We all have our own and differing sizes of risk appetite, depending on our personal perspectives, circumstances and outlook on life – and this can change at any given time.

It’s important to understand what the perceived risks are when you choose an investment, as CapitalRise’s perception of risk does not necessarily match your own. We don’t provide investment advice, so to help you make informed decisions, we aim to be as transparent as possible, setting out all the facts in a straightforward way.

With every opportunity we launch, our objective is to balance risk with reward and draw a correlation between the determined level of risk and the potential return on offer to investors.

All of our loans are secured with either a first or second legal charge, based on the type of loan we are making to a prime property borrower. If we provide a senior loan, we take a first legal charge over the property; providing a junior loan means we are subordinated to a senior lender and therefore have a second legal charge security over the property.

Opportunities with a first legal charge are the lowest risk opportunities we offer to investors as they put CapitalRise investors first in line to be repaid when the loan redeems. A second legal charge puts CapitalRise investors second in line, posing a slightly higher risk and therefore offering a slightly higher potential return.

From inception to September 2019, CapitalRise investment opportunities with a first legal charge have returned investors between 7-8.9% p.a. and opportunities with second legal charges have returned between 9-11.5% p.a.

The security position we take on a loan is what we deem our core indicator of risk. For example, two opportunities may have the same loan to value ratio (another key indicator of risk, showing the value of the loan in relation to the value of the property) but if one is a senior and one a junior loan, CapitalRise will perceive the junior loan position to have a greater risk and therefore could offer a greater potential return.

If you have a preferred level of risk appetite, you may not be interested in certain types of investment opportunities we offer. Offering a range of opportunities including senior loans with first legal charges, lower loan to value ratios and therefore lower rates of potential return means we can offer you more choice and diversification options.

The CapitalRise Risk Rating

The risk of an opportunity can be measured on multiple factors, a number of which are detailed above and will affect the return on offer.

The CapitalRise Rating is designed to help investors to compare CapitalRise investments, based on the findings and conclusions of our due diligence process. The rating looks at risks associated with: the developer or borrower, the property and business plan, the capital structure and the loan security.

Below is an example of how we display this information for investors, showing each element of the project in question and whether we have deemed its perceived risk level to be at the higher or lower end of our risk rating.

Please note, this is a subjective assessment made by our due diligence team. It is not independently verified and we cannot guarantee that it is an accurate measure of investment risk, quality or suitability.

IMPORTANT INFORMATION

Capital is at risk and interest payments are not guaranteed. Investments on our platform are illiquid and investors should consider these as long term investments. Investments are not directly into property but rather into dedicated subsidiary property companies. Past performance and forecasts are not reliable indicators of future performance. We recommend you seek advice from an appropriately qualified independent professional. See key risks before investing.

Investment performance is not covered by the Financial Services Compensation Scheme.