Loan Notes

Investments within residential or commercial property development offer a good yield, whether you decide to let or sell on. While securing investment for larger profits can be a challenge, finding an investor who can issue a loan note can offer you the flexibility and capital needed to generate a substantial profit for all parties involved.

The loan note holder is effectively labelled as ‘the bank’, and offers a very similar investment a residential development funding finance offered by UK financial institutions. A loan note holder offers to lend a fixed sum of money in return for a pre-agreed rate of interest. To offer security to both parties, loan note holders have first legal charge on the properties throughout the duration of the loan note.

What are the benefits of a loan note?

  1. Diversified investment
  2. Additional funding for larger projects
  3. Expert advice, opinion and contacts from within industry

How can a loan note be used in a development project?

With the letting market continuing its boom, there is a large demand for both residential and commercial property across the UK. Investors will find the UK particularly attractive for investment thanks to a strong legal system and high rental demand.

Loan notes can be used to kick start a development investment within the UK in a particularly attractive area. For example, in areas where other development projects are taking place, such as new schools, residential areas or commercial districts, significant return can be generated.

Firms can then undertake development work with companies who have proven records and a strong lettings model. HE Global Investments recommends risk assessment and professional due diligence to give transparency and clarity to both parties.

The development will then be retained within the group portfolio, or an exit plan can be lined up with mainstream lenders. In accordance with the Inland Revenue, a 20% regulations interest is paid net of withholding tax.

How can I make an exit route if I secure a loan note?

Loan notes are being issued to retain investment within the property and development market, and therefore the preferred exit route will be financed with one of a number of lenders.

As with any investment, the figures and yields stated on this website are not guaranteed and are only typical figures.

What are the key features of a loan note?

  • Interest begins the day after your funds are received
  • Interest is 10% in year one, and 12% in year two
  • Two year investment term
  • Interest payable every six months
  • Growth option of 10% in year one, and 12% in year 2
  • Meetings and site visits can be arranged
  • Loan note holders have first legal charge on properties

If you are looking more information on how you can work with HE Global Investments on a loan note, call us today on 0207 096 0125. You can also email info@heglobalinvestments.com.

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