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.
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.”
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.