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Good Investments : Great Returns COLONIAL CAPITAL London . Chicago

Colonial Capital 3yr Secured 032015- V.01

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Page 1: Colonial Capital 3yr Secured 032015- V.01

Good Investments : Great Returns

COLONIALCAPITAL

London . Chicago

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contractSecured

Assetbacked

Fixed termsT

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The Background How It Works Investment Strategy Strong Rental Cashflow Housing Choice Voucher Program Why Invest in Chicago About Us & Our Partners First Returns

Page 1Page 1Page 3Page 5Page 7Page 9

Page 11Page 13

Good Investments : Great Returns

COLONIALCAPITAL

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The: BondThe Colonial Capital Group PLC Three Year U.S. Social Housing Bond (SHB) was first issued in February 2014 with the express objective of re-housing thousands of families in the Chicago area and to create an exceptional investment vehicle for investors to make their money work harder.

There is no mistaking that the U.S. housing market has been on a downward path since it reached an all-time high in late 2006 early 2007. However, after plummeting over 50% in some areas, the consensus is we may have finally found a bottom to the market.

The graph below (Figure 1) shows that the bulk of the drop in prices occurred between mid-2006 and early 2009. This has provided an ideal opportunity for investors wishing to put their savings to good use in this ethical environment. The Three Year Fixed Social Housing Bond means that you can now invest in property without the hassle of managing your own portfolio. And, with as little at £10,000 you will receive a 12% return on your money.

How: It worksOur experienced team of property negotiators acquire properties on behalf of Colonial Capital Group PLC’s Social Housing Bond, direct from U.S. Banks and U.S. Government-sponsored entities (Organisations such as Fannie Mae and Freddie Mac.) via Foreclosure sales. These are typically two - four unit multi-dwelling houses in Chicago.

After a complete refurbishment we lease these properties to U.S. families under the Housing Choice Voucher (HCV) Programme, formerly known as Section 8. This allows Colonial Capital Group PLC to achieve high rental yields that are paid and underwritten by the U.S. Government. The properties are then managed and maintained by a professional property management company. In some cases we may sell a portion of our portfolio to help accelerate growth and use leverage where appropriate.

There is a minimum initial investment of £10,000 and subsequent purchases can be made at £1,000. The returns are as follows:

3 Year SHB – 12% p.a. – 100% end of term redemption

The first interest payment date is six months after the final date of subscription, with interest calculated on a daily basis from the date of investment.

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U.S. National Prices Historical

Figure 1

Year

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Total Delinquent and Foreclosure % By Month

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f Active Loans

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96 97 98 99 01 02 03 04 05 06 07 09 10 11 12 13

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Chicago, Illinios

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Investment: StrategyWe focus on multi-unit dwellings which consist of between two - four apartments and all properties are purchased direct from U.S. banks or via foreclosure sales and are refurbished to a high standard, which includes new kitchens, bathrooms, windows and wooden floors.

The yields achieved deliver the interest payment to the Bond investors while allowing Colonial Capital Group PLC to acquire more properties.

Throughout the fixed three year term, each property is professionally managed to maximise the returns and protect the investment. This includes a mixed strategy of buy & hold, buy & sell at the most appropriate times.

The table below shows the Housing & Urban Development (HUD) Department’s agreed rent payable in Chicago for 2015.

One-Bedroom Two-Bedroom $922 $1,093 Three-Bedroom Four-Bedroom $1,395 $1,624

Our strategy is to undertake more property dealing in the early part of the Bonds lifecycle while prices are particularly low. This will help to accelerate returns before switching to a longer term holding strategy as the bond matures

Colonial Capital Group PLC can acquire a two unit property for as little as $30,000 and refurb it for approximately $50,000. A two unit property with two, three bedroom apartments will produce a rental income of $33,480 per annum. If we take an acquisition and refurbishment cost of $80,000 we will achieve an un-leveraged yield of 41.85%.

Another option is to acquire, refurbish and sell. The above example could be sold for $186,000 and still produce an un-leveraged yield of 18% per annum for a buy-to-let investor (the cap rate).

The figures achieved are even better on a three unit dwelling. In this example the property has three, three bedroom apartments. A typical acquisition and refurb cost would be approximately $100,000.

The rental income generated by this property would be $50,220. This would provide an un-leveraged yield of 50.2% or an un-leveraged profit of $100,880 if we sold at a cap rate of 25%. The sale of just one of these three bedroomed apartment properties generates enough cash to cover all the Bond interest payments and the final redemption payment.

Three, three bedroom apartments (based on an investment of $100,000.

Rental Income as per FMR $50,220 Redemption Payment @ 100% $100,000 Sale Proceeds $200,880 Total Repaid to Bondholder $136,000 Note Investment $100,000 Note Interest @ 12% per annum $12,000 Property Type: 3 Apts - 9 Beds Total Note Interest Payable $36,000 Cap Rate 25%All of the returns shown above are un-leveraged.The Fair Market Rent (FMR) is set by the Housing & Urban Development department and is paid direct to either the investor or the investor’s agent, thus guaranteeing a certain level of rental income.All funds invested are secured against the property portfolio of Colonial Capital Group PLC* The HUD is a U.S Governmental Department

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Strong Rental: CashflowAs more people are forced to rent their home in Chicago, the demand for rental property increases and this creates upward pressure on rental prices.

1 People who have suffered from a foreclosure still need somewhere to live and therefore their only option is to rent.

2 Many first time buyers cannot get a mortgage to buy a property so they are forced to rent instead.

3 Voluntary Default, whereby a regular borrower hands back their keys because they are in a negative equity position and they decide they would be better off renting.

There has been a steady and unavoidable rise in the price of rental income across the U.S. since 1983.

Inflation-Adjusted House Prices

Nominal House Prices

Inflation-Adjusted Pre-Bubble Trend

Nominal Pre-Bubble Trend

Home Ownership Rates: United States

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House Prices: United States

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Michigan Avenue

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The: Housing Choice Voucher ProgrammeThe Housing Choice Voucher program is the U.S. Federal Government’s major program for assisting very low and low-income families, the elderly and the disabled to afford decent, safe and sanitary housing in the private market. Since housing assistance is provided on behalf of the family or individual, participants are able to find their own housing, including single-family homes, townhouses and apartments.

The participant is free to choose any housing that meets the requirements of the program and is not limited to units located in subsidised housing projects.

Housing Choice Vouchers are administered locally by public housing agencies (PHAs). The PHAs receive Federal funds from the U.S. Department of Housing and Urban Development (HUD) to administer the voucher program.

A family that is issued a housing voucher is responsible for finding a suitable housing unit of the family’s choice where the owner agrees to rent under the program. Rental units must meet minimum standards of health and safety, as determined by the PHA.

A housing subsidy is paid to the landlord directly by the PHA on behalf of the participating family. The family then pays the difference between the actual rent charged by the landlord and the amount subsidised by the program. Under certain circumstances if authorised by the PHA, a family may use its voucher to purchase a modest home.

The Rent SubsidyThe PHA calculates the maximum amount of housing assistance allowable. The maximum housing assistance is generally the lesser of the payment standard minus 30% of the family’s monthly adjusted income or the gross rent for the unit minus 30% of monthly adjusted income.

All rental payments are paid direct from the U.S. Government department HUD into our managing agent’s bank account before being passed directly to Colonial Capital Group PLC.

‘Home ownership level has fallen by approximately six

million since 2007’

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Navy Pier

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Why: Invest in Chicago?Diverse Economy

Chicago is home to more than 400 major corporate headquarters, including 27 Fortune 500 Headquarters. Rated #1 Large U.S. Metro for Economic Diversity by Moody’s Investor Services. Chicago is a key player in every economic sector from risk management innovation to manufacturing to information technology to health services.

Trading Post

The most distinctive aspect of Chicago’s financial services community is also among its oldest. The city’s derivatives exchange community, which started with commodity futures trading at the Chicago Board of Trade in 1848, established the city as a global financial center. To this day, even though the trading of derivatives is conducted on an ever-expanding international scale, Chicago arguably remains the geographic center of global derivatives trading – in terms of markets, scale and talent.

Chicago continues to growChicago has over $3 billion in global derivatives trading volume, nearly two times the trading volume of New York. Chicago futures and options exchanges collectively dominate exchange-based derivatives trading, with over four billion contracts traded in 2013.

Chicago futures and options exchanges collectively dominate exchange-based derivatives trading, with 51% of exchange based derivatives trading in the U.S.

Since 2000, the volume of global derivatives trading has increased from a little over two billion contracts traded to more than four billion per year in 2013.

Growing Economy

Chicago continues to grow: total trade surpassed $160 billion in 2010 (up from $95 billion in 2004). Chicago is top-ranked for economic potential among major cities across the world and in 2010, World Business Chicago identified more than 230 medium-sized new and expanding facilities announced, under development or completed in the metro area, representing a total of more than 14 million square feet and nearly $2 billion in economic development activity. In August 2010, Inc. Magazine included 202 companies from the Chicago region in its annual list of the 5,000 fastest-growing companies in the U.S. placing Chicago 4th among metro regions for number of ‘Inc. 5000’ companies; the city itself ranked second with 101 companies .

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Chicago, Illinois

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About us: Our PartnersColonial Capital Group PLC has offices in London, U.K. and Chicago, Illinois. Its sales and administration HQ are in Chelmsford, Essex, U.K.

The Social Housing Bond was established to take advantage of the dislocation in the U.S housing market and to provide both private and institutional investors from across the globe with above average asset backed returns.

Colonial Capital Group PLC’s management team has more than 40 Years combined property experience in the Chicagoland area.

Why: Invest Now?• To take advantage of the exceptional returns without the hassle of direct ownership.

• No worries about maintenance or refurbishment issues compared to direct ownership.

• No rental vacancy periods compared to direct ownership.

• Fixed contractual interest either paid or compounded every six months.

• Short to medium term. Returns and Redemption payments are concluded after Three Years.

• Asset backed investment.

• All bondholders have a floating First Ranking Charge against the Property Portfolio of Colonial Capital Group PLC.

• 85% rule. The amount of Bonds in circulation cannot exceed 85% of the value of the property portfolio.

• Fixed return of 12% per annum for the Three Year SHB term.

• Property management, trading and development team in place with combined experience of over 40 Years.

• Low entry levels of £10,000.

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USA

Chicago Housing AuthorityChicago, USA

LawyersMcCarthy Duffy LLPand Squire Patton Boggs (U.S) LLP

AccountantsMcGladery, Chicago, USA

BankBMO Harris Bank, Signature Bank

UK

Product AdviceClive Wolman, Barrister at Law, Lincolns Inn Fields, London

AccountantBaker Tilly, Chelmsford, Essex

SolicitorsGrant Dawe LLP, London

FCA Custodian and FX PartnerGCEN

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Soldier Field

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First Returns: After Six MonthsBuying Process - You will find everything you need to apply in this pack.

• Just complete and sign the Bond Application form

• Enclose the relevant Anti-Money Laundering documents, copies must be certified (two forms of ID, one showing your current address which must also be dated within the past three months and one which must be a picture ID such as a current Passport or Driving License)

• Funds request will be sent with the payment details once anti-money laundering checks are complete

• Bond Certificate issued

• First returns received six months from the end of the subscription date, unless the compound bond is selected, in which case the annual interest payment is compounded each year and paid in full upon redemption

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COLONIAL/mb/032015- v.01

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An offering for interests in Colonial Capital Group PLC is made only pursuant to a Confidential Private Placement Offering Statement.

Colonial Capital Group PLC288 Bishopsgate, London EC2M 4QP

Tel: +44 (0) 20 33 55 [email protected]

Good Investments : Great Returns

COLONIALCAPITAL

This document has been prepared by Colonial Capital Group PLC (Company) and approved by Blackstar Wealth Management Limited for distribution only to persons authorised to receive the Company’s Information Memorandum dated 10 March 2015 (IM).This document has been prepared solely on the basis of summarising the investment opportunity set out in the IM and should be read in conjunction with the IM and, specifically, the risk warnings contained therein. Any decision to invest in the Company should be made solely on the basis of the information contained in the IM. Distribution of the IM will be in accordance with the relevant provisions of the Financial Services and Markets Act 2000. This document should not be reproduced or redistributed without the consent of the Company. Blackstar Wealth Management Limited is authorised and regulated by the FCA and is entered on the FCA’s Register with registration number 491609 and can be contacted at 17 Wrens Court, Lower Queen Street, Sutton Coldfield, West Midlands B72 1RT.

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