KNIGHTSBRIDGE INVESTMENT OPPORTUNITY - 9.5% RETURN P.A.

Knightsbridge - outside view
funds raised
Only CapitalRise members can invest

Investment Highlights

Forecast Annual Return 9.5%
LTV at Entry  61.8%* 
LTV at Exit  62.3%* 
Total amount being raised £1.5 million
Estimated Term 15 months
ISA Eligible 
Product Debt
Legal Charge Second Legal Charge

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

Please note that following the receipt of an updated valuation the LTV and property value have changed from what was first posted here.

Investment Summary

  • Property – Knighton Place is a completed scheme of five townhouses and four apartments where 6 out of the 9 assets have already been sold. CapitalRise previously funded the development of the project and was repaid on time earlier this year. Now your investment will provide a sales period loan for the final 3 homes whilst they are on the market.
  • Location – Knighton Place is located on Yeoman's Row in Knightsbridge and connects Brompton Road to Walton Street and lies some 300m west of Harrods. Hyde Park and the amenities of Knightsbridge, including a variety of boutique shops on Beauchamp Place, are nearby.
  • Your Investment– Your investment will be used to provide a sales period loan to the developer in order to fund the holding costs of the properties through the marketing and sales phase.
  • Developer YRPL is a joint venture between Finchatton and another developer, both specialists in the development of luxury residential property in prime central London.
  • Structure – Investors will benefit from a second legal charge on the property. This sits behind the developer’s senior debt. In the event of a forced sale of the property the holder of the first legal charge would recover its investment first.
  • Sales Price – The three remaining houses have been valued at £47.75 million. Prior to investing you will be provided with the final valuation.

The Plan

  • The project consists of nine properties including five townhouses and four apartments which were completed in the Autumn of 2017.
  • To date six out of the nine assets have already been sold. The remaining properties are three of the townhouses all comprising of four bedrooms, private cinema rooms and underground garages.
  • Your investment will provide a sales period loan for these remaining properties whilst they are on the market. 
  • Knight Frank and Savills have both been engaged as the sales agents and are actively marketing the development scheme.
  • The property is located on a quiet residential street just a stone's throw away from Knightsbridge and the local attractions include Hyde Park, Harrods and Sloane Square.
  • Local transport links can be found nearby at Knightsbridge (Piccadilly Line) as well as South Kensington and Sloane Square (both on the Circle and District lines).
  • Your investment will be secured by a second legal charge on the property.

Returns Calculator

Return- Forecast annual return of 9.5%

Investment amount

Return accrues

You Invest

Sep 2018
Apr 2019
Dec 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.

Financials

FUNDING STRUCTURE - AT INVESTMENT

Developer Equity £ 47.5m 100%
Value Current Value
% of Value
CapitalRise Investors £ 29.5m 61.8%
Bank Loan £ 28m 59%
You will be repaid second after the capital provided by the bank who are the beneficiary of a first legal charge over the property.

FUNDING STRUCTURE - AT EXIT

Developer Equity £ 47.75m 100%
Value Current Value
% of Value
CapitalRise Investors £ 29.75m 62.3%
Bank Loan £ 28m 59%
The combined sales value of the properties would have to be 38% less than the total market value for your invested capital or accrued returns to be at risk.

Investment Structure

  • A new subsidiary company of CapitalRise, CR 38YR Limited, has been incorporated to issue bonds to investors. CR 38YR Limited will use the proceeds of these bonds from investors to provide funds to the developer to cover the costs of marketing and servicing the properties whilst they are on the market.
  • Your investment is ring-fenced because CR 38YR 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 38YR Limited.
  • 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 9.5% per annum, compounded annually.
  • CR 38YR Limited is the beneficiary of a second legal charge. The interest payable to the developer's bank has already been settled and will not need to be serviced through the sale of the remaining properties.
  • CR 38YR 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 38YR Limited has the benefit of a second 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 bank loan is secured against the property with a first legal charge so in any forced sale of the property, the bank will recover any amounts due to it first.
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.
Sales Rates Risk – Sales rates may be slower than forecast and/or the properties may sell for less. Your investment has an underlying redemption of 27 months, including a 12 month buffer in the event the sales period 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 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 38% in order for your capital and accrued return to be at risk.

The Developer

Overview

  • YRPL, the developer, is a partnership between Finchatton and another developer, in which Finchatton acts as development co-ordinator.
  • Finchatton is a leading luxury residential specialist.
  • Established in 2001, Finchatton has delivered over 120 projects in excess of £1 billion Gross Development Value.
  • Finchatton has a dedicated and creative team of 40 professionals operating out of Chelsea, London. Two shareholders and directors of CapitalRise are also shareholders in Finchatton. This could result in a potential conflict between the interests of our associates and investors’ interests. For further information on how we manage and monitor these conflicts please refer to s.9.2 of our Terms and Conditions. A copy of our Conflicts of Interest Policy is also available upon request.

Contact



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Deal Room

Documents

Deal Summary

Sales Brochure

Investor Bond Deed

Security Trust Deed

Access Deal Room

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