How does syndication work?
How does syndication work?
What is property syndication?
Property syndication is a simple concept whereby you become owner of part of a commercial property leased to tenant(s) and receive a proportionate share of the rental income and capital growth.
How much can I put in?
The minimum is £25,000 but no single investor can hold more than an 24% stake in any one syndicate. You can however invest in as many properties as you like.
What level of return can I expect?
Each property produces a different level of return and you can choose which one you wish to buy into. Typical annual net returns today are between 5.75% and 7.0% excluding capital growth, dependant upon the property, tenant and location.
How long should I keep my stake in a property?
Property syndication is suited to people looking for a long-term steady return with a relative lack of liquidity. In principle each property should be held until the first rent review, which generally occur on a five-year cycle.
What happens if I want to sell my share?
You are free to sell your share at any point, to anybody. To help facilitate this, Helmsley has a procedure, whereby your share can be offered to other members of the syndicate, other investors we are aware of, or you can sell your share on the open market.
What are the risks?
Property values may fall as well as rise and you should be aware that property values are a matter of valuers’ opinion, therefore, before any purchase is made, we would recommend that you consult with your financial and other professional advisers. In the case of leased properties, tenants may default, leaving a void in rental income until such default is remedied. If a tenant fails and a property becomes vacant there may be empty rates liabilities, insurance and other holding costs that may fall upon the owners.
Can I choose which property I put money into and how much control do I have?
You are in full control. We do not seek discretion. The choice of property is yours and we actively encourage you to spread your funds over more than one property. This level of choice and control is the beauty of syndicated property.
Who are the tenants?
Tenants range from single occupiers, “blue chip” tenants on long leases, to properties with mixed tenants on shorter leases. Generally, the shorter the lease the higher the return.
What happens if the property becomes vacant?
The tenants hold the properties on leases with fixed notice periods. Our property team anticipates the likely voids and appoints professionals to re-let or renew leases where appropriate. There is the possibility of tenant default. In this instance we would seek to re-let or sell as soon as possible. However, there is always a possibility of a void within the income stream and holding costs of an empty property may be payable.
What happens if the property market falls into recession?
Property values can rise and fall. However, over a ten year period property has out-performed most other traditional financial products. Property syndication is a long term option to create income. High borrowings can force owners to sell at inappropriate times i.e. when values are low. None of our syndicates have any borrowings, and therefore, avoid the necessity to sell at the wrong time. As long as the tenant is paying the rent your return should not be affected.
Who manages the property?
All of Helmsley’s syndicated properties are independently managed by Colenso Property Services LLP, which is responsible for ensuring that the tenant abides by the terms of their lease, as well as collection of the rents and service charge. Colenso Property Services LLP monitors the performance of each property and regularly liaises with both the tenant and the syndicate members to assist in determining future property management strategies.
What would happen if, for any reason, Helmsley ceased to exist?
The legal title to the property is held in the name of HSL as Trustees who must act in accordance with the wishes of the syndicate members (by a 75% majority of the ownership of the property). The syndicate members are the individual legal beneficial owners of the property. Helmsley acts as Managing Trustee. The syndicate Trust Deed includes a provision that allows the syndicate members to change the Managing Trustee should the members (acting together by a 75% majority of the ownership of the property) wish to do so. This structure safeguards both the legal title to the property and the ability of the syndicate members to make all the management decisions, including the appointment of a new Managing Trustee.
Annual reports are produced and an AGM for the syndicate is held annually and all participants are strongly encouraged to attend.
Are you regulated by the FCA?
Yes. Helmsley Securities Ltd are authorised and regulated by the Financial Conduct Authority.
Is there an annual administration fee levied by Helmsley?
No. There is no annual fee payable to Helmsley in respect of this service. Helmsley’s total remuneration is incorporated within its initial syndication fee.
More comprehensive information is available on request and confirmation of you investor status.
“We provide our client base and potential investors with a range of opportunities that are always secured against land or property and have the potential to provide good levels of returns on a mid to long term basis.”