Holt Hill, Birkenhead, Merseyside, UK · 2018-12-01 · Holt Hill, the asset to be acquired, is a 50-unit residential building in Birkenhead, UK. The asset has a funding target of

Holt Hill, Birkenhead, Merseyside, UKROI: 108%

IRR: 8.31%

Available for investment: £3,350,000

Share transferability: Instant, global and fee-less

Planned exit: EoY 2028powered by

Information displayed is not final and is subject to change. Provided and offered by Hillview Homes Limited, 28 Esplanade, St. Helier JE2 3QA, Jersey

This publication is purely for general information and is not a prospectus.

Brickblock is facilitating a unique investment opportunity that allows you to invest in an attractive real estate asset in the United Kingdom no matter where you are in the world – cheaper and more efficiently than ever before. Most importantly, your investment is tradable at any time, which provides greater liquidity should you wish to sell your shares. This is achieved through the issuance of digital shares which are registered on Brickblock’s secure blockchain-based registry. All transactions occur within a legal framework compliant in Europe.

Holt Hill, the asset to be acquired, is a 50-unit residential building in Birkenhead, UK. The asset has a funding target of £3,350,000, whilst Hillview will finance the other half through a bank loan. The asset’s ROI is estimated at 108% and it is being acquired at an 11% discount to fair value. Further investment details are provided in the following pages.

INTRODUCTION


CONTENT

Introduction 2

Investment highlights 4

Neighbourhood 5

Asset 6

Market analysis 8

Investment specs 10

Investment structure 11

Service provider highlight: Brickblock 12

How to invest via Brickblock 13

Chairman and the Board 14

Partners and service providers 15

Financials 16-19


4

Low risk, high yield: Holt Hill is a fully let, operational, profitable real estate asset. Earn stable and secure income at a 300-basis point premium over 10-year government bonds.1

Upside potential: Issuer has signed an option purchase contract to acquire the asset at an 11% discount to fair value.*

Strong fundamentals: The UK government has launched a 30-year plan to transform infrastructure in the North-West of England, delivering a boost to the economy and creating thousands of jobs.2

Growing opportunities: The average price of a home in Merseyside rose 8% in the past 12 months, outperforming the UK average of 0.6%.3

Catalyst: Wirral council is investing £1 billion to see more people visiting, living, and working in Birkenhead and stimulate economic growth. The plan is expected to bring 5,000 jobs and £250 million of inward investment.4

Trusted corporate and asset management: The asset is managed by an experienced board comprised of industry veterans with a history of generating quality returns for investors.

No asset management fee: The asset manager is entitled to an incentive fee of 10% of total profits at exit.

Efficient structure: No access, arranger, transfer, or broker fees. Your subscription is directly invested without any additional costs.

Tax-friendly: Jersey’s 0% corporate tax rate means all residual cash flows go straight to investors.

Currency discount: The Pound Sterling is at a 15-year low, presenting a substantial discount for international investors.5

Liquid investment: Sell your shares at any time without reliance on third parties.

Attractive region: A search for value has led an increasing number of investors to look beyond London for opportunities. Close to 59% of the UK’s investment activity last year took place in the regions, its highest level since 2006.6

1 Bloomberg, RCA 2 Infrastructure and Projects Authority 3 LSL Property Services plc

4 Wirral Council 5 Bloomberg 6 Office for National Statistics

*Holt Hill has been independently appraised at £7.1 M. Please contact [email protected] for more information.

INVESTMENT HIGHLIGHTS


Birkenhead combines the vibrant, cosmopolitan vibe of Liverpool and the neighbourly village feel of the surrounding Wirral peninsula.

The town centre of Birkenhead, a hub of leisure and retail amenities, lies just 0.5 km to the north, while an excellent transport network connects residents with the greater Merseyside area (population: 1.4 million). Green Lane railway station is within relatively close proximity and provides direct train links to Liverpool and Chester. The subject property fronts Holt Hill, which links with major arterial routes and the nearby A552 collector road.

The neighbourhood is recognised as a rapidly regenerating, up-and-coming hotspot with easy access to beautiful countryside, superb beaches, first-class shopping, and exceptional dining.

Positioned at the heart of the Church Road and Docklands Regeneration project, the development’s unique location offers panoramic views of the Liverpool waterfront. A master plan for the neighbourhood promises a host of modern retail amenities, open public spaces, and further residential development.

The neighbourhood is only beginning to realise its potential as a hub for both residential and commercial real estate development.

5

NEIGHBOURHOOD

MBE Construction Ltd. is an accredited contractor with more than 60 years experience developing properties in a variety of sectors ranging from social accommodation to unique luxury properties. The company boasts an annual turnover of £34 million, delivering social housing projects for UK housing associations and other development projects of a similar scope.

Property type: Multi-unit residential

Units: 50 units, including 44 flats, 2 maisonettes and 4 townhouses

Location: Warrington Street, Birkenhead, Merseyside, CH41 9AR, UK

Construction: 2008

Lettable area: 3,322.5 m2

Occupancy: 100%

Price per m2: £1,896

Built by: MBE Construction Ltd.


6

ASSET


7

MARKET ANALYSIS

Macro: Positive trends

The UK is one of the world’s prime real estate markets, having grown 30% in the last decade. Prices have remained stable across the market in recent months despite a deteriorating economic outlook. The uncertainty surrounding Brexit is not stalling investment, with residential real estate in the UK attracting the most capital of any country in Europe outside of Germany. Brexit is expected to have little impact on capital inflows since 90% of cross-border investment in residential real estate in the UK comes from the United States, Singapore, and Canada.

Real estate’s attractive income yield compared to other asset classes explains the consistent flow of investment in UK properties. In contrast to other G7 economies, residential real estate income return spreads on 10-year government bonds continue to rise, with spreads reaching 300 basis points. This suggests investors allocating capital to residential investments are rewarded with a healthy premium relative to government bonds for the added risks.

Significant endogenous drivers of the UK’s residential real estate market include economic and population growth, the supply and demand of housing, and credit conditions, all of which are developing positively.

Tamed inflation and accommodative monetary policy

The IMF expects inflation to decline gradually toward the 2% BoE target over the next two years as import price pressure from a weaker Sterling dissipates. The Bank of England is raising rates at a slow pace. They are expected to remain low, reaching 1.1% in 2021. The Bank of England’s corporate and government bond purchase program, combined with a low interest rate environment, is prompting investors to search for higher yields in alternative assets such as real estate.

Strong housing demand

Construction of residential units in the UK remains below pre-crisis (2008) levels and lags behind demand despite a growing population driven by immigration. New housing orders, which are an indicator of private housing starts and investment, rose by 19% in the first quarter of 2018 – their highest level since the crisis.

According to the Bank of England, modest real income growth and accommodative credit conditions should support housing market activity. Mortgage approvals are projected to remain stable, at about 65,000 per month, and UK house price inflation is expected to pick up to a little over 3% by mid-2019.


8

Local market: Stable and low-risk with growing opportunities

House and rent prices in the North West of England are half as volatile as those in the rest of England. House prices in Wirral, where Birkenhead is situated, were unaffected during the financial crisis and have grown above the UK average in the last five years.

Since 2013, the average price of property in Wirral has soared 17%, reaching record highs for the area. Wirral house prices rose by 6% in 2016 alone.

Birkenhead: Positive outlook

Wirral is home to global businesses including Cammell Laird, Vauxhall Motors, Typhoo Tea, and Unilever’s Advanced Manufacturing Centre. This pedigree is expected to continue with Wirral Council’s plan to transform the region into one of Europe’s major business centres.

Birkenhead experienced the fourth highest wage growth (15%) in the UK in the period between 2012 and 2016, and is one of the top 10 fastest-moving property markets in the UK, signaling a positive post-crisis recovery. New housing developments in the area target

the high end of the market and do not meet the growing need for middle-market housing units. Further compounding the housing demand, Nathaniel Lichfield & Partners, contracted by Wirral Council, found the current rate of housing formation in Wirral is lagging behind population and job growth. A significant increase in housing formation was recommended to meet future housing demands in the area. Vacancy rates have trended downwards to 3% over the past decade, reflecting the growing shortage of housing. The shortage of middle market rents increases our competitive position. We forecast a 2% per annum average rent inflation over the lifetime of the investment. It is likely that rental growth in the area surpasses our forecast.

The £1 billion redevelopment plan announced by Wirral Council is already materialising into new commercial developments and is poised to improve the attractiveness of the area, boost tourism and, in turn, raise property values.

We believe the Council’s redevelopment plan will be the catalyst that pushes property prices in the area towards a long-term average of 2.5% per annum.

Sources: RCA, IMF, Bank of England, PATRIZIA, Bloomberg, UK Land registry data, Office for

National Statistics, Savills, Rightmove, Wirral SHMA and Housing Needs Study


9


10

INVESTMENT SPECS

Asset class

Strategy

Risk

Planned exit

Available for investment

Offering

Asset fair value1

Gross annual letting income

Asset acquisition price2

Closing costs

Service provider fees

(non-reoccurring)

Bank loan

Target LTV

Investment type

Capital type

Gross IRR

Net IRR

Gross ROI

Net ROI

Gross EM

Net EM

Asset management fee

Incentive fee

Multi-unit residential

Value investment

Low

End of 2028

£3,350,000

Not for retail investors

£7,112,500

£334,800

£6,300,000

£85,000

£83,750

£3,465,000

50%

Single asset

Preferred equity

8.31%

7.00%

108%

87%

2.08x

1.87x

0% AUM

10% of profit

1 Holt Hill has been independently appraised at £7.1 M. Please contact [email protected] for more information. 2 Issuer has secured an option purchase contract to acquire the asset at a 11% discount


11

Single asset

Preferred equity

8.31%

7.00%

108%

87%

2.08x

1.87x

0% AUM

10% of profit

INVESTMENT STRUCTURE

Holt Hill real estate asset (UK)

Hillview Homes Limited (Jersey) Board of Directors Jeffery Woodward

Colin Nimsz JTCJTC Nominee

Investor

100%

Asset Management

Preferrence shares


12

Brickblock’s mission is to make financing and investing in real estate more efficient, cost-effective, and accessible. This is achieved through the use of blockchain technology within a secure and regulatory compliant framework.

Investing without borders

Access real estate investment opportunities around the world from wherever you are – 24/7/365.*

Liquid real estate investment. No minimum holding periods. For the first time, you can enjoy maximum flexibility by trading or selling your shares at any time with no transaction costs.

KYC/AML checks digitally initiated by a regulated financial institution. No need to go to a notary - identify yourself from the comfort of your home, or office.

*Restrictions apply for certain jurisdictions

SERVICE PROVIDER HIGHLIGHT: BRICKBLOCK

1 2

3 4


13

HOW TO INVEST VIA BRICKBLOCK

Get cleared to investAll investors are required to pass an AML/KYC process and sign the Subscription Agreement prior to subscription.

Transfer funds to:A traditional bank account administered by JTC for GBP, EUR, etc. subscriptions.

Funding target reachedFunds are held in escrow until the asset is fully funded. If the funding target is not reached, all funds will be returned to the investors.

Shares are issued and recorded on Brickblock’s blockchain registryAfter the funding target is reached, the Automated Clearing Registry representing your shares is activated and investors receive confirmation of their share ownership. JTC is the nominee of your shares.


14

CHAIRMAN AND THE BOARD“Behind your investment are people you can trust. We are committed and deeply engaged leaders with extensive market and industry knowledge” - Jeffery Woodward, chairman of Hillview Homes Limited

Jeffery WoodwardChairman

Jeffery is a real estate expert who leads the Board of Directors in managing the Holt Hill asset.

Jeffery’s career in real estate spans 25 years, during which he has secured investments totaling more than $900 million USD.

He has overseen million-dollar stock and billion-dollar real estate transactions and boasts extensive experience in trading on behalf of leading financial institutions.

Colin Nimsz Director

Colin is an expert in international financial structure, including syndication, securitisation, and fund structures. He is currently focused on utilising blockchain technology in the realm of real estate finance. A member of the U.S. Federal, California, and Washington D.C. BAR, Colin works with regulatory bodies throughout Europe in advancing the adoption of blockchain technology in cross-border financial structures.

Colin is a graduate of Chapman University’s School of Law and received his Doctor of Law (JD) in 2009.

JTCDirector

JTC is a publicly listed, award-winning provider of fund, corporate, and private wealth services for both institutional and private clients. Client-centric within a strong governance framework, JTC is always looking to exceed expectations with excellence of service.

JTC administers assets of $85 billion USD and will play a key role in the financial management of the property.

Nominee & Fund Solutions Banking partner regulated by BaFin

Legal consultancy Legal Counsel

Identification and verification processor

IT solutions & Investment facilitator


15

PARTNERS AND SERVICE PROVIDERSWe are proud to work with the industry leaders to provide our clients with unparalleled service, superior returns and peace of mind.

FINANCIALS

Note: The financials included in this brochure are based on historical costs and the forecasts rely on the successful implementation of our business plan and on the accuracy of cost and revenue estimates. Past performance is not an indicator of future performance. Please review the risks of this investment and consult your financial advisor prior to investing.


17

Base data

Asset fair value

Gross annual letting income

Bank loan

Investor equity investment

Value captured on acquisition

Asset acquisition price

Closing costs

Forecasts

Op. Exp. Increase

Rent increase

Value increase

£7,112,500

£330,000

£3,465,000

£3,350,000

£812,500

£6,300,000

£85,000

2.00% p.a.

2.00% p.a.

2.50% p.a.

Post-acquisition capital structure

Bank loan details

Amortisation

Annual interest rate

Loan maturity

0%

3.2%

20 years

51.3%

Investor Equity

48.7%

Bank loan

Value capture on acquisition


18

Year

Letting Income

Letting Success Fee

Bookkeeping

Bad Debt Write Off/Provision

Void Council Tax/Power

Letting Administration

Advertising

Apartment Furnishing

Apartment Repairs/Maintenance

Letting Expenses

SPV Admin Expenses

Service Charge Payments

Insurance

Total Expenses

EBITDA

2019

£334,800

£3,500

£500

£3,000

£3,000

£18,000

£3,000

£2,100

£25,000

£58,100

£28,700

£33,000

£3,500

£123,300

£211,500

2020

£341,496

£3,570

£510

£3,060

£3,060

£18,360

£3,060

£2,142

£25,500

£59,262

£29,274

£33,660

£3,570

£125,766

£215,730

2021

£348,326

£3,641

£520

£3,121

£3,121

£18,727

£3,121

£2,185

£26,010

£60,447

£29,859

£34,333

£3,641

£128,281

£220,045

2022

£355,292

£3,714

£531

£3,184

£3,184

£19,102

£3,184

£2,229

£26,530

£61,656

£30,457

£35,020

£3,714

£130,847

£224,445

2023

£362,398

£3,789

£541

£3,247

£3,247

£19,484

£3,247

£2,273

£27,061

£62,889

£31,066

£35,720

£3,789

£133,464

£228,934

2024

£369,646

£3,864

£552

£3,312

£3,312

£19,873

£3,312

£2,319

£27,602

£64,147

£31,687

£36,435

£3,864

£136,133

£233,513

2025

£377,039

£3,942

£563

£3,378

£3,378

£20,271

£3,378

£2,365

£28,154

£65,430

£32,321

£37,163

£3,942

£138,856

£238,183

2026

£384,580

£4,020

£574

£3,446

£3,446

£20,676

£3,446

£2,412

£28,717

£66,739

£32,967

£37,907

£4,020

£141,633

£242,947

2027

£392,272

£4,101

£586

£3,515

£3,515

£21,090

£3,515

£2,460

£29,291

£68,073

£33,627

£38,665

£4,101

£144,466

£247,806

2028

£400,117

£4,183

£598

£3,585

£3,585

£21,512

£3,585

£2,510

£29,877

£69,435

£34,299

£39,438

£4,183

£147,355

£252,762


19

Year

Interest p.a.

Loan amortisation

Taxes

Cash flow

Profit payout

Cash reserve*

Loan end of year

Property value

Net value:

Net value after

incentive fee

2019

£110,880

£0

£20,124

£80,496

£0

£426,746

£3,465,000

£7,290,313

£3,825,313

£3,442,781

2020

£110,880

£0

£17,825

£87,026

£213,772

£300,000

£3,465,000

£7,472,570

£4,007,570

£3,606,813

2021

£110,880

£0

£18,558

£90,607

£90,607

£300,000

£3,465,000

£7,659,385

£4,194,385

£3,774,946

2022

£110,880

£0

£19,306

£94,259

£94,259

£300,000

£3,465,000

£7,850,869

£4,385,869

£3,947,282

2023

£110,880

£0

£20,069

£97,985

£97,985

£300,000

£3,465,000

£8,047,141

£4,582,141

£4,123,927

2024

£110,880

£0

£20,848

£101,785

£101,785

£300,000

£3,465,000

£8,248,319

£4,783,319

£4,304,987

2025

£110,880

£0

£21,642

£105,662

£105,662

£300,000

£3,465,000

£8,454,527

£4,989,527

£4,490,575

2026

£110,880

£0

£22,451

£109,616

£109,616

£300,000

£3,465,000

£8,665,891

£5,200,891

£4,680,802

2027

£110,880

£0

£23,277

£113,649

£113,649

£300,000

£3,465,000

£8,882,538

£5,417,538

£4,875,784

2028

£110,880

£0

£24,120

£117,762

£117,762

£300,000

£3,465,000

£9,104,601

£5,639,601

£5,075,641

Gross IRR 8.31%

Net IRR 7.00%

Gross proceeds from investment £6,984,697

Net proceeds from investment £6,254,796

* A cash reserve of £300,000 will be built up and maintained in order to have sufficient liquidity and working capital for repairs and improvements.

Gross ROI 108%

Net ROI 87%

Gross equity multiplier 2.08

Net equity multiplier 1.87


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Holt Hill, Birkenhead, Merseyside, UK · 2018-12-01 · Holt Hill, the asset to be acquired, is a 50-unit residential building in Birkenhead, UK. The asset has a funding target of