A guide to Property Bonds · What is a Property Bond? Property Bonds therefore represent a new and exciting way for investors to generate attractive returns from development projects

B E S M A RT. B E A LT E R N AT I V E .

Be Smart. Be Alternative.

A guide to Property Bonds

Page 2 Page 3A Guide to Property Bonds A Guide to Property Bonds

“Never depend

on a single income.

Make investments

to create a second

source.” This guide is designed to illustrate not only how an

investment in property-backed bonds could work for you,

but also to reinforce our experience and expertise, thereby

hopefully providing you with the reassurance that, with our

help, you can make a truly informed investment decision.

With the recent changes to the tax treatment of buy-to-let

investments, we genuinely believe that – for most people

– property-backed loan notes are the smarter alternative,

offering investors high fixed returns with the security of

‘bricks and mortar’, but none of the downside of direct

property ownership.

We hope this guide provides you with a very good insight

into Hunter Jones and the attractive benefits of property

bonds. My expert team and I welcome any questions you

may have and so we’d encourage you to get in touch.


Reece Mennie

Founder & CEO

This well-known quote from the ‘Sage of Omaha’, Warren

Buffett, undoubtedly holds true. At Hunter Jones, we want

to make it a reality for all our clients, and are confident that

we can achieve this for all eligible investors.


What is a Property

Bond?

Property Bonds therefore represent a new and

exciting way for investors to generate attractive

returns from development projects. They do

so by allowing individuals to offer their capital

in the form of a loan (which is why they are

often referred to as ‘loan notes’) to a property

development company in return for a fixed rate

of interest over a fixed period of time. At the end

of the fixed period, the investor’s original capital

is returned in full – the developer will typically

have obtained the proceeds for repayment by

refinancing the borrowing or through the sale of

some or all of the property units.

A Property Bond is therefore a legally binding

contract between a lender (the investor) and a

borrower (the property developer) that details

specific terms as to how the investment can be

used, how much interest is paid to the investor

and when, how the investor’s capital is secured,

and when the initial investment is paid back. The

precise terms of each bond will, of course, differ

somewhat depending on the borrower.

Property remains one of the most popular forms of investing for

consumers, given the returns available in the UK market – and

Property Bonds are one of the most attractive options for gaining

access, quickly and easily, to that sector without requiring any

expert knowledge of construction or land development.


Why have

Property

Bonds become

so popular?

For investors, Property Bonds have becoming increasingly popular for a number of compelling reasons:

n With UK interest rates close to their historic

low (the bank base rate is currently 0.75%, the

all-time low of 0.25% having been reached in

August 2016), investors have struggled for

some considerable time to generate a healthy

return on their money

n The attractiveness of buy-to-let property

investment has diminished significantly due

to a marked dilution in the tax advantages

in recent years, coupled with stricter rules

regarding mortgage eligibility – for example,

the number of buy-to-let mortgages issued fell

from a multi-year high of 117,500 in 2015 to

74,900 in 2017, a two-year drop of 36%

n Conventional property investment is fraught

with complexity, requiring investors to

confront a host of issues such as insurance

payments, council tax, stamp duty,

maintenance fees, tenancy issues etc. As a

result, many investors prefer a more ‘hands-

off’ investment approach – in other words,

they see the potential for attractive returns

from the UK property market, but don’t

have the necessary time or experience. With

Property Bonds, however, investors aren’t

burdened by the day-to-day hassles that come

with owning properties directly.

Given that these factors have forced investors

to look at alternative investment opportunities,

Property Bonds offer the best of both worlds:

attractive fixed returns with the peace of mind

that comes from the security of bricks and mortar.

Property developers issue Property Bonds for planned

developments in order to raise funds to buy the necessary land

and/or to finance the necessary construction work. In other words,

the bonds are an alternative source of finance for the developer

rather than, say, traditional bank borrowing. They fulfil an

important need therefore, given the extent to which the banks and

other traditional lenders have withdrawn from the development

finance market subsequent to the financial crash of 2008.


How is the investment

‘secured’?

When you take out a mortgage on a house, the

lender will have a legal charge against your

property – should you not be able to maintain the

mortgage payments, the lender will have the legal

right to take over ownership of the property and

sell it to recoup the funds it has lent.

Property Bonds are typically secured in much the

same way. The bond issuer that the development

company uses – ie Hunter Jones – will hold the

legal right to seize the development and use it to

pay back investors should the developer default

on the interest payments. This legal charge adds

a considerable degree of security to a bond

investment therefore.

In order to make sure that the legal charge in place

is always valued higher than the debt incurred

by the developer, an independent surveyor will

revalue the development on a regular basis to

ensure that the level of borrowing remains within

a defined percentage – typically 85% – of the

development’s value.

An investment in a Property Bond is secured by virtue

of being asset-backed – that is to say, it is backed by the

physical security of the property development asset itself.


What sorts of returns

are available?

Are property bonds

suitable for me?

Below are some of the main features that are making Property

Bonds popular among financial investors of all categories:

nHigh fixed returns

nAsset-backed security via a legal charge

nCompounding income or regular income options

nNo stamp duty payable

nNo fees or charges

nMinimum £10,000 investment

The returns available from Property Bonds typically fall

within a range – from 8% to 12% per annum currently.

With many bonds, you can choose to roll up the interest

and receive it all together with the repayment of your

capital at the end of the fixed period, or to receive a

regular income, say, half-yearly.

The returns available from Property Bonds typically fall

within a range – from 8% to 12% per annum currently.

Property bonds can generate some of the best returns

currently available, and at relatively low risk. If you’re looking

for a medium-term investment option that pays a healthy

rate of interest with security in place to protect your capital,

Property Bonds could be just the right solution for you.


How can

Hunter

Jones help?

nWe are developer agnostic, promoting a

number of businesses across a wide range of

locations and property types.

nOur experienced and proactive team of

industry professionals is proud of its extensive

industry experience in this area, having raised

and deployed over £44m million in private

investment for a wide range of businesses

during our six-year history.

nAll of our investments are presented in a clear,

professional manner, with the accompanying

documentation clearly articulating the

investment opportunity and the potential risks

and returns. We adopt a rigorous approach

to assessment and due diligence prior to

promoting any investment – we do

our homework!

nOur goal is to provide you with a range

of innovative investment opportunities,

from a firm that you can trust. Utilising our

expertise, experience and contacts to originate

opportunities, we professionally negotiate

and arrange investments which we believe

will prove attractive to our network of client

investors, and on the most attractive terms

available – which is why our clientbase is

expanding rapidly.

nAs an investor, you benefit additionally

from our dedicated client relationship team

and a central client services team focused

on supporting your investment needs. We

professionally manage the whole process

on behalf of investors, from originating the

opportunity, through to post-deal

management and eventual exit.

nWe provide investors with regular reports on

the investee companies and take an active role

in managing the investors’ interests; we take

pride in forging strong working relationships

with both developers and investors from

the outset.

Whilst Property Bonds offer very attractive benefits,

not all property developers – and therefore not all

bonds – are the same. Finding the right investment

opportunities requires expert knowledge, and can

therefore be both difficult and time-consuming.

At Hunter Jones, we do this work for you and research a wide range of Property Bond opportunities

in order to create a range of high potential investments. Established in 2013, we are experts at

introducing very selective and highly researched opportunities to our discerning clients.

The tax burden on UK citizens is now at its

highest since 1969-70 and, unsurprisingly, most

of this tax burden falls upon the wealthy. At

the same time, the restrictions on other forms

of investment, such as pensions and buy-to-

let properties, are making it much harder for

those considered ‘well off’ to invest simply and

efficiently, and to generate a healthy return on

those investments.

For many, Property Bonds could be the answer.

However, whilst this guide explains at a glance

how Property Bonds work, it is only an overview

and so, to find out more, please call us on

020 7117 2913.

One of our specialist Property Bond consultants

will be happy to answer any questions you may

have about the bonds generally and to provide

you with further detailed information on the

specific Property Bond investments we are

currently promoting.


Next Steps...

We look forward to

hearing from you.

Telephone: (+44) 020 7117 2913

www.hjinvest.com

Email: [email protected]

UK: 40 Bank Street

Canary Wharf

London E14 5NR

Hunter Jones only markets to self-certified ‘High Net Worth Individuals’ and ‘Sophisticated Investors’. All investments marketed by Hunter Jones are illiquid and you may not receive back all of what you invested. All prospective investors should seek independent professional advice before investing.

Osborne Baldwin Limited, trading as Hunter Jones, is an appointed representative (FRN: 808287) of Equity For Growth (Securities) Limited (FRN: 475953) which is authorised and regulated by the Financial Conduct Authority.

Osborne Baldwin Limited is registered in England and Wales under company number 08744562. Its registered address is One Oaks Court, Warwick Road, Borehamwood, Hertfordshire WD6 1GS. Its business and correspondence address is 30th Floor, 40 Bank Street, London E14 5NR. Equity For Growth (Securities) Limited is registered in England and Wales under company number 05410446. Its registered address is International House, 24 Holborn Viaduct, London EC1A 2BN.

Copyright © Hunter Jones 2019. All rights reserved.

Important

Property Bonds are not suitable for everyone. They are illiquid and capital is at risk, such that

you could receive back less than you invest. Investors should not invest money that they are not

prepared to lose.

This guide does not constitute advice or a personal recommendation. Investing is a

complex subject and this guide is intended to give a broad overview only of Property Bonds. You

should not make, or refrain from making, any decision based solely on the contents of this guide. If

you are unsure as to whether an investment is appropriate for you, you should seek professional

advice. We have made every attempt to ensure the information in this factsheet is correct and

accurate as at the date of publication, but cannot guarantee it.

No part of this guide may be reproduced without the specific approval of Hunter Jones.

B E S M A RT. B E A LT E R N AT I V E .


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A guide to Property Bonds · What is a Property Bond? Property Bonds therefore represent a new and exciting way for investors to generate attractive returns from development projects