* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download Suitability report
Systemic risk wikipedia , lookup
Stock trader wikipedia , lookup
Investor-state dispute settlement wikipedia , lookup
Private equity wikipedia , lookup
Capital gains tax in the United States wikipedia , lookup
Mark-to-market accounting wikipedia , lookup
Corporate venture capital wikipedia , lookup
International investment agreement wikipedia , lookup
Internal Revenue Code section 1031 wikipedia , lookup
Hedge (finance) wikipedia , lookup
History of investment banking in the United States wikipedia , lookup
Mutual fund wikipedia , lookup
Capital gains tax in Australia wikipedia , lookup
Early history of private equity wikipedia , lookup
Socially responsible investing wikipedia , lookup
Private equity secondary market wikipedia , lookup
Environmental, social and corporate governance wikipedia , lookup
Investment banking wikipedia , lookup
Negative gearing wikipedia , lookup
Private money investing wikipedia , lookup
Walls & Futures London Growth Fund Suitability report Before giving advice to your clients, you will have carefully considered their financial needs, their attitude to risk and their own individual circumstances, as all these factors will influence the recommendations that you make to them. This document contains some factual information you may find useful when drafting your suitability reports. The headings and layout are only examples and should not be taken as a guide for how your suitability report should look or what it should include. You are solely responsible for making sure that the content of your report is current, appropriate, tailored for each client and meets regulatory requirements. We are not providing advice where you use any of this wording to contact your clients. No responsibility is accepted by Walls & Futures Limited for your reliance on, or use of, this information which is supplied at your own risk. All information in this document relating to taxation is based on our understanding of law and practice in Ireland and the UK at December 2009. The future tax position of the bond or your client’s own tax position may alter. Client report Walls & Futures London Growth Fund For [Client Name] [Date] Investment recommendations Having discussed your investment requirements with you it was agreed that you are: A cautious to medium risk investor seeking capital growth Willing to invest capital for a five year period Seeking to achieve a widely diversified portfolio to reduce investment risk Given your requirements as summarised above, our recommendation is that you consider the Walls & Futures London Growth Fund. It is a low to medium risk fund, and therefore suited to your investment risk profile. Investing in residential property would act as a diversifier to your existing investments due to its low correlation with bonds and equities. The Fund is designed to run for 5 years with profits from the underlying residential properties paid to investors at the end of the term of the Fund. You should therefore consider this as a commitment to invest for 5 years. The fund has a targeted return of 10.49% per annum (annualised) after all fees and expenses and a minimum investment is £25,000 Sterling. For this reason we would suggest that you consider investing [£___,___] representing some [__ %] of your existing investment portfolio. The construction of the Fund is innovative in that it will invest in a wide number of sites each meeting a specific risk / return / time frame criteria. The risk profile is therefore low, complemented by the fact that the Fund will have a target gearing ratio of 50% and maximum of 75%. It is structured as a Scottish Limited Partnership and is classified as an unregulated collective investment scheme. Investment Rationale Historically the UK property market has been seen as an asset class offering strong capital growth and income potential due to the imbalance between supply and demand. London has been a focus for global investors given its position as one of the most desirable places to live and work. The UK property market’s rapid decline has been well documented. Over the last 18 months the global financial crisis caused sales volumes to fall by 61% nationally and by 65% in London(1). As sales ground to a halt prices fell by up to 40%(2) depending on location. As the market stabilises the Asset manager believes there is an opportunity for investors to acquire quality property assets at a discount to peak values. Construction starts and property completions are now at their lowest levels in over half a century(3) further exacerbating the demand/supply imbalance. Coupled with a thawing in the credit markets, London property prices could rise sharply over the next 5 years The Asset Manager has identified South West London as the preferred area to invest with specific focus on the following London Boroughs: Royal Borough of Kensington & Chelsea: Chelsea (SW10) Hammersmith & Fulham: Fulham (SW6), West Kensington (W14) Wandsworth: Battersea (SW11), Putney (SW15), Wandsworth (SW18) Merton: Earlsfield (SW18/19), Southfields (SW18/19) These areas have been selected as they offer a blend of Prime and Entry Level Prime London property. The demographic profiles of these locations are similar to that of Prime Central London, however average price points are up to 40% lower. The target areas have a track record of demand from owner occupiers and higher than average private rental accommodation. By focusing on the middle market, the Fund aims to minimise downside risk while benefiting from investment in established areas together with the medium term price growth due to gentrification. (1) Land Registry (2) Knight Frank: London Residential Review 2009 (3) Knight Frank: London Residential Review 2009 Summary of the Walls & Futures London Growth Fund Strategy The Fund intends to target quality properties located in Prime London or Entry Level Prime London that will benefit from medium term gentrification. The target market for tenants and final asset disposals will be young professionals. The funds raised will be deployed over a two year period to capitalise on opportunities as they unfold. In summary, the Fund will seek to: Acquire property at a discount to underlying property values; Add value through refurbishment and redevelopment; Co-invest with developers to develop property The Asset Manager has identified South West London as the preferred area to invest with specific focus on the following London Boroughs: Royal Borough of Kensington & Chelsea: Chelsea (SW10) Hammersmith & Fulham: Fulham (SW6), West Kensington (W14) Wandsworth: Battersea (SW11), Putney (SW15), Wandsworth (SW18) Merton: Earlsfield (SW18/19), Southfields (SW18/19) Investment Criteria Investments in properties may be made by the Fund either directly (acquiring physical property) or indirectly for example via special purpose vehicles, investments in development schemes or investments in other structures. In addition; A minimum of 75% of the Total Commitments invested will be deployed in London Up to 25% of the Total Commitments may be deployed to acquire good quality residential property that falls outside London and where the Asset Manager believes there is an opportunity to generate similar or greater returns than may be available in London The objective of the Fund is to generate attractive returns whilst aiming to protect Investor’s capital. This will be achieved by: Deal origination. Many properties are not marketed widely and as such are not available to the wider market. The strong network of the Asset Manager means the Fund will have the opportunity to make investments which may not be available to the general market. Opportunism. The Fund will seek to acquire property at a discount to the values achieved at the peak of the market in mid 2007. The Asset Manager anticipates that some of these discounts will be significant. Market Knowledge. There is a difference between the price that a vendor is looking to achieve and the value of a property. The Fund will aim to acquire property at a genuine discount to previous value rather than a notional discount to the price. Adding Value. The Fund will particularly look for opportunities where value can be added beyond simply those of market timing. This will be accomplished through an active asset management. Downside risk management. The investment approach will be risk averse. The focus of the Fund will be in areas of consistent demand and limited supply. In areas which may be less established, the Fund will look for proportionately larger discounts to compensate for additional risk. Reporting In order to provide transparency for your investment a full management report will be issued annually. This will include audited accounts together with a portfolio valuation carried out by independent valuers Colleys. The valuations will be prepared by a Chartered Surveyor on an open market value basis in accordance with the prevailing guidelines issued by the Royal Institute of Chartered Surveyors. Risk warning An investment in the Limited Partnership involves a degree of risk and investment results may vary over time. The Information Memorandum provides you with details of risks and potential disadvantages associated with the investment being recommended. We have previously discussed these, and I would like to highlight the following points: As with property values in general, the value of the Properties can go down as well as up and Investors may not get back the amount invested. Past performance is no guarantee of future returns. Fund Structure The Fund is structured as a closed ended Scottish Limited Partnership registered under the Limited Partnerships Act 1907. The particular advantages of using a Scottish Limited Partnership (SLP) are a combination of the following: Separate legal personality: this is a unique trait of an SLP which is not enjoyed by limited partnerships registered elsewhere in the UK. It means that the SLP itself can own assets, enter into contracts, sue or be sued, own property, borrow money and grant certain types of security. Tax transparency: this means that the SLP is taxed as though it did not have a separate legal personality. No tax is payable by the SLP itself. Instead, the UK tax authorities (and many other foreign tax authorities) look through the partnership structure and partners are taxed on their share of partnership income and gains arrived at in accordance with their profit-sharing ratios (which can be different from the ratios in which capital has been contributed). As such direct investors are taxed on rental income under Schedule A (unearned income) but can offset certain expenses such as loan interest, property management costs, property insurance, repairs and maintenance. Gains will be subject to Capital Gains Tax on disposal. Based on the assumptions given in the information memorandum, it is estimated that a £25,000 investment would incur the following income tax and capital gains tax liability: Year 1 Year 2 Year 3 Year 4 Year 5 Income Tax Liability at 20% £92 £99 £107 £114 £122 Capital Gains at 28% £0 £0 £0 £0 £3,484 Investments made through a SIPP/SSAS will not attract income or capital gains tax. The hybrid status of separate legal personality coupled with tax transparency offers the best of both worlds in a way that limited partnerships incorporated in other jurisdictions generally cannot. Every investor will have the added security of collective legal ownership of the assets acquired for the Fund in a Limited Partnership structure, but will not have any responsibilities for the operation and management of the Limited Partnership, which rests with the Operator and General Partner. Fees & Commissions As a result of your investment into this fund [Intermediaries Name] will receive a fee of [up to 5%] of your investment is payable as an introductory commission. 2.5% of the total investment in the Fund will be applied on payment of the establishment costs of the Limited Partnership and will be paid to the Asset Manager. In addition, the Asset Manager will receive an asset management fee of 1.5% per annum of the total Participations of the Limited Partnership. About Walls & Futures Limited Walls & Futures Limited is an independent property investment company with expertise in the UK and London residential property market. With over 15 years property experience the team have sourced and managed over £350 million (GBP) worth of UK real estate for clients. They are in an excellent position to analyse, acquire and manage the best investment opportunities in the market. Dunadd Asset Management Limited Dunadd Asset Management Limited is the operator of the Partnership and is responsible for ensuring that the Fund complies with United Kingdom legislation as it affects collective investment schemes and the rules of the Financial Services Authority. The Operator is also responsible for ensuring that the Fund fulfils its obligations to investors by acting in accordance with the Partnership Agreement and related documentation.