Farrier's Way

Farrier's Way, Warwickshire
Farrier's Way, Warwickshire
Designer's Impression
funds raised

Investment Highlights

Forecast Annual Return 8.0% (paid at the end of the term)
Legal Charge First
LTV At Entry 58%
LTV At Exit (Month 12) 63%
Amount being raised £1,395,000
Estimated Term 12 months
ISA Eligible 
Product Debt

The expected total return is a forecast based on the estimated term and is not guaranteed. 

Investment Summary

  • Project – Farrier’s Way is a completed scheme of 9 new build homes completed by an award winning developer. Your investment will provide a sales period loan for the final 3 homes while they are on the market. The first 6 homes sold and settled 5 months post construction.
  • Location – Farrier’s Way is located in Lighthorne which is nestled between Royal Leamington Spa and Gaydon. These areas are known for their Tudor fronts, elegant regency architecture and Victorian townhouses. Farrier’s Way is easily commutable to London via Leamington Spa taking 1 hour and 15 minutes.
  • Structure – All investors will benefit from a first legal charge over the property and shares of the borrower.
  • Developer – The developer is a local expert specialising in high quality, sustainable homes. The team have over 15 years experience and have been awarded by a United Kingdom Property Award for their previous developments.
  • Sales Price – The developer has engaged Knight Frank who have provided a RedBook Valuation of £2.385 million. The final 3 houses have an average area of 2,031sqft (£398 psqft) and anticipated sales values between £625,000 and £950,000.
  • Your Investment – Your investment will be used to provide a sales period loan for the final 3 homes whilst they are on the market. The first six homes sold in under six months achieving sales prices 6%-18% above the original Redbook valuation with the largest home selling for £1.125m (£397 psqft).

Returns Calculator

Return - Forecast annual return of 8%

Investment amount

Return accrues

You Invest

Mar 2018
Sep 2018
Mar 2019

Total Return

On original Investment of

Notes: 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, Housestyle Countrywide Limited, is an award-winning developer in Warwickshire.
  • The team have over 15 years experience and are experts in identifying and executing high-quality schemes
  • The developer purchased the site conditional upon achieving planning permission in 2016.  After achieving permission they have completed construction of the multi-unit scheme, Farrier's Way, and have already completed sales on six of the nine homes.
  • Farrier's way benefits from charming countryside views and purchasers have the option to purchase additional land to increase their garden. The Redbook Valuation confirms that Farrier's Way has been completed to a high specification that is superior to the competing schemes in the area. This has lead to the existing sales achieving higher sales values than forecast.
  • Your investment will refinance the existing debt on the remaining three homes as well as provide an equity release to the developer for their other projects.
  • Your investment will be secured by a first ranking legal charge over the three homes and shares of the developer. Your capital and accrued returns will be repaid from the sales proceeds of the first two homes. 

Financials

FUNDING STRUCTURE- AT INVESTMENT

Developer Equity £ 2.385m 100%
Value Current Value
% of Value
CapitalRise Investors £ 1.395m 58%
Investors will be repaid first, before the developer.

FUNDING STRUCTURE-AT EXIT

Developer Equity £ 2.385m 100%
Value Current Value
% of Value
CapitalRise Investors £ 1.511m 63%
The final sales value would need to fall by more than 37% in order for your capital and accrued returns to be at risk.

Investment Structure

  • A new subsidiary company of CapitalRise, CR Lighthorne PLC, has been incorporated to issue bonds to investors. CR Lighthorne PLC will use the proceeds of these bonds from investors to provide funds to the developer that will refinance the existing debt and provide an equity release for the developer's other projects 
  • Your investment is ring-fenced because CR Lighthorne 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 Lighthorne 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 8.0% per annum, compounded annually.
  • CR Lighthorne PLC is the beneficiary of a first legal charge. In any forced sale of the property, investors will recover their capital and accrued interest first, before the developer 
  • CR Lighthorne 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 CapitalRise 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 How this applies to you
Capital and Income Risk – Your capital is at risk and the income is not guaranteed.

CR Lighthorne PLC has the benefit of a first legal charge against the property. This means in the event that the developer cannot repay your capital and accrued return CapitalRise, on behalf of investors,  will be able to force the sale of the property and will recover any amounts due first. However, the outcome is uncertain and there is a risk that the full amount due may not be recovered.

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.
Sales Rates Risk – Sales rates may be slower than forecast and/or the properties may sell for less.

Your investment provides for a 12 month sales period. Farrier's Way was completed in Q4 2017 and within 5 months 66% of the homes sold and settled. 

The homes values would need to drop by at least 37% in order for your capital and accrued return to be at risk. 

The first six homes that have sold in Farrier's Way achieved on average a final sales price 10% above the Redbook Valuation 

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.

Contingency - If during the due diligence period the borrower does not meet our high underwriting standards the investment opportunity will not progress  

The Issuer has not committed to issuing the Bonds and will not do so unless and until CapitalRise completes due diligence on the underlying transaction to its satisfaction. No interest will be paid on your subscription unless and until it is invested into Bonds. If the Bond issuance does not proceed, we will return your funds to you.

Deal Room

Documents

Valuation

Deal Summary

Bond Terms and Conditions

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