Commercial Property Investment Syndicate
Business Challenge
The client is a mid-sized investment intermediary based in mid-Munster (south of Ireland), offering a range of pension and investment options to its clients. The firm’s clients sought to invest in commercial property in Europe and the firm wished to keep as much of the investment activity within the firm. Accordingly, it approached Farrelly & Mitchell to create bespoke commercial property investment product.
Our Approach
Farrelly & Mitchell sourced, structured and acquired a suitable commercial property for the firm, which it promoted to its high net-worth clients. Farrelly & Mitchell was also retained to manage the investment post-acquisition.
Through its contacts in the German commercial property market, Farrelly & Mitchell identified an office property that matched the investment criteria. Farrelly & Mitchell carried out the due diligence and structured the investment in the most tax-efficient manner, taking both German and Irish tax law into account.
Utilising Farrelly & Mitchell’s strong relationship with the Irish and German banks, 70% non-recourse debt financing was secured for the client. This leveraged the investors investments, without exposing them to additional risk.
The building was leased to a number of high-quality tenants on strong covenants.
Benefits & Value
After 18 months, the value of the property had increased substantially and Farrelly & Mitchell was able to renegotiate the loan and to return 30 percent of the investors’ money based on the additional value of the clients’ collateral
Because of the strong yields on the property, the firm’s clients get an annual payout of 3 percent over the course of their investment. This is a particular advantage to those clients who borrowed to invest in the property.