Case Study – Development Finance, Bath

• Development finance syndicate, Bath
• 1 year investment
• Return of 10% per annum
• Residential sector

The Opportunity

To provide development finance to an established property investment and development company for the redevelopment of the upper floors of a historic city centre building in Bath in order to provide 4 one bedroom flats and 1 two-bedroom flat.

Structure

A private syndicate constituting members of the investors club was created. Members were entitled to invest a maximum of £50,000 in order to raise the required amount of £500,000. Investors were eligible to use SIPP, SSAS or private investment.

Returns

Syndicate investors received £550,000 (10% return) which included a return of capital, loan interest and the loan arrangement costs. This was payable on whichever came first, 12months from the loan agreement or practical completion of the redevelopment.

Security

The syndicate held a legal charge over the property. In the unlikely event that the developer was found to be in breach of the loan or development agreement, the syndicate had “step-in rights” to complete the redevelopment. This provided additional security and plenty of headroom to repay the syndicate loan.

Outcome

The redevelopment was completed within nine months of the loan agreement and investors received a gross return of 10% in addition to their existing investment within 30 days of completion.

Brochure

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