Who are Property Crowd?
Property Crowd is a global property investment platform that is optimised for the institutional and professional investor. We offer direct access to investments in institutional grade property assets that are sourced and managed by professional asset managers and principal lenders.
Property Crowd is owned and operated by Global Alternatives.
What do syndication and crowdfunding mean?
Syndication refers to the process of raising debt or equity funding from an array of otherwise independent investors (the syndicate). The term crowdfunding typically refers to a process of syndication amongst the wider investment community, facilitated by an online technology platform.
What type of investments does Property Crowd offer?
Property Crowd offers three main types of investment opportunities, sourced and managed by institutional real estate partners:
- Senior debt, which refers to an underlying investment in a senior loan collateralised by a first lien/charge over a property asset[s]. Such opportunities shall be offered as a bond issue.
- Mezzanine debt, which refers to an underlying investment in a loan collateralised by a lien/charge over a property asset[s] which is not a first lien/charge. Such opportunities shall be offered as a bond issue.
- Equity, which refers to an underlying investment in the real estate asset itself. Such opportunities shall be offered as a share issue.
Who is eligible to invest in Property Crowd opportunities?
Our investment opportunities are available only to institutional, high net worth, sophisticated, and other professional investors.
What type of background checks do Property Crowd perform prior to investment?
We verify your identity prior to accepting investment funds from you. The identity of most UK-resident investors, both individual and corporate, can be verified electronically after your personal details are confirmed in our member area. For those members that cannot have their identity verified electronically, we will require certified copies of an identification document as well as a proof of address.
How does Property Crowd select its investment opportunities?
Property Crowd is an independent marketplace platform and does not perform detailed due diligence or credit underwriting or offer recommendations of any investments. Our carefully selected principal lender and asset manager partners originate opportunities and undertake all aspects of detailed due diligence, deal structuring and strategic management.
What is a principal lender?
A principal lender is a bank or a non-bank lender that undertakes all aspects of borrower and asset due-diligence before lending funds either directly from its balance sheet or using its own funds or investor funds via lending vehicles.
What is an asset manager?
An asset manager is a property industry expert with a solid track record of managing institutional grade property investments on behalf of professional investors. The asset manager will manage the asset and report to investors on an ongoing basis. Generally, an asset manager will be an institution or specialist firm, acting in a fiduciary capacity, procuring, structuring, and strategically managing real estate investments on behalf of pension funds, family offices, HNWI, etc.
Can I exit my investment [early]?
Investments in private unlisted securities are illiquid in nature and an active secondary market does not currently exist. We will facilitate secondary market transactions where possible, but the availability of an early exit cannot be guaranteed.
Is Property Crowd regulated by the Financial Conduct Authority?
Property Crowd is a trading name of Global Alternatives Operations Limited, which is an Appointed Representative of Gallium Fund Solutions which is authorised and regulated by the Financial Conduct Authority under firm reference number 487176.
How does Property Crowd earn fees?
Property Crowd will earn fees in accordance with our Terms & Conditions.
Property Crowd typically receives fees from the issuer or a third party. For example, Property Crowd may receive an arrangement fee from the principal lender upon completion of the transaction and a bond placement fee from the Issuer.
If for a particular investment opportunity any fees are to be charged to you directly, details of such fees shall be clearly disclosed in the Deal Room.
What fees are charged to Crowd Investors?
We do not charge any fees to bond investors. As with Property Crowd, third parties may charge fees to the Issuer in accordance with the provisions of the relevant investment.
Why should I use Property Crowd rather than invest directly in property assets?
Property Crowd provides its members with the opportunity to invest directly in professionally sourced and managed institutional grade real estate assets that they may not typically have access to or do not have the time to procure themselves. Conventionally, institutional grade real estate investment has required a significant amount of capital and expertise.
Property Crowd offers access to the world of institutional grade property investment without the hassle and high minimums involved in direct investment.
How does the investment process work?
Our selected asset manager or principal lender will source the investment opportunity and perform full and detailed due-diligence. Property Crowd will present this information in a clear and concise manner to eligible professional investors who have completed the requisite self-certification process. The associated investment, financial and legal documentation is then made available in the Deal Room where members can review in detail prior to committing to any investment.
Once an investment is subscribed for, funds are held in a segregated client account by the custodian until the closing date of the investment. Funds are then released to acquire the asset (for an equity deal) or to participate in the loan (for a debt deal).
Every investment opportunity offered on Property Crowd shall have a closing date as stated in the Deal Room. If the funding target for a deal is met well in advance, the closing date of an investment may be brought forward.
Once the deal is closed and the subscription for securities completed, the custodian will hold the securities as nominee on behalf of the subscribing members.
What happens if the deal I invested in isn’t fully funded?
What is a custodian and who is it in this case?
The custodian for Property Crowd is Gallium.
How are my money and investments held?
Any securities subscribed for on Property Crowd will be held by the custodian as nominee on behalf of the subscribing investors.
What is the minimum investment amount?
The minimum investment amount will be defined for each individual investment opportunity, but is typically 10 bonds, or about £900.
Does Property Crowd provide advice in relation to its investment opportunities?
Property Crowd does not provide legal, investment or tax advice. Investment information provided by Property Crowd does not factor in any tax which may be payable on the amounts that you receive. Taxes may apply that are not payable by the company issuing the securities or by Property Crowd.
We recommend that you seek suitable tax advice before investing.
How do investors fund their Property Crowd account?
Once an investor has completed and passed the requisite checks and certifications and member access is confirmed, investors can fund their accounts by bank transfer directly to the custodian client account.
How do I withdraw my money?
We will then instruct our Custodian to process your request ASAP and aim to remit the funds to the same account from which they were received within 5 working days.
Does Property Crowd accept non-UK investors?
Property Crowd is a cross-border platform and therefore we welcome non-UK investors, subject to certain exceptions. Due to current regulations, we are unfortunately unable to accept investors who are residents of the United States.
As an investor, is my liability limited?
Yes, the liability of the investor is limited to the amount of capital that is invested. As with any investment, capital invested is at risk and money invested can be lost.
What currency will my account be denominated in?
Your account will be denominated in GBP, USD or EUR. The relevant currency for any particular investment opportunity will be that of the country in which the underlying investment is originating.
Investors should be aware of the effects of exchange rate fluctuations and its potential impact upon investment risk and return.
Are the SPVs for each deal separate?
Yes. Each investment opportunity is structured within its own stand alone dedicated SPV (Special Purpose Vehicle).
What happens if Property Crowd goes out of business?
Should Property Crowd fail for any reason, your investments and cash balances would remain entirely undisturbed. Investor reporting would be undertaken directly by the custodian.
How does Property Crowd ensure personal information is kept secure?
We hold a Data Protection Licence with the Information Commissioner and ensure that all personal data is encrypted on our website and that access to this sensitive data is strictly controlled.
Why do you have multiple institutions involved in your model?
The Property Crowd business model is to bring core competence, experience and credibility into every aspect of the investment proposition.
This segregation of duties encourages performance whilst maximising investor protection by ensuring that robust safeguards are in place to mitigate the risks arising, for example, from conflicting interests, negligence or fraud.
What is a Zero Coupon Bond and how does it differ from a regular bond?
The difference between a zero coupon bond and a regular bond is that a zero-coupon bond does not pay regular coupons, or interest payments, to the bondholder while a regular bond does.
The holder of a zero coupon bond only receives the face value of the bond at maturity, or the accrued value at early redemption. The return is realised as the difference between the discounted price at which the bond was purchased and its face value or redemption value.
In contrast, for the holder of a regular, coupon-paying bond, the return is primarily derived from the coupons received over the life of the bond, in addition to the difference (if any) between the purchase price and the face value of the bond received at maturity.
Why is the bond term different from the term of the underlying loan?
Bonds offered on Property Crowd are structured with due consideration to flexibility and, to the greatest extent possible, uniformity. For this reason, bonds will typically be issued with a term to maturity beyond that of the underlying loan. However, in all cases, when the underlying loan is repaid in full, the associated bond shall be redeemed under a pre-defined early redemption mechanism.
What are the types of ISAs available?
There are basically three main categories of Individual Savings Accounts (“ISAs”) – Cash, Stocks & Shares and Innovative Finance. You can put money into all or any combination of these ISAs in each tax year.
What is an Innovative Finance ISA (IFISA)?
The Innovative Finance ISA is a new type of ISA introduced by HM Revenue and Customs in the United Kingdom. Certain types of loans will be eligible to be held within this new type of ISA, without being subject to tax.
Can I invest in and hold bonds issued on the Property Crowd platform through an IFISA?
Yes. Bonds issued on the platform qualify for investment via IFISAs. For the moment, the Property Crowd ISA is the only ISA through which you can invest in these bond issues.
How can I invest in Property Crowd’s deals through an IFISA?
You will need to open an IFISA account on the platform (‘Property Crowd ISA’). Once your Property Crowd ISA application has been approved, you can subscribe for an open bond issue through your Property Crowd ISA. Your Property Crowd ISA will be opened and administered by Gallium PE Depositary Limited (Gallium), which is authorised and regulated by the Financial Conduct Authority as an ISA manager.
How do I open a Property Crowd ISA?
In addition to our standard on-boarding process, you will be required to complete a simple IFISA Application Form if you elect to apply for a Property Crowd ISA.
How much can I invest through my Property Crowd ISA?
In the 2017/2018 tax year, the ISA investment allowance is £20,000 per individual. You can therefore invest up to £20,000 in your Property Crowd ISA before the deadline on Tuesday April 5 2018, if you have not used all of your allowance in any other ISAs in the current tax year.
*Pursuant to Clause 4.5 of our Terms and Conditions, we do not provide any investment advice, legal advice or tax advice. If you are in any doubt as to your own personal circumstances regarding this matter, you should seek such advice from an appropriately qualified professional.
What are the benefits of investing within a Property Crowd ISA?
All investments held within an ISA are completely tax-free. Any investments returns that you earn in your Property Crowd ISA are not subject to any taxes on income or capital gains.
Pursuant to Clause 4.5 of our Terms and Conditions, we do not provide any investment advice, legal advice or tax advice. If you are in any doubt as to your own personal circumstances regarding this matter, you should seek such advice from an appropriately qualified professional.
Who can open a Property Crowd ISA?
You must be:
- aged 18 or over
- UK resident for tax purposes
- a Crown servant, or the spouse / civil partner of one, if you don’t live in the UK
You cannot hold an ISA with or on behalf of someone else.
Can I withdraw money from my Property Crowd ISA?
You can take uninvested cash out of your ISA at any time. The Property Crowd ISA is ‘Flexible’ which means you can withdraw cash and put it back in again during the same tax year without losing your current year allowance.
What should I do with cash in my Property Crowd ISA?
Your Property Crowd ISA must be fully invested into qualifying bonds at all times. Cash may only be held temporarily for the purpose of purchasing those qualifying bonds. While cash is available in your Property Crowd ISA, all uninvested cash will be treated by us as “client money.”
Can I transfer money held by another ISA provider to my new Property Crowd ISA?
You can transfer your ISA from one provider to another, and from one kind of ISA to another (e.g. from a Cash ISA to an Innovative Finance ISA), at any time. Transfers must be made in cash, you will not be able to appoint another ISA manager to hold bonds issued on Property Crowd and you cannot transfer other investments into your Property Crowd ISA. The transfer process typically takes 2-3 weeks. You must complete an ISA transfer form in addition to completing the Property Crowd ISA application.
How much will the Property Crowd ISA cost me? What fees are involved?
An annual fee of 0.95% (inclusive of VAT) per annum will be charged on the amount invested in your Property Crowd ISA. The fee shall be applied pro-rata for periods only where the account has a positive balance of cash and/or securities. Such pro-rata annual fee amount shall be deducted at the time of a cash withdrawal request.
For transfers in or out from other ISA providers
£50 is payable in respect of transfers in to your Property Crowd ISA from a different provider, other than the initial transfer (in respect of which no fee shall be payable). This fee shall not apply to customers who opened their Property Crowd ISA before 1 December 2017.
£50 is payable in respect of any transfer out of your Property Crowd ISA to a different provider. This fee shall not apply to customers who opened their Property Crowd ISA before 1 December 2017.
Why are there fees charged on the Property Crowd ISA?
The fees on the Property Crowd ISA reflect the external costs charged by third party providers for each ISA, which include fees related to the provision of administration and management services. We do not earn or retain any of these fees.
Why can’t Property Crowd just absorb the ISA fees and adjust yields accordingly?
Indeed, we could do this but if we did, the bond yields on our deals would be lower overall and this would be unfair to non-ISA investors.
Can I invest in Property Crowd bond offers through my SIPP or SSAS?
Yes, although this will require the approval of your scheme administrator, which will have to be a regulated firm.
What is Advance Subscription?
Advance Subscription allows investors to subscribe for some bonds in advance of their actual issue at a preferential yield.
What are the advantages of Advance Subscription?
Apart from qualifying for a preferential yield on their investments, investors who use the Advance Subscription facility will gain more time to plan their investments. They will also avoid the risk of missing out if a bond issue is oversubscribed.
How does Advance Subscription work?
By making an Advance Subscription, the investor will be applying to subscribe for bonds upon issuance by the SPV at completion. In order to make the application, sufficient funds will need to be credited to the investor’s account held with our custodian. It is important to note that at this point, the investment is not executed and there is no issuance of the bonds (each of which only occurs at completion).
Are there any disadvantages of Advance Subscription?
There is a potential opportunity cost of committing funds in advance of a bond issuance, as the cash will be held on account by our custodian earning no interest. However, this period is unlikely to be more than a few days since deals will only be made available for Advance Subscription when they are close to completion. Moreover, any interest payments foregone on funds held elsewhere should be more than offset by the higher yield paid on the Property Crowd bonds once they are issued.
How will I find out about deals available for Advance Subscription?
Information about Advance Subscription deals will be made available in the Indicative Advance Subscription Deal Rooms presented in the same way that deals are published now. The only difference is that their status will be clearly labelled as containing indicative information, as opposed to full and final details.
The information provided in the Indicative Advance Subscription Deal Room will not be approved for the purposes of the FCA’s financial promotion rules, whereas the information in the Final Advance Subscription Deal Room will be so approved.
What if I change my mind about investing in the deal that I have made an Advance Subscription for?
Investors will have an option to cancel their subscription request by midday the day before completion. The Final Advance Subscription Deal Room will be published before completion and will highlight any changes to the information provided in the Indicative Advance Subscription Deal Room. While we would not expect there to be any material changes at that point, it is the investor’s responsibility to review the information in the Final Advance Subscription Deal Room, both to check what changes (if any) have taken place and to assess whether they are comfortable to proceed with their investment (regardless of whether or not there have been any changes).
If no election is made to cancel their application for subscription, the investment will be deemed to be confirmed and the bonds will be issued to the investor at the issue price on completion.
What happens to my Advance Subscription funds if a deal doesn’t go ahead?
The risk of a deal not going ahead after it has been made available for Advance Subscription are limited, as, at that stage, most details will already have been finalised. However, if a deal does not proceed, your money will remain as funds on account, which can be withdrawn at any time.
What is the FSCS?
The FSCS is the Financial Services Compensation Scheme, whose purpose is to compensate clients of regulated firms if the firm becomes insolvent at a time that it owes money to its clients.
For securities business conducted by Global Alternatives Operations Limited, Gallium Fund Solutions Limited, and Gallium PE Depositary Limited, the maximum amount of compensation is £50,000. For deposit-taking business, such as any bank at which Gallium Fund Solutions holds your client money, the maximum amount of compensation is £85,000.
Who is eligible to claim compensation from the FSCS?
Individual investors and small businesses will, in principle, be eligible for compensation.
Detailed rules about who is eligible to make claims can be found here.
In essence, the following will not qualify:
- Regulated entities;
- Investment funds;
- Pension schemes other than personal pension schemes (SIPPs and SSASs); stakeholder pension schemes; and occupational pension schemes relating to money purchase benefits or small employers;
- Companies which meet two or more of the following tests will not be eligible: turnover of £6.5 million; balance sheet of £3.26 million; 50 employees;
- Partnerships with £1.4 million net assets.
What sort of claims are covered by the FSCS?
The FSCS does not cover pure investment performance, so if the issuer of securities you acquire through Property Crowd becomes insolvent or otherwise defaults on obligations it owes you, you will not be entitled to compensation
The FSCS covers the obligations of regulated firms, so if we or Gallium were to mis-sell an investment to you or lose your money or securities and we were not able to pay you the money you were entitled to (e.g. because of our insolvency), you could make a claim to the FSCS (if you were eligible to claim).