A new fund has been formed expecting to raise up to $500 million in five years to buy residential rental properties, initially in Auckland.

Tim Lichtenstein, formerly of Colliers International, is a co-founder and chief executive of Haven Funds which is aiming to buy new homes and pay investors returns.

"The target for year one is $50m, $150m in two years and $500m in five years," he said of the new venture he founded with executive director Kerry Hitchcock and non-executive director Paul Manning.

Lichtenstein said the information memorandum which contains details of the offer had not yet been finalised, "it's not signed off by our advisors."

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The offer is not to retail investors but "institutional investors and private high net worth individuals," he said. "We want to buy residential property in the Auckland market and look at other regions."

He refused to say what returns investors would be provided with, saying that was confidential "but it will be a combination of cash from the rental income and capital growth over time."

David Whitburn, a property investor and developer, said a product disclosure statement would help him understand more about the venture.

"I need more details into their statement 'Haven Living will acquire newly completed home products at a discount to market value'. I like the concept of combining rental return with capital value accretion to generate above average internal rates of return over a five to 10-year time-frame," Whitburn said.

But he wondered if the properties would be sold within a decade and said he could not decide on the terms of the investment without further written information.

Andrew King, NZ Property Investors Federation executive officer, also said there was too little information available to be able to evaluate any offer.

"Personally, I feel that in New Zealand, funds like this find it difficult to make the return they want at a price that their investors and tenants are willing to pay. It will be interesting to find more out about it," King said.

New Ground Capital offers investment in housing and appears to be operating in a somewhat similar field to that planned by Haven.

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Kerry Hitchcock of Haven. Photo/Janna Dixon
Kerry Hitchcock of Haven. Photo/Janna Dixon

Under funds, Haven says: "Haven Living focuses on a variation of the Build-to-Rent model known as Invest-to-Rent, explicitly to avoid exposure to development risk. From a development perspective, viability is the sector's biggest challenge – standard property economics make it difficult for rented developments to compete with standard build to sell. This has implications on rent levels, affordable housing contributions and whether schemes get built at all.

"To overcome the development risk/return equation, Haven Living will not develop these schemes. Haven Living will acquire newly completed home products at a discount to market value. This allows us to combine rental return with capital value accretion to generate above average IRRs over a 5 to 10-year time-frame.

Haven's website shows a range of housing plans. Stand-alone, semi-detached and terraced housing is classified as low-risk, low-rise apartments are listed as mid to high-risk and high-rise apartments are listed as high risk.