BEACONSFIELD PHASE C - 8.5% RETURN P.A.

Designer's impression of previous developments undertaken by the developer
funds raised

Investment Highlights

Forecast annual return 8.5% p.a. paid at the end of the term
Total amount being raised £2.1 million
Amount being raised in this phase £0.11 million (additional allocation added 25/11)
LTV at exit 66%
Estimated end date December 2020
IFISA Eligible 
Product Debt - Deep Discounted Bonds
Legal charge First Legal Charge and Personal Guarantee provided by the borrower

 

Date of funding

The borrower will receive the funds for this phase on Friday 29th November. If you invest before this date your funds will be processed on that day. This is when your investment will start accruing returns.

Investment Summary

  • OVERVIEW – This investment opportunity gives CapitalRise members access to the third phase of a development loan being used to create a new high specification home in the Buckinghamshire countryside.
  • PROPERTY – A new family dwelling located in the quaint market town of Beaconsfield which lies less than 25 miles west of central London.
  • DEVELOPER – The borrower has extensive experience with similar properties. Their impressive portfolio of sold properties boasts a number of grand family homes, like this property, as well as over 50 central London luxury residences. 
  • PLAN – The borrower purchased the site towards the end of 2017 and has subsequently secured planning permission to construct a new high specification family home consisting of 5 ensuite bedrooms, 3 reception rooms and a large open plan kitchen and breakfast room. 
  • EXIT PLAN – Construction of the property is scheduled to complete part way through the term providing a suitable sales period towards the end. Should a buyer not be found the borrower may refinance onto a Sales Period Loan.
  • YOUR INVESTMENT – Investors will benefit from a first legal charge on the property. In the event of a forced sale of the property, CapitalRise investors would recover their investment first. If the developer is unable to repay the loan CapitalRise will seek to force the sale of the property on behalf of investors. If a sale is achieved the value would need to be less than 66% of the anticipated market value before your invested capital and accrued return are at risk. The borrower has also provided a Personal Guarantee up to £400,000 during the construction phase of the project with it then reducing to £250,000 during the sales period.
  • SALES PRICE – Savills have provided an independent Red Book Valuation of £3.85m upon completion of the development.

PROJECT PROGRESS

Each month an independent Project monitor that is appointed by CapitalRise visits the site. They do this to confirm what work has been completed to date and verify the amount of each of the phases.

Since the last phase of the loan the following activities have taken place on site.

  • Superstructure brick and blockwork up to the roof plate level almost complete
  • Internal blockwork complete to ground floor and substantially complete to first floor

The independent Project Monitor has confirmed the project is running slightly behind schedule but remains within the original contingency period of the CapitalRise loan. The borrower intends to recover this time during the internal fitout. The delay was caused by a need for deeper foundations being required and incorrectly sized lintels being ordered.

 

Returns Calculator

Return- Forecast return of 8.5% p.a. paid at the end of the term

Investment amount

Return accrues

You Invest

Nov 2019
May 2020
Dec 2020

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

  • Since purchasing the site in late 2017 the borrower has subsequently secured planning permission for the development of a new detached family home.
  • The 6,200 sqft private gated house will consist of 5 bedrooms that all benefit from ensuite bathrooms and 3 will incorporate walk-in wardrobes. There are 3 reception rooms, an open plan kitchen as well as a detached double garage.
  • The borrower has a strong track record for the development of high specification homes and apartments.
  • The borrower is using part of the loan to refinance an existing facility as well as to cover the costs required to undertake the construction.
  • To date, including this phase, the borrower has been provided £1.37 million from the total facility of £2.24 million. 
  • The borrower is a highly experienced developer who has excellent knowledge of the area. They have completed a number of similar developments nearby and also have experience developing and selling central London luxury residences.
  • Construction of the property is scheduled to complete part way through the term of the investment providing a suitable sales period towards the end of the term. The borrower plans to sell the property on the open market. Should the borrower be unable to sell the property within this period they will have the option to refinance onto a sales period loan.
  • Investors will benefit from a first legal charge on the property. In the event of a forced sale of the property, CapitalRise investors would recover their investment first. The borrower has also provided a Personal Guarantee up to £400,000 during the construction phase of the project with it then reducing to £250,000 during the sales period.

Financials

FUNDING STRUCTURE - AT THE BEGINNING OF THE LOAN

Developer Equity £ 1.8m 100%
Value Original Value
% of Value
CapitalRise Bondholders £ 0.98m 54%
When investing you're providing a loan to a borrower. In return you are issued bonds by a dedicated subsidiary property company (CR Beaconsfield Ltd). The company is the beneficiary of a First Legal Charge over the property.

FUNDING STRUCTURE- AT EXIT

Developer Equity £ 3.85m 100%
Value Anticipated Value
% of Value
CapitalRise Bondholders £ 2.55m 66%
If the developer is unable to repay the loan CapitalRise will seek to force the sale of the property on behalf of investors. If a sale is achieved the value would need to be less than 66% of the anticipated market value before your invested capital and accrued return are at risk.

Investment Structure

  • A new subsidiary company of CapitalRise, CR Beaconsfield Limited, has been incorporated to issue bonds to investors. CR Beaconsfield Limited has already sourced some finance from pre-funding investors in order to facilitate the property transaction. We, CapitalRise Finance Limited, are one of the pre-funders and one of the other pre-funders is associated with us. The CR investors’ funds will be used to refinance the pre-funders.
  • Your investment is ring-fenced because CR Beaconsfield Limited 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 Beaconsfield Limited.
  • The investment is structured as deep discounted bonds. Deep-discounted bonds (also zero coupon bond where no interest is paid or discount bond) are bonds bought at a price lower than its face value, with the face value repaid at the time of maturity. For more information see the FAQ section. 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 8.5% per annum, compounded annually.
  • CR Beaconsfield Limited is the beneficiary of a first legal charge. In any forced sale of the property, investors will recover their capital and accrued return, before the developer.
  • The borrower has also provided a Personal Guarantee up to £400,000 during the construction phase of the project with it then reducing to £250,000 during the sales period.
  • CR Beaconsfield Limited 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 CapitalRise IFISA. 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 How this applies to you
Capital and Income Risk – Your capital is at risk and the income is not guaranteed. CR Beaconsfield Limited has the benefit of a first legal charge against the property which means that in the event that the developer cannot repay your capital and accrued return, the investors may be able to force the sale of the property. However, the outcome is uncertain and there is a risk that you may not recover the full amount due. The borrower has also provided a Personal Guarantee up to £400,000 during the construction phase of the project with it then reducing to £250,000 during the sales period.
Investment Liquidity Risk – You need to be prepared to hold this investment for the full term. We do operate the CapitalRise Bulletin Board where you can post your investment for sale at its current value. This does not guarantee a sale. CapitalRise will charge a fee of 1.5% of the sale amount if a buyer is found. You can post your investment for sale from within your CapitalRise account.
Construction Risk- As with any developments project, there might be a delay in the construction phase The developer has a proven track record for the development of high specification homes and apartments. Most notably they have completed a number of homes similar to this project. Should there be a delay past the estimated term your investment will continue to accrue returns for a further 9 months up until a hard stop date.
Sales Rates Risk – Sales rates may be slower than forecast and/or the properties may sell for less. One potential exit for your investment is a sale of the property after construction. Your investment has an underlying redemption period of 30 months, which includes a 9 month buffer in the event a potential sale takes longer than anticipated. This period commenced at the beginning of the loan (at Phase A) in March 2019.
Compensation Scheme – The Financial Services Compensation Scheme does not cover poor investment performance.

You cannot claim FSCS compensation if your investment does not perform as expected.

Market Risk - If the market for residential property in the local area deteriorates, it may not be possible to sell the property at the price currently projected and/or there could be delay in the sale.

If the developer is unable to repay the loan CapitalRise will seek to force the sale of the property on behalf of investors. If a sale is achieved the value would need to be less than 66% of the anticipated market value before your invested capital and accrued return are at risk.

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SECURITY TRUST DEED

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Capital at risk. No FSCS protection. See key risks.