Regulated Business

SPV1011

Deal, Kent, CT14
12 Units | Sell For Profit Strategy

61.33%

Targeted ROI

£4,005,555

of £4,148,203

Investment Term

18 months

Funded

96.56%

Investment Opportunity

JaeVee has joint ventured with Roddy New Homes in offering equity investors the opportunity to invest in the development of a residential scheme based in Great Mongeham just outside of the seaside town of Deal, Kent.

The development comprises the erection of 12 residential dwellings, construction of vehicular access, with associated car parking and landscaping.

The residential units are a mixture of terrace, semi detached and detached houses all up to national space standards.

The GDV, which is the collective value that all 12 properties could be sold for, works out to a conservative forecast of £5,140,000. 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 can be analysed when downloading the Investment Memorandum from the Documents section above.

The construction costs have been priced at £1,132.28 per sq-m. A further 5% contingency for construction costs and 10% for professional fees has been added, which makes the costs above BCIS Online for the local area. These numbers are detailed within the Financials section below.

The proposed investment turnaround time is 18 months which is based on 12 months to build and 6 months to sell.

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Property Summary

The development is located in the village of Great Mongeham which is located approximately one mile from the town centre of Deal in Kent, where there are a variety of independent shops with major supermarkets such as Marks and Spencer and Sainsbury’s also nearby. Deal is located 20 minutes from the A2 which links directly to Canterbury and London. Folkestone and the Channel Tunnel are also 20 minutes away.

The development site is situated approximately 2 miles away from Deal railway station which offers regular services into London taking approximately 1 hour and a half, making it an ideal commuter town. The site is also located close to the popular Deal Pier which is currently undergoing a £600,000 refurbishment to mark its 60th anniversary. The investment will include work to refurbish the iconic art sculpture and clock above the pier entrance.

With nearby amenities including independent wine bars, restaurants and a local farmers market on the first Saturday of each month, this area is popular with middle age professionals and families.

The Deal property market, over the last 5 years (as recorded by the House Price Index), shows prices have increased by 28.3% which represent an annualised increase of 5.7%. To break it down further, over the last 3 years there has been a 10.9% growth representing an annualised increase of 3.6%. This performance, along with a strong economic outlook, makes Deal an ideal area to invest in.

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Exit Strategy

The proposed exit strategy is to sell the units on the open market, with sales expected to begin 6 months before the completion of the construction works. As it's a 12 month construction programme, the marketing on the new houses will begin in month 7. This approach should ideally see some reservations of units secured before construction has been completed. Said approach helps to repay the senior debt facility without going too much into the 6 month sales period allocation, thus meaning any interest savings will create further profit for the SPV.

The houses will be marketed and sold via local estate agents, with the target market being a mixture of owner occupiers, first time buyers and single let landlords.

Based on sold comparables we expect to be able to sell the properties for the following prices:

3 bed terrace houses - £360,000-£370,000, 3 bed semi detached houses - £440,000-£485,000 4 bed detached - £550,000-£565,000

These sale estimates have been supported by a development sales appraisal report from LSL Land & New Homes, which is an estate agent based in the local area. The appraisal can be downloaded from the Documents section above. You'll note their GDV estimate totals £5,310,000 which demonstrates our targeted GDV of £5,140,000 is conservative. Should we be successful in selling the units for more than the GDV we've targeted, this will mean more profit for the SPV.

Senior and mezzanine debt will be repaid first together with the post sales costs and corporation tax set out in the financials section below. Investors will then be repaid their 40% share of the net profit pro rata to their shareholding.

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Operational Delivery

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 £1,972,266 (with an additional 5% contingency fund and 10% 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.

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Development Team

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Financials

The following financials are calculated against our Sell For Profit model.
Gross Development Value £5,140,000.00
Total Cost £4,149,027.43
Purchase Price £1,225,000.00
Stamp Duty £50,750.00
CIL £0.00
Construction Cost £1,972,266.00
Furnishing Cost £0.00
Professional Fees £197,227.00
Contingencies £233,163.00
Legals £10,000.00
Surveys & Searches £6,000.00
Building Regs £0.00
Insurance £5,000.00
Council Tax £0.00
Business Rates £0.00
Utilities £535.00
Senior Debt Interest £323,877.00
Mezzanine Interest £71,250.00
Sourcing Fee (1.0%) £12,250.00
Equity Raise Fee (5%) £29,459.43
Boost Fund (1.00%) £12,250.00
S106 £181,489.24
Gross Profit £990,972.57
Selling Fees -£79,650.00
Exit Fee -£31,989.00
Corporation Tax (19%) -£132,590.42
Net Profit £565,253.91
Net Profit Margin 13.62%
Targeted ROI (40% of Margin) 61.33%

What happens next after investing?

  1. Your funds will be held in trust by MangoPay until the total raise is achieved
  2. Once the total raise is achieved, the funds will be automatically transferred to the SPV bank account
  3. The shareholders agreement is issued for signature (electronically)
  4. Once signed by all parties, the development agreement is issued for signature by the developer (electronically)
  5. Once the development agreement is signed, shares are issued in the SPV
  6. Project commences
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Further Information

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Investment

Targeted ROI

Share Price (1%)

£9,216.20

% Share

2.17%

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.

How do we mitigate risk?

Documents

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Location

Proposed Plans

Plot 11 - Ground & First Floor.jpg Plot 1 - 4 - Ground & First Floor.jpg Plot 12 - Ground & First Floor.jpg Plot 5 & 6 - Ground & First Floor.jpg Plot 7 & 8 - Ground & First Floor.jpg Plot 9 & 10 - Ground & First Floor.jpg Proposed Elevation - Plot 1 - 4.jpg Proposed Elevation - Plot 5 & 6.jpg Proposed Elevation - Plot 7 & 8.jpg Proposed Elevation - Plot 9 & 10.jpg Proposed Elevation - Plot 11.jpg Proposed Elevation - Plot 12.jpg Proposed Street Elevation.jpg

Team Behind It

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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.

Capital at risk. Read more.