HIGH WYCOMBE INVESTMENT OPPORTUNITY - 8.5% RETURN P.A.

Designer’s impression of a previous development undertaken by the developer
funds raised

Investment Highlights

Forecast annual return 8.5% to be paid at the end of the term
Forecast total return 13%
Total amount being raised £1.3 million
Amount being raised in this tranche £0.4 million
LTV at exit 69%
Estimated term 18 months
ISA Eligible 
Product Debt - Deep Discounted Bonds
Legal charge First Legal Charge and Personal Guarantee

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

Investment Summary

  • PROPERTY - A new 3-storey purpose-built residential building, consisting of seven two-bed apartments, and a one-bed, each benefitting from an allocated parking space. The property is located within a well-established residential development to the west of High Wycombe town centre. The apartments will benefit from open kitchens and living rooms that provide access to individual private balconies. The properties are being finished to a high specification to attract young London commuting professionals upon completion. 
  • YOUR INVESTMENT – Your investment will be used to provide the first of a number of phases of development finance that will be raised by CapitalRise investors over the next 12 months. This phase will be used to repay existing debt as well as funding current construction activities. 
  • STRUCTURE – 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 value of the property would have to be 31% less than the anticipated sale value before investor capital and interest becomes at risk. The security package includes a Personal Guarantee on the loan up to the value of 25% of the total loan value. Investors will be issued with Deep Discounted Bonds with the accrued return paid at the end of the term. Invest using the CapitalRise ISA for tax-free returns. Tax rules apply and may change. 
  • SALES PRICE - Strutt & Parker have provided an independent Red Book Valuation of £2.135 million upon completion of the development. 
  • EXIT PLAN - Construction activities are scheduled to complete part way through the term of the investment providing a suitable sales period towards the end of the term. Six of the eight apartments must be sold to allow the full amount of the loan and accrued return to be repaid. Given the ability to buy these properties on the Help-to-Buy scheme CapitalRise feel there is sufficient time to sell the properties. Should this not be the case the borrower may refinance onto a further Sales Period Loan.
  • LOCATION – The property is located in the High Wycombe town centre and is within walking distance to the railway station providing direct trains to central London in just 30 minutes and Oxford in 40 minutes. The property is located a few hundred metres from “The Rye”, a large attractive recreational area which includes woodland, with a lido; gym; sport pitches; cricket club; boating lake; and playgrounds. The property is also in walking distance from the local Eden shopping centre.
  • DEVELOPER – The borrower is an experienced developer with a successful track record of similar new build multi-unit projects in the area. They have recently completed a similar 14 unit development on time and within budget. This development has proved popular for local home owners with most units now sold after a short period of time on the market. Past performance of previous projects is not indicative of future results for this project.

Returns Calculator

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

Investment amount

Return accrues

You Invest

Mar 2019
Nov 2019
Aug 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 the borrower has secured planning permission for the development of a new 3-storey purpose built residential building.
  • The scheme comprises of seven two-bedroom apartments and a one-bed. The two bedroom apartments benefit from two bathrooms and a generous square footage ranging from 588 to 737 sqft.
  • 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.
  • The borrower is being provided £400k at the beginning of the loan term. A further £900k will be provided throughout 2019. These later tranches will be launched on the CapitalRise platform and will be available for CapitalRise members to invest.
  • The borrower is an experienced developer with a successful track record of similar new build multi-unit projects in the area. They have recently completed a similar 14 unit development just one mile away from this site.
  • Construction activities are scheduled to complete part way through the term of the investment providing a suitable sales period towards the end of the term. Each of the eight units will be sold on the open market.
  • The borrower has partnered with an experienced contractor whom they also worked with throughout the development of their most recent project within the same area.
  • The borrower anticipates selling through two agents, both firms local to the area. This successful approach was also taken for the sale of the units of the borrower's other most recent project. Should the borrower not be able to sell the properties within the term of the loan they may refinance CapitalRise with another loan at the point of completion of the works.
  • 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. A Personal Guarantee is also provided by the borrower up to the value of 25% of the total loan amount.

Financials

FUNDING STRUCTURE - AT INVESTMENT

Developer Equity £ 0.65m 100%
Value Current Value
% of Value
CapitalRise Investors £ 0.4m 61%
The investment provides the first of number of phases of development finance.

FUNDING STRUCTURE - AT EXIT

Developer Equity £ 2.13m 100%
Value Current Value
% of Value
CapitalRise Investors £ 1.47m 69%
The property's sale value would have to be more than 31% less than the anticipated market value for your invested capital or accrued returns to be at risk.

Investment Structure

  • A new subsidiary company of CapitalRise, CR High Wycombe Limited, has been incorporated to issue bonds to investors. CR High Wycombe Limited has already sourced some finance from pre-funding investors in order to facilitate the property transaction. The pre-funders are associated with us, CapitalRise Finance Limited. The CR investors’ funds will be used to refinance the pre-funders.
  • Your investment is ring-fenced because CR High Wycombe Limited will not carry out any other commercial activity. The directors of this company will (through CapitalRise) administer and enforce the terms of the bonds issued by CR High Wycombe Limited.
  • The investment is structured as deep discounted bonds. A deep-discounted bond (also zero coupon bond where no interest is paid or discount bond) are bonds bought at a price lower than their 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 High Wycombe 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 25% of the value of the loan.
  • CR High Wycombe 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 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 High Wycombe 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 25% of the value of the total loan amount.
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 successfully completed a number of similar projects. The most recent project formed a 14 unit residential building was completed on time and within budget alongside the same contractor that is developing this property. Should there be a delay past the estimated term your investment will continue to accrue returns for a further 12 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 12 months buffer in the event a potential sale takes longer than anticipated.
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.

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. The property value would need to fall by 31% or more in order for your capital and accrued return to be at risk.

Deal Room

Documents

Deal Summary

Investor Bond Deed

Security Trust Deed

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Capital at risk. No FSCS protection. See Key Risks.