Steerpike
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SPV56
Aug 25, 2016 8:20:45 GMT
Post by Steerpike on Aug 25, 2016 8:20:45 GMT
I would have thought that piggy-backing a large project such as this would have involved significantly less work for PM than the usual property deals, however, it appears that PM are charging a 2% p.a. asset management charge on top of the initial 5% set up fee and final 15% profit share. I failed to note the changed fee structure on the previous one of these.
Does anyone else have thoughts on this?
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pom
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SPV56
Aug 25, 2016 9:51:23 GMT
Post by pom on Aug 25, 2016 9:51:23 GMT
Listing's been updated quite substantially since it first appeared...at least they're not double dipping and also charging rental management (like a certain other platform)
Edit in answer to your question tho, there's a lot of stuff that PM generally include in their fees that other platforms charge us extra for, so if they say it's going to take significantly more effort then I'm not quite happy with that particularly as they're being very clear and upfront (unlike my recent eye-opening/watering THC annual accounts). Haven't quite decided yet how much to invest, but will definitely have some.
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Neil_P2PBlog
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SPV56
Aug 25, 2016 10:42:19 GMT
Post by Neil_P2PBlog on Aug 25, 2016 10:42:19 GMT
I'd like if they had a clearer breakdown of gross/net figures on this one.
As buildings have been running for a number of years by another student accom provider, I am not sure where the high capital growth will come from?
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pom
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Post by pom on Aug 25, 2016 11:33:09 GMT
I'd like if they had a clearer breakdown of gross/net figures on this one. As buildings have been running for a number of years by another student accom provider, I am not sure where the high capital growth will come from? Personally I always take capital growth figures with a huge pinch of salt as there's so much else that can affect it. Rental income may be lower than other deals but should be pretty solid anyway, so I see this as hopefully a nice steady earner with maybe a nice bonus at the end. I'm also pretty relaxed about the possible variation in end dates. I would imagine the figures come from the people putting together the whole deal. It's probably a careless attitude, but I figure with the amounts being invested there'll be some ultra stringent checks going on a level way above anything we (or PM) can hope to do and the figures have to be pretty feasible or it won't go ahead (I don't even want to imagine how much the investor taking 90% could afford to spend on due diligence !!). Plus I take CG figures with a big dose of salt. And the amounts I invest at a time are (relatively) tiny so I can afford to be pretty relaxed about it.....and did I mention I take CG figures with a big dose of salt? Anyway I'm sure if you contact them they will be happy to provide you with more info.
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SPV56
Aug 25, 2016 14:57:17 GMT
Post by propertymoose on Aug 25, 2016 14:57:17 GMT
Hi guys I just wanted to pick up on the questions regarding value. The projected returns in this investment are not related to capital growth in the actual assets. The investment play is in the yield compression achieved by acquiring the asset on a general "we need to let it to students" basis and then putting in place a long term lease (20+ years) with Mears Group PLC on a full repairing basis. This means that Mears are responsible for the rent and up-keep of the property so the returns are fixed and protected. As a result of this, the asset becomes much more valuable and attractive to pension funds who are looking for safe, long-term yields. In the market, assets of this nature typically trade at around 6% NRI (rent). We are acquiring the properties at 7.7% NRI (so for less money). The properties are then intended to be sold at around 5.5% NRI (i.e. for more). This is where the returns come from and it is a well-trodden path in the private equity space. The rental return makes up a small part of the overall return is to be fixed in the long term lease with Mears. You can read more here: propertymoose.co.uk/blog/student-accommodation-portfolio-introduction-to-yield-compression/This download is also available on the website which contains all the information on the specific assets - www2.propertymoose.co.uk/Sheffield-Preston-StokeHope that helps. Andrew
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Neil_P2PBlog
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SPV56
Aug 25, 2016 15:48:26 GMT
Post by Neil_P2PBlog on Aug 25, 2016 15:48:26 GMT
Hi guys I just wanted to pick up on the questions regarding value. The projected returns in this investment are not related to capital growth in the actual assets. The investment play is in the yield compression achieved by acquiring the asset on a general "we need to let it to students" basis and then putting in place a long term lease (20+ years) with Mears Group PLC on a full repairing basis. This means that Mears are responsible for the rent and up-keep of the property so the returns are fixed and protected. As a result of this, the asset becomes much more valuable and attractive to pension funds who are looking for safe, long-term yields. In the market, assets of this nature typically trade at around 6% NRI (rent). We are acquiring the properties at 7.7% NRI (so for less money). The properties are then intended to be sold at around 5.5% NRI (i.e. for more). This is where the returns come from and it is a well-trodden path in the private equity space. The rental return makes up a small part of the overall return is to be fixed in the long term lease with Mears. You can read more here: propertymoose.co.uk/blog/student-accommodation-portfolio-introduction-to-yield-compression/This download is also available on the website which contains all the information on the specific assets - www2.propertymoose.co.uk/Sheffield-Preston-StokeHope that helps. Andrew Thanks Andrew! The blog is a good read and would answer my question if I could match it with figures on the property (I did send a request following the pre-announcement yesterday pom but had no reply). I skimmed through the prospectus from your second hyperlink Andrew but could not find the answer either. The net yield on SPV56 is given as "c.3.5%", even with management fees of 2% that's about 5.5%. However, the blog explains yield compression going from net yield of 7.7% to 5.5% for sale. If there was a breakdown of figures before and after all the taxes and charges it would be much easier to see where that missing 2% goes to.
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Post by propertymoose on Aug 26, 2016 9:14:07 GMT
Good to hear! I hoped it would help as I know these deals are new.
The yield compressions affects the capital value of the property and doesn't impact on the rental yield. I have set out the projected returns below from our calculations. Obviously, these are shared with the same caveats and risk warnings as on the Property Moose website:
Investment - £250,000
PM Fee - £12,500
Total = £262,500
Projected Distribution Year 1 = £14,462
PM Annual Fee = £5,000
Tax = £1,800
Projected Net Distribution = £7,662
Projected Distribution Year 2 = £15,258
PM Annual Fee = £5,000
Tax = £2,000
Projected Net Distribution = £8,258
Projected Distribution Year 3 = £395,000
PM Annual Fee = £5,000
PM Profit Fee = £22,125
Tax = £19,000
Projected Net Distribution = £348,875
Summary of Net Projected Returns
Year 1 – £7,662
Year 2 – £8,258
Year 3 - £86,375
Projected Total Returns = £102,295
Projected ROI = 38.96%
Projected P.A = 12.98%
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SPV56
Aug 26, 2016 21:35:03 GMT
Post by doorway on Aug 26, 2016 21:35:03 GMT
Front page of this offer - If I received 12.9% each year, over 3 years I would expect it to compound to over 40 %
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Neil_P2PBlog
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SPV56
Sept 1, 2016 17:39:45 GMT
Post by Neil_P2PBlog on Sept 1, 2016 17:39:45 GMT
Front page of this offer - If I received 12.9% each year, over 3 years I would expect it to compound to over 40 % Yep - looks like a simple divide by 3 from the total growth of 38.7% rather than taking into account compound growth. I would have said 11.6% annually (1.39^(1/3)). I would guess many in this one are hoping for a quicker turnaround than 3 years though.
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Neil_P2PBlog
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SPV56
Sept 23, 2016 14:10:52 GMT
Post by Neil_P2PBlog on Sept 23, 2016 14:10:52 GMT
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pom
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SPV56
Sept 23, 2016 17:28:50 GMT
Post by pom on Sept 23, 2016 17:28:50 GMT
Gone and replaced with PMF C... oooh go on then I'll have a bit more of these
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