The 2017 LoanNote Guide

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A New Alternative to Property InvestingSince the financial meltdown of 2008, the global investment industry has undergone fundamental change and smart investors have realised traditional investment models no longer work, and a new approach is required.

The definition of 'alternative investments' includes any investment that does not fall within one of the three traditional asset classes, being stocks, bonds and cash. Examples of alternative investments are hedge funds, private equity, managed futures, real estate, commodities and derivatives contracts.

Instability in the bond market combined with low interest rates giving poor returns on

cash has led to a huge growth in alternative investments. At a minimum, alternative investments are an essential diversifier in an investment portfolio, but increasingly they are being seen as the only real future of investing, post 2008.

Hunter Jones are experienced introductory agents, introducing certified investors to the opportunity to diversify their portfolios with a range of asset-backed investment vehicles across a variety of major sectors.

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Loan NotesLoan Notes provide a good introduction to the world of alternative investments with impressive returns and easy exit strategies. Loan Notes ensure you are taking full advantage of your capital and beating the returns offered by more traditional formats.

Just like an investment bond issued by a bank, a Loan Note pays interest over a predetermined timescale and at the end of the period the original investment is returned plus any interest accrued.

Loan Notes - Part 1

Loan Notes - Part 2During the investment term, the Loan Note is secured via a legal charge over the assets for a fixed length of time.

Interest is paid as ‘income’ periodically or interest is compounded over the investment and repaid at the end of the term as ‘growth’.

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Why Loan Notes?Traditionally, property developers and construction companies funded property developments with loans from the bank. But after the 2008 recession, banks changed the way they lend money. Heightened caution amongst lenders caused them to deem virtually all development financing too ‘short term’ which has meant that developers have had to seek alternative methods for raising capital.

The gap in the development financing market has been fulfilled in the form of Loan Notes, which allow developers to raise the necessary capital required and also offer high returns to investors in exchange. They were rarely issued by smaller quoted financial companies to private investors, but there has been tremendous growth in the number of individuals moving their funds into Loan Notes due to the enviable yields paid.

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UK Property MarketIt has become abundantly clear that the recession of 2008 has fundamentally changed the way the UK housing market operates. It has created a generational divide which will only continue to widen further, especially as private renting continues to grow and homeownership among both the under 35s and 35-49 year olds falls further.

However, the UK government has made numerous attempts to address the housing shortage, and in 2015 it set a target of building one million new homes in England by the end of 2020, the equivalent of 200,000 new homes every year. However, the last time the country built 200,000 homes a year was just after World War Two. Since then the role of local government has evolved away from being a housing provider to being a facilitator. Subsequently, supply of new homes has dropped, with less than 165,000 new homes built in England in 2015 (The Guardian,

2016).

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The average UK house price is £205,937

The number of UK households renting has risen from 2.3 million in 2001 to 5.4 million in 2014

Less than 165,000 new homes were built in England in 2015

JLL have recently forecast house prices in the North West to rise 18.1% until 2021.

Facts & FiguresOne attempt by the UK Government which is helping to assist with the UK Property shortage is Permitted development rights which allow certain changes to be made to a building without the need to apply for planning permission. The right to convert Class B1 (offices) to Class C (residential) was first introduced on a temporary basis in May 2013 but they were made permanent in May 2016. According to the Guardian, there has been a leap of more than 10% in new dwellings aided by commercial properties being turned into flats with 12,824 offices converted in 2015-16 alone (The Guardian, 2016).

Hunter Jones offer various Loan Note opportunities which allow certified investors to invest and benefit from a strong investment opportunity that is the UK Property Market.

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Track RecordLoan Notes are fast becoming the new ‘go-to’ property investment opportunity in the UK and Europe. Hunter Jones are a leading introducer of such opportunities and we introduce certified investors to a range of developers who then use these funds to acquire commercial properties for development into residential accommodation.

Empire Property Holdings is one of the developers which Hunter Jones raises Loan Note funds for. In 2016, Hunter Jones were the lead introducer in raising £6 million in Loan Note finance in less than 6 months. This capital was then used to acquire three commercial properties for development. The details of each development are displayed below.

Empire Property Holdings takes advantage of the recent permanement change in Permitted Development Rights.

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Example #1 of a Successful Loan Note Funded Development

63 Bradshawgate, Bolton

£900,000 - Purchase Price£2,240,000 - Development Costs£3,140,000 - Total Cost

£491,400 - Rental Income£5,310,000 - 2016 Valuation

Expected Annual Return - 13.6%*

Empire Property Holdings was set up by Paul Rothwell, who was recently featured in the Daily Telegraph with a £33 million portfolio.

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King Charles House, Pontefract

£900,000 - Purchase Price£1,860,000 - Development Costs£2,760,000 - Total Cost

£400,000 - Rental Income£4,500,000 - 2016 Valuation

Expected Annual Return - 12.3%*

Example #2 of a Successful Loan Note Funded Development

New Commerce House, Wakefield

£370,000 - Purchase Price£1,280,000 - Development Costs£1,650,000 - Total Cost

£260,000 - Rental Income£3,120,000 - 2016 Valuation

Expected Annual Return - 11%*

Example #3 of a Successful Loan Note Funded Development

*Figures based on management projections based on development’s business plans and official valuations. They are not intended to act as an indication of future performance of any other investment opportunities. Investors may lose all invested capital if the property market or development fails. Hunter Jones only markets to suitably qualified investors. For more information, see our website.

The information contained within this document is intended as a general guide. This information does not constitute an offer or a contract and we (or anyone in our company) do not imply, make or give any representation, guarantee or warranty whatsoever relating to the terms contained within. Any intending investor must satisfy themselves as to the correctness of any of the statements, plans or images contained within. Images are for illustrative purposes only. The content contained within is

correct adhering to the previous statement at the time of publishing.

Reasonable care has been taken by us in the preparation of this document but we do not accept any responsibility or liability for the information which has been provided by 3rd parties. We further do not accept responsibility or liability of views or opinions herein provided or provided by us or on our behalf (whether orally or in writing) unless we have expressly confirmed such information and/or views and/or opinions in writing as being such that it should and can be relied upon. The

information provided should not be taken asfinancial advice in relation to the UK property market or property investment advice. We do not warrant the accuracy or completeness of the information and/or

measurements and/or financial returns provided in this document and any intending investor should be aware thatproperty prices can go down as well as up.

We recommend that all appropriate commercial, tax and legal enquiries and advice is obtained before entering into a legally binding contract to investing. Copyright in and to this document and its contents belong to Osborne Baldwin Limited.

Hunter Jones is a trading name for Osborne Baldwin Ltd. Registered Office: One Oaks Court, Warwick Road, Borehamwood, Hertfordshire, WD6 1GS. Company Number 08744562. Registered in England & Wales.

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