18 Grosvenor Square

Grosvenor Square, London

Investment Summary

  • Developer – PSJL is a specialist residential development firm run by an experienced and seasoned team of property professionals. At present, they are the consortium developing an £800m luxury residential development also in Mayfair.
  • Location - Grosvenor Square, a 6 acre garden square in Mayfair regarded as London's most famous square.
  • Property – The property is located on the 3rd floor and faces due south with 5 windows overlooking the grand gardens of Grosvenor Square. The property benefits from high ceilings and has been renovated by the developer to a high standard.
  • Pricing - The property has a forecast sales price of £18,800,000 from Savills which is in line with other comparable sales evidence in the area.
  • Investment – Receives an interest return of 10% per year, compounding annually, paid at the end of the investment term.
  • Protection – The property would have to fall in value by 37% or more for any of your invested capital or interest to be at risk.
  • Investment structure – The property is owned by Grosvenor Square Limited, a subsidiary of PSJL.

Investment Highlights

Amount Being Raised £ 1,000,000
Mininum investment £ 1,000
Annual Interest Return 10.0% (paid at the end of the loan term)
Estimated Term 19 months
Expected total return 17%
Product Type Debt

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

Returns Calculator

Return - Annual interest rate of 10 % (paid at the end of the loan term)

Investment amount

Interest accrues

You Invest

Aug 2016
Aug 2017
May 2018

Total Return

On original Investment of

Note: These returns are an indication only and are not guaranteed. This assumes your investment starts in Aug 16 and the investment ends in May 2018 which is an estimate from the developer.

The Plan

  • Developer acquired the property in August 2013 and has carried out a complete refurbishment to create a 3 bedroom lateral flat of approximately 3,500 sqft.
  • The developer is now going to refurbish and upgrade the common parts of the building and the external façade which is expected to further increase the saleability of the apartment.
  • The developer is using the flat as a show flat for another development and will keep the property until December 2017 when the developer plans to sell it.
  • Investors therefore benefit from a project with less than usual construction or development risk because the interior of the flat is already completed.
  • Your investment will be used to finance the final stage of this project.
  • On the sale of the property your capital and interest will be repaid.

Financials

PROPERTY FUNDING STRUCTURE
- AT INVESTMENT

Value
% of Value
You will be repaid 2nd. After the bank but before the developer.

PROPERTY FUNDING STRUCTURE
- AT EXIT

Value
% of Value
The post development property sales value would have to be more than 37% less than the anticipated sale value for your invested capital or accrued interest to be at risk. The developer would have to absorb up to £6.9m of loss before you would be impacted.
You will be repaid 2nd. After the bank but before the developer.

Investment Structure

  • The property is owned by Grosvenor Square Limited, a subsidiary of PSJL.
  • Investors will acquire bonds issued by 18 Grosvenor Square Limited, a new company that has been set up to make unsecured loans to PSJL to finance the final stage of the project.
  • Your investment is ring-fenced because 18 Grosvenor Square Limited will not carry on any other commercial activity. The directors of this company will (through CapitalRise) act in your interests in administering and enforcing the terms of the loan to PSJL.
  • Like all companies who pay interest to individuals, 18 Grosvenor Square Ltd is required to retain tax at the UK basic rate - currently 20% - on all interest payments made, and pay it over to HMRC on the investor’s behalf. A tax certificate will be issued to each investor annually after 5th April.

Risks

As with all investments you should carefully consider the key risks involved which include:

RisksMitigation
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.
Capital & income risk – Your capital is at risk and the income is not guaranteed.PSJL is contractually obliged to repay the loans it has received from 18 Grosvenor Square Limited, together with any interest accrued thereon.
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 developer has a sufficient profit margin in the deal to cover 2.3yrs worth of bank interest if it has to hold the property for longer than anticipated.
Security risk – the loan from 18 Grosvenor Square Limited to PSJL is unsecured. 18 Grosvenor Square Limited cannot prevent PSJL from incurring further secured liabilities that may reduce its ability to settle its liabilities in full.There is an existing Senior Debt facility secured by a first legal charge on the property. PSJL has advised CapitalRise that the senior lender will not allow any further lending secured on the property.
Development risk – the uplift in value between August 2016 and May 2018 is predicated on the common parts works and the development next door completing. If these works are not completed on time, the value of the flat may not increase.Even if the value did not increase and remained at £16.5m, it would be the equity that would suffer. The Senior Debt and CapitalRise Investors (including their accrued return) are fully repaid at a value of £11.9m
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.

Location

  • Grosvenor Square is known as one of Mayfair’s finest address.
  • An impeccably-designed 3 bedroom apartment occupying the entire third floor of 18 Grosvenor Square.
  • With views over the Square, the property features a double reception room with marble fireplaces and a media room.
  • Master en-suite bedroom includes a walk-in dressing room and study. Two further en-suite guest bedrooms and a guest cloakroom.
  • The building is portered and provides direct access to a service lift.
  • Property also features an array of top specification technology such as a Control4 home automation system which controls lighting, heating/cooling and the AV system, and an intruder alarm system.
  • Walking distance to world-famous restaurants and boutiques.
Address
18 Grosvenor Square, W1K 6LE
City
London
NEAREST STATIONS

Bond Street (0.3 mi)

Marble Arch (0.4 mi)

Green Park (0.7 mi)

Comparable Properties in Grosvenor Square

Sales values in £ per square foot

Data source: Savills Valuation Report

The Developer

Overview

  • PSJL’s management team are very experienced residential developers with a strong track record.
  • The management behind the development are currently in the process of developing an £800m scheme also in Mayfair as well as other large scale projects globally.
  • Specialists in development finance and project management.
  • The team have carried out developments all over the world including New York, London and the Middle East.
  • PSJL appointed Finchatton as the Interior Designer for the apartment.
  • Some shareholders in the developer PSJL are also shareholders in CapitalRise.

Contact



Chris Marshall

Director

DEAL ROOM

Documents

Valution report

Budget

Valuation opinion

Estate Agent's view

BOND T's & C's

Access Deal Room

Capital at risk. Interest not guaranteed. ISA rules apply. See key risks.