Partner Article

Development in York Pays Investors Returns of 22.5%

A residential development in York, fully funded by P2P property lending specialist CapitalStackers, has been completed ahead of schedule. All 24 apartments at Foss Place, Foss Island Road in York have been sold and CapitalStackers’ investors have received returns of up to 22.5% per annum within just 8 months.

CapitalStackers raised a £2.25m loan for developer Norstar Limited, in order to fund the purchase and development of Foss Place. The development was a conversion of disused offices into 6 studio and 18 one-bed apartments, with a predicted gross development value of £3.2 million and peak loan to value ratio of 76% including interest. Upon completion the development sold out for £3.4m with a loan to value ratio of 71%. The apartments were priced between £99,000 and £120,000.

Steve Robson of CapitalStackers comments, “We are delighted to say that our investors have received returns of between 8.5% and 22.5% in just eight months, two months ahead of schedule. We provided three layers of finance to Norstar: Layer 1 being £1.75m of senior debt; Layer 2 provided £350,000; and Layer 3 £150,000, at returns of 8.5%, 15% and 22.5% per annum respectively.

“The £2.25 million was raised through 16 separate investors who invested between £5,000 and £1.73 million. CapitalStackers’ investors not only have the choice of the development project they help fund, but also the risk level and associated return. We make the whole process fully transparent and the majority of the Foss investors have re-invested into another CapitalStackers funded scheme, a residential conversion in the centre of Harrogate.”

Foss Place building works were completed by contractor Pacy & Wheatley. The entire funding for the development was completed in just 14 days from CapitalStackers’ engagement to the full loan being drawn down.

CapitalStackers allows a wide range of investors to get involved with larger commercial building projects, from housing to offices - schemes that would otherwise be out of the smaller investor’s reach, except through REITs or unit trusts. The idea is to plug the funding gap between typical bank debt and the developer’s equity. The Foss deal was different in that CapitalStackers provided the full debt requirement.

The attraction for P2P investors is that CapitalStackers invites them to take a stake at a risk and reward level of their own choosing, with typical returns of between 5% and 20% per annum on completion of the project, around 12-24 months later. It also gives them more control over their investment than they would have with a REIT or unit trust.

The minimum lend is just £5,000, and all loans are fully secured on the property being funded and benefit from high quality due diligence. The company now has in excess of 100 investors on its books and rising.

There are a number of exciting projects in the pipeline with similar attractive risk and reward profiles.

Find out more at www.capitalstackers.com.

This was posted in Bdaily's Members' News section by Cath Cookson .