JaeVee has agreed a joint venture with XRE Developments in offering equity investors the opportunity to invest in the development of a residential scheme based in Buxton, Derbyshire. Planning Permission has been granted under planning reference HPK/2019/0280 however, we're awaiting for the planning decision notice to be issued which is pending the execution a Section 106 (available to view in Documents above).
The development comprises the erection of 27 residential dwellings, construction of vehicular access, with associated car parking and landscaping.
The residential units comprise 10 x 2 bedroom houses, 16 x 3 bedrooms houses and 1 x 4 bedroom house, all of which are up to national space standards.
9 of the 27 units have been allocated for affordable homes and will be sold to a housing association for a total of £1,250,000. The remaining 19 units will be sold on the open market for a targeted GDV of £4,190,000. Combining the two makes a targeted GDV of £5,440,000.
The GDV, which is the collective value that all 27 properties could be sold for, is detailed within the Investment Memorandum (available to view in Documents above). When determining a GDV, one uses sold comparables for similar properties in and around the local area typically within 5 - 10 mile radius for new build housing schemes. Details of the sold comparables we have used to determine the GDV, are also available for your review via the Investment Memorandum.
The site itself was previously under construction by another developer (Walmer Homes) that went into liquidation. As such, 21 out of the 27 dwellings have the substructure works already completed. This means the cost to complete is less than what it would be from the outset hence the construction costs have been priced at £879.15 per sq-m. We have also been able to agree with the architect to use the construction drawings hence the allocation for the professional fee fund has been set at 7%, rather than the traditional 10%. A further 5% contingency has been added to allow for additional construction costs to use, if required.
These numbers are all detailed within the Financials section below.
Batham Gate is located in on the outskirts of Buxton, Derbyshire and is approximately 2.5 miles from the town centre of Buxton.
The town centre of Buxton hosts a variety of boutique shops, independent cafes and national chain supermarkets. Buxton town centre is also home to number of leisure options including Buxton Opera House, Buxton Raceway, a number of bars, restaurants and is also home to two golf courses.
The site is situated approximately 1.5 miles away from Dove Holes railway station which offers regular services into Manchester taking approximately 1 hour and Stockport taking approximately 45 minutes.
Buxton is located close to a number of A roads that lead to other towns and cities including Derby, Sheffield, Manchester, Stoke on Trent, Chesterfield, Stockport and Macclesfield, all can be reached within an hour or less.
The exit strategy is to sell the individual units on the open market. 9 of the 27 properties have been allocated as affordable homes so these will be sold directly to a housing association for a total of £1,250,000.
The open market units qualify for the current Help to Buy incentive on offer from the UK Government. The sale estimates have been supported by an EA Appraisal from Bagshaws Estate Agents, which is an estate agent based in the local area. The appraisal can be downloaded from the Documents section above.
Should the planned exit of selling the 19 open market units experience delays (even though 9 months has been allocated for a sales period) an alternative option is to rent the properties instead. Local estate agents, William H Brown, have provided market rental commentary confirming that the units can be rented for a total of £182,400 per annum. A breakdown per unit per month is detailed within the Estate Agent Rental Appraisal, downloadable from the Documents section above.
The current buy to let portfolio mortgage criteria permits up to 75% LTV against the GDV, which calculates as £3,142,500. Add the sale income from the 9 affordable homes (£1,250,000) totals £4,392,500 which pays off the total debt of £4,080,875.
With all JaeVee development projects, the SPV (in its role as the client) enters into a JCT 2016 design & build construction contract whereby the responsibility in delivering the project rests with the Principal Contractor.
The Principal Contractor has agreed to a fixed total contract sum of £2,416,438 (with an additional 5% contingency fund and 7% professional fees fund) in delivering the project within the set time frame of 12 months.
As the Principal Contractor is holding the design and build contract, it will procure the sub-contractors to assist in delivering the project. The SPV has the right to request copies of the JCT subcontractor contracts which will be taken care of by JaeVee's inhouse project management team. This forms part of JaeVee's role as Employers Agent, overseeing the project from inception through to completion (the pre, during and post construction phases) assisting the property developer throughout.
As per UK Finance regulations, a structural warranty will be issued after the building regulations completion certificate of work. This will provide a 10 year structural warranty which is a mandatory UK Finance requirement for mortgage lenders to be able to lend on each dwelling. The cost of this is covered via the allocated professional fee fund.
The Property Developer will also be uploading monthly construction updates to the JaeVee system throughout the duration of the project thus allowing investors to see the progress in real time.
|The following financials are calculated against our Sell For Profit model.|
|Gross Development Value||£5,440,000.00|
|Surveys & Searches||£8,000.00|
|Senior Debt Interest||£247,914.00|
|Sourcing Fee (1.0%)||£12,500.00|
|Equity Raise Fee (5%)||£52,900.00|
|Boost Fund (1.00%)||£12,500.00|
|Corporation Tax (19%)||-£142,742.03|
|Net Profit Margin||13.43%|
|Targeted ROI (40% of Margin)||50.62%|
Share Price (1%)
All the above figures are targeted and subject to taxation based on personal circumstances. Corporation tax has been taken into account, based on a rate of 19%. Capital at risk: before investing please read the risk warning.
JaeVee is a trading name of Estateducation Ventures Ltd (FRN797322), which is an Appointed Representative of Prosper Capital LLP, which is authorised and regulated by the Financial Conduct Authority (FCA) (FRN453007).
Estateducation Ventures Ltd is registered in England & Wales with company number 10172481. The registered office of the company is Studio 9 Netherconesford, 93-95 King Street, Norwich, NR1 1PW.
Estateducation Ventures Ltd (10172481) undertakes both regulated and unregulated business. Business activities described in the ‘Invest’ section of this website are considered regulated business. All other sections are considered unregulated. Note that senior debt and mezzanine finance is arranged by Teal Finance Ltd (registered in England and Wales no. 11305739), which is not authorised and regulated by the Financial Conduct Authority.
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Investing in JaeVee involves risk, including loss of capital and illiquidity and it should be done only as part of a diversified portfolio. Investments made through JaeVee are not covered by the Financial Services Compensation Scheme (FSCS). Please read our full risk warning before deciding to invest.
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