Know your risks

There may be times when it is difficult to sell a stake in a syndicate, particularly when a lease renewal or a break clause is approaching or if the property has become vacant and the lease has expired. Property values may fall as well as rise and you may get back significantly less than you invested.

Although an annual independent valuation is obtained on each syndicated property, this valuation alone may not be a reliable indication of the valuation of an investor’s particular syndicated stake and other factors could influence the value. For example, if there is only a short number of years left to the expiry of the lease, this will impact on the valuation of an investment in the shorter term until the lease is renewed.

In the case of leased commercial properties, tenants may default, a property may become vacant and in these cases there may be a void in rental income until such time as the default is remedied, the property re-let or sold. Should the property become vacant or the tenant default, there may be costs incurred by the participants, which could include empty rates, service charges, utilities and insurance requirements.

The investment should be seen as a high risk component of any investment portfolio, and it is important for investors to recognise that it is prudent to diversify their investments.

Decisions on a syndicated property are taken by a 75% majority of the participants, and no participant may hold more than 25%. An individual investor can therefore be outvoted on a sale, a letting or a refurbishment, and cannot compel a sale of the property.

Management costs are deducted from rental income before it is distributed. On some syndicates Helmsley also takes a share of any uplift in value on sale. The fees and any profit share that apply are set out in the offer document for each syndicate.

Helmsley Group is unable to provide you with any form of investment advice or confirmation that this investment is suitable for you. It is the investor’s responsibility to carry out ongoing monitoring or assessment of their syndicated commercial property investment.

There are tax rules associated with syndicated commercial property investment and these tax rules are subject to change. Helmsley Group strongly advises you to seek professional tax advice regarding the taxation implications of syndicated commercial property investment.