Frequently Asked Questions
The most common questions asked by our investors
How much Capital will I need to invest?
Every project will require a pre-determined level of Private Capital to be invested, which will be provided in the initial Investment Memorandum. The amount will depend on the size of the project and how the finances are structured. However, as a guide, Private Capital investments usually start from £150,000 based on the size of the projects we currently review and manage.
When do you need the money?
Again, every deal is different and the capital requirements may be different depending on how the finances are structured. However, typically we require all the Private Capital to be forwarded to our Lawyers client account before we set-up the SPV and bank account for the project so that we can make all the necessary preparations for the exchange of contracts.
Why do you need all the capital at Exchange?
Our lenders will generally fund all the development costs and contribute any balance against the purchase costs up to their credit approved LTV/LTC thresholds. It is, therefore, a requirement of how development finance funds a development that determines how much Private Capital is invested on day 1.
When we request the first drawdown from the lender, it is quite normal that all the Private Capital is deployed on day 1 for the acquisition and first stages of development. Therefore, all the Private Capital needs to available at the point of Exchange for the purchase of the property.
Am I providing the Capital as a Loan or Equity?
The difference between the two comes down to your risk appetite and the level of security you want on your investment. A Loan attracts interest, which is measured over the term of the loan. The Loan can be secured or unsecured. The amount of security will determine the rate.
Equity investments into a project will attract a higher risk and therefore a higher potential return. This return is usually distributed as a shareholding of company profits.
Am I a sophisticated and non-sophisticated Investor?
Before any Private Capital can be accepted from individuals, we will need to pre-qualify you with a questionnaire so that we can satisfy our compliance requirements. The FCA requires us to pre-qualify individuals that are providing their Capital as Equity into an investment so that they understand what they are doing due to the risks involved if that Capital is lost. If you provide your Capital as a Loan with a fixed rate of interest over a specified term then you will not need to go through the pre-qualification process, as your investment is not at risk. There are 5 short questions and 2 further qualifying criteria for HNWI to determine if you are sophisticated or non-sophisticated, after which you have the choice in how you wish to invest your Capital. Please see the document HERE.
How do you structure your Shareholders Agreement?
If your investment is a loan to the SPV, then you may be able to get some security over the property but will not have a shareholding of the SPV. Whereas, if your investment is equity into the SPV, then you will not receive any security over the property, but you will have a Shareholding of the SPV that is delivering the project and a percentage of profits. Once the project is complete and Senior debt is repaid, the Private Capital will always be repaid before profits. If there are multiple equity investors within the SPV then each shareholding will be on equal Pari Passu terms with no priority return on profits.
Are you putting any Capital into the Project?
Yes. Our Capital is invested at the earliest stages of sourcing and surveying a project. We engage our Architects, Planners, Building Surveys, R&D Surveys, Light Surveys and many other core professionals very early on in the due diligence process of checking the viability of an investment. This initial seed Capital carries the highest risk of any project and can sometimes be sunk costs against our business development expenditure.
We risk this Capital so that our investors do not have to. Once we present a viable project to our investors, they are happy that the majority of the risk has been mitigated and no further Capital is required from Apogee.
Can I visit the Project?
Yes. Whether you have invested a loan or Equity into the SPV, we actively encourage site visits so that you can see where your Capital is being invested and get a real sense of how important your Capital is in delivering each project. No site visit can take place unannounced. All visits will need to be planned in advance so that any potential safety risks can be removed from site prior to visiting and all PPE equipment can be made available for your visit.
How much participation do you require from me?
Apogee and the professional teams connected with each SPV have a clear objective for each project and do not require any participation from investment partners. Once a project is in full flight you will be notified about project milestones, planned visits to sites and SPV shareholder meetings, if relevant.
Can we get regular updates?
Yes. When the project is Live, you will be given access to the SPV Google Share Drive folder, which will hold all the associated documentation connected with the project and you will receive monthly or bi-monthly reports, photographs and cost plans on the progress of the project depending on the size, complexity and build schedule of the development.
What's my Exit from the project and when will I get my return?
The 'Exit' will be pre-determined at the start of the project but could change depending on the SPV or market circumstances, but no decision will be made without you being notified first. Commercial development will typically be built and sold for the first-time buyer's market. If you invested a loan into the SPV your Capital and interest will be repaid as soon as the 1st and/or 2nd charge lender is repaid. If you invested equity into the SPV, your initial Capital will be repaid after the senior debt, sales cost and Apogee transaction costs. Following this, profits will be distributed according to the shareholding.
If there are any questions you have that have not been answered here, please do not hesitate to contact us and we will endeavour to answer your queries. Many thanks.