Empire Property Concepts offers three unregulated loan notes:
- A 2 year fixed rate secured loan note which will accrue 10% compound interest in the first year and 12% compound interest in the second year. Interest is compounded annually and payable at the end of the term with a 4% bonus (equating to 4% of the capital invested) together with the capital invested.
- A 2 year fixed rate secured loan note which will accrue 10% simple interest in the first year and 12% simple interest in the second year. Interest is payable every 6 months in arrears.
- A 4 year fixed rate secured loan note which will accrue 15% simple interest in the first year, 15% simple interest in the second year, 15% simple interest in the third year and 15% simple interest in the fourth year. Interest is payable at the end of the term together with the capital invested. (So in other words 60% interest paid after four years, which is equivalent to 12.5% per annum on a Compound Annual Growth Rate basis.
The investment opportunity is not openly promoted on EPC’s website, but I was able to easily obtain details of the opportunity from an unregulated introducer after self-certifying as a sophisticated investor (without being asked to provide any evidence).
Open to new investment.
Who are Empire Property Concepts?
Paul Rothwell is the founder and director of the business. The other director is Jeffrey Taylor. Companies House shows that there is a single voting “A” share in Empire Property Concepts which is owned by Paul Rothwell – which means that Paul Rothwell has full control over the company.
Empire Property Concepts was incorporated in 2009, but the business seems to have taken off in 2015 when current assets leapt from £175k to just over £1 million (according to the December 2015 and December 2014 accounts).
Tangible assets according to the December 2016 accounts are just over £11k, so Paul Rothwell’s £33m property empire (The Telegraph) is presumably held in his own name or in the name of special purpose vehicles – other companies owned by him and associates.
How secure is the investment?
These investments are unregulated corporate loans and if Empire Property Concepts defaults you risk losing 100% of your money.
Investors’ money is secured against the underlying property by a First Legal Charge. However, before placing any reliance on this security, it is essential that investors undertake professional due diligence to ensure that in the event of a default, that their charge against the security is propertly recorded, and that the asset can be sold to raise sufficient money to compensate investors, as any other corporate lender would.
This is particularly important given that the company offering the loan (Empire Property Concepts) does not appear to own the underlying investment properties.
Should I invest with Empire Property Concepts?
As with any unregulated corporate bond, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.
Any investment offering 12.5% per annum yields should be considered high risk (i.e. higher risk than a diversified portfolio of stockmarket funds).
This particular bond is described as asset-backed. Before putting any reliance on the security backing the bond, investors should undertake professional due diligence to ensure that a) the security exists b) in the event of default, the security could be easily sold and would raise enough money to cover all investors’ money c) the charge over the security has been properly and legally recorded.
Before investing investors should ask themselves:
- How would I feel if the investment defaulted and I lost 100% of my money?
- Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
- Have I conducted due diligence to ensure the asset-backed security can be relied on?
If you are looking for “security”, you should not invest in unregulated products with a risk of 100% capital loss.