DEVONPORT ROAD, SHEPHERD'S BUSH PHASE A - 8.5% RETURN P.A.

DESIGNER'S IMPRESSION OF THE PROPERTY ONCE COMPLETE
funds raised
Only CapitalRise members can invest

Investment Highlights

Product Debt - Deep Discounted Bonds
Forecast annual return 8.5% p.a. paid at the end of the term
Forecast total return Up to 10% at 14 months
Total amount being raised £1.09 million
Amount being raised in this phase £0.72 million
LTV at exit 62.6%
Estimated end date September to November 2020 (12-14 months)
IFISA Eligible 
Legal charge First Legal Charge and Personal Guarantee provided by the developer

Investment Summary

  • OVERVIEW – This investment opportunity gives CapitalRise members access to fund the first phase of a loan for the redevelopment of 3 apartments in Shepherd's Bush.
  • PROPERTY – The property is located on a quiet residential street, just a short walk from Shepherd's Bush Green and the shops and cafes of Goldhawk Road. The 3 flats occupy a 4 floor property and are in need of modernisation. 
  • PLAN – The developer is using this first phase of finance to acquire the property. The total expected investment term is 12-14 months, consisting of a 6 month build period and a 6-8 month refinance and contingency period. 
  • EXIT PLAN – Construction of the property is scheduled to complete part way through the term providing a suitable period for the borrower to refinance their debt with a buy-to-let mortgage. This property is a long-term investment for the borrower who plans to rent the flats upon completion.
  • LOCATION – Located just between Shepherd’s Bush and Hammersmith, Devonport Road is within walking distance of 6 underground stations. Also within walking distance are multiple bars and restaurants, Westfield shopping centre, the River Thames and numerous parks. Great transport links and local amenities make this area especially popular with young professionals looking to rent.
  • YOUR INVESTMENT – Investors will benefit from a first legal charge over the property, meaning that in the event of a forced sale, CapitalRise investors will recover their investment capital 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 will have to be less than 62.6% of the anticipated market value before invested capital and accrued return are put at risk.
  • THE DEVELOPER – Collectively, the development team have a large amount of experience in redeveloping similar properties and have worked together on previous projects. The primary contact has previously borrowed from a CapitalRise associated entity and the loan was repaid in full and on schedule. 
  • VALUATION – Strutt & Parker have provided an independent Red Book Valuation of £1.9 million upon completion of the development.

Returns Calculator

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

Investment amount

Return accrues

You Invest

Sep 2019
Mar 2020
Sep 2020

Total Return

On original Investment of

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 is using the funds from this phase to acquire the site. 
  • As with all CapitalRise investments, the borrower has already been provided this phase of the loan through our pre-funding mechanism, before investor funds are received. This ensured the borrower received funds when required, which coincided with the completion of the purchase.
  • The flats on the lower ground and ground floors will be rearranged to provide 2 bedrooms each and both will have access to a garden at the rear of the property. 
  • The larger flat on the first and second floor will offer 4 bedrooms, balcony and roof terrace and a large open plan kitchen and living room.
  • The refurbishment is expected to complete within the first 6 months of the investment leaving a suitable 6 to 8 month sales period.
  • The developer will be provided with £0.7 million in this phase. This is to cover some of the costs of acquiring the site.
  • They will be provided with up to a further £0.35 million over the coming months to undertake the development works. All future construction phases will cover costs already incurred by the borrower and are independently verified by a project monitor appointed by CapitalRise.
  • Strutt & Parker have provided an independent ‘red book’ valuation of £1.9 million for the completed property.
  • The developer comprises of 4 individuals who have been working together on recent projects. The primary borrower has recently completed 2 significant schemes himself and his experience is supplemented by the other stakeholders' 70+ years in construction and surveying.

Location

  • The property is located on a popular residential street in West London. The immediate area comprises mostly of traditional terraced houses, many of which have been converted to provide self-contained flats- similar to this property. This is particularly appealing to younger professionals.
  • Located nearby is Ravenscourt Park to the West, the Westfield shopping centre to the East as well as many popular restaurants, bars and entertainment venues.
  • Within less than a mile from the property are numerous train and underground stations providing quick access to the Circle, Hammersmith & City, Piccadilly and Central lines.
Nearest stations

Goldhawk Road (0.3 mi)

Shepherd's Bush (0.7 mi)

Ravenscourt Park (0.9 mi)

INVESTMENT WEBINAR

Financials

FUNDING STRUCTURE - AT PHASE A

Developer Equity £ 1.03m 100%
Value
% of Value
CapitalRise Bondholders £ 0.72m 70.4%
When investing you're providing a loan to a developer. In return you are issued bonds by a dedicated subsidiary property company (CR Devonport Road Ltd). The company is the beneficiary of a First Legal Charge over the property.

FUNDING STRUCTURE - AT EXIT (MONTH 14)

Developer Equity £ 1.9m 100%
Value
% of Value
CapitalRise Bondholders £ 1.19m 62.6%
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 62.6% of the anticipated market value before your invested capital and accrued return are at risk.

Investment Structure

  • A new subsidiary company of CapitalRise, CR Devonport Road Limited, has been incorporated to issue bonds to investors. CR Devonport Road 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 CapitalRise investors’ funds will be used to refinance the pre-funders.
  • Your investment is ring-fenced from other CapitalRise investments because CR Devonport Road 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 Devonport Road 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.
  • CR Devonport Road 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 developer has also provided a Personal Guarantee up to 25% of the total amount of the loan.
  • CR Devonport Road 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.
  • To meet investor demand CapitalRise may allow investments totalling a sum greater than the present amount being raised in this phase. The oversubscribed amount will be deducted from future phases. Any potential oversubscription amount is accounted for in the stated loan to value ratios quoted.

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 – The borrower may not be able to repay the loan meaning your capital is at risk and the income is not guaranteed. CR Devonport Road Limited has the benefit of a first legal charge against the property which means that in the event that the borrower 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 25% of the loan.
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 development team has a proven track record for the redevelopment of similar properties together and individually. Should there be a delay past the estimated term your investment will continue to accrue returns up until a hard stop date in August 2021.
Refinance Risk – The borrower will refinance their debt at the end of the term. They may not be able to do so. The borrower plans to refinance their debt with a Buy-To-Let mortgage. CapitalRise has discussed this refinance with several mortgage brokers who are confident the refinance would be successful. Your investment has an underlying redemption period of 24 months from August 2019, which includes a 10-month buffer in the event a potential sales takes longer than anticipated.
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 or refinance the property at the price currently projected and/or there could be delay in the sale. If a sale is achieved the value would need to be less than 62.2% of the anticipated market value before your invested capital and accrued returns are at risk.

Deal Room

Documents

INVESTOR BOND DEED

SECURITY TRUST DEED

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