Strand chambers

227-228 Strand, London
227-228 Strand, London
Designer's impression
funds raised

Investment Highlights

Forecast Annual Return 11.5% (paid at the end of the term)
Estimated Term 23 months
Expected Total Return 23% (based on estimated term)
Mininum investment £ 1,000
Amount Being Raised £ 1,200,000
Product Type Debt
Loan to value ratio 67% (at exit)

The expected total return is a forecast based on the estimated term and is not guaranteed. Past performance of previous projects is not indicative of future results for this project.

Investment Summary

  • Developer – Strand Chambers is being developed by Seastar Developments, which delivered an award winning scheme on the Strand in 2014, as well as projects on Buckingham Gate in Chelsea.
  • Location – Opposite the Royal Courts of Justice in an increasingly popular residential location well located for Covent Garden and the Southbank. Perfect for a London pied-à-terre.
  • Property – The conversion of former offices into 9 luxury residential apartments. The building has currently been stripped back to its shell and will be fitted out over the next 18 months.
  • Pricing – Average resale values of £2,100 per sqft are in line with those achieved at the developer’s previous scheme on the Strand.
  • Protection – The property would have to fall in value by over 33% for any of your invested capital and accrued return to be at risk. Investors benefit from the security of a second legal charge over the property and a third legal charge over the developer’s scheme next door.

Returns Calculator

Return - Forecast annual return of 11.5% (paid at the end of the term)

Investment amount

Return accrues

You Invest

Mar 2017
Mar 2018
Feb 2019

Total Return

On original Investment of

Note: These returns are an indication only and are not guaranteed. Your capital is at risk and you may not get back the money you invest.

The Plan

  • The developer acquired the property in June 2015.
  • The developer received planning approval in May 2016 to reconfigure the existing building from 8 apartments to 9 apartments by altering the internal layout.
  • To date, the developer has stripped the building in preparation for the redevelopment works.
  • The redevelopment will be of high quality and completed to the same standard as the developer's other projects.
  • Your investment will be used to partially refinance existing bonds secured on the property.
  • On the sale of the property, your capital will be repaid.

Timeline

property purchased June 2015
works commence April 2017
Works complete Sept 2018
Sales launch Nov 2018
property sold
Feb 2019

Dates are for guideline purposes and may vary

Financials

FUNDING STRUCTURE
- AT EXIT

Value
% of Value
£1.2m from CapitalRise investors & £0.47m from an existing investor. Investors will be repaid 2nd. After the bank but before the developer.
The post development property sales value would have to be more than 33% less than the anticipated sale value for your invested capital or return to be at risk. The developer would have to absorb up to £6.4m of loss before you would be impacted.
£1.2m from CapitalRise investors & £0.47m from an existing investor.
Investors will be repaid 2nd. After the bank but before the developer.

Investment Structure

  • The property is owned by 227- 228 Strand Limited
  • A new subsidiary company of CapitalRise, CR Strand PLC, has been incorporated to issue bonds to investors. CR Strand PLC will use the proceeds of these bonds from investors to partially refinance bonds secured on the property which it has previously issued to an existing investor.
  • Your investment is ring-fenced because CR Strand PLC will not carry on any other commercial activity. The directors of this company will (through CapitalRise) administer and enforce the terms of the bonds issued by CR Strand PLC.
  • The investment is structured as deep discounted bonds . The bonds will be issued at a discount to the nominal amount and (if sufficient proceeds are generated from the sale of the property) at the point of redemption of the bonds, investors will receive proceeds equal to the issue price of the bonds and a return equivalent to 11.5% per annum, compounded annually.
  • CR Strand PLC is the beneficiary of a second legal charge and a third legal charge over the neighbouring property, 226 Strand.
  • CR Strand PLC is not required to withhold UK income tax on this investment and so returns will be paid gross. Income tax may be payable by investors on any return on the investments unless you invest via your ISA. Investors should take their own tax advice from an appropriately qualified professional.

Risks

As with all investments you should carefully consider the key risks involved which include:

Risks Mitigation
Capital and Income Risk – Your capital is at risk and the income is not guaranteed. CR Strand PLC has the benefit of a second legal charge against the property as well as a third legal charge against a neighbouring property. This means in the event that the developer cannot repay your capital and accrued return, the investors may be able to force the sale of both properties. However the outcome is uncertain and there is a risk that you may not recover the full amount due. The bank loan is secured against the property with a first legal charge as well as a second legal charge against the neighbouring property so in the event of a forced sale over either property the bank will recover any amounts owed to it first.
Investment Liquidity Risk – You need to be prepared to hold this investment for the full term. We help you try to sell your investment if you want to exit early but this may be difficult and a sale is not guaranteed.
Construction Risk – Construction works to the property may be delayed by events outside the control of the developer such as contractor insolvency or mismanagement. The developer has allowed an eighteen month construction period which has been verified as an appropriate period by an external Quantity Surveyor. In the event of a delay, you will continue to accrue returns until the developer repays the loan in full. The target date for completion is February 2019 but the investment allows for this to extend until August 2019. The developer is obliged to repay all CapitalRise investors by this date at the latest.
UK Property Market and the value of your security – If the market for central London residential property deteriorates, it may not be possible to sell the property at the price currently projected and/or there could be delay in the sale. The property value would need to fall by 33% in order for your capital and accrued return to be at risk.
Compensation Scheme – The Financial Services Compensation Scheme does not cover poor investment performance. You cannot claim compensation if your investment does not perform as expected, unless it results from us or Gallium not discharging our obligations to you. The FSCS would cover amounts owed to our customers in the event of our insolvency, up to a maximum of £50,000 per customer.

Location

  • Strand Chambers lies opposite the Royal Courts of Justice just moments from the River Thames.
  • Covent Garden's bustling Piazza is 900m away offering a plethora of shops, restaurants, cafés and bars.
  • A short distance from a variety of entertainment venues; the world famous Royal Opera House; thirteen historic theatres, and an array of museums and galleries.
  • Situated only a few hundred metres from London's principal business district and two of London's most prestigious educational establishments, Kings College and The London School of Economics.
  • London's largest public square, Lincoln's Inn Fields, is 500m away offering historic gardens and three tennis courts.
Address
227-228 Strand, WC2R 1BE
City
London
Nearest stations

Temple (0.2 mi)

Chancery Lane (0.5 mi)

Blackfriars (0.5 mi)

Comparable Properties

In WC2

Sales values in £ per square foot

Data source: Savills Prime London Index

The Developer

Overview

  • The property is being developed by Seastar Developments Limited through its development company 227-228 Strand Limited.
  • Seastar was incorporated in 2010 and is a specialist in converting office buildings to luxury apartments.
  • The Developers previous project, 353 The Strand, an office conversion into 3 apartments and 1 penthouse, won the Evening Standard’s ‘2014: New Homes Award- Best Conversion’.

Contact



Peter Dykes

Piers Rooke

Directors

Deal Room

Documents

Valuation report

Bond T&C's & Trust Deed

FT Article

Access Deal Room

Capital at risk. Interest not guaranteed. See key risks.