Developers’ Loan Notes – probably as good as any property based investment
Here at Investabroad Properties, we pride ourselves on having as good a selection of property related investment opportunities as you will find anywhere.
Whether your preference is for conventional Buy to Let Apartments or Student Accommodation, Care Home Suites or Hotel Rooms, whether it’s solely in the UK or in Portugal, Spain, France, Cape Verde or one of several other countries, we are confident of having something of interest to you – and some of them do not appear on this website due to marketing restrictions.
In this article, we will concentrate on a type of investment that you may not have come across before and which we believe to be as good as any other property based investment either in the UK or abroad, and probably better than most.
Currently, we have two Developer’s Loan Notes available, one with a minimum investment of only £5000, the other starting at £25,000. Both are intended for high net worth and sophisticated investors. Both are offered by major developers with a proven track record and an exceptionally strong asset base.
The £5000 minimum Loan Note has a life of two years. The investor has the option of receiving interest at 10% a year after each of four periods of six months or waiting until the end of two years and then receiving interest at 12% a year.
The interests of all investors, or loan note holders, are protected by the appointed security trustee, which holds a first legal charge over the land site or building being purchased by the developer. In addition, the security trustee holds a mortgage debenture over all the assets of the developer.
This means that, in the highly unlikely event of the developer being unable to pay the agreed interest to any of the loan note holders, the security trustee would immediately liquidate sufficient of the developer’s assets and use the capital realised to pay all investors in full.
The £25,000 minimum Loan Note has a life of from one to seven years, the choice being left to the investor. Selecting just one year results in the addition of 12% to the capital invested. Investors can choose to opt out after any year subject to providing the required notice of thirty days.
At the end of the second and every successive year, a bonus is added to the base figure of 12%. This starts at 3%, meaning that a loan note holder opting out after two years will receive 15% for the second year. The bonus increases by 1% after each year until the end of year 5, when the total return will be 18%. It then increases by 2% after each of years 6 and 7, so that an investor remaining for the full seven year term will be rewarded with interest at 22% for the final year of the term.
The interests of the loan note holders are protected in exactly the same way as described above, a major financial institution having a floating debenture over all the developer’s assets which, in this case, had a balance sheet value of over £41 million as at a year ago.
For full details of either Loan Note, please contact Investabroad Properties’ Managing Director, Peter Veitch FRICS FNAEA on 0121 616 5108 or email@example.com.