Targeted Annual Yield
This property investment opportunity involves both rental income and potential capital gains. Number 10 The Abbey is an awarded winning block of 20 serviced apartments with an onsite concierge and gym. JaeVee has acquired the asset for £2,038,200 from the developer. The existing operator of the business Estateducation is remaining involved holding 40% shareholding in order to continue the smooth operation of the business.
Investors hold shares in the SPV with the associated shareholders right and protection.
The total share capital of the SPV is £1,533,000 with each share priced at £15,330.
The acquisition has been supported by a commercial mortgage from Hampshire Trust Bank. The survey which recently completed by Watsons Chartered Surveyors (as instructed by Hampshire Trust Bank), confirmed the current market value at £2,340,000. As a result of this survey Hampshire Trust Bank provided a commercial mortgage loan £1,453,500. Purchasing the asset for £2,038,200 demonstrates there is currently additional equity of £301,800 (as of the 15th of January 2019 when the survey was conducted).
The rental income is being generated by the 20 serviced apartments that have been in operation for over 12 months. Currently the operator is producing £336,000 per annum which, after deducting the mortgage cost and operational expenses, works out to a forecasted net yield per annum to investors of 10.90%.
The 10.90% is net of corporation tax with dividends to be paid quarterly. As investors own shares in the SPV that owns the property, you’ll also benefit from any potential uplift in both the annual income and sale of the property in 60 months time. For example, if the operator gets the annual income up to £360,000 per annum, your forecasted net return would be 12.09% per annum.
The plan is to sell the shares of the SPV in 60 months time for £2.5m to another operator. Investors are entitled to up to 40% of the net profit from that sale (after selling costs). Should the exit be successful an additional forecasted return of 34.95% would be generated. This is in addition to the forecasted dividend annual yield of 10.90%. Therefore, when combining both the potential rental yields (over 5 years) and capital gain together, you’d be looking at a total forecasted return on capital of 89.45%.
There is no restriction or early redemption charges on selling your shares at any point within the 60 month term to a third party. So in essence, you could exit the investment earlier if you have a willing buyer for your shares.
Please download the Investment Memorandum to find out more, this is available within the documents section once you've created or signed into your investor account.
Number 10 The Abbey is home to 20 serviced apartments and an onsite concierge and gym. It went through a heavy refurbishment in 2017 with the property developer spending £600,000 on the transformation.
It is located in Norfolk, UK which has a £3.1bn tourism economy thus making it ideal for serviced accommodation. The economy is supported by three main sectors - agricultural, public sector and tourism. in 2010, agriculture, forestry and shing enterprises made up 11% of all VAT and PAYE registered enterprises in Norfolk.
A lot of the economy is based on the tourism sector, with Norwich International Airport bringing many overseas tourists to the county. Over the last few years, the number of passengers has risen, indicating a growth in tourism within the area. They aim to increase passenger numbers to 930,000 by 2030.
The number of day visitors in 2018 to the region was an estimated 40,933,000 with 3,058,000 overnight stays as well, collectively staying a total of 12,339,000 nights. The most significant sector in Norfolk, in employment terms, is the Public Sector (public administration, defence, education and health), which in September 2010 employed 29.5% of the working population.
Nationally, serviced accommodation rates in the latest January 2018 Visit England report have found that, since last year, occupancy rates have increased by 1% and the demand for rooms have increased by 2.5%. Small town rooms in particular, had an occupancy increase of +1% to 58%. Over the last 3 years, the average occupancy rate in the East of England has increased by 1%, showing a healthy and steady growth.
The exit strategy is based on holding the asset over a 60 month period whilst working closely with the operator to increase the current annual income year on year. This would help to increase the value of the property when looking to sell at the end of the 60 month period.
The planned exit is to sell the property for £2.5m in 60 months time to another operator. As investors will hold redeemable shares, the share price of £15,330 is specified from the outset. Should we not achieve the planned exit of £2.5m after 60 months, then investor share prices will increase in value by 0.25% per month until the shares are redeemed.
Number 10 The Abbey is operated by Estateducation, a large scale property developer with a GDV of £50m in the pipeline. Estateducation will remain involved holding 40% shareholding in order to continue operating the business.
The business has established a large number of corporate accounts whom regularly stay at Number 10 The Abbey. Due to the high standard of the finishings and furnishings, the property is considered a destination venue. It benefits from popular weekend getaway bookings as well as wedding seasons being to its prime location opposite Wymondham Abbey.
There is a Concierge desk based onsite which is operated by two employees. They work shift patterns so there is a presence on-site 7 days a week. The housekeeping and maintenance workers are appointed on a self-employed basis so the costs are ad hoc rather than fixed.
The plan is to continue to increase the number of corporate accounts for the Sun-Thurs business whilst attracting the tourism business via dynamic pricing and offers.
|The following financials are calculated against our Let & Hold model.|
|Surveys & Searches||£5,000.00|
|Boost Fund (0.00%)||£0.00|
|Equity Raise Fee (5%)||£29,200.00|
|Mortgage Amount (71.3% LTV)||£1,426,000.00|
|Management Fee (0%)||£0.00|
|Corporation Tax (19%)||-£39,148.88|
|Net Yield On Capital||10.90%|
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.
JaeVee © 2019 • All rights reserved.
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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