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.

Case Study – Acquisition finance partnership, Belfast

• Acquisition finance partnership, Belfast
• 18- month investment
• Return of 12% per annum
• Commercial/Student Accommodation sector

The Opportunity

To provide acquisition finance to an established property development company for the purchase of a site on York Street, Belfast, with a view to securing planning permission to convert existing office space to a 407- bed student accommodation scheme.

Structure

A limited partnership constituting members of the investors club was created. Members were entitled to invest a minimum of £25,000 in order to raise the required amount of circa £1.8m. Investors were entitled to use SIPPs, SSASs or invest personally.

Returns

The partnership, in addition to a full repayment of capital, received a total return of 18% for an 18-month loan. This equated to an annualised return of 12% of their subscription amount and was net of all fees and costs but not net of tax for personal investors.

Security

In the event of default on the loan, the partnership had a first legal charge over the property.

Outcome

The developer secured planning permission for the demolition of the existing building and erection of a 12-storey mixed use building with a ground floor retail unit, 407 managed student accommodation rooms (with communal living rooms, kitchens), associated reception/office facility and gym in March 2016. Investors received an associated interest and return of their initial subscription amount on the maturity date of the loan.

Brochure

See more of our Private Investors Club case studies in our brochure.