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Private Syndicates PRIVATE SYNDICATE = CASE STUDIES Geared syndicate Business flexibility syndicate Professional partnership syndicate The Problem The Problem The Problem ■ Growing IT business with two owners/ ■ Family car dealership who want to buy ■ Private accountancy practice wanted to directors want to buy a new office for freehold of one of their showrooms and acquire a £ office for their own 1,650,000 their own occupation adjacent land for £ occupation 1,140,000 ■ Directors want to maximise the use of ■ Business cannot take out any further ■ The senior partner wanted to retire in the their SSAS which has a current value of loans due to current growth strategy next five years so needed a structure that £ ■ Business owner’s SIPP has £ would allow flexibility in the future 400,000 450,000 ■ Property to be purchased is valued at ■ Maximum borrowing £ ■ Five other partners also wanted to 225,000 £ participate in varying degrees, all 1,200,000 ■ Property is currently leased and is over- ■ Maximum borrowing of £ giving rented. This is restricting ability to invest investing through their SIPPs 200,000 total available funds of £ and a money back in to the business 600,000 The Solution shortfall of £ 600,000 The Solution ■ Establish a Custodian Capital Private The Solution ■ Establish a Custodian Capital Private Syndicate to acquire the property for ■ Establish a Custodian Capital Private Syndicate to acquire the property for £ plus costs 1,650,000 Syndicate to acquire the property for £ ■ Senior partner plus five others invested 1,140,000 £ ■ Business owner and third party SIPP to £ through their SIPPs 1,200,000 1,285,000 ■ Directors contribute £ into SSAS invest £ ■ Private syndicate secures a bank loan of 100,000 640,000 benefitting from tax relief ■ Business invests £ £ 120,000 445,000 ■ Business invests £ ■ Private syndicate secures a bank loan of ■ Lease back to the business for years at 100,000 10 ■ LLP established between directors and £ £ per annum 380,000 123,000 their partners which invests £ 200,000 ■ Lease to the business is varied to reduce The Outcome ■ Private syndicate secures a bank loan of the current rent by £ per annum 10,000 ■ New offices acquired by the partners’ £ and to include an additional parcel of 400,000 SIPPs ■ Lease back to the business at £ per land, adjacent to the dealership 90,000 ■ A single loan is secured at a syndicate annum for years 15 The Outcome level to be repaid over first years 5 The Outcome ■ Dealership and expansion land acquired ■ No rent paid to third party landlord ■ New office premises acquired ■ Loan to be repaid over first years 15 ■ Over time senior partner will reduce his ■ Loan to be repaid over first years ■ No rent paid to third party landlord 10 share of ownership and sell to the ■ No rent paid to third party landlord ■ Business to make in specie transfer of its remaining partners ■ Business to make in specie transfer of its share of the syndicate as SIPP ■ Syndicate structure allows for changes in share of the syndicate as SSAS contributions over first years ownership without the need to adjust the 2 contributions over first years ■ Business has secured both a reduced rent loan terms 2 ■ Syndicate to buy out LLP over time and expansion land ■ Partners can shrink or expand the ■ Year – SSAS owns property outright ■ Year – SIPPs own property outright ownership of the syndicate to match the 10 15 partnership of the business at any one time Custodian Capital is a property fund management business. The company is authorised and regulated by the Financial Conduct Authority to operate unregulated collective investment schemes. More information on this can be found at our website www.custodiancapital.com. PRIVATE SYNDICATE = CASE STUDIES Acquisition finance syndicate Residential development land Asset management syndicate syndicate The Problem The Problem The Problem ■ A Northern Irish Property developer ■ A group of five private investors wanted to ■ Two business partners wanted to purchase wanted to secure acquisition finance as purchase some residential development a traditional mill building with development quickly a possible to purchase a retail land with the hope of improving the land development site near Belfast planning permission ■ The plan was to split the mill into lettable 8 ■ The site, with two fully let units, was ■ The investors could only finance this by units and develop the surplus land for available at £ from the receiver using a combination of funds from both retail use 400,000 ■ The development was valued at £ their pension scheme and personal wealth ■ The mill was on the market for £ 800,000 1,000,000 prior to the purchase ■ It is difficult to combine these investments but the partners only had £ of their 300,000 ■ Due to the time parameters sources of and retain the required flexibility using a own equity equity or bank finance were limited joint purchase arrangement ■ Although the pension scheme had money The Solution The Solution and a potential investment from an additional private investor was possible it ■ Establish a Custodian Capital Private ■ Establish a Custodian Capital Private Syndicate from which a loan can be made Syndicate to acquire the land for was not easy to combine all these resources to the developer £ plus costs and have the flexibility of ownership 1,300,000 required in the future ■ Investors contribute investments from ■ The five investors contribute £ 600,000 £ to £ to the syndicate from their pension schemes The Solution 10,000 50,000 ■ In return a comprehensive loan facility ■ The additional £ is made from ■ Establish a Custodian Capital Private 700,000 agreement and personal guarantee are personal investments Syndicate to acquire the property for agreed giving first charge over the £ plus costs The Outcome 1,000,000 development site to the investors ■ The pension scheme invests £ the ■ Successful acquisition of the land without 700,000, ■ Investors would receive a gross return on business partners £ and a separate the need for bank finance 300,000 their investment of % per annum for private investment of £ 9 ■ Possibility of enhancing value through an 100,000 years ■ No need for bank finance 3 improved planning permission ■ The borrower is permitted to repay the ■ Medium term return expected to investors The Outcome loan after months but this will incur an 12 and their pension schemes ultimately ■ The syndicate intends to buy out the rd early payment charge of % of loan value 3 4.5 secured against residential development party shareholder and the pension scheme The Outcome land over a number of years as the site is developed ■ Loan to be repaid after years with an ■ Flexible structure with each investor and increased rental income is achieved 3 additional charge for early repayment having control of their share ■ The two business partners each own a % 50 ■ The client secures the site and is able to share of the property personally which was develop the site further with additional their ultimate objective funds. In years the developer is hoping 1-3 ■ The pension scheme achieves a double to sell the site on for a profit digit income return and an improvement ■ Planning for a standalone coffee shop was in capital value during the hold period granted within 2 months of the syndicate’s establishment adding value to the site Custodian Capital is a property fund management business. The company is authorised and regulated by the Financial Conduct Authority to operate unregulated collective investment schemes. More information on this can be found at our website www.custodiancapital.com. BESPOKE PROPERTY SOLUTIONS FOR INVESTORS & OWNER OCCUPIERS Private Syndicates ‘A group of connected party or associated investors, to include SIPP and SSAS pension schemes, who combine resources to buy a property investment through a tax transparent, special purpose vehicle’ Our Private Syndicate is a flexible and tax efficient structure designed to facilitate the purchase of business premises and other investment properties. members are required to include: ■ Private Investors ■ Pension Schemes ■ Limited Companies ■ Partnerships ■ Charities 2-20 Benefits Investor Control Flexible Simplified Ownership Funding Professional Tax Management Transparent Structure Does not create a Collective Investment Scheme Investor Control Does not create a Collective Investment Scheme ■ Each investor has control of their share of the asset ■ These syndicates do not constitute a collective investment scheme and therefore are not subject to the Financial Conduct Authority Simplified Funding ■ A single loan secured as non-recourse debt can be agreed at the Professional Management syndicate level rather than against individuals ■ Custodian Capital is a professional property manager ■ Investors cannot lose more than their original investment ■ The syndicate allows a broad base of investor participation, which Flexible Ownership can also reduce the requirement for debt ■ Each investor can adjust their percentage ownership ■ For self-invested pension investors borrowing at a syndicate level offers ■ Investors can transfer ownership to their pension scheme through greater flexibility than borrowing against the pension scheme in specie pension contributions ■ Selling some or all of the investor’s ownership to another party does Tax Transparent Structure not impact on the loan or other investors ■ Investors receive gross rental income, net of costs Background Custodian Capital, a subsidiary of the Mattioli Woods Group, is an established property investment and management business, which provides a structure for SIPP, SSAS and private investors giving access to direct property ownership. We manage a portfolio of over commercial properties held in a range of bespoke syndicated structures, valued at £ million. In addition to providing 80 140 the structure, establishing the syndicate and managing the property, Custodian Capital can also arrange any bank funding. Custodian Capital Limited Contact: Tel: Ben Aspell Ema0il1:1b6e n24.a0s p8e7l4l@0 custodiancapital.com Website: www.custodiancapital.com A Mattioli Woods Company.

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