INVITATION DOCUMENT - ASSET-BACKED INVESTMENT OPPORTUNITY PAYING 8% PA OVER FIVE YEARS - London Property Bonds
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INVITATION DOCUMENT
ASSET-BACKED INVESTMENT OPPORTUNITY
PAYING 8% PA OVER FIVE YEARS
1
WWW.LONDONPROPERTYBONDS.COM
2
This section is important and requires your attention
THE CONTENT OF THIS FINANCIAL PROMOTION HAS BEEN APPROVED, FOR THE PURPOSES OF SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS
ACT 2000, BY NCM FUND SERVICES LTD, WHICH IS AN AUTHORISED PERSON WITHIN THE MEANING OF THE FINANCIAL SERVICES AND MARKETS ACT
2000. RELIANCE ON THIS FINANCIAL PROMOTION FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE AN INDIVIDUAL TO A
SIGNIFICANT RISK OF LOSING ALL OF THE CASH INVESTED.
Many people tend to skip the small print. Please don’t. All investment Edinburgh, EH3 7JA which is authorised by the Financial Conduct Authority
involves risk. We want you to be sure that you understand the particular to conduct investment business. NCM is registered on the Financial Conduct
risks involved here and make a decision that is right for you in light of your Authority’s Register with registered number 183732.
personal circumstances.
This Invitation does not constitute an offer of transferable securities to the
If you are in any doubt about the action you should take or the contents public and accordingly this Invitation does not constitute a prospectus to
of this document, you should contact your professional adviser, authorised which the Prospectus Rules of the FCA apply. Therefore, this Invitation and
by the Financial Conduct Authority (“FCA”), to conduct investment business the Instrument have not been approved by the FCA or any other regulatory
and who specialises in advising on investments in shares, bonds and other body.
securities, including unlisted securities.
You should ensure that you have read and understood all of this Invitation
This document (the “Invitation” or “Invitation Document”) constitutes an Document before applying for London Property Bond. This Invitation is
invitation to subscribe for secured bonds (“London Property Bond”) issued only directed at persons certified as high net worth investors, restricted
by London Property Bonds plc (the “Company”) on the terms and conditions retail investors, advised retail investors or investors who are self-certified as
set out in this Invitation. sophisticated investors in accordance with FCA rules.
Investors should not subscribe for any of the bonds referred to in this If you are in any doubt as to the contents of this Invitation, or whether
Invitation Document except on the basis of the information published in subscribing for London Property Bond is a suitable investment for you, you
this Invitation and the instrument dated 12 February 2016 constituting the should seek your own independent advice from an appropriately qualified
London Property Bond of the Company (the “Bond Instrument”) set out on adviser authorised by the FCA and who specialises in advising on the
page 28 onwards of this Invitation Document. acquisition of unlisted securities.
Your attention is particularly drawn to the “Risk Factors” which are set out This Invitation Document does not constitute an offer to sell, or the
on pages 18 and 19 of this Invitation. Prospective investors should consider solicitation of an offer to buy, London Property Bond in any jurisdiction
carefully whether an investment in London Property Bond would be suitable in which such offer or solicitation is unlawful and, in particular, is not for
for them in the light of their personal circumstances. London Property distribution into the United States or Canada. London Property Bond have
Bond are a secured debt of the Company but are not freely transferable or not been and will not be registered under the applicable securities laws of
negotiable on the capital markets and no application is to be made for the the United States or Canada and may not be offered or sold within the United
London Property Bond to be admitted to listing or trading on any market. States or Canada or to any national, resident or citizen of the United States
or Canada. The distribution of this Invitation Document in other jurisdictions
London Property Bond may not therefore be a suitable investment for all may be restricted by law and therefore persons into whose possession this
recipients of this Invitation. Investment in unquoted securities of this nature, document comes should inform themselves about and observe any such
being an illiquid investment, is speculative, involving a degree of risk. Other restriction. Any failure to comply with these restrictions may constitute a
than in exceptional circumstances, it will not be possible to sell or realise the violation of the securities laws of any such jurisdictions.
London Property Bond before they mature or to obtain reliable information
about the risks to which they are exposed. London Property Bonds are a The Security Trustee shall not accept any responsibility for, or be liable
debt of the Company secured over all of its assets and undertakings under a for, the adequacy, accuracy or completeness of any information (whether
debenture constituting a fixed and floating charge security. relating to the financial condition or tax status of the Company or otherwise)
supplied by the Company and contained in this document. The Security
However, there can be no certainty or guarantee that any realisation of such Trustee shall have no obligation to, and does not undertake to, make any
assets through the enforcement of such security or that the enforcement of investigations into the financial condition of the Company at any time at
the guarantee will be sufficient to enable the Company to repay the London which any of the London Property Bond are outstanding. The Security
Property Bond or the Company’s liabilities thereunder. Trustee shall have no duty to advise any Bondholder of any information
(whether financial or otherwise) relating to the Company which may come
This Invitation, which is a financial promotion for the purposes of Section to its attention at any time at which any of the London Property Bond are
21 of the Financial Services and Markets Act 2000 (“FSMA”), is issued by outstanding.
the Company, which accepts responsibility for the information contained
herein. Communications sent by you to the Receiving Agent shall be treated
as delivered to it on the day of actual receipt by the Receiving Agent. All
This document has been approved as a financial promotion for UK documents, payments or electronic information and communications sent
publication by NCM Fund Services Ltd (“NCM”) of 7 Melville Crescent, by, to or from you or on your behalf will be sent entirely at your own risk.
London Property Bonds are not covered by the Financial Services Compensation Scheme.
12
Contents
4
Welcome to the London Property Bond
6
A letter from the CEO
8
About the London Property Bond
10
Meet the Senior Team
12
Property Advisor Robert Holmes & Co
13
Financials
14
Market Overview
16
Our Plans
17
Investor Safeguards
18
Risk Factors
20
Frequently Asked Questions
24
How to Invest in the London Property Bond
27
Definitions
28
Bond Instrument
32
Terms and Conditions
3Welcome to the
London Property Bond
Your opportunity to invest in 30 years
of London property expertise
4Welcome to the London Property Bond, a property- Robert Holmes & Co has stood up to some of the worst
backed mini bond that pays 8% interest pa over five years. recessions since 1987.
Nearly 30 years ago, I set up Robert Holmes & Co as We believe that the way to grow the business is not only
estate agents and since then we have grown the business to carefully expand our office network but also to invest
to become the leading estate agent in Wimbledon Village. in maximising the sale value of our clients' properties in
It is now time for the business to take its next step. order that our clients can recommend us in the future.
We have identified a fresh approach to making that step: As you will read in the market overview section, our market
we will help our clients to increase the sale value of their share now stands at some 50% of our chosen segment.
houses by helping them improve their properties prior to Other agencies – all situated in Wimbledon – vie for the
sale. remainder.
London Property Bonds plc has been specifically Today I am as passionate about the business as I ever
established to issue the Bond to capitalise on these was. My father started the business as a professional
opportunities. It will fund improvements to those practice, and one of my sons works in the business with
properties in exchange for a stake in the property and a me. I see it as an ongoing legacy for the directors, my sons
share in the increased sale value. and the generations to come.
Robert Holmes & Co acts as the property adviser to So, where now? What do I envisage for the newly-created
London Property Bonds plc. company, London Property Bonds plc?
Many people buy and sell property during their lifetime London Property Bonds plc will benefit from advice from
and we all certainly aspire to a bigger and better home, Robert Holmes & Co on all aspects of property valuation,
often working long hours to make that dream come true. prospective development opportunities and property
sales strategies.
In my experience, everyone finds property interesting.
Whether it’s viewing it, decorating it, extending it or buying Our real opportunity lies in exploiting our market-leading
it – there’s never a shortage of discussion points. For me experience and our knowledge and contacts in the
at least, there isn’t! Wimbledon area to identify owners who have property that
will benefit from targeted investment in improvements.
I am a Chartered Surveyor by profession, a member of the
Royal Institution of Chartered Surveyors (MRICS) which We will then ensure those improvements are made, and
I joined after studying Estate Management at London again, using our market leadership, manage the sales
University, where I graduated with a BSc. degree. The process.
name makes it sound as if I spent three years studying
farming and forestry but in fact it covered all aspects of We all know that property over time is completely
property and property management, and I then had more unpredictable and can be volatile. The current trends may
training with the RICS before embarking on my career. change, but I am certain there will always be a demand
for South West London homes. I think that being advisers
Next year it will be 30 years since I opened the estate to London Property Bonds plc will benefit our already
agency. I knew most of the jokes and bad publicity about prestigious place in the market for many years to come.
estate agents and was determined to do it differently.
So, over those first few years, I developed my own I feel that what is written here amounts to ancillary detail.
philosophy as to how to deliver the service. That model What really matters to the Company and investors alike
now permeates all that we do. It is reflected in the office is whether the investment works and whether, with our
layout, the staff we employ, the service and in particular advice, we can prove it.
the community engagement.
The answer is we can.
Many businesses claim to have their own personal style
but we endeavour to become part of the community, not We have now put a management team in place to take the
just a business. I believe we achieved this by concentrating company forward into the next stage of its development.
on the Wimbledon and Coombe areas, appointing staff
from the immediate vicinity, which enables them to I’d like to thank you in advance for considering our offer.
understand and appreciate not only the area but also the
needs of the residents, and by involving ourselves in local
schools, charities and social activities and sponsorships.
Since starting the business nearly 30 years ago, the
company has successfully built its business so it has
achieved profits on average of almost £1 million per
annum for the past five years (pre-tax and before Robert Holmes
shareholder's drawings). Chairman of Robert Holmes & Co.
5A letter from
the CEO
Earn 8% per annum by investing in the
London Property Bond
6We have established London Property Bonds plc to issue London Property Bonds plc will be advised on property
a mini bond in order to give you an opportunity to invest values, improvements and marketing strategies by Robert
in the property market in Wimbledon and the surrounding Holmes & Co Limited.
areas that Robert Holmes & Co, our advisers, will be
expanding into. We are focussing our development on two You can invest anything from £1,000 in multiples of £1,000
core areas. into the Bond.
Local Expansion Your money will be lent to us for a period of five years in
With nearly 30 years of local knowledge, it simply makes return for a fixed rate of interest of 8% per annum. You will
sense for Robert Holmes to expand in areas where receive interest payments on a quarterly basis. At the end
it already has a name in order that more investment of the investment period, your original investment amount
properties can be sourced for London Property Bonds will be returned to you in full.
plc.
This document explains in detail how the Bond works,
Investing in Property Improvement what we will do with the funds raised, and how this is
As with many estate agents, properties arrive on its books secured. You can invest at any time between 12 February
that can, for a proportionally low level of investment, 2016 and 29 July 2016.
significantly increase the value of the property. London
Property Bonds plc will seek to fund the improvements, Please visit www.londonpropertybonds.com to learn
for a pre-agreed percentage of the expected increase more about Robert Holmes, our advisers, and the Bond,
in value of the property. To safeguard investments, all apply and invest online or download an application form.
funding will be secured against the property. Robert
Holmes has extensive knowledge of the property market I very much appreciate your interest in our business.
in the Wimbledon area and relationships with developers Please take the time to read this document carefully. If
have built up over nearly 30 years. London Property you have any questions, please call our helpdesk on 0845
Bonds will also take the opportunity to part or wholly 468 0379.
fund the regeneration of buildings in Wimbledon and
the surrounding areas, secured against the value of the I look forward to providing you a secure and rewarding
properties being improved. return on your investment.
Martin Helme
CEO of London Property Bonds plc
* source: rightmoveplus analysis 16 September 2015 to 5 December 2015
7About the
London Property Bond
Issuer London Property Bonds plc
Term 5 years
Close Date 29 July 2016
Coupon (gross) 8%
Payment Quarterly
Early Bird Interest paid from
the date of investment
Early Bird Close 30 June 2016
Target Raise £1 million - £3 million
A Mini Bond The Process
The London Property Bond is a mini bond, which is a type When you apply to invest in a London Property Bond (please
of loan to a company. refer to the section “How to invest in the London Property
Bond”), you will be asked to complete an FCA-compliant
The company agrees to pay you a fixed rate of interest on application procedure and, subject to you completing this,
your subscription amount over a defined period of time. you will have your own investor registration with STOA
and on the London Property Bonds plc website.
At the end of the period, your money is repaid.
Once your investment is accepted, you will receive an
With any bond, there is a risk of not getting all your money email confirmation, a ‘thank you’ letter by post and your
back so, when buying mini bonds, investors should focus investment will be recorded with GCS.
on the credit worthiness of the issuing company and the
security being offered by the company. All applications are gathered between the Launch Date
and the Closing Date. Once the London Property Bond is
closed, investors will receive a certificate registering their
The London Property Bond ownership of the Bond. This should be kept safely.
London Property Bonds plc agrees to pay you 8% per If you qualify for the Early Bird Offer, then your initial
annum (paid quarterly) for five years. interest will be calculated and paid on the Closing Date or
as soon as practicable.
The capital raised from the London Property Bond will be
used primarily to provide funding to residential owners Once the Bond has closed, the Registrar will maintain a
who are intending to sell their properties to improve and/ record of your investment and contact details.
or develop them before sale (therefore enhancing their
value). The capital may also be used to provide funding Each time a coupon is paid, it will be paid directly to your
to developers undertaking a change of use to local nominated bank account.
properties as well as funding the day to day management
of London Property Bonds plc. Money deployed in
ANY CAPITAL YET TO BE DEPLOYED WILL BE INVESTED IN BANK
providing development funding will be charged against DEPOSITS AND ASSET-BACKED HIGH-YIELDING INSTRUMENTS UNTIL
the value of the property it is being lent to improve. IT IS REQUIRED.
8What returns can you
look forward to?
£ 1,000.00
Total interest paid each quarter £ 20.00
Total return paid in a year £ 80.00
Total paid at end of five years* £ 1,400.00
£ 2,000.00
Total interest paid each quarter £ 40.00
Total return paid in a year £ 160.00
Total paid at end of five years* £ 2,800.00
£ 5,000.00
Total interest paid each quarter £ 100.00
Total return paid in a year £ 400.00
Total paid at end of five years* £ 7,000.00
£ 10,000.00
Total interest paid each quarter £ 200.00
Total return paid in a year £ 800.00
Total paid at end of five years* £ 14,000.00
£ 20,000.00
Total interest paid each quarter £ 400.00
Total return paid in a year £ 1,600.00
Total paid at end of five years* £ 28,000.00
£ 50,000.00
Total interest paid each quarter £ 1,000.00
Total return paid in a year £4,000.00
Total paid at end of five years* £ 70,000.00
* Including return of initial investment
9Meet the
Senior Team
The directors of London Property Bonds plc
and management team
Nicolas Holmes Matthew D Rocksborough-Smith BSc Dip, MBA
Director London Property Bonds plc Director London Property Bonds plc
Nick joined Robert Holmes to inject fresh ideas and Matthew is the deputy CEO and advisor of Brookwood
technology into the business and to grow its client base. Capital Corporation, a specialist investment banking
Aged 40, he provides succession together with the two and private equity house with offices in Beijing,
existing directors. Nick has always focused on building Johannesburg and London. He has significant
client relationships and sales. He built up his own gallery experience and relationships in the technology, media
in Chelsea, where he had a loyal following of customers and communications markets in Europe, Africa and the
and artists. Middle East. Among other achievements, Matthew was
a founding partner of InMedia Management, a European
media and technology private equity fund with portfolio
investments in Europe and the US.
10Martin Helme Robert Holmes BSc MRICS
CEO London Property Bonds plc Managing Director & Founder Robert Holmes & Co Limited
Martin is Group Chief Executive and is tasked with After studying Estate Management at University and
managing the group’s expansion. After 10 years in achieving RICS (The Royal Institute of Chartered
senior Finance Director roles in the UK and the Far East, Surveyors) qualifications, Robert Holmes ran the family
he built two retail chains in the UK. More recently, he property surveying business and set up Robert Holmes
has specialised in UK property and raised £50 million & Co in 1986. Nearly 30 years later, the company is the
for a developer in London of commercial and residential leading realtor in Wimbledon, which is a testament to
conversions. He qualified as a Chartered Accountant with Robert and his directors’ business acumen, dedication to
Arthur Andersen. clients and the business, and the team that he has built.
From this successful core, the company has laid the
ground work for a controlled expansion of the operations.
11Property Advisor
Robert Holmes & Co
The leading residential property
service in the Wimbledon area in
the over £1 million home sales*
History & Success Our business model
Robert Holmes & Co was established in 1987 in Robert Holmes & Co's Wimbledon market leadership
Wimbledon. Largely due to the prowess of the founder, against competition from national brands and other
Robert Holmes, and his co-directors, the business has local agencies (all located in the same area as Robert
become the leading residential property service in the Holmes) can be directly attributed to the company’s
area – capturing approximately half of the market for business model.
home sales in the over £1 million bracket.
This model includes every element of client engagement,
Proof of Robert Holmes & Co's success in this chosen but also focuses strongly on community engagement.
niche is its consistently strong financial performance, Robert Holmes & Co constantly works in the local area,
averaging circa £1m profit (before tax and shareholder involving themselves with local schools, charities and
drawings) over the past four years (see below). 2014’s community organisations.
profit was impaired by restructuring costs.
The following is also of paramount importance to Robert
Holmes & Co:
2011 £ 1,186,687
2012 £ 961,279
ưư Attracting the right sort of buyers, sellers,
tenants and landlords.
2013 £ 1,235,133 ưư Sourcing the highest quality properties.
ưư Looking after clients’ needs.
2014 £ 666,666 ưư Dealing with enquiries promptly and efficiently.
ưư Optimising the way viewings are conducted.
ưư Maintaining discretion and loyalty throughout
the client-agent relationship.
However, in the opinion of Robert Holmes & Co, its
business model’s most valuable point of difference lies in
its staff: their unrivalled local knowledge and involvement
in the community allows Robert Holmes & Co to succeed
against much larger firms.
* source: rightmoveplus analysis 16 September 2015 to 5 December 2015
12Financials
London Property Bonds plc is newly established and
therefore has no historic financial data to disclose
The financial information provided is for Robert
Holmes & Co Limited, the major trading entity within
the Robert Holmes group of companies
Financials
2014 2013 2012 2011 2010
Turnover £ 2,696,253 £ 2,996,462 £ 2,732,354 £ 3,251,269 £ 2,373,327
Cost Of Sales (£ 542,116) (£ 579,272) (£ 430,618) (£ 456,619) (£ 200,175)
Gross Profit £ 2,154,137 £ 2,417,190 £ 2,301,736 £ 2,794,650 £ 2,173,152
Admin Expenses (£ 1,753,705) (£ 2,089,568) (£ 1,665,196) (£ 1,908,462) (£ 1,499,328)
Other Income £0 £ 11,524 £ 52,145 £ 53,983 £ 41,364
Operating Profit £ 400,432 £ 339,146 £ 688,685 £ 940,171 £ 715,188
Profit On Sale Of Property £0 £ 607,102 £0 £0 £0
Profit On Ordinary Activities £ 400,432 £ 946,248 £ 688,685 £ 940,171 £ 715,188
Net Interest £ 1,834 £ 575 £ 894 £ 306 (£ 1,788)
Pre-tax Profit £ 402,266 £ 946,823 £ 689,579 £ 940,477 £ 713,400
Tax (£ 99,325) (£ 180,644) (£ 165,525) (£ 255,499) (£ 196,949)
Net Profit £ 302,941 £ 766,179 £ 524,054 £ 684,978 £ 516,451
Add Back Shareholder Drawings* £ 264,400 £ 288,310 £ 271,700 £ 246,210 £ 237,850
Adjusted Pre-tax Profit £ 666,666 £ 1,235,133 £ 961,279 £ 1,186,687 £ 951,250
Source: annual statutory accounts published at Companies House
*add back of normal annual shareholder drawings from Robert Holmes & Co Limited.
13Market London & South East
The Market
Overview There is significant evidence suggesting that the London
housing market demonstrates rare resilience compared
to elsewhere in the country.
The Office of National Statistics points to an average
11% growth in London house prices over recent years.
This reflects a comparatively bullish trend to other
geographic areas, with growth figures as low as 3% in
the North East.
Supply
In July 2015, The Centre for Economics and Business
Research (CEBR), a leading consultancy, said the
drought in properties on the market was pushing up
prices. CEBR now predicts that annual house price
inflation across the UK will be no less than 23.6% higher
by 2020. Savills also forecasts price growth of 21.5%
over the next five years in Prime Central London, and the
Land Registry reported that the average London home
value now stands at £500,000.
Prof Tony Travers, who is local government expert at
the London School of Economics, says that London's
rapid house price inflation is more to do with the lack of
building than with foreign buyers.
"The population of London is growing by about 100,000
each year, but we're only building about 18,000 to 20,000
new homes."
There has been a historic undersupply in London
residential development, where the minimum
requirement is 42,000 new build units per annum, but
only 10,000-30,000 new builds come onto the market
annually. This has resulted in a cumulative shortage in
supply over time.
The Chancellor’s recent reforms abolished the old 'slab-
sided' stamp duty system and introduced a new system
of progressive bands. This is affecting the market. Latest
figures from the Land Registry show house sales were
20% down in March compared with a year previously,
with deals involving properties worth more than
£2 million down by 30% from 175 to 122.
Although the changes have so far mainly affected
central London properties in the £1.5 million to £5 million
bracket, there are concerns that the ripples will start to be
felt elsewhere in the capital, even though stamp duty bills
are now lower on transactions below £937,000.
14The National Market Threats and Opportunities
Increase in Mortgage Lending Collectively, the outlined trends make the London property
market a hostile climate for small, independent estate
2014 saw an increase in mortgage lending and the agencies who do not:
trend continued in 2015, with banks waging price
wars to offset the increase in the historically low ưư Capitalise on High Net Worth property price growth;
base rate. For buyers, the cost of funding a home
purchase looks to be lower than in previous years. ưư Meet the lower-end of the market’s
demand for self-service;
Buy-to-Let
ưư Expand their service offerings to capitalise
The option of buying a home to let has become on their market knowledge and client base.
increasingly popular. For many, becoming a landlord
represents a superior investment, with The Guardian Despite these threats to high-street realtors, Robert Holmes
reporting rental returns of up to 16% pa. The report also & Co firmly believes there is still a need for ‘traditional’ estate
states that one-in-seven British mortgages are made to agencies and their methods, specifically among individuals
landlords, reinforcing the perception that there has been selling and buying High Net Worth property in excess of £1.2
a large demand. The Chancellor’s Autumn statement, million, i.e. among the existing Robert Holmes & Co target
which increased the stamp duty for buy-to-lets, will market.
impact this demand in the future.
Selling high value property is not a mass-market proposition.
Self-Service Selling It requires a considered approach and the intrinsic values
associated with the Robert Holmes & Co brand: experience,
It is widely accepted that properties in the lower value credibility, discretion, commitment to customer service,
bracket (Our Plans
London Property Bonds plc is issuing the
Bond to invest in property opportunities
The corporate structure and the entities involved Property Improvement
The senior team has established a holding company, London Property Bonds plc will fund loans on properties
London Property Bonds plc, to oversee the funding of the in the area of London covered by Robert Holmes aimed at
expansion of the company, both geographically and its increasing the value of properties prior to a subsequent
product offering. sale. As with many estate agents, properties arrive
on its books that can, for a proportionally low level
A number of reputable businesses are also involved in of investment, significantly increase the value of the
this Bond: property. In most cases the vendor does not have the
budget or the desire to fund these improvements. Where
ưư Independent Portfolio Managers Ltd (IPM), an Robert Holmes advises on these opportunities, London
investment management business authorised Property Bonds plc will seek to fund the improvements
and regulated by the Financial Conduct for a pre-agreed percentage of the expected increase in
Authority, has been appointed as the Security value of the property. All funding will be secured against
Trustee. the property. in some circumstances, London Property
ưư STOA is a trading name of IPM and is the Bonds plc may purchase an interest in the property, fund
promoter of the mini bond. the improvements and share the increase in value with
ưư NCM Fund Services Limited, which is the vendor.
authorised and regulated by the Financial
Conduct Authority, has approved this
Invitation Document. Location Expansion
ưư Buckingham Corporate Services is the
Registrar. Following the closure of the Offer Based on the near 30 years of local knowledge and market
Period of the Bond, Buckingham Corporate leadership of Robert Holmes, London Property Bonds
Services will maintain a record of each plc will fund the establishment of new Robert Holmes
investor, including their details and investment offices in the affluent areas surrounding Wimbledon.
amount. It simply makes sense to expand in areas that Robert
ưư Black Swan Edge is: a subsidiary of Holmes already has a name but, until recently, no physical
Black Swan, the UK’s fastest growing presence in order that more offices could translate into
tech start-up, and provides data, marketing more property investment opportunities.
and strategic insight to the financial sector.
ưư Global Currency Exchange Network (GCEN) Property Development
and its affiliate entity, Global Custodial
Services (GCS), provide payment and As in most London areas, there are opportunities to
subscription services. GCEN and GCS are redevelop existing buildings for residential use. Robert
authorised and regulated by the Financial Holmes, as advisor to London Property Bonds plc,
Conduct Authority. GCEN is also authorised has extensive knowledge of the property market in the
and regulated by HM Revenue & Customs Wimbledon area and relationships with developers built
and is a member of the UK Money Transmitters up over nearly 30 years. Where there are opportunities to
Association. part- or wholly fund the regeneration of buildings in the
Wimbledon and surrounding areas and other property
development opportunities arising from within the wider
network of property contacts, knowledge and expertise,
built up over the years by Robert Holmes, London Property
Bonds plc will provide loans to these developers, secured
against the value of the properties being developed.
16Investor
Safeguards
Safeguards
The London Property Bond is designed to offer you the
maximum security for your investment, but it is important
to understand that all investment involves risk. In this
section the safeguards are outlined but please read the
section on risk to ensure you fully understand the risks
involved.
Ring-fenced and Secured
London Property Bonds plc is a UK public limited company
over which Bondholders have several levels of security:
ưư There is a debenture over all the assets of
the London Property Bonds plc, in favour of
an independent Security Trustee.
ưư London Property Bonds plc only deploys
capital for property improvements where
there is a charge over a UK property.
The charge is an asset of London Property Bonds plc.
If London Property Bonds plc defaults (for instance if a
due payment is not made to Bondholders), the Security
Trustee can take control of the assets.
The Security Trustee acts solely in the interest of
Bondholders.
Security Trustee
To further safeguard the interests of bondholders,
Independent Portfolio Managers Ltd (IPM), an investment
management business authorised and regulated by the
FCA, has been appointed to act as Security Trustee.
17Risk Factors
What risks should I consider? No repayment guarantee
In addition to the other relevant information set out in this There is no guarantee that you will get all your money
Invitation Document, the following specific risk factors back, or all outstanding interest, if the Company becomes
should be considered carefully in evaluating whether to insolvent.
make an investment in the London Property Bond.
The London Property Bond is not protected against loss
If you are in any doubt about the contents of this Invitation by the Financial Services Compensation Scheme.
Document or the action you should take, you are strongly
recommended to consult a professional adviser who
specialises in advising on investment in unlisted debt,
shares and other securities.
The directors of London Property Bonds plc (the
“Directors”) believe the following risks to be significant Government action
for potential investors. The risks listed, however, do
not necessarily comprise all those associated with The impact of actions, inactions or retrospective legislation
an investment in London Property Bonds and are not in jurisdictions in which London Property Bonds plc
intended to be presented in any assumed order or priority. operates may adversely affect its activities.
In particular, the Company’s performance may be affected
by changes in legal, regulatory and tax legislation as well
as London property market conditions.
Illiquid and non-transferable Macro-economic risks
Investment in unquoted securities such as these (i.e. Changes in the general economic outlook in the UK and
investments not listed or traded on any stock market or globally may impact the performance of London Property
exchange) are illiquid. In other words, you cannot trade Bonds plc and its projects. Such changes may include (but
them, so your money is effectively locked in untill the are not limited to):
maturity date in five years’ time.
ưư Contractions in the UK economy or
Only in the event of bankruptcy or death can you transfer increases in inflation resulting from domestic
the bond to someone else. This important exception is or international conditions (including
what should allow the bond to be accepted by the trustees movements in domestic interest rates and
of a self-invested personal pension (SIPP) or small self- reduced economic activity);
administered scheme (SSAS). ưư Increases in London Property Bonds plc
expenses (like cost of goods and services);
Normally mini bonds are not allowable within a pension ưư New or increased government taxes, duties
wrapper because the wrapper provider needs to be able or changes in taxation laws;
to turn all the assets held into cash on a holder’s death. ưư Fluctuations in equity markets in the UK
This does not mean that all SIPP and SSAS providers will and internationally. A prolonged and
accept the London Property Bond, but it is worth asking significant downturn in general economic
your provider if you would like to hold it within your own conditions may have a material adverse
SIPP or SSAS. impact on the trading of Holmes Property
Bonds plc and its financial performance.
18Reliance on key personnel Summary
The Company may be dependent on the skills of senior The above factors are not exhaustive and they do not
people with particular expertise or contacts. Deprival of purport to be a complete explanation of all the risks and
their services – whether it is through them changing job, significant considerations involved in investing in London
or through illness or death – could impact the business. Property Bonds. Accordingly, and as noted above, additional
risks and uncertainties not presently known to the Directors
or that the Directors currently deem immaterial, may also
have an adverse effect on the Company's business and
prospects.
Third party risk
London Property Bonds may not be a suitable investment
The operations of London Property Bonds plc involves for all who review this Invitation Document or the Bond
exposure to a number of third parties. There is also Instrument. Investors should take their own tax advice as
reliance on the companies or individuals funded by to the consequences of owning London Property Bonds as
London Property Bonds plc. Financial failure, default well as receiving interest payments from them.
or contractual non-compliance on the part of such third
parties may have a material impact on London Property Other than the obligations and other covenants on the
Bonds plc’s development and general performance. It is part of London Property Bonds plc to pay interest on the
not possible for London Property Bonds plc to accurately London Property Bonds, repay the principal sum of the
predict or protect itself against all such risks. London Property Bonds when due and to perform the other
obligations contained in the Bond Instrument, the express
warranties and undertakings given by London Property
Bonds plc in the Bond Instrument and the obligation of
London Property Bonds plc to perform the liabilities of
Security Trustee London Property Bonds plc in the event that London
Property Bonds plc defaults, no representation or warranty,
The Security Trustee shall not be responsible, nor shall express or implied herein, is given to Bondholders by London
face any liability, for any loss incurred by the Bondholders Property Bonds plc or the Directors and officers of London
relating to a failure of the Company to make payments Property Bonds plc. In particular but without limitation, no
(whether of interest or of the principal amount) to the representation or warranty is given by any such person as to
Bondholders when due. The Security Trustee will not have (i) the tax consequences; (ii) the regulatory consequences;
any ability or responsibility to protect any monies in the and (iii) the business and investment risks associated with
accounts of London Property Bonds plc which may have acquiring, owning or redeeming London Property Bonds.
been set aside for payment of interest or the principal
amount in respect of the London Property Bond.
19Frequently Asked
Questions
What is a mini bond? How much can I invest?
A mini bond is a way for UK companies to borrow directly £1,000 is the minimum investment. You may invest in
from the public. After the 2008 global financial crisis, multiples of £1,000 thereafter, with no upper limit.
the UK government recognised that banks did not have
the money to lend to small and medium-size enterprises
(SMEs). The government allowed UK SMEs to directly Who can invest?
approach the public with a corporate IOU (or promissory
note) called a mini bond. The investor lends money to a Any individual who is over the age of 18, or a trust,
UK plc for a set amount of time (the “Term”) in return for company or charity that is not prevented by the laws of its
a fixed amount of interest (the “Coupon”) plus the original governing jurisdiction from applying for or holding London
investment amount which is returned at the end of the Property Bonds.
Term.
How is a mini bond different from a listed bond? What is STOA?
Mini bonds are effectively a private borrowing agreement A mini bond must be promoted by a regulated Firm. STOA
between a company and an investor that cannot be is a trading name of Independent Portfolio Managers
transferred to someone else. In contrast, retail corporate Limited, which is authorised and regulated by the
bonds and government gilt-edged securities are freely Financial Conduct Authority.
tradeable instruments. The financial promotion of mini
bonds must be carried out by an FCA-authorised and
regulated company to ensure the invitation to invest is
fair, clear and not misleading. However, mini bonds are
corporate treasury instruments and not securities, so they What is NCM?
are not protected by the Financial Services Compensation
Scheme. While safeguards are in place, the FCA is very NCM Fund Services Limited is authorised and regulated
clear that every investor should be aware that their capital by the Financial Conduct Authority and has approved this
is at risk. Invitation Document.
Why are you seeking investment via a mini bond rather
than going direct to the banks or considering other
forms of investment? What is Buckingham Corporate Services?
A mini bond is a cost-effective method of raising Buckingham Corporate Services Limited is the Registrar.
investment, and London Property Bonds has tailored Following the closure of the Offer Period of the Bond, they
its offer to maximise investors’ returns while generating will maintain a record of each investor, including their
a strong level of security. Dealing with banks can be details and investment amount.
onerous and time-consuming, and would not give London
Property Bonds the flexibility and agility it needs to make
the most of market opportunities. Similarly, banks can be
reluctant to loan against some properties and to some
owners (the retired, for example) – and London Property
Bonds is well-placed to service the needs of those
owners.
20Can I put the London Property Bond into my SIPP or What return do I receive on my investment and is the
ISA? interest rate fixed?
Mini bonds are suitable for self-invested personal The gross interest rate is 8% a year on the amount
pensions (SIPPs) subject to approval by the scheme subscribed with a payment every quarter, which is fixed
trustees and administrators. and does not change.
Mini bonds are not currently approved for ordinary tax-
free individual savings accounts (ISAs).
Can I pay by instalments or top up my holding? How do I get paid my interest?
Unfortunately not. There is a fixed invitation period For the five-year term of the London Property Bond, you
during which all applications must be completed. Once are entitled to receive each quarter 2% gross interest.
the invitation period is closed, no new applications or
additions to existing holdings can be accepted.
What is the Offer Period? What is a ‘Bond Account’?
The invitation period opens on 12 February 2016 and You may access details of your investment online through
closes on 29 July 2016. your personal account on www.londonpropertybonds.
com (this is the ‘Bond Account’).
How can I confirm my investment has been accepted? When do I get my original investment back?
Once your application has been accepted, your investment All of your original investment is expected to be returned in
will be recorded in your Bond Account. In addition, full on 30 June 2021.
following the closing date, all bondholders will be issued
with a bond certificate registering their investment.
Can I change my mind?
Yes, provided you do so within 14 days of your completed
Application Form being received or being submitted
online. If you wish to cancel your application, you should
write to STOA, Becket House, 36 Old Jewry, London,
EC2R 8DD. After this date, your application will be
irrevocable and you will not be able to terminate it or
rescind it unless there are exceptional circumstances.
21Frequently Asked Questions
How does the Early Bird bonus work? What is London Property Bonds plc?
Any investor who completes their application before 30 London Property Bonds plc is the company that has been
June 2016 will start accruing 8% p.a. interest from the day established to issue the London Property Bond to provide
their investment is cleared up to the Closing Date. The funding for property improvements, advised by Robert
Early Bird interest will be paid to you as an initial bonus Holmes & Co.
soon after the Closing Date.
Individuals who invest after 30 June 2016 will accrue Who is Robert Holmes & Co?
interest from the Closing Date.
Robert Holmes & Co is a successful estate agency
business that has been a leader in the Wimbledon area of
London for nearly 30 years and is the property adviser to
Are there any hidden fees, charges or deductions? London Property Bonds plc.
London Property Bonds plc will take no fees or make any
deductions or charges of any kind on the interest paid by How will the money be invested in order to pay 8%?
the London Property Bond.
ưư Local Expansion: With nearly 30 years of
HMRC has made changes to the tax deduction scheme local knowledge, Robert Holmes & Co
for interest (TDSI), which came into effect on 6 April 2016. will carefully expand in areas where the
The obligation of deposit-takers (like London Property company already has a name in order that
Bonds plc) to withhold tax ceased on this date. Therefore, more property investments can be found for
all interest paid by London Property Bonds plc is paid the bondholders.
gross, without deducting 20% withholding tax. It is now ưư Property Improvement: London Property
the obligation of the bondholder to report interest earned Bonds plc will seek to fund property
to HMRC. improvements in the Wimbledon area for
a pre-agreed percentage of the increase
Furthermore, from 6 April 2016, R85 declarations are no in value of the property. And all funding will
longer required for non-UK taxpayers. be secured against the property.
ưư Property Development: London Property
Bonds plc will take the opportunity to part
or wholly fund the regeneration of buildings
Do mini bonds track the stock or bond markets? in the Wimbledon and surrounding areas,
secured against the value of the properties
No, it is highly unlikely that there will be any correlation that being developed.
is not statistically coincidental. ưư Property: investment in properties that
without improvements can still achieve
substantial growth due to location.
Can I withdraw my money before the end of the five- Where does the money go if it isn't invested in properties
year term? as planned straight away?
Mini bonds have a fixed term and are not freely Any capital yet to be deployed may be held in bank deposit
transferable. The London Property Bond allows investors accounts and/or invested in high-yielding instruments
to request the return of their investment if they can show (as long as they are asset-backed).
financial hardship or if an executor of their estate makes
a formal request.
22What more can you tell me about the properties London
Property Bonds will invest in? What if something happens to me or I die?
They will be prime London property, mainly in Wimbledon. If a bondholder shows they are subject to material
The growth in value expected upon the sale of the financial hardship, the Directors have discretion to repay
property is expected to be significantly higher than the the bondholder’s investment early.
value of London Property Bonds’ investment. Any
downturn in the sale value will be borne by the clients, not London Property Bonds that are not jointly held would
the Bondholders. form part of your estate and title would pass to the
executors or administrators of your estate. The London
Property Bond allows your executors or administrators to
apply for early repayment of the bond so the estate can
What projects are you currently working on? be settled.
As detailed in this document, London Property Bonds
plc is a new entity. However, its advisor, Robert Holmes
& Co has carried out similar work for third parties. Robert
Holmes & Co’s experience will be to London Property
Bonds’ and its investors’ benefit.
How is the investment protected?
Bondholders have several levels of protection:
ưư First is a debenture over all the assets of
London Property Bonds plc.
ưư Second, London Property Bonds plc will
hold a charge over any properties against
which it lends.
ưư Third, an independent Security Trustee
is appointed to act on behalf of Bondholders
if London Property Bonds plc defaults. The
Security Trustee acts solely on behalf of
Bondholders.
How much money do you hope to raise with this London
Property Bond?
London Property Bonds plc is seeking to raise a total of £3
million. Following analysis of the market, we believe this is
the optimum investment for us to deploy.
There is no minimum raise.
23How to invest in the
London Property Bond
Online Application Postal Application
You can complete the online application process by Visit www.londonpropertybonds.com and download an
visiting www.londonpropertybonds.com and selecting application form or write to STOA at:
Invest Online Now.
London Property Bonds, ℅ STOA,
Step 1 Becket House, 36 Old Jewry,
Begin the registration process by entering your full name, London EC2R 8DD
address and telephone number.
You will receive an application form in the post.
Step 2
Create an account by providing your email address and a Please complete and sign the application form and
password. You will receive an email confirming you have investor questionnaire (if applicable) by hand in black
created an account. ink and in block capitals (there is no maximum value for
postal applications).
Step 3
State how much you would like to invest. The minimum Make a bank transfer to the details on the application
investment is £1,000; there are no maximum investments form or you may include a cheque (see “Payment
but investments are required to be in multiples of £1,000. Information” for details) with your application form. Once
the transferred funds are cleared, they will automatically
Step 4 be matched to your application.
State what type of investor you are and if prompted
complete the appropriate investor questionnaire. Note: postal applications need to be checked and
approved. You may be contacted to confirm or check
Step 5 some details.
Provide your bank details to ensure payment of your
quarterly interest payments.
Step 6
Select your payment method. Invest by debit card up
to £10,000 or an unlimited amount via bank transfer or
cheque.
Step 7
Upload your identification and proof of address
documentation.
Step 8
You have completed the investment process, you will see
an overview of your application which you may print for your
records and you will receive a confirmation email.
24Payment Information Payment by cheque
The minimum application is for £1,000 and multiples of Please make cheques payable to ‘Global Custodial
£1,000 thereafter. Services’.
You may pay by bank transfer (using the details below) or
online using a debit card (maximum of £10,000) . It is also
possible to pay by cheque if preferred.
Bank Transfer Details Bank Transfer Details
Account Name Under the Money Laundering Regulations 2007 (as
GLOBAL CUSTODIAL LPB amended), all applicants are required to submit a copy of
Sort Code photographic ID and proof of address.
090222
Account Number If you are applying online, you will be prompted to upload
10502509 these documents as part of the online application process.
Bank Name If you are unable to do so at the time of investment, you
Santander UK plc will need to submit these documents at a later date.
Branch
Bridle Road, Bootle L30 4GB If you are applying via post, you are required to enclose a
IBAN Number copy of these documents with your application.
GB69ABBY09022210502509
SWIFT Code Please do not send original documents in the post. You
ABBYGB2LXXX will be contacted if the original documents are required.
There is no maximum investment (except a maximum of GCS reserves the right to withhold any entitlement
£10,000 by debit card) and you may invest any number of until such verification of identity is completed to its
times as long as it is within the offer period. satisfaction.
Help
If you have any questions regarding the procedure for investment or payment, please contact the mini bond Help Desk:
Telephone Email Address
0845 468 0379 info@londonpropertybonds.com London Property Bonds, ℅ STOA,
Lines are open from 9am and 5pm, Becket House, 36 Old Jewry,
Monday to Friday. London EC2R 8DD
2526
Definitions
A M
Application: An application to subscribe for the London Mini Bond: An unlisted and untradeable corporate loan.
Property Bond.
C N
Closing Date: 5:00 pm on 29 July 2016, or such other date NCM: NCM Fund Services Limited of 7 Melville Crescent,
prior to the Long Stop Date as selected by STOA. Edinburgh, EH3 7JA which is authroised and regulated by
the Financial Conduct Authority, number 183732.
E R
Early Bird Offer: Applications accepted prior to 30 June Robert Holmes: Robert Holmes & Co Limited and its
2016 will atract addition interest between the date the subsidiaries and affiliates.
funds cleared and the Closing Date.
Receiving Agents: The entity that collects the application
monies, GCS.
F Registrars: Buckingham Corporate Services Limited,
5th Floor,St George's House, 15 Hanover Square, London,
FCA: Financial Conduct Authority (in the UK). W1S 1HS.
G S
GBP or £: Pounds Sterling Security Trustee: A party responsible for the administration,
recovery or enforcement of the security taken over the
GCS: Global Custodial Services Ltd, The Old Barn, Oasts assets of the Company by way of a debenture.
Business Village, Red Hill, Wateringbury, Maidstone, Kent,
ME18 5NN which is authorised and regulated by the SME: Small or medium-sized enterprise.
Financial Conduct Authority, number 595875.
STOA: A trading name of Independent Portfolio Managers
GCEN: Global Currency Exchange Network Limited, The Limited which is authorised and regulated by the Financial
Old Barn, Oasts Business Village, red Hill, Wateringbury, Conduct Authority, number 184115, and is the promoter
Maidstone, Kent, ME18 5NN, which is authorised and of the Bonds.
regulated by the Financial Conduct Authority, number
04675786.
L U
Launch Date: 12 February 2016. US$ or $: United States Dollar.
London Property Bonds plc or Company: London Property
Bonds plc, with Company Number 9867110, which is
issuing the London Property Bond.
Long Stop Date: 5:00 pm on 30 September 2016.
London Property Bond(s): The bond(s) issued by the
Company created by the Bond Instrument.
27
27Bond
Instrument 1. Definitions and Interpretation
This deed is made on the 12 February 2016 by: 1.1. The following words have these meanings in this Instrument unless a
contrary intention appears;
LONDON PROPERTY BONDS plc registered in England
and Wales with registration number 9867110 whose A Aggregate Nominal Amount: in respect of the London Property Bonds in
registered office is at 106 Mount Street, London, issue at any time, the aggregate principal amount of London Property Bonds
W1K 2TW (the Company). outstanding at that time and/or all accrued and unpaid interest thereon.
B Bondholder or Bondholders: the person(s) from time to time entered in the
Register as the holders of the London Property Bonds.
Bond Instrument or Instrument: this bond instrument constituting London
Property Bonds.
Business Day: a day other than a Saturday or a Sunday on which clearing
banks are open for business in London.
C Certificate: a certificate evidencing title to the Bonds.
Commencement Date: Being the date on which the Bonds are first issued.
D Default Event: has the meaning given to that term in clause 6.1 of this
Instrument.
Directors: the board of directors of the Company from time to time.
F First Interest Payment Date: 30 September 2016.
G Group: a company which is from time to time a parent undertaking or
a subsidiary undertaking of the Company or a subsidiary undertaking
of any such parent undertaking, and the terms “parent undertaking”
and “subsidiary undertaking” shall have the meanings as set out in the
Companies Act 2006.
I Interest Payment Date: The date being (i) the First Interest Payment
Date and (ii) thereafter the last day of every, December, March, June and
September provided that it is a Business Day, (but if it is not a Business Day,
then the next Business Day) up to and including the date on which the Bonds
are finally redeemed.
Interest Period: In respect of a Bond, the period commencing on (and
including) an Interest Payment Date for that Bond and ending on (but
excluding) the next Interest Payment Date for that Bond, except that the
first Interest Period will commence on (and include) the Commencement
Date and end on (but exclude) the First Interest Payment Date.
Interest Rate: 8% p.a. (eight per cent per annum).
L London Property Bonds or Bonds: The non-convertible and non-
transferable bonds of the Company constituted by and issued pursuant to
this Bond Instrument.
R Recognised Investment Exchange: has the meaning ascribed to that term
in section 285 of the Financial Services and Markets Act 2000.
Register: the register of Bondholders maintained by the Company as
provided for in clause 12.
Registered Office: the registered office of the Company from time to time.
Repayment Date: subject to pre-payment by the Company in accordance
with the terms of this Bond Instrument, the date that is the fifth anniversary
of the Commencement Date (but if it is not a Business Day, then the next
Business Day).
S Security: the security created by the Security Document.
Security Document: a debenture being a fixed and floating charge over the
assets of the Company granted to the Security Trustee.
Security Trustee: Independent Portfolio Managers Limited or such other
person as is appointed as trustee under the Security Trust Deed.
Security Trust Deed: the deed by which the Security Trustee is appointed
to hold the Security for the benefit of the Bondholders on the terms set out
in that deed.You can also read
