Property demand in the UK has been rising in recent years for both residential and commercial properties. Higher demand means good news for property developers but correlates to lower yields for investors, particularly when combined with new and unfavourable tax regimes in the UK. Investors looking at the property market are therefore facing new challenges. Marlborough Securities has developed a fully asset-backed Bond that has been designed specifically to help investors not only overcome these challenges, but also take advantage of new market opportunities post-COVID-19.
As the issuer, Marlborough Securities will be issuing Secured Notes up to a maximum value of GBP 50,000,000. Each note will have a nominal value of £1,000, $1,000 or €1,000. Marlborough Securities aims its products at self-certified high-net-worth individuals and sophisticated investors. The minimum investment for this Bond will be set at £100,000. There is no maximum investment threshold beyond the maximum number of notes.
The investment offers fixed returns in GBP of 9.25%, equating to 46.25% in Interest Distribution over the five years of the investment term. For euros, the fixed-rate return will be 8% and for US dollars 8.5%. The investment has 100% allocation and no initial charges, with interest paid on a 12-monthly basis, following the first payment 15 months after the initial investment. At the end of the five years, the original invested amount becomes repayable, along with any accrued interest.
The investment monies raised will generate short-term bridging loans for property developers and small and medium-sized enterprises in the south-east of England, which is typically one of the most lucrative property markets. The nature of the loans, which will provide seed financing, will be high-interest and over-collateralised with a short timescale. This over-collateralisation helps protect investors and all loans are secured against company and/or shareholder/principal assets. The portfolio may also be adapted throughout the lifecycle of the investment should new opportunities arise, overseen by a team of expert advisors.
The Advisory Team includes Andrew Green, founder of Grosvenor Bridging Loans Limited, a bridging finance specialist based in London that focuses on high quality short-dated loans. Mr Green has executed and redeemed over £300 million of loans with no defaults to date, with a 25-year track record of success. As well doing £15 million of lending in the last six months, Marlborough Securities has another £10 million pending on deals, most of which are only out for 18 months before being renewed.
Marlborough Securities is exploring a comprehensive portfolio of assets that will include residential properties and commercial opportunities. LTV has risen in the bridging market from between 65% and 70% to 75% due to the COVID-19 pandemic, with rates dropping to around 0.55% PM. This facilitates Marlborough Securities offering a blended rate that is more attractive to the borrower. Some locations in the target area have seen a rise of over 7% in the past few months. Portfolio investments include luxury housing, hotel development and buy-to-let properties.