We review Signature Capital’s investments offering up to 16% per year

[Note: due to a copyright claim, the logo above is an original approximation of Signature Capital’s logo, and not its own.]

Signature Capital offers a range of unregulated property investments.

As at March 2019, these investments included an investment in the Dixie Dean Hotel paying 12% over 12 months, and an investment in The Signature Flotel paying 12% over 12 months (with a higher minimum investment).

I have seen an email detailing a further investment in the Martins Bank project paying 10% per year for investments between £15k and £45k, rising to 16% per year for investments of over £250,000.

Signature Capital frequently changes the individual properties on which its investments are based. However the interest rates above are typical of their offerings, based on previous offerings which are now “sold out”.

Who are Signature Capital?

lawrencekenright
Signature Capital CEO Lawrence Kenright (note: due to a copyright claim, the subject’s photo has been replaced with an artist’s impression)

Signature Capital is headed by Lawrence Kenright, who is director of 56 active UK companies at time of writing. The “top company” is described as Signature Living Hotel.

Signature Living Hotel is currently a month overdue with its Companies House accounts, as are a total of 20 other Signature Capital companies at time of writing.

The March 2017 accounts of Signature Living Hotel (which are now two years old) show net liabilities of £11 million on total assets of £74 million.

Up to date accounts are essential for due diligence. Anyone considering investing will need up to date audited accounts for Signature Capital (or the specific company borrowing money from them) – just as a starting point.

How safe is the investment?

Signature Capital promotes itself via a testimonial from Hong Kong rugby player who Tyler Spitz who describes the investment as “fantastic returns in a secure environment” and “a safe place”.

I’m getting fantastic returns in a secure environment. It didn’t take me long to realise my money is in a safe place and that I was going to get great returns on my investment.

-Tyler Spitz

[Marketing material published on Signature’s website as at the publication date of this article. Emphasis as per original.]

This is a misleading description of Signature Capital’s investments which are inherently a very high risk investment, being a loan to an unlisted company bearing rates in the region of 10% per year.

The fact that Signature Capital offers a fixed return to investors means these investments are in Signature Capital itself, not just in property.

Loans secured against property are not risk-free as there is a risk that if the underlying borrower defaults, the security cannot be sold for enough to cover the loan.

Investors in asset-backed loans have been known to lose 100% of their money when it turned out that there were not enough assets left to pay investors after paying the insolvency administrator (who always stands first in the queue).

We are not in any sense implying that the same will happen to investors in Signature Capital only illustrating the risk that is inherent in any loan note even when it is a secured loan.

If investors wish to mitigate this risk, it is essential that they hire professional due diligence specialists (working for themselves, not Signature Capital) to confirm that in the event of a default, the assets of Signature Capital – or the specific company borrowing money from them – would be valuable and liquid enough to compensate all investors. Investors should not simply rely on what Signature Capital tells them about their assets.

Signature Capital’s literature is big on financially irrelevant statistics like the occupancy rate of its hotels or the square metrage of its assets. The occupancy rate of a hotel, by itself, tells you nothing about how profitable the business is and by extension how likely it is to be able to pay up to 16% per year to lenders.

Should I invest in Signature Capital?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any individual loan note to an unlisted company, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk up to 100% loss of their money.

Any investment offering returns of up to 16% is inherently extremely high risk. As an individual, illiquid security with a risk of total and permanent loss, Signature Capital’s loan notes are much higher risk than a mainstream diversified stockmarket fund.

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?

The investment may be suitable for high net worth and sophisticated investors who will already be well aware of all of the above risks, are looking to invest a small part of their assets in corporate lending, have done sufficient due diligence, and feel that the return on offer is sufficient for the risks involved in lending to a small company.

If you are looking for a “safe” or “secure” investment, you should not invest in corporate loans with a risk of 100% loss.

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13 thoughts on “We review Signature Capital’s investments offering up to 16% per year

  1. Just as you made a “friend” in Shaun Prince and Paul Careless, you’ve probably now made a “friend” in Lawrence Kenright …. lucky you ….

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  2. Signature Living Hotel has just filed group accounts of the year end 31/03/18
    The accounting period was shortened by 1 day on 21/12/18 , probably to get an extension of time to file the accounts, so the expected date of the accounts would be 30/03/18?

    The balance sheet shows net current liabilities of £35,978,865
    Note 1.3 Going concern suggests that the net current liabilities are £37,093,939
    (the difference probably isn’t considered to be significant given the scale of Prior period adjustments.

    According to Note 35 Prior period adjustment – there is a prior year adjustment which gives rise to a reduction in the previous year’s equity position by £10,507,225 and a reduction in the previously stated profit by £10,132,165 (although the previous reported profit figure does not correspond to the previous year’s filing).

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  3. I appreciate the concerns raised about Signature Capital, but my experience as a long-term investor has been that they’ve been excellent.

    They have ALWAYS paid on time. There has never been a delay with a single payment they’ve made to me.

    Security is backed with their vast portfolio of real estate which has been independently valued.

    Their customer service is fantastic and I’ve never been unable to get hold of them. And so on and so forth.

    Obviously there are risks involved with any non-FSCS-protected home for your money, but if don’t take any risks in life whatsoever, even diligently researched ones, you will not achieve anything. I spent dozens of hours researching Signature Capital and, unlike 99% of investment opportunities I’ve explored and investigated, the very fair risk-reward ratio meant I have invested a sizeable sum in Signature Capital… and earned very healthy returns.

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  4. @Adam
    If your DD suggests that the risk/reward of Investing in Signature Capital / Signature Living is skewed in your favour then it bodes well for your investment.
    Like you, I have done some research, but I came to a different conclusions concerning the risk/reward.
    My main concerns focused on:
    1 Companies House filings
    2 Gazette notices
    1 Companies House
    There are more than 100 companies connected in some shape or form. There are significant histories of charges filed by lenders who mainly offer “bridging loans” – this suggests that the companies costs of raising finance will be towards the higher end of the scale, given the relatively short-term nature of the lending and the level of monthly interest charges.
    The accounts filing history of Signature Living Hotel (the holding company) shows the accounts have been consistently late – there may be mitigating circumstances for the late filings, but it brings into question the companies overall administration.
    The last set of accounts includes an £11m prior year adjustment which negatively impacts reserves.
    Prior year adjustments may indicate a shortfall in general administration and the internal audit functions.
    https://beta.companieshouse.gov.uk/company/08124207/filing-history
    https://beta.companieshouse.gov.uk/company/08124207/charges
    2 Gazette notices
    Signature Living Hotel and associated companies have a number of winding-up orders on record.
    A wind-up order is generally viewed as a “red flag”, given that each advertised order results in that company’s bank accounts being frozen until the matter is settled.
    https://www.thegazette.co.uk/all-notices/notice?results-page-size=10&numberOfLocationSearches=1&location-distance-1=1&sort-by=latest-date&categorycode=G105000000&service=all-notices&text=signature

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