The Westway Property Bond · Wellesley Road Clacton-on-Sea 10x 2 bed flats GDV: £1.5m Three Wells...

The WestwayProperty BondInvestment Summary

www.westwayholdings.co.uk

Up to 10%annual return

3 or 5 year term

RISK WARNINGThis document should only be read in conjunction with the Information Memorandum (IM) dated 18th October 2018. Please consult your Independent Financial Advisor before deciding to lend. Investors should be aware that there are risks to investing in bonds and debentures.

These investments are NOT covered by the Financial Services Compensation Scheme (FSCS) and lenders will not have access to the Financial Ombudsman Service (FOS). Capital at risk.

This document is a summary of information contained in the Information Memorandum issued by Westway Holdings Ltd. The Information Memorandum was approved as a financial promotion (under Section 21 of the Financial Services and Markets Act 2000) by London Court Limited which is authorised and regulated by the Financial Conduct Authority (FCA registered number 146522).

Contents

01

05

03

07 - 08 09

11

02

0604

09

10

The company

The investment process

Bonds explained

Case study Security of investment

FAQ’s

The Westway portfolio

Benefits of fixed returnsThe investment opportunity

Exit strategies

Advisors

About Westway HoldingsWith sustained demand for Supported Housing, the Directors have decided to utilise their experience within the HMO sector. The Company is well-positioned to identify suitable opportunities that will provide reliable earning potential. The provision of quality homes for people with support needs is a serious concern for both local and national government. Currently, there is a shortage of suitable supported accommodation, from both local authority provision and the private sector.

The Company is seeking to purchase property, predominantly across the South East with the focus on Kent and the Thames estuary. The directors believe that this strategy is expected to achieve a high yield from the acquired assets due to the rental income achieved through the various government allowances. Business Model Overview

Westway Holdings will look to acquire and develop properties to provide housing for various vulnerable groups throughout the UK that come under the “Supported Housing” umbrella.

Supported Housing represents an essential and growing requirement in the UK which includes tenants with mental health issues, learning difficulties, people recovering from drugs and alcohol addiction, ex-offenders, victims of domestic violence and various other vulnerable groups. Westway are looking to partner with a number of Registered Providers who receive allowances direct from the UK government to facilitate reliable housing solutions for the sector.

Westway typically enters an arrangement direct with the registered provider instead of the tenant, as a result, the rent is paid directly from the tenant’s allowance

(provided to them by the government) in return for making the property available over the agreed term. This means that the rent should be reliable and, in the opinion of the Directors, there are not expected to be any void periods. Westway typically acquires property assets at best possible prices in growth areas and then seeks to add additional value through change of planning uplift, refurbishment or development.

Existing PortfolioThe Company uses the net proceeds from the bond issues to acquire a portfolio of properties (see page 2), which is currently valued at approximately £24m by the directors.

The portfolio is comprised of a number of different properties some of which are tenanted and others that are currently being developed or readied for letting.

The companyWestway is a property developer whose primary objective is delivering suitable sites for registered providers within the Supported Housing sector. The management team has a proven track record with more than 30 years of market expertise, with particular knowledge of the HMO and Supported Housing sector.

1 The Westway Property Bond

debden hall

College AvenueCrosby, Liverpool 15x 2 bed flats

GDV: £2.4m

Debden HallLoughtonWith planning permission for 4 houses

GDV: £2.4m

Midlands Portfolio10x HMOs

GDV: £4.0m

Highgate Rooftop Scheme3x penthouse flats

GDV: £2.7m

Wellesley RoadClacton-on-Sea 10x 2 bed flats

GDV: £1.5m

Three WellsPolsham Land with closed public house - planning currently being sought

GDV: £350,000

Inverclyde GardensRomford Existing 3 bed house. Planning submitted for 3x 3 bed houses to be built on land to the rear

GDV: £1.6m

Balliol Road Development 17 bed HMO Land to the rear of granted for 10x 1 bed flats

GDV: £7m

The Westway portfolio

0203 198 4420 www.westwayholdings.co.uk 2

What is a bond?

A bond is a securitised debt instrument through which investors loan money to a legal entity (typically corporate or governmental) that borrows the funds subscribed for a defined period of time. Bond instruments are usually offered at a fixed rate of interest per annum known as the coupon.

Bonds are used by companies to raise money and finance a variety of projects and activities. Owners of bonds are debt-holders or creditors, of the issuer.

Bonds are commonly referred to as fixed-income securities and are one of the three main generic asset classes, along with stocks (equities) and cash equivalents.

When companies or other entities need to raise money to finance new projects or to maintain ongoing operations, they may issue bonds directly to investors instead of obtaining loans from a bank.

The directors believe that most companies can borrow from banks but view direct borrowing from a bank as more restrictive, less flexible, and often more expensive than selling debt on the open market through bond issues.

With finance not being as freely available from traditional lenders, more and more businesses are turning to bond issues as a favourable financing alternative.

Bonds explained

Why do companies issue bonds rather than borrowing from a bank?


Example Return on an Investment of £100,000

Term Options 3 Year Income 5 Year Income 5 Year Deferred

Total initial investment £100,000 £100,000 £100,000

Interest per Annum 7.5% 8.5% 10%

Total interest payable £22,500 £42,500 £50,000

Total capital repayment £100,000 £100,000 £100,000

Total funds delivered to bondholder £122,500 £142,500 £150,000

Traditionally, property development projects of this scale have been funded by banks and institutional investors, but now, thanks to our new corporate bond structure, smaller private investors have been offered the opportunity to invest in a fixed-income bond to support Westway’s development projects in the UK housing market.

The investment opportunityIn simple terms, investors subscribe to a bond which provides Westway with funding to facilitate the purchase and subsequent operation of residential and Supported Housing property development projects at various locations within the UK.

Investors in the Bonds should note that they will not have the benefit of the Financial Services Compensation Scheme in the event of insolvency of the Company.

Your capital is at risk if the Bond issuer becomes insolvent.

Prospective investors should review carefully the IM with particular attention to the section entitled “Risk Factors”.

NOTE

RISK WARNING

Westway has to withhold an amount from payments of interest on the bond on account of UK income tax at the basic rate (currently 20%).

* The figures shown are gross, prior to tax being deducted

* 5 Year Deferred means that all the interest payments are rolled up and paid at the end of the Term.

Investment Terms

Minimum Participation Then increments of £1,000 GBP £10,000 GBP

Term MaximumIssuer has the option to redeem at any time prior 3 or 5 years

InterestPaid bi-annually in mid-January and mid-July Up to 10% gross per annum

Security Asset-backed with a floating debenture

Transferability of BondUnless approved by the issuer Non-transferable

Capital RepaymentUnless approved by the issuer 100% of investment at end of Term

Rental income underpinned by Government allowances

Issuer has established links with Supported Housing sector

Independent Security Trustee appointed on behalf of Bond holders

Experienced management team

UK based company focusing on UK based assets

Investment Highlights


The process for investing in the bond is simple.

The investment process

The general steps are outlined here:

Review the IM (Information Memorandum) document, ask any questions you may have and take any professional advice (financial advice, tax, legal) that you may require before making an investment decision.

Once you have decided to proceed, you should request an Application Form and follow the required steps to complete and return your application.

Your Application will be reviewed and processed (subject to various criteria being met). In addition, AML (Anti-Money Laundering) checks will be conducted prior to you being provided with details of the subscription account to which to send your investment funds.

Once your funds are sent and accepted your investment is live and you will receive confirmation in the form of a Bond Certificate and you will receive the interest payments as outlined within this document.

At the end of the term (or earlier at the discretion of the Bond issuer) your invested capital will be repaid.


With the property market constantly changing over the last 20 years, important variables such as location, trends, service charge, insurance, legislation, stamp duty and upkeep can prove to be costly for direct property investors.

Mortgage rate fluctuations and the requirement for increased deposits can sometimes reduce investors’ returns.

Hurdles often include a large upfront cash requirement and a mortgage that leaves you exposed to funding significant repayments if the property is empty between tenants. Not to mention costly administration and legal obligations, and making the right property decision while effectively forecasting the market.

Our suggested solution to all these headaches from an investment point of view is to let the professionals handle the difficulties while you enjoy a fixed yield semi-annual income.

Fixed income securities can be used to diversify an investor’s portfolio, as they can reduce the overall risk of an asset allocation or investment strategy that is weighted heavily in the stock market. Fixed income securities are generally seen as more stable than pure equity holdings as they are designed to provide a regular income irrespective of whether the issuer pays a dividend to its equity shareholders. Additionally Bonds can be secured against the assets of the issuer and are designed for the capital to be repaid at the end of the term. Investors tend to rely on this asset class more during times of low interest rates on cash savings or when steady income is the objective of the investment account.

Although fixed income securities do not provide any potential for upside return through capital appreciation or the opportunity to outpace inflation, income investing through fixed securities offers some unique advantages over growth investing through equity.

Steady Income StreamFixed income securities are designed to provide investors with a steady stream of income. Most bonds pay steady interest, creating a consistent cash inflow to investors. Fixed interest rates are set when the security is issued, and these payments are guaranteed as long as the company issuing the bonds does not default.

This feature of fixed income is particularly attractive to investors looking for a balanced portfolio that has been designed for income as well as capital growth.

Benefits of fixed returnInvesting directly into the property market can be a daunting task, even if you are a professional.


Example purchaseand development The following case study details a typical project that Westway Holdings Limited has undertaken

The Existing BuildingThe existing building is a two storey Victorian/ 1980s construction with a shop, shop display and storage on the ground fl oor, with existing fl ats to the fi rst and second fl oors above the shop area. There is also additional shop display to the fi rst fl oor rear section.

The site covers 0.02 hectares and has always been served by on road parking for visiting clients, tenants or visitors.

Proposed Change of UseUnder the Permitted Development Rights of Class G of the Town and Country Planning Order 2013, we proposed to change part of the building from Class A1(shops) to C3 (dwelling houses).

It is understood that the proposed works, comprising of 4 new units within the rear section of the existing building and under 150sqm of fl oor area, is allowed under the Permitted Development Rights of Class G of the Town and Country Planning (General Permitted Development) (Amended) (England) Order 2013.

The ProposalThe proposal is to convert the “rear” section of the building that fronts Wellesley Road into 4 x 1 bed units, each with their own fl at entrance and facilities.

Parking for these units would remain on Eton Road and other adjacent roads that allow parking. The existing shop and display/storage, together with the existing fl ats are to remain as they are and be retained and continue as previously designed, with the same arrangements for parking and facilities as before.

Case Study Example

10 UnitDevelopmentClacton-on-Sea

Purchase Price: £275,000 Proposed Change of Use cont

6

Proposed Change of Use cont

6

Proposed Change of Use cont

6


Address Postcode Property Type Bedrooms Bought for (£) Date Sold for (£) Date

2 Pollard Walk CO15 3LB Detached 3 £235,000 21/08/18 £165,000 01/08/14

61 Holland Road CO15 6EJ Detached 3 £331,000 14/08/18 £230,000 04/10/13

38 St. Andrews Road CO15 3AP Semi-Detached 3 £225,000 09/08/18 £148,000 15/02/13

20 Elthorne Park CO16 7HW Semi-Detached 3 £232,000 01/08/18 £141,500 09/01/04

Potential Capital Growth

Using past trends and current values for the area the following formula can be applied

Property Value 2018 £1,100,000

Annual Capital Growth 6.6%

Potential Property Value 2023 Using compounded annual figures £1,505,661

Capital Growth for period £405,661

Potential Figures (October 2018 - October 2023)

Initial Purchase Price £275,000

Development and Refurbishment Cost £348,000

Potential Value at end of period £1,505,661

Capital Growth for period £405,661

Total Capital Growth initial development and capital growth for period £882,661

Rental Income £276,000

Financial Overview

Examples of properties recently sold in the CO15 area of Clacton-on-SeaSourced 01.10.2018

Purchase Costs

Purchase Price £275,000.00

Development and Refurbishment Costs £348,000.00

Total £623,000.00

The graph demonstrates the following information:

Average House Price April 2013 £140,410

Average House Price April 2018 £186,285

Percentage Growth over the 5 year period 33%

Rental Income

4x One Bedroom Flats £550

6x Studio Flats £400

Total £4600

Annual Rental Income £55,200

Per Unit,Per Month

Per Unit,Per Month

Per Month

Price Comparison Report CO15 3QD

Please see below a graph showing the rise in average house prices for the CO15 area in Clacton-on-Sea for the past five years.

Financial Overview

11

The following pages provide an overview of the financials for the development, including rental income and yields and the proposed growth in equity for the site over the next five years.

146, Wellesley Road, Clacton-on-Sea.

Purchase CostsPurchase Price : £275,000.00Development and Refurbishment Costs : £348,000.00Total : £623,000.00 Rental Income4x One Bedroom Flats : £550.00 per unit per month6x Studio Flats : £400.00 per unit per monthTotal : £4600.00 per month Annual Rental Income : £55,200.00 Valuation of Developed Site : £1,100,000.00 (including all units, based on a yield of 5.02%) Potential Gross Profit : £477,000.00

Price Comparison Report CO15 3QD Please see below a graph showing the rise in average house prices for the CO15 area in Clacton-on-sea for the past five years.

Average House Price March 2012 : £138,545.00Average House Price March 2017 : £198,281.00Percentage Growth over the five-year period : 43%

The graph demonstrates the following information :

Average price

Key

Properties sold

Source: Rightmove 2.8.2017

Source: 01/10/2018


Exit strategies

There are four options when it comes to repayment of initial investor capital:

01 Refinance against company assets with more permanent options (e.g. commercial mortgage).

02 Sell properties to other Supported Housing providers at an increased rate due to established income stream.

03 Raise finance through future bond issues.

04 Capital reserves generated from income across the portfolio

Security of investment

What will the bond be secured against?The Bond will be secured against the underlying assets of the Company, including property, income and cash reserves by way of a floating debenture against the Company. This is a legal agreement which enables a charge to be taken over multiple assets within the balance sheet of the Company and the charge will be registered with Companies House.

The Security TrusteeFor additional safeguarding, an independent Security Trustee (More Group Capital Services Limited) has been appointed to act as an independent trustee who holds the security, acting on behalf of the Bondholders. If for whatever reason, payments are not made, the Security Trustee is able to enforce the charge over the Company’s assets, taking ownership of the assets and liquidate to realise value used to reimburse investor capital and interest.

Security is a key element for all potential investors. The following factors help to protect the capital and interest payments on behalf of investors:

Our ExperienceThe management team is experienced within the Supported Housing sector and HMO sector.

RegulationThe Homes and Communities Agency (HCA) of the UK government regulate the Registered Providers to ensure they do not get into financial difficulty, or should they do so, that a more financially secure organisation will take over.


The company’s advisors and service providers

Squire Patton Boggs’ client base spans every type of business, both private and public, worldwide. They advise a diverse mix of clients, from Fortune 100 and FTSE 100 corporations to emerging companies and from individuals to local and national governments. In the private sector, they provide the full range of legal advice required to implement practical strategies and resolve disputes. In the public sector, they counsel governments on privatisation of whole industries and on establishment of regulatory systems under which new private businesses can compete. They also serve the regional needs of the countries and cities we call home. Whatever is needed, they are able to deliver the seamless cross-practice, cross-border and industry specific support that clients require for success in today’s competitive markets.

Ipsum Invest Ltd (FRN: 750730) is an appointed representative of Met Facilities LLP (FRN: 587084) which is authorised and regulated by the Financial Conduct Authority in the UK.

More Group Capital Services Limited is a leading practice of accounting, international tax and corporate service specialists. More Group Capital Services Limited has multiple specialists spanning all key service fields and has offices in six international locations: UK, USA, UAE, Russia, Ireland and Latvia.

More Group Capital Services Limited provides a professional security trustee service representing investors to ensure their views are appropriately represented. It has experience working with different asset types in a wide range of jurisdictions. Based on More Group Capital Services Limited´s expertise, it can act in a variety of scenarios from straight-forward debenture to complex capital-raising structures. It works with counter-parties across multiple jurisdictions, ensuring that investors’ interests are represented, protected, and maintained.

In the field of commercial property Stirling Ackroyd Legal have developed a strong reputation over the years. They act on behalf of a number of builders and developers in the acquisition and development of all types of commercial sites and in the sales of residential developments. They have developed an expertise in the specialised field of planning law, advising clients with regard to planning applications and appeals, disputes and enforcement matters. They have an extensive knowledge of – business leases and advise both landlords and tenants in connection with their negotiation, termination and renewal and the disputes which can arise as a consequence. The funding of commercial sites is complex and we are experienced in this area.

Baptiste & Co are a general accounting practice, whose main focus is the SME market. As a general practice, they specialise in providing core accounting, taxation and consulting services. Baptiste & Co have always been based in the city. They are regulated by the association of Chartered Certified Accountants.

7 Devonshire Square, London. EC2M 4YH

60 Commercial Road, London. E1 1LP

Heron Tower, 10 Bishopsgate London. EC2N 4AY

23 Austin Friars London. EC2N 2QP

More Group Capital Services Limited (UK Head Office)65 Compton Street London. EC1V 0BN

Corporate Lawyers

Solicitors

Bond Administrator

Accountants

Security Trustee


Question Answer

Is there a minimum or maximum I can invest? The minimum investment is £10,000 with additional £1,000 increments thereafter.

Who can invest? Anyone can invest provided that they either seek advice from a suitably qualified IFA or fall into one or more of the categories of people listed in the Important Information of the Information Memorandum.

Do I get shares or profit-share in the company?

No, you are essentially lending us money and we will pay you interest for the period of the Bond. At the end of the Bond term the Company will pay your capital back to you.

Is this a collective investment scheme (CIS)? No, the investment is not a CIS because loans and debt instruments do not fall into this investment classification.

How long is the investment for? The investment term is three or five years although Westway Holdings have the ability to redeem sooner.

What is the Westway Holdings property bond?

Westway Holdings offers investors the opportunity to finance Westway’s investment into residential and commercial property development projects undertaken by the experienced and competent team at Westway Holdings. The financial support is made in the form of a bond. Westway Holdings will pay an annual interest rate of up to 10% gross per annum depending on which term you have opted for and will return your capital when the term of the loan is reached.

What security do I have?

The Bond will be secured against the underlying assets of the Company by way of a floating debenture against the Company. This is a legal document which enables a charge to be taken over multiple assets which will be registered with Companies House. For additional safeguarding, a Security Trustee has been appointed to act as an independent controller on behalf of the Bondholders. The Trustee can enforce your rights to recover capital and interest in the event that Westway Holdings breach any terms of the Bond.

Could the interest rate change?

No, the Bond is a contract and Westway is committed to paying the interest rate offered for the relevant subscription of 7.5% or 8.5% per annum depending on the term of your investment or 10% if you elect to have the payment of interest deferred to the end of the term.

When will I receive interest payments? Interest is paid semi-annually in arrears in mid-January and mid-July.

Can I withdraw my money before the end of the agreed term?

Investors cannot withdraw their money before the end of the agreed term. Westway reserves the right to repay your capital early along with full interest for the agreed term. What happens if I die during the term? The Bond would form part of your estate and the title would fall to the executors of your estate; until the administration of transferring it to your intended beneficiary can take place.

Is the bond transferable?

The Bond is only transferable at the Company’s discretion by any means other than by sale on a regulated exchange or market. If you need to transfer your Bond, complete and sign a Transfer Application, available on request from the Company, and deliver it in original form to the Company together with the relevant certificate(s). The Company will consider the request within seven days and, if approved, will issue a new certificate to the transferee.

FAQ’s


0203 198 4420 www.westwayholdings.co.uk

The Westway Property Bond · Wellesley Road Clacton-on-Sea 10x 2 bed flats GDV: £1.5m Three Wells...

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