Understanding risks and how those risks affect you is important. You should speak to a professional investment adviser if you feel that you need advice regarding the suitability and risks of you investing, however, some of the key risks are as follows:
The achievement of projected income and capital returns will depend on a wide range of factors relating to the wider economy as well as the underlying property asset. Past performance does not necessarily provide an accurate guide to future performance. You should recognise that your capital is at risk and you may lose all capital invested. You should ensure that you understand the effects of fees, taxation, and if applicable – currency fluctuations – on any investment return that you may receive.
Real estate investments can perform in a cyclical nature and values can increase or decrease. Economic, political, and legal issues can affect values as they can with any other investment. Any future downturn in the real estate market could materially and adversely impact the value and income generated from the investments.
The shares or bond instruments in which you will invest are unquoted, and may be issued and sold or redeemed based on valuations (including of the underlying assets) which will involve an element of subjectivity and/or an element of time lag. You should recognise that the value of your shares can go down as well as up.
There is no right to compensation in respect of poor investment performance.
We cannot give tax advice and any investment information provided does not factor in any tax which may be payable on the amounts that you receive. If you are unsure as to the tax implications of a potential investment, you should seek professional advice before investing.
As with all investments, it is wise to diversify your portfolio to mitigate risk.
The laws around financial services and real estate are subject to constant change. Increased regulation brings increased costs. It may be necessary for the entities that you invest in to expend additional funds in order to comply with new legal obligations. This would impact the investment return that you receive.
Where the investment opportunity concerns an investment in a mezzanine loan, there are further risks which do not apply when investing in senior loans. In particular, if a loan becomes non-performing, typically the senior lender will have control over the default and enforcement process and the mezzanine lender has little or no input on that process. There is therefore an inherent risk in these structures that the senior lender may be willing to sell security assets in an enforcement scenario at a price which allows recovery of the senior debt, but not necessarily the mezzanine debt.
The investments offered on the Property Crowd portal are in private securities. These securities are not publicly traded. Whilst we will facilitate secondary market transactions, Property Crowd or any of its group companies do not guarantee to fulfill and match the order. Investors should consider the investment life cycle prior to making any investment decisions.
Money held in cash bank accounts
All investor cash balances are held with the custodian in segregated client accounts. The custodian is independent and authorised by the Financial Conduct Authority.
Foreign exchange movements
Investors should carefully consider and understand the potential effect of exchange rate fluctuations upon the projected investment returns.
SPV structure for investments
The bonds for each deal are issued by a standalone SPV which in turn participates in the loan. If the underlying loan were to become non-performing or default, the SPV may in turn default on its obligations under the bond. Under this structure for investing in secured property loans, it should also be noted that the bond investors cannot themselves take any action to enforce the underlying real estate security (these processes will be instigated and managed by an independent security trustee or by the principal lender, depending on the deal particulars).