest in offshore unit trusts.

£1,000 or $1,000

Unit Trusts (USD and/or GBP)

Invest in global unit trusts.

R500 lump sum and/or R300 debit order

Unit Trust Feeder Funds (ZAR)

Preservation Fund

Where

Minimum investment

Product

I am transferring from a ...

R50,000

Pension Fund

I am transferring from a ...

R50,000

Provident Fund