SUNNYSIDE, WIMBLEDON PHASE A - 8.5% RETURN P.A.

Designer's impression of the property

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 11.5% at 16 months
Total amount being raised £1.7 million
Amount being raised in this phase £0.39 million
LTV at exit 61.1%
Estimated end date October to December 2020 (14-16 months)
IFISA Eligible 
Legal charge First Legal Charge and Personal Guarantee provided by the developer

 

CapitalRise, along with its funding partners, has already underwritten this phase of the loan. This ensures the developer receives the loan when required ahead of collection of investor funds.

Investment Summary

  • OVERVIEW – This investment opportunity gives CapitalRise members access to fund the first phase of a development loan for a new three bedroom family home in the heart of Wimbledon Village. The estimated investment term is 14-16 months and further investment phases will be launched to members over the coming months.
  • PROPERTY – A new four-storey family home with three en-suite bedrooms, ample living space across the lower two floors and access to private outdoor space.
  • DEVELOPER – The development team has over 20 years collective experience of property development across London and the Home Counties, having collectively delivered over 60 units successfully.
  • PLAN – The developer purchased the site in 2018 and development of the new property has already commenced. Development is scheduled to complete in March 2020, leaving a suitable sales period of 6-8 months within the investment term.
  • YOUR INVESTMENT – Investors will benefit from a first legal charge over the property, this means that in the event of a forced sale, CapitalRise investor capital would be recovered first. The property value would have to be 39% less than anticipated upon completion of the development for investor capital and forecast return to be put at risk. In the unlikely event the property could not be sold, your invested capital and accrued returns would be at risk.
  • SALES PRICE – Strutt & Parker have provided an independent 'red book' Valuation of £2.95 million upon completion of the development.
  • EXIT PLAN – Construction is scheduled to complete part way through the term, providing a sufficient sales period for the developer. Should a sale  not be achieved within this period, the developer has suitable time to refinance their CapitalRise debt. 

Returns Calculator

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

Investment amount

Return accrues

You Invest

Aug 2019
Mar 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

  • The developer is using the funds to develop a property on land they acquired in 2018.
  • The property is located within Wimbledon Village just a few minutes walk away from Wimbledon High Street with its independent bars, restaurants and shops. 
  • As with all CapitalRise investments the developer has already been provided this phase of the loan before all investor funds are received through our pre-funding mechanism. This ensures the developer was able to receive funds when required.
  • The property being developed is a four-storey home with three en-suite bedrooms, a media room, study and space for off-street parking.
  • The developer is already part way through the development. During our latest site visit in mid-July 2019 the foundations had been completed with brick work and the substructure already in place.
  • The development is expected to complete within the first eight months of the investment leaving a suitable six to eight-month sales period.
  • The developer will be provided with £0.39 million in this phase. This is to cover recently incurred costs as well as provide an equity release to the developer. The developer is using the equity release to secure the purchase of the adjacent property to the site for another development project they plan to undertake.
  • The developer will be provided with further funding over the coming months. This will be available to CapitalRise investors. All construction phases cover costs already incurred and are independently verified by a project monitor appointed by CapitalRise.
  • Strutt & Parker have provided an independent ‘red book’ valuation of £2.95 million for the completed property.

Financials

FUNDING STRUCTURE- AT INVESTMENT (PHASE A)

Developer Equity £ 1.08m 100%
Value
% of Value
CapitalRise Bondholders £ 0.39m 36.5%
When investing you're providing a loan to a developer. In return you are issued bonds by a dedicated subsidiary property company (CR Sunnyside Ltd). The company is the beneficiary of a First Legal Charge over the property.

FUNDING STRUCTURE- AT EXIT (MONTH 16)

Developer Equity £ 2.95m 100%
Value
% of Value
CapitalRise Bondholders £ 1.8m 61.1%
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 61% of the anticipated market value before your invested capital and accrued return are at risk.

Investment Structure

  • A new subsidiary company of CapitalRise, CR Sunnyside Limited, has been incorporated to issue bonds to investors. CR Sunnyside 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 Sunnyside 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 Sunnyside 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 Sunnyside 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 Sunnyside 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 developer may not be able to repay the loan meaning your capital is at risk and the income is not guaranteed. CR Sunnyside Limited has the benefit of a first legal charge against the property. In the event that the developer cannot repay your capital and accrued return, CapitalRise may be able to force the sale of the property on behalf of the investors. However, the outcome is uncertain and there is a risk that you may not recover the full amount due. The developer has also provided a Personal Guarantee up to 25% of the total value 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 developer has a proven track record for the development of high specification homes and apartments in the local area and further afield. Should there be a delay past the end of the estimated term range your investment will continue to accrue returns up until a hard stop date of 30 September 2021.
Sales Rate Risk – Sales rates may be slower than forecast and/or the properties may sell for less.

Your investment has an underlying redemption period of 26 months from August 2019, which includes a 9 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 the property at the price currently projected and/or there could be delay in the sale. The property value would need to fall by 39% or more in order for your capital and accrued return to be at risk.

Deal Room

Documents

Investor Bond Deed

Security Trust Deed

Access Deal Room

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