Syndicated Commercial Property Investment
Since the onset of the financial crisis, banking criteria have become more stringent and the level of equity required to deliver new acquisitions significantly increased.
In order to enhance our own equity, Craigard has successfully used a trust for sale syndication structure evolved by London lawyers, Druces. Druces has effected over 400 transactions over several years and a number of these have been successfully realised and closed.
The structure offers a number of advantages:
- It is tax transparent.
- Although there is no public market for an investor’s stake, it is possible to undertake private sale and purchase of the individual investment.
- It is relatively inexpensive to set up and administer.
- There is no personal liability for participating investors, either for any debt or for any further investment beyond that agreed at the outset.
- Anonymity to investors behind a nominee company.
- A direct property interest for each syndicate investor.
- The ability to accommodate SSAPS and SIPPS plus individuals or corporate investors.
In order to retain the tax transparency of this particular type of structure, it is essential that investors have day to day control of all arrangements and decisions (aside from the general property administration by Craigard). Provided the investors retain this control, the structure will not amount to a collective investment scheme and will not need to be regulated.This type of investment is not therefore suitable for passive investors.
Craigard has now effected 35 syndicate acquisitions totalling circa £70million and securing equity of nearly £50million. A dozen or so projects have been successfully realised with some very pleasing results. Four projects have encountered hurdles usually as a consequence of tenant defaults. Recovery plans have been executed.
Craigard always co invests. We charge relatively modest property administration fees and work on an incentivised performance fee after a priority return to investors.