Park First withdraws 8%pa guaranteed investment after regulatory action, offers existing investors 2%pa + variable dividends, or their money back if they wait a year

Park First previously offered investments in airport car parking spaces with a “guaranteed” yield of 8% in the first two years, followed by “projected yields” of 10% in years 3 and 4 and “projected yields” of 12% in years 5 and 6.

Park First is part of the Group First group of companies, which also owns Store First, which offered a very similar scheme offering “projected returns” of 8% in the first two years.

Store First is in serious difficulties, with numerous pension investors (such as those in the Capita Oak scheme) not receiving promised returns and unable to sell their investments. The Business Secretary has launched High Court action to wind up Store First Limited and associated companies. The court hearing was adjourned and at time of writing a new date has not been set.

The Financial Conduct Authority took the view that Park First was promoting a collective investment scheme without authorisation and in December Park First agreed to stop promoting the original schemes and move to a “lifetime leaseback” model, which the FCA agreed was not a collective investment scheme, and therefore not its problem not an activity requiring FCA authorisation.

Money Marketing has now seen details of the new investment and reports that it “offers investors a fixed 2 per cent annual yield plus variable dividends from the management company’s profits.”

Accounts
What profits? (Source: Companies House)

2% per annum plus “variable dividends from profits” – which could be nil – is clearly much less attractive than a “guaranteed yield” of 8%. (Park First’s most recent accounts of 30 December 2015 showed a pre-tax loss of £200,000, so variable dividends will be nil unless profitability improves.)

Furthermore, investors in the original “8% guaranteed” scheme are now apparently being forced to either take up a “buy back option” to get their initial investment back – minus any rental income already paid to them – or switch to the 2% + variable dividends offering. Continuing in the original investment is apparently not an option.

In order to take up the buy back offer investors must hand back title to Group First and then give them a year to sell their space. This would appear to mean that investors must allow Park First to use their money interest-free for a year, plus however long it takes for title to be transferred, to get their original stake back.

In respect of the 2%pa + dividends option, it is questionable how many investors who originally invested expecting guaranteed returns of 8%pa (and 10% and 12% thereafter) would have been willing to invest in a small business in exchange for almost nothing except the hope of future dividends if Park First achieves profitability.

As there is no external market for spaces in Park First’s car park, investors would appear to have no other option available than the buy back option or switching to the new “leaseback” investment.

An investor tells Money Marketing: “I think for the FCA to deem this as a collective investment, and them just let Park First walk away by making a rather clumsy and unpalatable offer of their lifetime lease back scheme is deplorable.

“I have decided to take their buy-back offer, however this offer has many strings attached, like any usage payments would need to be paid back, and that you need to hand back title to the spaces to Park First, which then has a year to sell them. All in all, a great piece of leg work by Park First to make as much out of this as possible.

The FCA suggests that people who have already invested in Park First should seek financial or legal advice about which option to take, and say they will take no further action.

In other words, Park First investors are on their own.

This article was edited on 10 January to reflect a correction made to the original Money Marketing article.

5 thoughts on “Park First withdraws 8%pa guaranteed investment after regulatory action, offers existing investors 2%pa + variable dividends, or their money back if they wait a year

  1. I am also a victim of the parkfirst carpark and together with other investors in hk. We wonder if there is any consumer right in this as this is a one sided determination from ParkFirst to stop the scheme to compile to FCA. Any guru can give some legal advice?

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  2. This is an unregulated investment, neither consumer rights nor the FCA apply. You need professional legal advice from a regulated solicitor.

    Have you told Park First that you want to opt for the buyback option?

    What is HK? Surely not Hong Kong?

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  3. I am also a victim of this. Either way there doesn’t seem to be any good choice. If I do the buyback, it will take over a year to get my original investment back. From my understanding It seems I would have got 0% on the investment for 3 years. If i go for life time lease, they say I can keep the original interest but I cannot sell for 5 years. I would get 2% every year. Then they say I can sell privately( seems unlikely) or ask them to find a buyer. They will probably only get 75% of the price I paid or even less. Then they will also charge 5% fee and extra solicitor charges. If I do go for the lifetime lease I may end up getting even less than what I would get from the buyback scheme. Who knows what will happen in 5 years time. They might have got bankrupt and I might have lost everything. I dont know what to do. I really need some advice to decide what I should do. Can anyone please recommend any good financial adviser or lawyer, who knows about this and give me sound advice.
    Many thanks
    Sindy

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  4. Park First’s parent company is £31m in the red (as at June 2017) as a direct result of making a £62m provision to pay back Park First investors. If you get your original investment back in a year that will be an outstanding result.

    For the same reason, holding on to your Park First investment for five years in the hope of getting back more than that would be speculative in the extreme. Investors in Store First, Park First’s sister company, which is essentially the same investment only with storage pods in place of parking spaces, have lost all their money (their investments have no yield and no-one wants to buy them).

    Whichever option you choose I am afraid you will need to manage your expectations.

    Who sold you this investment?

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  5. In 2015 I started doing internet search for good return investments. I must have left my phone number on some sites. A company called MCI management rang me and sold me the investment. I wish I had done some more research on it before hand.

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