10 February 2025
If you are covering the news that the TIME Commercial Long Income fund has confirmed plans to invest in direct property and REIT shares, please see the following comment from Oli Creasey, property analyst at Quilter Cheviot:
“Another daily-dealt property fund is transitioning to a hybrid format. The TIME Commercial Long Income fund has confirmed plans to invest in both direct property and REIT shares (subject to shareholder approval), following similar moves by L&G and abrdn’s property funds in 2024.
“The move appears partly driven by regulatory concerns, with the FCA’s ongoing review hanging over the sector. Fund managers such as TIME are investing in REITs to retain property exposure while staying below the regulator’s proposed threshold for illiquid investments. Additionally, investor sentiment is likely a factor, as daily-dealt funds fall out of favour and the hybrid format becomes the default for open-ended, daily-dealt property funds.
“TIME has been an early adopter of the hybrid format, managing the Property Long Income and Growth (PLIG) funds for over three years. The commercial long income fund differs slightly from the existing fund and other hybrids in the market, particularly with its very long leases on properties. However, the TIME team has the experience and expertise to manage a hybrid portfolio effectively.
“The existing PLIG fund has outperformed its benchmark by almost 100bps per annum since inception in 2022.
“We view this move positively, noting that the valuation gap between direct property investments and REITs is historically wide, making this an opportune moment to switch to a hybrid format.”
